AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 581
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....maining appeals. The assessee has assailed the impugned order on the following grounds of appeal : "1. Ld. C1T (Appeals) erred in confirming the addition of Rs.5,40,000/- made by the AO as undisclosed income, holding the transaction of sale of shares to be bogus. The addition of Rs.5,40,000/- made by AO and confirmed by CIT (A) is not justified. The AO erred in rejecting the claim of appellant that the amount disclosed in return represented capital gain on sale of shares. 2. Ld. CIT(A) erred in confirming the addition of Rs. 5,40,000/- made by the AO disregarding the evidences filed and without bringing any material on record to controvert the claim of appellant. 3. Without prejudice to above grounds the AO, erred in taxing the amount of Rs. 5,40,000/-added by him u/s 115BBE. 2. The appellant reserves the right to add, amend or alter any ground or ground/s of appeal." 3. Succinctly stated, the assessee-HUF had e-filed its return of income for A.Y.2015-16 on 18.08.2015, declaring an income of Rs.17,96,730/-. Subsequently, the case of the assessee was selected for "complete scrutiny" under CASS for examination of "suspicious sale transaction in shares (Penny Stock tab in ITS....
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.... (xiii). referring to the statements of seven exit providers/accommodation entry providers/brokers who in their statement(s) recorded on oath u/s.131 of the Act by the department had, inter alia, confirmed/admitted that they had over the years earned commission by providing accommodation entries in the garb of transactions of purchase/sale of shares of CCL International Ltd.; (xiv). examination of a concern, viz. Genuine Dealtrade Pvt. Ltd. who had purchased scrips of CCL International Ltd. from the assessee, and referring to the fact that the said purchaser was not only found to be a paper/shell company, but also its director, viz. Shri Abhijit Ghosal was a director of Inova Dealtrade Pvt. Ltd., i.e. the broker company from whom the assessee had claimed to have purchased shares, which, thus revealed a meticulously planned transaction that was carried out to facilitate bogus LTCG on the sale of shares of the aforesaid scrip; (xv). reference of the fact that the sale transaction of the aforesaid 3000 shares by the assessee was concluded within a fraction of a single second, i.e. order time 14:15:31 and trade time 14:15:32; (xvi). issuance of notice u/s.133(6) of the Act to the compa....
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....rders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their contentions. 9. At the very outset, it may be pointed out that the case of the assessee was selected for "complete scrutiny" under CASS for examination of "suspicious sale transactions in shares (Penny Stock tab in ITS). Before proceeding any further, I may herein observe, that though the A.O on various occasions had stated in her order that the assessee had obtained bogus entries of Long Term Capital Gain (LTCG) on purchases/sale of shares of a penny stock company, which thereafter was claimed as exempt u/s.10(38) of the Act, but as pointed by the Ld. Authorized Representative (for short 'AR') for the assessee and, rightly so, the assessee had in its return of income disclosed Short Term Capital Gain (STCG) on purchase/sale of the aforesaid 3000 shares of CCL International Ltd. and had not claimed the capital gain earned therefrom as exempt u/s 10(38) of the Act. Be that as it may, I shall look into the genuineness/authenticity of the transactions of purchase/sale of 3000 shares of CCL International ....
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...., viz. Inova Commotrade Pvt. Ltd., had stated that though it had made the payment of Rs.2.46 lac (supra) vide cheque to the broker on 27.06.2013 but due to RBI Instruction that only CTS cheques were to be presented w.e.f. July 31, 2013 the said cheque could not be presented by the Head Office of the said broker at Delhi. It was further stated by the assessee that after receiving back the cheque from the aforesaid broker it had made the payment of the balance amount of purchase consideration of Rs.2.46 lac (supra) through RTGS/NEFT on 19.03.2014. The assessee in order to buttress his aforesaid claim had drawn support from the confirmation of the broker to the said effect. For the sake of clarity, the submissions filed by the assessee before the CIT(Appeals) are culled out as under: "......In fact the appellant explained to the A.O that the payment of Rs.2,46,000/- were made on 27/6/13 itself. The broker Inova Commotrade Private Limited is having its head office in Delhi and thus the cheque was passed on by the local office to Head Office at Delhi for presentation. Owing to RBI's instruction to clearly only CTS cheque with effect from July, 31, 2013, the cheque was not presented by....
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....y of the same. In fact, I would mince no words in observing that there could have been no justification for the assessee to have kept pending the payment of the balance purchase price of shares which it had claimed to have earlier made vide cheque on 27.06.2013, till 19.03.2014. In my considered view, the entire explanation of the assessee is merely a concocted story hatched in an attempt to justify relating back its claim of purchase of shares to 26.07.2013, which I am afraid in absence of any supporting material cannot be accepted and is destined to fail. Nothing is available on record which would conclusively prove beyond doubt that the cash payment of Rs.9000/- was made by the assessee on 26.07.2013 in its account with the broker, viz. Inova Commotrade Pvt. Ltd. It is also a fact to which I cannot remain oblivion that the aforementioned broker, viz. Inova Commotrade Pvt. Ltd. (supra) had evaded compliance of notice that was issued to it u/s.133(6) of the Act. My aforesaid view that the assessee had not carried out any genuine transaction of purchase of shares of CCL International Ltd on 26.07.2013 is all the more fortified by the fact, that as observed by the A.O and, rightly s....
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.... accommodation entries to various beneficiaries. Also, the fact that the 3000 shares of CCL International Ltd. were sold by the assessee to, viz. M/s. Genuine Dealtrade Pvt. Ltd., i.e. a paper company whose one of the director, i.e Shri Abhijit Ghosal who was also the director of Inova Dealtrade Pvt. Ltd., i.e. the broker company from whom the assessee had claimed to have purchased shares clearly demolishes its claim of having entered into a genuine transaction of purchase/sale of the aforesaid shares. It cannot be said to be sheer coincidence that the aforesaid 3000 shares which the assessee had sold on the online platform were purchased by the aforementioned party, viz. M/s. Genuine Dealtrade Pvt. Ltd (supra), i.e the only one purchaser, and that too through a transaction of sale that was carried out within a fraction of a single second, i.e. order time 14:15:31 and trade time 14:15:32. I may herein observe that the features of the aforesaid transaction of sale of shares, i.e. there being only one purchaser and the transaction having been carried out within a fraction of a single second is a peculiar feature of trading in the scrips of a penny stock company. 15. I shall now adve....
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....n fact justifies raising of serious doubts, but the said fact does not on such standalone basis weigh with me for concluding that the assessee had not entered into any genuine transaction of purchase/sale of 3000 shares of CCL International Ltd. The Ld. AR had pressed into service certain orders of the Tribunal at Pages 42 to 86 of APB, wherein drawing of adverse inferences as regards the LTCG on sale of share of CCL International Ltd. by the A.O's had been vacated by the Tribunal; and also, it has been held that a mere spike in the stock/shares price a/w. pre-existing statements recorded by the Investigation Wing cannot be a sole criteria for drawing of adverse inferences as regards the authenticity of the transaction of purchase/sale of shares by the assessee. I am though principally in agreement with the aforesaid view taken by the co-ordinate Benches, but cannot remain oblivion of the other material facts which I had come across in the present case, i.e. serious infirmities in the transaction of purchase of shares, wherein it is irrefutably proved that the assessee had attempted to relate back the purchase transaction; infirmities in the sale transaction; and shortcomings in th....