TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2747
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..... The said returns filed by all the four assessees were initially processed by the Assessing Officer under section 143(1) of the Income Tax Act, 1961. A search and seizure action under section 132 was conducted in the case of one Shri Shyamsukha on 24.10.2006. During the course of the said action, certain documents were found and seized from the residence of Shri Shyamsukha identified as pages 7 to 10 of Annexure-'A' indicating that cash of various persons including the four assessees in the present case was converted into cheque by way of the alleged accommodation entries in the form of purchase and sale of shares in order to claim the bogus long-term capital gain and this position was accepted even by Shri Shyamsukha in his statement recorded under section 132(4) of the Act. He also admitted of having acted as an intermediary to generate all these bogus transactions for earning certain commission. On the basis of these findings of the search conducted in the case of Shri Shyamsukha, assessments in the case of all the four assessees were reopened by the Assessing Officer and he issued notices under section 148 to all the four assessees on 20.12.2007 after recording the reasons. In....
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....rther the directors of Ahilya Commercial Pvt. Ltd. Are neither related to me nor I know them personally. 2. No cash was converted into cheque by way of trading in shares of Continental Fiscal Management Ltd., Swastik Securities & Finance Ltd. As mentioned by your honour in the above mentioned notice. I have never paid any cash to a person called Narendra Kumar Shyamsukha. This fact was duly narrated by myself during the proceeding u/s 131 of the I.T. Act, 1961. 3. The long term capital gain earned by me on these transaction are duly supported by contract notes/bills (duly submitted) and are made through recognized stock exchange which can be verified. All the transactions were made through a/c payee cheque only. The conditions to be satisfied for a transaction to be long term capital gain are fully made. 4. In order to make investment in share market it does not mean that one has to invest in those companies which are media friendly or are regularly mentioned in newspaper. There are so many listed companies who have given handsome/mindboddling return to the investor whom we have never heard of. Further, it entirely depend on the investor (i) when to invest, (ii) where to inves....
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..... During the course of appellate proceedings before the ld. CIT(Appeals), it was pointed out that all the shares of the two Companies, viz. M/s. Continental Fiscal Management Limited and M/s. Swastik Securities & Finance Limited, were purchased by the assessees through the stock broker in financial year 2002-03 by making payment through account payee cheques. It was also pointed out that the investment made in the said shares was duly reflected in the Balance-sheets of the assessees as on 31.03.2003 and 31.03.2004 before the sale of the corresponding shares in financial year 2004-05. It was also brought to the notice of the ld. CIT(Appeals) that the sale proceeds of the said shares were received by the assessees through account payee cheques and all these transactions of purchase and sale of shares were duly supported by the Contract Notes issued by the concerned broker. It was contended that this direct evidence available on record showing the genuineness of the transactions in shares, however, was ignored by the Assessing Officer and the claim of the assessees for long term capital gain was held to be bogus by him on the basis of statement of third person, who was not even known ....
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....s of section 292C, the first presumption is that the said seized papers belong to Shri Shyamsukha and the noting made on these papers are true. However, on the basis of this presumption, it cannot be concluded that the transactions of shares noted on these papers pertain to Shri Shyamsukha because he had not disclosed any long term capital gain on sale of shares as noted on the seized papers and, therefore, it cannot be concluded that the cash as per the seized paper was paid by Shri Shyamsukha. On the contrary, all the persons including the appellant, against whose name share transactions are written in the seized papers, had disclosed the same amount of long term capital gain in their respective return of income. It means that the transactions of shares recorded on the seized documents are true and the beneficiaries are those persons whose names are written on the seized documents. The details/ dates of purchase and sale of shares written on the seized papers match with the details furnished by the appellant in the course of appellate proceedings as well as declared in the return of income. Thus, it will not be correct to say that the seized documents have no evidentiary value. A....
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....l persons and several brokers were involved. But, in any case, it does not mean that the transactions noted on the seized papers are not true. The appellant has relied on various judicial decisions, but they are distinguishable on facts and none of the decision is applicable to the facts of the appellant. In view of above, it is held that the AO was justified in making addition u/s 68 of the Act. The addition made by the AO is confirmed. The ground nos. 2 to 5 are dismissed". Aggrieved by the orders of the ld. CIT(Appeals), the assessees have preferred these appeals before the Tribunal. 7. The ld. Counsel for the assesses, at the outset, submitted that there were 13 persons in whose cases similar additions were made by the Assessing Officer under section 68 by treating their claim of long term capital gain arising from sale of shares as bogus by relying on the findings of search action conducted in the case of Shyamsukha. He submitted that all these thirteen persons disputed the said additions made by the Assessing Officer under section 68 by filing the appeals before the ld. CIT(Appeals) and when the ld. CIT(Appeals) confirmed the said additions in case of three assesses, namely....
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....ffered such commission as income to tax. (iv) The two Companies whose shares were claimed to be purchased and sold by the assessees giving rise to the substantial amount of capital gain had no credential and even after earning exorbitant profit in the said shares, the assessees never made any further investment in the said shares. (v) The broker through whom the transactions in question of purchase and sale of shares were made by the assessees got suspended subsequently by the Stock Exchange for indulging into unfair practices. (vi) The party to whom shares were claimed to be sold by the assessees was not found in existence at the address given. 9. Ld. D.R. contended that all the above factors brought on record by the Assessing Officer were sufficient to indicate that the relevant transactions of purchase and sale of shares were nothing but accommodation entries and the capital gain arising from the same claimed as exempt by the assessees was bogus. He contended that all these factors brought on record by the Assessing Officer are clearly abnormal and this abnormality leads to the conclusion that the claim of the assessees for long term capital gain was bogus. He contended t....