TaxTMI 
TaxTMI 
2023 (10) TMI 1309
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.... i.e. purchase and sale through SEBI registered brokers through cheque, DMAT, Bank A/C. b. Neither the Ld. AO nor the Ld. CIT(A) have established how their unilateral concocted theory of arranging bogus long term capital gain applies to the assessee by any tangible evidence. The addition made by the Ld. AO has been sustained only on the basis of theory of human probabilities without any concrete basis or live link/involvement of assessee in their theory. c. The material unilaterally relied on by the Ld. AO & Ld. CIT (A) has not been provided to the assessee despite specific repeated requests made at all stages. The order so passed is thus perverse being against the basic principles of natural justice and may very kindly be quashed. 2. That on the facts and in the circumstances of the case and in law the Ld. CIT has erred in maintaining the disallowance of Rs. 31,641/- on account of alleged bogus brokerage expense. 3. That the appellant seeks leave to add, amend, alter, abandon or substitute any of the above grounds during the hearing of the appeal." 2. The only issue arises in this appeal of the assessee is whether the Ld. CIT(A) is justified in confirming the order of the....
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.... credited in the Demat Account of the assessee placed at page 66 to 73 of the paper book vide entry dated 14th August 2012. Out of these 50000 shares held by the assessee, 31100 shares were sold by the assessee during the year under consideration for a consideration of Rs. 16,44,557/-. These shares were sold through stock exchange and from the Demat account of the assessee. The sale transactions are duly reflected in the Demat account of the assessee. He has further submitted that the Transactions of Sale of shares suffered Security Transaction Tax(STT). 4. The AO doubted the genuineness of the transactions and propose to treat these transactions are bogus and long term capital gain declared by the assessee as income from undisclosed sources. In response to the assessee filed all relevant 3rd party evidence such as contract note, bills from the brokers, demat account and assessee's ledger with the broker. The Assessing Officer has nowhere disputed the evidence produced by the assessee but referred some search operations conducted by the department on 3rd party wherein the department taken a view that some people are engaged in the manipulation of share market and/or providing bogu....
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....rs vs. CIT 49 ITR 112 and submitted that before rejected evidence filed by the assessee, the department must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence which it has in its possession. The department cannot be merely rejecting unreasonably a good explanation and converted good proof into no proof. 5. He has relied upon the judgment of Hon'ble Calcutta High Court. Commissioner Of Income-Tax vs Carbo Industrial Holdings Ltd. 244 ITR 422 and submitted that the Hon'ble High Court has held that where the payments are made through account payee cheque and identity of broker is not in dispute then the transactions cannot be held to be bogus. The assessee made payment through account payee cheque and the AO in his order has nowhere disputed the identity of the broker and therefore, the judgment of Hon'ble Calcutta High Court in case of CIT vs. Carbo Industrial Holdings Ltd (supra) is applicable to the facts of the present case. He has also relied upon the decision of Hon'ble Calcutta High Court in the case of CIT vs Emerald Commercial Ltd 120 Taxman 282. 6. The assessee is a regular investor in shares for last 15....
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....ACIT 109 taxmann.com 174 (Delhi -Trib) 5. Pooja Ajmani vs. ITO 177 ITD 127 (Delhi -Trib) 8. He has submitted that in the above decisions when the investment was made in the Penny stock companies and assessee failed to establish the genuineness of rise of price of the shares within a short period of time then the AO has reached a reasonable conclusion in treating the transactions as bogus and capital gain is as a result of accommodation entry and raging of price of the shares. He has submitted that Hon'ble Calcutta High Court in case of Pr. CIT vs. Swati Bajaj held that when the report of the investigation division was available in the public domain then nothing prevented the assesses to download such reports and examine the same and thereafter put up their defence. The Hon'ble High Court has held that the violation of principles of natural justice for want of the supply of the said report has not made out any case. The Hon'ble High Court has passed the judgment after considering all the decisions on this point. He has then referred to the judgment of Hon'ble Delhi High Court in the case of Suman Poddar vs. ITO and SLP filed by the assessee has been dismissed by the Hon'ble Supre....
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....of the share remains same. The assessee has produced before the AO the evidence regarding purchase of shares and payment of purchase consideration through account payee cheque in shape of contract note of broker, bank account statement shown payment of Rs. 62,500/- against which the broker has issued a receipt giving the details of the purchase consideration received vide cheque No. 767734 dated 20.03.2012. Thereafter these shares were dematerialized in the demat account of the assessee in the month of September 2012 against dematerialization request dated 9th August 2012 made to the IDBI Bank. The assessee has also filed the shares certificate wherein the transfer of shares in the name of the assessee has been duly endorsed by the company vide entries dated 30th June 2012. The assessee has also shown these shares in the balance sheet as on 31.03.2012 and the return of income for the assessment year 2012-13 was filed on 22nd June 2012. Therefore, the holding of the shares by the assessee as on 31.03.2012 and at least on 22nd June 2012 when the assessee filed the return of income cannot be dispute as evident from the record being return of income for the A.Y. 2012-13 and balance she....
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....of face value of Rs. 10. The assessee sold the shares during the year @ Rs. 58.10, Rs. 43.30, Rs. 46.90, Rs. 56.95, Rs. 58.55 and Rs. 58.10 per share. The orders for sale were executed at the Bombay Stock Exchange. Since the sale price is more than 20 times the cost of acquisition of these shares therefore, the AO doubted the genuineness of the transactions. However, once the cost of acquisition is the real amount the assessee has paid for purchase of these shares and the sale price was actual prevailing price at the stock exchange then in the absence of any material or fact to show that the assessee had played any role or was involved in alleged rigging of price of this scrip at the stock exchange the transactions cannot be held as bogus. The price prevailing at the stock exchange on the date of sale is beyond the control of the assessee and it might have been manipulated by the alleged brokers or the other interested persons who were in position to manipulate price by create an artificial demand and shortage of supply. Ld. DR has referred to the order of the SEBI dated 30th September 2021 wherein certain brokers were suspended from the trading at the stock exchange because of the....
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....question. When the transaction of acquisition of shares and sale of the shares cannot be disputed then the rigging of the shares price at the stock exchange by some body having vested interest cannot render each and every transactions carried out at the stock exchange as bogus. The report of the investigation giving the modus operandi or the transactions of bogus capital gain entry provided by certain persons including brokers is a good reason to doubt the transactions of the assessee however, this report of the investigation wing carried out in the case of 3rd person cannot be the sole basis for holding the transaction of the assessee as bogus when the fact of purchase and sales and holding of these shares by the assessee are not disputed. Therefore, the report of the investigation wing can be a reason to conduct a proper inquiry by the AO to verify the genuineness of the claim and transactions carried out by the assessee in respect of these shares but the said report cannot be the sole basis of holding the transactions as bogus. The AO has recorded the statement of the assessee and nothing incriminating is detected or resulted as per the outcome to the inquiry conducted by the AO....
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....ibunal not found to be perverse attains finality. Therefore, the factual finding of one case cannot be strictly regarded as precedent for other case. The finding of the Tribunal is in the nature laying down any principle of law. There are divergent decision in respect of the penny stock transaction but each case has been decided on the basis of its own facts. Therefore, the judgments on this issue are not in the nature of interpretation of the provisions of the Act or declaration of law in respect of the provisions of the Act. There is no dispute or issue before us about violation of principle of natural justice due to non-supply of the investigation report relied upon by the AO therefore, the decision in case of Swati Bajaj (supra) shall have not applicable on the facts of the case. 14. Therefore, in the facts and circumstance of the case we hold that the assessee has successfully proved the genuineness of the transaction of purchase and sale as well as holding of the shares which is also not disputed by the AO and therefore, in absence of any material brought on record to controvert these facts substantiated by the evidence produced by the assessee the claim of the assessee cann....
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....ical verbatim order as it was for the assessment year 2014-15. The CIT(A) has also upheld the order of the AO on similar reasoning while passing an identical order. 17. We have heard the Ld. AR as well as Ld. DR. Both the Ld. AR as well as Ld. DR has stated at bar that the issue for A.Y. 2015-16 is identical and based on the identical fact as for the A.Y. 2014-15. Accordingly, in view of our finding on this issue for A.Y. 2014-15 this issue is decided in favour of the assessee and against the revenue. ITA No. 217/Ind/2019 The assessee has raised following grounds of appeal: That on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in maintaining addition of Rs. 17,54,828/- u/s 68 of the IT Act, 1961 towards alleged bogus long term capital gain when a. All the transactions stand duly established by contemporaneous, independent third party evidences which have not been disproved i.e. purchase and sale through SEBI registered brokers through Cheque, DMAT, and Bank A/C. b. Neither the Ld. AO nor the Ld. CIT(A) have established how their unilateral concocted theory of arranging bogus long term capital gain applies to the assessee by any tangible evi....