TaxTMI 
TaxTMI 
2023 (11) TMI 439
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.... Korp Securities Ltd recorded by DDIT (Inv), Kolkata did not 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) ....
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....ld by the assessee during the year under consideration on different dates during the month of July 2013 to august 2013 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 ....
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.... in the assessee's demat account. Therefore, on account of merger of Conart Trader's Ltd. in Sunrise Asian Limited, since 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....
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.... the appellant to prove that it has earned genuine LTCG under section 101 of the Indian Evidence Act, 1972 as it is the appellant who is asserting 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, ....
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....nce upon which the department may rely should have been subjected to cross-examination. If the AO refuses to produce an informant for cross examination 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, ....
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....me Court in the case of CIT Vs. Durga Prasad More [1972] 82 ITR5 40, are "that though an appellant's statement must be considered real until it was shown that there were 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 r....
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.... of appeal no.1 is dismissed. 7. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 8. The learned AR before us filed a paper book running from pages 1 to 108 and contended 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 repe....
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....vide letter dated 13.12.2016 has specifically requested for such information/documents/statements and details of enquiry which has been conducted by the AO as apparent from his reply and the contents thereof read as under: *********************** 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 ....
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....about 12 companies which include shares of M/s. SantoshimaTradelinks Ltdworth Rs 31,68,000/- which were acquired in the financial year 2011-12 and similarly reflected in the balance sheet as on 31.03.2012. We find that the assessee has duly reflected all these shares 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....
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.... arises in the said case. On the contrary, in the case in hand the assessee produced all the relevant documentary evidence to establish the genuineness of the transaction. Even if the AO doubted the transaction, then to establish that the transaction is bogus, the AO is required to produce 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 ....
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....n and subsequent sale of shares, financial statements and books of account and the return of income relevant for the assessment year pertaining to year of purchase and year of sale, the contract notes reflecting the transaction executed as per price prevailing on the stock exchange. We therefore find that 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 c....
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....mentation is proper, the gains cannot be assessed as unexplained credit or as unexplained money. It was further observed that nowhere it has been found that assessee was in any manner found to be beneficiary of any accommodation entry under any inquiry or investigation and there is no material that any action has been taken by the SEBI 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 ....
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....ccommodation entry providers. Further in the aforesaid case, the issue as to whether the legal evidence produced by the assessee has to guide our decision in the matter or the general observations based on statements, probabilities, human behavior and discovery of the modus operandi adopted in earning alleged bogus LTCG and STCG, that have surfaced during 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 be....