AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 728
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....e considered and the additions be deleted. b) The Ld. CIT (A) has erred in treating the transaction for sale of shares of Pine Animation Limited, a listed entity as bogus and proceeded to continue to confirm the addition made by the Ld. AO without considering the facts and circumstances of the case. The same be considered and the additions be deleted. c) The CIT(A) has erred in confirming the addition made for Rs. 5.18.95,425/- of the Ld. AO u/s 68 of the Income Tax Act, 1961 without appreciating that the assessee had duly proved the Identity and Nature of the Source of the credit of sale proceeds were explained and proved. The additions made are merely on assumptions, which are not sustainable in law. d) The CIT (A) has failed to appreciate that the Ld. AO has made the additions by merely relying on external data, information from BSE, third party statements etc. without proving assessee's involvement in the price rigging. The Order passed on such basis is bad in law and needs to be quashed. e) The Ld. CIT (A) has failed to appreciate that nowhere do the information available prove the assessee as a beneficiary of the alleged bogus entry. f) The Ld. AO as well as....
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.... an opportunity to the assessee for cross-examination of evidences in his possession. The same be considered and the additions be deleted. n) The Ld. AO has failed to prove with evidence that any unaccounted money was received by the operators from the assessee. The same be considered and the additions be deleted. o) The Ld. AO as well as the Ld. CIT (A) has failed to consider that the assessee had filed complete set of documents for preferential allotment of share and trading in shares for past many years. The same be considered and the additions be deleted. p) The Ld. AO as well as the Ld. CIT (A) has failed to consider the fact that the assessee till date holds 12, 00,000 equity shares of the alleged penny stock Company, Pine Animation Ltd. Had the assessee been the intentional beneficiary to the said price rigging he would have sold all the shares held by him. The fact that the assessee has sold only part shares retaining a major lot till date justifies that he is not a party beneficiary to price rigging. The same be considered and the additions be deleted. q) The Ld CIT(A) has failed to consider the fact that even if the buyers are doubtful or of suspicious characte....
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....de for Rs. 2,10,02,400/- of the Ld. AO u/s 68 of the Income Tax Act, 1961 without appreciating that the assessee had duly proved the Identity and Nature of the Source of the credit of sale proceeds were explained and proved. The additions made are merely on assumptions, which are not sustainable in law. d) The CIT (A) has failed to appreciate that the Ld. AO has made the additions by merely relying on external data, information from BSE, third party statements etc. without proving assessee's involvement in the price rigging. The Order passed on such basis is bad in law and needs to be quashed. e) The Ld. CIT (A) has failed to appreciate that nowhere do the information available prove the assessee as a beneficiary of the alleged bogus entry. f) The Ld. AO as well as the Ld. CIT(A) has failed to consider that SEBI vide their Order dated 28.09.2017 has confirmed that there were no adverse findings against 114 parties of which the assessee was one of them with respect to their role in manipulation of the script of Pine Animation Limited. The same be considered and the addition be deleted. g) The Ld AO as well as the Ld. CIT(A) failed to consider that the assessee was exo....
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.... complete set of documents for preferential allotment of share and trading in shares for past many years. The same be considered and the additions be deleted. p) The Ld. AO as well as the Ld. CIT (A) has failed to consider the fact that the assessee till date holds 12.00.000 equity shares of the alleged penny stock Company, Pine Animation Ltd. Had the assessee been the intentional beneficiary to the said price rigging he would have sold all the shares held by him. The fact that the assessee has sold only part shares retaining a major lot till date justifies that he is not a party/beneficiary to price rigging. The same be considered and the additions be deleted. q) The Ld CIT(A) has failed to consider the fact that even if the buyers are doubtful or of suspicious character, it does not affect the transaction of sale of shares by the assessee through recognized stock exchange by the registered broker and that the payments are duly received. The same be considered and the additions be deleted. r) The Ld. AO as well as the Ld. CIT(A) has failed to consider that by submitting the relevant documents for the sale of the said shares, the assessee has duly complied with the provisio....
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....ubmitted the purchase bill of shares, bank account statements, and Demat Account and broker notes for the sale of shares. It was contended that the shares were sold on a stock exchange through the broker and payments have been received also through the stock exchange by the broker and in turn paid to the assessee. 09. The learned Assessing Officer noted that there is a specific investigation in several companies listed on stock exchange, the prices of such companies were rigged, and the transactions are not genuine. The learned Assessing Officer thereafter noted that the shares in which the assessee has traded was originally having a name of M/s Four K Animation Limited , later on merged with Pine Animation Limited, registered with Registrar of Companies (ROC), Chennai, since 1st August, 1989. He noted that assessee purchased shares of this company on 13 December 2012 and at that time; the financials of the company did not support its viability in the market. It was further stated that Pine Animation Limited was converted into a public company recently, before assessee purchased those shares. The learned Assessing Officer held that assessee in spite of being experienced in share m....
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....e assessee submitted the copy of the bank passbook, sale bill of shares, purchase bill of shares, copies of the ledger of the broker, detail of application and copy of letter from the company for allotment of shares and copy of the order issued by Securities Exchange Board of India (SEBI) dated 19 September 2017. Assessee also asked cross-examination of parties whose statement is mentioned by the learned Assessing Officer. The assessee also categorically stated that none of the parties whose statements are recorded by the learned Assessing Officer or investigation wing Kolkata, has not at all named the assessee. The assessee also submitted that in the order of the SEBI, there is no allegation against the assessee or the broker through whom the sale has been made. 012. The learned Assessing Officer rejected all the contentions of the assessee stated that there is no justifiable reason that why assessee would investing in M/s Four K Animation Limited even though he had been investing in many companies. Further, in the price movement of this company accommodation, entry providers are involved and there are exit providers also in the trading of above shares. The learned Assessing Offi....
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....f the learned CIT (A) for both the years, assessee is in appeal before us. 017. The learned Authorized Representative submitted that i. A company called M/s Four K Animation Limited has received a Pre-approval from Bombay Stock Exchange Limited for the issue of 1, 50, 00,000 equity shares of face value of Rs.10 each on preferential basis on 23rd November, 2011. Assessee has participated in the preferential offer for two lac shares at Rs. 10each. Accordingly, the assessee deposited purchase consideration through banking channel in the bank account of M/s Four K Animation Limited, maintained with Allahabad Bank, Bombay. Assessee made payment through RTGS as per page no.24 of the Paper Book ii. On 4 February 2013, assessee was granted an allotment of two lac shares and the assessee was intimated through allotment advice that he has been allotted the above shares by virtue of resolution dated 13 December 2012 of the company. Share certificate no.30005 was also issued to the assessee. In the share certificates, there was also a lock in period. iii. The assessee thereafter got these shares dematerialize and held in Demat form. iv. Copies of the notice of extraordinary general me....
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....ne Animation Limited or its promoter's directors or promoter related entities or any role in price manipulation, volume manipulation in the script of above company. xiv. SEBI by that order has categorically held that violation of Provisions of SEBI Act, securities contract regulation Act as well as PFUTP regulations were not observed in the case of the assessee company. He specifically referred to page no.7 of that order wherein assessee name is mentioned at serial no.12 out of 114 entities. xv. Para no.10 of that SEBI order has categorically held that there is no adverse finding against the assessee. xvi. That when SEBI, who is the regulatory authority to find out any manipulation in the price of shares of any script has not found anything against the assessee, then the finding of the learned Assessing Officer and learned CIT (A) that assessee is involved in any manner in price manipulation etc. is devoid of any merit. xvii. No cross-examination was granted to assessee of statement of several persons recorded by Investigation wing Kolkata, which are used for making addition. 018. He submitted that assessee has discharged its initial onus cast upon him in showing the natur....
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....tive vehemently supported the orders of the lower authorities and submitted that the honourable Bombay High Court in case of Sanjay Bimalchand Jain 89 taxmann.com 196 and honourable Calcutta High Court in case of principal Commissioner of income tax versus Swati Bajaj 139 taxmann.com 352 as well as the honourable Delhi High Court in case of suman Poddar versus ITO 112 taxmann.com 329 squarely covered the issue in favour of the assessee. 021. The learned authorized representative submitted that in the decision of honourable Delhi High Court in case of Krishna Devi considered the various proposition lay down by the decision of the honourable Delhi High Court in case of Suman Poddar. Further, the decision of the honourable Bombay High Court in case of Sanjay Jain was a case where there was no response to the notices issued by the learned assessing officer. Therefore, in both the cases the facts are distinguishable. With respect to the decision of the honourable Calcutta High Court in case of Swati Bajaj, he submitted that the decision of jurisdictional High Court in case of Shyam Pawar needs to be followed. 022. We have carefully considered the rival contention and perused the order....
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....pect to peculiar facts and circumstances of the person providing the credit and his financial standing and whether the transaction between the parties are not tainted. No judicial precedents can be said to give a straitjacket answer to these questions. The reason being these are facts specific issues. Applying one decision to the different facts will lead to violation that judicial precedent. In the case of Government of Karnataka v. Gowramma (2007), the Hon. Supreme Court held that reliance on the decision without looking into the factual background of the case before it is clearly impermissible. A decision is a precedent on its own facts. Each case presents its own features. It is not everything said by a Judge while giving a judgment that constitutes a precedent. The only thing in a Judge's decision binding a party is the principle upon which the case is decided and for this reason, it is important to analyze a decision and isolate from it the ratio decidendi. A decision often takes it colour from the questions involved in the case in which it is rendered. The scope and authority of a precedent should never be expanded unnecessarily beyond the needs of a given situation. Thu....
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....company. However, we state the facts in case of transactions of the assessee as well as by others in this company. i. SEBI carried out investigation in price rigging of shares of Pine Animation limited for the trading period May 22, 2013 to 30, January 2015. ii. It investigated Preferential Allotment made by it of Rs 24.7 Crores to 92 Allottees during 2012-13. Assessee is one of them. iii. Investigation was with respect to violation of SEBI Act 1992, SCRA 1956 and SEBI Prohibition of Fraudulent and Unfair Trade Practices Relating to - Securities Market 0 Regulation 2003. iv. Ad Interim ex parte order was passed on 8/5/2015 restraining 178 entities from accessing securities Market. Assessee is one of them. Assessee appears in that list at Sr No 71. v. Subsequently this order was confirmed. vi. Final order was passed on 19/9/2017 after detailed investigation by SEBI as mentioned in Para no 8 & 9 of that Order. vii. By that Final Order SEBI held that in case of 114 entities, preferential allottees, and alleged exit providers there is no evidence of any violation of above two acts and one Regulation [PFUTP Regulation 2003]. Assessee, exit providers name appears in that li....
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....nnot be termed illegal or manipulative or fraudulent or violative of the PFUTP Regulations." "36. The finding that the investments made by the appellants cannot be termed as a regular investment made in the ordinary course of business or trading as the Company had weak fundamentals and financials is based on surmises and conjectures and cannot be a ground to charge the appellants. The finding that the appellants had purchased the shares pursuant to a pre-decided scheme with an assurance of a profitable exit at a manipulated price is purely based on surmises and conjectures without any corroborative evidence. This finding cannot be based on a preponderance of probabilities especially in the absence of reasonable explanation as to why would anyone give the appellants an assurance of a profitable exit at manipulated price. Further, there is nothing on record to suggest as to who had given such an assurance to the appellants. Nothing has come on record to indicate that the six entities had sold the shares for some ulterior purpose. The six entities did not know these appellants directly and unless there was some intention of parting with the profits the charge of selling the shares w....