AI Drafter 
TaxTMI 
TaxTMI 
2022 (3) TMI 1418
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....d exemption under section 10(38) towards sale 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 ....
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....013 and 24-07-2013 at varying rates as under: Date No. of shares Rate per share Amount 10.4.2013 40000 9.79 3,91,600 11-04-2013 75000 9.98 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....
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....ise in share price to be natural and based on market forces, and, in view of order of SEBI finding that company these alleged companies, were involved in providing bogus long term capital gains, claim of exemption of long term capital gains earned by assessee was denied. 3. On appeal before Ld.CIT(A), observations and findings by Ld.AO were upheld. 4. Aggrieved by order of Ld.CIT(A) 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 ori....
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....€¢ decision of Hon'ble Delhi High Court in case of Oracle Systems Corporation, vs. DCIT reported in (2015)94 CCH 0045; • decision of Hon'ble Delhi High Court in case of ITO vs. Lakhmani Mewal Das reported in 103 ITR 437; • decision of Hon'ble Bombay High Court in case of CIT vs. Shyam R Pawar, reported in 229 Taxman 256; • decision of Hon'ble Madras High Court in case of CIT v M.Chinnaswamy, reported in 350 ITR 694; • decision 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....
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....section 143(3) was passed in the case of assessee for assessment year 2013-14. Hence the argument of the Ld.AR that the issue of notice under section148 amounts to change of opinion cannot be accepted. Explanation 2 to Section 147 clarifies that, following shall be deemed to be cases where income chargeable to tax has escaped assessment namely: a. where no return of income has been furnished by the assessee and no assessment has been made although: i. his total income; or ii. the total 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 Jha....
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....he above discussions. We therefore do find any infirmity in the reopening of the assessment. Accordingly grounds 3-10 on legal issue stands dismissed. On Merits: 6. Both sides submit that the arguments advanced by both sides are common for all the assessment years under consideration. 6.1. Perusal of assessment order it is observed that Ld.AO carried out detailed investigation/verification in respect of scrips of alleged companies sold by assessee during the year under consideration and found them to be lacking sound financials. 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 par....
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....e decisions are of any help to assessee on merits in the present facts of the case. The Ld.AR relied heavily on the decision of coordinate bench of this Tribunal in Shri.Lxmipat Dudheria Vs.ACIT in ITA no.2373 to 2376/Bang/2018 by order dated 09/04/2019, wherein investment in Bule circles Services Ltd by the assessee therein and the there assessment was reopened which was struck down by this Tribunal. We note that in the decision by this Tribunal nothing is decised on merits but the entire decision was on the validity of reopening where there the assessment 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 circu....