AI Drafter 
TaxTMI 
TaxTMI 
2018 (12) TMI 1960
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....ing the amount of Rs.67,24,391/- being claimed by the appellant to be proceeds of shares sold to be LTCG and claimed as exempt. The findings of the Ld. AO are based on the information being supplied by the Investigation wing of the Department at Kolkata. I have also carefully examined the submissions of the appellant, wherein he has cited several cases wherein the claim has been made that the decisions are in his favour. I have also carefully examined the submissions filed by the appellant assessee before the Ld. AO during the course of the scrutiny assessment. On perusal o the sub mission filed by the assessee, report received from DGIT(Inv.),Kolkata and available records, the following noteworthy features of the transactions have surfaced as disclosed hereunder: Tunl Textile Mills Stand alone balance sheet .... In Rs Cr.... Equities and liabilities shareholders fund Mar 15 Mar 14 Mar 13 Mar 12 Mar 11 Equities share capital 13.18 13.18 13.18 13.18 13.18 Total share capital 13.18 13.18 13.18 13.18 13.18 Reserves and surplus -0.85 &nbs....
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....p;3.87 5.26 Cash and cash equivalents 0.14 0.16 0.10 0.07 0.06 Short term loan & advances 0.66 0.68 0.86 0.33 0.28 Other current assets 0.03 0.03 0.03 0.08 0.06 Total current assets 153.15 16.92 16.18 11.33 11.66 Total assets 20.14 Rs. 22.71 24.25 21.52 21.89 Tuni Textile Mills Previous Year Standalone Profit & loss account .....in Rs. Cr.... Mar'15 Mar'14 Mar'13 Mar'12 Mar'11 Income Sales Turnover 29.76 24.52 19.32 22.01 18.30 Net sales 29.76 24.52 19.32 22.01 18.30 Other income 0.20 0.22 0.07 0.07 0.12 Stock adjustments -1.35 1.05 1.17 0.71 0.08 &n....
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..... The EPS of the company (which reflects the financial health of a company) was absolutely negligible throughout the period. e. During the period, no material corporate announcement was made by Tuni Textile which could suppsort such price rise in its scrip. Thus, the sharp rise in the price of the scrip of Tuni Textile during the period was not supported by its fundamentals or any other genuine factor. Strangely, in spite of such trifling fundamentals the share price rose to abnormally high level. Investment in a company having such poor and meager fundamentals cannot prima facie be termed as a rational investment behavior. Since period to the trading in its scrip during the Examination Period, financial standing in the securities market and the only way it could have increased its share value is by way in market manipulation. Similar upswing of prices of shares have been observed in case of some other companies, whose fundamentals are not justifying the northern movement of the stocks. The SEBI has suspended trading in 26 Scrips of such penny stocks. f. On investigation and analysis of the trend, it is deducted by the SEBI that circular trading and price rigging by the op....
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....tement under oath, before a public authority? Ans. I am Narendra Praphudayal Sureka, aged 61 years, S/o Shri Prabhudayal Surekha, residing at Ashray, 78, Hatkesh Society, 9th Road, JVPD Scheme, Vile Parle West, Mumbaii-54, I confirm that the oath has been administered to me and I have been made aware of the consequences of giving a false statement on oath before a public authority. Q-2 Please give your Educational Qualification? Also, please confirm that you can read, write and understand English language completely? Ans. My educational qualification is B.Com. I further confirm that I can read, write and understand English language and I shall be comfortable, if any statement is recorded in English. Q.3 Please state your PAN? Also state with whom you are assessed to tax and up to which year you have filed your return of Income? Please provide the copy of Income Tax return from AY 2015-16. Also, state your source of Income? Ans. My PAN is AACPP8853C. I do not know my exact Ward office. I have filed return of income till date i.e. upto A.Y 2014-15. I am providing you a copy of my PAN. Sir, my source of income is remuneration as a Director of M/s Tu....
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..... All the books of account are maintained in this Mumbai Office only and in no other office. Other than these two, no any other address are there of the company. Q8. Please confirm that the books of account of M/s Tuni Textile Mills Ltd are kept only at this office premises at Room No.53/54, 3rd Floor, 63/71, Dadiseth Aglary Lane, Kalbadevi Road, Mumbai-400002 and at no other premises. Sir, the books are maintained in tally software since FY 2014-15 and in "Foxpro" based customized software since FY 2011-12 to FY 2013-14. Q.9 Please state since when you are in the Director/Managing Director of M/s Tuni Textile Mills Ltd. Also state your role as Managing Director in M/s Tuni Textile Mills Ltd. Also state in which year the company was listed with BSE. Ans. Sir, I am Managing Director in this company since 06.07.1987 i.e. since incorporation of the company. Sir, as a Managing Dire tor I look after all the affairs of the Company. I am the final authority in respect of entire business activity and all financial matters. To the best of my knowledge the company was listed with the BSE in 1996. Q.10 Please state the name of the other directors o....
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....ills Ltd? Ans. No. Sir, no advertisements were issued in this regard. Q. 17. Please state whether M/s Tuni Textile Mills Ltd. Textile has declared dividend to the shareholders since FY 2008-09 to till date? Ans. Sir, I do not know anything about the HUFs/individuals which have purchased the shares of M/s Tuni Textile Mills Ltd. on preferential basis. Q.18 Please tell what you know about the HUFs/individuals which have purchased shares of M/s Tuni Textile Mills Ltd. at a premium? Ans. Sir, I do not know anything about the HUFs/individuals which have purchased the shares of M/.s Tuni Textile Mills Ltd. on preferential basis. Q.19. You have stated on oath that you do not know about any of the entitles/individuals which have purchased the shares of M/s Tuni Textile Mill Ltd on preferential basis. Please explain as to how these HUFs/individuals invested in the shares of M/s Tuni Textile Mills Ltd. How were these HUFs/individuals approached and where did you meet them? Ans. Sir, I know one Shri Manish Baid his Mob. No.9820051103 (having his office at 8th Floor. Reheja Tower ,Noriman Point, Mumbai in the name of GCM Securities....
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...., 462, AB Nair Road, Opp.Sun- N-Sand Hotel, Juhu Vile Parie (West), Mumbai 11,30 AM 26.09.2014 FINANCIAL YEAR 2013-14 Rame Guest Line Hotel, 462, AB Nair Road, Opp.Sun- N-Sand Hotel,Juhu Vile Parle (West), Mumbai 11.30 AM Sir, I am producing the AGM file contains the minutes of the above. AGMs, I am also providing you the attendance registers for FY 2011-12, fy 201-213 and FY 2013-14. In respect of the attendance register for FY 2009-10 and FY 2010-11 are not available at present. Q.22 Please provide the copy of the notices sent to the shareholders list in Annexure-1 to this statement? Ans. Sir, I am not able to provide you the same. Q.23 Please confirm that the registers of the AGMs for the FY 2011- 12(Annexure-A3 page no.1 to page no.4) FY 2012-13 (Annexure-A4, page no.1 to page no.2) and FY 2013-14 (Annexure-A2, page no.1 to page no.2) is provide by you. Please confirm that the same is impounded. It is observed from the minutes of the meeting of AGM and attendance register of AGM provide by you., one of the shareholders ass listed in Annexure-1 to this statement have attended the meetings of the AGM. Pease Comment? ....
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....Textile Mills limited were issued to the beneficiaries of bogus Long Term Capital Gain by Shrl Manish Baid. These shares were allotted on preferential basis through the route of private placement. Thereafter, the shares of M/s. Tuni Textile Mills Limited were rigged by way of circular trading and the price of the shares was jacked up. Once a period of one year was over after the issue of preferential shares (pre-requisite for claiming exemption on LTCC), the beneficiaries were asked to deposit cash to Shri Manish Baid and sell their shares on the stock exchange. The shares of the beneficiaries were purchased by bogus/paper entities managed and controlled by Shrl Manish Baid and these bogus/paper companies used the cash provided by the beneficiaries to purchase the shares of the beneficiaries. In this way the unaccounted cash of the beneficiaries were routed to the books of the beneficiaries as entry of Long Term Capital Gain through the route of stock exchange. In this process some entities have also been given entry of Short Term Capital Loss/business loss by way of purchasing the shares at high prices and selling them when the prices have gone down. Q.27. Please state, w....
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....of bogus Long Term Capital Gain and Short Term Capital Loss. These entire affairs have been managed by Shri Manish Baid and only he will be able to explain the same. Q.30. I am once again reminding you that the statement Is being given by you on oath and you are bound by law to speak truth and not to hide any fact. I request you to please go through the responses given by you to the above questions and kindly confirm that you have understood the content of the questions posed to you and you are stating the truth. Ans. Sir, I confirm that I am speaking the truth and I am aware of the consequences of giving false statement on oath. Q.31. Please state, how the amount of Rs. 7,50,00,000/- was treated in the books of M/s Tuni Textile Mills Ltd. Please substantiate the same documentary evidences. Ans. Sir, the amount received as Investment through preference share allotment was utilized for the business affairs of the business activities of M/s Tunl Textile Mills Ltd in the form of Capital Investment. A separate bank account was created for this. Q.32. Please provide the details of the bank account Into which the amount of Rs 7,50,00,000/- whi....
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.... Q.39 I am once again reminding you that this statement Is being given by you on oath and you are bound by law to speak truth and not to hide any fact. I request you to please go through the responses given by you to the above questions and kindly confirm that you have understood the content of the questions posed to you and you are stating the truth? Ans. Sir, I confirm that I am speaking truth and I am aware of the consequences of giving false statement on oath. Q.40 Please confirm that during the survey proceeding, the data backup as per Annexure-A1 In 16GB pen drive has been taken from this premise at 63/71, 3rd Floor, Dadiseth Aglary Lane, Kalbadevi Road, Mumbal-400002 has been Impounded. Ans. Sir, I confirm the same. Q.41 Do you have to say anything else? Ans. No. Sir. I have read the statement recorded and I understand it. Whatever stated above Is true to the best of my belief and knowledge and has been correctly recorded. I have given this statement in sound state of mind without any threat, coercion, and compulsion or under any undue pressure. I shall abide by my statement. Further, I would like to state that his statement has been giv....
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.... universal procedure or method which should be adopted by the assessing officer when verification of facts Is required. The manner and mode of conducting assessment proceedings has to be left to the discretion of the assessing officer, and the same should be just, fair and should not cause any harassment to the assessee or third persons form whom confirmation or verification is required. The verification and Investigation should be one with the least amount of Intrusion, inconvenience or harassment especially to third parties, who may have entered into transactions with the assessee. The ultimate finding of the assessing officer should reflect due application or mind on the relevant facts and the decision should take Into consideration the entire material, which Is germane and which should not be ignored and exclude that which Is Irrelevant. Certain facts or aspects may be neutral and should be noted. These should not be ignored but they cannot become the bedrock or substratum of the conclusion. The provisions of Evidence Act are not applicable, but the assessing officer being a quasi judicial authority, must take care and caution to ensure that the decision is reasonable ....
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....d 'material' clearly shows that the assessing officer is not fettered by the technical rules of evidence and the like, and that he may act on material which may not strictly speaking be accepted evidence in court of law. 4. The Hon'ble Supreme Court in CIT v. Durga Prasad More[1971] 82 ITR 540 at pages 545-547 made a reference to the test of human probabilities In the following fact situation : "... ... It Is true that an apparent must be considered real until It is shown that there are reasons to believe that the apparent Is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals. Otherwise it will be very easy to make sett- serving statements In documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax Is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide-open to evade tax. A little probing was sufficient In the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at t....
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....lated and abnormal price of off load and the sudden dip thereafter. Therefore, I have to reach the inevitable conclusion that the transactions as discussed by the Ld.AO fall in the realm of "suspicious" and "dubious" transactions. The Ld. AO has therefore necessarily to consider the surrounding circumstances, which he indeed has done in a very meticulous and careful manner. In the case of Win Chadha Vs CIT (International Taxation) in ITA No.3088 & 3107/Del/2005, the Hon'ble Delhi ITAT "B"-Bench has observed, on 31.12.2010 as under: "SUSPICIOUS AND DIBIOUS TRASANCTION HOW TO BE DEALT WITH: 6.11. The tax liability in the cases of suspicious transactions, is to be assessed on the basis of the material available on record, surrounding circumstances, human conduct, preponderance of probabilities and nature of Incriminating Information/ evidence available with AO. 6.12. In the case of Sumati Dayal V. CIT (1995) 80 Taxman 89 (SC), the Hon'ble Supreme Court has dealt with the relevance of human conduct, preponderance of probabilities and surrounding circumstance, burden of proof and its shifting on the Department in cases of suspicious circumstances, by f....
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....t taken together, they form a chain of circumstances leading to an inference or presumption of the existence of the principal fact. In the appreciation of circumstantial evidence, the relevant aspects, as laid down from time to time are - (1) the circumstances alleged must be established by such evidence, as In the case of other evidence (2) the circumstances proved must be of a conclusive nature and not totally Inconsistent with the circumstances or contradictory to other evidence. (3) although there should be no missing links in the case, yet It is not essential that every one of the links must appear on the surface of the evidence adduced i some of these links may have to be Inferred from the proved facts; (4) In drawing those Inferences or presumptions, the Authorities must have regard to the common course of natural events, to human conduct and their relation to the facts of the particular case. (5)The circumstantial evidence can, with equal facility, be resorted to In proof of a fact in issue which arises In proceedings for the assessment of taxes both direct and indirect, circumstantial evidence can be made use of In order to prov....
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....Ld. AO, confirm the same. Grounds 1 to 3 taken by the appellant stand dismissed. 3. We have given our thoughtful consideration to rival contentions. The assessee's paper book comprising of all details of its LTCG, copy of its bill dated 25.02.2012 in connection with purchase of shares of M/s Surabhi Chemicals & Investments Ltd. and Panchshul Marketing Ltd, bank statement. The said latter entities amalgamated regarding merger with M/s Kailash Auto Finance, contract notes in respect of sale of share of M/s Surabhi Chemicals & Investments Ltd. Similar contract notes regarding M/s Kailash Auto shares sold, bank statement reflecting payment receipts alongwith corresponding demat statements stand perused. Mr. Choudhury relies on hon'ble apex court's decision in Sumati Dayal vs. CIT (1995) 80 Taxmann 89/ 214 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) that the assessee's explanation in the corresponding backdrop of facts pin-pointing suspicious circumstances has been rightly rejected in both the lower proceedings. It is vehemently argued that assessee has taken LTCG entry in collusion with dubious entry operators. We find no merit in any of these a....
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....lating to LTCG on sale of shares. The Ld. AR drew our attention to the order of the AO wherein the AO has erroneously recorded at para 3.1 that the assessee had purchased the shares of M/s. NFGL off market (not through established stock exchange) whereas the assessee had purchased the shares of M/s. NFGL through M/s. M. Prasad & Co. Ltd. which is a recognized stock broker of Bombay Stock Exchange (BSE), through whom the assessee had made several investments in various scrips/shares and drew our attention to page 5 of paper book wherein the details of investment made by the assessee for the previous AY 2013-14 is given which shows that assessee has dealt with 30 nos. of different shares of companies including Reliance, Infosys, L & T etc. and it was thus contended that this transaction with M/s.NFGL was not the single investment which assessee carried out through this broker. Thus, according to Ld. AR, the AO erred in finding that the assessee had purchased shares of M/s. NFGL in off market and not through established stock exchange. The Ld. AR drew our attention to page no. 6 of the paper book wherein we note that the assessee had purchased on 13.06.2012, 25000 shares at cost price....
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....s from page 25 to 33 of the paper book. v) Copy of ledger of assessee in the books of the share broker pages 34 to 36 of the paper book. Following documents were filed before the authorities below in support of the sale of the shares: i) copy of contract note for sale of shares of M/s. NFGL page 7 to 17 of the paper book. ii) Copy of bank statement highlighting the receipt of sale consideration pages 20to 23 of paper book. iii) Copy of de mat holding statement and transaction of the statement which highlighting the movement of shares pages 24 to 33 of the paper book. 4. It was also pointed out by the Ld. AR that purchase of shares of M/s. NFGL in FY 2012-13 was duly recorded in the balance sheet and the return was processed by the department u/s. 143(1) of the Act thereby the department has accepted the purchase of shares of M/s. NFGL, however, when sales of the same scrips happened it was not accepted by the AO which action of the AO, according to Ld. AR, was unjustified and need to be set right. The Ld. AR further pointed out that the AO in his eagerness to somehow hold that transaction of M/s. NFGL bogus has erroneously made ....
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....essee did not know the names of the buyers and has no connection and/or relations with any such persons. The transactions of sale of shares were online trading system through his broker from whom he received the sale consideration. The broker also received payments for all his transactions from Stock Exchange. The seller and the buyer cannot know the names of each other as well as that of their respective brokers, who were involved in the trading transactions in the secondary platform. In such a situation according to ld AR, it cannot be presumed that there could be any transfer of cash between the buyers and sellers to convert their unaccounted money of the beneficiaries as alleged by the AO. The ld AR referred to the judgement of Hon'ble Bombay High Court in the case of CIT vs. Lavanya Land Pvt. Ltd. [2017] 83 taxmann.com 161 (Bom) to contend that there was no evidence whatsoever to allege that money changed hands between the assessee and the broker or any other person including the alleged exit provider whatsoever to convert unaccounted money for getting benefit of LTCG as alleged. In the said case, the Hon'ble High Court at Para 21 held that in absence of any material t....
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....on record. The theory of 'preponderance of probability' is applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumptions of facts that might go against the assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigations have been carried out, then nothing can be implicated against the assessee . 7. The ld AR submitted that there is no direct evidence against the assessee brought on record by AO to hold that the assessee introduced his own unaccounted money by way of bogus LTCG. The ld AR submitted that although various investigations were carried out by different agencies, there is no evidence against the assessee and/or the brokers and/or the Companies in which the assessee dealt with to hold that the assessee was a beneficiary to the modus operandi adopted by different entities / brokers / entry operators. The ld AR submitted that, in view of the aforesaid judgement of Special Bench of Mumbai T....
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.... (iii) CIT V. Shreyashi Ganguli [ITA No. 196 of 2012] (Cal HC) - In this case the Hon'ble Calcutta High Court held that the Assessing Officer doubted the transactions since the selling broker was subjected to SEBI's action. However the transactions were as per norms and suffered STT, brokerage, service tax, and cess. There is no iota of evidence over the transactions as it were reflected in demat account. The appeal filed by the revenue was dismissed. (iv) CIT V. Rungta Properties Private Limited [ITA No. 105 of 2016] (Cal HC) - In this case the Hon'ble Calcutta High Court affirmed the decision of this tribunal , wherein, the tribunal allowed the appeal of the assessee where the AO did not accept the explanation of the assessee in respect of his transactions in alleged penny stocks. The Tribunal found that the AO disallowed the loss on trading of penny stock on the basis of some information received by him. However, it was also found that the AO did not doubt the genuineness of the documents submitted by the assessee. The Tribunal held that the AO's conclusions are merely based on the information received by him. The appeal filed by the revenue was di....
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.... Ms. Farrah Marker vs. ITO - ITA No. 3801/Mum/2011 (Mumbai ITAT) (ix) Anil Nandkishore Goyal vs. ACIT - ITA Nos. 1256/PN/2012 (Pune ITAT) (x) CIT vs. Sudeep Goenka - [2013] 29 taxmann.com 402 (Allahabad HC) (xi) CIT vs. Udit Narain Agarwal - [2013] 29 taxmann.com 76 (Allahabad HC) (xii) CIT vs. Jamnadevi Agarwal [2012] 20 taxmann.com 529 (Bombay HC) (xiii) CIT vs. Himani M. Vakil - [2014] 41 taxmann.com 425 (Gujarat HC) (xiv) CIT vs. Maheshchandra G. Vakil - [2013] 40 taxmann.com 326 (Gujarat HC) (xv) CIT vs. Sumitra Devi [2014] 49 Taxmann.com 37 (Rajasthan HC) (xvi) Ganeshmull Bijay Singh Baid HUF vs. DCIT - ITA Nos. 544/Kol/2013 (Kolkata ITAT) (xvii) Meena Devi Gupta & Others vs. ACIT - ITA Nos. 4512 & 4513/Ahd/2007 (Ahmedabad ITAT) (xviii) Manish Kumar Baid ITA 1236/Kol/2017 (Kolkata ITAT) (xix) Mahendra Kumar Baid ITA 1237/Kol/2017 (Kolkata ITAT) 10. The ld AR further submitted before us that once the assessee has furnished all evidences in support of the genuineness of the transactions, the onus to disprove the same is on revenue. He referred to the judgement of Hon'ble Supreme Court in the case of Kri....
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....hares were bogus relying on the statements of various unknown persons recorded by Investigation Wing wherein these persons accepted to have provided accommodation entries of various natures including LTCG to different persons. The ld AR submitted that in the statement of third parties, the name of the assessee was not implicated. Even otherwise, no adverse inference could be taken against the assessee on the basis of untested statements without allowing opportunity of cross- examination. The ld AR referred to and relied on the following judgements in support of the aforesaid submissions:- (i) Andman Timber Industries vs. CCE - [2015] 62 taxmann.com 3 (SC) (ii) ITO vs. Ashok Kumar Bansal - ITA No. 289/Agr/2009 (Agra ITAT) (iii) ACIT vs. Amita Agarwal & Others - ITA No. 247/(Kol) of 2011 (Kol ITAT) (iv) ITO vs. Bijaya Ganguly - ITA Nos. 624 & 625/Kol/2011 (Kol ITAT) (v) Ganeshmull Bijay Singh Baid HUF vs. DCIT - ITA Nos. 544/Kol/2013 (Kolkata ITAT) (vi) Rita Devi & Others vs. DCIT - IT(SS))A Nos. 22-26/Kol/2p11 (Kol ITAT) (vii) Malti Ghanshyambhai Patadia vs. ITO - ITA No.3400/Ahd/2015 (Ahmedabad ITAT) (viii) Pra....
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....". It was pointed out by the Ld. AR that the assessee has purchased share of M/s. NFLG for Rs.128.25 per share which is reflected in page 6 of the paper book which is the contract note. According to Ld. AR this is nothing but cut paste of some other case and has nothing to do with the assessee's case and it exposes non-application of mind of the AO. We find that the AO has stated that the assessee has purchased the share at Rs.865 per share whereas the assessee had purchased the shares at Rs.128.25, therefore, we note that the AO erred in making the erroneous finding of the purchase value of the shares. We note that in this case the assessee was investing in different shares of the companies (30 different shares of companies ) as evident from perusal of page 5 of paper book and the purchase and sale of shares in M/s. NFGL is one among the 30 odd shares the assessee dealt with as an investment through a registered stock broker of Bombay Stock Exchange "M. Prasad & Co. Ltd." The assessee had purchased 25000 shares of M/s. NFGL on 13.06.2012 at a cost price of Rs.128.25 per share and remitted Security Transaction Tax (STT) of Rs.4007.81 and at a total cost price of Rs.32,16,000/- ....
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....he value of Rs.820/- per share and paid STT and received a consideration of Rs.40,82,079/- which the assessee received by account payee cheque which is reflected in page 21 of the paper book received on 24.08.2013. Like wise, the other sale transactions are reflected from pages 8 to 17 of the paper book for different rates from Rs. 845/- per share, Rs.865/- per share, Rs.920/- per share, Rs.921/- per share etc. and the assessee has received the said consideration through account payee cheque. It was pointed out by the Ld. AR that when a show cause notice was given by the AO on 09.12.2016 wherein the assessee was asked to explain why the sale consideration of Rs.2,16,49,202/- shall not be added back u/s. 68 of the Act as well as Rs.10,82,460/- being 5% of the said sum be added u/s. 69C of the Act, the assessee promptly replied to it. The AO acknowledges that the assessee had replied vide letter dated 22.12.2016 which the AO has stated to have been placed on record. However, it was brought to our notice that the AO has not made any adverse finding in respect to the submissions made by the assessee in justifying the LTCG claim. It was brought to our notice that no attempt has been mad....
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....scrupulous elements in the financial markets has made a vague statement that some accommodation entry provider has admitted that M/s. NFGL also indulged in wrong practices, however, we sought the Ld. DR's help to throw some light on this specific allegation made by the AO. However, other than the bald statement, nothing adverse could be found against the shares of M/s. NFGL. Even if for argument sake if there was such an adverse admission made by an accommodation provider against M/s. NFGL, then the AO in all fairness had to confront the assessee with the adverse material and given an opportunity to the assessee to meet it and the assessee should have been given an opportunity to explain it; and in case the assessee desires, she should have been allowed to cross examine the accommodation provider or else the adverse material cannot be acted upon to draw adverse inference against the assessee as held by the Hon'ble Apex Court in Andaman Timber Industries Vs. Commissioner of Central Excise 62 Taxman.com 3. It should be kept in mind that assessee cannot be kept in dark as to the material against her and it has to be given to the assessee if AO proposes to use it against the as....
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....exchange and each trade of sale of shares were having unique trade number and trade time. It is not the case of the AO that the shares which were sold on the date mentioned in the contract note were not the traded price on that particular date. The AO doubted the transactions due to the high rise in the stock price and for that the assessee cannot be blamed unless there was any material/ evidence to prove that the assessee or any one on his behalf has rigged or manipulated the stock price. It should be noted that the stock exchange of SEBI are the statutory authority appointed by the Government of India to ensure that there is no stock rigging or manipulation. The AO has not brought any evidence on record to show that these agencies have alleged any stock manipulation against the assessee or the brokers or the companies in question. In absence of any relevant evidences it cannot be said that merely because the stock price moved sharply, the assessee was to be blamed for bogus transactions. It is pertinent to note that the assessee has purchased the stocks through registered brokers and thereafter the assessee has sold the shares through the registered share/stock brokers with Calcu....
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....fail. At the cost of repetition, we note that the assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions relevant to the purchase and sale of shares resulting in long term capital gain. These evidences were neither found by the AO nor by the ld. CIT(A) to be false or fictitious or bogus. The facts of the case and the evidence in support of the evidence clearly support the claim of the assessee that the transactions of the assessee were genuine and the authorities below was not justified in rejecting the claim of the assessee that income from LTCG is exempted u/s 10(38) of the Act. For coming to such a conclusion we rely on the decision of the Hon'ble Calcutta High Court in the case of M/s. Alipine Investments in ITA No.620 of 2008 dated 26th August, 2008 wherein the High Court held as follows : "It appears that there was loss and the whole transactions were supported by the contract notes, bills and were carried out through recognized stock broker of the Calcutta Stock Exchange and all the bills were received from the share broker through account payee which are al....