TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 771
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....as well as facts. The action of the CIT (A) in dismissing the appeal is unjustified, arbitrary and against law. 2. The learned Commissioner of Income Tax (Appeals) has erred to notice or adjudicate the issue that the Assessing Officer (A.O) had made the additions without even stating under which provisions of the Income Tax Act, 1961 he made those additions. Such non-mentioning the section invoked renders the assessment order bad in law. 3. The Ld. CIT (A) has completely erred against facts when she held that there is no violation of Natural justice as according to CIT (A) giving a show cause notice is sufficient compliance of "Natural Justice". The fact is that the A.O has neither furnished the copy of the statement recorded from a third party implicating the Appellant herein and nor the appellant was given an opportunity to cross examine the person who is purported to have given a statement implicating the appellant. This is a clear violation of Principle of Natural justice and this ground was never considered by the Ld. CIT (A) while passing the order on Appeal. 4. The Appellant submits that she was not given any opportunity to rebut the evidence, if any, gathered at th....
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.... banning(sic. banking) channels. Such chain of transactions cannot be held as "Bogus" or "sham" merely on suspicion or surmises by the AO. 8. The appellant submits that the recording of the statement from any person which is used as evidence in any proceedings under this act is not a conclusive proof of evidence by itself. The appellant has the right to cross-examine the person who has given this statement. This injustice has been ignored by not allowing cross-examining the person whose statement has been relied before dismissing the appeal by the Hon. CIT (A). 9. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of AO in charging interest u/s.234B, 234C and 234D of the Act. 10.That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. The appellant prays that on the above grounds, the Hon. Income-tax Appellate tribunal may kindly delete the additions and pass such as they deem fit." 3. Before we proceed further, it is pertinent to mention at this stage that assessee file....
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....ated , the Bench decided to proceed to adjudicate this appeal filed by assessee in ITA no. 2342/Chny/2019 for ay: 2014-15 after hearing learned DR and in the absence of the assessee. 4. The brief facts of the case are that assessee is an individual and partner in partnership firms. The assessee filed her return of income for impugned ay: 2014-15 on 29.07.2014 declaring total income of Rs. 4,99,910/-. The assessee's case was selected by Revenue under CASS for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act. The statutory notices u/s 143(2) as well notices u/s 142(1) of the 1961 Act were duly issued by AO and served on assessee. During the course of aforesaid scrutiny proceedings conducted by AO, it was observed by AO that assessee has claimed an exempt income to the tune of Rs. 39,77,886/- u/s.10(38) of the 1961 Act. The said exemption was claimed by assessee on sale of long term capital asset, being shares of M/s. Turbotech Engineering Ltd. . The AO observed that investigations were conducted by various regulatory and enforcement agencies of Government of India which indicated that said company namely M/s.Turbotech Engineering Ltd. was a company wit....
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....The AO further observed that assessee has not furnished travel details to indicate that all three persons were in-fact present at the same place at the same time. The AO observed that assessee has opened a DMAT account with ICICI securities on 26.10.2010 and another DMAT account with Integrated Enterprises India Limited on 24.09.2013. The AO observed that aforesaid shares which were allegedly purchased on 22.11.2011 were dematerialized with ICICI Securities on 12.03.2013 i.e. nearly one and half years from the purchase of shares. The AO observed that subsequently these shares were sold on 23.09.2013 and 22.11.2013 and assessee claimed exemption u/s 10(38) of the 1961 Act on long term capital gains arising on sale of said shares. The AO observed that the above sequence of events clearly reveals that assessee has manipulated entire sequence of events related to alleged purchase of aforesaid shares to introduce unaccounted income as an exempt income. The AO called for information u/s.133(6) of the Act from Bombay Stock Exchange (in short "BSE") regarding transactions carried out by assessee during the year under consideration. The BSE in response thereof submitted desired data's to th....
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....- - - - Extra ordinary items - - - - - Net profit/(Loss) for the period -0.09 -0.13 -0.04 -0.03 -0.03 The AO also brought on record movement of price of the share of M/s.Turbotech Engineering Ltd. on BSE for last one year which has varied from Rs. 19.65 to Rs. 518/- during the financial year, which as per AO clearly defy economic rationale as financials of the said company Turbotech Engineering Limited reveals no revenue earned by company for last year which has not changed during last four years and these significant price variation reveals a pattern in the manipulation of the share price of the said company namely M/s Turbotech Engineering Limited, which is re-produced hereunder: "4.1 The movement of the price of the company on BSE is also detailed below, that clearly reveals a pattern in the manipulation of the share price of the company: Turbotech Engg BSE: 504358 | NSE: | ISIN: INE764M01018 Historic data for the period: Apr-2013 to Mar-2014 on BSE Change Period High: 518.00 Period Low: 19.65 Change in market-cap:-94.91% Date Open High Low Close Mar 2014 28.80 28.80 19.65 19.65 Feb 2014 41.65 41.65 29.35 29.35 ....
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....re shares of M/s Turbotech Engineering Limited. The AO observed that these Kolkatta based companies have acted in concert with entry operators and share brokers to rig share prices of M/s Turbotech Engineering Limited as given in the order of the SEBI, referred above. . The AO observed that assessee is also part of the same transactions and claimed bogus long term capital gain on her own unaccounted money. The AO relied upon decision of Hon'ble Supreme Court in the case of CIT v. Durga Prasad More(1971) 82 ITR 540(SC) and in the case of Sumati Dayal v. CIT(1995) 214 ITR 801(SC) to come to conclusion that long term capital gain declared by assessee is bogus and it is the unaccounted money of the assessee which is routed through investment in this company and has now been shown as legitimate by claiming the same as an exempt income. The AO also relied upon decision of Hon'ble Guwahati High Court in the case of CIT v. Smt. Jasvinder Kaur [2013] 37 taxmann.com 286 (Guwahati) to disallow claim of exemption filed by assessee u/s 10(38) of the 1961 Act. The AO further relied on decision of Mumbai-tribunal in the case of Usha Chandresh Shah v. ITO in ITA No.6858/Mum/2011 , dated 26.09.2014....
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....his appeal was called for hearing on 09.10.2019 nor any application for adjournment was filed. We have elaborately discussed entire background in para 3 of this order as to grant of early hearing in this case at the behest of assessee and the same is not repeated. The Ld.DR, on the other hand, supported the orders of the authorities below. It was submitted by Ld.DR that assessee has no case on merits and it is only after detailed investigations conducted by authorities below , the claim of exemption filed by assessee u/s 10(38) of the 1961 Act was disallowed by the authorities below by holding the same to be bogus claim filed by assessee for seeking exemption u/s 10(38) of the 1961 Act and it is infact assessee's own unaccounted money which is brought back as legitimate money through circuitous route of purchase and sale of shares which were all sham transaction to convert black money into legitimate money and then claiming exemption u/s 10(38) of the 1961 Act so that no liability to tax can be fastened on the assessee. The learned DR submitted that assessee is not regularly dealing in shares and there is around 2636% variation in share price of Turbotech Engineering Limited in whi....
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....ntity is based in Mumbai. The payment for acquisition of said shares were claimed by assessee to have been made in cash as is emerging from receipt dated 24.11.2011 issued by said Shivani Tradecom Private Limited. The assessee has got these shares of M/s Turbotech Engineering Limited Dematted into her DMAT Account on 12.03.2013 which is almost one and half year after purchase of the said shares by assessee, which is against the normal human behavior more so when payments for these shares were claimed to be made in cash in an off market transaction which was not routed through stock exchanges . Under normal circumstances, the person who buys shares will get the shares transferred and Dematted to his/her DMAT account immediately on purchase of shares. These shares were then sold by assessee on 23.09.2013 and 22.11.2013 which is within 6-8 months of being transferred to assessee's DMAT account . The assessee has claimed that during previous year relevant to impugned ay: 2014-15 , the assessee has sold 7900 shares of Turbotech Engineering Limited for Rs. 40,22,940/- , translating into long term capital gains of Rs. 39,77,886/- , which long term capital gains were claimed as an exempt u....
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....er annum , in dealing in shares of M/s Turbotech Engineering Ltd. . We have also observed that SEBI has also debarred/suspended this company namely M/s Turbotech Engineering Ltd. effective from 07.01.2015 until further orders from trading/dealings of its shares in stock exchanges. It has also emerged from inquiries conducted by AO that certain Kolkatta based companies having little or no means have bought entire shares of M/s Turbotech Engineering Ltd. and these companies acted in concert with entry operators and share brokers to rig/manipulate share price of Turbotech Engineering Ltd. with an intent to defraud Revenue. The AO has deeply analyzed Balance Sheet and Profit and Loss account of this company M/s Turbotech Engineering Ltd. for five years from year ended 31.03.2012 till year ended 31.03.2016 and it revealed that this company does not have any revenue/income and expenses in all these years . Its profits were almost nil or negligible during all these years. Its key financial years are extracted in assessment order passed by AO which we have also reproduced in preceding para's of this order (page 8-9). We have also carefully gone through the financial of this company namely ....
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....on investigations carried by other government agencies but has also conducted independent inquiries with BSE which also revealed that the prices of the shares of Turbotech Engineering Ltd. were rigged / manipulated with an intent to defraud revenue. The financials of said company M/s Turbotech Engineering Limited wherein there is no turnover/income earned and no expenses incurred by said company for last five years also does not support price variation of Rs. 19.65 per share to Rs. 518 per share within previous year 2013-14 relevant to ay: 2014-15, which clearly points to manipulation and rigging in share price of Turbotech Engineering Ltd. with malafide intention to defraud revenue. It is unbelievable that assessee having never dealt in share market will earn a yield / return of 12500% per annum within 2 years on her first dealing in stock market which also happened to be last dealing undertaken by assessee in stock market. The claim of the assessee that purchase of shares was made in cash in November 2011 and that the DMAT of the shares of said company Turbotech Engineering Ltd. in assessee's DMAT account was credited after around one and half year in March 2013 just 6-8 months p....
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....ted fact that the assessee has failed to prove the genuineness of the transaction. The AO has worked out the glaring facts, which cannot be ignored and which are clear indicative of the non-genuine nature of the transactions. The assessee could not satisfactorily explain how the investments in the absence of any evidence as to the financials, growth and operations of the company could earn profit of 4910% over a short period of 5 months from the date of allotment of shares (21.02.2013-date of allotment and 18.07.2013 to 12.09.2013 -date of sale) of Cressanda Solutions Ltd. against the purchase of 15,000 shares of Smarchamps IT and Infra Ltd. on 22.09.2011. Most importantly, in spite of earning so much of profit, the assessee has never embarked upon any transactions for investments with the broker or in any other dealing of shares. The revenue from operations of Cressanda Solutions Ltd. for the year March 2012 was Rs. 00 and, for the year March 2013 is Rs. 0.99 Cr. The financials of the company proving that the entity is a penny stock company are as under: 7. Thus, Tribunal has in depth analyzed balance sheets and profit and loss accounts of Cressanda Solutions Ltd. which shows t....
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....ade 0.00 0.00 29.13 26.01 0.00 Receivables Cash and Cash Equivalents 0.10 0.23 0.18 0.18 0.04 Short Term Loans and Advances 0.00 0.00 0.00 0.00 0.01 Other Current Assets 0.00 0.08 0.05 0.05 0.00 Total Current Asses 0.10 0.31 29.37 26.95 0.05 Total Assets 29.30 29.81 53.68 53.98 1.79 Profit & Loss account of Cressanda Solution ---- in Rs. Cr. -------------- Mar 16 Mar 15 Mar 14 Mar 13 Mar 12 12 mths 12 mths 12 mths 12 mths 12 mths INCOME Revenue From Operations [Gross] 0.00 0.00 6.44 0.99 0.00 Revenue From Operations [Net] 0.00 0.00 6.44 0.99 0.00 Total Operating Revenues 0.00 0.00 6.44 0.99 0.00 Other Income 0.03 0.17 0.14 0.07 0.02 Total Revenue 0.03 0.17 6.58 1.06 0.02 EXPENSES Operating and Direct Expenses 0.00 0.00 5.14 0.08 0.00 Changes in Inventories of FG, WIP and Stock in Trade 0.00 0.00 0.70 0.00 0.00 Employee Benefit Expenses 0.05 0.04 0.03 0.06 0.00 Depreciation and Amortization Expenses....
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....dence to unreliability of entire transaction of shares giving rise to such capital gains. ratio laid down by Hon'ble Supreme Court in case of Sumati Dayal vs. CIT, 214 ITR 801 is squarely applicable to case. Though assessee has received amounts by way of account payee cheques, transactions cannot be treated as genume in presence of overwhelming evidences put forward by Revenue. fact that in spite of earning such steep profits, assessee never ventured to involve himself in any other transaction with broker cannot be mere coincidence of lack of interest. Reliance is placed on judgment in case of Nipun Builders and Developers Pvt. Ltd. (supra), where it was held that it is duty of Tribunal to scratch surface and probe documentary evidence in depth, in light of conduct of assessee and other surrounding circumstances in order to see whether assessee is liable to provisions of section 68 or not. In case of NR Portfolio, it was held that genuineness and credibility are deeper and obtrusive. Similarly, bank statements provided by assessee to prove genuineness of transactions cannot be considered in view of judgment of Hon'ble court in case of Pratham Telecom India Pvt. Ltd., wherei....