TaxTMI 
TaxTMI 
2019 (7) TMI 1514
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....rsely and also for not providing cross examination of persons whose statements have been recorded on the back of the assessee and has been used adversely, moreso, when specific request was also made for the same. 1.2 That the findings of addition of Rs. 73,77,806/- U/s. 68 are based on no cogent material whatsoever and is a result of assumptions, presumptions, surmises and conjectures." 3. Brief facts of the case are that during the year, the assessee has declared income of Rs. 4,96,650/- by filing the ITR online on 20.03.2015. She has shown income from house property, business and other sources. She has also shown long term capital gains of Rs. 73,77,806/- and claimed it as exempt u/s 10(38). The Assessing Officer made addition of the Long Term Capital Gain u/s 68 of the Act after taking into consideration the affairs of the assessee which was supported by the findings of investigations done by the Revenue department at Kolkata. The ld. CIT (A) confirmed the addition made by the Assessing Officer for which the assessee is in appeal before us. 4. During the hearing the ld. AR argued that the assessee has purchased 1,500 shares of Smartchamps IT & Infra Ltd. vide cheq....
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....mount 22.09.2011 Purchase of 15000 shares at the Rate of Rs. 10/-per shares of M/s Smartchamps IT & Infra Ltd 1,50,000/- 21.02.2013 Letter dated 21 February 2013 from M/s Cressanda Solutions Limited informing the issue of shares pursuant to the Scheme of Amalgamation of Smartchamps IT and Infra Ltd. with Cressanda Solutions Limited, approved by the Hon'ble High Court of Bombay vide order dated 24 January 2013 to prove the conversion of shares of M/s Smartchamps IT & Infra Limited into the shares of M/s Cressanda Solutions Limited in the ratio of 1:1 as on record date of 21 February 2013 (15000 shares received) This was conveyed to the assessee by M/s Sharepro Services (India) Pvt. Ltd. who was the Share Transfer agent of M/s Cressanda Solutions. 05.07.2013 Dematerialization of shares through DP, M/s KK Securities Ltd. 18.07.2013 to 12.09.2013 Sale of 15000 shares @ varying between Rs. 501.75 to Rs. 503.50 through M/s Religare Securities.(broker) 73,77,806/- 6. The ld. AR argued that the decisions have made solely on the report of the Investigation Wing and the statement of the persons recorded during the survey and opportunit....
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....ating authority in spite of specific request by the appellant, whereas the addition made in the case is not solely based on the statement of witness but a number of corroborative and direct evidences collected by the department and hence, the case of Andman Timber Industries is differentiated on facts. 8. Heard the arguments of both the parties and perused the material available on record. 9. We have gone through the rationale given by both the parties pertaining to their arguments. In this case, it is an uncontroverted fact that the assessee has failed to prove the genuineness of the transaction. The AO has worked out the glaring facts, which cannot be ignored and which are clear indicative of the non-genuine nature of the transactions. The assessee could not satisfactorily explain how the investments in the absence of any evidence as to the financials, growth and operations of the company could earn profit of 4910% over a short period of 5 months from the date of allotment of shares (21.02.2013-date of allotment and 18.07.2013 to 12.09.2013 -date of sale) of Cressanda Solutions Ltd. against the purchase of 15,000 shares of Smarchamps IT and Infra Ltd. on 22.09.2011. Most im....
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....s 29.20 29.50 24.31 27.03 1.74 CURRENT ASSETS Inventories 0.00 0.00 0.00 0.70 0.00 Trade Receivables 0.00 0.00 29.13 26.01 0.00 Cash And Cash Equivalents 0.10 0.23 0.18 0.18 0.04 Short Term Loans And Advances 0.00 0.00 0.00 0.00 0.01 Other Current Assets 0.00 0.08 0.05 0.05 0.00 Total Current Assets 0.10 0.31 29.37 26.95 0.05 Total Assets 29.30 29.81 53.68 53.98 1.79 Profit & Loss account of Cressanda Solution ---------------- in Rs. Cr. -------------- Mar 16 Mar 15 Mar 14 Mar 13 Mar12 12mths 12mths 12mths 12mths 12mths INCOME Revenue From Operations [Gross] 0.00 0.00 6.44 0.99 0.00 Revenue From Operations [Net] 0.00 0.00 6.44 0.99 0.00 Total Operating Revenues 0.00 0.00 6.44 0.99 0.00 Other Income 0.03 0.17 0.14 0.07 0.02 Total Revenue 0.03 0.17 ....
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.... of shares except the copies of the contract notes, cheques received against the overwhelming evidences collected by the Revenue regarding the operation of the entire affairs of the assessee. This cannot be a case of intelligent investment or a simple and straight case of tax planning to gain benefit of long-term capital gains. The earnings @ 491% over a period of 5 months is beyond human probability and defies business logic of any business enterprise dealing with share transactions. The net worth of the company is not known to the assessee. Even the brokers who coordinated the transactions were also unknown to the assessee. All these facts give credence to the unreliability of the entire transaction of shares giving rise to such capital gains. The ratio laid down by the Hon'ble Supreme Court in the case of Sumati Dayal vs. CIT, 214 ITR 801 is squarely applicable to the case. Though the assessee has received the amounts by way of account payee cheques, the transactions cannot be treated as genuine in the presence of the overwhelming evidences put forward by the Revenue. The fact that in spite of earning such steep profits, the assessee never ventured to involve himself in any othe....