TaxTMI 
TaxTMI 
2024 (9) TMI 522
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....atory to file with the appeal memo. The assessee also requested the assessing officer to provide the assessment order for the year in dispute. However, on the advice of the ld. counsel the appeal was preferred without the assessment order. Nevertheless, the delay in this process occurred for 43 days, which was beyond the control of the assessee. Accordingly, the ld. AR requested to condone the delay. Considering the length of the delay, the ld. DR appearing on behalf of the revenue did not raise any objection if the delay is condoned and matter is decided on merit as per the provisions of law. In view of the above and after considering the length of delay, we condone the same and proceed to hear the matter on merit. 3. The effective issue raised by the assessee vide ground Nos. 2 to 9 is that the learned CIT(A) erred in confirming the disallowance of exempted capital gain under section 10(38) of the Act for Rs. 10,86,720/- only and treating the same as unexplained cash credit under section 68 of the Act. 4. The facts in brief are that the assessee in the present case, a HUF, has filed its return of income declaring income from other sources and exempted LTCG. The assessee in the ....
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....olkata highlighting the racket of bogus long term capital run by entry operator and broker or sub-broker to provide accommodation entry in the form of LTCG and STCL etc. The DDIT in the report highlighted the modus operandi of providing bogus long term capital gain and the facts involved in the present case are identical to modus operandi identified by the DDIT. Therefore, the AO in view of the above and after referring to judgment of Hon'ble Supreme Court in the case of Durga Prasad Moore in 82 ITR 540 and Sumati Dayal in 214 ITR 801 where the test of preponderance of human probability and surrounding circumstantial evidence was discussed, treated the LTCG on the script of M/s Comfort Intech Ltd as sham transaction. Thus, the AO disallowed the claim of exempt long-term capital gain on the sale of impugned scripts for Rs. 10,86,720/- and added to the total income of the assessee. 7. Aggrieved, assessee preferred an appeal before the learned CIT(A). 8. The assessee before the learned CIT(A) submitted that transaction of purchase and sale of shares of M/s Comfort Intech Ltd are genuine and duly supported by documentary evidence such as share purchase evidence, contract note, demat ....
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....e which is undoubtedly alarming that to within a short span of time. The Court referred to the decision in Commissioner of Income Tax Versus Nova Promoters Finlease Private Limited wherein it was held that in view of the link between the entry providers and incriminating evidence, mere filing of PAN, acknowledgement of IT Returns of the entry providers, bank account statements etc. where not sufficient to discharge the onus under Section 68 of the Act." Hence the Hon'ble Kolkata High Court has given a clear finding rejecting this contention of the appellant and holds that mere furnishing of these documents does not prove the genuineness of the transaction. Further, the AO has made a detailed discussion on these issues and the Assessee has not been able to discharge the onus placed on him. Accordingly, the addition of Rs. 10,86,720/- made by the Assessing Officer u/s 68 is hereby confirmed." 11. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 12. The learned AR before us filed paper book running from pages 1 to 143 and reiterated the contentions made before the authorities below. 13. On the contrary, the learned DR supported findin....
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....an investment in the scripts of other companies. We also note that the assessee, on investment in other scrip namely M/s Spectacle Industries Ltd., has earned long term capital gain of Rs. 1,42,93,981/- only. It is also important to note that the assessee purchased the share of the impugned company M/s Comfort Intech Ltd in the year 2005 through a broker and consideration of the same was paid through a banking channel. The assessee kept the investment till May 2010 i.e. for almost 5 years. Thus, in our considered view, had the assessee indulged in prearranging transaction for taking accommodation entries, then he should not have waited for such period. 14.3 The AO further alleged that the director of M/s Comfort Intech Ltd Shri Anil Agarwal admitted having provided accommodation entry in the script of M/s Comfort Intech Ltd. Similar, admission was also made by the other parties mainly identified as exit provider during the search and survey proceeding conducted by the Department in the matter of penny stock. However, their statements were not provided to the assessee for the rebuttal and cross examination. It was also not brought on record that any of the person whose statement wa....
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....TA No. 4861/Mum/2014. In the said case the assessee Indravadan Jain HUF purchased share of M/s Ramakrishna Fincap Ltd in the year 2003 for Rs. 3.12 per share at the floor of Kolkata stock exchange through the broker namely M/s Basant Periwal & Co. The assessee Indrvadan Jain HUF sold the impugned share in the year 2005 at Rs. 155.04 per share at the floor of Kolkata stock exchange through the broker namely M/s Basant Periwal & Co and claimed exempted long-term capital as per the provision of section 10(38) of the Act. Subsequently the AO received an information that an investigation carried out by the SEBI wherein it was found that broker namely M/s Basant Periwal & Co was indulged in price manipulation through synchronized and cross deal in scrip of Ramkrishna Fincap Ltd. The assessee sold his holding in Ramkrishna Fincap Ltd during the same period when the broker namely M/s Basant Periwal & Co. was found to be indulged in manipulation of the price of script of Ramkrishna Fincap Ltd. Thus, the case of the assessee was reopened and finally the exempted long-term capital claimed by the assessee was held as bogus by the AO and added to total income in accordance with provision of sec....
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....espectfully following the same vis-à-vis findings recorded by CIT(A) which are as per material on record, we do not find any reason to interfere in the order of CIT(A). 14.5 The above finding of the Mumbai Tribunal came to affirmed by the Hon'ble Bombay High Court vide order dated 12th July 2023 on instance of further appeal preferred by the Revenue in Income Tax Appeal No. 454 of 2018. Considering the facts involved in above mentioned case viz-a-viz facts involved in the case of the present assessee, we find that the case of the present assessee is better placed. 14.6 Likewise, we also note that the assessee has discharged the onus imposed under section 68 of the Act by furnishing the necessary documentary evidence in support of the nature of transaction and sources thereof. The necessary details furnished by the assessee stand as under: 1. Purchase consideration of shares was paid through cheque. 2. Share was duly dematerialized in demat account. 3. Shares were sold through the stock exchange after the payment of STT. The transactions have been confirmed by brokers. 4. The payments are received through ECS through demat account. 5. Inflow of shares are reflecte....
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....gent proof. As found concurrently by the CIT(A) and the Tribunal, the AO had failed to show that the material documents placed on record by the assessee like broker's note, contract note, relevant extract of cash book, copies of share certificate, de-mat statement etc. were false, fabricated or fictitious. The appellate authorities have rightly observed that the facts as noticed by the AO, like the notice under s, 133(6) to the company having been returned unserved, delayed payment to the brokers, and dematerialisation of shares just before the sale would lead to suspicion and call for detailed examination and verification but then, for these facts alone, the transaction could not be rejected altogether, particularly in absence of any cogent evidence to the contrary. 14.9 We also draw support and guidance from the judgment of Hon'ble Delhi High court in case of Pr. CIT vs. Smt. Krishna Devi reported in 126 taxmann.com 80 where it was held as under: 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion an....
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....er 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 demat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the ....
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....ter of Mohan Polyfab Pvt. Ltd. vs. ITO wherein ITAT has held that A.O. should have granted an opportunity to cross examine the person on whose statement notice was issued to the assessee for bogus long term capital gain. But in this case, neither statement was supplying to the assessee nor cross examination was allowed by the ld. A.O. Therefore, in our considered opinion, assessee has discharged his onus and no addition can be sustained in the hands of the assessee. 14.12 At this juncture, we also feel pertinent to refer the order of coordinate bench of Indore Tribunal in case of Shivnarayan Sharma & Ors bearing ITA Nos. 889/Ind/2018, 474,206,60,987/Ind/2019, where in identical fact and circumstances held as under: 16. Since we are adjudicating the above stated common issue on the basis of above assessee namely Shri Shivnarayan Sharma, we note that the assessee purchased 6000 equity shares of Conart Traders Ltd on 22.10.2011 at a cost of Rs. 1,50,000/- . There is no restriction under the law to purchase equity shares on off line mode. Vide order dated 22.3.2013 of the Hon'ble Mumbai High Court M/s Conart Traders Limited was merged with M/s SAL and in lieu there of 6000 shares of....
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....s squarely applicable on the instant appeals. ******************* 23. We therefore in the light of above judgments which are squarely applicable in the issues raised in the instant appeals are of the considered view that the claim of Long Term Capital Gain made by the respective assessee(s) deserves to be allowed as they have entered into the transactions of purchase and sales duly supported by the documents which have not found to be incorrect. The conditions provided u/s 10(38) of the Act have been fulfilled by the assessee(s) namely Shivnarayan Sharma, Sapan Shaw, Prayank Jain, Govind Harinarayan Agrawal (HUF) and Manish Govind Agrawal (HUF) as they have sold the equity shares held in Demat account and transactions performed on a recognised stock exchange through registered broker at the price appearing on the exchange portal and at the point of time of sale of equity shares, companies were not marked as shell companies by SEBI and nor the trading of these scrips were suspended. The assessee also deserves to succeed on the legal ground as no opportunity was awarded to cross examination the third person which were allegedly found to be providing accommodation entries and ther....