TaxTMI 
TaxTMI 
2024 (6) TMI 97
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....essee filed its return of income on 18.10.2016 by declaring the total income of Rs. 5,55,996/- as declared by filing its original return of income on 31.03.2012. 2.1 On perusing the computation of the income filed by the assessee the Assessing Officer (AO) observed that the assessee has earned income from salary, business, capital gain and from other sources. The AO further observed that the assessee had purchased 15000 shares on 02.04.2008 @ 2.25 per share through off market from M/s. VRP Financial Services Ltd., Navi Mumbai and sold the said shares in parts i.e. 2500 on 19.10.2010 on a consideration of Rs. 4,50,799/- and consequently earned LTCG of Rs. 4,45,174/- and 12,500 on 22.10.2010 on a consideration of Rs. 22,70,372/- and consequently earned LTCG to the tune of Rs. 22,42,247/-. In effect the assessee had purchased 15000 shares on a consideration of Rs. 33,750/- on 02.04.2008 and sold the same on a consideration of Rs. 27,21,171/- on 19.10.2010 and 22.10.2010 and consequently earned total LTCG of Rs. 26,87,421/- and claimed as exempt under section 10(38) of the Act. 2.2 Therefore, in order to verify, the AO issued the notice to M/s. VRP Financial Services Ltd. from wh....
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.... principles and market factors. c. Findings of Investigation wing: The findings of the Directorate of Investigation of Mumbai and Kolkata as discussed above have proved that Shri Anil Agarwal and associated brokers, entry operators and the assessee had worked out an arrangement in which the shares were acquired by the assessee, the share prices were rigged and then with the help of entry operators by routing the cash, shares were sold at high price to arrive at tax free capital gains. d. Analysis of transactions: Facts revealed that such trading transactions of purchase and sale of shares are not been effected, for commercial purpose but to create artificial gains, with a view to evade taxes - i. Transactions of shares were not governed by market factors prevalent at relevant time in such trade, but same were product of design and mutual connivance on part of assessee and the operators. ii. The assessee resorted to a preconceived scheme to procure long- term capital gains by way of price difference in share transactions not supported by market factors. iii. Cumulative events in such transactions of shares revealed that same were devoid o....
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....e of shares. 16.3 Thus considering the findings of the search/ survey, inquiries conducted in the case of assessee, brokers, operators and the entry providers and the nature of transaction entered into by the assessee the LTCG of Rs 26,87,421/- claimed exempt u/s 10(38) of the act by the assessee can not be allowed and the amount of Rs 27,23,895/- received back as sales proceeds on sale of shares is required to added back towards her taxable income under section 68 of the act. Penalty proceeding u / s 271(1)(c) is initiated for furnishing inaccurate particulars of income with a view to concealment of income." 3. The assessee, being aggrieved, challenged the said addition before the Ld. Commissioner, who on the similar reasoning as given by the AO, affirmed the said addition/disallowance by dismissing the appeal of the assessee. The assessee, being aggrieved, is in appeal before us. 4. Having heard the parties and perusing the material available on record and giving thoughtful considerations to the peculiar facts and circumstances of the case, we observe that the assessee had purchased 15,000 shares of M/s. NCL Research & Financial Services Ltd. on total consideration....
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....wing details of Securities Transaction Tax (STT) collected by the broker from the assessee, ledger account of the assessee in the books of broker, Demat account statement for the period 01.04.2008 to 31.03.2011 etc. and it is also a fact that the AO has not doubted any of the documents filed by the assessee to substantiate his claim. Therefore it goes to show that the assessee has discharged its prima-facie onus casted upon him. 4.2 The Hon'ble Jurisdictional High Court in the case of Pr. Commissioner of Income Tax vs. Indravadan Jain HUF (2023) 156 taxmann.com 605 has also dealt with the identical issue as involved in the instant case and ultimately affirmed the deletion of the identical addition on account of disallowance of deduction claimed under section 10(38) of the Act by observing and holding as under: "3. Respondent had shown sale proceeds of shares in scrip Ramkrishna Fincap Ltd. (RFL) as long-term capital gain and claimed exemption under the Act. Respondent had claimed to have purchased this scrip at Rs. 3.12/- per share in the year 2003 and sold the same in the year 2005 for Rs. 155.04/- per share. It was A.O.'s case that investigation has revealed that ....