TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 439
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....t have any evidentiary value as the same were recorded in the absence of the Appellant.. (ii) Copies of recorded statement of Shri Anuj Agrawal, Director of Korp Securities Ltd as mentioned at pages 6-10 of the assessment order were not provided to the Appellant. (iii) Recorded Statement of Shri Anuj Agrawal, Director of Korp Securities Ltd could not be relied upon as the AO did not allow the Appellant to cross examine Shri Anuj Agrawal, Director of Korp Securities Ltd despite a specific request having been made by the Appellant. (iv) Documentary evidences have been filed by the appellant to prove long term capital gain of Rs. 95,43,251/- on sale of shares have neither been controverted nor disproved by the Ld. CIT(A) / AO . (v) The Ld. CIT(A) / AO had not brought anything on record to prove that the Appellant had routed her own unaccounted money in the garb of long term capital gain. (2) That the Ld A.O/CIT have also wrongly challenged the mechanism of purchase of shares acquired by the appellant without bringing any material on record. (3) That the Hon'ble CIT (A) has erred in law and on fact by upholding the Ld. AO's order which was based on the arbitrary and....
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....on BSE platform for an amount aggregating to Rs. 99,43,251/- only. Thus, the assessee earned long term capital gain of Rs. 95,43,251/- which she claimed as exempted income under section 10(38) of the Act. The assessee in support of her claim furnished copy of share application form, copy of cheque issued for purchased of shares, copy of share certificate issued to her by Conart Traders Ltd, copy of amalgamation scheme approved by Hon'ble High Court, copy of demat account, copy of contract note for sale of shares and copy of bank statement showing amount received through banking channel. 5. However, the AO found that the Income tax Investigation of Kolkata has carried out countrywide search and survey proceedings on several brokers or sub-brokers to find out the racket of bogus long-term capital gain. The DDIT Kolkata identified 84 companies whose shares/script were utilized by the entry provider/broker to provide bogus long term capital gain by rigging their price at the stock exchange through synchronized trading. The scrip of M/s Sunrise Asian Ltd is included in the 84-scrip identified by the DDIT-Kolkata. The AO found that the DDIT during search or survey proceeding recorded st....
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....the company M/s Santoshima Trade Links Ltd. to whom the assessee has applied for the shares have also been merged with Sunrise Asian Limited, the shares of Sunrise Asian Limited ought to have been issued to the assessee on merger. The fact remains that Santoshima Lease Finance and Investment (India) Ltd./ Santoshina Trade Links Ltd., cannot issue or sell any shares of Conart Traders Ltd. being a separate entity even if there is merger as per Hon'ble High Court's order and change of name of company. As per the provisions of the Companies Act, such transaction of shares cannot be done, and even if it is done, the same is done violating the provisions of Companies Act and SEBI Rule and the same is illegal and as such, said transaction can be held to be a void. It is also not out of place to mention here that the shares were purchased off market and the same was done with the connivance of the promoters of various companies. Thus, the purchase transaction of the shares could not be established. Therefore, it is not established that the appellant held the shares of a listed company on a recognized stock exchange for the said period before their sale. These observations when cons....
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....ng a claim that it was engaged in genuine share transactions. It is relevant to note here that Hon'ble Supreme Court in the case of Shri Charan Singh versus Chandra Bhan Singh AIR 1988 SC 637 has clarified that the burden of proof relies on the party who substantially asserts the affirmative of the issue and not upon the party who denies it. It has been further held that the party cannot, on failure to establish a prima facie case, take advantage of the weakness of his adversary's case. The party must succeed by the strength of her own right and the clearness of her own proof. It cannot be heard to say that it was too difficult or virtually impossible to prove the matter in question. Since in this case the appellant had made the claim that it had earned genuine LTCG, all the facts were especially within his knowledge. Section 102 of Indian Evidence Act makes it clear that initial onus is on person who substantially asserts a claim. If the onus is discharged by it and a case is made out, the onus shifts on to deponent. In this case, once the evidence that appellant has claimed bogus LTCG was proved by the AO, the burden of evidence shifted to the appellant. During the assess....
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.... by the assessee there cannot be any violation of natural justice. In the case of GTC Industries Itd. Vs ACIT(1998) 60 TTJ(Bomb-Trib) 308, it was held that where statement and report of third parties are only the secondary and subordinate material which were used to buttress the main matter connected with the amount of addition, denial of opportunity to cross examine third did not amount to violation of natural justice. Each case has got to be decided on the facts and circumstances of that case. The relevant factors to be considered are surrounding circumstances, objective facts, evidences adduced, presumption of facts based on common human experience in life and reasonable conclusions. In the present case, as discussed above, there is overwhelming evidences as discussed in details in the order that the transactions on which adverse views have been taken are sham transactions. 23. As far as the appellant's demand for cross examination of third party is concerned, it is to be stated that nowhere in the show cause notice, it was alleged by the AO that the appellant has traded through these persons, whereas the statement of those persons, which are quoted in the show cause notic....
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....ere reasons to believe that the appellant was not the real, in a case where the party relied on self-serving recitals in the documents, it was for the party to establish the transfer of those recitals, the taxing authorities were entitled to look into the surrounding circumstances to find out the reality of such recitals. Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal. Therefore, the Courts and the Tribunals have to judge the evidence before them by applying the test of human probability. Human minds may differ as to the reliability of piece of evidence, but, in the authority is made conclusive by law. Deere, the decision of the final fact finding 26. The above ratio laid down by the Hon'ble Supreme Court has been reiterated and applied by the Hon'ble Apex Court in the case of Sumati Dayal V CIT 214 ITR 801 (S.C). It is essential on the part of the AO to look into the real nature of transaction and what happens in the real word and contextualize the same to such transactions in the real market situation. It is pertinent to state here, the wisdom of Hon'ble Supreme Court in CIT V Arvinda Raju (TN) (....
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....ended that the shares of the company namely M/s Conart Trader Ltd were acquired by the assessee through M/s Santoshima Tradelink Ltd. which is evident from the debit note, shares certificate and shares transfer form placed on page 36 to 39 of the paper book. The learned AR also pointed out that the shares were sold on the floor of the stock exchange where the buyers are not known. The learned AR also submitted that the shares were purchased through the banking channel and the cost of the shares purchased was also allowed by the revenue while calculating the income of the assessee. Thus, as per the learned AR, the purchase of the share cannot be doubted. 9. On the other hand, the learned DR vehemently supported the order of the authorities below. 10. We have heard the rival contentions of both the parties and perused the materials available on record. The facts of the case have been elaborately discussed in the previous paragraphs. Therefore, we are not inclined to repeat the same for the sake of brevity and convenience. At the outset, we find the coordinate bench of the Jaipur ITAT in the case of Shri Ashok Aggarwal and Smt. Ritu Aggrawal bearing ITA No. 124 & 188/JP/2020, involv....
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.... *********************** 13. We however, find that no such information/documents/statements was made available to the assessee thereby violating the basic principle of confronting the assessee with the documents which the Revenue wishes to rely against the assessee. Further, it is noted that in the assessment order so passed, the AO has made reference to a statement of Shri Vipul Vidur Bhatt recorded u/s 132 during certain search operations by the Investigation Wing, Mumbai and has relied on the same for holding the transaction as bogus by availing the accommodation entry of long term capital gain and beneficiary of the bogus LTCG scam. As the assessee was again not confronted with such statement during the show-cause notice and he came to know of the same from perusal of the assessment order, he raised the objection before the ld CIT(A) that no such statement of Shri Vipul Vidur Bhatt recorded u/s 132 was made available to him during the course of assessment proceedings and secondly, he deserves a right to cross-examine Shri Vipul Vidur Bhattwhose statement is being used against the assessee. However, we find that even during the appellate proceedings, the assessee was not mad....
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....res in the Balance Sheet as on 31.03.2012 as well as 31.03.2013 and the return of income for the assessment year 2012-13 and 2013-14 was also filed in time before the date of sale of the shares starting September 2013 onwards in various lots till March 2014. Thus it is clear that 158400 shares acquired by the assessee on 08.10.2011 were reflected in the Balance Sheet as on 31st March, 2013. We further note that the assessee produced the copy of allotment advice of these shares issued by the company along with the bank statement showing the purchase consideration paid by the assessee through cheque whereby the shares were allotted of face value of Rs 10/- at a premium of Rs 10/- each. The bank account of the assessee has reflected the payment of Rs. 31,68,000/- for purchase of shares. The AO has not disputed that subsequently there were events of amalgamation of the company with M/s. Sunrise Asian Ltd. pursuant to scheme of amalgamation duly approved by the Hon'ble High Court of Mumbai and consequently the assessee was allotted 158,400 shares of M/s Sunrise Asian Ltd as against 158,400 shares of M/s. SantoshimaTradelinks Ltd originally allotted by the company. The shares acquired by....
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....oduce the contrary material evidence so that the evidence produced by the assessee can be controverted. In the absence of such contrary material or evidence brought on record by the AO and the evidence produced by the assessee is otherwise independently verifiable being the documents in the shape of allotment advice, bank statement, Demat account, books of account and contract notes for which the assessee has no control or say, therefore, the said evidence cannot be manipulated by the assessee. Once the evidence produced by the assessee is not prepared or beyond the scope of any manipulation by the assessee, then the assessee has discharged his onus to prove the transaction of purchase and sale of shares and consequential capital gain. As we have already mentioned that this is not an isolated transaction of purchase and sale of shares in single scrip, but the assessee has been holding the shares of 12 companies out of which the AO has doubted only one scrip. Thus the decision of Hon'ble Delhi High Court will not help the case of the department. 17. The ld. D/R has also relied upon the decision of Hon'ble Guahati High Court in case of CIT vs Smt. Sanghamitra (supra). In that case,....
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.... unless these documentary evidence are proved otherwise or any contrary evidence brought on record, the assessee has discharged his onus to prove the transaction of purchase and sale of shares and consequential capital gain. Thus the decision of Hon'ble Gauhati High Court will not help the case of the department. 19. There is another decision of the jurisdictional Hon'ble Rajasthan High Court in case of Pramod Jain (supra) relied upon by the ld A/R where the Hon'ble High Court has referred to its earlier decision in case of CIT vs. Smt. Pooja Agrawal (supra) and has affirmed the findings of the Coordinate Bench and held that no question of law arises and has dismissed the appeal of the Revenue. The relevant findings of the Coordinate Bench are contained at para 6 to 8 as under: ************************ 20. Thus, it is clear that the Tribunal in the said case has analyzed an identical issue wherein the shares allotted in the private placement @ Rs. 10 at par of face value which were dematerialized and thereafter sold by the assessee and accordingly the Tribunal after placing reliance on the decision of Hon'ble Supreme Court in case of CCE vs. Andaman Timber Industries (supra) ....
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....EBI against the company and the company has been blacklisted or suspended from trading on account of price manipulation. Once all these transactions are duly proved by trading on stock exchange, then to hold the sale of shares as unexplained and bogus cannot be upheld. Similarly, in the instant case, we find that the AO has not brought on record any material or documentary evidence to show that the assessee has availed accommodation entry of bogus long term capital gains under any enquiry or investigation rather the assessee has produced all relevant documentary evidence in support of his purchase and sale transaction through the stock exchange and there is nothing on record that the trading in the scrip has been suspended by SEBI on account of any price manipulation. We therefore find that the assessee satisfies the necessary ingredients and conditions as so specified in section 10(38) of the Act, in terms of transfer of long term capital asset by way of sale of equity shares on which STT has been paid, he shall therefore be eligible for exemption in respect of whole of the income so realized on transfer of such shares as the provisions of section 10(38) talks about any income ari....
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....ng investigations, should guide the authorities in arriving at a conclusion as to whether the claim is genuine or not has been discussed at length. And referring to legal proposition laid down by the Hon'ble Supreme Court that the burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidence held that the modus operandi, generalisation, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee unless specific evidence is brought on record to controvert the validity and correctness of the documentary evidences produced, the same cannot be rejected. We are in complete agreement with the said view and in the instant case, we find that evidence produced by the assessee in support of his claim of purchase and sale of shares on the stock exchange have not been refuted by any adverse findings or material which could demonstrate involvement of the assessee or collusion with so called accommodation entry providers to obtain bogus LTCG as so alleged by the authorities below. 24. We also find that while analyzing sale of shares of similar scrip of M/s Sunrise Asian Ltd and claim of exemption of long term capi....