TaxTMI 
TaxTMI 
2019 (10) TMI 462
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.... shares of Essar India Ltd. Further, the shares of Essar India Ltd were found by them as penny stock company which has been used for generating bogus LTCG and the investigations revealed that a scheme was hatched by various players to obtain / provide accommodation of entry of bogus LTCG through manipulation of stock market. Therefore, the Assessing Officer re-opened and scrutinized assessment / scrutinized the assessment, as the case may be, and found that the respective assessees purchased off market 4000 & 4200 shares, respectively, of M/s. Essar (India) Ltd., @ Rs. 1per share, subsequently sold them on line through M/s. Sugal and Damani Share Brokers Ltd., for Rs. 9,08,000/- and Rs. 14,45,500/-, respectively, at an average rate of Rs. 227/- per share approx., disclosed Long Term Capital Gain in their respective return and claimed it as an exempt income U/s.10(38). The Assessing Officer examined the entire set of transactions in the background of the information received from the DIT(Inv), Kolkatta and upon such examination of facts and on detail analysis of the transactions held, inter alia, that the respective assessee has deliberately entered in to a sham transaction of purch....
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....olkata for purchasing these shares when the appellant is based at Chennai. The appellant had also not substantiated as to how and why the shares of these particular companies were selected at random for investing off market without even knowing the financial credentials etc. to justify the investment say, on the basis of the level of risk involved or the level of return or on the degree of liquidity involved etc. 5.3.7 Since the shares of the said company have been specifically held by the investigation to be one of the penny stocks traded in, it is for the appellant to discharge his onus to establish the genuineness of purchases with respect to such scrip on the aspects as discussed above which he has failed to do so even during the course of appellate proceedings. 5.3.8 Further, the jurisdictional tribunal in the case of Heera Chand Kanunga Vs ITO in ITA Nos. 2786 & 2787/Chny/2017 vide its order dated 3-5-2018 has held that the assessee shall prove the transaction by providing all such evidence to substantiate the claim of exemption u/ s 10(38) by producing the persons through whom the assessee has purchased and sold the shares, sub-brokers and the others in the....
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.... 5.3.12 It is to state m this regard that the Operating Revenue and Operating Expenditure of EIL depicts very poor operations being carried out by EIL. The value of the scrip was highly inflated with respect to its book value. It is thus concluded against these facts that considering the financial and operating figures of EIL, the huge market capital of EIL and price/traded volumes in the scrip during the relevant periods was inflated and unrealistic. 5,3.13 This proves that such artificial increase in prices were stage managed through predetermined transactions amongst the members of the syndicate, The prices of the shares were thus clearly manipulated apparently to 227 times the purchase value only to provide bogus gains to the beneficiaries who approached such members, like the appellant In the instant case. 5,3,14 Further, the genuineness of sale of this company's scrip at such atypical price is also questionable from the timing of exit by the appellant. The decision to exit at a particular time when the price was at a particular level is not a natural event as is made out to be but comes across as a pre-determined event decided by the entry operator....
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....y the appellant are manipulated to convert unexplained money into tax free profits. 4.1 Thereafter, the Ld. DR submitted that after considering the facts and circumstances, supra, the Ld. CIT(A) relying on various Tribunal / High Court decisions viz., a) CIT vs. Krishnaveni Ammal, [1986] 158 ITR 826 (Mad) b) ITO vs. Ratnakar M. Pujari in ITA No.995/MUM/2012 dated 03.08.2016 c) ITO vs. Shamim M. Bharwani in ITA No.4906/MUM/2011, [2016] 69 taxmann.com 65 (Mumbai - Trib) d) Arvind Bakrishna Goregonkar vs. ITO 21(2)(1), in ITA No.6717/Mum/2016 dated 03.01.2018 e) Sanjay Bimalchan Jain, [2017] 5 TMI 983 dated 10.04.2017, Mumbai High Court f) Vidya Reddy, Chennai vs. ITO International Taxation, Ward 1(2) in ITA No.2016/CHNY/2017 dated 16.05.2018 held that the transactions involving purchase and sale of shares of Essar India Ltd., have been manipulated and the LTCG stated to have been earned from them are clearly bogus in nature and accordingly upheld the action of the Assessing Officer in the respective cases. Thereafter, the above assessees filed the impugned appeals before this tribunal. Since the findings recorded by the lowe....