TaxTMI 
TaxTMI 
2018 (4) TMI 453
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the back of the assessee. 3. Under the facts and circumstances of the case the learned CIT (A) has erred by not treating the sale of share as genuine transaction on the ground of human probabilities inspite of submitting credible evidences which are more reliable. 4. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing. 2. The assessee is an Individual and derives income from business or profession, house property and income from other sources. The assessee filed his return of income on 27th September, 2013 declaring total income of Rs. 9,86,410/-. The assessee has claimed exempt income of Rs. 4,78,38,157/- under the head Long Term Capital Gains on account of shares. The AO while passing the assessment order under section 143(3) has held that the long term capital gains claimed by the assessee is bogus as the assessee has arranged the accommodation entries from the persons who are engaged in providing bogus accommodation entries of capital gains. The assessee challenged the action of the AO before ld. CIT (A) but could not succeed. 3. Before us, the ld. A/R of the assessee has submitted tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Coordinate Bench of this Tribunal dated 31.01.2018 in the case of Shri Pramod Jain & Others vs. DCIT & Others in ITA Nos. 368 to 370/JP/2017 and submitted that the same script was involved in the said case and by considering an identical case, the Tribunal has decided the issue of genuineness of the transaction of purchase and sale of shares and consequential capital gain. 3.1. On the other hand, the ld. D/R has relied upon the orders of the authorities below as well as the decision of Hon'ble Bombay High Court dated 10th April, 2017 in case of Sanjay Bimalchand Jain vs. CIT in ITA No. 18/2017. 4. We have considered the rival submissions as well as the relevant material on record. At the outset, we note that an identical issue of purchase and sale of shares of M/s. Paridhi Properties Ltd. which was got merged with M/s. Luminaire Technologies Ltd. and subsequent to the merger, the shares of M/s. Luminaire Technologies Ltd. were allotted to the assessee which were duly dematerialized in the Demat account and thereafter sold by the assessee was considered by the Coordinate Bench of this Tribunal in the case of Shri Pramod Jain & Others vs. DCIT & others (supra) in para 7....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on when the assessee has shown the share application money paid through his bank account and the AO has not brought on record any material to show that apart from the share application money paid through bank account the assessee has brought his own unaccounted money back as long term capital gain. It is also pertinent to note that the shares of M/s Oasis Cine Communication Ltd. are still held by the assessee in its demat account to the extent of 17,200 shares and therefore, the holding of the shares by any parameter or stretch of imagination cannot be doubted. The AO has passed the assessment year based on the statement of Shri Deepak Patwari recorded by the Investigation Wing of Kolkata however, the assessee has specifically demanded the cross examination of Shri Deepak Patwari vide letter dated 15.03.2016 specifically in paras 3 and 4 as reproduced by the AO at page No. 7 of the assessment order as under:- "3. Since, the shares were allotted by the company through private placement after completing the formalities of ROC and were sold through the recognized Bombay Stock Exchage (BSE) there is no question of knowing individual persons or company official personally in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. CCE (supra) while dealing with the issue has held in para 5 to 8 as under: "5. We have heard Mr. Kavin Gulati, learned senior counsel appearing for the assessee, and Mr. K. Radhakrishnan, learned senior counsel who appeared for the Revenue. 6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity' where there are many probable factors, some in favour of the assessee and some may go against the assessee. But the probable factors have to be weighed on material facts so collected. Here in this case the material facts strongly indicate a probability that the wholesale buyers had collected the premium money for spending it on advertisement and other expenses and it was their liability as per their mutual understanding with the aseessee. Another very strong probable factor is that the entire scheme of 'twin branding' and collection of premium was so designed that assessee-company need not incur advertisement expenses and the responsibility for sales promotion and advertisement lies wholly upon wholesale buyers who will borne out these expenses from alleged collection of premium. The probable factors could have gone against the assessee only if there would have been some evidence found from several searches either conducted by DRI or by the department that Assessee-Company was beneficiary of any such accounts. At least something would have been unearthed from such global level investigation by two Central Government authorities. In case of certain donations given t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d also to the order of Tribunal and contended that in view of the finding reached, which was done through Stock Exchange and taking into consideration the revenue transactions, the addition made was deleted by the Tribunal observing as under:- "Contention of the AR is considered. One of the main reasons for not accepting the genuineness of the transactions declared by the appellant that at the time of survey the appellant in his statement denied having made any transactions in shares. However, subsequently the facts came on record that the appellant had transacted not only in the shares which are disputed but shares of various other companies like Satyam Computers, HCL, IPCL, BPCL and Tata Tea etc. Regarding the transactions in question various details like copy of contract note regarding purchase and sale of shares of Limtex and Konark Commerce & Ind. Ltd., assessee's account with P.K. Agarwal & co. share broker, company's master details from registrar of companies, Kolkata were filed. Copy of depository a/c or demat account with Alankrit Assignment Ltd., a subsidiary of NSDL was also filed which shows that the transactions were made through demat a/c. Wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns made through Shri P.K. Agarwal cannot be held as non-genuine. Consequently denying the claim of short term capital gain (6 of 6) [ ITA-385/2011] made by the appellant before the AO is not approved. The AO is therefore, directed to accept claim of short term capital gain as shown by the appellant." In view of the above facts and circumstances of the case, we are of the considered opinion that the addition made by the AO is based on mere suspicion and surmises without any cogent material to show that the assessee has brought back his unaccounted income in the shape of long term capital gain. On the other hand, the assessee has brought all the relevant material to substantiate its claim that transactions of the purchase and sale of shares are genuine. Even otherwise the holding of the shares by the assessee at the time of allotment subsequent to the amalgamation/merger is not in doubt, therefore, the transaction cannot be held as bogus. Accordingly we delete the addition made by the AO on this account. 9. Ground No. 3 is regarding addition on account of payment of commission to Shri Deepak Patwari. This issue is consequential to the issue involved in ground no. 1 ....