TaxTMI 
TaxTMI 
2023 (8) TMI 434
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssion paid by the appellant for arranging accommodation entry in the form of capital loss in the shares of luminaire tech." 2.1 The brief facts of the case are that the assessee is an individual and earns income from profession, income from house property and certain capital gain etc. The assessee had filed his return of income 16.01.2015 by declaring total income at Rs. 2,35,160/-. The case of the assessee was selected for scrutiny through CASS and notice u/s 143(2) dated 18.09.2015 was issued. Further notices u/s 142(1)along with query letter were issued on 24-05-2016 and duly served upon the assessee fixing the date for hearing on 02-06-2016. In compliance thereof, the assessee attended hearing from time to time and furnished the requisite details as desired by the AO. It is noted from the assessment order that the AO on the basis of the information received from Investigation Wing, Calcutta/Mumbai formed an opinion that the short term capital loss declared by the assessee on shares of Luminaire Technologies for Rs. 3,41,083/- was bogus and hence a show cause notice was issued to the assessee. An explanation was furnished by the assessee but the AO was not convinced and he di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d a sum of Rs. 6,821/- (2% of 3,41,083/- STCL value) and the assessee has not offered any satisfactory explanation about the source of the same. This sum of Rs. 6,821/- is treated as unexplained expenditure u/s 69C of the Income-tax Act, 1961 and added to the total income of the assessee for the year under consideration. Looking to the nature of issue involved and the evidences with the undersigned, I am satisfied that the assessee has concealed particulars of income and therefore, penalty proceedings u/s 271(1)(c) of the income-tax Act, 1961 are initiated separately on this issue.[Addition of Rs. 6,821/-].'' 2.2 In first appeal, the ld.CIT(A) has confirmed the action of the AO as to both the grounds by observing as under:- ''5.2 Ground 2 (now as Ground No.1 before ITAT) ''5.2.1 It is seen that the appellant has relied upon its documentation maintained with respected to the disputed transactions i.e, transactions through cheque, contract notes etc. and has relied upon certain decisions as quoted above. As has been discussed in paragraphs above, the AO has not merely relied upon the statements but discussed the facts of the instant case as well as the surroundin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... decision of the Hon'ble High Court of Delhi in Suman Poddar Versus Income Tax Officer (ITO) which was affirmed by the Hon'ble Supreme Court in (2019) 112 taxman.com 330 is applicable to the facts of the instant case. The facts of the instant case are on similar footing. 5.2.4 Based on the above discussion, Ground No 2 raised by the appellant is dismissed.'' 5.3 Ground 3 (now as Ground No.2 before ITAT) 5.3.1 It is seen that in this ground the appellant has disputed the addition of Rs 6,621 being alleged commission spent for arranging the accommodation entry in the form of STCL. It is seen that the payment of commission is a natural corollary of the finding of obtaining accommodation entry through the stated modus operandi, which has been discussed. In the earlier grounds of appeal, the stand of the AO in holding that the assessee has obtained accommodation entry has already been found correct. As discussed earlier, the decision of Hon'ble Calcutta High Court in the case Swati Bajaj and others (IA no. GA/2/2022 dated 14/6/2022) is relevant here wherein the Hon'ble Court has taken together a group of cases and have noted the prevalence of e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... loss. Under such circumstances no presumption can be formed for taking transactions in this share as accommodation entry. Further for a small loss (and not profit) no ulterior motive can be assumed with the appellant. 6. The appellant had purchased shares through SEBI registered broker namely Hem Securities Ltd. and also sold the same through it within a span of less than a month. He had purchased shares through contract note dated 17.02.2014 and 18.02.2014 (APB 7- 8) and sold all the shares through contract note dated 13.03.2014 (APB 9). 7. There is nothing to prove that any unaccounted cash changed the hands. 8. The shares purchased by the appellant were credited in his D Mat account and same were transferred there from (APB 10-11). 9. All the transactions for purchase and sale of shares through above named broker were settled only through banking channel. 10. No opportunity was provided to the appellant to verify whether his name appears in the statements of the persons relied upon by the ld. AO as well as CIT (A). Under such circumstances the action of the ld. AO as well as ld. CIT (A) is required to be quashed. Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a facility that their purchased shares are received in Pool Account of the Broker and on immediate sale of the shares, same are transferred from Pool Account. This facility is provided to save exit charges levied by CDSL and due to this reason, the purchased shares of the assessee of Luminaire Technologies Ltd. were received in Pool Account of the Broker and were transferred in the D Mat account of the assessee on 11-03-2014 from Pool Account. This fact stands proved from the narration mentioned against entry dated 11-03-2014 in account of Luminaire Technologies Ltd. in the D Mat account of the assessee (APB 11) as under:- ''TXN WITHIN SAME CDSL DP (BO TO BO) trade Id 286917 Tm id 566296 Counter.'' The above narration shows that shares of Luminaire Technologies Ltd. were received in D Mat account of the assessee from some other account maintained with same CDSL DP. Hence, it is proved that the shares of Luminaire Technologies Ltd. were routed through D Mat Account of the assessee only 2.5 We have heard both the parties and perused the materials available on record including the case laws cited by the assessee with written submission. It is verified from the records o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... huge capital gain earned by the assessee within a very short period of time by investing in a penny stock i.e. Luminnaire Technologies Ltd. whose fundamentals had no support for the premium it commanded, was neither the result of a coincidence nor of a genuine investment activity but were carried through well planned and executed scheme in which the company, the bankers and buyers and sellers of the scrip worked in tandem to achieve the predetermined objectives. We observed that in this case there is no capital but it is a loss incurred by the assessee. Therefore, we note that one prudent men will indulge in the purchase and sale of securities where the ulterior motive is not to earn the capital gain. Thus, the blame of the lower authorities considering the assessee as Coterie of the person calming the exempt capital gain is not correct based on the facts. It is also noted from the available record that the assessee had purchased shares through SEBI registered broker namely Hem Securities Ltd and the same were not physical form as it would be in the case of the penny stock companies and also there is not split corporate action. Thus, we note that the assessee had purchased the sha....