AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 284
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....ctions are a smoke screen to cover up the true nature of the transactions. D. That the learned CIT(Appeals) has erred in drawing adverse inference against the assessee merely on the basis of general modus operandi of certain persons with whom the assessee has never transacted and with whom no connection or nexus was proved or brought on record by the Assessing Officer. E. That the addition made by the Assessing Officer and upheld by the learned CIT (Appeals) is based merely on suspicion, surmises and conjectures and that the learned CIT (Appeals) ought to have deleted the addition made. F. That the learned CIT (Appeals) has erred in upholding the addition of Rs. 5,07,385/- made by the Assessing Officer on the allegation of unexplained expenditure u/s 69 of the Act even when there is no material brought on record to show that the assessee has actually incurred this expenditure or has made any such payment." 3. Since, all the grounds of appeal are inter-connected and facts are common they are being disposed off together as under. 4. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. In the instant case, the a....
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....ky rocketed without having any financial result. The parameters which are essential for increase of price of share are not present. In absence of backing financial results it can be concluded that the increase is due to artificial increase by circular trading of shares forming cartel. Thus, the trend observed above again lead to the conclusion that prices of the shares of M/s Danleela Investment & Trading Company limited were artificially hiked to create non-genuine LTCG to the beneficiaries. 8. The Assessing Officer also observed that statements were also recorded by the investigation Wing in other cases of various brokers, operators and entry providers, who accepted that M/s Danleela Investment & Trading Company limited is a Penny Stock company and the scrip has been used to provide bogus LTCG to various beneficiaries. Sri Anil Khemka's, statement was recorded on 30.03.2015 before DDIT (Inv), Kolkata and Sri Harshvardhan Kayan's statement was recorded on 27.01.2015 before DDIT (Inv), Kolkata in which they have admitted that the script M/s Danleela Investment & Trading Company limited was used to provide bogus LTCG to various beneficiaries. Thereafter the Assessing Officer after ....
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.... of Share Broker, Annual Accounts of M/s Danleela Investment & Trading Company limited for the Financial Years 2011-12, 2012-13 and 2013-14. The copies of all these documents are placed in the paper Book filed before the Tribunal at page Nos 30 to 274. No defect in these evidences has been pointed by the AO as well the Commissioner of Income Tax (Appeals). 11. Further, the reasons given by AO as well as the Commissioner of Income Tax (Appeals) that increase in the share capital of M/s Danleela Investment & Trading Company limited without any backing of the Financial Results of the company may at best give rise to suspicion which requires deeper investigation of the matter. But suspicion alone cannot be the basis to treat the LTCG of the assessee as not genuine. It was further argued that the AO has relied on the statement of two share Brokers namely, Sri Anil Khemka and Sri Harshvardhan Kayan who were examined by DDIT(Inv), Kolkata with whom the assessee did not have any transaction. Further, the statements of these share brokers were not made available to the assessee. Still further the assessee had asked for a cross examination of the share brokers whose statement has been use....
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....profit of more than Rs. 31 lakhs as compared to loss in the immediately preceding year. Thus, the business of the company increased around 171 times which shows that the Assessing Officer was not correct in stating that no business activity was conducted by the company and also incorrect in stating that the increase in share price was without any increase in financial performance of the company. Thus, we find that the transaction of the assessee was considered as sham by the Assessing Officer without proper material or analysis of the financials of the company. 18. Further, the Assessing Officer also drawn support from the investigation report of the Kolkata Investigation Wing and the statements of two share brokers, namely, Sh. Anil Khemka and Sri Harshvardhan Kayan. 19. The ld. Departmental Representative could not controvert the submission of the assessee that the said investigation report and the statements of the share brokers were prepared or recorded at the back of the assessee and the assessee was not provided with the copy of the same and was not allowed any opportunity to cross examine the brokers. Ld. DR filed report of Assessing Officer wherein it is admitted that st....