TaxTMI 
TaxTMI 
2021 (3) TMI 688
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....Assessing Officer for re-examination, especially when the assessing officer had considered all the material placed while passing the assessment order? 2. 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 promoters and role of inflating of prices etc which exercise had already been done by the AO and the SEBI? 3. Is not 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?" 3. We have heard Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the appellant-R....
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....essing Officer to reconsider the issue regarding the claim made by the assessee under Section 10(38) of the Act. On a reading of the order passed by the Tribunal, we find that the Tribunal did not interfere with the factual findings recorded by the Assessing Officer and the CIT(A) with regard to the transaction done by the assessee. Thus, unless and until the Tribunal found an error in the approach of the Assessing Officer or the CIT(A) and only after interfering with such a finding, the Tribunal could have exercised its power of remand. Even in such circumstances, the Tribunal was required to record reasons as to why the matter should be remanded and as to why the Tribunal could not decide the factual issue on the available material. 16. We find from the order passed by the CIT(A) that the assessee raised a vague contention that a thirty party statement was relied upon by the Assessing Officer without affording an opportunity to the assessee to confront the same and the decision was taken against the assessee. Unfortunately, the Tribunal did not examine as to whether such a contention raised before the CIT(A) was rightly decided or not. Further, from the grounds raised by....
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....having no experience in share trading. The Security Exchange Bureau of India (SEBI) had blacklisted nearly 14 brokers for their alleged involvement in manipulating the market prices and rigging the markets for jacking up the share prices. The Income Tax Department Investigation Wing which had conducted detailed investigation had unearthed shell companies which specialized in manipulating the market prices of the shares of certain listed company on the stock exchange by a group of persons working as a syndicate for the purpose of providing entries of tax exempt, bogus long term capital gains to large number of beneficiaries in lieu of unaccounted cash converting black money into white without payment of tax. The profit made from the sale of scrip was multiple time the cost of the shares and sale price was not supported by the financial status of the company. The companies had shown very meager profits and were mostly loss making companies with negative earning per shares. These unknown companies never declared dividends and the Director's report did not show any projects or major events done in the operation of the company that would attract investors to trade in t....
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....and sale of shares. The assessee had not discharged the onus cast upon him to prove the genuineness of the transactions. The assessee had entered into engineered transaction to generate artificial long term capital gains and the Explanation offered by the assessee regarding the credit of Rs. 15,86,250/- in its book was found to be unsatisfactory and therefore, the Assessing Officer held the same as unexplained cash credit which was added to the total income of the assessee as per the provisions of Section 68 of the Act and assessed under the head Income from other sources." 18. The above facts have been culled out by the Assessing Officer as well as the CIT(A). If such is the case, it is not known as to whether there was any justification on the part of the Tribunal to interfere with the order and that too, by remanding the matter for a fresh consideration. 19. In the decision in the case of Sumati Dayal Vs. CIT [reported in (1995) 214 ITR 0801], the Hon'ble Supreme Court, while considering the aspect regarding burden of proof relating to cash credits, pointed out as follows: "4. It is no doubt true that in all cases in which a receipt is sought to be....
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....m capital gain. 22. In the decision in the case of Suman Poddar Vs. ITO [reported in (2019) 112 Taxmann.com 329], the Delhi High Court upheld the order of the Tribunal, which held that the share transactions were bogus because the company, whose shares were allegedly purchased, was a penny stock. This decision was affirmed by the Hon'ble Supreme Court in the decision reported in (2019) 112 Taxmann.com 330. 23. In the decision of the Hon'ble Supreme Court in the case of PCIT, Central Vs. NRA Iron & Steel Private Limited [reported in (2019) 412 ITR 0161], the issue, which fell for consideration was as to whether in a case where share capital/premium was credited in the books of accounts of the assessee company, the onus of proof was on the assessee to establish by cogent and reliable evidence after identity of the investor companies, the credit worthiness of the investors and genuineness of transactions to the satisfaction of the Assessing Officer. While answering the issue, the Hon'ble Supreme Court, after referring to its decisions in the case of Sumati Dayal and CIT Vs. P.Mohankala [reported in (2007) 291 ITR 0278], held as follows: "8.2. As ....
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....ightly held to be the assessee's own undisclosed income. 8.4. Reliance was also placed on the decision of CIT v. Kamdhenu Steel & Alloys Limited and Others [(2012) 206 Taxman 254 (Delhi)] wherein the Court that : "38. Even in that instant case, it is projected by the Revenue that the Directorate of Income Tax (Investigation) had purportedly found such a racket of floating bogus companies with sole purpose of lending entries. But, it is unfortunate that all this exercise if going in vain as few more steps which should have been taken by the Revenue in order to find out causal connection between the case deposited in the bank accounts of the applicant banks and the assessee were not taken. It is necessary to link the assessee with the source when that link is missing, it is difficult to fasten the assessee with such a liability. ....... 10. On the issue of unexplained credit entries/share capital, we have examined the following judgments : i. In Sumati Dayal v. CIT [(1995) 214 ITR 801 (SC), this Court held that : "if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Off....
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....03) 264 ITR 254 (Gau.)] held that merely because a transaction takes place by cheque is not sufficient to discharge the burden. The assessee has to prove the identity of the creditors and genuineness of the transaction: "It cannot be said that a transaction, which takes place by way of cheque, is invariably sacrosanct. Once the assessee has proved the identity of his creditors, the genuineness of the transactions which he had with his creditors, and the creditworthiness of his creditors vis-a-vis the transactions which he had with the creditors, his burden stands discharged and the burden then shifts to the revenue to show that though covered by cheques, the amounts in question, actually belonged to, or was owned by the assessee himself." (emphasis supplied) vi. In a recent judgment the Delhi High Court in CIT Vs. N.R.Portfolio (P) Ltd. [(2014) 42 Taxmann.com 339/222 Taxman 157 (Mag.) (Delhi) 21] held that the creditworthiness or genuineness of a transaction regarding share application money depends on whether the two parties are related or known to each other, or mode by which parties approached each other, whether the transaction is entered into through written ....
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....uthorities 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 nonexistent, and the onus to establish the identity of the investor companies, was not discharged by the assessee. 14. The practice of conversion of unaccounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be placed on the assessee since the information is within the personal knowledge of the assessee. The assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the assessee." 24. Bearing the principles laid down in the decision of the Hon'ble Supreme Court in the case of NRA Iron & Steel Private Ltd., in mind, if we examine the order passed by the Assessing Officer, we find that a detailed enquiry had been conducted by the Assessing Officer after affording an opportunity to the assessee. The assessee availed the opportunity th....
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....mited. 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 'RTGSNWFIX- FIT SECURITIES'. Considering the above fact, it is concluded as under : 2.4. The purchase of 450 shares of M/s.Dhanlabh Merchandise Limited is itself a sham transaction for the following reasons: 1. Based on the details filed by the AR of the assessee and the address was provided the assessee the communication sent by this office to M/s.Excellent Batters Private Limited. 2. The postal remarks is 'not known' only. The postal authorities did not mention that the person left or something else. The word 'not known' means that the address itself bogus or incorrect one. 3. Accordingly, it is established that there is no such person in that address having name M/s.Excellent Batters Private Limited. 4. It is onus on the part of the assessee to prove the genuineness of the transaction. 5. It is also noticed that the documentary evidence filed by the assessee towards payment made for purchase of shares also not related to this transaction. 6. In the abse....
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.... 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 assessee in accordance with the provisions of Section 68 of the IT Act, 1961 and assessed under the head 'income from other sources' Penalty proceedings under Section 271(1)(c) read with Explanation 1 thereto are separately initiated for furnishing the inaccurate particulars of income with respect to the claim of capital gain made in the light of the findings made in the preceding paragraphs. ...... 7.3.......However, in the present appeal, the appellant purchased the shares of M/s.Bakra Pratisthan Limited in off market. During the course of the hearing on 24.7.2018, the AR admitted that the assessee purchased the shares of M/s.Dhanlab Merchandise Limited in off market. ..... 7.4. These shares were purchased through off market an....