TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 1347
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and on fact to confirm assessing officer's addition of Rs.98,037/- u/s 69 of the Act without there being any proof of payment of commission @ 2% of LTCG made by the assessee as per para 15 of assessment order. 3. Ld. CIT(A), NFAC has erred in law and on fact to confirm assessing officer's action of charging Income tax @ 30% u/s 115BBE of the Act." 3. The appeal filed by the assessee for Assessment Year 2014-15, is barred by limitation by 137 days. The assessee has moved a petition requesting the Bench to condone the delay. The contents of the petition for condonation of delay are reproduced below: "1- That appeal order of NFAC, Delhi is dated 19.07.2022 has been communicated through portal under the tab 'For Your Information'. It is deemed to be served on 19.07.2022. Appeal is filed with the registry, ITAT, Surat on 02.02.2023. Thus it is filed after -197- days from the date of order of 1st appellate authority. Limitation period provided under the act, for filing of 2nd appeal is -60- days. Therefore, the appeal is late by -137- days. 2- NFAC has served appeal order on portal electronically. I am a house hold lady do not have any computer system, internet facility etc. S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to negligent approach of the assessee`s Tax Consultant/Advocate. We note that assessee should not be penalized because of the mistake of assessee`s Tax Consultant/advocate. Reliance in this regard, is placed on the decision of I.T.A.T., 'C' Bench, Kolkata in the case of M/s. Garg Bros. Pvt. Ltd. & Others vs. DCIT [ITA Nos. 2519 to 2521/Kol/2017, order dated 18.04.2018, wherein under similar set of facts and reasons, the Hon'ble Tribunal was pleased to condone the delay of 211 days by holding as under: "3. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the application for condonation of delay, we are of the considered opinion that assessee was under a bona fide belief that the impugned order of Pr. CIT was not appealable before this Tribunal since they were not advised by their Tax Consultants about this legal right. Later on, when a Senior Lawyer advised them to file an appeal, the assessees immediately took steps to file the appeals. Therefore. the delay caused. we note. was because of the wrong advice of the Tax Professional for which assessees cannot be penalized. For the ends of justice, we condone the delay and ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... during the year under consideration, on total sale prices of Rs.49,01,840/- which has resulted in total earning of Rs.45,01,840/- in F.Y. 2013-14. During the course of assessment proceeding, information u/s 133(6) of the Act was called for from Bombay Stock Exchange and the details of sale of Sunrise Asian Ltd have been received by the assessing officer. The details of the sale of the script during the year are stated by the assessing officer on page No.5 and 6 of the assessment order. Ongoing through the purchase details of these shares, it was observed by the assessing officer that the Assessee had purchased shares of M/s Conart Trade's Ltd on 21.08.2011, directly from the company. Since the Assessee has purchased share of M/s Conart Trader's Ltd and sold shares of Sunrise Asian Ltd., therefore, the Assessee was asked to clarify the matter. The Assessee has replied to the Assessing Officer that the company Conart Trades Ltd was later amalgamated with Sunrise Asian Ltd. vide order of Hon'ble Bombay High Court dated 24.01.2013. 11. On perusal of the submission made by the assessee, it was observed by the Assessing Officer that the assessee purchased share of M/s Conar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ay, Learned Counsel for the assessee argued that during the assessment stage, the assessee submitted the following documents and evidences to prove its claim, which are reproduced below: (i) Ledger account of Conart Trader, Debit note for purchase of shares, share certificate and assessee's SBI Passbook for FY.2011-12 (vide PB.11 to 18) (ii) Income Tax Return, Computation and Financial statements for AY.2012-13 (vide PB. 19 to 23) (iii) Income Tax Return (ITR), Computation, Financial statements for AY.2013-14 (vide PB. 24 to 30) (iv) ITR, Computation and Financial statements for AY.2014- 15 (vide PB.31 to 35) (v) Copy of ledger account of Nirmal Bang Securities Pvt. Ltd. with their contra account and Demat account (vide PB. 36 to 40) (vi) Contact notes issued by SEBI register, broker Nirmal Bang Securities Pvt. Ltd. w.r.t. sale of shares in BSE with payment of STT (vide PB. 41 to 47) (vii) Appellant's SBI Bank account passbook for FY.2013-14 (vide PB. 48 to 50) (viii) Copy of NSDL statement of holding as on 31.03.2013 & 31.03.2014 (vide PB.51 to 52) (ix) Copy of written submission before CIT(A) (vide PB.53 to 56) (x) Copy of Assessing Officer (assessing officer)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eleted. 19. On the other hand, Ld. Sr. DR for the Revenue submitted that assessee has not proved the genuineness of the transaction, just to submit that the transaction was done through banking channel is not sufficient. The assessee submitted debit note, ledger account and other evidences such as STT was paid on the transaction, these evidences and documents do not show that the transaction is genuine. The Ld. Sr. DR for the Revenue also relied on the judgment of Hon'ble Calcutta High Court in the case of PCIT vs Swati Bajaj (2022) 139 taxmann.com 352 (Calcutta) and stated that assessee has not proved the genuineness of the transaction and therefore addition made by the Assessing Officer should be sustained. 20. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that during the assessment proceedings, the assessee submitted before the assessing officer, Ledger account of Conart Trader, Debit note for purchase of shares, share certifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nge. The assessee has also submitted past history and business of the company, market cap and other financial data of the company. The shareholding pattern of the company and management particular, directors, administrators and auditors, were also proved. A price moment chart between April, 2012 to March, 2015 was also supplied. It was submitted that during the given period, high price of "Sunrise Asian Ltd" (in brief "SAL") was Rs.605.50 and low price was Rs.548.50 per share. Further, a list of the company who has given handsome return in the span of one year or less is also supplied to the Assessing Officer. These companies are in existence but not much popular due to its fundamentals, financial and corporate news. The assessee has argued that share market activities are risky business and many persons are losing their money and capital in the market due to its volatile nature. Therefore, only because of sharp moment in prices of shares, transaction in share cannot be held bogus. It was submitted that she being a genuine investor, has invested in the share of Conart Trader's Ltd, and hold it for several months, say two and half years, being satisfied with the profit, share were s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of the most important principles of natural justice........" 24. We note that while passing the assessment order, Assessing Officer has relied on certain additional documents, which are neither disclosed before the assessee nor supplied copy of such document to the assessee during assessment proceeding. These documents are listed as under: Sr. No. Additional documents relied on bye the assessing officer Assessment order Page no Para No. i Information collected u/s 133(6) from BSE 2 & 3 4 ii Reports of Directorate of Investigation of Kolkata vide their latter No.75A/2015-16/257-273 dated 27.04.2015 3 5 iii A statement Shri Anuj Agrawal u/s 131 during survey dated 30.03.2015 6 to 14 9.1 The ld Counsel stated that addition made on the basis of above documents is liable to be deleted in view of the decision of Ho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was established. Further, no contrary and conclusive evidences were brought on record to dispute the documentary evidences furnished by assessee. The enquiries were conducted by the DCIT at Kolkata and the statements were recorded at the back of the assessee. The assessee was deprived off to cross examine the witnesses. The documentary evidences submitted by the assessee were neither proved contrary nor proved fabricated. Assuming that the brokers may have done some manipulation but the assessee cannot be held liable for the act of the brokers when the entire transactions have been done through banking channels duly recorded in the Demat accounts with a Government depository and traded on the stock exchange. The Sale transactions took place through recognized stock exchange and statutory Securities Transaction Tax (STT) as well as Services Tax was paid on sale transactions. In the online platform, the identity of the seller as well as purchaser would not be known. The shares were delivered in demat form though clearing mechanism of the stock exchange. Therefore unless any link is established, the assessee could not be held to be part of the group indulging into rigging shares price....
X X X X Extracts X X X X
X X X X Extracts X X X X
....906 34.35% Financial Institutions 5,143,909 11.26% The ld Counsel submits that the shares of "Sunrise Asian Ltd.", were being held buy Canara Bank, New Delhi, 6% of SAL shares during September 2015 and 11.26% shares of SAL, during March 2016 and June 2016 respectively. Thus, the sale transaction of 'SAL' shares cannot be doubted as bogus and denying the exemption u/s 10(38) of the Act. The ld Counsel also submitted the judgments of various Coordinate Benches of ITAT, wherein addition made by the assessing officer U/s 68, in respect of sale of shares of "Sunrise Asian Ltd" were deleted: 1) ITO vs. Devyani Dharmendra Shah [ITA No.576/Ahd/2020] (Ahd Trib.) 2) Sita Devi Agarwal Vs. ITO [ITA No.56/JP/2020] (Jaipur Trib.) 3) Ashok Agarwal vs. ACIT [ITA No.124/JP/2020] (Jaipur Trib.) 4) ITO vs. Liberal Realtor LLP [ITA No.449-450/Mum/2021] (Mumbai Trib.) 5) Shri Shripal Rai Lodha vs. DCIT [ITA No.619/Mum/2020] (Mumbai Trib.) 6) Narayan Ramchandra Rathi vs. ITO [ITA No.4811/Mum/2018] (Mumbai Trib.) 7) Arun S. Tripathi vs. PCIT [IA No.2560/Mum/2018] (Mumbai Trib.) 8) Anraj H.Shah (HUF) vs. ITO [ITA No.4514/Mum/2018 (Mumbai Trib.) 9) Anjana Sandeep Rathi vs. ACIT [ITA ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and in the nature of penny stock. By adding Rs. 2,10,474/- under section 68 of the Act, total income was assessed at Rs. 5,21,964/-. 3.2 In appeal by the assessee before the Commissioner of Income-tax (Appeals), the issue was re-examined. According to the appellate authority the appellant assessee had furnished evidence to show that the shares were brought as genuine investment which was long back in the year 2000-01. As the shares were in the nature of old investment, they could not be treated as penny stock by any stretch of imagination. 4. The Income-tax Appellate Tribunal further examined the question in appeal preferred by the revenue and confirmed the view of the appellate authority noticing that the shares were purchased in the year 2001 and they were sold after long time in the year 2010-11. 5. The genuineness of investment in the shares by the assessee was substantiated by him by producing copy of transaction statement for the period from 1-6-2001 to 1-10-2010. The investment was made in the year 2000-01. The shares were retained for more than ten years and were sold after such long time. These circumstances suggested that the investment was not bogus or investme....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the challenge needs to fail. Though no rigid format is a must to express application of mind or for formation of belief that income chargeable to tax has escaped assessment and yet, when reliance on the information is mechanical without reassessment for the verification, independent opinion needs to be held to be absent. 17. Resultantly, this appeal fails and dismissed accordingly." 31. Hon`ble Delhi High Court in the case of Principal Commissioner Of Income vs Smt. Bindu Garg, ITA No.125.2020, order dated 15 January, 2021, held as follows: "10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same for the reasons stated hereinafter. 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8 of the Act. It is recorded that "There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of shares namely copy of allotment letter from Conart Traders Ltd., Ledger account of Conart Traders Ltd. and share certificate of SAL dated 24/05/2013, Copy of Audit Report for the Assessment Year 2013- 14 showing investment in shares of Conart Traders Ltd and bank statement reflecting payments made for purchase of SAL shares [at Page No. 333 to 364 of the Paper Book]. Similarly, the assessee also filed documentary evidences submitted before the Assessing Officer in respect of SAL of shares by producing the copy of the ledger account of the four share brokers, copy of the bank statement reflecting the amount received on sale of shares after making Securities Transaction Tax [at page no. 65 to 113 of the Paper Book]. The assessee also produced contract notes/bills issued by approved share brokers in respect of sale of shares [at Page nos. 114 to 216 of the Paper Book]. Thus the genuineness of investment in the shares of the assessee was substantiated by producing the above details by the assessee. Therefore the investment cannot be doubted as bogus investments made in penny stock. 7.1. In order to prove the purchase of shares, the assessee filed copy of the allotment letter, l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....market information and happened to get phenomenal gain. It could have been otherwise as well. The rags to riches story in the stock market are galore. It has been submitted that the alleged, circumstantial evidence and material has led the Assessing Officer to believe that the real is not the apparent. In the absence of any link between the assessee and the alleged, admissions of the directors and brokers, human probability is being used as a vague and convenient medium for the department's conjectures. To draw an adverse inference without any admissible evidence on record, is bad in law. In the light of the discussions that have preceded and for the reasons alluded we are of the view that the addition made by the assessing officer and confirmed by the Ld. CIT(A) needs to be deleted. Accordingly, we delete the additions made by assessing officer in case of Smt. Muktaben N. Patel and Shri Nishant K. Patel in the assessment year 2014-15." 7.4. Similarly, the Jurisdictional High Court in the case of PCIT Vs. Parasben Kasturchand Kochar (cited supra) held as follows: ".. 2. We take notice of the fact that the issue in the present appeal is whether the assessee earned long ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Co-ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. Shri Dilip B. Jiwrajka (cited supra) distinguished the Calcutta High Court judgment held as follows: "... 51. Apart from the above, we have also taken suo-motto judicial notice of the judgment rendered by the Hon'ble Calcutta High Court in the case of Pr. CIT Vs Swati Bajaj (288 Taxman 403). Having carefully perused the same, it is noted that peculiar facts were involved before the Hon'ble Court wherein eighty-nine different appeals of different assessee's were disposed off by the Tribunal in a single consolidated order without taking cognizance of the specific facts involved in each case (appeals preferred by different assessee's). The relevant observations made by the Hon'ble High Court is as follows: "40. Before we examine the contentions, we are tempted to point out that the exercise done by the tribunal was a bit perfunctory. There is absolutely no discussion of the factual position in any of the 89 appeals, the exception is in paragraph 4 with regard to the certain facts of the assessees case (SwatiBajaj). We are not very appreciative of the manner in which the bunch of appeals have....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idance on this subject by the Hon'ble jurisdictional High Court, which is binding upon us. 7.6. Similarly, the Co-ordinate Bench of this Tribunal in ITO Vs. Devyani Dharmendra Shah in ITA No.576/Ahd/2020 dated 15.06.2022 held as follows: "... 7. We have heard the rival contentions and perused the material on record. The Assessing Officer has not doubted the purchase of shares were through banking channels. While making the additions, the ld. Assessing Officer has not brought any material how the assessee has brought its own unaccounted money for the acquisition of the shares specially when the purchase of shares was not doubted and shares have been sold on Stock Exchange. Further, the ld. Assessing Officer has not brought on record statement of any persons through whom assessee's own unaccounted money has been brought in. As stated above, the appellant has held the shares for over 3 years and it would be incorrect to treat sale of shares as bogus merely on the basis of suspicion and on account of fact that a substantial quantum of capital gains has been made by the assessee. In the present case, no material has been brought on record to suggest that purchase and sale of s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld by the Investigation Wing of the Revenue to be a paper entity and that this scrip was being used for creating artificial capital gain. The objection was not found to be acceptable. (iii) The Mumbai ITAT in the case of Dipesh Ramesh Vardhan vs. DCIT (ITAT Mumbai) I.T.A. No.7648/Mum/2019 held that the AO has not discharged the onus of controverting the documentary evidences furnished by the assessee and by bringing on record any cogent material to sustain the addition. The allegation of price rigging / manipulation has been levied without establishing the vital link between the assessee and other entities. The whole basis of making additions is third party statement and no opportunity of cross-examination has been provided to the assessee to confront the said party. As against this, the assessee's position that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. (iv) The Delhi ITAT in the case of Suresh Kumar Agarwal vs. ACIT, ITA No 8703/Del/2019 held that the assessee has produced contract notes, demat statements etc. & discharged the onus of proving that he bought & sold the shares. The AO has only ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....:- "11. The authorities below have not doubted the documentary evidence produced by the assessee to prove the genuineness of the transaction of sale and purchase of the shares in question. Further, the authorities below have not pointed out any evidence on record to hold that the assessee has obtained bogus entries in connivance with entry operators and brokers etc., in order to claim bogus LTCG. As pointed out by the Ld. counsel, the assessee was not given an opportunity to cross examine the witnesses whose statements were relied upon and on the basis of their statements it was concluded that the transaction in question was a part of penny stock scam. So, in view of the cases discussed in the foregoing paras, particularly the ratio laid down by the Hon'ble Supreme Court in the case of M/s Andaman Timber Industries (supra), we are of the considered view that the Ld. CIT (A) has wrongly confirmed the assessment order passed by the AO in violation of the principles of natural justice. Hence, the impugned order passed by the Ld CIT (A) suffers from legal infirmity. We, therefore, allow the sole ground of appeal of the assessee and set aside the impugned order passed by the Ld. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that Ld DR for the Revenue heavily relied on the Judgment of Hon`ble Calcutta High Court in the case of Swati Bajaj and others (supra), however, we are of the view that as per the judgment of Hon'ble High Court of Bombay in the case of Thana Electricity Supply Ltd (1994) 206 ITR 727 (Bom) wherein it was held that decision of a High Court will have the force of binding precedent only in the State or territories in which the Court has jurisdiction. Hence we note that Judgment of Hon`ble Calcutta High Court in the case of Swati Bajaj and others(supra) should not be applicable to the assessee as it is outside the territorial jurisdiction of Gujarat. However, the Judgment of Hon`ble Jurisdictional High Court of Gujarat in the case of Jagat Pravinbhai Sarabhai and Nishant Kantilal Patel (supra) should be applicable to the assessee`s case, as these are the judgment of Jurisdictional High Court. Besides, the Jurisdictional Coordinate Bench of ITAT Ahmedabad in the case of M/s. Ice Worth Reality LLP, vide ITA Nos. 565 & 566/Ahd/2020, for Assessment Years 2012-13 & 2015-16, order dated 13-03-2023 (supra), deleted the addition made by the Assessing Officer in respect of Sunrise Asian Ltd ("S....