TaxTMI 
TaxTMI 
2021 (6) TMI 926
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....prays that the said addition and adjustment be deleted and returned Income be accepted. 2.On the facts and circumstances of the case and in law the learned CIT(A) erred in confirming the action of Assessing Officer in disallowing the claim of long term capital gains on sale of listed shares amounting to Rs. 1654277. The Appellant prays that the said disallowance be directed to be deleted. 3.On the facts and circumstances of the case and in law the CIT(A) erred in not providing or confronting the alleged information, third party material and statements, if any, which have been relied for drawing adverse inference in disallowing the claim of exemption under Section 10(38) of the Act. The Appellant prays that the said disallowance made in contravention to principles of natural justice be directed to be deleted. 4.On the facts and circumstances of the case and in law the learned CIT(A) erred in not appreciating that the shares have been sold on recognized stock exchange and the same cannot be doubted and accordingly the sale proceeds cannot be treated as unexplained. Accordingly the Appellant prays that the said treatment by AO be directed to be quashed and the application of Sec....
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....and brevity. As agreed by all the parties we will take up the facts of assessee namely Neelam Mittal to adjudicate the common issues. 5. Brief facts of the case as culled out from the records are that the assessee is an individual. She filed e-return of income on 29.10.2015 showing income at Rs. 3,22,610/-. Case selected under complete scrutiny through CASS followed by serving of notices u/s 143(2) and 142(1) of the Act. While examining records it was revealed that during the year assessee had earned LTCG at Rs. 16,54,277/- from sale of 3000 equity shares of Kappac Pharma Limited (in short KPL) purchased for Rs. 6,000/-. The assessee claimed it to be exempt income u/s 10(38) of the Act but the same was not disclosed in the income tax return. Ld. AO called for various details pertaining to this transaction. The assessee filed various documents in support of purchase and sale of shares. Purchase was offline in cash made from a Private Limited Company and sale was through a registered broker on the recognized stock exchange. Ld. AO called for information from the seller of the shares located at Ahmedabad. The notice was returned un-served. Ld. AO doubted the purchase which was made ....
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.... dated 07.04.2021 running from pages 1 to 17. Reliance was placed on following decisions: 1. Arun Kumar v. ACIT (ITANo.457/Del/2018) 2. Usha Singhania v. ITO (ITANo.1495/Kol/2018 3. Shyam Sundar Agarwal v. ITO (ITANo.1714/Kol/2018 4. Suresh Kumar Chug v. ITO (ITA No.2789/Del/2018 5. Sidhartha Jain vs. ITO (ITANo.4459/Del/2017 6. Himanshu Chaudhary v. ITO (ITANo.7772/Del/2017 7. Radhika Garg v. ITO (ITANo.2429/Del/2018 8. Yogendra Dalmia ITANo.774/KOL/2018 dated 09.08.2019 (I.T.A.T., Kolkata) 9. Krishna Devi ITANo.125 of 2020 dated 15.01.2021(High Court of Delhi) 9. Per contra ld. Departmental Representative vehemently argued supporting the orders of both lower authorities. Reliance was placed on various decisions referred by Ld. CIT(A) and in addition reliance was also placed on the following judgments: 1. Udit Kalra vs. ITO ward-50(1) ITANo.220/2019 dated 08.03.2019(Delhi HC) 2. Udit Kalra, vs. ITO ITANo.6717/Del/2017 dated 08.01.2019 3. Suman Poddar vs. ITO [2019} 112 taxmann.com 330 (SC) 10. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred and relied by both sides. The common iss....
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.... that the shares are sold through registered brokers on the stock exchange. The details of buyers of the shares are not visible as all such transaction of purchase and sale on the recognized stock exchange are carried out through registered brokers and work under a software controlled by SEBI. So the genuineness of documents evidencing sale consideration from sale of shares has not been doubted by revenue authorities. 12. It is also brought to our notice that the trading of equity shares of KPL was suspended from 1st January 2015 but the transaction of sale of shares in the case of assessee was carried out almost 9 months before i.e. in April & May 2014 when there was no such restriction on trading of equity shares of KPL on the portal of stock exchange. The purchase and sale of equity shares of KPL were allowed for all those who wanted to deal in this scrip. 13. We further note that Ld. AO has referred to investigation report pertaining to some persons who are alleged to be indulged in providing accommodation entry to various persons in the form of bogus capital gain against charging of some brokerage/commission. No such report has been filed before us. Ld. AO has also not all....
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....relevant extract is reproduced below: Para 6 - "Next comes assessee's latter appeal ITA No.775/Kol/2018 seeking to reverse both the lower authorities action treating his sale proceeds amounting to Rs. 1,81,009/- derived from sale of shares in M/s GCM Securities Pvt. Ltd and Kappac Pharma Ltd. has to be in the nature of unexplained cash credits. Both the lower authorities have further disallowed the alleged commission expenditure @ 5% thereupon with coming to Rs. 1,81,009/- u/s. 69C of the Act. The CIT(A)'s detailed discussion under challenge to this effect reads as under:-..........." Para 7 - "We have given our thoughtful consideration to rival contentions. There can hardly be any dispute that assessee has placed on record his supportive documentary evidence comprising of relevant purchase bills of shares allotment, certified copies, contract notes, brokerage details etc. We put up a specific query as to whether any of entry operators searched or survey has quoted these assessees names or not before the departmental authorities. There is no such material in the case file indicating such as statement. I find that this co-ordinate bench's decision in ITA No. 1918/Kol/2018 in S....
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....Udit Kalra (supra) is a decision given by a single member on 08.01.2019 and the same will not be applicable, since the Coordinate Bench Kolkata being a double bench has decided the very same issue in favour of assessee vide order dated 09.08.2019. 18. As regards the judgment of Hon'ble Delhi High Court in the case of Suman Poddar vs. ITO [2019] 112 taxmann.com 329 (Delhi), the Special Leave Petition filed against the order of Hon'ble High Court was dismissed by Hon'ble Supreme Court but in this case the issue related to sale of equity shares of Cressanda Solutions Ltd. where as in the case of assessee company is KPL. The facts are also different as in the case of assessee in the instant appeal, there was no restriction by the SEBI on the trading of Shares of KPL on the Bombay Stock Exchange on the dates when sale transaction took place. It was almost after 9 months that the trading was suspended. There are also no documentary evidence to prove that the assessee was indulged in managing the affair of providing accommodation entry. Judgment of Hon'ble Delhi High Court in the case of Suman Poddar (supra) was subsequently considered by the Hon'ble Delhi High Court....
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....y further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that "There is no dispute that the shares of the two companies 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....