TaxTMI 
TaxTMI 
2022 (9) TMI 1176
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....hat a search and seizure operations u/s 132 was conducted on 13.10.2010 in Welspun Group of cases, in which assessee was also covered. The assessee had filed his return of income for the AY 2006-07 u/s 139(1) on 31.07.2006 showing total income of Rs. 52,86,860/-. The said return of income was duly processed u/s 143(1) on 14.07.2007 accepting the return of income. Thus, on the date of search, the assessment for the AY 2006-07 stood finally concluded. Accordingly, in terms of 2nd proviso to section 153A, the assessment for the AY 2006-07 is to be reckoned as "unabated assessment‟. A notice u/s 153A was issued on 04.08.2011 and in response, assessee declaring his total income at Rs. 88,86,856/- on 15.09.2011 which included additional income of Rs. 36 lakhs in the said return. 3. In so far as the issue raised in the grounds of appeal are that, the brief facts are that the AO on the examination of return of income and the computation of income noted that assessee has claimed Long Term Capital Gain of Rs. 57,86,609/- in respect of shares of "Asahi Infrastructure Ltd." and Rs. 55,306 shares of "Om Metal Ltd." as exempt. In the computation of income and submission, the assessee ha....
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.... held to be genuine. The main factors therefore are i. Shares were purchased in physical form and dematerialized within a month's time and sold thereafter. ii. Payment for purchase of shares is made by adjustment of speculation profit which is also a adjustment entry. iii. The modus-operandi is absolutely same in such type of bogus transactions, where after bogus purchase, the same are dematerialized iv. once the purchase itself is questioned, the incidence of capital gain cannot be attracted. v. During the course of search action, several beneficiaries have admitted that cash equivalent of sale receipt was given to intermediaries who arranged back dated purchase invoices for which commission was paid. 7. Accordingly, after referring to certain decisions of Tribunal, AO held that the credits on account of sale of shares of Rs. 57,86,609/- was nothing but generating artificial LTCG and added to the total income of the assessee u/s 68 of the Act. 8. Ld. CIT (A) has deleted the additions on merits after making the following observations:- 7.3 The appellant has been heard in the matter. It is submitted by the appellant tha....
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....he appellant that if the purchases are bogus the question of demat does not arise; the dematerialization rather prove that the purchases are rather genuine. - e) It is submitted that merely because certain beneficiaries might have submitted that cash equivalent of sale receipt was given to intermediaries who arranged back dated purchases, it is submitted that it does not mean that the appellant had also been given back cash unless the same is established with cogent material. f) It is submitted merely because the shares of Asahi Infrastructure Ltd. were credited in the demat account of the appellant on 19.4.2005, the transactions can neither be termed as bogus particularly when the transaction of sale and purchase are supported by the bills of the share brokers. g) It is submitted that the basic reason for making the addition is the information stated to be in the possession of the Department that Mahanagar Securities Pvt. Ltd. was indulging in providing accommodation entry to various parties. It is submitted that the said information has been mechanically applied in the hands of. the. appellant without independent application of mind on the issue involve....
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....ssion that M/s Mahasagar Securities Pvt. Ltd., from whom the purchases have reportedly been made have been indulging in providing accommodation entries. But it has not been established on the facts of the present case that the entries/documents as placed on record are sham/bogus. The source of credit in the books of the appellant for which addition has been made has not been doubted. The holding period of shares, as can be seen from the copies of documents on record is more than 12 months. The shares, as per the copy of the bill from Mahanagar Securities Pvt. Ltd., (placed at page 38 of PB) have been purchased on 13.4.2004. It is found that sale has subsequently been made out of shares held in the Demat Account of the appellant. In the face of the said facts, I am unable to sustain the action of the Assessing Officer in treating the sale of shares as bogus and making addition under s. 68 of the Act.. Therefore this ground is allowed in favour of the appellant. 9. Ld. DR strongly relied on the order of AO and submitted that the addition made by the AO was in possession of some information that the broker Mahanagar Securities Pvt. Ltd. was indulged in accommodation entries to vari....