2024 (4) TMI 19

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.... The assessee has raised as many as 21 grounds of appeal. From the perusal of all these grounds, we note that these are nothing but peripheral arguments on the issue noted above. Accordingly, these are not reproduced for the sake of brevity and the same will be dealt while adjudicating on the issue. 3. Brief facts as culled out from records are that assessee filed her return of income on 09.07.2013, reporting total income at Rs. 1,98,320/- along with claim of exemption u/s. 10(38) of Rs. 79,69,089/- towards long term capital gain on sale of shares of CCL International Ltd. (in short "CCL"). Case of the assessee was reopened u/s. 147 of the Act. In the assessment proceeding after examining the explanation and submission of the assessee, Ld. AO held the transaction of long term capital gain of Rs. 79,67,088/- as not genuine which represents undisclosed money of the assessee, introduced in the form of long term capital gain. Assessment was completed at the total income of Rs. 84,04,420/-. 3.1. Assessee had purchased 25000 shares of face value of Rs. 10/- each of AAR Infrastructure Ltd. (in short "AAR") on 18.01.2011 for an amount of Rs. 2,50,000/-. The said company amalgamated i....

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....d various judicial precedents. 5. According to Ld. Counsel for the assessee, investment and disinvestment in the share of CCL cannot be treated as accommodation entry in the garb of LTCG as the issue is no longer res integra for which he placed reliance on the decision of Hon'ble jurisdictional High Court of Jharkhand in the case of Arun Kumar Agarwal, HUF (2012) 26 taxmann.com 113 (Jharkhand). 5.1. He contended that no addition can be made on the basis of doubts and suspicion which are based merely on the information from Investigation Wing of the Department. These have never been confronted to the assessee, till date. 5.2. According to him, ld. AO did not conduct any independent enquiry to falsify the evidences filed by assessee in support of transaction of sale of shares undertaken. In this regard, reliance was placed on the decision of Hon'ble Delhi High Court in the case of CIT vs Krishna Devi 431 ITR 361 (Del). This decision was further referred and relied by Hon'ble Delhi High Court in Pr. CIT vs Karuna Garg in ITA No. 477/2022 dated 23.11.2022. 5.3. On the allegation that assessee executed offline purchase of shares of CCL to book bogus LTCG, ld. Counsel....

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....f Andaman Timber Industries vs CCE 314 ELT 641 (SC). 5.8. On the issue relating to addition made towards brokerage/commission as unexplained expenditure u/s 69C on the aforesaid alleged bogus LTCG accommodation entry, ld. Counsel submitted that it is based on surmises, conjectures and suspicion. There is nothing brought on record to establish as to who is the entry operator to whom assessee paid the alleged brokerage/commission and how and when such sum was paid. 5.9. Per contra. Ld. CIT DR strongly relied on the order of the authorities below for the additions made as it is a clear case of accommodation entry arranged by the assessee in the form of LTCG on the penny stock of CCL. According to him, mere furnishing of plethora of documents by the assessee does not in any way absolve her from the responsibility to prove such a huge increase in the share price resulting in LTCG when the Department is seized of the report from its Investigation Wing on the conduct of such a scam involving several such penny stock companies, beneficiaries, brokers and entry operators. He pressed for sustaining the additions made. 6. We have heard the rival contentions and perused the material o....

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....ion. ix) No addition can be made on the basis of adverse material, when neither such purported material was shown nor referred and confronted or supplied to the assessee in the course of assessment proceedings. x) No opportunity was afforded to assessee to cross examine the purported statements relied upon by Assessing Officer in the order of assessment violating the principles of natural justice. 8. We draw our force from the decision of Hon'ble jurisdictional High court in the case of Arun Kumar Agarwal (HUF) (supra) wherein it has been held that the long term capital gain realized on sale of penny stocks has to be treated as genuine as the assessee has furnished all the evidences in support of her claim. The relevant finding of the Hon'ble High Court of Jharkhand is as under: "9. Learned counsel for the assessee submitted that a bare perusal of the reasons given in the two impugned orders, one passed by the C.I.T Tax Appeal No.4 of 2011 with analogous case (Appeals) and another by the I.T.A.T will clearly reveal that the facts of the each case have been carefully considered by the C.I.T. (Appeals) and the facts mentioned in the order have not been dispute....

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.... was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame transaction. Fact of tinted broker may be relevant for suspicion but it alone necessarily does lead to conclusion of all transaction of that broker as tinted. In such circumstances, further enquiry is needed and that is for individual case. Such further enquiry was not conducted in that case." 9. In the present case, the purchase of shares has not been disputed or doubted. However, the sale has been disputed in the current year to be bogus and in the nature of accommodation entries. The Hon'ble High Court of Jharkhand has dealt with the identical issue in the above referred decision. 10. Considering the totality of facts and circumstances of the case, factual matrix and submissions of parties narrated above and judicial precedents relied upon as discussed and observations made herein above, we set aside ....