TaxTMI 
TaxTMI 
2023 (8) TMI 136
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....mission of Rs 37,07,006/- totalling to Rs 4,78,44,571/-; 2.0 The Ld. CIT(A), before confirming the addition of Long Term Capital Gain on sale of listed share of Rs. 4,41,37,566/-, ought to have considered the understated vital facts, being; a) The correctness of exhaustive documentary evidences such as Contract- cum-bills, transaction statements, D- mat statements, bank statements, bhav copy, confirmation of broker, letter of allotment, Intimation by listed company to BSE and other documents filed on assessment record had not been disputed by the AO and CIT(A); b) The period of holding of the listed shares in appellant's D-mat account exceeds 12 months; c) The listed shares had been sold on floor of recognized Bombay stock exchange at prevailing market price on making the payment of STT and Service Tax and mere substantial increase in price of shares cannot be a sole reason to treat the bonafide transactions as non-genuine; c) The genuineness of capital asset acquired in earlier year ended 31/3/2013 cannot be disputed in impugned year; d) The appellant is not related to any directors/promoters and exit providers and general ....
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....tatement recorded in search operations on 16.12.16 dealt at Para 7 of the order, observe that the transactions are not genuine. The AO dealt on the various facts of transactions, the allotment of shares, payment of premium on allotment of shares, the price trend on stock exchange, the report of the kolkata investigation wing and the statement of persons and has doubted the earning of Long Term Capital Gains. The A.O observed that there is a no correlation of the price rise and fall of the share price and was not satisfied with the explanations and material information and observed that there could be money trail and came to a unilateral conclusion that transactions are not genuine and made addition as unexplained cash credit u/s 68 of the Act of Rs. 4,78,44,571/- including commission estimated @8% on the transactions and assessed the total income of Rs. 4,87,10,330/- and passed the order u/s 143(3)(ii) of the Act dated 28.12.2016. 3. Aggrieved by the order, the assessee has filed an appeal with the CIT(A), whereas the CIT(A) considered the grounds of appeal, submissions of the assessee, findings of the scrutiny assessment and was not satisfied with the explanations and details a....
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....e shares in the financial year 2013-14 at average price of Rs. 92/- per share at BSE through a SEBI registered broker. The AO has doubted the allotment of shares and sale of shares transaction. 6. The Ld. AR demonstrated the evidence in support of sale of shares with the sale cum contract notes, confirmation of account of the SEBI registered stock broker, bank statement reflecting credits of sale proceeds, demat account for the debits on account of sales, bhav copy of BSE prevailing rate on the date of sale and CIN Master data and certificate of incorporation substantiating the identity and name change of the company placed at page 2 to 23 of the paper book. Further the Ld. AR referred to the affidavit filed by the assessee at page 38 of the paper book. The contentions are that the assessee has filed the documentary evidence to justify the genuineness of the purchase and sales and the long term capital gains as the assessee has sold the shares on the recognized stock exchange where the STT has been paid in respect of listed shares and held for more 12 months. And in respect of allotment of shares, the Ld.AR demonstrated the allotment letter, bank statement disclosing the payment....
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....ayee cheques which were debited in assessee's books of accounts. Thus, the transaction was a debit entry in the books of accounts and therefore, the purchase price paid by the assessee could not be held to be unexplained cash credit in the books of account. This being so, the provisions of Sec.68 would have no applicability to the fact of the case and the addition was totally on a wrong footing. Therefore, the impugned additions were not sustainable under law. 4.2 At the same time, in para-5.3, it was observed by Ld. CIT(A) that Ld. AO had not considered the documents pertaining to purchase and sale of shares of Gomti Finlease (India) Limited. These documents were in the shape of contract note, bank statements, brokers ledger and Demat Account statement of the assessee which were duly submitted at the time of assessment proceedings. The assessee had fully discharged the onus to prove the transactions. The assessee had purchased the shares of a listed company through recognized stock broker on BSE and similarly sold the shares through recognized stock broker on BSE at the prevalent price. As regards adjustment / fluctuation in rate (Rs 494/- to Rs. 99/-), the same was due t....
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.... addition of estimated commission, as made by Ld.AO, was deleted. Aggrieved, the revenue is in further appeal before us. Our findings & Adjudication 5. After having gone through the findings of Ld. CIT(A) in the impugned order, the undisputed fact that emerges are that the purchase as well as sale transactions have taken place on stock exchange through stock-broker. There is movement of shares in assessee's demat statement. The transactions have taken place through banking channels and duly supported by broker's contract notes, demat statements, ledger statements as well as bank statements. The assessee is regular investor in shares. The assessee has always maintained that the transactions were genuine. As against this, the only adverse material in the armory of Ld. AO is the investigation findings. However, the assessee has not been named in any of the statement. The assessee has denied having known Shri Nikhil Jain & Shri Bidyoot Sarkar whose statements form the very basis of doubting the assessee's transactions. The assessee, as rightly pointed out by Ld. CIT(A), had duly discharged the onus to establish the genuineness of the transactions and the onus was on L....
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....'ble Calcutta High Court in the case of Principal Commissioner of Income Tax Vs. Swati Bajaj on similar issue which held that the AO should conduct enquiry on the impugned transaction to substantiate that the claim of the assessee for LTCG/STCL is non genuine and further held that the AO can rely on circumstantial evidence based on the doctrine of preponderance of probabilities in such cases where it is beyond the reach to carve out direct evidences. But, in the present case we find that the AO has made no enquiry other than relying on the report of the investigation wing and the steep increase in the price of the shares. We are of the considered opinion that the AO should have done a further analysis and enquired into the genuineness of the alleged transaction. We place our reliance for this proposition on the decision of the Hon'ble Apex Court in the decision of Principal Commissioner of Income Tax Vs. NRA Iron and Steel Private Limited (2019) 412 ITR 161 (SC). In the present case in hand the assessment order is flawed by lack of enquiry by the AO. 6. From the above observation and by respectfully following the decision cited above, we hereby direct to delete the additio....
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.... placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent's unaccounted money, but he did not dig deeper. Notices issued under Sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the ....
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....the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal v. CIT (supra) too turns on its own specific facts. The above- stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order." 5. Consequently, this Court is of the view that no substantial question of law arises for consideration in the present appeal. Accordingly, the same is dismissed. 10. The Hon'ble High Court of Delhi in the case of Pr. CIT Vs. Krishna Devi, 126 taxmann.com 80 has obse....
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....dent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent's unaccounted money, but he did not dig deeper. Notices issued under Sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter ....
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....he CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar v. ITO (supra) and Sumati Dayal v. CIT (supra) is of no assistance. Upon examining the judgment of Suman Poddar (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal v. CIT (supra) too turns on its own specific facts. The above-stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, h....
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.... The Tribunal concluded that there was something more which was required, which would connect the assessee to the transactions and which are attributed to the promoters/directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not cared forward by the revenue. A copy of the DMAT account, placed before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available which gave details of the transactions. The contract note is a system generated and prescribed by the stock exchange. From this material, 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 same, by itself, is not enough to prove that the transactions in the impugned shares were bogus sham. The details received from stock exchange have been relied upon for the purposes of faulting the revenue in failing to discharge the basic onus. If the Tribunal proceeds on this ....
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....dences in favour of assessee were rejected by AO merely on basis of some casual replies given by assessee to AO- Documentary evidences were in favour of assessee and CIT(A) had passed very reasoned and speaking order-Dividend amount was received with regard to holding of shares and said amount was disclosed by assessee in his return of income and exemption was claimed accordingly-Thus, addition being without any logical basis was deleted-Revenue's appeal dismissed. Held: The CIT(A) examined the matter and the comments of the Assessing Officer in the remand report. It has been recorded by the CIT(A) that the purchase of shares in the financial year 2006-07 for an amount of Rs. 11 lakhs had been physically transferred in favour of the assessee in the books of the company namely GeeFCee Finance Limited. Further, the said shares were dematerialized and credited in the assessee's account maintained with depositary participant i.e. HDFC on 16.10.2006. The dividend amount of Rs. 1,50,000/- had been received with regard to aforementioned holding of shares on 23.10.2007. The said amount had been disclosed by the in his return of income and exemption was claimed acc....
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....ribunal is based on findings of fact and no substantial question of law arises. The fact that the assessees in the group have purchased and sold shares of similar companies through the same broker cannot be a ground to hold that the transactions are sham and bogus, especially when documentary evidence was produced to establish the genuineness of the claim. From the documents produced, it is seen that the shares in question were in fact purchased by the assessees on the respective dates and the company has confirmed to have handed over the shares purchased by the assessees. Similarly, the sale of the shares to the respective buyers is also established by producing documentary evidence. It is true that some of the transactions were off-market transactions. However, the purchase and sale price of the shares declared by the assessees were in conformity with the market rates prevailing on the respective dates as is seen from the documents furnished by the assessees. Therefore, the fact that some of the transactions were off-market transactions cannot be a ground to treat the transactions as sham transactions. The statement of the broker P that the transactions with the H Group ....