TaxTMI 
TaxTMI 
2019 (1) TMI 1630
X X X X Extracts X X X X
X X X X Extracts X X X X
....cts of the case and the submissions made during the course of proceedings u/s 263 vide letter dt. 06.03.2018. 3. That the order passed by the Id. Pr. CIT, Delhi-19, New Delhi u/s 263 is liable to be quashed because the allegation that "the assessing officer had not properly examined the main issue on which the case was picked up for scrutiny i.e. Suspicious transaction relating to Long Term Capital Gain on shares", levelled by the Id. Pr. CIT is baseless and incorrect, in as much as during the course of assessment proceedings (i) the Id. A.O. had raised a specific query as to why the shares (which were sold during the year) be not treated as Short Term Capital Asset as against the Long Term Capital Asset claimed by the assessee; and (ii) the Id. A.O. had also made direct inquiries from M/s Shri Parasram Holdings Pvt. Ltd. by issuing notice u/s 133(6). 4. That the order passed by the Id. Pr. CIT, Delhi-19, New Delhi u/s 263 is liable to be quashed because the Id. Pr. CIT had failed to justify as to how the assessment order passed by the AO on 01.04.2 16 for A.Y. 2014-15 was erroneous in so far as it is prejudicial to the interests of revenue. 5. That the order passed by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... inquiries have been made by the AO. However the learned Principal Commissioner Of Income Tax rejected the explanation of the assessee and stated that assessment order has been passed without making due verification and inquiries and therefore it is erroneous insofar as it prejudicial to the interest of the revenue. The learned principal Commissioner of income tax referred to the fact that case was selected for scrutiny only to verify suspicious transaction of long term capital gain earned by the assessee and AO has not enquired anything from that angle and has merely relied up on the documents submitted by the assessee. It was stated that the abnormal price rise in the share of the company in deviation to the percentage rise in the Sensex during the period created a doubt regarding the genuineness of the said transaction, AO has not investigated from the angle that it is a colourable device when specifically it is selected for scrutiny stating that LTCG claim of the assessee is suspicious, AO has not taken note of the investigation wing prepared on this specific aspect etc. The learned principal Commissioner also noted that the assessing officer has not made any inquiries regardin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh Court sanctioning the scheme of merger and amalgamation between the Trinity trade links private limited and Omni Tech petroleum Ltd was also shown. The assessee also submitted on a specific query by the learned assessing officer that assessee has purchased the shares on 7/2/2014, the assessee submitted that it has not purchased the shares as on 7/2/2014 but has purchased the shares on 8/2/2012 in Trinity trade links private limited which later on merged with the another company and therefore the learned assessing officer is noting the date of the merger of the one company with the another company. He therefore submitted that the assessee is a holding a capital asset for more than 12 months. The assessee further submitted the copy of account of the broker and also the transaction Ledger of the broker wherein the details of shares purchased and sold are shown. In view of this the submission of the learned authorised representative was that the assessing officer has made the detailed enquiry during the course of assessment proceedings. He further stated that the order of the learned Commissioner of Income Tax does not give any finding that how the order of the learned AO is erroneo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ink Limited company where assessee allegedly purchased 10,000 shares on 12/2/2012 for Rs. 1,00,000/- of Trinity Trade Link for which cheque no 619395 on 22/2/2012 through DCB Bank Limited. Those shares were transferred in demat account of the assessee with Depository Parasram Holdings P Ltd with NSDL. Subsequently, Trinity Holdings Limited Got amalgamated with Omnichem Petroleum Limited and assessee got 10000 shares of amalgamating company in amalgamated company. Subsequently name of Omnichem Petroleum Limited was changed to Sharp Trading and finance Limited. On 26/2/2014 assessee sold these 10000 shares @ 963.54 per share. Therefore assessee has shown that she has sold the shares of the company which has been bought by her on 22/2/2102 @ Rs. 10/-per share has been sold by her on 26/2/2014 within a span of almost two years at the astronomical price of Rs. 963.54 per share resulting in to a gain of almost 96 times of the original investment. On these facts in case of the assessee, case was selected for scrutiny for the reason that suspicious transactions relating to long-term capital gain on shares is required to be verified. 8. During the course of assessment proceedings the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g to note that central board of direct taxes has issued instruction vide letter dated 16/03/2016 containing detailed instruction to the assessing officer to enquire such kind of transactions. The letter issued is as under :- LETTER F.NO.287/30/2014-IT (INV.II)-VOL-III, DATED 16-3-2016 REF : EFS Instruction No.53 of Directorate of Systems dated 08.03.2016 Kind attention is invited to the above referred EFS Instruction issued by the System Directorate regarding handling cases of Penny Stocks (suspect Long Term Capital Gains/Short Term Capital Loss etc). 2. It is informed that the said instruction is in the context of investigation conducted by Kolkata Investigation Directorate in respect of large number of penny stock companies, whose share prices were artificially raised on the Stock Exchanges in order to book bogus claims of Long Term Capital Gains or Short Term Capital Loss by various beneficiaries. Extensive investigation, including search and seizure/survey action on entry providers, riggers, beneficiaries etc. was conducted by the Investigation Directorate in such cases. Based upon outcome of such investigation and analysis of the data, the Systems Directorate has no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eneral and movement of other scrip in the same line of business. c. Price movement of the scrip upwards and downwards done mainly through thin volume. d. Mostly the long-term capital gain is resulting only from few scripts in most cases 1 or 2 and the long-term capital gain as many times the purchase value. e. Typically holding period shown is just more than one year in case of long-term capital gain matching with the period of crystallization of extraordinary income. 12. Further there are certain parameters also specified to identify the bogus long-term capital gain. According to the instructions there are several information to be collected from the assessee such as the copy of the Demat account, history of assessee in share transaction in earlier years, crystallization of extraordinary income and try to match the same with the purchase of shares, normal business of the assessee or family or firm in which the assessee is a major stake holder to trace the source of unaccounted cash in case of long-term capital gain or use of unaccounted cash generated from long-term capital gain, statement of assessee which can be taken at any stage by pointing out his inefficiency for ....