TaxTMI 
TaxTMI 
2021 (8) TMI 417
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.... heard analogously and are being disposed by a common order for the sake of convenience. However, the ITA No. 242/Ind/2019 is taken as the lead case. 2. The brief facts leading to the case is this that the assessee company filed its return of income on 09.02.2015 showing total income of Rs. 07,73,479/- which was proceeded under Section 143(1) of the Act. As per the return, the assessee derives income from Business (Ginning pressing, Khandsari udyog, and Sugar Mill), trading of shares and bank interest. 3. The same was selected for scrutiny through CASS and notice under Section 143(2) was issued and duly served upon the assessee. Upon verification of the computation of income and return of income filed by the assessee, it was found that the assessee claimed exempt long-term capital gain on purchase/sale of shares at Rs. 26,72,311/-. Such claim was, however, rejected by the Ld. AO treating it as bogus which was, in turn, confirmed by the First Appellate Authority. Hence, the instant appeal before us. 4. The facts culled out from the records is this that the assessee purchased 350 Equity shares of Lifeline Drugs & Pharma Limited (in short "LDPL") through broker namel....
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....he holding of these shares in the books of accounts of the appellant 77-80 8 Copy of D-Mat account of the appellant with M/s Anand Rathi Share and Stock Brokers Ltd. for the period from19.11.2018 in respect of shares of M/s Lifeline Drugs & Pharma Limited 75-76 9 Copy of sale note for sale of 15,000 shares of M/s Lifeline Drugs & Pharma Limited 81-83 10 Copy of bank statement of the appellant wherein the amount realized from sale of shares is duly reflected 70 6. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee relied upon the written notes filed before us. The Ld. AR further submitted that the company namely M/s Lifeline Drugs & Pharma Limited now known as Arihant Multi Commercial Ltd. is not a paper company neither a shell company. In support of his contention he has filed the statement of Profit and Loss Account for the relevant Assessment Year and the balance sheet of the said company before us. 7. As regards the allegation in respect of artificial rigging up of the price of shares, it was submitted that the Id. A.O. did not provide any documentary evidence of a live link and direct relation to such alle....
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....ion of addition made by the Revenue. 10. The Ld. AR relied upon the order passed by the Hon'ble Delhi Bench of ITAT in the matter of Anoop Jain vs. ACIT, reported in 181 ITD 218 wherein the issue of long-term capital gain on sale of shares of the same company namely M/s Lifeline Drugs & Pharma Ltd. has been decided in favour of the assessee. He ultimately prayed for deletion of addition made by the Revenue since the revenue has failed to launch any contrary evidence to the genuineness of the transaction made by the appellant. 11. On the other hand, the Ld. DR vehemently argued in support of the order passed by the authorities below. He is further relied upon the judgment passed by the Hon'ble Delhi High Court in the following matters:- 1. Udit Kalra vs. ITO ward-50(1) in ITA No. 220/2019 dated 08.03.2019 (Delhi HC) 2. Udit Kalra vs. ITO ITA No. 6717/Del/2017 dated 08.01.2019 3. Suman Poddar vs. ITO [2019] 112 taxmann.com 330 (SC) 12. We have heard the rival submission made by the respective parties and we have also perused the relevant materials available on record. It appears from the order passed by the Ld. A.O that he has been guided by the re....
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....kes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealer....
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....erandi of the entry operators and further supporting his observations by report of the Investigation Wing. 23. It would not be out of place to mention here that LDPL, now known as Arihant Multi Commercial Ltd, is not a paper company nor a shell company. In F.Y. 2013- 14, the Revenue from operations were at Rs. 40,85,02,313/- and total assets were at Rs. 32,79,07,684/- which included investment, trade receivables, cash and cash equivalent, short term loans and advances and tangible assets. The share capital and reserves and surplus were at Rs. 3,62,40,000/- and Rs. 17,65,16,912/- respectively. Trade payables were at Rs. 10,80,74,165/-. 24. These financials go to show that LDPL is not a shell company. SEBI has suspended trading in shares of LDPL w.e.f 28.08.2015 whereas the assessee has sold shares from May 2014 to December 2014, many months before suspension of the scrip. It is not the case of the Assessing Officer, nor there is any evidence on record to show that SEBI has declared all transactions done in scrip of LDPL prior to the suspension as null and void. It is a matter of fact that SEBI looks into irregular movements in share prices and warns investors again....
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....he appellant, thus denying opportunity of cross examination to the appellant, who has prima facie discharged the initial burden of substantiating the purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and the fact of payment through cheques, & VAT Registration of the sellers & their Income Tax Return. In view of the above discussion in totality, the purchases made by the appellant from M/s Padmesh Realtors Pvt. Ltd. is found to be acceptable and the consequent disallowance resulting in addition to income made for Rs. 19,39,60,866/-, is directed to be deleted." 4. The ITAT by its judgment dated 16th May, 2014 relied on the self-same reasoning and dismissed the appeal of the revenue. Likewise, the High Court by the impugned judgment dated 5 th July, 2017, affirmed the judgments of the CIT and ITAT as concurrent factual findings, which have not been shown to be perverse and, therefore, dismissed the appeal stating that no substantial question of law arises from the impugned order of the ITAT. 5. In these circumstances, the Review Petitions are dismissed." 28. On identical set of facts, the coord....
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....e drawn from the reading of the investigation report and the statement of Mr. Mahesh Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the assessing officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the assessing officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description of Section 68." 25. Considering the vortex of evidences, we are of the considered view that the assessee has successfully discharged the onus cast upon him by provisions of section 68 of the Act and as mentioned elsewhere, such discharge of onus is purely a question of fact and therefore, the judicial decisions relied upon by the ld. DR would do no good on the peculiar plethora of evid....
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....ny was considered wherein it was held that the Lifeline Drugs & Pharma Ltd. now known as Arihant Multi Commercial Ltd. is not a shell company. 16. It is evident from records that SEBI has suspended trading in shares of LDPL w.e.f 28.08.2015 whereas the appellant before us sold these shares on 25.02.2014 and 11.03.2014 through the broker M/s. Anand Rathi many months before suspension of this scrip. It is an admitted position that Revenue has never recorded showing that SEBI has declared all transactions done in scribe of LDPL prior to the suspension as null and void. 17. We have further considered the submissions made by the Ld. DR and the judgment passed by the Delhi High Court in the matter of Udit Kalra vs. ITO as relied upon by him. So far as Udit Kalra is concerned it appears that the challenges made in the appeal before the Hon'ble Delhi High Court in that case stood dismissed in limine; no question of law was found to be formulated. Apart from that the said judgment is distinguishable. In that particular case the scrips of the company were delisted on stock exchange, whereas, in the instant case suspension order in trading in securities of M/s Turbo Tech Engineering Ltd....
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....nducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent's unaccounted money, but he did not dig deeper. Notices issued under Sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any 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 unac....
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....iance placed by the Revenue on Suman Poddar v. ITO (supra) and Sumati Dayal v. CIT (supra) is of no assistance. Upon examining the judgment of Suman Poddar (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal v. CIT (supra) too turns on its own specific facts. The above-stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. 14. In this view of the matter, no q....