TaxTMI 
TaxTMI 
2019 (5) TMI 841
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.... of both the lower authorities' action treating its Long Term Capital Gains (LTCG) amounting to Rs.76,68,565/- arising from sale of shares after payment of Security Transactions Tax (STT); as bogus unexplained cash credits u/s 68 of the Act. The CIT(A)'s detailed discussions to this effect reads as under:- "Perusal of fact shows that the assessee is not regular investor in shares. The shares were purchased on one single day of 17.02.2014 and were sold on 14.03.2014. The appellant earned a phenomenal return of 50 times within a short span of period which is extremely unusual./ the paste records of the assessee for the preceding years show that the assessee has been not active in the stock market. The shares in which the assessee has claimed to have made a deal, are identified as Penny shares by the investigation wing of the department because rates of these shares are not based on business results of the companies but some are fluctuated by insider's trading from zero value (negligible price) to very high price and vice versa without any reason or basis to accommodate or generate bogus capital gain or loss. There was specific information about the script for indulgence in n....
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.... the transfer of those recitals, the taxing authorities were entitled to look into the surrounding circumstances to find out the reality of such recitals. Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal. Therefore, the Courts and the Tribunals have to judge the evidence before them by applying the test of human probability. Human minds may differ as to the reliability of piece of evidence, but, in the sphere, the decision of the final fact finding authority is made conclusive by law." The above ratio laid down by the Hon'ble Supreme Court has been reiterated and applied by the Hon'ble Apex Court in the case of Sumati Dayal V CIT 214 ITR 801 (SC). Perusal of fact shows that the price of share of M/s Cresaanda Solution Pvt. Ltd. in 2011-12 was Rs. 10/- and after that it was substantially increased. Now, as on date September 2017 it has come to the price of Rs. 2.71/- per share. As on date the credence of Cresanda Solution Ltd. is that its face value of share remains Rs. 1/- average equity is (-) 1.43 and PE Ratio is (-) 0.16, which shows that the company has no net worth as such. Recently,....
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.... is reproduced hereunder: 'The return for the assessment year 1998-99,, field by the assessee at an income of Rs. 7,93,140 was processed under section 143(1) of the Income-tax Act, 1961. Subsequently, in response to a notice under section 148, the assessee again filed an return declaring the same income as shown in the return filed earlier. During the reassessment proceedings, the Assessing Officer found that the assessee had purchased 30000 shares of A at the rate between Rs. 2.50 and Rs. 3.40 per share, in the month of April, 1997, and out of those shares, he sold 24000 shares through a broker. The Assessing Officer came to the opinion that the value of the shares could not be as high as Rs. 55 per share and accordingly made an addition of Rs. 12,47,500 to the income of the assessee as income from undisclosed sources. However, he determined a sum of Rs. 2,85,620 as long-term capital loss, while computing the income. The Commissioner (Appeals) deleted the additions whereas the Tribunal reversed the order of the Commissioner (Appeals) and upheld the additions made by the Assessing Officer. On appeal: Held, dismissing the appeal, (i) that the Tribunal recorded a fi....
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....le proposition, as is discernible from the Act-situation of the present appeals. The apes restored to a preconceived scheme, to procure short term capital loss, for the purpose of neutralizing the short term capital gains, by way of price-differential, in the said share transactions, not supported by market factors. Cumulative events in such transactions of shares reveals that the same are devoid of any commercial nature and fall in the realm of not being bona fide, in contents,. In view of the above legal and factual discussions and judicial precedents discussed above, we are of the opinion that the findings of the CIT(Appeals) are not based on relevant, cogent and credible material or evidence. Such share transactions were not quoted and consequently, were not traded trough stock exchange. When all the facts and circumstances of the case are viewed in totality, it is evident that the assessee apes failed to discharge the onus, to prove the genuineness of the transactions of purchase and sales of such shares. The impugned transactions of shares are preordained one, not for legitimate commercial purpose in view but for the purpose of creating non-genuine and artificial short term c....
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....atement. We therefore quote this tribunal's decision in Prakash Chand Bhutoria vs. ITO in ITA No.2394/Kol/2017 decided on 27.06.2018 deleting identical addition for lack of any evidence against the concerned assessee as follows:- "8. A perusal of the order of the AO demonstrates that this addition was made merely on "suspicion" and in a routine and mechanical manner. This is clear from the fact that the AO refers to some 'Sharp Trading Company' as one of the main manipulated company and whereas the assessee sold scrips in Unno Industries Ltd. The AO refers to various enquiries made by "The Directors of Income Tax", Kolkata on project basis and that this resulted into unearthing of a huge syndicate of entry operators and share brokers and money lenders involved in providing of bogus accommodation entries. The report as the socalled project and the evidence collected by the DIT (Inv.), Kolkata etc have not been brought on record. It is well settled that any document relied upon by the AO for making an addition has to be supplied to the assessee and an opportunity should be provided to the assessee to rebut the same. In this case, general statements have been made by the AO a....
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....not reappreciate, recording is such, cannot be said to be perverse as it is not fact finding of the ld. Tribunal alone. The commissioner of Income Tax came to the same fact finding. Concurrent fact finding itself makes the story of perversity, unbelievable." The "D" Bench of the Kolkata Tribunal in the case of Gautam Kumar Pincha vs. ITO, in I.T.A. No. 569/Kol/2017 dated 15.11.2017 at para 19 onwards held as follows: (i) M/s Classic Growers Ltd. vs. CIT [ITA No. 129 of 2012] (Cal HC) - In this case the ld AO found that the formal evidences produced by the assessee to support huge losses claimed in the transactions of purchase and sale of shares were stage managed. The 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. (ii) CIT V. Lakshmangarh Estate & Trading Co. Limited [2013] 40 ta....
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....e Hon'ble Jurisdictional High Court, affirmed the decision of the Tribunal wherein it was found that the chain of transactions entered into by the assessee have been proved, accounted for, documented and supported by evidence. It was also found that the assessee produced the contract notes, details of demat accounts and produced documents showing all payments were received by the assessee through banks. On these facts, the appeal of the revenue was summarily dismissed by High Court. 8.4. In the light of the documents stated i.e. (I to xiv) in Para 6(supra) we find that there is absolutely no adverse material to implicate the assessee to have entered gamut of unfounded/unwarranted allegations leveled by the AO against the assessee, which in our considered opinion has no legs to stand and therefore has to fall. We take note that the ld. DR could not controvert the facts supported with material evidences which are on record and could only rely on the orders of the AO/CIT(A). We note that in the absence of material/evidence the allegations that the assessee/brokers got involved in price rigging/manipulation of shares must therefore also fail. At the cost of repetition, we note....
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....l of the assessee is allowed." The "A" bench of the Kolkata Tribunal in the case of ITO vs. Shaleen Khemani in I.T.A. No. 1945/Kol/2014 dated 18.10.2017 at para 9.1. to 9.4 held as follows: 9.1 We further find that the transaction of sale of shares by the assessee was duly backed by all evidences including Contract Notes, Demat Statement, Bank Account reflecting the transactions, the Stock Brokers have confirmed the transactions, the Stock Exchange has confirmed the transactions, the Shares have been sold on the online platform of the Stock Exchange and each trade of sale of shares were having unique trade no. and trade time. It is not the case that the shares which were sold on the date mentioned in the contract note were not traded price on that particular date. The ld AO doubted the transactions due to the high rise in the stock price but for that, the assessee could not be blamed and there was no evidence to prove that the assessee or any one on his behalf was manipulating the stock prices. The stock exchange and SEBI are the authorities appointed by the Government of India to ensure that there is no stock rigging or manipulation. The ld AO has not brought any....
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.... are merely based on the information representative. Therefore on such basis no disallowance can be made and accordingly we find no infirmity in the order of ld. CIT(A), who has rightly allowed the claim of assessee. Thus ground No. 1 of the revenue is dismissed." We agree with the reasoning of the Tribunal on this point also. We do not find any reason to interfere with the impugned order. The suggested questions, in our opinion do not raise any substantial question of law. 9.3. We therefore hold that there is absolutely no adverse material to implicate the assessee to the entire gamut of unwarranted allegations leveled by the ld AO against the assessee, which in our considered opinion, has no legs to stand in the eyes of law. We find that the ld DR could not controvert the arguments of the ld AR with contrary material evidences on record and merely relied on the orders of the ld AO. We find that the allegation that the assessee and / or Brokers getting invo2lved in price rigging of SOICL shares fails. It is also a matter of record that the assessee furnished all evidences in the form of bills, contract notes, demat statements and the bank accounts to pro....