AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 1358
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....-32(2)(1), Mumbai [hereinafter referred to 'Ld. AO'] u/s.143(3) of the Income Tax Act [hereinafter referred to the 'Act'] dated 28.12.2018 for AY 2016-17. 1.2. Identical issues are involved in both the appeals, therefore, the same are taken up altogether and disposed of by this common order for the sake of convenience. 2. The only identical issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in deleting the additions made u/s.68 of the Act in respect of sale proceeds of shares of M/s. Sunrise Asian Ltd (SAL) in the facts and circumstances of the case. 2.1. The brief facts of this issue are that the assessee is a Limited Liability Partnership (LLP) formed by conversion of erstwhile company M/s. Liberal Securities and Financial Services Ltd., into LLP as per Companies Act. The assessee LLP filed the return of income for AY 2015-16 on 31/08/2015 declaring total income of Rs. Nil. The assessee had shown exempt income of Rs.67,95,98,197/- on sale of shares of SAL. The predecessor company purchased 14,96,290 shares of SAL for a total consideration of Rs.29,92,580/-@2/- per share and the said shares became investments of the LLP after conversion, alongwith ....
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....purchase agreement dated 11/01/2012, copy of DEMAT account to show receipt of shares purchased and the name and address of the share broker, copies of contract notes for sale together with bank statement wherein sale proceeds of shares were reflected. We find that assessee had also given evidence for purchase of shares of SAL, payments for which were made by account payee cheque and also stating that the shares were duly dematted immediately after the purchase of shares and held thereon for more than 2 years from the date of its purchase. The assessee pointed out that the part of the shares were sold during A.Y.2015-16 and remaining part of the shares for A.Y.2016-17. All the transactions were routed through recognised stock exchange through registered share broker and had duly suffered levy of Security Transaction Tax (STT). Accordingly, it was pleaded that the long term capital gain arising on sale of such listed shares would be eligible for exemption u/s.10(38) of the Act. We find that the ld. AO had primarily made the addition only based on the original statement recorded from Shri Vipur Vidhur Bhatt, ignoring the fact that the said statement had been duly retracted by him by w....
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....the prevailing market price at any point of time. Hence the assessee cannot be nor is supposed to be aware of and know the identity of the persons, who have purchased the Shares at the time of the Sale of the said Shares by the Assessee at the Stock Exchange. 1. It is further submitted that the Share price is a/ways determined by the market mechanism at any given point of time because there is a robust system of the Stock Exchange which is transparent, open and equitable, and the assessee has also sold the Shares on such a platform at a price which was a reflection of the market price derived through the interplay of the forces of market demand and supply. Sir, it is further submitted that the assessee firm or any of its partners are not connected or related with any of their promoters or Directors of the Company M/s. Sunrise Asian Limited or any of the so-called entry operator. As a matter of fact, the assessee firm or any of its partners never indulged any such questionable activity nor has been part of any modus operandi as stated by the A.O. in the assessment order. It is further submitted that investment in a Company with weak fundamentals can be for several reasons su....
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....r submitted that just because the assessee is able to draw benefit out of the rigging of prices done by others in the transaction bonafidely done in the fully legalised system with not a shred of evidence on record to prove the complicity of the assessee in the alleged crime, it is not possible to draw any adverse inference against the assessee. It is submitted that the overwhelming documentary and circumstantial evidence has to be considered and not mere suspicion and preponderance of probabilities. It is submitted that the Hon. Supreme Court in the case of Omar Sa/ay Mohamed Salt (1959) 37 ITR 151 (SC) held that no addition can be made on the basis of surmises, suspicion and conjectures. In the case of Umacharan Shaw & Bros, v C.I.T. (1959) 37 ITR 271 (SC), the Hon'ble Supreme Court held that suspicion however strong, cannot take place of evidence. The Hon'ble Supreme Court in the case of CIT (Central) Kolkata v. Daulat Ram Rawatmull reported in 87 ITR 349 held that the onus to prove that the apparent is not the real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences which....
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....f shares as well as ledger account of the assessee with the registered share broker. The ld. CIT(A) also categorically observed that the transaction was duly subjected to STT on sale of shares and that none of these evidences were controverted by the ld. AO in his assessment order. The ld. CIT(A) had observed that there was no specific mention of the name of the assessee in the information as beneficiary. Further, Shri. Vipul Vidur Bhat in his detailed statement recorded during search had given names of the entities and names of the beneficiaries of accommodation entries. In none of those lists, he had taken anywhere the name of the assessee LLP or the erstwhile company or name of any partner as beneficiaries of entries provided by him. Further the ld CIT(A) also observed that the statements recorded from alleged brokers during the search at Mumbai (which had been heavily relied upon by the ld. AO), do not directly M/s. Liberal Realtors Limited Liability Partnership link the assessee with any of said companies or persons, much less with Kolkata operators. None of the persons whose statements were recorded stated that the assessee was involved in price rigging of the shares or that ....
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....e the addition made by the ld. AO u/s.68 of the Act treating the sale proceeds of sale of SAL as cash credit. 2.12. Apart from this, the ld. CIT(A) had also dealt with various allegations levelled by the ld. AO on the statement of Shri Vipul Vidhur Bhatt and the modus operandi applied by him. In this regard, the ld. CIT(A) had observed in para 5.27 of his order that since Shri Vipul Vidhur Bhatt had retracted his statement by filing an affidavit, reliance placed by the ld. AO on the original statement is not warranted as it is not backed by any corroborative evidence on record. The ld. CIT(A) also placed reliance on various decisions of various High Courts to drive home the point that statement recorded during search which is not backed by any corroborative evidence cannot be basis for making any addition in addition thereto. He also relied on certain case laws where the statements once retracted would lose its evidentiary value. Further, the ld. CIT(A) also placed reliance on the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Mukesh Ratilal Marolia in ITA No.456 of 2007 dated 07/09/2011. In that case, the ld. AO had held that long term capital gain shown....
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....ces submitted by the assessee are proper and genuine and had not stated that the transactions carried out by the assessee are proper and genuine. We are unable to persuade ourselves to accept to this narrow argument of the revenue, in view of the fact, that the entire evidences are filed by the assessee only in support of the transactions carried out by the assessee. When the evidences are accepted as proper and genuine, that too after due enquiries and examination thereon, obviously the transactions carried out by the assessee also would be proper and genuine. Hence the only logical conclusion would be that the ld. AO had indeed accepted the entire transactions together with its evidences as proper and genuine. We deem it unnecessary to go into the merits of the addition made herein. The entire remand report of the ld. AO had already been reproduced herein supra. We hold that when the ld. AO had given a favourable report in his remand proceedings, then fairly the Revenue ought not to have preferred any further appeal before this Tribunal as there could not be any grievance for them. 3.1. We draw support in this regard on the decision of the Hon'ble Madras High Court in the case o....
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....ng Officer stating that she has furnished the details of the goods to the Assessing Officer during the assessment proceedings and no further details could be furnished, as the assessment was taken up only around the limitation period and as such sufficient time was not provided to her. The applicant furnished confirmations by way of affidavits from various donors of the gifts in dispute during the appellate proceedings and based on the affidavits, the applicant contended that there was no justification for the Assessing Officer to treat the gifts as 'unexplained credits'. Similar contention was raised with regard to the loan of Rs.2,00,000/- from Mrs. S. Saraswathy. With regard to the order of the Assessing Officer treating the agricultural income as non-agricultural income, the applicants filed certificate from VAO to the effect that her agricultural income was around Rs.7,00,000/- per annum and that she had taken 30 acres of land in the village on lease from Mr. Danushkodi and his son D. Muthukumar and paying lease rent of Rs.75,000/- per year to Mr. Danushkodi and Rs.15,000/- per year to Mr. D. Muthukumar. 16. Further, coconut trees were grown in about 17 acres and pa....
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....ade a detailed enquiry, and the Inspector of Income Tax has recorded statements from the landowners verified the Revenue records maintained in the office of the VAO and then submitted his remand report. The Tribunal ought to have made an endeavour to examine as to the effect of the remand report, which was the basis for allowing the appeal filed before the CIT (A). When the assessee filed appeals before this Court in TCA.Nos.819 to 821 of 2010, the appeals were dismissed and the findings in the judgment are contained in paragraphs 9 & 10. We find that while dismissing the assessee's appeals, the question which was required to be considered is whether the Tribunal is right in disallowing the claim of agricultural income of the assessee, having failed to appreciate the evidence available on record and traversing beyond the scope of the records and findings given by authorities as also the admission made in the remand report by the Assessing Officer himself. Thus, what was required to be considered, was the effect of the findings given by the authorities more particularly, the admission made in the remand report by the Assessing Officer himself. Thus, a subsidiary substantial ques....
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.... the Tribunal. 20. In the case of RamanlalKamdar v. CIT [1977] 108 ITR 73 (Mad.), the appeal before the Hon'ble Division Bench of this Court was against the order passed by the ITAT, Bangalore Bench and one of the substantial question of law which was framed for consideration, was "whether on the facts and circumstances of the case, it has been rightly held that the proceedings under Section 154, were rightly invoked." The Division Bench held that the reference itself was incompetent for the reason that in the original assessment for the year 1962-63, a mistake at crept in while making out interest under Section 139(1)(iii). Thereafter, the Income Tax Officer issued a notice to the assessee proposing to rectify the mistake under Section 154 and calling upon the objections of the assessee. The said notice expressly referred to the tax effect which would result as a consequence of the rectification. The mistake was that instead of treating the assessee as an unregistered firm for the purpose of calculating the interest, the Income Tax Officer had treated the assessee as a registered firm. The assessee appeared before the Income Tax Officer and stated that he had no objection t....
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....the consent by the assessee will not confer jurisdiction on the Income Tax Officer to pass rectification order under Section 154 of the Act, it was held that the appeal filed by the assessee before the CIT (A) itself is incompetent, since the assessee cannot be considered as a person aggrieved by the order passed under Section 154. 22. In the light of the above, we are of the clear view that the question of law as framed for consideration in the appeals, TCA Nos.819 to 821 of 2010, should have been re-framed or in the alternative, the subsidiary question arising out of the question framed namely as to whether the appeal before the Tribunal was competent, was required to be decided. That apart, since the issue touches upon the jurisdiction of the Tribunal to entertain an appeal, the Tribunal ought to have first answered the said question before proceeding to take up the other issues. 23. As already noticed, the Tribunal verbatim repeated the order passed by the Assessing Officer, dated 29.03.2001, and ignored the remand report, dated 25.11.2002 and the findings rendered by the CIT (A) based on such remand report. Thus, if such is the situation, the appeal itself would have bee....