TaxTMI 
TaxTMI 
2021 (6) TMI 966
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....which is quite unjust, illegal and against the facts of the case. 3. That the Ld. CIT(A) has erred in considering the script from which the assessee has earned Long Term Capital Gain as "Penny Stock" a term nowhere define under the Income Tax Act as any other law for the time being in force, which is quite unjust, illegal and against the facts of the case. 4. That the Ld. CIT(A) has erred in confirming the disallowance of claim of assessee of exempted LTCG based on information/statement gathered by investigation wing of the department, without any opportunity to cross examine such persons and without providing such documents for assessee's comments, which is quite unjust, illegal and against the facts of the case. 5. That the Ld. CIT(A) has erred in confirming the disallowing of claim of exempted income based on wrong analysis of the financial and prices of the shares, which is quite unjust, illegal and against the facts of the case. 6. That the Ld. CIT(A) has erred in mentioning the fact that Learned AO has tried to conduct inquires during assessment proceedings, in confirming disallowance, whereas no such inquiries have been carried out, which ....
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....gments quoted by the assessee, which is quite unjust, illegal and against the facts of the case. 9. Appellant craves to leave, add, amend, alter or modify of any ground before final date of hearing." 4. Assessee has raised following grounds of appeal in ITANo.466/Ind/2019 "1. That the order passed by Ld. CIT(A) is bad in law and on facts. 2. That the Ld. CIT(A) has erred in confirming the addition of Rs. 20,46,018/- under section 68, which is quite unjust, illegal and against the facts of the case. 3. That the Ld. CIT(A) has erred in considering the script from which the assessee has earned Long Term Capital Gain as "Penny Stock" a term nowhere define under the Income Tax Act as any other law for the time being in force, which is quite unjust, illegal and against the facts of the case. 4. That the Ld. CIT(A) has erred in confirming the disallowance of claim of assessee of exempted LTCG based on information/statement gathered by investigation wing of the department, without any opportunity to cross examine such persons and without providing such documents for assessee's comments, which is quite unjust, illegal and against the facts of ....
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.... 20,46,018/- and claim of LTCG. 6. From perusal of the above, we find that common facts relates to genuineness of transactions of sale of equity shares of Kappac Pharma Limited. 7. As the issue raised is common and almost identical facts, all the above captioned appeals were heard together at the request of all the parties and are thus being disposed of by this common order for the sake of convenience and brevity. As agreed by all the parties we will take up facts of the assessee namely Prakash Javia, HUF for adjudicating this common issue. 8. Brief facts of the case as culled out from the records are that the assessee is a Hindu Undivided Family(HUF). Return of income filed on 12.09.2014 declaring total income of Rs. 5,15,270/- and also claiming exempt income u/s 10(38) of the Act from Long Term Capital Gain from sale of listed securities at Rs. 21,11,075/-. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act to the assessee. Written submissions were filed. Books of accounts and other documents produced were examined on test check basis. As regards transactions of purchase and sale of equity shares of Kappac Pharma Limited....
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....ted that no material was found by the ld. AO which could establish that the assessee had converted unaccounted money into accounted money by managing bogus LTCG. Reliance placed on judgment of Hon'ble Delhi High Court in the case of Krishna Devi ITANo.125 of 2020 dated 15.01.2021 & Judgment of Hon'ble Bombay High Court in the case of Uttamchand Jain [2009] 182 taxman 243 dated 02.07.2009. 14. Further reliance placed on the following decisions wherein the LTCG from sale of shares of Kappac Pharma Limited are held to be genuine: i. Aditya Mundra ITANo.632/Ind/2019 dated 13.01.2021 (I.T.A.T., Indore) ii. Sunil Agrawal HUF ITANo. 434/Kol/2020 dated 03.12.2020 (I.T.A.T., Kolkata) iii. Yogendra Dalmia ITANo.774/KOL/2018 dated 09.08.2019 (I.T.A.T., Kolkata) 15. It is also submitted that the Kappac Pharma Limited is neither included in the list of Shell Companies nor has been struck off from the Registrar of companies. Reliance placed on decision of I.T.A.T., Mumbai in the case of Shakti Hardware Collections Private Ltd. in ITANo. 6301/Mum/2014 dated 31.01.2018. 16. Referring to the ratio that no addition can be made when all documents to substan....
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....AT account of the assessee. Genuineness is proved as the shares were purchased during F.Y. 2012-13 through a Private Limited Co. on offline basis and creditworthiness is proved with a fact that shares are sold on the recognized stock exchange through a registered stock broker and the identity of the purchaser of the shares is not revealed on the portal. 19. Thus, considering above facts and circumstances of the case submissions made, documents on record and judicial precedents Ld. counsel for the assessee prayed that addition made by the Ld. AO for the amount of gross sale consideration/net sale consideration/LTCG as income of the assessee deserves to be deleted and benefit u/s 10(38) of the Act for LTCG to be allowed. 20. Per contra, Ld. Departmental Representative (DR) vehemently argued supporting the finding of both the lower authorities and decisions/ judgments referred and relied by the Ld. CIT(A) and further submits that there was an abnormal increase in share prices within a short span of two year which was not commensurate with the financial growth of the company and therefore Ld. CIT(A) has rightly held that the alleged transactions are sham and bogus. 21. We have....
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....other hand all the relevant documents to prove the purchase and sale were before the Ld. A.O. Purchases were at the fair market value at Rs. 12/-. Sales have been effected through registered broker after payment of security transaction tax and sold at the prices appearing at the recognized stock exchange. Merely observing that the prices of the equity shares have been increased drastically cannot be a evidence in itself to treat the transactions as bogus. There are number of incidences where the share prices of certain listed companies increased drastically but that all depends on demand and supply of the equity share, perception of its growth and the market sentiments. Unless and until the company of which the equity shares are being traded is found to be involved in malpractices the financial results are not commensurate with the prices at the NSE/BSE portal and sufficient proofs are available showing the alleged company to be a bogus/penny stock or paper company, one cannot question the genuineness of transactions carried out on the portal of NSE/BSE which are under the control of Securities and Exchange Board of India." [emphasis supplied] 25. The above finding of t....
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.... not part of a business stock and have been held for more than 12 months so will comes under the category of Long Term Capital Asset. The equity shares are sold through recognized stock exchange (Bombay Stock Exchange) and security transactions tax have been paid on this transaction. 29. Now coming to the part of purchase and sale: Purchase is off line and made in cash. Ld. AO has raised doubt on the purchases being made in cash but there is no bar under the law to make purchase in cash. In all these cases equity shares were purchase from Shah & Sons Propon Private Limited. PAN No. of the seller was provided before both the lower authorities. The seller namely Shah & Sons Propon Private Limited purchased equity shares in November 2010 and was originally allotted the shares by Kappac Pharma Ltd. which is a company registered at Mumbai. Genuineness of the documents namely share certificate placed page 10 of the paper book is not doubted. For sure the details of shareholder would be available on the portal of the Registrar of Company where annual returns are filed by the Companies. Further has this certificate being bogus then how could the shares are dematerialized. Because onc....
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....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 Smt. Sangita Jhunjhunwala vs. ITO decided on 04.01.2019 has deleted similar bogus LTCG vide following detailed discussion in para 3 to 5 as under............" Para 8 - "This tribunal's yet another decision in (2017) 60 ITR (Trib) 1 (Bang) Canara Bank vs. JCIT holds that the estopple principle does not apply in income tax proceedings. We therefore reject Revenue's arguments in support of impugned addition. We take into account all the relevant facts and circumstances to adopt the learned co-ordinate bench's above extracted detailed reasoning mutatis mutandis to delete the impugned addition forming subj....