TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 425
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....r merged with M/s. Sunrise Asian Ltd. The Investigation Wing had carried out investigation with regard to the price manipulations and generation of bogus long term capital gains in number of stocks, classified as penny stocks. The AO noticed that the shares of the above said company was also identified as one of the penny stocks. The AO noticed that the assessee has sold 50,000 shares for a consideration of Rs. 2.47 crores and declared long term capital gains of Rs. 2.36 crores. Relying fully upon the report given by the Investigation Wing, the AO took the view that the long term capital gain declared by the assessee on sale of shares of above mentioned company was pre-arranged method employed by the assessee with the connivance of the operators in order to generate bogus long term capital gains. 3. The AO noticed that the Investigation Wing had reported that the increase in the prices of shares of above said company was not commensurate with the financial results declared by the company and further, the net worth of the company was negligible. Investigation Wing also reported that the trading in the above said company was controlled by certain brokers and in the statement taken f....
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....t account of the assessee. The assessee has also furnished all the documents to prove the purchases and sales. He further submitted that the SEBI has conducted enquiries in respect of the above said company, but the assessee was not subjected to any enquiry. He also submitted that the turnover and profits of the above said company was growing year after year. He submitted that the assessee has made investments on the basis of advice given by some known persons and the same was proved to be right decision also. The Ld. AR further submitted that it was not shown by the AO that the assessee was part of any group which involved in manipulation of the prices of the above said shares. He submitted that the AO has entirely relied upon the report given by the Investigation Wing for disbelieving the transactions carried on by the assessee. However, the AO has not brought any independent material on record to show that the transactions of purchase and sale of shares undertaken by the assessee were not genuine. In fact, the AO has conducted detailed enquiry with the assessee and he could only observe that the assessee could not furnish the name of person, who has advised him to purchase the s....
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....d.AR submitted that the decision rendered by the Mumbai Bench in the case of Aakruti Ketan Mehta (supra) did not consider the binding decisions rendered by the Hon'ble Bombay High Court. He submitted that the ratio of decisions rendered by the Hon'ble Bombay High Court is applicable to the facts of the present case. 8. We have heard rival contentions and perused the record. We notice that the AO has primarily placed reliance on the report given by the Investigation Wing of the Income Tax Department, Kolkatta to arrive at the conclusion that the long term capital gains reported by the assessee is bogus in nature. We notice that the investigation report prepared by Investigation Wing, Kolkatta is a generalized report with regard to the modus operandi adopted in manipulation of prices of certain shares and generation of bogus capital gains. We notice that the AO has placed reliance on the said report without bringing any material on record to show that the transactions entered by the assessee were found to be a part of manipulated transactions, i.e., it was not proved that the assessee has carried out the transactions of purchase and sale of shares in connivance with the people, who ....
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....the Assessee through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr.Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, therefore, be admitted. 4. Mr.Gopal, learned Counsel appearing on behalf of the Assessee in each of these Appeals, invites our attention to the finding of the Tribunal. He submits that if this was nothing but an accommodation of cash or conversion of unaccounted money into accounted one, then, the evidence should have been complete. Change of circumstances ought to have, after the result of the investigation, connected the Assessee in some way or either with these brokers and the persons floating the two companies. It is only, after the Assessee who is supposed to dealing in shares and producing all the details including the DMAT account, the Exchange at Calcutta confirming the transaction, that the Appeal of the Assessee has been rightly allowed. The Tribunal has not merely interfered with the concurrent orders because....
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....re material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs. 25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, ....
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....e documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commissioner of Income tax (Central)-1 vs. NRA Iron & Steel (P) Ltd (2019)(103 taxmann.com 48)(SC) 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. 12. In the case of CIT vs. Jamnadevi Agarwal (20 taxmann.com 529 (Bom), the Hon'ble Bombay High Court held that the transactions of purchase and sale of shares cannot be considered to be bogus, when the documentary evidences furnished by the assessee establish genuineness of the claim. In the case of PCIT v....
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....essee, viz., astronomical increase in the price of shares, weak fundamentals of the relevant companies are based on mere conjectures. Accordingly, the Hon'ble Delhi High Court affirmed the decision rendered by ITAT in deleting the addition of capital gains. 14. With regard to the decision relied upon by the Ld.DR, we noticed that it did not consider the binding decision of the Hon'ble Bombay High Court. In any case, these types of cases revolve around the facts prevailing in each of the case. In the instant case, we have discussed the facts of the present case and noticed that the assessee has proved the transactions of purchase and sale of shares, while the AO did not disprove the same. Accordingly, in the facts and circumstances of the case, we are of the view that the decisions rendered by the jurisdictional Hon'ble Bombay High Court in the cases cited above shall apply to the present case, since the AO has not established that the assessee was involved in price rigging and further the AO did not find fault with any of the documents furnished by the assessee. 15. We noticed earlier that the AO has assessed the sale consideration of shares as unexplained cash credit u/s. 68 of ....