TaxTMI 
TaxTMI 
2020 (3) TMI 545
X X X X Extracts X X X X
X X X X Extracts X X X X
....also i.e., income from house property of Rs. 2,67,889/-, income from other sources of Rs. 85,796/-. There is no income from business and profession and income from capital gains. The assessee in the reply before the A.O. claimed long term capital gains on sale of shares of M/s Esteem Bio Organic Food Processing Ltd. ("EBFL"). The sale value of 15,600/- shares is of Rs. 73,58,953/-. The purchase value was Rs. 1,56,000/-. Thus, net sale value was Rs. 72,02,953/-. However, this long term capital gains was not shown in the return of income claimed as exempt. The A.O, thereafter, noted the brief details of modus operandi of tax evasion through bogus LTCG and referred the report of Director of Investigation, Kolkata to show that these are cases of penny stock companies. There are two types of companies i.e., (1) An old already listed company, the entire shareholding of which is bought by the syndicate to provide LTCG entries. These are generally dormant company with no business and with accumulated losses and (2) A new company which is floated just for the purpose giving LTCG entries. The A.O. further noted as to how the parties have been operating through the entry provider and riggin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T") have been paid by assessee. Therefore, assessee entered into genuine transaction and long term capital gains is genuine and non-taxable. The assessee also given details of the comparative investment in shares by assessee to show that there is no unrealistic return through investment. The assessee relied upon several decisions in support of the contention that assessee entered into the genuine transaction. 2.2. The A.O. however did not accept the contention of assessee and noted that assessee has failed to prove that he has entered into genuine transaction and in the light of investigation carried-out by SEBI through interim order the capital gain of Rs. 73,58,953/- on sale of shares of M/s EBFL was treated as bogus and same was added under section 68 of the I.T. Act, 1961. The A.O. further made addition of Rs. 2,20,768/- on account of commission paid for sale of shares. 3. The assessee challenged both the additions before the Ld. CIT(A). The submissions of the assessee are reproduced in the appellate order in which the assessee reiterated the submissions made before the A.O. and filed details of purchase and sale of M/s EBFL shares to show that he has entered into genuine tra....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... etc., Dated 06.08.2019. iv) Swati Luthra, New Delhi vs., ITO, Ward-51(5), New Delhi & Others ITA.No.6480/Del./2017 etc., Dated 28.06.2019. 4.2. He has submitted that neither assessment order nor the Order of the Ld. CIT(A) reflecting the name of the person whose statement have been relied upon against the assessee and as such even till date it is not known as to who was the entry operator stating that assessee has undertaken the alleged accommodation entry. The assessee submitted before A.O. during the course of assessment proceedings that cross-examination of such persons may be allowed whose statements have been relied upon by the A.O. However, same have not been granted to the assessee. The denial of right of cross-examination is a flaw which renders the assessment order a nullity. The Counsel for Assessee relied upon Judgment of Hon'ble Supreme Court in the case of Kishanchand Chellaram 125 ITR 713 (SC) and Andaman Timber Industries vs., CCE 314 ELT 641. Learned Counsel for the Assessee submitted that in case of Amar Nath Goenka vs., ACIT (supra), the Tribunal considered an identical issue in support of the same company M/s EBFL. In that case also interim order of the SEB....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss of the transaction. The assessee purchased shares through banking channel and actually got the shares transferred in his name. Purchase was made through cheque which is supported by bank statement. The transactions of sale have been made through Demat account. The contract note along with other details were produced to show that purchase and sale of the shares have been made through banking channel through recognized Stock Exchange through Demat account on which Security Transaction Tax have also been paid. The A.O. did not make any enquiry on the documentary evidences filed by the assessee. No material have been brought on record against the assessee to disprove the claim of assessee. It is not the case of the Revenue that amount received on sale of shares is more than what is declared by the assessee. The assessee pleaded that the Interim Order of the SEBI have been diluted by passing final order in which no adverse view have been taken against the aforesaid company. Thus, the assessee's claim of purchase and sale of shares have been supported by documentary evidences. The statement of Shri Sanjay Vohra was recorded by the Investigation Wing, Kolkata, but, the same was not....