TaxTMI 
TaxTMI 
2024 (8) TMI 628
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..../s. Surbhi Chemicals and Investments Ltd where the assessee name has been surfaced and a detailed finding has been given by the Investigation Wing." 2. "On the facts and the circumstances of the case and in law the LD. CIT (A) has not appreciated the facts that in such penny scrip, trading transactions of purchase and sales are not effected for commercial purpose but to create artificial gains and complete the cycle of circular trading with a view to evade taxes." 3. "On the facts and the circumstances of the case and in law the LD. CIT (A) erred in getting the facts that transaction of shares of such penny scrip are not governed by market factors prevalent at relevant time rather transactions are product of design and mutual connivance on part of assessee and operators." 4. "On the facts and the circumstances of the case and in law the LD. CIT (A) erred in deleting the addition of Rs. 62,45,275/- made u/s.68 of the I.T. Act, 1961 being sale proceeds of the Scrip and Rs. 1,87,358/- made u/s. 69C of the I.T. Act, 1961 without appreciating that statement of various relevant person admitting that these companies were indulged in giving accommodation entries,....
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..../- each, i.e., in the ratio of 1:10. Thus, assessee received 1,00,000 shares of face value of Re.1/- each on 10.04.2013. Assessee sold these shares during the year on the platform of Bombay Stock Exchange (BSE) through SEBI registered broker. This entire factual matrix is presented by the chart reproduced below: Buy Sell Date of purchase/sale Quantity Rate Amount Quantity Rate Amount Gain 17.02.2012 1000 250 2,50,000 100000 62,45,275 59,76,790 (bonus shares issued in the ratio of 9:1) 9000 Shares subdivided into Rs. 10 to 1 90,000 1,00,000 100000 3.2. Case of the assessee was taken up for reassessment on the basis of investigation by the DDIT (Inv.), Kolkata. In the course of assessment, Ld. Assessing Officer called for details and explanations in respect of the transaction of sale of shares on which exemption has been claimed under section 10(38) on account of long-term capital gain earned by the assessee. To corr....
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....ions undertaken by her. Ld. Assessing Officer also issued notices under section 133(6) to the purchaser of the shares sold by the assessing, referred to as "exit providers" which according to him remained un-complied. Ld. Assessing Officer also referred to statement of various persons who according to him were running the racket of providing accommodation entries by manipulating the share prices of alleged penny scrip of the Surbhi Chemicals & Investments. Ld. Assessing Officer noted that statement of these various persons were recorded during the course of survey/search operations undertaken by the DDIT (Inv.), Kolkata and Mumbai to state that they had provided accommodation entries in the alleged penny scrip. 4. Ld. Assessing Officer, after considering the submissions made by the assessee, arrived at the adverse conclusion by observing that there is unusual rise in the price of the shares sold by the assessee which has been investigated by the Investigation Wing of the Department to establish that cash has been routed from various accounts to provide accommodation to the assessee and that assessee had failed to discharge her bonus to prove the unusual rise and fall of share pr....
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....said shares were undertaken on the stock exchange platform through the SEBI registered broker on which STT was levied and the consideration was routed through normal banking channel. The entire flow of these transactions is corroborated by relevant documentary evidences placed on record. While making the addition, there are no discrepancies pointed out by the Assessing Officer in the documents and the details furnished by the assessee. Ld. AO has not bothered to discuss or point out any defect or deficiency in the documents furnished by the assessee. These evidences furnished have been neither controverted by the Ld. AO during the assessment proceedings nor anything substantive brought on record to justify the addition made by him. At any stage of the present case, Revenue has not brought on record any material about participation of the assessee with any such dubious transactions relating to accommodation entry, price rigging or exit providers. To our mind, Ld. AO could have taken an adverse view only if he could point out the discrepancies or insufficiency in the evidence and details furnished in his office. Once the assessee has produced documentary evidence to establish the ver....
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....receipt of sale consideration of the impugned transaction cannot be sustained. In our considered view, ld. Assessing Officer has not established that the assessee was involved in price rigging. 8. We note that ld. Assessing Officer has observed about the so called purchasers of shares sold by the assessee who have not been identified even though notices were issued u/s. 133(6) of the Act. In this context, it is worth noting that impugned share sale transactions undertaken by the assessee are on the online digital trading platform of stock exchange of BSE which is a regulated market under the aggies of a regulator viz. SEBI. There is nothing on record from the market regulator SEBI for the relevant period which establishes the 'tainted' status of the scrip involved in the present case, so as to hold the share sale transactions as bogus/accommodation entry as alleged by the ld. AO. It is also important to note that the operations and modus operandi of this regulated market does not in any way provide for any mechanism by which assessee can bring forth the identity of the buyers of his shares and their creditworthiness. Further, sale proceeds are received through the stock market p....
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....has - a. purchased the shares under accepted off-line mode by making payment through banking channel. b. dematerialized the shares purchased by credit to the DMAT account and part of it were later sold out of the holding. c. sold the shares on the platform of recognised stock exchange on the then prevailing prices. d. received the sale proceeds through stock market process in his bank account. 10. We note that ld. Assessing Officer has not brought on record any material to show that assessee was part of any group which was involved in the manipulation of share prices. Suspicion by the ld. Assessing Officer on the purchase and sale of shares is baseless. We also note that ld. Assessing Officer did not allow the assessee to cross examination the parties whose statements were relied upon by him for drawing the adverse conclusion. Such an approach adopted by ld. Assessing Officer is not in compliance with the provisions of section 142(3) of the Act which is a statutory mandatory procedural requirement for making a valid assessment. We note that the required compliance with section 142(3) has not been met. 11. As already noted above, ld. Assessi....
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....ibunal." 4. Mr. Walve placed reliance on a judgment of the Apex Court in Principal Commissioner of Income-tax (Central)-1 v. NRA Iron & Steel (P.) Ltd. but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal is devoid of merits and it is dismissed with no order as to costs." ii) PCIT vs. Indravadan Jain HUF [2023] 156 taxmann.com 605 (Bom) wherein it was held: "Where shares were purchased by assessee on floor of stock exchange and not from broker, payment was made through banking channel, deliveries were taken in DMAT account where shares remained for more than one year, contract notes were issued and shares were also sold on stock exchange, there was no reason to add capital gains as unexplained cash credit under section 68" iii) CIT vs. Shyam R. Pawar [2015] 54 t....