TaxTMI 
TaxTMI 
2019 (10) TMI 970
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....stances of the case. The interconnected issue 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. ....
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....shares. 135 Copy of shares certificate at the time 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 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 ....
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....134 Copy of letter from Trinity Trade Link Ltd. for transfer of shares. 135 Copy of shares certificate at the time 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,....
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....he LTCG claimed as exempt under section 10(38), hence, addition cannot be made in the hands of assessee without rebutting the documentary evidences and 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 judgm....
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....dated 07.12.2018. • Copy of final adjudication order dated 31.10.2018 passed by SEBI in the matter of M/s Trinity Tradelinks Ltd. • Copy of financial statements of M/s Trinity Tradelinks Ltd. for the financial year 2013-14 available in public domain. • Copy of relevant extracts of financial statements of M/s Trinity Tradelinks Ltd. for the financial year 2014-15 available in public 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 ....
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....see is duly through DMAT and all the said documentary evidences are placed at pages 126 to 134 of PB-I. (ii) That secondly, notice u/s 133(6) issued to M/s Trustline Securities Ltd. was duly complied as can be seen from page 6 of AO's order and thus, the submission of ld. DR that the share broker failed to comply is factually incorrect and contrary to material available on record. (iii) Further, the submission of ld. DR that the assessee has not been able to establish 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 (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 t....
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.... assessee is appearing in the said annexure. However, a perusal of Annexure - A, reveals that it is nothing but the list of shareholders as 07.02.2014 of STFL/ TTL. A close perusal of the said annexure will show that name of Sh. Vikrant Kayan is also appearing in the same at page 1. Thus, the submission of assessee was that the said annexure merely contains the list of shareholding as why will Vikrant Kayan mention his own name in the list of beneficiaries of accommodation entries. Rather, on reading of the said annexure, it becomes clear 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 yea....
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....sessee vide reply dated 28.12.2016 had sought for the cross examination of Sh. Vikrant Kayan, which could not be provided to the assessee. The said issue of cross examination was also raised before ld CIT (A) vide submission dated 02.08.2017, 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. However, ld. AO in his remand report dated 15.11.2017 showed his inability to summon Sh. Vikrant Kayan and requested ld. CIT (A) to issue commission and ensure 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, bec....
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....the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the 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 o....
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....ssessee and corroborates the fact that the assessee was a genuine investor and as a consequence of long term capital gain so declared is also genuine. 16. That the ld CIT DR during the course of hearing had placed heavy reliance on judgment of Hon'ble High Court of Delhi in the case of Udit Kalra vs ITO in ITA No. 220/2019. Relevant extracts of said judgment for sake of ready reference are extracted below: "The assessee is aggrieved by the concurrent findings of the tax authorities - including the lower appellate authorities rejecting its claim for 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....
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....d company are available in public domain, which have also been placed at Pages 325 to 370 of PB- II by assessee. That further, the interim order of SEBI in the case of TTL banning trading has been uplifted and cooled down by subsequent order of SEBI vide order dated 31.10.2018 placed before us at Pages 305 to 324 of PB- II by assessee. Thus, the growth in prices of TTL was backed by sound financials and as such, the case of Udit Kalra vs ITO relied by ld. DR is clearly distinguishable on facts and is not applicable to the facts of assessee. Thus, we hold that the case of assessee is factually 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 ....