TaxTMI 
TaxTMI 
2022 (9) TMI 871
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....ulsiyan (HUF) in ITA No. 813/PUN/2018 for A.Y. 2014-15, as evident from the Order Sheet entry in this case, the matter was listed for hearing before Bench 'A' on 07-12-2021. The matter was adjourned at the request of ld. D.R. to 08-12-2021. Again on 08-12-2021 the matter got adjourned at the request of ld. D.R. to 06-1-2022. On 06-01-2022 Bench 'A did not function and the matter was posted for hearing on 23-02-2022. On 23-02-2022 Bench 'A' did not function and the matter was posted for hearing on 08-04-2022. Again on 08-04-2022 Bench 'A' did not function and the matter got posted for hearing on 26-05-2022. On 26-05-2022 none appeared for the assessee and the case was adjourned to 29-07-2022. On 29-07-2022 the matter got adjourned to 30-8-2022 at the request of ld. A.R. On 30-8-2022 the ld. A.R again requested for adjournment. The Bench having observed that this matter has been prolonged and several adjournments have been provided to the parties and the matter is still kept pending, therefore, keeping in mind the directions of the Hon'ble Supreme Court in the case of Ishwarlal Mali Rathod Vs. Gopal and Ors., in Special Leave Petition (Civil) Nos. 14117-14118 of 2021, order dated 20-....
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....order sheet in ITA No. 814/PUN/2018 for A.Y. 2014-15 in the case of Smt. Sumandevi D. Tulsyan. At this moment, we observe that Hon'ble Supreme Court has further emphasised that as on today, the judiciary and justice delivery system is facing acute problem of delay which clearly affects the rights of the litigants to access to justice and speedy trial, arrears are mounting because of such delay and dilatory tactics asking for repeated adjournments by Advocates and mechanically and in a routine manner granted by the Courts. It cannot be disputed that due to delay in access to justice and not getting timely justice it may shake trust and confidence of the litigants in the justice delivery system. Therefore, Hon'ble Apex Court has directed that adjournments should not be granted in a routine manner and mechanically and such grant of adjournment by the Courts should not be a cause for delay in dispensing justice. We are of the considered view that sufficient opportunities were provided to the assessee and the Department in these prolonged litigations in respect of these cases and any further delay in disposing such matters would ultimately result in hindrance of justice and would act as....
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....ring total income of Rs. 7,28,260/- on 02-08-2014. The A.O assessed the income of the assessee at Rs. 1,09,42,141/- after making an addition of Rs. 1,00,97,902/- on account of unexplained income in the garb of sale of shares u/s 68 and Rs. 1,00,979/- on account of unexplained expenditure and Rs. 15,000/- on account of unexplained investment. That, with regard to the addition of Rs. 1,00,97,902/- u/s 68 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") and denial of exemption u/s 10(38) claimed by the assessee, the relevant facts are that the case of the assessee was selected for scrutiny through CASS for the reason "Suspicious Transaction relating to Long Term Capital Gain on sale of shares" (Inputs from Investigation Wing). The issue before the A.O was to examine the claim for exemption of Rs. 1,00,97,902/- u/s 10(38) of the Act on sale of securities of M/s. Mishka Finance and Trading Pvt. Ltd. (hereinafter referred to as "Mishka"). The assessee had purchased shares of Pyramid Trading Ltd., in physical form which was subsequently changed to Mishka Finance Ltd. The shares were purchased by preferential mode @ Rs. 6 per share for an amount of Rs. 15,000/- on 15-06-2....
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....t. Suman Devi. The assessee admitted that he and his wife had purchased bogus long term capital gain through the sale of scrip of M/s. Mishka and disclosed an amount of Rs. 1,00,97,902/- in his hands and Rs. 99,63,145/- in the hands of his wife on account of bogus Long Term Capital gains for A.Y.2014-15. However, the statement was subsequently retracted by letter dated 04-09-2015 and it was contended that the long term capital gains are genuine and correct and legitimate exemption has been claimed us 10(38) on the purchase/sale of shares of Mishka. The A.O examined the balance-sheet of Mishka and concluded that the company has poor financial fundamentals. The company is doing the business of financing investing and investment in trading and incurred a loss of Rs. 12 lakhs during F.Y. 2011-12 and earned a profit of Rs. 12 lakhs during F.Y 2012-13. Further, from the annual report of Mishka for F.Y. 2012-13 it is observed that for financial year ended 2012 the earning per shares ('EPS') of Mishka was Rs. (-)2.4 and for the financial year ended on March 31, 2013, the EPS was Rs. 0.12. This company does not have any business and does not have fixed assets of plant and machinery. Most of....
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.... trade data it was observed that there were 8 paper companies whose common Directors were Abhiset Basu and Pradip Dey who had purchased these shares from the assessee. During investigation it revealed that the aforesaid paper companies were managed by entry provider Shri Anil Kumar Khemka. The A.O also discussed the statement of Mr. Khemka of Devshyam Stock Broking Pvt. Ltd., who admitted in his statement recorded on 30-03-2015 by the Dy. DIT (Inv), that he has provided accommodation entry in respect of scrips as per list which included Mishka. He admitted that the companies controlled by him were paper companies, which were used for giving accommodation entries. The shares of Mishka which were sold after the price was manipulated, were purchased by Abhisit Basu and Pradip Dey who are dummy Directors of the paper company operated by Anil Kumar Khemka. The A.O analysed financial statements of these companies and noticed that these companies do not have any assets and have no net worth. It was also noticed that the above mentioned paper companies were operated by Khemka who had employed various dummy Directors namely Abhiset Basu, Pradip Dey, etc. who were persons of no means and wer....
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.... shares were sold on 19-03-2014 @ Rs. 50.36 per share (face value Re. 1/-) for an amount of Rs. 1,00,74,511/-. The CIT(A) observed that the A.O has discussed in detail that the stocks treaded by the assessee was a penny stock whose price was manipulated to claim exemption u/s 10(38) of the Act. On the other hand, the contention of the assessee was that he has fulfilled the requirement of section 10(38) as long term capital gain arisen from the sale of equity share of company and the transaction was charged to STT. He made investment as an investor and did not have any knowledge about the management and financials of the company and he did not have any role in price manipulation. Thereafter, the ld. CIT(A) observed that there is no doubt about the modus operandi of the penny stock in general and about the fact that the assessee is a beneficiary of bogus long term capital gain on penny stock. The CIT(A) further observed that the ld. A.O has dealt with all the relevant issues in the assessment order through necessary enquiry and investigation and thereafter, he referred to the investigation done by SEBI in its report No. WTM/RKA/ISD/30/2015 DATED 17-04-2015 which is also available on ....
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....love with each other." 7. At para 20 of the ld. CIT(A)'s order, he gives a categorical finding that from the entire facts and circumstances, it is observed that the entire modus operandi of allotting shares on a preferential basis at a premium, announcing a stock split and then bringing in connected entities to provide exit was a scheme devised to make ill-gotten gains. Further the modus operandi of pumping the share price artificially and then dumping the price so that the same cycle could be repeated, demonstrates the mala fide intention of the Mishka group. On further observation of the A.O's order and the investigation by SEBI and facts in this case it was held by the ld. CIT(A) that in the entire modus operandi the companies with the help of brokers have given colour of genuineness to the sham transactions by first putting the shares on Dmat, then routing the transaction through stock exchange, paying STT and making payments by cheque at the time of sale. Only when the corporate veil is lifted, the modus operandi of how share price was manipulated by circular trading with the help of paper companies to bring in circulation of the unaccounted money in the form of long term cap....
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....has been introduced in disguise in lieu of sale proceeds of shares. In view of examination of facts appearing in the assessment order and the various investigation reports of SEBI as well as the Investigation Wing and the case-laws referred hereinabove, the ld. CIT(A) upheld the order of the A.O as regards the addition of Rs. 1,00,97,902/- u/s 68 of the Act and denial of exemption u/s 10(38) as claimed by the assessee. 8. We observe that the ld. A.O and the ld. CIT(A) have made a detailed examination of the facts and circumstances in this case and it has been clearly brought out that the assessee has purchased shares investing Rs. 15,000/- and after manipulation and rigging of the price of the shares, the assessee has received total consideration of Rs. 1,00,97,902/-. It is also relevant that there is a report of the Investigation Wing, Kolkata who had conducted search and seizure action at the premises of the entry operators who were involved in providing entries for bogus long term capital gains and in this report itself, it was found that the prices of various listed companies including Mishka in which the assessee has traded the prices of shares were manipulated and the unacco....
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....d up and the prices kept on raising till desired level and thereafter are routed through entry providers in order to obtain bogus long term capital gain and claiming exemption u/s 10(38) of the Act. This is nothing but tax evasion which is not permissible within the frame work of the Income-tax Act. It is further true that the A.O has recorded the statement of various entry providers which were recorded during the course of investigation by the Investigation Wing and they have admitted that they were dealing in penny stocks including shares of Mishka which were jacked up for the purposes of providing bogus long term capital gain. The assessee was even confronted with the statement of these entry providers who themselves have admitted that they were engaged in providing such accommodation entries for bogus long term capital gain in lieu of commission in the shares of Mishka in which the assessee has transacted. We also find that thorough investigation has been made by the A.O by even getting informations from the Bombay Stock Exchange and National Stock Exchange regarding purchases and sales of shares made by the assessee. We further find that the transactions of allotment of shares....
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....6 of 2022 came heavily upon fraudulent transactions being carried out in the form of shell companies and has strongly held against the assessee and in favour of the revenue observing that this modus operandi in taking undue advantage of the legal procedure and provisions of the Act should not be permitted in the greater interest of the country as a whole. The Hon'ble High Court on analyzing the facts on the issue regarding the entire process adopted by these assessees in order to fraudulently gain and take advantage for non-payment of the taxes has been specifically held to be unwarranted, illegal and bad in law by the Hon'ble High Court. The facts and circumstances in the cases before us are absolutely identical and similar with the cases adjudicated upon by the Hon'ble High Court of Kolkata. The Pune Tribunal in ITA No. 77/PUN/2019 for A.Y. 2015-16 order dated 16-08-2022 in the case of Sarika A. Sanap Vs. ACIT has held in favour of the revenue and against the assessee also taking the guidance from the aforesaid decision of Hon'ble Kolkata High Court (supra) with the same parity of reasoning and in same set of facts and circumstances. 11. Having gone through the entire case recor....
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....mity with the findings of the ld. CIT(A) on this issue also. The order of the ld. CIT(A) is accordingly upheld on this issue as well. 13. The next ground is with regard to the addition of Rs. 15,000/- which was the initial investment made by the assessee. The A.O held that the assessee has not been able to prove the source of investment. The ld. CIT(A) on this issue observed and held as follows: "I have gone through the rivlal contentions, it is true that the initial investment has to be deducted from the total sale consideration provided the assessee explains the source of this investment, howsoever small amount it may be. On going through the assessment order and submission of the assessee, it cannot be made out whether the amouynt paid in cash or by cheque. The AO made enquiry from broker Roongta Rising Stock Pvt. Ltd. Surat, as the bill issued by the broker was unsigned and amount was shown as due from the assessee. It was submitted by the broker that he had received the amount in cash on 10-04-2012 and 16-04-2012. It is strange to note that the broker is based in Surat and assessee is in Nashik and in the bill the broker has not charged any commission and the bill also does....
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....g on page 11 and 12 of the assessment order, which was claimed as exempt u/s 10(38) of the Act. In this case also, the shares were purchased offline through Roongta Rising Stock Pvt. Ltd., share broker of Surat. In this case also, the Investigation wing, Kolkata conducted search and seizure action in the premises of entry operator involved in providing accommodation entry of long term capital gain and such report even included the shares of various companies including Mishka which were manipulated and the unaccounted money of the investors were routed through share transaction resulting in long term capital gain as the same were exempt. Same information was passed on to the Investigation Wing, Nashik, who conducted survey on the business premises of the assessee. During the course of survey, husband of the assessee Mr. Dineshkumar R. Tullsyan admitted that he and his wife had purchased bogus long term capital gain through sale of scrip of Mishka and disclosed the amount of Rs. 1,00,97,902/- in his hands and Rs. 99,63,145/- in the hands of the assessee on account of bogus long term capital gain for A.Y. 2014-15 and exemption u//s 10(38) of the Act. However, his statement was subseq....