TaxTMI 
TaxTMI 
2023 (1) TMI 206
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.... 3. The grounds raised by the assessee are as under: 1. CIT(A) erred in law by not allowing the exemption u/s.10(38) of the Income Tax Act in respect of long term capital gain earned on shares. This act of CIT(A) is out of ambit of law. 2. CIT(A) erred in law by not considering the cash payment for purchase of shares as genuine payment inspite of evidences for cash payment submitted before AO as well as before CIT(A). C1T(A) believe that only payment made through cheque is the genuine payment for purchase of shares. This act of CIT(A) is against the principle of law. 3. CIT(A) has erred by confirming the addition Which was made by AO without giving opportunity of Cross Examination of third party inspite of assessee's request to AO. This act of CIT[A) is against the principle of natural justice. 4. CIT(A) erred in confirming the addition made by AO which was made by AO based on surmises & conjectures. This act of CIT(A) is against the Justice and against the law. 4. The issue in the present appeal relates to long capital gain on sale of shares claimed as exempt by the assessee under section 10(38) of the Act, being held as bogus and additio....
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.... source that the said was purchase as off market transaction. The shares were kept in pull holding of the brokers. The payment for the purchase were made in cash. The shares were demitasse on 06/08/2014 on the date of sale. Hence, the genuineness of purchase of share are not established. The capital gains out of the sale of the above shares have been claimed as exempt income. The assessee has also not explained any valid reason for the purchase of such shares at very lower price. Further, the stock exchange has suspended Life line Drugs & Pharma Ltd from trading with effect from 28/08/2015. On account of surveillance measures by the exchange All these sequence of facts and modus operand! adopted by the assessee, proved that the shares does not fetch any potential value and the shares sold at very higher price is nothing but the accommodation entries taken by the assessee to camouflage his undisclosed income under the garb of capital gains, income from which is exempt income. This is nothing but colorful device just to avoid legitimated payment of tax which is not permissible as per law, In view of the decision of the MC Dowell & Co. Ltd. Vs CTO 154 ITR 148 (SC) in which it....
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....s the bank account but not used for making payment for purchase of shares through cheque and the same shifts the onus to the appellant which has not been and could not be shifted to the AO. Secondly, the shares were never in his demat account till 08.08.2014. Thirdly, the shares have been sold the same day of arrival in demat account. Fourthly, the name of the broker prominently reflects in any of the investigation report on the issue involved. The shares were not held by the appellant in his/her demat account. As far as procedural aspect is concerned, the shares were kept in pool holding of the broker, M/s. Vijay Bhagwandas & Co. As per SEBI's rule, if the full payment of share purchase made, then the broker must transfer the shares to the. client demat account within 24 hours. In this case, the assessee alleged to have made payment on 01.04.2013 and shares of Lifeline Drugs & Pharma Limited converted in demat form on 08.08.2014. Hence, the plea, of the assessee in respect of the share in pool account of the broker is not correct and hence rejected. In the circumstances, there is no independent credible evidence so as to show that the-appellant was holding th....
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....becomes far from the destined judicial path stipulated therein. The appellant was not able to prove the ownership of the shares as same is alleged to have happened through payment of cash and is not brought in personal demat account. Similar issue has been dealt in detail in ITAT Mumbai's judgment in the case, of Ratnakar M, Pujari vs. ITO (ITA No.995/Mum/2012: A. Y.2006-07) dated 03.08.2016 wherein the appeal of assessee is dismissed on. similar facts. In another decision delivered on 27.03.2015 on similar fact the Hon'ble ITAT, E-Bench, Mumbai has allowed the Revenue appeal in the case of Shamim M. Bharwani vide ITA No.4906/Mum/2011 (AY 2006-07) and observed as under: "Firstly, documentary evidences, in the face of unusual events, as prevailing in the instant case, and without any corroborative or circumstantial evidences/s, cannot be regarded as conclusive. Two the preponderance of probabilities only denotes the simultaneous existence of several 'facts', each probable in itself, albeit low, so as to cast a serious doubt on the truth of the reported 'facts' which together make up for a bizarre statement, leading to the inference of collus....
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....se, it is proved the case of revenue that the transaction is of suspicious nature. In my opinion, the transaction is stage-managed to get benefit u/s. 10(38) and the same is not permissible under the Act. In the circumstances, the addition made by AO is hereby confirmed and ground of appeal is dismissed." 5. I have gone through the order of the Ld.CIT(A) as well as that of the Assessing Officer. I find that both the Revenue authorities i.e. AO and the Ld.CIT(A) have given a detailed finding on the issue of bogus long term capital gain claimed by the assessee. 6. The assessee had shown long term capital gains in respect of sale of 6100 shares of Lifeline Drugs & Pharma Ltd to the tune of Rs.14,96,591/- and claimed the same as exempt u/s 10(38) of the Act. The assessee had purchased 610 shares of the said company on 01/04/2013 for a consideration of Rs.22,164/- at a value of Rs.36.10/- per share . On 13/11/2013 these 610 shares were split into 6100 shares and subsequently sold on 08/08/2014 for Rs.15,18,755/- @ Rs.248.97/- per share. Thus shares purchased @ Rs.3.61 /- per share were sold @ Rs. Rs.248.97/- per share within a short span of a year. 7. The AO noted the history o....