TaxTMI 
TaxTMI 
2022 (5) TMI 226
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....he Act and confirming the addition Rs.94,099/- made by the AO u/s 69C of the Act being unexplained expenditure for obtaining the accommodation entry. 3. Facts of the case, in brief, are that the assessee is an individual and derives income from house property and income from other sources. She filed her return of income on 25.08.2015 declaring total income of Rs.6,09,460/-. The case was selected for scrutiny and statutory notices u/s143(2)/142(1) were issued and served on the assessee along with questionnaire. 4. During the course of assessment proceedings, the AO noted that the assessee has claimed exempt income u/s 10(38) of the Act amounting to Rs.18,81,961/- earned from sale of 50000 shares of M/s Kailash Auto Finance Limited. Fro....
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....order of SEBI and noted that M/s Kailash Auto Finance Ltd. was found to be guilty of price manipulation of the scrip and had jacked up the rate so as to provide a Long Term Capital Gain entry to its investors. Accordingly, the AO after detailed analysis of the transaction held that the transaction of sale resulting in Long Term Capital Gain of Rs.18,81,961/- was in fact a sham transaction used as sophisticated device to launder assessee's black money. Rejecting the various explanation given by the assessee and relying on various decisions, the AO treated the LTCG as an unexplained credit entry in the hands of the assessee and made an addition of this amount after invoking provisions of section 68 of the Act. Similarly, the AO made addition ....
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.... that the shares were purchased on 10.09.2012 and sold between April-June 2014 which is much before the SEBI report which is of 2015. Referring to the coy of the order of SEBI, he submitted that SEBI has passed final order dated 21.09.2017 particularly on the scrip Kailash Auto by revoking the interim order as para 6 of order. He submitted that the assessee has shown the transaction duly supported by admissible evidence by way of purchase bill, sale bill, bank account payment, etc. The proceeds were duly credited in Dena Bank. Referring to the decision of the Co-ordinate Bench of the Tribunal in the case of Vidhi Malhotra vs ITO in ITA No.93/Del/2018 and in the case of Santosh Mendiratta vs ITO in ITA No.94/Del/2018, for AY 2014-15, order d....
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....in the instant case claimed Long Term Capital Gain of Rs.18,81,961/- as exempt income u/s 10(38) of the Act being sale of 50000 shares of M/s Kailash Auto Finance Limited. I find the AO rejected the deduction claimed u/s 10(38) of the Act on the ground that the assessee has earned a return of approximately 3763% over a very short period of just over 15 months and the financial results of M/s Kailash Auto Finance Limited are not very good. While doing so, the AO examined the modus operandi of the transaction, analysed the price/volume movement of the scrip and acquisition of promoter share of both PML, CAPAL and KAFL and examined the order of SEBI wherein SEBI has held that M/s Kailash Auto Finance Ltd. was guilty of price manipulation of th....
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....by the assessee in the earlier year. In fact assessee has purchased shares of Capital Projects Advisory Limited in the financial year 2011-12 and the said company was merged with M/s. Kailalsh Auto Finance Ltd. vide amalgamation order dated 9.5.2013 passed by Hon'ble Allahabad High Court. Reliance has been placed by the authorities below on the statement of Shri Sunil Dokania. However, in his statement he has given list of certain scrips on which he has sated that these were paper companies used for providing accommodation entries. The said statement no doubt is quite incriminating to hold that scrips of M/s. Kailash Auto Finance Limited were used for purpose of accommodation entries, however such a statement cannot be the sole ground to im....
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....d found out that scrips of Kailash Auto Finance Limited was used by certain persons for providing accommodation entry, then he should have carried out some prima facie inquiry to find out whether assessee too was involved in routing her own unaccounted money for getting bogus long term capital on the scripts of such company. General observation about the modus operandi of long term capital gain would be of no use unless and until there is some specific information and material qua the assessee. Once purchase of the shares are not doubted and sale has been made through Bombay Stock exchange routed through DMAT account then consideration received has to be treated from amount of sale of shares whether the price has been rigged or not. One fac....