TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 939
X X X X Extracts X X X X
X X X X Extracts X X X X
....her three appeals. In this view of the matter, I proceed to decide ITA.No.5971/Del./2018 as under. ITA.No.5971/Del./2018 - Ms. Aupama Garg, New Delhi : 3. Briefly, the facts of the case are that the assessee filed return of income declaring income of Rs. 3,57,000/-. The case was selected on reasons of "Suspicious long term capital gains on shares". During the scrutiny assessment, statement of assessee was recorded on oath under section 131 of the I.T. Act. The A.O. found that assessee had sold 2000 shares of M/s. Jackson Investment Limited on BSE and payment was received from the broker M/s. Anurity Multi Broking Pvt. Ltd. The assessee explained that shares were purchased in October, 2011 and were sold in October, 2014. The purchase price was Rs. 20,000/- which was sold for Rs. 6,14,000/- and the long term capital gains of Rs. 5,83,762/- was claimed as exempt under section 10(38) of the I.T. Act. The assessee submitted copies of the bank account, Demat account, share purchase documents and share certificate are on record. The details of purchase and sale of this particular scrip i.e., M/s. Jackson Investment Limited were examined. It was found that assessee had purchased 2000 sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lained cash credit. Addition of Rs. 6,14,000/- was accordingly made. The A.O. also noted that entry have been obtained after paying Commission. Therefore, addition of Rs. 18,420/- was made under section 69C of the I.T. Act on account of unexplained expenditure incurred for obtaining LTCG accommodation entry. 4. Both the additions were challenged before the Ld. CIT(A). The written submissions of the assessee is reproduced in the appellate order in which the assessee reiterated the same submissions. The Ld. CIT(A), however, dismissed the appeal of assessee. The assessee in the present appeal challenged the addition of Rs. 6,14,000/- under section 68 of the I.T. Act on account of sale proceeds of the shares and addition of Rs. 18,420/- on account of Commission under section 69C of the I.T. Act. 5. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that assessee was holding shares for about 36 months which were sold in assessment year under appeal. Purchase and sale of shares have not been doubted. These were supported by documentary evidences and all the transactions are carriedout through banking channel. The assessee asked f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....IOL-733-ITAT-CHD. 7. Arvind M. Kariya vs. ACIT ITA.No.7024/Mum/2010. 8. ITO vs. Shamim M. Bharwani (2016) 69 taxmann.com 65 7. I have considered the rival submissions and perused the material available on record. In this case, assessee purchased the shares in question in October, 2011 which was sold in October, 2014. The A.O. admitted that assessee purchased the shares in physical form, therefore, assessee hold the shares for three years. Assessee sold shares on BSE and payment was received from share broker. The assessee submitted copies of bank account, Demat account, share purchase documents and share certificate before the authorities below. The assessee explained that after purchase of the shares in physical form, then, the same were put in Demat account and were sold through recognized Stock Exchange on which STT has also been paid. The documentary evidences submitted by assessee have not been rebutted by the A.O. No adverse material has been brought on record to disprove the claim of assessee. It is a case where shares have been purchased in earlier year which have not been doubted in earlier year by the Revenue Department and only the sale of shares have been doubted w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in ITA.No. 5882/Del./2018 and have submitted that the issue is same in the remaining appeals, therefore, Order in this case may be followed in other four appeals. In this view of the matter, I proceed to decide ITA.No.5882/Del./2018 as under. ITA.No.5882/Del./2018 - Shri Amar Nath Goenka, New Delhi 3. This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-7, New Delhi, Dated 08.08.2018, for the A.Y. 2015-2016, challenging the addition of Rs. 14,61,585/- under section 68 of the I.T. Act, 1961, on account of long term capital gains. 4. Briefly, the facts of the case are that the assessee filed its original return of income declaring income of Rs. 25.35.010/-. The assessee is an individual and declared income from Salary, House Property and Income from other sources. The assessee is Employee-Director of M/s. Premier Polyfilm Ltd. The assessee filed necessary details which have been examined by the A.O. The A.O. found that the assessee claimed Rs. 23.44.613/- as long term capital gain (LTCG) on sale of listed shares. Part of the Long Term Capital Gain (LTCG) has been claimed to have been earned is through sale of shares of M/s.Esteem Bio Organic Food Processi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....non-genuine transactions. The assessee explained before A.O. that all evidences related to sale and purchase of shares have been provided and there is no material to hold that transactions are bogus. All the purchases have been made through banking channels and sold through stock market platform. Reason of suspicion is insufficient. The allegation that price is rigged is baseless and without any evidence. No opportunity to cross-examine have been given of the statements which are used against the assessee. The A.O. however, did not accept the contention of the assessee and by applying the test of human probability held that long term capital gains claimed by assessee is not genuine and falls within the ambit of Section 68 of the I.T. Act. Therefore, Section 115BBE of the I.T. Act is applicable and the same is taxable @ 30%. The A.O. accordingly made the addition of Rs. 14,61,585/-. 5. The assessee challenged the addition before Ld. CIT(A). The written submissions of the assessee and grounds of appeals are reproduced in the appellate order in which the assessee briefly explained that cost of the acquisition of Rs. 60,000/- have not been reduced. The addition is perverse and invalid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent of Hon'ble Delhi High Court in the case of Pr. CIT-5 vs. Jatin Investment Pvt. Ltd., in ITA.No.43 & 44 of 2016, Dated 18.01.2017 approving the Order of ITAT, Delhi Bench in the case of ITO, Ward-4(2), New Delhi vs. Jatin Investment Pvt. Ltd., New Delhi in ITA.No.4325 & 4326/Del./2009. The Ld. CIT(A), however, did not accept the contention of assessee and dismissed the appeal of assessee. The Ld. CIT(A), more or less on the same reasoning as given by the A.O. noted that there is strong circumstantial evidence against the assessee and that transaction is an accommodation entry, therefore, following the rule of preponderance of probability decided the issue against the assessee. It is also observed that A.O. is not under obligation to allow cross-examination of any person. The appeal of assessee was accordingly dismissed by the Ld. CIT(A). 6. Before the Tribunal, the Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that that all documentary evidences were filed before A.O, of which were filed in the paper book. The documents are, copy of the application for allotment of shares along with copy of the cheque. Allotment of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roduced as under : 6. Ld. Counsel for the assessee reiterated the submissions made before the authorities below and submitted that an inquiry conducted in the cases of other assessees and statements referred to by the AO in the assessment order have not been confronted to the assessee. The assessee has not been named by any of these persons for indulging in taking accommodation entries. He has, therefore, submitted that such evidence cannot be read in evidence against the assessee and relied upon the decision of the Hon'ble Supreme Court in the case of Kishan Chand Chela Ram 125 ITR 713 (SC). He has submitted that for claiming exemption u/s 10(38) of the Act, the assessee shall have to prove twin conditions i.e. the income arise from the transfer of long term capital asset and being equity share in a company where the transfer of sale of such equity share is entered into on or after the date of which Chapter-VII of the Finance Act, 2004 comes into force and such transaction is chargeable to security transaction tax under that Chapter. In the case of the assessee, both twin conditions are satisfied. He has filed copy of the shares certificate with transfer form, copy of debit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....copy of bank statement in which sale proceed from the sale of shares received; copy of calculation of long term capital gain, which was not faulted by the AO. However, the lower authorities have not considered the aforesaid documents and rejected all the claims made by the assessee by relying on the report of the Investigation Wing and thereby made the addition, which is not sustainable in the eyes of law. I further find that the AO has given detailed explanation in the order regarding the modus operandi of bogus LTCG scheme but failed to substantiate how the assessee fell in the purview of the same without bringing any material on record and proving that the assesssee was directly involved in the so called bogus transaction. I further note that the addition in dispute made by the AO and upheld by the Ld. CIT(A) u/s 68 as unexplained credit instead of long term capital gain as claimed by the assessee, however, the source identity and genuineness of the transaction having been established by documentary evidences and there is no case for making addition u/s 68 of the Act, hence, the same deserve to be deleted. I note that in most of the case laws of the Hon'ble High Courts refer....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in their value, where the facts themselves speak loud and clear, the AO is justified to even draw an inference from the attendant circumstances ? (iv) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal has erred in law in upholding the order of the CIT(A) deleting the addition of Rs. 12,59,000/- made by the AO on the basis of seized document on the grounds that the AO has not pointed out as to how the figures of Rs. 12.59 lacs has been worked out ignoring the fact that the assessee himself in his reply to the AO had tried to explain the source of the receipts of Rs. 12,59,000/- instead of challenging the working out of the said figure by the A.O. ? 3. The first three questions of law raised in this appeal are covered against the appellant by an order and judgment of a Division Bench of this Court dated 16.02.2017 in ITA-18-2017 titled as The Pr. Commissioner of Income Tax (Central), Ludhiana vs. Sh. Hitesh Gandhi, Bhatti Colony, Chandigarh Road, Nawanshahar. 4. The issue in short is this : The assessee purchased shares of a company during the assessment year 2006-07 at Rs. 11/- and sold the same in the assessment year 200....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AO which are copy of the shares certificates with transfer form, copy of debit note issued by Shreeji Broking (P) Ltd., copy of cash receipt of Shreeji Broking (P) Ltd., copy of the account statement of the assessee in the books of the broker, copy of ledger account of Indus Portfolio (P) Ltd., copy of evidence for payment of securities transaction tax and copy of the bank statement of the assessee to show that the assessee had entered into genuine transaction of purchase of share which were later on sold through the broker on recognized stock exchange after payment of STT. The claim of the assessee for sale of shares has been supported by the documentary evidences which have not been rebutted by the authorities below. Whatever inquiry was conducted in the cases of other parties and statement recorded of several persons namely Sh. Anil Khemka, Sh. Sanjay Vohra and Sh. Bidyoot Sarkar as referred in the assessment order and the report of the Investigation Wing were not confronted to the assessee and above statements were also not subject to cross-examination on behalf of the assessee. Therefore, such evidences cannot be read in evidence against the assessee. The order of the SEBI was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder section 68." 8.2. ITAT, Hyderabad Bench in the case of ITO, Ward-2, Nizamabd vs. Smt. Aarati Mittal (2014) 149 ITD 728 (Hyd.) (Trib.) held as under : "Where assessee having purchased shares in physical form, converted them in D-Mat form and thereupon sale of those shares was carried out through recognized stock exchange after paying securities transaction tax, said transactions were to be regarded as genuine in nature and, therefore, assessee's claim for exemption under section 10(38) was to be allowed." 8.3. ITAT, Delhi Bench in the case of ITO, Ward-4(2), New Delhi vs. Jatin Investment Pvt. Ltd., New Delhi in ITA.No.4325 & 4326/Del./2009 vide Order Dated 27.05.2015 in paras 12 to 14 held as under : "12. We have considered the submissions of both the parties and gone through the material available on the record. In the present case, it is noticed that the assessee purchased the shares in earlier years which were shown as investment in the books of accounts and reflected in the "Asset Side" of the "Balance Sheet", out of those investments (copy which is placed at page no. 23 and 24 of the assessee's paper book), the assessee sold certain investments and accounted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions it is clear that assessee placed sufficient documentary evidences before A.O. to prove genuineness of the transaction. The assessee purchased shares through banking channel and actually got the shares transferred in his name. Purchase was made through cheque which is supported by bank statement. The transactions of sale have been made through Demat account. The contract note along with other details were produced to show that purchase and sale of the shares have been made through banking channel through recognized Stock Exchange through Demat account on which Security Transaction Tax have also been paid. The A.O. did not make any enquiry on the documentary evidences filed by the assessee. No material have been brought on record against the assessee to disprove the claim of assessee. It is not the case of the Revenue that amount received on sale of shares is more than what is declared by the assessee. The assessee pleaded that the Interim Order of the SEBI have been diluted by passing final order in which no adverse view have been taken against the aforesaid company. Thus, the claim of assessee of purchase and sale of shares have been supported by documentary evidences. The st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....count of long term capital gains. 12. Learned Representatives of both the parties submitted that the issue is same as have been considered in the case of Shri Amar Nath Goenka, Delhi in ITA.No.5882/ Del./2018 (supra) except that in these cases the sale is shares of M/s. KAPPAC Pharma Limited, through broker. Learned Representatives of both the parties submitted that the issue being the sale, therefore, Order in the case of Shri Amar Nath Goenka, Delhi (supra) may be followed. 13. We find that the issue in the remaining four appeals is same as has been considered in the case of Shri Amar Nath Goenka, Delhi (supra). Therefore, following the reasons for decision in the case of Shri Amar Nath Goenka, Delhi (supra), we set aside the Orders of the authorities below and delete the entire additions. Accordingly, appeals of the Assessees are allowed. 14. In the result, ITA.No.5883, 6457, 6458 and 6459/Del./2018 of the Assessees are allowed. 15. To sum-up, all the appeals of the Assessees are allowed." 8. In the present case, the A.O. relied upon certain statements of the share brokers recorded by Investigation Wing, Kolkata to prove that they have provided accommodation entries for lo....