TaxTMI 
TaxTMI 
2021 (11) TMI 321
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....f M/s Splash Media Ltd. u/s 10(38) of the Act. Shorn of unnecessary details, the assessee had on 15.09.2009 purchased 650 shares of M/s Splash Media Ltd. @ Rs. 253.65 for a consideration of Rs. 1,65,553/-. On 30.04.2010 the assessee received 2600 bonus shares against the existing 650 shares. On 02.08.2010 the bonus shares (Face value : Rs. 10/-) were split into 1:10 making it 26000 shares (Face value : Rs. 1). Out of the 26,000 shares 16,000 shares were sold by the assessee to various entities in the month of September, 2009 to March, 2010 on the BSE floor at an average rate of Rs. 82/- (approx) for a total sale consideration of Rs. 13,10,647/-, resulting to a LTCG of Rs. 13,10,647/-. The details of sale of 16,000 shares by the assessee are culled out as under : Date Trade Value Scrip PAN Name of the buyer 27.09.2010 Rs. 5,41,283/- Splash Media AADCR7368C Ranisat Dealers Pvt. Ltd. 07.02.2011 Rs. 2,55,838/- Splash Media AADPS8372G Suresh Poojara 11.02.2011 Rs. 5,08,750/- Splash Media AAACV9962H Vikraamshilla Credir & Finvest Pvt. Ltd. 11.02.2011 Rs. 4,775/- Splash Media AANPN3354K Premnath Total Rs. 13,10,647/- Long Term Capital Gain (LTCG) of Rs.....
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....of 1:3 and holding became 2600 further the face value became Re. 1 from Rs. 10 and splitted into 26000 shares. (b.) Sale of shares and unusual rise in the price: Further the assessee has sold the 16000 shares at the price of Rs. 13,10,647/-, thus resulting the long term capital gain which is 08 times the increase of the cost price, and as discussed the rise in share prices is not due to any commercial principles and market factors. (c). Findings of Investigation wing: The findings of the Directorate of Investigation of Mumbai and Kolkata as discussed above have proved that thassociated brokers, entry operators and the assessee had worked out an arrangement in which the shares were acquired by the asessee, the share prices were rigged and then with the help of entry operators by routing the cash, shares were sold at high price to arrive at tax free capital gains. (d). Analysis of transactions : Facts revealed that such trading transactions of purchase and sale of shares are not been effected, for commercial purposes but to create artificial gains, with a view to evade taxes - i. Transactions of shares were not governed by market factors prevalent at relevant time in such tra....
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....rom its aforesaid transaction of sale of shares. On a perusal of the records, we find that the assessee in order to substantiate the authenticity of the aforesaid transaction of purchase/sale of shares of M/s Splash Media Ltd. had in the course of the assessment proceedings placed on record supporting documentary evidences, viz. (i). broker note evidencing the purchase of shares of M/s Splash Media Ltd. a/w the fact that payment of the purchase consideration was made through her bank account directly to the broker, viz. Emkay Global Financial Services Ltd; (ii). demat account of the assessee reflecting the purchase and sale of shares of M/s Splash Media; (iii). demat account of M/s Emkay Global Financial Services, broker of the assessee reflecting the entries of purchase and sale of the shares of M/s Splash Media Ltd.; (iv). broker note evidencing the sale of shares and its receipts from the broker, viz. Emkay Global Financial Services Ltd.; (v) the transaction statement of Emkay Global Financial Services Ltd showing the daily movement of various stocks held by the assessee a/w the shares of M/s Splash Media Ltd.; and (vi). the balance sheet, profit & loss a/c, statement of various....
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....Splash Media Ltd., which revealed beyond doubt that the same was an artificial increase caused by rigging of the shares by a cartel of accommodation entry providers. In our considered view, though the aforesaid data gathered by the A.O being based on the facts and figures cannot be faulted on our part, however, we are unable to persuade ourselves to concur with him that for the said reason the assessee is to be held to have evaded taxes and laundered his unaccounted money by booking a bogus claim of exempt LTCG u/s 10(38) of the Act. Although, the A.O had at length discussed in his order the information that was shared with him by the Investigation wings of Kolkata, Mumbai and Kolkata i.e the modus operandi adopted by beneficiaries with the help of entry operators to obtain tax free capital gains, however, we are afraid that nothing concrete has been brought on record which would prove to the hilt the falsity of the assessee's claim of having carried out genuine transactions of purchase/sale of the shares under consideration, and therein prove that the assessee had only procured an accommodation entry of capital gain. On the contrary, we find that the assessee had duly substantiate....
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....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 justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a pre-planned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted 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, w....
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.... 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 human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance 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....