TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 974
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....Year (AY) 2010-2011 [ITA 13/2023], AY 2009-2010 [ITA 14/2023] and AY 2008-2009 [ITA 15/2023]. 3. The main allegation against the respondent/assessee is, that it has introduced unaccounted income in its books in the guise of "bogus Long Term Capital Gains" ["LTCG"]. 3.1 The LTCG, as per the Assessment Order dated 31.03.2015, which were registered by the respondent/assessee in each of the AYs is the following: Assessment Year (AY) Amount 1. 2008-09 Rs. 37,41,74,914/- 2. 2009-10 Rs. 2,29,30,711/- 3. 2010-11 Rs. 59,24,97,150/- 4. In order to adjudicate upon the appeals, the following broad facts are required to be noticed: 4.1 On 07.08.2012, a survey was carried out by the appellant/revenue in exercise of powers under Section 133A of the Income Tax Act, 1961 [in short, "the Act"], and according to the appellant/revenue, during investigation, the aforementioned fact was revealed i.e., that the respondent/assessee had introduced unaccounted income in its books of accounts in the guise of LTCG to the extent indicated hereinabove, albeit, by first investing and then selling the shares of two entities i.e., REI Agro Ltd. [in short, "REI....
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....r. The Tribunal, however, came to the conclusion that the order passed by the CIT(A) had to be confirmed. For the sake of convenience, the relevant observations made by the Tribunal are hereafter: "14. We have heard the rival submissions and perused the relevant findings given in the impugned order as well as material referred to before us. It is an undisputed fact that assessee-firm is engaged in the business of trading in shares and also made investment in shares from where assessee had shown huge business income and also shown capital gain. One of the facts noted by the Assessing Officer in the assessment order is that during the Assessment Year 2008-09 assessee has declared profit from trading in shares of REI Agro Ltd. and also during the year assessee has transferred opening stock and purchased shares of REI Agro India under investment portfolio. The assessee had shown separate ledger account in respect of purchases made under investment account of Rs. 13,38,77,337/- and had also shown purchases of Rs.27,84,14,870/- under stock-in-trade for trading purpose from which assessee has declared income of Rs. 16,66,59,460/- and stock (investment) has been disclosed at Rs. 1....
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....e inference is not clear. If REI Agro Group has funded certain companies through loan and if these six companies have purchased shares from the assessee and then have suffered losses, then how it can be inferred that there was some kind of collusion of assessee. First of all, it is not clear that these companies have incurred losses merely on trading of shares of REI Agro Group; and secondly, if the entire transaction is through National Stock Exchange had traded on quoted market price, then how it can be inferred that the Long Term Capital Gain claimed by assessee was on account of dumping of losses in the books of some Gujarat based companies. There has to be some material or inquiry wherein assessee has been found to be involved directly or indirectly either in rigging of price of REI Agro Group or was some kind of collusion for such accommodation entries. 16. One another angle which can be seen is that, nowhere the Assessing Officer has stated that the stares of the REI Agro Group have jumped astronomically within a short period; or REI Group has been black listed either by the SEBI or by the Stock Exchange for any kind of price manipulation or any kind of action has b....
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.... by a group of companies. The said question and reply reads as under: Q.20 What was the reason of purchase of shares of REI Agro Ltd at very high prices and consequently suffering losses by your group companies? Ans. Sir, these companies have made investment in the shares of REI Agro Ltd with the intention to earn profit and the same was purely a business decision and on the basis of study of the share market. However, sometimes we had taken advice from director of M/s. Tripti Merchants Pvt. Ltd regarding investment to be made in shares. In returns, they are bearing with us in losses made by my companies Q. 22. The fact that you have taken unsecured loan uithout any interest and also incurred huge losses. Does this suggest that you are buying these shares at the instance of parties who are giving loan to you. Ans. No, Sir, the whole purchases are purely business decision to earn the profit. However, sometimes we had taken the advice of from Director of M/s Tripti Merchants Pvt Ltd regarding investment to be made in shares. Here again, no adverse inference from such a statement can be drawn, as it has been categorically said that thaes[si....
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....hich were located in Gujarat, were unaccounted income of the respondent/assessee, appears to be based on assumptions and/or conjectures. We were shown no material to back the conclusion arrived at by the AO. 22. According to us, the appellant/revenue could not have bifurcated the purchase and sale transactions. Concededly, when the shares were purchased for trading purposes in earlier years, the profits so generated were accepted, and at the point in time, when these scrips were converted into investment and sold during the Assessment Years in issue, they could not be treated as bogus transactions. 23. The fact that shares were traded on stock exchange after paying securities transaction tax, and that money had been received through banking channels only demonstrated that they were not bogus transactions. 24. The statement of another gentleman i.e., Mohan Singh Jadoun, on which reliance was placed before us as well by Mr Vipul Agarwal, who appears for the appellant/revenue, according to the Tribunal, did not lead to an adverse inference. 25. According to us, the aforesaid observations made by the Tribunal are, in effect, findings of the fact. 26. There are concurrent....