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2023 (2) TMI 298
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....ct in respect of long term capital gain derived from sale of shares of Radford Global Ltd, in the facts and circumstances of the case. The inter connected issue involved therein is whether the ld. CIT(A) NFAC was justified in confirming the addition @ 3% of transaction amount of long term capital gain as unexplained expenditure u/s 69C of the Act in the facts and circumstances of the case. 3. We have heard the rival submissions and perused the materials available on record. The assessee is an individual engaged in investment in shares on long term basis. The assessee had made investments in various scrips including Radford Global Ltd. The evidence in the form of making investments in various scrips is enclosed in 37 of the paper book. He had filed his return of income for the Asst Year 2014-15 on 27/09/2014 declaring total income of Rs Nil. In the said return, the assessee claimed exemption u/s 10(38) of the Act in respect of long term capital gain derived from sale of shares of Radford Global Ltd. The said return was duly processed u/s 143(1) of the Act. This was later sought to be reopened u/s 147 of the Act on the ground that the claim of exemption u/s 10(38) of the Act claim....
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....011 b) Payment receipt dated 23/11/2011 given by the seller of shares to the assessee c) Advertisement published in newspaper by Seller which enabled assessee to approach the seller for purchase of shares d) Bank statement of assessee disclosing payment of purchase consideration for shares on 24/11/2011 e) Share Certificate dated 30/11/2011 evidencing transfer of shares in assessee's name f) Special resolution passed by Radford Global Ltd at an Extra Ordinary General Meeting of its shareholders for sub-division of shares g) Demat statement of the assessee showing the credit of 50000 shares on purchase and consequential sub-division of shares h) Balance Sheet of the assessee for Asst Years 2012-13 and 2013-14 evidencing the fact of assessee making various investments in various scrips including Radford Global Ltd i) ITR acknowledgement together with the computation of income and balance sheet of the assessee for Asst Year 2014-15 (ie the year under consideration) j) Sales Bills cum Contract Notes 08/04/2013 to 22/04/2013 k) Confirmation of stock broker M/s Motilal Oswal Securities Ltd enclosing....
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....he outset, we find that the documentary evidences submitted by the assessee were found to be genuine and no adverse inferences were drawn by the revenue on the same. The purchase transaction of shares made in off-market in Asst Year 2012-13 and assessee had made payment for the same by account payee cheque. We find that the assessee has made investment in various scrips of various companies including Radford Global Ltd. The entire investments made by the assessee has been duly disclosed in the Balance Sheet of the assessee , which fact is not disputed by the revenue. The sale transactions were carried out by the assessee in the secondary market through a registered share broker at the prevailing market prices. Payments were received by the assessee by account payee cheques from the stock exchange through the registered broker. Amounts received on sale of shares were duly subjected to levy of Securities Transaction Tax (STT) at the applicable rates. 6.1. We find that no enquiries were carried out by the revenue either on the broker or with the stock exchange with regard to transactions carried out by the assessee. The revenue had merely relied on the Kolkata investigation report ....
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....erein it was preliminarily held that the share prices of the said scrip had been artificially rigged by manipulators. Later SEBI had passed a final order dated 20/09/2017 under sections 11,11(4) and 11B of the SEBI Act, 1992 in the matter of Radford Global Ltd, wherein all the 82 entities had been acquitted by SEBI by clearly giving a finding that those entities were not involved in artificial price rigging of shares. 6.5.We find that the assessee had held the shares in the instant case for 17 months and then sold the shares in the open market at prevailing market prices. The assessee bought the shares on 18/11/2011, which was prior to the investigation period carried out by SEBI as admittedly SEBI carried out investigation of this scrip for the period 28/01/2013 to 24/03/2014. We find that the assessee had sold the shares from 08/04/2013 to 22/04/2013 in the open market at the prices reflected in earlier part of the order and the said price remained in the same level even after the sale made by the assessee, which fact is evident from the rate chart enclosed by the assessee in page 23 of the paper book. We further find that from page 7 of the SEBI order, there is a categorical ....
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....sumati Anantrai Mody 36 AADCD7140G Devatma Distributors Private Limited 37 AAFHA0709M Anil Rajat Agarwal & Sons (HUF) 38 AADCD6028P Dhanraksha Vincom Private Limited 39 AACPJ3610K Ashok B Jiwrajka 40 AABCD8146J Divyadrishti Traders Private Limited 41 AAIPG4573G Rabita Mittal 42 AABCD8147K Divyadrishti Merchants Private Limited 43 AAKPD3160A Bimal J Desasi 44 AAECK6244R Katyani Commodities Private Limited 45 ACDPT3428N Dalsukh Upmashi Trevadia 46 AACCL3868N Ladios Trading Private Limited 47 AAGPJ8756J Dilip B Jiwrajka 48 AACCL0133G Limestone Properties Private Limited 49 AADPM9919M Dilip Chotala Imorzaria 50 AADCM4316K Manimudra Vincom Private Limited 51 AHEPG0025A G.M. Prasanna Kumar 52 AADCN6251G Natural Housing Private Limited 53 ADPPK9874N G.S. Anith Kumar 54 AAFCR2818B Radison Properties Private Limited 55 AAJPV4754H Harikishan Suderlal Vermani 56 AAGCR1715E Rangan Vincom Private Limited 57 AABPJ2835R Hitesh Mangilal Jain 58 AAECR9858C Ridhi Vincom Private Limited 59 A....
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....or in the discharged list. Hence it could be safely concluded that the assessee herein is merely a gullible investor, who had resorted to make investment in the shares of Radford Global Ltd based on market information and had sold the shares in the secondary market in prevailing market prices. 6.7. Hence the entire addition has been made merely by placing reliance on the Kolkata Investigation Wing report which are more general in nature and does not implicate the assessee herein in any manner whatsoever. We are unable to persuade ourselves to accept to the contentions of the ld. DR that Kolkata Investigation Wing had conducted a detailed enquiry with regard to the scrip dealt by the assessee herein and hence whomsoever had dealt in this scrip, would only result in bogus claim of long term capital gain exemption or bogus claim of short term capital loss. Merely because a particular scrip is identified as a penny stock by the income tax department, it does not mean all the transactions carried out in that scrip would be bogus. So many investors enter the capital market just to make it a chance by investing their surplus monies. They also end up with making investment in certain sc....
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....ind that the Co-ordinate Bench of this Tribunal in the case of Mukesh Ratilal Marolia vs Additional CIT reported in 6 SOT 247 (Mum ITAT) dated 15/12/2005 had held that personal knowledge and excitement on events should not lead the ld. AO to a state of affairs where salient evidences are overlooked. When every transaction has been accounted, documented and supported, it would be very difficult to brush aside the contentions of the assessee that he had purchased shares and had sold shares and ultimately purchased a flat utilizing the sale proceeds of those shares and therefore, the co-ordinate bench chose to delete the impugned additions. We find that this tribunal decision was approved by the Hon'ble Jurisdictional High Court in ITA No. 456 of 2007 dated 07/09/2011. It is pertinent to note that the Special Leave Petition preferred by the Revenue against this decision before the Hon'ble Supreme Court has been dismissed vide SLP No. 20146 of 2012 dated 27/01/2014. 6.10. Further we find that the Hon'ble Jurisdictional High Court in the case of CIT vs Shyam S Pawar reported in 54 taxmann.com 108 (Bom), it was held that where Demat account and contract note showed details of share tr....
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....igation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs.25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, is not enough to prove that the transa....