AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 1376
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....n :- The only ground of appeal relates to the disallowance of loss in shares transaction amounting to Rs. 93,41,510/- which was claimed as short Term Capital Loss. This STCL was set off against the compensation of Rs. 1 ,22, 12,055compensation the AO rejected the Short Term Capital Loss of Rs. 93,41,510/- arising from shares transactions and thereafter added back the same to the total income. Perusal of fact shows that in the return of income, the appellant has claimed to have received compensation of Rs. 1 ,22,12,0551- from the Land Acquisition Officer, Haryana Govt against acquisition of her land. She had declared the said amount as short term capital gain which had been set off with the Short Term Capital Loss of Rs. 93,41 ,510/- from share dealings. As per the details filed by the assessee, she dealt with the shares of Seven (7) different companies and claimed to have incurred above said loss. The details of the shares dealings are given as under:- Sl. No. Name of the Company Nos of Shares Purchase Sales Gain/Loss Rs. Date Amount all values excluding Date Amount all values excluding 1 Strides Accolab Ltd 1,100 STT(Rs.) ....
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.... and RUTRON INT. are penny stock companies which are bogus. The statement on oath given by one of the Entry Operator Shri Anil Agarwal the Promoter/Operator u/s.132(4) of the I. T: Act, 1961 on 12/04/2015 in answer to Q.7, Q.8, Q.9, Q.10 stated that trading were done on behalf of client/beneficiary to book bogus L.T.C;G or S.T.C loss as per their requirement. (In the course of a Search operation u/s 132 of IT Act 1961 on 12/04/2015 in the office and residence of one the Entry Operator Shri Anil Agarwal, who was the promoter. of companies viz. M/s First Financial Services Ltd. and Rutron International, in his statement recorded u/s 132(4), has! accepted such dubious and unscrupulous entries were done through the accounts of the companies managed or promoted by him. The modus operandi of how the Capital Gains or Losses are created as per the requirement of the beneficiaries through entry operations by layering of funds under the various penny stock companies ~are well described by him in his statement made on oath before the investigating officer, the DCIT (Inv),Unit- 8(1), Mumbai. The extract of answers to questions Nos 8 and 9 of the statements given by Shri Anil Agarwal, on oath....
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...., I knew three persons, namely, Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Join, of Mumbai, who are primarily involved in the business of providing entry of LTCG. I knew the directors of Mls Rutron International Limited and M/s First Financial Services limited and introduced them to Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain. I also came to know that Mls Redford Global Limited is also one such penny stock company which was operated by Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain. Some clients contacted me tot availing the entry of LTCG and I introduced them to Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain. Thereafter. as per the modus operandi the beneficiaries inverted in the penny stock of Mls Redford Global Limited, M/s Rutron International Limited and M/s First Financial Services Limited. The shares of these companies were rigged and the price was increased to desired level over a desired period. Once the prices of the shares reached their peak price, the sale of he above mentioned scripts was errer.qed by Shri Paras Ctieplot. Shri Pankaj Shah and Shri Vijay Jain so as to provide entry of LTCG to the beneficiaries. In this process s....
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....f aforesaid observations of the AO and finding of investigation wing shows that the Entry Operator Shri Anil Agarwal, who was the promoter of companies viz. M/s First Financial Services Ltd. and Rutron International, in his statement recorded u/s 132(4), has accepted such dubious and unscrupulous entries were done through the accounts of the companies managed or promoted by him. In his 'statement Sh. Anil Agarwal stated that Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain, of Mumbai, who are primarily involved .in the business of providing entry of LTCG were known to him. He also knew the directors of M/s Rutron International limited and Mls First Financial Services limited and introduced them to Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain. He also came to know that M/s Redford Global limited is also one such penny stock company which was operated by Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain. Some clients contacted me for availing the entry of L TCG and I introduced them to Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain. Thereafter, as per the modus operandi the beneficiaries invested in the penny stock of M/s Redford Global limi....
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....on the decision of the jurisdictional High Court in the case of Somnath Maini V CIT (2008) 3061TR 414 (P&H) and Balbir Chand Maini V CIT & another (2012) 340 ITR 161 (P&H) and contended that the issue in question is covered by these decisions. We have carefully perused and considered the facts and the ratio of the decisions of the jurisdictional High Court, in the case of Balbir Chand Maini (supra) and Somnath Maini V CIT (supra) and found that the facts of the present case are squarely covered by this decision. The relevant and operative part of the decision in the case of Balbir Chand Maini (supra) is reproduced hereunder "The return for the assessment year 1998-99, filed 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 essessee again filed a return declaring the same income as shown in the return filed earlier. I 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 throug....
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....create artificial loss, with a view to reducing tax liability. The appellant resorted to readymade scheme for purchase and sale of shares which ultimately found their last destination, to the original seller i.e. the said unlisted company. Such transaction are not genuine and natural transactions but preconceived transactions, demonstrating creation of such short term capital loss. Such transactions are mutually self-serving. It is mentioned that earning profit is a natural instinct ingrained in human beings, particularly m the businessman unless of course, earning of loss is also a profitable proposition, as is discernible from the fact- situation of the present appeals. The appellants 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 ....
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....indings of Hon'ble Supreme Court, in the matter of discharge of 'onus of proof' and the relevance of surrounding circumstances of the case are; "that though an appellant's statement must be considered real until it was shown that there were reasons to believe that the appellant was not the real, in a case where the party relied on self-serving recitals in the documents, it was for the party to establish 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 CI T 214 I TR 801 (S.C).Keeping in view of the aforesaid fa....
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....rove the genuineness of her share transactions on both purchase and sale aspects. And also even lack of cross examination to assessee in such circumstances does not vitiate the entire proceedings. Mr. Singh lastly quotes hon'ble Supreme Court's decisions in (1995) 214 ITR 801(Sc) Sumati Dayal V/s. CIT V/s. Durga Prasad More 82 ITR 540(Sc) that assessee's explanation has to be considered in the light of human probabilities by removing all blinkers. 8. We have given our thoughtful consideration to rival contentions. The question that arises for our consideration/adjudication is about the genuineness of assessee's impugned short term capital gain treated as bogus by both the lower authorities. She has filed all the requisite details on record in support of her share transactions. The Revenue's case questions the genuineness of assessee's details particularly in the light of search statement by Shri Anil Agarwal in the light of SEBI's proceedings finalized on 2-4-2018 regarding M/s. First Financial Services Ltd. Rutron International Ltd (supra). Learned departmental representative fails to dispute that there is no direct evidence against the assessee to have indulged in artificial rig....