AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 698
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....The brief history of the case is like this that there was a search and seizure operation along with survey operation at the premises of Shri Chandrakant Shah (for short SCS) and his employees and the associates of SCS dated 9th April 2013. There were found various documents of incriminating nature marked as "cash sheet and cheque sheet" containing the information about the accommodation entries provided by SCS to various parties. SCS used to provide accommodation entries through various intermediaries. He was maintaining 212 companies which were utilised for layering the funds, generating bogus share application money, unsecured loan, long-term capital gain, short term capital gain. The cash and cheque sheets were containing the information of the intermediaries who were engaged in introducing the clients to SCS for providing the accommodation entries to the parties. 3.1 The statements under section 132(4) /133A of the Act of SCS and his employees were recorded wherein they admitted having been engaged in providing accommodation entries to the parties as discussed above. 3.4 The name of the assessee was appearing in the "cash and cheque sheet" under various nomenclature which evi....
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....ustries Ltd were managed and controlled by SCS to generate accommodation entries. vi. There has not been brought anything on record whether the AO has conducted any enquiry from the counterparties so as to establish that such company was engaged in providing the accommodation entries and the assessee has booked bogus loss after having collusion with such parties. 3.9 Besides the above the assessee further submitted that all the transactions carried out by him in the script of M/s Prraneta Industries were duly recorded in the books of accounts which evidence that the assessee has incurred trading loss of Rs. 42,14,344.00. All the purchases and sales of the shares were carried out through the banking channel, DMAT A/c, supported by valid contract notes. It was also submitted that the assessee is not aware of the counterparties, which is also not possible to know if such transactions are carried out at the stock exchange platform where the buyers and the sellers do not know each other. 3.10 Likewise, it was also submitted that there was survey operation at the premise of the assessee dated 30-01-2013 but no information of incriminating nature about the bogus loss claimed by the as....
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....re duly recorded in the books of accounts and matched with the date of the stock exchange. All the transactions were carried out through the registered stockbrokers which were not connected with SCS. 4.2 The trading in the script of M/s Prraneta Industries at the stock exchange was active till financial year 2018-19 whereas the assessee has entered into the transactions in the financial year 2009-10. Admittedly, the trading in the script of the impugned company at the stock exchange was restricted from 4th of January 2019 but on the ground of non-payment of listing fees. 4.3 The assessee has also filed the details of the turnover of the company namely M/s Prraneta Industries for the financial years 2009-10, 2010-11 and 2011-12 to establish that the company is having huge gross receipt and making the payment of the income tax and therefore the same cannot be regarded as a paper company. 5. However, the Ld. CIT-A rejected the contention of the assessee by observing as under: It is observed that AO has made addition under Section 68 of the Act for loan taken from various companies which were managed by Mr.Shirish Shah and his group to provide accommodative entries. The above refe....
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.... accommodative entries were explained by Mr. Shirish Shah and Mr. Praveen Jain and such facts are elaborately discussed herein above It is observed that addition under Section 68 of the Act made in the hands of Mr. Pavan Sanghvi was also confirmed by Hon'ble Ahmedabad ITAT, as discussed herein above. The above referred decision was also upheld by Hon'ble High Court and SLP of Department was dismissed by Hon'ble Supreme Court. (vi) In preceding paras, circumstantial evidences being investigation carried out by SEBI, DGCI, Crime Investigation Department, GST Intel Unit are brought on record which also prove beyond doubt that Mr. Shirish Shah was entry provider and loan received by Appellant from companies managed by him is not genuine (vii) The appellant has relied upon the confirmation, bank statement, return of income of depositors to substantiate its argument that loan taken by it was genuine. However, this contention of Appellant cannot be accepted for the reason that financial statements of depositors, as discussed herein above clearly prove that such companies have not earned significant income in relevant Assessment Years and which prove beyond doubt that cre....
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....ying cross examination of Mr. Shirish Shah, mere fact that cross examination was not provided to Assessee would not render the Assessment Order as infructuous order. On the contrary AO has asked to produce the relevant directors of the depositors for verification in assessment Proceedings but none of the directors have remained present. Even Mr. Shirish Shah was not produced before the Assessing Officer to prove that statement given by him during the course or search and admitting that various companies managed by him were bogus is incorrect. 24. In view of holistic consideration of all the facts, as discussed herein above, the arguments taken by the appellant are rejected. 25. Further, in this regard, it is stated that keeping in view of the detailed findings given in assessment order and para 6 to 24 of this order, it is observed that the evidence found during the search clearly established that Shri Shirish C. Shah had used the platform of BOLT to jack up the price of shares by resorting to synchronized trading to provide accommodation entry of LTCG to his clients against receipt of cash. It is pertinent to mention here that the members of Amrapali Group and others were pr....
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....om pages 1 to 33 along with the Ledger of the investment in shares made in the company namely M/s Prraneta Industries, containing the information about the sale and purchase of the shares along with the profit and loss of each transaction. The copy of ledger is placed on pages 1 to 2 of the paper book. 7.1 The learned AR also filed the ledger copy of the registered stockbrokers along with the contract notes which are placed on pages 2 to 30 of the paper book. As per the learned AR none of the stockbrokers was connected to SCS so as to provide the bogus trading loss to the assessee. 7.2 The learned AR also submitted that the assessee has been dealing in the scripts of multiple companies and therefore it is inappropriate to say that the assessee has taken some arranged transaction so as to book the bogus loss in the books of accounts. The ld. AR in support of his contention drew our attention on pages 31 to 32 of the paper book containing the details of the scripts in which the assessee has dealt in the year under consideration. As per the details provided by the assessee, the gross turnover of the assessee stands at Rs. 93,19,71,306.00. Thus, as per the ld. AR, considering the pro....
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....ices, then there would not have been declared any profit in the script in the given facts and circumstances. Thus, the conduct of the assessee suggests that he was not involved in manipulating the trading in the script of the company. 9.3 In the light of the above stated discussion, it is difficult to register in mind that a person maintaining such a portfolio shall enter any bogus transactions to bring down the profit so as to avoid the tax liability in a situation where he has sufficient brought forward losses. As such, considering the magnitude of the business of the assessee, the loss in dispute is miniscule and no prudent person will enter into such bogus transactions. 9.4 It was alleged by the revenue that the assessee has carried out the transactions in the script of M/s Prraneta Industries in connivance with SCS. The basis for holding so was that it was discovered during the search proceedings at the premises of SCS and M/s Prraneta Industries that the company namely M/s Prraneta Industries is engaged in providing accommodation entries through the involvement of SCS. However, on the contrary we find that all the transactions were carried out by the assessee at the stock e....
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....ough stock exchange. (iv) The inflow of shares is reflected in Demat account. Shares are transferred through Demat account. The assessee does not know the buyer. (v) There is no evidence that the assessee has paid cash to purchase trading loss. (vi) The assessee has no nexus with the company, its directors, or operators. He is not concerned with the activity of broker and has no control over the same. (vii) The purchase and sale of shares have been duly recognized by the concerned company. They are also reflected in the balance sheet of the assessee. (viii) The Opportunity of cross examination is not given. 9.9 In our view, just 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 prove that the assessee was involved in the collusion with the entry operator/ stockbrokers for such a scam. In the absence of such finding how is it possible to link their wrong doings with the assessee. Further the case laws relied by the AO are with regard to test of human probabilities which may be of greater impact but the same cannot be used blindly w....
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....he matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 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 conducte....
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....he findings for the assessment year 2010-11 shall also be applied for the assessment year 2011-12. Hence, the ground of appeal filed by the assessee is hereby allowed. 13. In the result, the appeal of the assessee is allowed. Coming to the ITA No. 428/AHD/2023 - Asst. Year 2012-13 14. The only issue raised by the assessee is that ld. CIT-A erred in confirming the order of the AO by sustaining the disallowance of trading loss of Rs. 10,14,955.00 treating the same as bogus loss. 15. At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2012-13 is identical to the issue raised by the assessee in IT(SS)A No. 426/AHD/2023 for the assessment year 2010-11 except the change of the scripts i.e. Chandni Textile Engineering Industries Limited and Shri Ganesh Spinners Ltd. Therefore, the findings given in IT(SS)A No. 426/AHD/2023 shall also be applicable for the assessment year 2012-13. The appeal of the assessee for the AY 2010-11 has been decided by us vide paragraph No. 9 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2010-11 shall also be applied for the....