TaxTMI 
TaxTMI 
2019 (5) TMI 527
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....00 shares for Rs. 47,533/- of M/s. SEL on 03.01.2013 and thereafter sold the same on 22.10.2013 for Rs. 1,38,672/- and on 05.11.2013 @ Rs. 1,34,216/- and on 06.11.2013 at Rs. 1.,04,526/- and on 08.11.2013 at Rs. 10,079/- and on 07.11.2013 at Rs. 10,069/- thus made gain totaling to Rs. 3,97,564/-. It was brought to AO's notice that 200 shares of M/s. SEL was purchased and splitted on 04.02.2013 in the ratio 1:10 thus became 2000 shares. The assessee also claimed to have purchased shares of SRK Industries on 07.11.2013 numbering 2400 shares for Rs. 4,37,138/- and sold it on 13.03.2014 for Rs. 11,06,560/- thus claimed short term capital loss of Rs. 3,30,578/-. In order to support the aforesaid transaction and claim as aforestated, the assessee had filed the contract note of purchase of M/s. SEL which reflects that assessee had purchased 200 shares on 03.01.2013 and 15.01.2013 (100 each) for Rs. 42,692.13 and Rs. 47,533.05 respectively. The DP statement for the period 01.04.2013 to 31.03.2014 and 01.04.2012 to 31.03.2013 were filed before the AO and the ledger account for the period commencing from 02.02.2013 to 31.03.2014 and 01.04.2012 to 31.03.2013 was also filed in the paper book. ....
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....ee, which is not legally sustainable, so he wants us to allow the claim of the assessee in this regard. Further the Ld. AR submits that the assessee has discharged the onus on him to show that the transaction is in the recognized stock exchange through recognized stock broker and on online platform and the shares were held in de mat account and sold through the banking channel. According to Ld. AR, there is no evidence/material to suggest that assessee had indulged in any activity as suggested by the AO to cause a doubt on the claim made by the assessee. According to Ld. AR, in the Investigation Report of the department is a general report and has nowhere indicted the assessee/broker/scrips or any report of SEBI to suggest that the assessee had indulged in any nefarious activity. So without any evidence assessee's claim cannot be disallowed Per contra, the Ld. DR supported the order of the Ld. CIT(A) and AO and does not want us to interfere in the order of Ld. CIT(A) and cited the order of Hon'ble Bombay High Court in Bimal Chand Jain in TAX Appeal No. 18/2017, the Ld. DR vehemently opposing the arguments of the Ld. AR completely supported the order of the lower authorities and ....
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....which is recognized member of the Bombay Stock Exchange Ltd, SEBI Registration No. INB010960458 and sold it also through the same broker. Scrips of M/s. SRK Industries was also purchased and sold through the same broker. The AO was of the opinion that huge rise in the shares of M/s. SEL was not real and it is a stage managed, pre-arranged transaction wherein the assessee's own money has been converted/laundered through the use of a syndicate/racket which initially sold the scrips of M/s. SEL for a very low price and after twelve months rigs/artificially inflated the price wherein pre-arranged companies to whom assessee's cash is delivered, then purchases the shares of M/s. SEL of a very high price thus the assessee earns huge LTCG which the assessee later claims to be exempt income. According to AO, the modus operandi as suggested above has been revealed after in depth study by the Investigation Wing of the Department as well as by other agencies like SEBI etc. Even though the assessee filed various details/documents/papers before the AO to show that purchase and sale of share scrips of M/s. SEL which resulted in LTCG of Rs. 3,07,927/- and STCL of Rs. 3,30,578/- and which was not a....
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....fore, the fact that some of the transactions were off-market transactions cannot be a ground to treat the transactions as sham transactions. The statement of the broker P that the transactions with the H Group were bogus has been demonstrated to be wrong by producing documentary evidence to the effect that the shares sold by the assessees were in consonance with the market price. On perusal of those documentary evidence, the Tribunal has arrived at a finding of fact that the transactions were genuine. Nothing is brought on record to show that the findings recorded by the Tribunal are contrary to the documentary evidence on record. The Tribunal has further recorded a finding of fact that the cash credits in the,bank accounts of some of the buyers of shares cannot be linked to the assessees. Moreover, yn the light of the documentary evidence adduced to show that the shares purchased and sold by the assessees were in conformity with the market price, the Tribunal recorded a finding of fact that the cash credits in the buyers' bank accounts cannot be attributed to the assessees. No fault can be found with the above finding recorded by the Tribunal. Therefore, the decision of the Tr....
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....as he in control of the company. The assessee had taken shares from the market, the shares were listed and the transaction took place through a registered broker of the stock exchange. There was no material before the AO, which could have lead to a conclusion that the transaction was simplicitier a device to camouflage activities, to defraud the Revenue. No such presumption could be drawn by the AO merely on surmises and conjectures. In the absence of any cogent material in this regard, having been placed on record, the AO could not have reopened the assessment. The assessee had made an investment in a company, evidence whereof was with the AO. --Therefore, the AO could not have added income, which was rightly deleted by the CIT(A) as well as the Tribunal. It is settled law that suspicion, howsoever strong cannot take the place of legal proof. Consequently, no question of law, much less a substantial question of law, arises for adjudication.- C. Vasantlal & Co. vs. CIT (1962) 45 ITR 206 (SC), M.O. Thomakutty vs. CIT (.1958) 34 ITR 501 (Ker)) and Mukand Singh vs. Sales Tax Tribunal (1998) 107 STC 300 (Punjab) relied on; Umacharan Shaw &Bros. vs. CIT (1959) 37 ITR 271 (SC) A....
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....xamination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the crossexamination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civ....
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.... the A.O. to treat the gains arising out of the sale of shares under the head capital gains- "Short Term" or "Long Term" as the case may be. The other grievance of the assessee becomes infructuous." 11. The assessee has furnished all evidences in support of the claim of the assessee that it earned LTCG on transactions of his investment in shares. The purchase of shares had been accepted by the AO in the year of its acquisition and thereafter until the same were sold. The off market transaction for purchase of shares is not illegal as was held by the decision of Co-ordinate Bench of this Tribunal in the case of Dolarrai Hemani vs. ITO in ITA No. 19/Kol/2014 dated 2.12.2016 and the decision by Hon'ble Calcutta High court in PCIT Vs. BLB Cables & Conductors Pvt. Ltd. in ITAT No. 78 of 2017 dated 19.06.2018 wherein all the transactions took place off market and the loss on commodity exchange was allowed in favour of assessee. The transactions were all through account payee cheques and reflected in the books of accounts. The purchase of shares and the sale of shares were also reflected in Demat account statements. The sale of shares suffered STT, brokerage etc. In the facts and ci....
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....he Hon'ble High Court held that the opinion of the AO that the assessee generated a sizeable amount of loss out of prearranged transactions so as to reduce the quantum of income liable for tax might have been the view expressed by the ld AO but he miserably failed to substantiate that. The High Court held that the transactions were at the prevailing price and therefore the suspicion of the AO was misplaced and not substantiated. iii)CIT V. Lakshmangarh Estate & Trading Co. Limited [2013] 40 taxmann.com 439 (Cal) - In this case the Hon'ble Calcutta High Court held that on the basis of a suspicion howsoever strong it is not possible to record any finding of fact. As a matter of fact suspicion can never take the place of proof. It was further held that in absence of any evidence on record, it is difficult if not impossible, to hold that the transactions of buying or selling of shares were colourable transactions or were resorted to with ulterior motive. iv) CIT V. Shreyashi Ganguli [ITA No. 196 of 2012] (Cal HC) - In this case the Hon'ble Calcutta High Court held that the Assessing Officer doubted the transactions since the selling broker was subjected to SEBI's action. However ....
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....earlier years, the same could not be treated as bogus simply on the basis of some reports of the Investigation Wing and/or the orders of SEBI and/or the statements of third parties. In support of the aforesaid submissions, the ld AR, in addition to the aforesaid judgements, has referred to and relied on the following cases:- (i) Baijnath Agarwal vs. ACIT - [2010] 40 SOT 475 (Agra (TM) (ii) ITO vs. Bibi Rani Bansal - [2011] 44 SOT 500 (Agra) (TM) (iii) ITO vs. Ashok Kumar Bansal - ITA No. 289/Agra/2009 (Agra ITAT) (iv) ACIT vs. Amita Agarwal & Others - ITA Nos. 247/(Kol)/ of 2011 (Kol ITAT) (v) Rita Devi & Others vs. DCIT - IT(SS))A Nos. 22-26/Kol/2p11 (Kol ITAT) (vi) Surya Prakash Toshniwal vs. ITO - ITA No. 1213/Kol/2016 (Kol ITAT) (vii) Sunita Jain vs. ITO - ITA No. 201 & 502/Ahd/2016 (Ahmedabad ITAT) (viii) Ms. Farrah Marker vs. ITO - ITA No. 3801/Mum/2011 (Mumbai ITAT) (ix) Anil Nandkishore Goyal vs. ACIT - ITA Nos. 1256/PN/2012 (Pune ITAT) (x) CIT vs. Sudeep Goenka - [2013] 29 taxmann.com 402 (Allahabad HC) (xi) CIT vs. Udit Narain Agarwal - [2013] 29 taxmann.com 76 (Allahabad HC....
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....ing or manipulation of price in CSE. The ld AR referred to the following judgments in support of this contention wherein under similar facts of the case it was held that the AO was not justified in refusing to allow the benefit under section 10(38) of the Act and to assess the sale proceeds of shares as undisclosed income of the assessee under section 68 of the Act :- (i) ITO vs. Ashok Kumar Bansal - ITA No. 289/Agr/2009 (Agra ITAT) (ii) ACIT vs. Amita Agarwal & Others - ITA Nos. 247/(Kol)/ of 2011 (Kol ITAT) (iii) Lalit Mohan Jalan (HUF) vs. ACIT - ITA No. 693/Kol/2009 (Kol ITAT) (iv) Mukesh R. Marolia vs. Addl. CIT - [2006] 6 SOT 247 (Mum) 15. I note that the ld. D.R. had heavily relied upon the decision of the Hon'ble Bombay High Court in the case of Bimalchand Jain in Tax Appeal No. 18 of 2017. We note that in the case relied upon by the ld. D.R, we find that the facts are different from the facts of the case in hand. Firstly, in that case, the purchases were made by the assessee in cash for acquisition of shares of companies and the purchase of shares of the companies was done through the broker and the address of the broker was incidenta....