TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 364
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....neness of the claim, issued statutory notices u/s 142(1) etc. on the assessee pursuant to the same, the AR of the assessee appeared and filed copies of unaudited account, copy of bill of purchase of shares, contract notes for sale of shares, bank statements and the details of income from Long Term Capital Gain. The AO after acknowledging receipt of the aforesaid documents, however, took aid of the report of the Investigation Wing of the department relating to certain brokers misuse of stock exchange platform for sale of penny stocks to avoid legitimate taxes. The AO thereafter discussed about the investigation report wherein the name of 84 penny stock have been identified and dealt with. The AO discussed the modus operandi and states how the stocks after being bought for a very low price after being held for 12 months and thereafter the prices are artificially jacked up and sold with the assistance of certain unscrupulous brokers in stock exchange in a pre planned manner. According to the AO the SEBI after enquiry have taken note of this nefarious practice. Thereafter the AO issued a notice to the assessee dated 24.08.2016 therein the AO brings to the notice of the assessee his a....
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....,000/- was added as undisclosed commission expenses u/s 69C of the Act. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) who was pleased to confirm the same. Aggrieved the assessee is before us. 5. The ld. AR assailing the decision of the Ld. CIT(A) brought to our notice that the issue whether the scrip of M/s. Kailash Auto Finance Ltd. was bogus or not was tested by the coordinate bench of this Tribunal in several cases and has been held to be a genuine transaction and drew our attention to the coordinate bench of this Tribunal in the case of Manish Kumar Baid and Mahendra Kumar Baid vs ACIT ITA No. 1236/Kol/2017 dated 18.08.2007 and contended that the issue is no longer res integra. According to the ld. AR, the AO has made the addition based on suspicion and conjectures. According to the ld. AR, the assessee has discharged its onus by producing all the documents to prove the transactions to be genuine and the AO has not been able to point out any mistake in the documents and without doing so, he cannot based on a general report of the Investigation Wing cannot make the disallowance. It was also brought to our notice that the SEBI order suspending M/s. Kailash Aut....
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.... page 11 to 13 of the Paper Book that scrips of M/s. KAFL was sold on 13.08.2013, 19.08.2013 and on 26.08.2013 which fact is corroborated from the Demat Statement of HDFC Depository details found placed at page 15 of paper book. vi. Bank statement is found placed at page 14 of the Paper Book which reveals that sale consideration was received through banking channel. With the aforesaid documents, the assessee claimed to have sold the scrip of M/s. KAFL through Bombay Stock Exchange after paying STT. 7. We note that the AO / CIT(A) has not made any negative/adverse remarks or finding against the aforesaid documents produced before the AO. However, they have brushed aside these documents and has relied heavily upon the general investigation report of the department, which has not found any wrong doing on the part of the assessee or her broker who sold the shares. We note that the suspension by SEBI of transaction of scrips of M/s. KAFL has been later lifted. Therefore, in the light of the above supporting documents referred to in para 6 (supra) the assessee's claim for LTCG has to be allowed. For doing so, we also rely on the decision of the coordinate bench in the case of Manish ....
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....ators. In the instant case, the shares of CPAL were purchased by the assessee way back on 20.12.2011 and pursuant to merger of CPAL with KAFL, the assessee was allotted equal number of shares in KAFL, which was sold by the assessee by exiting at the most opportune moment by making good profits in roder to have a good return on his investment. We find that the assessee and / or the broker Ashita Stock Broking Ltd was not the primary allottees of shares either in CPAL or in KAFL as could be evident from the SEBI's order. We find that the SEBI order did mention the list of 246 beneficiaries of persons trading in shares of KAFL, wherein, the assessee and / or Ashita Stock Broking Ltd's name is not reflected at all. Hence the allegation that the assessee and / or Ashita Stock Broking Ltd getting involved in price rigging of KAFL shares fails. We also find that even the SEBI's order heavily relied upon by the ld AO clearly states that the company KAFL had performed very well during the year under appeal and the P/E ratio had increased substantially. Thus we hold that the said orders of SEBI is no evidence against the assessee, much less to speak of direct evidence. The enquiry by the Inv....
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.... LTCG of the assessee and delete the addition made u/s 69C of commission expenses. 8. Before parting we would like to address the question which was raised by the Ld. DR whether assessee held the scrip for a period of 12 months, the ld. AR drew our attention to the Circular of CBDT No. 704 dated 28.04.1995 which is found placed at page 42 of the Paper Book which is as under: "1. Under the provisions of clause (42A) of section 2 of the Income-tax Act, 1961, the share held in a company or any other security listed in a recognised stock exchange in India or units of the Unit Trust of India or units of a mutual fund specified u/s 10(23D) shall be regarded as short-term capital assets if they are held by an assessee for not more than 12 months immediately preceding the date of its transfer. Clarifications have been sought as to which date should be regarded as the date of transfer and also about the date from which the holding period of the securities should be reckoned. Clarifications have also been sought as to how the holding periods will be computed for the purposes of capital gains when the securities, purchased in several lots at different points of time and which are taken d....