TaxTMI 
TaxTMI 
2019 (1) TMI 2041
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....under appeal and the additions being made on facts which are similar/identical in nature, we propose to adjudicate all the appeals together by this consolidated order. 2. In the case of Shri N. K. Saraogi, the appeals pertain to AYs. 2014-15 and 2015-16. In respect of Mrs. Urmila Saraogi it is pertaining to AYs 2013-14 and 2014-15 and for Shri Robin Saraogi it is pertaining to AYs. 2010-11 and 2013-14. Since the assessment years before us have both abated proceedings and unabated proceedings, we would like to first look into the abated proceedings, so that the incriminating evidence even if is existing can be identified and understood properly. Therefore, we take up first the assessment of Shri N. K. Saraogi for AY 2015-16 which is admittedly the only abated proceeding before us out of six assessment years in appeal. IT(SS)A No. 47/Kol/2018 for AY 2015-16 in respect of Shri N. K. Saraogi 3. So, we take up Shri N. K. Saraogi's case for AY 2015-16 as lead case. Brief facts as noted by AO is that Shri N. K. Saraogi filed his return of income on 26.03.2016 declaring a total income of Rs.29,89,390/-. A search was conducted on 15.12.2015 u/s. 132 of the Act at the residence and ....
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....mber of share broking entities have accepted before the Department that they were involved in these unscrupulous/ nefarious activities. In all the assessment orders before us, the AO discusses from pages 2 to 5, the general observations in respect of bogus/accommodation entry providers, their modus operandi etc. According to AO, the survey of entry providers has resulted in them, confessing about their dubious role in the whole racket. According to the Investigation Report, the beneficiary in order to bring his unaccounted money into his regular books used this route and at the same time wants to avoid paying income tax. According to AO, the operators maintain complex network and have nexus with the paper companies and have control over some penny stock companies to do this money laundering for the beneficiary and the AO taking note of the astronomical rise in price of shares, he was of the opinion that there was manipulation on the trading activity and rigging of prices so according to him, the human probabilities does not allow him to accept the claim of the assessee. The AO acknowledges that the transactions though happening in the approved stock exchange and through recognized ....
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....e order." was pleased to deny the cross examination of the persons'. However, interestingly, the AO had given opportunity to assessee to bring the witnesses whomever he wished to cross examine and thereafter, the AO was of the opinion that the assessee failed to discharge his onus u/s. 68 of the Act in respect to the amount of Rs.3,53,56,735/- which was added to the total income. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to confirm the same. Aggrieved, the assessee is before us. 5. Assailing the action of Ld. CIT(A)/AO, the Ld. AR brought to our notice that out of the six appeals, only the appeal relating to Shri N. K. Saraogi for AY 2015-16 which was pending before the AO on the date of search on 15.12.2015, so the assessment for AY 2015- 16 is abated in the eyes of law. However, all other assessments pertaining to the assessee's herein were not pending before the AO on the date of search on 15.12.2015 and so according to him, the AO has to reiterate the return accepted by the department u/s. 143(1)/143(3) of the Act and cannot venture to make any addition /disallowance u/s. 153A without incriminating material unearthed by the department....
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....ngs of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 6. According to Ld. AR, the aforesaid ratio was upheld by the Hon'ble jurisdictional Calcutta High Court in ITA No. 661 of 2008 Commissioner of Income Tax Vs.Veerprabhu Marketing Ltd., wherein the Hon'ble High Court held as under: "We agree with the view expressed by the Karnataka High Court that incriminating material is prerequisite before power could have been exercised u/s 153(C) r.w Section 153(A). In the case before us, the AO has made a disallowance of the expenditure, which was held disclosed, for one reason or the other, but such disallowances made by the AO were upheld by the LD.CIT(A) but the Ld. Tribunal deleted these disallowance. We find no infirmity in the aforesaid Act of the Ld. Tribunal. The appeal is, therefore, dismissed". 7. ....
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....e found in search as well as of other documents and such materials available to Assessing Officer relatable thereto. He also submitted that the Hon'ble Kerala High Court decision in E.N. Gopa Kumar vs. CIT (2016) 75 taxmann.com 215 (Kerala) took the same view. And he relied on the following decisions:- i) PCIT, Delhi-2 Vs. Best Infrastructure India Pvt. Ltd. (2018) 94 taxmann.com 115(SC); ii) ITAT Mumbai Bench decision in M/s. Priyanka Chopra vs. DCIT (2018) 89 taxmann.com 288 (Mum. Trib) . The ld CIT DR Mr. Shrihari accordingly seeks to validate the impugned assessment in all these three assessees' case. 9. Apart from the above, the Id DR vehemently argued that the Hon'ble Supreme Court though had admitted the Special Leave Petition filed by the assessee in the case of Dayawanthi Gupta against the decision rendered by the Hon'ble Delhi High Court in the case of Dayawanthi Gupta reported in 390 ITR 486 (Del) which was in favour of Revenue wherein the Tribunal on the basis of statement u/s. 132(4) has sustained the addition made by AO. He also pointed out that SLP has been admitted by the Hon'ble Supreme Court against the decision rendered by the Hon'ble ....
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....creation of Court. It is part of legal and statutory justice, and not a part of natural justice, therefore, it cannot be laid down as a general proposition of law that the Revenue cannot rely on any evidence which has not been subjected to cross-examination ." 12. The Ld. CIT, DR drew our attention to Hon'ble Calcutta High Court decision in the case of Manindra Nath Chatterjee Vs. Collector of Central Excise & Another [1977 TLR 1754(CI.)] is "Whether in a particular case the particular party should have the right to cross-examine or not depends upon the facts and circumstances of a particular case. This is so, because the right to cross-examine is not necessarily a part of reasonable opportunity." 13. Similar judgements according to Ld. CIT, DR were also pronounced by the Hon'ble Kerala High Court in the case of M.K. Thomas Vs. State of Kerala [ 40 S.T.C. 278] in view of the decision of Hon'ble Supreme Court in the case of K.T. Shadull Vs. State of Kerala [39 S.T.C. 478 S.C.]. 14. And according to him, all these judgements/decisions lead to one conclusion that right to cross-examine the witness, who made adverse reports, is not an invariable attribute of the re....
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....alment or suppression of the consideration." 17. The Ld. AR drew our attention to the decision of the Tribunal in the case of Manish Kumar Baid, Mahendra Kumar Baid vs ACIT (ITA No. 1236/1237/Kol/2017 dated 18.08.2017) (A.Y. 2014-15) wherein it has been held that:- We find lot of force in the arguments of the Ld. AR that the AO was not justified in rejecting the claim of the assessee on the basis of theory of surrounding circumstances, human conduct and preponderance of probability without bringing on record any legal evidence against the assessee. We rely on the judgement of Special Bench of Mumbai Tribunal in the case of GTC Industries Ltd. (supra) for the proposition. The various facets of the arguments of the ld AR supra, with regard to impleading the assessee for drawing adverse inference which remain unproved based on the evidences available on record are not reiterated for the sake of brevity. The principles laid down in various case laws relied upon by the ld AR are also not reiterated for the sake of brevity. 18. It has also been held in the said order that- "Hence we hold that there is absolutely no adverse material to implicate the assessee to the....
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....ion entries, the assessee answered in the negative that he does not know the directors of M/s. Tuni Textiles Ltd. and M/s. SRK Industries. To the specific question no. 30 as to whether he knew the directors of M/s. Life Line Drug & Pharma Ltd. he said that he does not know them also. 22. We note that the AO has heavily relied upon the statement of Shri Devesh Upadhyay whose statement was recorded u/s. 131 of the Act by the Investigation wing of the department on various dates before and after search of assessee's premises i.e. 04.03.2016, 01.05.2015, 03.01.2014, 24.01.2014, 02.03.2015 and 22.09.2017. According to AO, Shri Devesh Upadhyay has accepted to question no. 6 (recorded on 04.03.2016) that he is an accommodation entry provider who does it directly through his paper /shell companies (list referred to as annexure 'A'). For question no. 9, he has stated that he directly controlled certain company's (name which are in annexure 'A') through which he purchases penny stock shares and that for question no. 13 he answered that he had purchased through his paper companies shares of M/s. Life Line Drugs & Pharma Ltd., M/s. Tunni Textiles, M/s. SRK Industries etc. Based on the state....
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....roviding exit route to penny stock companies like GCM, Life Line Drug & Pharma Ltd., SRK Industries, Tunni Textiles etc. After going through the entire statement of Shri Devesh Upadhyay, we note that for question no. 8 asked by the officer of the Department he answered as under: Question no. 8: Do you know Shri N. K. Saraogi and his family members who are the members of Saraogi Group engaged in the trade of cotton sarees from Burrabazar, Kolkata? Answer - Sir, I do not know Shri N. K. Saraogi and his family members. 24. We note that question no. 12 was that "it is seen that the Jama Kharchi companies controlled by you as per annexure 'A' have bought the penny scrips from the members of Saraogi group discussed in the above question which has resulted into huge long term capital gains in the hands of the members of Saraogi Group. Hence, they were beneficiaries of LTCG entry provided with the help of your Jama Kharchi Companies. Please state the name and address of the persons who contacted for providing the abovementioned entries." Ans- Sir, Shri Vikash Sureka contacted him for arranging the exit route for providing the bogus LTCG entry. For this I got the commission of 0....
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.... Vikash Surekha nor Shri Vikash Surekha's statement was recorded to corroborate any wrong doing or even to suggest any kind of connection between (Shri Vikash Surekha) and the assessee's. So, we do not find any statement of Shri Devesh Upadhyay to be incriminating in nature qua the assessee's claim of LTCG. It may be true that Shri Debesh Upadhyay may be involved in nefarious/unscrupulous acts of providing accommodation entries for beneficiary's and must have dealt with the scrips on which the assessee's are also claiming LTCG, but that fact alone cannot be used to deny the assessee's claim, when there is no evidence either oral or documentary against the assessee's claim. So, as aforerstated, we note that Shri Devesh Upadhyay has specifically answered to question no. 8 that he does not know Mr. N. K. Saraogi and his family members. Therefore, the general leading question as to whether he dealt with penny stocks companies which happened to be ones which were traded by the assessee and his family members cannot be the foundation on which the AO can debunk the claim made by the assessee, when the assessee has produced supporting documents to prove the purchase and sale of scrips thro....
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....y way of account payee cheque which has been duly debited in the bank account maintained with Bank of Baroda, India Exchange Place Branch. Thereafter, allotment of shares by letter of allotment from the company is also found placed in the paper book. We also note that after the allotment of shares, the shares were received in assessee's de mat account maintained with M/s. Motilal Oswal Securities Ltd., the deposit participant. We note that these shares were duly held in the assessee's name in de mat account before being sold and the de mat statement is found placed in the paper book. We note that the assessee sold in AY 2014-15 96800 shares through the broker M/s. Motilal Oswal Ltd. on various dates between 11.03.2014 and 27.03.2014 on the electronic trading platform of the BSE. We note that the shares of LDPL was listed only on the BSE. The broker has issued contract note cum bill of sale of shares and after sale of the shares, the delivery of the said shares were done by issue cum instruction slip to the deposit participant for transfer of equivalent number of shares to the broker's account for onward transfer of the said shares to Stock Exchange. It was brought to our notice tha....
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....ilar scrips. 27. We note that in an identical/similar case, wherein the AO made addition of the LTCG claim made on sale of M/s. KAFL scrips on similar reasoning based on the SEBI interim report, investigation report of the Wing of the Department and certain statements recorded by the Department in the case of Sanjiv Shroff Vs. ACIT in ITA No. 1197/Kol/2018 Dated 02.01.2019, wherein the Tribunal observed as under and gave relief to the assessee: "We note that shares of M/s. KAFL were sold by assessee through recognized broker in a recognized Bombay Stock Exchange. The details of such sale and contract note have been submitted before AO/Ld. CIT(A). We take note that when the transactions happened in the Stock exchange, the seller who sells his shares on the stock exchange does not know who purchases shares. According to our knowledge, the shares are sold and bought in an electronic mode on the computers by the brokers and there is also no direct contact at any level even between the brokers. We note that as and when any shares are offered for sale in the stock exchange platform, any one of the thousands of brokers registered with the stock exchange is at liberty to purcha....
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....Dokani, Shri Bidyoot Saral, Shri Narendra Basin and Shri Amit Dokani. Therefore, the statement of witness cannot be sole basis of the assessment without given an opportunity of cross examination and consequently it is a serious flaw which renders the order a nullity. The Mumbai Special of the Tribunal in case of GTC Industries vs. ACIT (supra) had the occasion to consider the addition made by the AO on the basis of suspicion and surmises and observed in par 46 as under:- "46. In situations like this case, one may fall into realm of 'preponderance of probability' where there are many probable factors, some in favour of the assessee and some may go against the assessee. But the probable factors have to be weighed on material facts so collected. Here in this case the material facts strongly indicate a probability that the wholesale buyers had collected the premium money for spending it on advertisement and other expenses and it was their liability as per their mutual understanding with the aseessee. Another very strong probable factor is that the entire scheme of 'twin branding' and collection of premium was so designed that assessee company need not incur adv....
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.... the Assessing Officer has not brought any material on record to show that the assessee has paid over and above the purchase consideration as claimed and evident from the bank account then, in the absence of any evidence it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long term capital gain. The Hon'ble Rajasthan High Court dated 11-09-2017 in case of CIT vs. Smt. Pooja Agrawal [ITA no 385/2011 ] has upheld the finding of the Tribunal on this issue in para 12 as under:- "12. However, counsel for the respondent has taken us to the order of CIT(A) and also to the order of Tribunal and contended that in view of the finding reached, which was done through Stock Exchange and taking into consideration the revenue transactions, the addition made was deleted by the Tribunal observing as under:- "Contention of the AR is considered. One of the main reasons for not accepting the genuineness of the transactions declared by the appellant that at the time of survey the appellant in his statement denied having made any transactions in shares. However, subsequently the facts came on record that the appellant had transacted not only....
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....lable on record does not help much. The AO has failed to prove through any independent inquiry or relying on some material that the transactions made by the appellant through share broker P.K. Agarwal were non-genuine or there was any adverse mention about the transaction in question in statement of Sh. Pawan Purohit. Simply because in the sham transactions bank a/c were opened with HDFC bank and the appellant has also received short term capital gain in his account with HDFC bank does not establish that the transaction made by the appellant were non genuine. Considering all these facts the share transactions made through Shri P.K. Agarwal cannot be held as non-genuine. Consequently denying the claim of short term capital gain (6 of 6) [ ITA-385/2011] made by the appellant before the AO is not approved. The AO is therefore, directed to accept claim of short term capital gain as shown by the appellant." In view of the above facts and circumstances of the case, we are of the considered opinion that the addition made by the AO is based on mere suspicion and surmises without any cogent material to show that the assessee has brought back his unaccounted income in the shape of l....
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.... claim of LTCG, which has not been found fault with by the AO. 23. Let us look at certain judicial decisions on similar facts:- 24. The case of the assessee's is similar to the decision of Hon'ble Bombay High Court, Nagpur Bench in CIT vs. Smt. Jamnadevi Agrawal & Ors. dated 23rd September, 2010 reported in (2010) 328 ITR 656 wherein it was held that: "The fact that the assessees in the group have purchased and sold shares of similar companies through the same broker cannot be a ground to hold that the transactions are sham and bogus, especially when documentary ITA Nos. 93 to 99/RPR/2014 & C.O. Nos. 12 to 18/RPR/2014 . A.Y. 2004-05 10 produced to establish the genuineness of the claim. From the documents produced, it is seen that the shares in question were in fact purchased by the assessees on the respective dates and the company has confirmed to have handed over the shares purchased by the assessees. Similarly, the sale of the shares to the respective buyers is also established by producing documentary evidence. It is true that some of the transactions were off-market transactions. However, the purchase and sale price of the shares declared by the asse....
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....03, sale bill, bank account, demat account and official report and quotations, of Calcutta Stock Exchange Association Ltd. on 23rd July, 2003. Therefore, 'the prese/itdppeal does not raise any question of law, much less any substantial question of law." 25. The Hon'ble High Court of Punjab and Haryana in the case of Anupam Kapoor 299 ITR 0179 has held as under:- "The Tribunal on the basis of the material on record, held that purchase contract note, contract note for sates, distinctive numbers of shares purchased and sold, copy of share certificates and the quotation of shares on the date of purchase and sale were sufficient material to show that the transaction was not bogus but a genuine transaction. The purchase of shares was made on 28th April, 1993 i.e.. asst. yr. 1993-94 and that assessment was accepted by the Department and there was no challenge to the purchase of shares in that year. It was also placed before the relevant AO as well as before the Tribunal that the sale proceeds have been accounted for in the accounts of the assessee and were received through account payee cheque. The Tribunal was right in rejecting the appeal of the Revenue by holding ....
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....applying the ex factory prices, as we find them contravened and not normal price as envisaged under section 4(1), we find no reason to disturb the Commissioners orders." 15. The Hon'ble Apex Court held as under:- "According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the T....
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....ecord which could suggest that the shares were never transferred in the name of the assessee. There is also nothing on record to suggest that the shares were never with the assessee. On the contrary, the shares were thereafter transferred to demat account. The demat account was in the name of the assessee, from where the shares were sold. In our understanding of the facts, if the shares were of some fictitious company which was not listed in the Bombay Stock Exchange/National Stock Exchange, the shares could never have been transferred to demat account. Shri Mukesh Choksi may have been providing accommodation entries to various persons but so far as the facts of the case in hand suggest that the transactions were genuine and therefore, no adverse inference should be drawn. 18. In the light of the decisions of the Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) and considering the facts in totality, the claim of the assessee cannot be denied on the basis of presumption and surmises in respect of penny stock by disregarding the direct evidences on record relating to the sale/purchase transactions in shares supported by broker's contract notes, confirma....
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....aced at pages 72 to 75 of the paper book. The ld. AR produced the purchase & sale contracts notes which are placed on pages 28 to 69 of the paper book. The purchase and sales registers were also submitted in the form of the paper book which is placed at pages 76 to 87. The Board resolution passed by the company for the transactions in commodity was placed at page 88 of the paper book. On the other hand the ld. DR relied in the order of the lower authorities. 4.1 From the aforesaid discussion we find that the assessee has incurred losses from the off market commodity transactions and the AO held such loss as bogus and inadmissible in the eyes of the law. The same loss was also confirmed by the ld. CIT(A). However we find that all the transactions through the broker were duly recorded in the books of the assessee. The broker has also declared in its books of accounts and offered for taxation. In our view to hold a transaction as bogus, there has to be some concrete evidence where the transactions cannot be proved with the supportive evidence." ii) M/s Classic Growers Ltd. vs. CIT [ITA No. 129 of 2012] (Cal HC) - In this case the ld AO found that the formal evidences....
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....Hon'ble Calcutta High Court affirmed the decision of this Tribunal wherein the loss suffered by the Assessee was allowed since the AO failed to bring on record any evidence to suggest that the sale of shares by the Assessee were not genuine. vii) CIT V. Bhagwati Prasad Agarwal [2009- TMI-34738 (Cal HC) in ITA No. 22 of 2009 dated 29.4.2009] - In this case the Assessee claimed exemption of income from Long Term Capital Gains. However, the AO, based on the information received by him from Calcutta Stock Exchange found that the transactions were not recorded thereat. He therefore held that the transactions were bogus. The Hon'ble Jurisdictional High Court, affirmed the decision of the Tribunal wherein it was found that the chain of transactions entered into by the assessee have been proved, accounted for, documented and supported by evidence. It was also found that the assessee produced the contract notes, details of demat accounts and produced documents showing all payments were received by the assessee through banks. On these facts, the appeal of the revenue was summarily dismissed by High Court. 28. We note that since the purchase and sale transactions are support....
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....ld that the burden of showing that a particular transaction is benami and the appellant owner is not the real owner always rests on the person asserting it to be so and the burden has to be strictly discharged by adducing evidence of a definite character which would directly prove the fact of benami or establish circumstances unerringly and reasonably raising inference of that fact. The Hon'ble Apex Court further held that it is not enough to show circumstances which might create suspicion because the court cannot decide on the basis of suspicion. It has to act on legal grounds established by evidence. The ld AR submitted that similar view has been taken in the following judgments while deciding the issue relating to exemption claimed by the assessee on LTCG on alleged Penny Socks. (i) ITO vs. Ashok Kumar Bansal - ITA No. 289/Agr/2009 (Agra ITAT) (ii) ACIT vs. J. C. Agarwal HUF - ITYA No. 32/Agr/2007 (Agra ITAT) 30. Moreover it was submitted before us by ld AR that the AO was not justified in taking an adverse view against the assessee on the ground of abnormal price rise of the shares and alleging price rigging. It was submitted that there is no allegati....
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....ale of such shares by the operator. We have already held that the transactions relating to LTCG were genuine and not the accommodation entries as alleged by the AO. Consequently the addition of Rs.1,83,020/- is hereby directed to be deleted. We accordingly hold that the issue is allowed in favour of the assessee." 28. In the light of the documents filed by the assessee before the AO/Ld. CIT(A) and before us, which could not be controverted by any material by AO, so respectfully following the ratio laid by the Hon'ble jurisdictional High Court and other High Courts and the ratio laid by the Hon'ble Supreme Court and this Tribunal, and in the light of the aforesaid facts and circumstances discussed and in the light of the evidence placed by the assessee before the AO/Ld. CIT(A) and before us which have been discussed in para supra and below (infra)), we have to necessarily allow the claim of the assessee for LTCG on Life Line Drug & Pharma Ltd. 29. For AY 2015-16, we note that the assessee had opening investment of 153200 shares of LDPL as on 01.04.2014 which were allotted to him in the year 2012 and as discussed above. These remaining shares were sold through the same broker M....
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....nk account reflecting transactions, the shares having been sold on the online platform of the stock exchange and each trade of sale of shares were having unique trade number and trade time. It is not the case of the AO that the shares which were sold on the date mentioned in the contract note were not the traded price on that particular date and for that the assessee cannot be blamed unless there was any material/evidence to prove that the assessee or any one on his behalf has rigged the stock price. It should be noted that the Stock Exchange and SEBI are the statutory authorities appointed by the Govt. of India to ensure that there is no stock rigging or manipulation. The AO has not brought any evidence on record to show that these agencies have alleged any stock manipulation against the assessee or the brokers or the company in question. In absence of any evidence to back the conclusion of AO/CIT(A), it cannot be said that merely because the stock price moved sharply, the assessee was to be blamed for bogus transitions. It is also pertinent to note that the assessee has purchased the stocks through BSE and through registered brokers and thereafter the assessee has sold the shares....
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....on, we note that the assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions relevant to the purchase and sale of shares resulting in long term capital gain. Neither these evidences were found by the AO nor by the ld. CIT(A) to be false or fictitious or bogus nor the AO had issued any notice to the brokers for confirmation. The facts of the case and the evidence in support of the evidence clearly support the claim of the assessee that the transactions of the assessee were genuine and the authorities below was not justified in rejecting the claim of the assessee exempted u/s 10(38) of the Act on the basis of suspicion, surmises and conjectures. It is to be kept in mind that suspicion how so ever strong, cannot partake the character of legal evidence. In the aforesaid facts and circumstance, for allowing the appeal we rely on the decision of the Hon'ble Calcutta High Court in the case of M/s. Alipine Investments in ITA No.620 of 2008 dated 26th August, 2008 wherein the High Court held as follows : "It appears that there was loss and the whole transactions were supported b....
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.... without incriminating material, against the assessee qua the assessment year. As discussed above in the assessee's case of AY 2015-16, we note that there is no incriminating material against the assessee either oral or documentary to draw adverse inference against the assessee on his claim of exempt income by virtue of sale of shares of M/s. Life Line Drugs & Pharma Ltd. (now M/s. Arihant ) on 11.03.2014 and 27.03.2014. We note that based on the general statement of Shri Debesh Upadhyay/general report of Investigation Wing of Department and interim order of SEBI [which in no way implicate the assessee/broker/scrip] the claim of assessee has been disallowed and addition of Rs.2,06,65,887/- was saddled on assessee. Thereafter an addition of commission for earning this income @ 5% of Rs.10,33,294/- was also made against the assessee. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who confirmed it. Now the assessee has preferred this appeal before us. 36. We note that assessee has purchased 25000 shares of M/s. Life Line Drug & Pharma Ltd. at the rate of Rs.10/- each on 26.09.2012. These shares were purchased from M/s Motilal Oswal Securities Ltd who has raised b....
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....nformation such as contract notes evidencing the payment of STT as per the provisions of the act, bills, payment and receipts through bank, Demat account etc. already submitted. The Ld. Assessing Officer has neither considered nor reviewed the information filed before him. The shares transaction cannot be termed as bogus merely on suspicion, in spite of the Assessing Officer's acceptance in the assessment order that the transactions were on the electronic platform of Stock Exchange and done through approved broker and through banking channels. Since the assessee has presented all the relevant documents such as contract notes, bills etc. the long- term capital gain earned on sale of shares shall be treated under section 10(38) and considered as exempted. 38. These documents have been filed before the authorities below and before us. In the light of the aforesaid evidence filed to substantiate the LTCG claim on sale of shares of LDPL and in the absence of any material to find any infirmity in the documents filed by the assessee or any evidence/material to take a view as that of AO/Ld. CIT(A), we are of the opinion that the LTCG claim of assessee needs to be accepted and direct....
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....r. So the addition of RS 2,06,65,887/- is ordered to be deleted and commission @ 5% of Rs 10,33, 294/- is also ordered to be deleted. Appeal of Smt. Urmila Devi Saraogi in IT(SS)A Nos. 42 & 43/Kol/2018 41. At the outset itself, we note that this assessee is the wife of Shri N. K. Saraogi. First we will take up the AY 2013-14, wherein we note that for AY 2013-14. she had filed the return of income on 27.12.2013 which has been accepted by the Department on 04.02.2014 vide intimation u/s. 143(1). So, this assessment year is not pending on the date of search which happened on 15.12.2015. As per the settled principle of law, though once search takes place u/s. 132 of the Act, the AO has to issue notice u/s. 153A for six assessment years, previous to the year of search, unless the assessment year is pending before him (i.e. abated Assessment Year), the AO has to reiterate the returned income unless there is incriminating material (which was undisclosed by assessee) found during the search. In this year, though there was no incriminating materials found during search in respect to scrips transacted during this year pursuant to which assessee claimed LTCG which is exempt from tax, th....
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....the statement given by Shri Devesh Upadhayay against whom the assessee asked for cross examination was denied. Though the statement of Shri Devesh Upadhyay does not in any way incriminate the assessee and since the AO has heavily relied on the statement it was incumbent upon him to allow the assessee to cross examine Shri Devesh Upadhyay without which the statement of Shri Devesh Upadhyay cannot be relied upon to draw adverse inference against the assessee. So without any incriminating materials against the assessee unearthed during the search qua this assessee this assessment year in respect of the claim of the assessee, no addition can be made by the assessee in the light of the Hon'ble Delhi High Court decision in CIT Vs. Kabul Chawla (2016) 380 ITR 573 (Del.), concurred by the Hon'ble Jurisdictional High Court in CIT Vs. Veerprabhu Marketing in ITA No. 661 of 2008 and the Hon'ble Supreme Court upholding the order of Hon'ble Delhi High Court in Kurele Paper Mills (supra) and since there is no incriminating material qua the assessment year under consideration against the assessee, therefore, no addition is warranted and therefore, the LTCG claim of the assessee is to be allowed a....
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....015 and since the search happened only on 15.12.2015 this assessment year is obviously not pending on the date of search and so, the AO has to reiterate the return of income of the assessee of Rs.7,77,552/- and only unsettle the same by making an addition/disallowance only on the basis of incriminating materials unearthed during search qua this assessment year. As aforesaid, the assessee had shown in its return the LTCG exempt income from the sale of shares purchased from M/s. Island Media Entertainment, M/s. Transcend Industries Ltd. which has been merged with M/s. SRK Industries. During the proceedings u/s. 153A, the assessee has filed the following documents to substantiate its claim of LTCG which was exempt u/s. 10(38) of the Act on sale of M/s. SRK Industries by filing the copy of the contract note for purchase of the same from pages 146 to 162 of the paper book wherein we note that the assessee had filed copies of the contract note for purchase of shares, copy of bank statement showing the payment, copy of de mat statement, copy of contract note for sale of shares, copy of bank statement for receipt of payment and de mat statement showing delivery of the shares. The assessee ....
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....since there is no incriminating material qua the assessment year under consideration against the assessee, therefore addition of Rs 4,15,84,883/- and commission @5% of Rs 20,79,244/- is directed to be deleted. Thus grounds of appeal for these two assessment years are allowed in favour of the assessee. Appeal of Shri Robin Saraogi in IT(SS)A Nos. 50 & 51/Kol/2018 46. Coming to AY 2010-11 in the appeal preferred by Shri Robin Saraogi, the assessee, who is the son of Mr. Narendra Kumar Saraogi filed his return of income on 11.10.2010. He received intimation from the Department u/s. 143(1) of the Act on 12.05.2011 and since the search happened on 15.12.2015 this assessment year was not pending before the AO on the date of search and so it is an unabated assessment u/s. 153A proceeding. The AO has taken note that the assessee has claimed LTCG on sale of shares of M/s. Kailash Ficom Ltd. (Now M/s. Mindvision Capital Ltd.) the AO taking note of the astronomical rise in price of shares, he was of the opinion that there was manipulation on the trading activity and rigging of prices so according to him, the human probabilities does not allow him to accept the claim of the assessee and ....
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....y Stock Exchange with a BSE Code of 530955 and earned Long Term Capital Gain which is exempt under section 10(38). The Assessing Officer has neither found any infirmity in the documents filed nor bothered to verify the evidences filed by the assessee, but had got carried away by the investigation report and mechanically treated the transaction as bogus added the said amount as undisclosed income under Section 68. Since the assessee has presented all the relevant documents such as contract notes, bills and de-mat account details the long-term capital gain earned on sale of shares through BSE the claim of assessee under section 10(38) need to be allowed unless any adverse material is in the possession of the AO to disallow it. So without any incriminating materials against the assessee unearthed during the search qua this assessee this assessment year in respect of the claim of the assessee, no addition can be made by the assessee in the light of the Hon'ble Delhi High Court decision in CIT Vs. Kabul Chawla (2016) 380 ITR 573 (Del.), concurred by the Hon'ble Jurisdictional High Court in CIT Vs. Veerprabhu Marketing in ITA No. 661 of 2008 and the Hon'ble Supreme Court upholding the or....
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....t date i.e. 7.4.2011 being 10000 equity share having face value of Rs 10/- each automatically by corporate act on stood converted in to 1,00,000 equity shares having face value of Re 1/- each of Tuni Textiles Ltd. in the Demat account of the assessee by way of above Corporate action as evident from Demat statement. 51. That the said shares on instruction from assessee were sold by broker M/s Jalan & Co on 28.06.2012, 02.07.2012, 03.07.2012, 04.07.2012 & 06.07.2012 being 28000, 13400, 6800, 7000 & 44800 equity shares of Rs. 1/- each respectively on the platform of Bombay Stock Exchange, relevant contract notes have been filed before Assessing Officer/CIT(A) and found placed in paper book. We note that the contract notes specifically show the amount of STT paid on the said transactions of sale executed on the Bombay Stock Exchange. And that the assessee has received payment from the broker on 04.12.2012, 05.07.2012, 06.07.2012, 07.07.2012 & 11.07.2012 against the above sale in its bank account maintained with IDBI Bank. Copy of the bank statement evidencing the same is found placed in paper book. 52. We note that the Assessee had sold the shares of M/s. Tuni Textile Ltd which a....