AI Drafter 
TaxTMI 
TaxTMI 
2022 (1) TMI 1358
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....order of assessment framed by Income Tax Officer-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 beca....
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....missions before the ld. AO and also filed copies of share 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 t....
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....ged in, on real time basis It is not possible to sell/purchase the Shares of any Company on the Stock Exchange in variance to 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....
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....arly 2012 and were kept in Demat Account till the same were sold in 2014, i.e. almost after about more than two years and almost about three years. It is further 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....
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....t for purchase of shares as well as the DEMAT statement through which the shares were transferred. He also observed that the sale of shares is evidenced by bank statement in respect of share sale consideration, contract notes for sale of 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 Liabi....
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.... arguments advanced by the assessee proved to be true and these enquiries and statements did not reveal anything against the assessee. Since, nothing adverse was referred by the ld. AO in the remand report, the ld. CIT(A) proceeded to delete 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 ....
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....to the various contentions of the ld. DR before us, which was argued on merits , when the ld. AO had given a favourable remand report. It was vehemently pleaded by the ld CIT DR that the ld. AO in the remand report had only stated that the evidences 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 proc....
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.... loan of Rs.2,00,000/- from Mrs. S. Saraswathy and agricultural income of Rs.4,08,840/- treating it as 'non-agricultural income'. Aggrieved by the said order, the assessee preferred appeal before the CIT (A). The applicant objected to the order of the Assessing 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 ta....
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....nder Section 143(3) read with Section 147 of the Act. We find that there is no reference to the remand report dated 25.11.2001, which was called for by the CIT (A) based on which the CIT (A) allowed the appeal. To be noted, the Assessing Officer on report being called for, has made 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....
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....he amount from the assessment and having considered the deletion before the Appellate Assistant Commissioner, cannot be aggrieved by that part of the order to enable it to file an appeal before the Tribunal and therefore, such an appeal, neither competent nor capable of being entertained by 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 ....
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....agitated in appeal. 21. In Cochin Malabar Estates & Industries Ltd.'s case (supra), one of the question which arose for consideration before the Division Bench of the High Court of Kerala was whether on the facts and in the circumstances of the case, the Tribunal was right in holding that 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 ....
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....drawn by the ld. AO after carrying out detailed investigations and enquiries carried out with various parties as mandated. We find that the ld. CIT(A) granted relief based on the said remand report apart from giving relief on merits. We are not giving any opinion on the merits of the case. We find that at the threshold itself, this appeal is required to be decided against the Revenue by following the decision of the Hon'ble Madras High Court referred to supra in view of the fact that the ld. AO had accepted the entire contentions of the assessee in the remand report. We also find that the Revenue had not raised any grounds before us stating that remand report of the ld. AO is incorrect. Accordingly, the grounds raised by the Revenue are dismissed. 4. In the result, appeal of the Revenue for A.Y.2015-16 is dismissed. 5. The same conclusions would apply for the grounds raised by the Revenue for A.Y.2016-17 in view of the identical facts except with variance in figures. 6. In the result, appeals of the Revenue are dismissed. Order pronounced on 17/01/2022 by way of proper mentioning in the notice board. ============= Document 1 บ Office of the Income-tax Of....
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....mium, if any. Justification for premium being charged. Notice u/s 133(6) of the Income Tax Act, 1961 was issued to M/s Sunrise Asian Limited vide letter dated 1/3/2019. Reply alongwith details have been received vide letter dated 18/3/2019 from M/s. Sunrise Asian Limited, which are verified and placed on record. The relevant portion of the letter 18/3/2019 is reproduced as under: "c) HWe am/are do not have any transaction with Liberal Realtors LLP for the A.Y. 2015-16 and A.Y. 2016-17. Hence ledger account not applicable. d) Liberal Realtors LLP had acquired the shares of Sunrise Asian Limited through the scheme amalgamation approved by the Bombay High Court vide its order dated 22nd March, 2013. e) Sunrise Asian Limited has not received any amount for the share capital or share premium during the A.Y. 2015-16 and A.Y. 2016-17. f) There is no communication of any kind with Liberal Realtors LLP as regard to the purchase of shares of Sunrise Asian Limited during the A.Y. 2015-16 and 2016-17. Hence providing the copy of the bank statement is not applicable. g) Sir, the Sunrise Asian Limited has a BSE Listed copy and according to the b....
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.... made by the Securities and Exchange Board of India, if the trading in the securities of the company has remained suspended for a period of more than six months. Accordingly, the company, Sunrise Asian Limited was compulsorily delisted w.e.f. May 11, 2018 in terms of Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 ("Regulations") (b) Documents/Reply filed by Sunrise Asian Limited pursuant to the delisting order passed by BSE As per Exchange records, no reply has been received from Sunrise Asian Limited pársuant to the issue of the delisting order." The trading in the securities of the company Sunrise Asian Limited (listed in the year 1983) was suspended w.e.f. November 29, 2016 as per the provisions of SEBI SOP circular no. CIR/CFD/CMD/12/2015 dated November 30,2015 (copy attached). Notice was issued by BSE dated 7/11/2016 regarding suspension of trading in securities of companies for non-compliances of certain Regulation of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 wherein, the name of Sunrise Asian Ltd. appears at s.no.7 (copy enclosed). Also find enclosed copy of A....
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....nt relating to the company are already hand over to the concerned persons. 3) Copy of return of income file for A.Y. 2015-16 and A.Y. 2016-17 is submitted and marked as annexure-I 4) I have not arranged for any fund for M/s. Liberal Realtors LLP, hence this question is not applicable to me. 5) Since, I have not arranged for any fund for M/s. Liberal Realtors LLP, hence this question is not applicable to me. 6) I have no transaction with Mr. Vipul Vidur Bhatt and hence no ledger in my book. Therefore, this question is not applicable to me." Subsequently, summons u/s 131 of the Income Tax Act, 1961 dated 16/4/2019 was issued to Shri Aniruddh Baheti requiring him to attend before me on 30/4/2019. He attended before me and his Statement u/s. 131 of the Income Tax Act, 1961 of Mr. Aniruddh Baheti has been recorded on 30/4/2019. The relevant portion is reproduced as under: Q.4. Do you know Liberal Realtors LLP and how? Ans. I am made to understand that Liberal Securities and Financial Services Private Limited was converted into Liberal Realtors LLP. I have dealt with the private limited company in the past for an Open Offer of a co....
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....not done any financial dealings with or for Liberal Realtors LLP. Q.5 Have your carried out any financial dealings with or for Sunrise Asian Limited. I have not carried out any transaction for Sunrise Asian Limited Ans. Q6. Liberal Realtors LLP have sold share of Sunrise Asian Limited through Sunteck Wealth Capital Private Limited during Financial Year 2014-15. The said shares have been sold online through Bombay Stock Exchange. What is your connection with this transaction? Have you facilitated purchase of these shares through purchasers organised by you? Ans. I am not aware of any such transaction. I am not knowing Sunteck Wealth Capital Private Limited, Sunrise Asian Limited or Liberal Realtors LLP. I have not carried out any dealings with above 3 entities and I have not been party to any purchase or sale of shares of Sunrise Asian Limited." b) Further, statement of Mr. Jitendra Joshi has been recorded on 29/3/2019. The relevant portion is reproduced as under: "Q.4 Have you carried out any financial dealings with or for Liberal Realtors LLP or any of their partners? Ans. I have not met any partners of Liberal Realtors LLP and....
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.... been sent to M/s. DCB Plus N Holdings LLP but no reply was received. Hence, Inspector, Mr. Subodh Shukla was deputed to serve the notice u/s 133(6) of the Income Tax Act, 1961 dated 6/6/2019. The relevant portion of the notice is reproduced as under: (a) Please give details of purchase and sale of shares of Sunrise Asian Limited in your books of accounts. (b) Please give details of income offered by you with respect to gain in above transactions. The reply to this notice is received from the authorized representative, VMRS & Co., CAs on behalf of M/s. DCB Plus N Holdings LLP on 7/6/2019. The relevant portion of the reply is being reproduced as under: 7) "With reference to above and under instruction from our above named client i.e. DCB Plus N Holdings LLP, we hereby state that our client have no transaction of whatsoever nature with M/s. Liberal Realtors LLP during the Assessment Year 2015-16. Therefore, the information called for in the abovementioned notice is not applicable. However, we hereby state that the details of sale of shares of Sunrise Asian Limited in the AY 2015-16 were duly submitted to our client's jurisdictiona....