TaxTMI 
TaxTMI 
TaxTMI 
2022 (3) TMI 1418
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.... of equity shares as under: Asst Yr. ROI filed on Total income declared Exemption u/s.10(38) claimed during the year 2013-14 20/01/2014 6,29,540/- 2,93,54,121 2014-15 29/03/2015 14,11,860/- 3,69,27,070/- 2015-16 22/03/2016 10,80,810/- 2,58,45,625/- Information from investigation wing was received by intimating the organised racket involved in generating bogus entries of long term capital gains which was exempt from capital gains tax. The Ld.AO observed that assessee traded in Blue Circles Services Pvt.Ltd during assessment year2013-14, and for assessment years 2014-15 & 2015-15, assessee traded in Blue Circles Services Pvt.Ltd and M/s. Parag Shilpa Investments Pvt.Ltd. 2.1. The Ld.AO observed that assessee computed LTCG for AY: 2013-14 as under: "Sale value of 4,61,500 shares : Rs.3,01,69,363.74 Less: Purchase value Rs. 6,92,250.00 Long term Capital Gain Rs.2,94,77,113.74 The assessee applied and 400,000 shares of Blue Circle Services of Rs.10/-each was allotted to the assessee on 14.09.2010 at a premium of Rs.5/- each share. The shares were later converted to Rs.1/- each share and the assessee was holding 39,30,000 shares as on 31.03.2012 in his dem....
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.... 7,48,500 15-04-2013 45000 10.33 4,64,650 16.04.2013 26406 10.57 3,00,251.42 26.04.2013 229991 11.85 27,25,393.35 28.05.2013 175000 20,94,750 04.06.2013 250000 10.27 25,67,500 05.06.2013 500000 9.76 48,80,000 13.06.2013 600000 7.20 43,20,000 20.06.2013 300502 6.25 18,78,137.50 21.06.2013 132720 6.13 8,13,573.60 24.06.2013 670000 6.01 40,26,700 02.07.2013 400000 21,80,000 24.07.2013 21881 98,245.69 3468500 2,74,89,301.56 6. As far as the other scrip is concerned, the assessee purchased 28700 shares of Parag Shilpa Investments (erstwhile PS IT Infrastructure 86 Services on 18-0720 1 2 @ Rs 10 for Rs. 2,87,000 and sold them on various dates between 26.12.2014 to 28.03.2014 as under Date No. of shares Rate per share Amount 26.02.2014 4500 23,91,390 04.03.2014 5000 531.87 26,59,350 07.03.2014 4200 533.56 22,40,952 13.03.2014 5000 534.56 26,72,800 28.03.20140 10000 548.92 54,89,175 28700 1,54,53,667 For assessment year 2015-16 For Asst Yr 2014-15 the LTCG was earned by assessee on sale of shares held in PS IT Infrastructure & Services, formerly kno....
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....assessee is in appeal before us. 4.1. It is submitted that, assessment year 2013-14 is reopened under section 147 of the Act, and assessment years 2014-15 & 2015-16 are regular assessments under section 143(3). On legal grounds raised for assessment year 2013-14, the Ld.AR submitted that, the assessee for the above assessment year filed its return of income on 20.01.2014 declaring total income of Rs.6,29,540/- consisting of Income from House Property of Rs.72,996/-, Short term capital gains of Rs.5,32,549/- and Income from Other sources of Rs.33,990/-. The assessee also earned exempt . Long term capital gains of Rs.2,93,54,121/- and dividend of Rs.13,47,615/-. A notice u/s 148 of the Act dt.31.03.2018 was issued to the appellant. The assessee filed a letter on 07.05.2018 stating that the original return of income filed on 20.01.2014 may be treated as return in response to notice u/s 148 and also requested for reasons recorded for reopening the assessment. The AO issued notices u/s 142(1) of the Act for which the assessee furnished the details called for from time to time during the course of the assessment proceedings. The AO provided the reasons recorded vide letter dt.18.07.201....
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....ision of Hon'ble Mumbai Tribunal in case of Farrah Marker vs.ITO in ITA no. 3810/Mum/2011decision of Hon'ble Mumbai Tribunal in case of Sunil Prakesh vs.ACIT in ITA no.6494/Mum/2014 4.2. Ld.Sr.DR on the contrary filed written submission stating that assessee's claim of genuineness is merely confined to the act that the shares were sold through recognised stock exchange and payment/receipt of consideration was through banking channels. He submitted that these transactions are tailor made and when the circumstantial evidence point on an opposite direction the claim is proven to be illegitimate. The Ld.Sr.DR submitted that the assessing officer was made aware by the investigation wing regarding these companies are fictitious companies of shell companies. He submitted that the alleged long term capital gain was disallowed by the Ld.AO as assessee did not discharge the onus to establish the source of investment in the alleged scripts. 4.2.1. The Ld.Sr.DR submitted that the assessee provided various documents to establish alleged sale of shares of these companies, which was carried out through brokers registered with stock exchange and also with SEBI, contract notes, payments made thr....
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....otal income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income tax; b. where a return of income has been furnished by the assessee but no assessment (scrutiny/best judgment assessment) has been made and it is noticed by the Assessing Officer that the assessee: i. has understated the income; or ii. has claimed excessive loss, deduction, allowance or relief in the return; 5.3. In the present facts of the case assessee falls under situation (b) above. We also place reliance on the decision of Hon'ble Supreme Court in case of ACIT vs.Rajesh Jhaveri Stock Brokers reported in (2007) 291 ITR 500, wherein Hon'ble court held that Section 147 authorises and permits the Ld.AO to assessee or reassess income chargeable to tax if he has reason to believe that income for assessment year has escaped assessment. The word 'reason' in the phrase, 'reason to believe', would mean cause or justification. If the Ld.AO has cause or justification to know or support that income had escaped assessment, it can be said to have reasons to believe that income had escaped assessment. The expressi....
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....s. Various queries raised by Ld.AO has not been answered with supporting cogent and uncontrovertable documents by assessee. Enquiries carried out by Ld.AO revael these companies to be mere paper companies, without having any activities/business. View taken by Ld.AO was upheld by Ld.CIT(A) against which assessee filed present appeal. 6.2. It is the submission of the Ld.AR that the LTCG earned by assessee on sale of shares in the alleged companies were through recoganised stock exchange and banking channels. It is also submitted that both receipt and payments are done through account payee cheques. He thus submitted that the statement of third parties has been relied on for making addition in the hands of assessee. 6.3. Whereas the Ld.Sr.DR submits that the statements and materials are only circumstantial regarding the alleged companies to be shell companies and that these companies were used in providing accommodation entries and that they were managed by the persons whose statements were recorded by the investigating wing. 6.4. In present facts of the case, the statements recorded of third parties only reveal that the alleged companies involved in providing bogus LTCG/STCG or LT....
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....sment order was passed under section144 of the Act. We therefore are of the opinion that the decision is of no rescue to assessee. 6.9. We are conscious of principle laid down by Hon'ble Supreme Court in case of M/s Andaman Timber Industries vs CCE, Kolkata-II, reported in (2015) 127 DTR 241, in support of his contention as well as decision of Hon'ble High Courts relied by the Ld.AR. All these decisions lay down that, without opportunity of cross-examination, statements cannot be relied upon against any asessee. However, such right, as held in various decisions by Hon'ble Supreme Court, is not an absolute right and depends on circumstances of the case and the statute concerned, as held in State of J&K Vs. Bakshi Gulam Mohd. AIR 1967 (SC) 122, and Nath International Sales Vs. UOI reported in AIR 1992 Del 295. Similar is the view taken by Hon'ble Allahabad High Court in case of In case of Prem Castings Pvt.Ltd. Vs.CIT (Supra). 6.10. At this juncture we referred to decision of T.Devasahaya Nadar V. CIT reported in (1964) 51 ITR 20 (Mad), wherein, it has been held that; "We are of opinion that it cannot be said as a general proposition of law that any evidence upon which the depart....