TaxTMI 
TaxTMI 
2021 (6) TMI 491
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....action, by applying test of human probability, without any evidence against the assessee, which is quite unjust, illegal and against the facts of the case. 4. That the Ld. CIT(A) has erred in holding the decision of Hon'ble Delhi Bench of I.T.A.T. in case of Shikha Dhawan (Appeal No. ITAT No. 3035/Del/2018) wherein the similar transaction of Turbotech Engineering is considered as genuine, which is quite unjust, illegal and against the facts of the case. 5. That the Ld. CIT(A) has erred in wrong applying the decision of Hon'ble Supreme Court in case of the assessee wherein the facts of the case of the assessee is altogether different, which is quite unjust, illegal and against the facts of the case. 6. That the Ld. CIT(A) has erred in holding the script as "penny stock", whereas no such word has been defined under the Income Tax Act or under any law for the time being in force, which is quite unjust, illegal and against the facts of the case. 7. That the Ld. CIT(A) has erred in holding that the capital gain earned by the assessee, based on some inquiries but not on the assessee, is bogus and/or managed affairs, which is quite unjust, illegal and against the facts of ....
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....king accommodation entry and had earned excessive return within a short span of period which is extremely unusual. Ld. CIT(A) further held the transaction as "sham" as it cannot stand the test of human probability. 5. Now the assessee is in appeal before the Tribunal. Ld. counsel for the assessee filed written submissions dated 12th April 2021 running from pages 1 to 27 which also referred to various judgments and decisions. It was also submitted that the issue raised in the instant appeal is squarely covered by the decision of Coordinate Bench, Delhi in the case of Swati Luthra [2020] 115 taxmann.com 167 dated 28th June 2019(Trib-Delhi). Reliance was also placed on the ratio laid down by Hon'ble Delhi High Court in the case of Krishna Devi ITA No. 125/2020 & Ors. dated 15.01.2021(Delhi-HC). 6. The crux of the argument of the Ld. counsel for the assessee are that the additions made by the Ld. AO are vague and based merely on surmises and conjectures. No report or statement recorded under oath of the third party has been made available to the assessee which is gross violation of principles of natural justice. The term listed 'penny stock' has mentioned by the Ld. AO ha....
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....4. Vijay Ratan Mittal-ITA No. 3429 of 2019 dated 01.10.2019 (I.T.A.T., Mumbai) 15. Karuna Garg- [2019] 109 taxmann.com 403-dated 06.08.2019-(I.T.A.T., Delhi) 16. Vidhi Malhotra- [2019] 101 taxmann.com 361-dated 20.12.2018 (I.T.A.T., Delhi) 17. Saurabh Mittal-ITA No. 16 of 2018-dated 29.08.2018 (I.T.A.T., Jaipur) 18. Pramod Kumar Lodha- [2018] 100 taxmann.com 8 dated 16.07.2018 (I.T.A.T., Jaipur) 19. Rungta Properties-ITA No. 105 of 2016 dated 08.05.2017 (Calcutta HC) 20. M/s. Alpine Investments-ITA No. 620 of 2018-dated 26.08.2008 (Calcutta HC) 8. Per contra Ld. DR vehemently argued supporting the orders of both the lower authorities and by the decisions relied by Ld. Assessing Officer and ld. CIT(A) in the impugned order. 9. We have heard rival contentions and perused the records placed before us and carefully gone through the written submissions filed by the Ld. counsel for the assessee and the judgment referred and relied by both parties. Though the assessee has raised 9 grounds of appeal and one additional ground but all refers to a single issue about the genuineness of claim of Long Term Capital Gain as exempt income u/s. 10(38) of the Act arising from sale of 22....
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....on various brokers of stock exchange and companies. 14. Ld. AO discussed about the scheme hatched by various players to obtain/provide accommodation entry of bogus LTCG through manipulation of stock market. Ld. AO also referred to the particulars of profit and loss account of various years of 'TEL' to show that there is hardly any income in the year of sale of shares and it shows that the market capitalization is very small and no business has been done during last five years. Ld. AO also observed that the company did not have any earnings and has shown loss during the period and these documents clearly shows that company does not have the potential nor fundamental to fetch such huge price. 15. We also note that Ld. AO has not referred to any specific report of the investigation wing in which the name of assessee is appearing or any connection of the assessee with the broker/promoters of the company is established. No such report was made available to the assessee in order to provide opportunity to cross examine. The only common thing is the name of company 'TEL'. 16. We find that the above stated facts are verbatim similar to the facts dealt by Coordinate Bench ....
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....any adequate opportunity to the assessee to defend her case. Since the statements were not confronted to the assessee, she was deprived of her right to cross examine the witnesses. Also whatever they have stated in their statement is no gospel truth and cannot be applied blindly to all the persons who have brought the scrips in the entire country. Thus, under these circumstances, atleast some inquiry should have done from these persons, whether they have provided any entry to the assessee, if the request for cross examination was not possible at that stage. Cross examination of a person in whose basis any adverse inference is drawn, then it cannot be primary evidence or material to nail the assessee and simply based on the statement no addition can be made. This has been held so by various courts, and also by Hon'ble Apex Court in the case of M/s. Andaman Timber Industries vs. CCE (SC) reported in 127 DTR 241 has held as follows: "According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it....
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....n, 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." 14. That the ld DR during the course of hearing 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 are extracted as 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., and pointed out that the tax authority....
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.... Moreover, the said order seems to be passed in year 2015, whereas the appellant had purchased the shares in year 2011 and 2013 and sold them in year 2014. It was evident from this document only that no action has been taken by the SEBI against the company during the period when the appellant holds the shares. Thus, even otherwise, we find that the order of SEBI so relied by ld. AO and CIT (A) is not applicable for the transactions under consideration. In any case as stated above, the SEBI in its subsequent decision has absolved most of the companies including the companies whose scrips are under suspicion, as they were nor found to be rigging the price. This fact alone vitiates the case of revenue. 17. We also find that the Ld. AO has raised objection regarding the cash purchase of shares and that shares were dematerialized few days back only from the date of sale. There is no law which prohibits the purchase of shares in cash, however in the present case, assessee had filed copies of bills of purchase, copy of share certificates and transfer forms etc. before Ld. AO and no adverse inference could be drawn only because the shares were purchased in cash. Regarding Demat of shar....
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....e four assessees, namely, Smt. Swati Luthra, Smt. Shruti Luthra, Smt. Namata Sehgal Luthra and Smt. Asha Luthra bearing ITA No. 6480 to 6483/Del/2017 are allowed. 17. We further find that ratio laid down by Hon'ble High Court of Delhi in the case of Pr. CIT vs. Smt. Krishna Devi (Supra) is also favourable to the assessee. As in the case of assessee also there was no evidence produced by the Ld. AO to show that there was an agreement between assessee and any other party which are alleged to be involved in providing accommodation entry. The relevant finding of Hon'ble Court dismissing the revenue's appeal is reproduced below: 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s. Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not....
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....ompanies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of....