TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 837
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....r Rs. 47,533/- of M/s. SESL on 21.11.2012 @ Rs. 410/- per share. Subsequently, the shares were split shares with a face value of Rs. 1/- per share on 04.02.2013 thereby assessee got 7000 shares of M/s. SESL and sold these shares for claiming LTCG. Thereafter, the assessee purchased 25,000 off market shares of M/s. Transcend Commerce Ltd. @ Rs. 10/- per share. Subsequently, the shares were dematerialize. Consequent upon the scheme of arrangement between Transcend Commerce ltd. and SRK Industries Ltd., the assessee got 55,000 shares of M/s. SRKIL. The shares were split with a face value of Rs. 5/0- per share. In this way, the assessee got 1,11,000 shares of M/s. SRK Industries Ltd. and sold these shares for claiming LTCG. In order to support the aforesaid transaction and claim as aforestated, the assessee had filed the purchase contract note/bill, letter of merger, letter of sub-division of shares, sale contract note, demat statement and bank statement before the lower authorities which is also filed in the paper book. However, the AO was of the opinion that huge rise in the shares of M/s. SESL and M/s. SRKIL was not real and it is a stage managed, pre-arranged transaction wherein th....
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.... of Hon'ble Bombay High Court in Bimal Chand Jain in TAX Appeal No. 18/2017, the Ld. DR vehemently opposing the arguments of the Ld. AR completely supported the order of the lower authorities and stated that the assessee's own money has been laundered through maze of companies which are pre-arranged, stage managed and, therefore, needs to be dealt with heavy hands. And cited few case laws in support of revenue which I will discuss infra. 5. I note that the assessee claimed long term capital gain of Rs. 27,35,178/- on sale of shares of M/s. SESL as well as M/s. SRKIL and according to him its exempt u/s. 10(38) of the Act. In this case, the Ld. AR Shri Subash Agarwal, Advocate painstakingly took us through the purchase contract note/bill placed at pages 11 and 15 of the paper book wherein I note that assessee had purchased 700 shares of M/s. SESL and 25000 shares of M/s. SRKIL and sold it which is evident from the sale contract note placed at pages 12 and 18 of the paper book respectively. I have also gone through the demat statement found placed at pages 13 to 14 and 19 to 25 of the paper book and bank statement which is found placed at pages 31 to 34 respectively of the paper boo....
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....n any activity like stage managed and/or pre-arranged as suggested by the AO, it cannot be held that the assessee's LTCG claim is bogus. I note that this Tribunal have held that both the shares in question are not bogus in the following cases. i) In respect of sale of scrips of M/s. Sulabh Engineers & Services Ltd. (M/s. SESL), these scrips are covered by this Tribunal's order in Asish Kumar Ghosh Vs. DCIT in ITA No. 1164/Kol/2019 dated 02.08.2019; ii) In respect of sale of scrips of M/s. SRK Industries Ltd. (M/s. SRKIL) these scrips are covered by this Tribunal's order in Shreyan Chopra Vs. ACIT, ITA No. 661/Kol/2018 dated 25.07.2018. 7. Therefore, I respectfully following the decisions cited supra, overturn the decision of the authorities below and direct the AO to allow the claim of LTCG of the assessee. 8. The case of the assessee's is similar to the decision of Hon'ble Bombay High Court, Nagpur Bench in CIT vs. Smt. Jamnadevi Agrawal & Ors. dated 23rd September, 2010 reported in (2010) 328 ITR 656 wherein it was held that: "The fact that the assessees in the group have purchased and sold shares of similar companies through the same broker cannot be a ground to hol....
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....shpa Malpani - reported in (2011) 242 CTR (Raj.) 559; (2011) 49 DTR 312 dismissed the appeal of department observing 'Whether or not there was sale of shares and receipt of consideration thereof on appreciated value is essentially a question of fact. CIT(A) and Tribunal have both given reasons in support of their findings and have found that at the time of transactions, the broker in question was not banned by SEBI and that assessee had produced copies of purchase bills, contract number share certificate, application for transfer of share certificate to demat account along with copies of holding statement in demat account, balance sheet as on 31st March, 2003, sale bill, bank account, demat account and official report and quotations, of Calcutta Stock Exchange Association Ltd. on 23rd July, 2003. Therefore, 'the prese/itdppeal does not raise any question of law, much less any substantial question of law." 9. The Hon'ble High Court of Punjab and Haryana in the case of Anupam Kapoor 299 ITR 0179 has held as under:- "The Tribunal on the basis of the material on record, held that purchase contract note, contract note for sates, distinctive numbers of shares purchased and s....
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....that neither a copy of the statement was supplied to the assessee nor any opportunity of cross-examination was given by the Assessing Officer/CIT(A). The Hon'ble Supreme Court in the case of Andaman Timber Industries in Civil Appeal No. 4228 of 2006 was seized with the following action of the Tribunal:- "6. The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static. Since we are not upholding and applying the ex factory prices, as we find them contravened and not normal price as envisaged under section 4(1), we find no reason to disturb the Commissioners orders." 15. The Hon'ble Apex Court held as under:- "According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adver....
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....ses was the only basis of issuing the Show Cause. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 16. On the strength of the aforementioned decision of the Hon'ble Supreme Court, the assessment order has to be quashed. 17. Even on facts of the case, the orders of the authorities below cannot be accepted. There is no denying that consideration was paid when the shares were purchased. The shares were thereafter sent to the company for the transfer of name. The company transferred the shares in the name of the assessee. There is nothing on record which could suggest that the shares were never transferred in the name of the assessee. There is also nothing on record to suggest that the shares were never with the assessee. On the contrary, the shares were thereafter transferred to demat account. The demat account was in the name of the assessee, from where the shares were sold. In our understanding of the facts, if the shares were of some fictitious company which was not listed in the Bombay Stock Exchange/National Stock Exchange, the shares could never have been transferred to demat account. Shri Mukesh Choksi may have been providing acc....
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.... books. First book is running in pages no. 1 to 88 and 2nd paper book is running in pages 1 to 34. Before us the ld. AR submitted that the order of the AO is silent about the date from which the broker was expelled. There is no law that the off market transactions should be informed to stock exchange. All the transactions are duly recorded in the accounts of both the parties and supported with the account payee cheques. The ld. AR has also submitted the IT return, ledger copy, letter to AO land PAN of the broker in support of his claim which is placed at pages 72 to 75 of the paper book. The ld. AR produced the purchase & sale contracts notes which are placed on pages 28 to 69 of the paper book. The purchase and sales registers were also submitted in the form of the paper book which is placed at pages 76 to 87. The Board resolution passed by the company for the transactions in commodity was placed at page 88 of the paper book. On the other hand the ld. DR relied in the order of the lower authorities. 4.1 From the aforesaid discussion we find that the assessee has incurred losses from the off market commodity transactions and the AO held such loss as bogus and inadmissible in ....
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....actions in alleged penny stocks. The Tribunal found that the AO disallowed the loss on trading of penny stock on the basis of some information received by him. However, it was also found that the AO did not doubt the genuineness of the documents submitted by the assessee. The Tribunal held that the AO's conclusions are merely based on the information received by him. The appeal filed by the revenue was dismissed. vi) CIT V. Andaman Timbers Industries Limited [ITA No. 721 of 2008] (Cal HC) - In this case the Hon'ble Calcutta High Court affirmed the decision of this Tribunal wherein the loss suffered by the Assessee was allowed since the AO failed to bring on record any evidence to suggest that the sale of shares by the Assessee were not genuine. vii) CIT V. Bhagwati Prasad Agarwal [2009- TMI-34738 (Cal HC) in ITA No. 22 of 2009 dated 29.4.2009] - In this case the Assessee claimed exemption of income from Long Term Capital Gains. However, the AO, based on the information received by him from Calcutta Stock Exchange found that the transactions were not recorded thereat. He therefore held that the transactions were bogus. The Hon'ble Jurisdictional High Court, affirmed the decision....
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....TAT) 13. The ld AR also brought to our notice that once the assessee has furnished all evidences in support of the genuineness of the transactions, the onus to disprove the same is on revenue. He referred to the judgement of Hon'ble Supreme Court in the case of Krishnanand Agnihotri vs. The State of Madhya Pradesh [1977] 1 SCC 816 (SC). In this case the Hon'ble Apex Court held that the burden of showing that a particular transaction is benami and the appellant owner is not the real owner always rests on the person asserting it to be so and the burden has to be strictly discharged by adducing evidence of a definite character which would directly prove the fact of benami or establish circumstances unerringly and reasonably raising inference of that fact. The Hon'ble Apex Court further held that it is not enough to show circumstances which might create suspicion because the court cannot decide on the basis of suspicion. It has to act on legal grounds established by evidence. The ld AR submitted that similar view has been taken in the following judgments while deciding the issue relating to exemption claimed by the assessee on LTCG on alleged Penny Socks. (i) ITO vs. Ashok Kumar B....