TaxTMI 
TaxTMI 
2020 (12) TMI 740
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....es of the case, the Tribunal was right in setting aside the well reasoned order passed by the Assessing officer for reexamination, especially when the assessing Officer had duly examined the matter while passing the assessment order? ii. Whether on the facts and in the circumstances of the case, the Tribunal was right in remitting the issue back to the file of the Assessing Officer by quoting the decision in the case of Kanhaiyal and Sons (HUF) in ITA No.1849/Chny/2014 Sunil Kumar Lalwani and that Aashesh Kumar Lalwani wherein the onus has been shifted to the revenue with a direction that the Assessing Officer is to bring on record the role of the assessee in promoting the company and the relation of the assessee if any with that of the promotors and role of inflating of prices etc which exercise had already been done by the AO and the SEBI? iii. Is not the finding of the Tribunal perverse especially when the decision of the Tribunal is contrary to the time tested principal that the person who asserts a fact has to discharge the initial burden cast upon him to show that the said facts are true and only thereafter the burden would shift to the department?" 4. The assessee, who ....
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....the bank accounts highlighting the transactions made towards purchase of shares, found that the closing balance as on 02.3.2010 was Rs. 5,607/- and that on 03.3.2010, there was a credit entry of Rs. 90,000/- and a debit entry of Rs. 90,000/-. The bank was called upon to explain the nature of transaction and the bank informed that it was a manual cheque, which was passed for clearing on the same day by a Calcutta company. This was found to be wholly impossible by the Assessing Officer. Hence, a communication dated 28.9.2017 was sent to M/s.Excellant Barter Private Limited calling for details under Section 133(6) of the Income Tax Act. However, the said communication returned with the postal acknowledgment 'not known'. The authorized representative of the assessee could not furnish any documentary evidence with respect to the sale of shares and he only furnished the copy of the bank account wherein on 03.1.2012, the amount of Rs. 9,50,714/- was credited into the bank, which was described as 'RTGS-IN-WFIX-FIT' securities. 9. Thus, the Assessing Officer concluded that the purchase of 450 shares was a sham transaction and that the assessee could not discharge the onus c....
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....f remand can be exercised. For this proposition, it would be beneficial to refer to the decision of this Court in the case of Cholamandalam MS General Insurance Co. Vs. Royal Sundaram Alliance General Insurance Co. Ltd. [reported in (2013) 357 ITR 597] wherein the Division Bench held as follows : "17. In the background of the jurisdiction of the Tribunal as a fact finding authority, we feel that the Tribunal should have acted with greater circumspection to order a remand particularly when the Revenue itself does not dispute that the materials were all those that were considered by the Assessing Officer. Remand is not a power to be exercised in a routine manner and should be used sparingly as an exception only when the facts warranted such course of action. We feel that the Tribunal should have arrived at its own conclusion on facts after due consideration of the materials before it which were no different from which was placed before the authorities below. Hence, we have no hesitation in setting aside the order passed by the Tribunal in remanding the matter back to the Income Tax Appellate Tribunal on the admitted fact that no fresh materials were placed before the Tribunal n....
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....see were converted into 4500 shares. All the purchases were made through off market ie. after closing of share markets and the assessee had never heard of the name of the scrip before. The amount of investments was very meager in some cases and huge profits were made by the assessee on the sale of unknown company shares. The name of the person and his details were not known to the assessee and the assessee was not able to produce the person before the Assessing Officer from whom the said shares were said to have been purchased. The letters sent to the address of the seller were all returned unserved and details of the Company were also not known to the assessee. The share certificate issued to the seller from whom the assessee had purchased and the certificates issued to the seller would be a month or so before the alleged sales to the assessee. The evidence was typed date of transfer on the back side of the share certificates and the bill for purchasing this scrip was shown as a proof and the date of bill would be the prior to the date of share certificate itself allotting the shares to the seller. In many cases, implying that the shares were sold to the assessee, even before the ....
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....unt over a period of time. Once a period of one year was over (for claiming exemption) under long term capital gains under Section 10(38) the Operator asked the beneficiary to deliver the unaccounted cash. Once the unaccounted cash was delivered by the beneficiary, then the same was routed by the operator to the books of various papers/bogus companies which ultimately bought the shares belonging to the beneficiary at a very high price and these paper companies avoided direct cash trail. Thereafter the operator used to instruct the beneficiary to sell the shares with a particular lot on a particular day and time. In the present assessee's case, the assessee has originally purchased 450 shares of face value of Rs. 10/- each at Rs. 200/- per share amounting to Rs. 90,000/- of Dhanlabh Mercantile Ltd, Offline on 15.1.2010 from M/s.Excellent Barter Ltd, Calcutta. The said company was subsequently merged with M/s.Bakra Prathisthan Ltd and 4500 shares of M/s.Bakra Prathisthan Ltd., were allotted to assessee at Rs. 10/- per share. The assessee sold 4500 shares of M/s.Baktra Prathisthan Limited on 03.01.2012 for Rs. 15,83,623/-, which had acquired for Rs. 90,000/-. The assessee had not ....
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....ase of Sumati Dayal was followed in the decision of the High Court of Delhi in the case of Sanjay Kaul Vs. PCIT [reported in (2020) 119 Taxmann.com 470] wherein it was held that where the assessee was not a regular investor in shares and had only invested in high risk stocks of obscure companies with no business activity or asset, which were identified as penny stocks, the Assessing Officer had correctly concluded that the assessee had entered into a pre-arranged sham transaction so as to convert unaccounted money into accounted money in guise of capital loss and therefore, the alleged short term capital loss was rightly disallowed. 21. A similar view was taken in the decision of the High Court of Bombay in the case of Sanjay Bimalchand Jain Vs. PCIT-1, Nagpur [reported in (2018) 89 Taxmann.com 196]. In that case, the assessee purchased shares of two penny stock companies for a lower amount and within a year, sold such shares at a higher amount. The assessee had not tendered cogent evidence to explain as to why shares in an unknown company had jumped to such a higher amount in no time and also failed to provide details of persons, who purchased the said shares and the transaction....
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....further burden on the Revenue to show that the income is from any particular source. 8.3. With respect to the issue of genuineness of transaction, it is for the assessee to prove by cogent and credible evidence that the investments made in share capital are genuine borrowings, since the facts are exclusively within the assessee's knowledge. The Delhi High Court in CIT v. Oasis Hospitalities Pvt. Ltd. [333 ITR 119 (Delhi) (2011)], held that : "The initial onus is upon the assessee to establish three things necessary to obviate the mischief of Section 68. Those are: (i) identity of the investors; (ii) their creditworthiness/ investments; and (iii) genuineness of the transaction. Only when these three ingredients are established prima facie, the department is required to undertake further exercise." It has been held that merely proving the identity of the investors does not discharge the onus of the assessee, if the capacity or creditworthiness has not been established. In Shankar Ghosh v. ITO [(1985) 23 TTJ (Cal.) 20], the assessee failed to prove the financial capacity of the person from whom he had allegedly taken the loan. The loan amount was rightly held to be the asses....
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....planation is not acceptable, the material and attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature." (emphasis supplied) iii. The Delhi High Court in a recent judgment delivered in PR.CIT -6, New Delhi v. NDR Promoters Pvt. Ltd. (410 ITR 379) upheld the additions made by the Assessing Officer on account of introducing bogus share capital into the assessee company on the facts of the case. iv. The Courts have held that in the case of cash credit entries, it is necessary for the assessee to prove not only the identity of the creditors, but also the capacity of the creditors to advance money and establish the genuineness of the transactions. The initial onus of proof lies on the assessee. This Court in Roshan Di Hatti v. CIT [(1992) 2 SCC 378], held that if the assessee fails to discharge the onus by producing cogent evidence and explanation, the AO would be justified in making the additions back into the income of the assessee. v. The Guwahati High Court in Nemi Chand Kothari v. CIT [(2003) 264 ITR 254 (Gau.)] held that merely because a transaction takes place by cheque is not sufficient to ....
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....f the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. ...... 13. The lower appellate authorities appear to have ignored the detailed findings of the AO from the field enquiry and investigations carried out by his office. The authorities below have erroneously held that merely because the Respondent Company - assessee had filed all the primary evidence, the onus on the assessee stood discharged. The lower appellate authorities failed to appreciate that the investor companies which had filed income tax returns with a meagre or nil income had to explain how they had invested such huge sums of money in the assessee Company - Respondent. Clearly the onus to establish the credit worthiness of the investor companies was not discharged. The entire transaction seemed bogus, and lacked credibility. The Court/Authorities below did not even advert to the field enquiry conducted by the AO which revealed that in several cases the investor companies were found to be non-existent, and the onus to e....
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....alance as on 02.3.2010 was Rs. 5,607/-. On 03.3.2010, there was a credit entry of Rs. 90,000/- and a debit entry with narration 'manual chg' Rs. 90,000/-. As per the narration of the bankers, it is manual cheque only and the same was passed in clearing on the same day by Calcutta base company. It is not at all possible. .... 2.3. As it was held by the assessee the shares of M/s.Dhanlabh Merchandise Limited was purchased from M/s.Excellent Barter Pvt. Ltd. Of Shaym Nagar WB 743127, a communication dated 28.9.2017 was sent to M/s.Excellent Batter Private Limited calling for the following details under Section 133(6) of the I.T. Act 1961. By the examination of the details and the same was returned unserved by the postal authorities with remarks 'not known'. ...... Besides the above, the AR of the assessee has not furnished any documentary evidences with respect to the sale of shares of M/s.Bakra Pratisthan Limited. Instead, he furnished the bank account copy wherein on 03.1.2012, an amount of Rs. 9,50,714/- was credited in the bank with description 'RTGS-INWFIX- FIT SECURITIES'. Considering the above fact, it is concluded as under : 2.4. The purchase ....
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.... Abhishek Jain AEUPJ3242F 15,93,300 03 Abhishek M Jain HUF AAJHA1645J 15,86,250 04 Amit Kumar AEEPA9942F 15,86,250 05 Amit Kumar I Jain HUF AAJHA1641N 15,86,250 06 Hitesh M Jain HUF AADHH3539N 10,57,500 07 Mamta M Jain AFJPM4958B 9,52,290 08 Manish D Jain HUF (assessee) AAJHM6100N 15,86,250 09 Nitin I Jain AEPPN8578R 15,86,250 10 Nitu Amit Jain AEZPJ1421K 22,21,695 11 Rajesh D Jain AEOPR8702G 15,93,300 12 Shilpa M Jain AGZPJ9692C 15,93,300 Total 1,94,89,490 From the above table, it is established that the entire family involved in this operation to convert their black money into white. It is a sham transaction only. .... 9. Considering the above factual position as also the legal position, it is held that the assessee has entered into an engineered transaction to generate artificial long term capital gains. As the explanation furnished by the assessee regarding the credits of Rs. 15,86,250/- in its books is found to be unsatisfactory, the same are hereby held as 'unexplained cash credits' in the books of the assessee and accordingly added to the total income of the ....