TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 970
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....ssue involved is, whether the ld CIT (A) was justified in confirming the addition made towards unexplained expenditure on commission of a sum of Rs. 3,87,136/- since the long term capital gain was treated as non - genuine on the facts and in circumstances of the case. 3. The brief facts qua the issue involved are that the assessee filed her return of income for the AY 2014-15 on 31.07.2014 declaring total income of Rs. 11,56,260/-. The assessee had declared income from salary, house property, income from other sources and also from investing in shares. The assessee claimed exempt income u/s 10 (38) of the Act in respect of long term capital gain derived from sale of listed company's shares of M/s Trinity Tradelink Ltd. (in short TTL, as name of STFL was changed to TTL w.e.f. 28.04.2014) where securities transaction tax was duly paid by the assessee. As culled out from the records, the assessee had purchased 20,000 shares of TTL on 25.03.2012 on allotment made by the company at par value of Rs. 10 per share. The assessee was issued share certificates numbering 0005208 to 0005211. The assessee made payment of Rs. 2,00,000/- vide cheque no. 114782 dated 25.03.2012, drawn on HDFC Ban....
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....arding purchase of shares. 140 Copy of Assessee's bank statement showing payment regarding purchase and sale of shares. 141-142 Copy of information about merger of M/s Trinity Trade Link Ltd. 143-144 4. The Assessing officer in the impugned assessment order dated 29.12.2016 has observed that the share price of TTL sky rocketed without having any financial result. The parameters which are essential for increase in price of share are not present. In absence of sound financial results it can be concluded that the increase is due to artificial increase. Further, the trend observed of TTL again lead to a conclusion that prices of the shares of TTL were artificially hiked to create non-genuine LTCG to the beneficiaries. 4.1 The Assessing Officer also observed that statements were also recorded by the Investigation Wing in other cases of various brokers, operators and entry providers, who accepted that TTL is a Penny Stock company and the scrip has been used to provide bogus LTCG to various beneficiaries. Reliance was placed by the Assessing Officer on the statement of Sri Vikrant Kayan, which was recorded on 09.06.2014 before DDIT (Inv), Kolkata in which he had admitted tha....
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....of purchase. 136-139 Copy of bill regarding purchase of shares. 140 Copy of Assessee's bank statement showing payment regarding purchase and sale of shares. 141-142 Copy of information about merger of M/s Trinity Trade Link Ltd. 143-144 7. The ld Counsel further submitted that the reasons given by AO as well as the Commissioner of Income Tax (Appeals) that increase in the price of TTL was without any backing of the Financial Results is factually incorrect, as the said company TTL is a growing company having turnovers of Rs. 117.39 crores (AY 2014-15); Rs. 150.59 crores (AY 2015-16); Rs. 154.88 crores (AY 2016-17); and Rs. 146.23 crores (AY 2017-18). He submitted that the TTL is a dividend paying company and the financial statements of said company are available in public domain, which have also been placed at Pages 325 to 370 of PB-II. He further submitted that reliance placed by AO on the interim order of SEBI, wherein, trading in securities of TTL were suspended temporarily is misconceived, as vide Adjudication Order dated 31.10.2018, SEBI has found no irregularities in the trading of shares of TTL, nor it has found its directors involved in any price rigging (sai....
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....without conducting investigation to discard the said documents. The case laws so relied by assessee are tabulated below: * Copy of judgment of Hon'ble Punjab and Haryana High Court in the case of PCIT vs Prem Pal Gandhi in ITA No. 95/2017 dated 18.01.2018. * Copy of judgment of Hon'ble Punjab and Haryana High Court in the case of PCIT vs Hitesh Gandhi in ITA No. 18/2017 dated 16.02.2017. * Copy of judgment of Hon'ble Bombay High Court in the case of CIT v. Shyam R. Pawar reported in 229 Taxman 256 dated 10.12.2014. * Copy of judgment of Hon'ble Bombay High Court in the case of CIT CIT v. Smt. Jamnadevi Agrawal reported in 328 ITR 656 dated 23.09.2010. * Copy of judgment of Hon'ble Gujarat High Court in the case of CIT vs. Maheshchandra G. Vakil reported in 220 Taxman 166 (Magz) dated 25.09.2012. * Copy of judgment of Hon'ble Rajasthan High Court in the case of CIT vs. Smt Sumitra Devi reported in 229 Taxman 67 dated 24.02.2014. * Copy of judgment of Hon'ble Allahabad High Court in the case of CIT vs. Anirudh Narayan Agrawal reported in 219 Taxman 126 dated 16.01.2013. * Copy of order of Hon'ble ITAT Raipur in the case of DCIT vs Rakesh Saraogi & Sons (HUF) i....
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....c domain. * Copy of relevant extracts of financial statements of M/s Trinity Tradelinks Ltd. for the financial year 2015-16 available in public domain. * Copy of relevant extracts of financial statements of M/s Trinity Tradelinks Ltd. for the financial year 2016-17 available in public domain. 9. On the other hand, the Ld. CIT DR relied on the orders of the lower authorities and filed written submissions dated 16.05.2019, wherein, his main plank of arguments were as under: (i) The assessee purchased and sold shares of TTL. In statement of Sh. Vikrant Kayan, Managing Director of TTL, he admitted that he was mainly engaged in facilitating accommodation in the form of providing bogus billing, share capital, unsecured loan and LTCG to some companies. He has also provided LTCG in Trinity Tradelink Ltd. to various clients. (ii) The transaction has not been made through Dmat account. (iii) Summon u/s 133(6) were issued to M/s Trustline Securities Ltd, broker, but there was no compliance. (iv) Action was initiated by SEBI in the case of TTL which has not been revoked. (v) The assessee has not been able to explain the source of cash of Rs. 2,00,000/- for purchase of sh....
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....f Rs. 2,00,000/- for purchase of shares is again factually incorrect, as the shares were purchased through account payee cheque (see bank statement at page 141 of PB-I) and even in the statement of assessee recorded during the course of assessment proceedings, it was stated by the assessee that the payment for purchase of shares of TTL have been made through account payee cheque, which has also not been disputed by AO. (iv) That the ld DR is again factually incorrect in stating that no cross examination was demanded by assessee, rather, the statement of Sh. Vikrant Kayan was provided to the assessee at the fag end of assessment i.e. on 27.12.2016 at 6 pm and immediately thereafter, assessee vide reply dated 28.12.2016 sought for the cross examination of Sh. Vikrant Kayan, which was not provided to the assessee. That further, the said issue of cross examination was also raised before ld CIT (A) vide submission dated 02.08.2017 (Pg 87 to 90 of PB-I), which was accepted by ld CIT (A), wherein, the matter was remanded to the file of AO for providing opportunity of cross examination to the assessee (Pg 91 of PB-I). However, ld. AO vide its remand report dated 15.11.2017 showed his in....
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....ear that the same is not containing the list of beneficiaries; it merely contains the list of shareholding, which is also available in public domain as TTL is a listed company. Thus, Annexure - A so relied by ld. DR rather supports the case of assessee, as the same shows at page 13 that assessee was a genuine investor in TTL and was holding 0.08% of shareholding of TTL. Decision 12. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. We find that the transaction of the assessee of purchase of shares of M/s Trinity Trade Link Ltd. (TTL), holding of the shares for more than one year and the sale of shares is through a registered share broker in a recognized Stock Exchange and after payment of Securities Transaction Tax thereon. Besides this, the purchase and sale were supported by documentary evidences which were placed before the lower authorities. Nowhere, the Revenue has pointed out any specific defect or shortcoming with regards to the documents so submitted by assessee. The effect of a transaction which is duly supported by documentary evidences cannot be brushed aside at the threshold, merely on suspicion or ....
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....nsure presence of Sh. Vikrant Kayan. The ld. CIT (A) thereafter, did not issue commission nor provided any opportunity of cross examination of the so called alleged entry operator to the assessee. Rather, we find that the ld. CIT (A) at page 27 of his order records that there is no requirement to provide cross examination of Sh. Vikrant Kayan to assessee. Thus, after going through the record, we have no hesitation in holding that it was incumbent upon the learned AO/ CIT (A) to have provided opportunity to cross examine the person or atleast issued commission to Revenue Authorities at Kolkata to summon and specifically inquire about assessee, because heavy reliance has been placed on the statement. It is more so in the present case, because in the statement, there is no mention about the assessee. It is an elementary principle of law that, if any adverse inference is drawn against the assessee based on statement of a third party and no opportunity is provided to cross examine, then such a statement loses its credibility as primary evidence. On this point, before us Ld. Counsel has relied upon by various courts, including that of judgment of Hon'ble Apex Court in the case of M/s And....
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....e case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 15. Even, otherwise on a specific query raised by the Bench, with regards to statement referred in the order of assessment of Sh. Vikrant Kayan, wherein, relevant portion of statement of Sh. Vikrant Kayan has been extracted by ld AO in his order at pages 3 and 4, it was specifically enquired by us, as to whether, department is in possession of "Annexure A and B", as has been mentioned by Sh. Vikrant Kayan in the said statement. The ld. DR in response had produced a report from AO dated 20.05.2019, wherein, two Annexure "A and B" were produced before the Bench. As discussed above, in 'Annexure-B', which contains various names, the name of assessee is absent. Thu....
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.... a long term capital gain reported by it, to the tune of Rs. 13,33,956/- and Rs. 14,34,501/- in respect of 4,000 shares of M/s Kappac Pharma Ltd. The assessee held those shares for approximately 19 months; the acquisition price was Rs. 12/- per share whereas the market price of the shares at the time of their sale, was Rs. 720/-. It is contended that the assessee was not granted fair opportunity. Mr. Rajesh Mahna, learned counsel appearing for the assessee relied upon the orders of the co-ordinate Bench of the tribunal, in respect of the same company i.e. M/s Kappac Pharma Ltd., andpointed out that the tax authority's approach in this case was entirely erroneous and inconsistent. The main thrust of the assessee's argument is that he was denied the right to cross-examination of the two individuals whose statements led to the inquiry and ultimate disallowance of the long term capital gain claim in the returns which are the subject matter of the present appeal. This court has considered the submissions of the parties. Aside from the fact that the findings in this case are entirely concurrent - A.O., CIT(A) and the ITAT have all consistently rendered adverse findings - what is....
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....actually and materially distinguishable from the facts of the case of Udit Kalra vs ITO so relied by ld. DR. 18. Lastly, we deem it appropriate to consider the written submission dated 16.05.2019, so furnished by ld. CIT DR, Wherein, he has raised various submissions. The first submission of ld DR is that the transaction of assessee was not through DMAT is factually incorrect as we notice that the same is duly through DMAT, the documentary evidences for the same have been placed by assessee placed at pages 126 to 134 of PB - I. That secondly, the submission of ld DR that notice u/s 133(6) issued to M/s Trustline Securities Ltd. was not complied is again contrary to record as the same was duly complied as is also mentioned by AO at page 6 of the order. That further, the submission of ld DR that the assessee has not been able to prove the source of cash of Rs. 2,00,000/- for purchase of shares is again factually incorrect, as the shares were purchased through account payee cheque, the bank statement has been placed by assessee at page 141 of PB - I and moreover, we find that the purchase has also been accepted by AO in the order of assessment and there is no dispute regarding the g....