TaxTMI 
TaxTMI 
2018 (10) TMI 1088
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....the permission to add to or amend to any of the above grounds of appeal or to withdraw any of them." 2. The assessee is a private limited company and engaged in manufacturing of nutrition food to be supplied in various Government schemes. The assessee filed its return of income for the year under consideration on 15.10.2010 declaring loss of Rs. 4,36,62,802/- and long term capital gain of Rs. 2,65,27,020/- which was claimed as exempt under section 10(38) of the IT Act. The long term capital gain claimed by the assessee is arising from sale of 98,000 shares of M/s. Well Pack Papers & Containers Ltd. The AO disallowed the claim of the assessee by treating the same as bogus and holding that the assessee has introduced its unaccounted income in the shape of long term capital gain. The assessee challenged the action of the AO before the ld. CIT (A). The ld. CIT (A) though confirmed the action of the AO, however, allowed the claim of purchase consideration and sustained the addition to the extent of capital gain instead of full amount of sale proceeds made by the AO. 3. We have heard the ld. A/R as well as the ld. D/R and considered the relevant material on record. We find that the....
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....ll Pack Papers & Containers Ltd. was listed in the Stock Exchange and though the assessee purchased the shares through off market transaction but the shares were dematerialized before the same were sold after one year from the D-mat account of the assessee. Thus the ld. A/R has submitted that the assessee has produced all the relevant documents and evidences establishing the purchase of shares, dematerialization of the same and thereafter sale of shares from D-mat account against the consideration received through banking channel. The AO as well as the ld. CIT (A) has not disputed the sale of shares and receipt of consideration but have treated the transaction of long term capital gain and claim of exemption under section 10(38) as bogus. The ld. A/R has further contended that the assessee has purchased the shares in the month of November, 2008 and were duly recorded in the books of account and shown in the balance sheet of the assessee as on 31st March, 2009. Therefore, the shares which were already recorded in the books of account and shown in the Balance Sheet as on 31st March, 2009 cannot be treated as bogus transaction only because the assessee earned a huge capital gain due t....
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....ate Bench of this Tribunal dated 31.01.2018 in the case of Shri Pramod Jain & Others in ITA Nos. 368 to 372/JP/2017 and submitted that the Tribunal has held that it is not expected from the assessee individual to produce the Principal Officers of the assessee rather the AO ought to have summoned them if the examination of officers were considered necessary by the AO. The AO ought not to have asked the assessee to produce the principal officers of those companies. The ld. A/R has also relied upon the decision of Hon'ble Jurisdictional High Court in the case of Principal CIT vs. Shubh Mines Pvt. Ltd. dated 3rd May, 2016 in DBIT Appeal No. 96 of 2015 and submitted that Hon'ble High Court has held that in the absence of cogent evidence on record establishing that money shown to have received as share application money was, as a matter of fact, unaccounted money belonging to the assessee, the finding of the AO based on suspicion has rightly been held not sustainable in the eyes of law. He has then referred to the decision of Mumbai Bench of the Tribunal ( Special Bench) in the case of GTC Industries vs. ACIT, 164 ITD 1 and submitted that it was held that no addition can be made....
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....hares of M/s. Well Pack Papers & Containers Ltd. to the assessee. The ld. D/R has thus submitted that the AO has brought on record evidence in the shape of enquiry and statements to hold that the transaction of purchase and sale of shares is bogus, in the nature of accommodation entry to claim long term capital gain which is exempt from tax. The assessee was also given the Inspector's Report as well as the statement of Shri Mahesh Pancholi which was duly responded by the assessee during the assessment proceedings and, therefore, the assessee was given opportunity and confronted with the report of the Inspector Investigation, Indore as well as the statement of Shri Mahesh Pancholi. The ld. D/R has further submitted that the case law relied upon by the assessee are not applicable in the facts of the present case as in those cases the transactions were through banking channel whereas the assessee has claimed to have paid the purchase consideration in cash. She has relied upon the orders of the authorities below. 4. We have considered the rival submissions as well as the relevant material on record. The details of purchase and sale of shares in question are given by the AO in para 3....
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.... as well as sale. Since the market price and the price at which the assessee purchased the shares and subsequently sold are not in dispute, then merely because there is huge capital gain earned by the assessee on the transaction cannot be a basis for holding the same as bogus transaction. Though the increase in the market price of the shares is abnormal and many fold, however, the same can be only a reason to conduct the enquiry to verify the genuineness of the claim but cannot be a basis of holding the transaction as bogus. The assessee has also recorded the transactions of purchase of shares in the books of accounts and as per the Balance Sheet as on 31st March, 2009 these shares have been shown in the Investment schedule of the assessee. The balance sheet as on 31st March, 2009 has been annexed by the AO to the assessment order and, therefore, it is part of the assessment record which shows the shares shown in the Balance Sheet as on 31st March, 2009. The facts of showing these shares in the Balance Sheet of the assessee for the preceding year and sale of these shares in the subsequent year in the month of November and December, 2009 is also not in dispute as the AO as well as t....
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....Ltd. in allots of 400 each for a consideration of Rs. 2 lacs each total amount to Rs. 4 lacs @ Rs. 500 per shares. The purchase price of Rs. 500 per share itself shows that it was not a transaction of purchase of penny stock. These shares were duly reflected in the balance sheet as 31.03.2011. The payment of the purchase consideration was made by the assessee vide cheque on 17.05.2011 which is evident from the bank account of the assessee at page 40 of the paper book. In the mean time the said M/s Gravity Barter Pvt. Ltd. changed its status from private limited to a public limited and fresh certificate was issued by the Registrar of company on 05.02.2011 which is placed at page 43 of the paper book. Therefore, there is no reason to disbelief the fact of fresh certificate issued by the Registrar of companies on 05.02.2011 and hence, the date mentioned in the order of the Hon'ble Kolkata High Court as 18.04.2011 appears to be typographical mistake. Even otherwise these two dates do not have any effect on the genuineness of the transactions of purchase of equity shares by the assessee of M/s Gravity Barter Pvt. Ltd. The assessee though produced all the relevant records and evidences r....
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....hares of the assessee at the time of the same were issued by M/s Oasis Cine Communication Ltd. is not in dispute then the holding of shares of M/s Gravity Barter Ltd. also cannot be dispute because of the fact that without holding of the same the shares of M/s Oasis Cine Communication Ltd. could not be issued to the assessee. Once, the shares were held by the assessee then, the question of genuineness of the transaction does not arise however, the purchase consideration can be doubted by the AO if the shares were claimed to have been purchased against consideration paid in cash which is not in case of the assessee. The assessee has paid purchase consideration through cheque and therefore, even if the said consideration is found to be very less in comparison to the sale price at the time of sale of shares in the absence of any material or other facts detected or brought on record by the AO that the assessee has brought back his own unaccounted money in the shape of long term capital gain and has used the same as a device to avoid tax, the purchase consideration paid by the assessee cannot be doubted in the absence of any corroborating evidence. The Assessing Officer has not disputed....
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....zation. The said company M/s Paridhi Properties Ltd. was subsequently merged with M/s Luminaire Technologies Ltd. vide scheme approved by the Hon'ble Bombay High Court order dated 27.07.2012. Hence, the assessee got allotted the equity shares of M/s Luminaire Technologies Ltd. as per swap ratio approved in the scheme and consequently the assessee was allotted 5 lacs share of Rs. 1/- each on M/s Luminaire Technologies Ltd. The evidence produced by the assessee leave no scope of any doubt about the holding of the shares by the assessee." We further note that the decision of the AO holding the transaction as bogus and denying the claim of long term capital gain under section 10(38) of the Act is based on suspicion without any material evidence to controvert or disprove the evidence produced by the assessee. The enquiry conducted by the ITO Investigation Indore is not a conclusive finding of fact that the transaction of purchase of shares by the assessee is bogus particularly in view of admitted fact that these shares were held by the assessee and were duly materialized in the d-mat account. Therefore, until and unless a finding is given that the shares were acquired ....