TaxTMI 
TaxTMI 
2024 (11) TMI 756
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....nuine and all the requisite prescribed conditions were in existence. 4. That the ld. CIT(A)/AO failed to appreciate that the assessee is a genuine customer and the transactions made through proper D Mat account and the purchase and sale of shares were never doubted by the AO. That there is a straight denial of a reasonable and sufficient opportunity viz. absence of cross examination of witnesses, a right the appellant legally deserves under the provisions of law. 5. That the CIT(A) simply based the decisions on judgments which were not relevant to the appellant's case and at the same time failed to give any weightage to decisions cited during the appellate level. 2.1 Apropos Ground No. 1 to 5 of the assessee, brief facts of the case are that the assessee is an individual and during the year under consideration has derived Income from Salary, Rent, Share trading and Income from other sources. ITR for the year was filed on 25.07.2012 declaring total income at Rs. 3,94,648/-. The case was reopened and notice u/s 148 was issued on 29.09.2016. Details and information sought by AO were furnished and the assessment was finalized u/s 143(3) r.w.s. 147, on 22.12.2017 as....
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...., drawing of suitable inferences and estimation of facts is inevitable. In view of the above discussion, the arguments raised by the appellant are found to be not acceptable and the addition made by AO with regard to disallowance of bogus long term capital gain (LTCG) and unexplained expenditure on commission paid for procuring these entries of LTCG is found to be justified. Therefore, the order of the AO is confirmed. This ground of appeal is treated as dismissed.'' 'Page 25' In view of the discussion while deciding the ground no. 1, the arguments raised by the appellant are found to be not acceptable and the addition made by AO with regard to disallowance of bogus long term capital gain (LTCG) is confirmed. The AO held that the assessee has to incur expenditure by way of commission for getting such accommodation entry. The source of such expenditure is not explained. Therefore, such unexplained expenditure on commission paid for procuring these entries of LTCG is found to be justified. The appellant has not furnished any evidence to prove that the findings of the AO are not correct with regard to expenditure made on commission for getting the accommodation entry. The app....
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.... claiming exemption u/s 10(38) of the Income Tax Act, the assessee rightly claimed the exemption. 1.2 For proving the genuineness of the purchase and sale of shares of the Company, the assessee filed the following documents before the Assessing officer - (a) Copy of invoice of the broker dated 09.09.2010 showing the details of shares purchased (b) Copy of relevant Bank statement evidencing amount paid for acquiring the shares (c) Copy of Transaction statement with DP evidencing purchase and dematerialization of shares (d) Statement of holding issued by DP reflecting shares of Dhanlabh Merchandise as on 31.03.2011 (e) Copy of Balance sheet of the assessee reflecting the investment made in shares of Dhanlabh Merchandise Ltd. (f) Copy of Calcutta High Court approving the merger of Dhanlabh Merchandise Ltd. with Bakra Pratisthan Ltd. (g) Copy of Demat account evidencing merger and subsequent sale (g) Copy of sale bill issued by broker (h) Copy of cheque received from the broker (i) Relevant Bank Statement showing deposit of the above cheque. 1.3 It may be noted that that all evidences of purchase and sales were submitted by the assessee, as were called for by the AO. ....
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....naccounted money of the assessee in the form of non-taxable long-term capital gain. 1.5 It is submitted that the basic principles of law as have been consistently adopted by the courts are: a. The person who alleges should prove b. All adverse material is required to be supplied to the person against whom the allegation is made c. No findings can be recorded on surmises and conjectures d. Adverse action can be initiated only based on evidence 1.6 As against the aforesaid principles of law, in the present case, the transaction of the assessee is held bogus only and only on the basis of general report of the Investigation Wing. The report was prepared only on the basis of statements of various persons without referring to any underlying documents. From the extract of report, as appearing in the assessment order, it can be seen that the name of the assessee or his broker or his transaction has not been discussed. Thus, no link with the case of the assessee has been established, no direct evidence is found against the assessee. Chain of flow of cash has also not be established. Except oral testimony, which also remains uncorroborate....
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....ctions through them. Moreover, these statements were never provided to the assessee. Even no Show cause notice of the proposed additions was issued in the case. The assessee does not have any connection with any of the operators, entry providers or stock brokers. So, these statements could not implicate the assessee. Moreover, these statements were never made available to the assessee and even their existence is dubious. It would not be out of place to mention here that apart from the so called information received from Investigation Wing, Calcutta, stated to be containing statements of operators, entry providers and stock brokers, there was no corroborative material available with the Ld. AO or referred to by him in the assessment order found as a result or gathered during the course of assessment proceedings in support of the impugned addition made by him. 1.9 The AO after holding that the transactions of purchase and sale of shares by the assessee are sham, made the addition of the LTCG u/s 68. Section 68 of the Act places the burden of proof on the tax payer, to explain the nature of source of any credit but not the source of the source. Hence, when an assessee gives e....
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....yer, source of the credit and genuineness of the transactions. It is well settled that evidence collected from third parties cannot be used against an assessee unless this evidence is put before him and he is given an opportunity to controvert the evidence. In this case, the AO relies only on a report as the basis for the addition which is not (during assessment) brought on record by the AO nor is it put before the assessee. The submission of the assessee is that he is just an investor and as he received some suggestion for investment and he chose to invest based on these market tips/suggestions and had taken a calculated risk and had gained in the process and that he is not party to any alleged scam or illegal trades etc. has to be controverted by the revenue with evidence when a person claims that he has done these transactions in a bona fide manner, one cannot reject this submission based on surmises and conjectures. As the report of investigation wing suggests, there are many beneficiaries of LTCG. Each case has to be assessed based on principles of legal import laid down by the courts of law. 1.10 At this stage, it is pertinent to discuss the Investigation report, whi....
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....ssee could not reply that why the shares were purchased and sold through brokers of Calcutta when the assessee had demat account in Kota. The shares were purchased on the recommendation of a friend. These facts make it clear that the above transactions of sale-purchase of shares were not made with an intention of investment. This was an adjustment made to generate bogus LTCG. - The assessee has produced all relevant documents [(a) Copy of invoice of the broker dated 09.09.2010 showing the details of shares purchased (b) Copy of relevant Bank statement evidencing amount paid for acquiring the shares (c) Copy of Transaction statement with DP evidencing purchase and dematerialization of shares (d) Statement of holding issued by DP reflecting shares of Dhanlabh Merchandise as on 31.03.2011 (e) Copy of Balance sheet of the assessee reflecting the investment made in shares of Dhanlabh Merchandise Ltd. (f) Copy of Calcutta High Court approving the merger of Dhanlabh Merchandise Ltd. with Bakra Pratisthan Ltd. (g) Copy of Demat account evidencing merger and subsequent sale (g) Copy of sale bill issued by broker (h) Copy of cheque received from the broker (i) Relevant Bank Statement showing....
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....e that every one who has dealt with the shares of this company has generated bogus LTCG. iv) The assessee has sold the shares through Fix Fit Securities Pvt. Ltd. though the demat account was opened with Zuari Investments Ltd. M/s Fix Fit Securities Pvt. Ltd. has been covered by the Investigation Directorate and it has been held that the broker was involved in this dubious scheme. The name of these brokers have been given in the report in the following manner...................................................... Again, the observation and the comment of the Ld.AO are baseless and false. There is no requirement in law that the broker and the Depository participant should be the same person. An investor can open multiple Demat Accounts with different brokers with a valid PAN card. The Securities and Exchange Board of India (SEBI) does not levy any limitation on opening more than one Demat account in India. As Fix Fit Securities Pvt. Ltd. is not a Depository Participant, the demat account was opened with Zuari Investments Ltd. There is no evidence of Fix Fit Securities Pvt. Ltd. having been covered by the Investigation Directorate. In the report of the Investigation Directora....
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....n made through banking channel and it's source is fully verifiable. * The address of both the companies whose shares were purchased were interestingly the same / which is not the case here. * The authorized signatory of both the companies were also the same person/ which is not the case here. * The purchase of shares of both the companies was done by the assessee through broker Globle Stock and Securities Ltd. and the address of the said broker was incidentally the address of the two companies / where as here the address of the company whose shares have been purchased and the broker are distinct and different. * The AO made extensive inquiries in the case / whereas no inquiries at all were made by the AO in the instant case. * The broker, viz. Ashish Stock Broking Pvt. Ltd. did not respond to AO's letter seeking information about the purchasers of the shares of the two companies / whereas no such letters were sent to the broker by the AO in this case. Based on these crucial facts and since no substantial question of law was involved, the appeal of the assessee was dismissed by the Hon'ble High Court. The said decision is not app....
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....sued to the broker) from whom shares were purchased and sold and statements were recorded. The AO also analyzed the balance sheet of M/s Ankur International Ltd. (The balance sheet of Bakra Pratisthan was not available before the AO, what to talk of its analysis) to justify as to how the share price of a company can go up from a mere Rs. 3 to Rs. 55 in a short span of six to seven months' time. The AO made detailed and extraneous exercise of finding the fundamental of the share of the company by different methods (No such exercise was undertaken by the AO) and concluded that these shares were not genuine and transactions were so arranged so as to cover up the loss incurred on account of sale of jewelry only. The AO also recorded the finding that transactions were done at Ludhiana where also the share price of the company is quoted but maximum value of the share quoted was Rs. 17/- (Shares were traded at prevailing market rates on the stock exchange) and that too in July, 1997, i.e. long before the shares were sold by the assessee to M/s S.K. Sharma & Co. in the months of February and March, 1998. The shares have been sold at Ludhiana when actually stock exchange was not functio....
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....the assessee has furnished all evidences in support of the genuineness of the transactions, the onus to disprove the same is on revenue. Reference in this regard may be made to the judgment of Hon'ble Supreme Court in the case of Krishnan and Agnihotri vs. The State of Madhya Pradesh [1977] 1 SCC 816 (SC). In this case the Hon'ble Apex Court held that the burden of showing that a particular transaction is benami and the appellant owner is not the real owner always rests on the person asserting it to be so and the burden has to be strictly discharged by adducing evidence of a definite character which would directly prove the fact of benami or establish circumstances unerringly and reasonably raising inference of that fact. The Hon'ble Apex Court further held that it is not enough to show circumstances which might create suspicion because the court cannot decide on the basis of suspicion. It has to act on legal grounds established by evidence. Just the modus operandi, generalization, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee. Unless specific evidence is brought on record to controvert the validity and correctness of the docu....
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....he company Bakra Pratisthan facilitating generation of bogus long term capital gain. 1.13 It is further submitted that the various observations and the conclusions drawn by the AO in the assessment are based on suspicion, surmises and hearsay. It is trite law that suspicion however strong cannot partake the character of legal evidence (Lal Chand Bhagat Ambika Ram vs. CIT 37 ITR 288 SC). The suspicion or presumption, however strong it may appear to be true, needs to be corroborated by some evidence to establish a link that the assessee has brought back his unaccounted income in form of LTCG. In this connection, reference can be made to the judgment of Special Bench of Mumbai, ITAT in case of GTC Industries vs. ACIT 164 ITD 1, wherein it has been held that conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of facts that might go against assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigation have been carried out, then nothing can be implicated against the assessee. Further, reliance is placed on the following decisions: ....
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....oborated and affirmed during the assessment by the Assessing Officer, by examining the concerned persons who can affirm the statements already recorded by any other authority of the department. Facts narrated above clearly show that the Assessing Officer has not made any enquiry whatsoever and the entire assessment order is devoid of any such enquiry. Even the CIT(A) on Page-16 of his appellate order has observed - After careful perusal of facts of the case it is noted that the addition made by the AO is based on the findings of search and survey proceedings conducted by investigation wing where syndicate operating to provide accommodation entry of bogus gain and Bogus loss is detected. There is nothing on record to show that the trading by the broker/company was ever suspended by the SEBI nor is there anything on record to show that the broker of the appellant mentioned here in above was involved in the alleged scam. The Assessing Officer has not even considered examining the broker of the appellant. It is a matter of fact that SEBI looks into irregular movements in share prices on range and warns investors against any such unusual increase in shares prices. No such warnings were ....
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....f the Ld.CIT(A) confirming the action of the AO, the CIT(A) has erred in overlooking the facts which are as under: a) The assessee had purchased 265 shares of Dhanlabh Merchandise Ltd. through broker in the FY 2010-11; b) Payment for purchase of shares had been made through banking channel; c) Investment so made was reflected in the Balance sheet of the assessee in the earlier year for which "return" had duly been filed; d) The shares so acquired were held in demat account; e) The shares were sold through registered broker on CSE; f) The sale of shares was supported by the bills issued by the brokers and further supported by corresponding movement in demat account; g) The price on which sale consideration had been realized was in full conformity with the rates prevalent in the stock exchange at the relevant time; h) The transactions were Security Transaction Tax (STT) paid and thus, requirement of condition for exemption as contained in section 10(38) had been fully complied with; i) In addition to payment of brokerage, service tax had also been paid by the assessee through bills issued by the brokers;....
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....d Bogus loss is detected. Such entry providers confirmed that they were involved in providing accommodation entries before the Investigation wing during search and survey proceedings. There is astronomical rise and fall in prices of these shares which are not related to the fundamentals or any projections made by these companies. The rise and fall were disproportionate to real financial position of the companies. Steep rise in the shares purchased by the appellant was also not related to financials of the companies. The pattern of chart of share price of these companies is bell shaped typical to these types of manipulated stocks where the price rises without any reason and falls without any reason. The prices were clearly manipulated by the operators. The share prices and sale purchase transactions are not genuine but planned to provide entries of fictitious gains and losses to the beneficiaries by these operators. The appellant failed to justify purchase and sale of these shares. The appellant has not given name of the person who recommended purchase of these shares to the appellant. The appellant failed to prove that there was no such scheme as identified by the Income Tax Depart....
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....which has driven the Hon'ble bench to pass the order in favor of the department, is the non consideration of principle of preponderance of probabilities or what is apparent is not real, the principal laid down by the Apex court in Sumati Dayal vs CIT and P. Mohonkala vs CIT, wherein the Hon'ble Apex court had pronounced a new rule of law that in taxation matters department is not bound by only documentary evidences furnished by the assessee before the A.O. The A.O as an investigator is empowered to look at the surrounding circumstances, including the circumstantial evidences, apart from documentary evidences. It means that what is apparent in documentary evidences furnished by the assessee is not real, if the department goes for further investigation on these matters. Therefore, Hon'ble bench mostly relied on the investigation report of DIT(Inv), Kolkata wherein entire modus operandi of penny stock is dealt with including the gullible method of price rigging by a well organized syndicate of brokers and shell companies. In the opinion of the Hon'ble bench, while passing orders in penny stock cases, ITAT should have given weightage to this well established legal principle of Apex cou....
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....y stock cases, as being bogus and colorable. But alas, Hon'ble HC has totally overlapped this most crucial legal and factual point in its adjudication. Hon'ble bench was duty bound either to establish the involvement of assesses in the racket which was actually department's job or to set aside all files to A.O for fresh investigation. But instead of doing so, the Hon'ble bench appeared too earnest and anxious to establish the guilt of assesses, relying upon the case laws which are in a different context and such a serious issue like country wide investigation by the government was not issue in those cases. The Hon'ble bench totally misread the said judgements of Apex court contextually. One basic question can fall flat the impugned order of HC and that is can any body be held guilty for an offence when his or her name has nowhere figured out in the investigation report? If the reasoning of the Hon'ble bench is accepted, then it means that any person can be hanged in the country, although the investigation or enquiry report, which is basis of charging a person for any offence, has not spared a word or evidence about the involvement of that hanged person in any offence. Will it not b....
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....nce- 1) Delhi ITAT Shivani Gupta G bench order dated 06.04.2021 in ITA 5204/Del/2019 - Para 7 & 7.1 2) Delhi ITAT Mukesh Mittal E bench order dated 26.03.2021 in ITA 761/Del/2020 Para 5.6 & 5.7, 5.11 3) Delhi ITAT G bench order dated 19.03.2021 in Tapas Kumar Mullick case para 16 to 21 4) Hyderabad A bench of ITAT in Tarun Kumar Goyal ITA 456/Hyd/20 order dated 20.04.2021 5) Surat bench of ITAT in case of Mukesh Nanubhai Desai ITA 781/SRT/2018 order dated 06.05.2021 6) Lucknow bench of ITAT in case of Uma Shanker Dhandhania ITA 475 & 681/LKW/2019 (order dated 16.02.2021) Further reference may be made to Gujarat High court order in case of Parasben Kochar (dated 17.09.2020 approving Ahmedabad ITAT's order dated 20.02.2020 in ITA No.549/Ahd./2018). 1.27 In this regard, reference may also be made to decision in the case of Sanjay Singhal vs. DCIT, in ITA Nos.708, 710, 711/Chd/2018 decided on 20/09/2021, wherein the Chandigarh ITAT has rebutted the issue and held - 34.The next issue discussed by the learned assessing officer was with respect to the preponderance of the probabilities in para number 4.12 of the asses....
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....that the capital gain earned by the assessee is to be taxed u/s 68 of the act on the principles of preponderance of the probabilities. He further submitted that it was argued before the bench in appeal from earlier years that no incriminating evidences were found during the course of search. The order is awaited. He further stated that the preponderance of probabilities would come into play only when the basic test of direct and factual evidences fails. He stated that in the present case the complete evidences have been placed by the assessee before the revenue authorities, they are not found to be false but only allegation has been made that transactions are sham. He further stated that the decision relied upon by the learned AO of honorable Supreme Court is quite distinct on its fact. On careful analysis of the evidences placed before us, findings rendered by the lower authorities, we proceed to consider the taxability of the long-term capital gain earned by the assessee under section 68 of the income tax act whether in situations like this, one may fall into realm of "preponderance of probability" where there are many probable factors, some in favour of the assessee and some may....
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....ponderance of probabilities addition cannot be sustained. The theory of "preponderance of probability‟ is applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. The conclusions have to be drawn based on certain admitted facts and materials and not based on presumption of facts that might go against assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigation have been carried out, then nothing can be implicated against the assessee. The reliance placed by the learned AO on the decision of the hon'ble Supreme Court is clearly distinguishable. So far as the facts of that case with the case on hand before us are compared, in that particular situation before the hon'ble Supreme Court where the assessee was constantly earning money from the jackpot, further was not having any losses, it was confessed before the settlement commission that the expenditure incurred or the losses suffered by the assessee have been adjusted against the unaccounted income of the assessee, books of the assessee did not show in that particular case....
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....have done manipulation, assessee cannot be held liable when the entire transaction is done through banking channels duly recorded in demat accounts with Government depository and traded on the stock exchange. There is nothing on record to suggest that assessee gave cash and purchased cheque from broker. 1.30 In the case of CIT vs. Shyam R. Pawar, 54 taxmann.com 108 (Bom) ITAT, Bombay concluded that where DMAT account and contract note showed details of share transaction, and Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income under section 68. 1.31 As the issue involved is of chargeability of long term capital gain as undisclosed income of the assessee u/s 68 of the Act, it may be mentioned that many High courts and ITAT benches have held in favour of the assessee. In one of the cases (CIT vs. Mukesh Ratilal Marolia) SLP filed by the Revenue against the order of the Hon'ble Bombay High Court has also been dismissed by Hon'ble Supreme Court. Many of the decision of the coordinate benches have also discussed the facts similar to the issue in the present case and decided in fav....
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.... ITAT 26. Aditya Vikram Sureka HUF V ITO ITA No.1839/KOL/2017 dt. 28/11/2018 Kolakata ITAT 27. Rashmi Maheshwari vs. ITO ITA No. 4424/DEL/2018 dt. 28/11/2018 Delhi ITAT 28. Mohanlal Agarwal HUF vs. ITO ITA No. 2766/DEL/2018 dt. 26/11/2018 Delhi ITAT 29. Jaishree Bamboly vs. ITO ITANo. 1679/CHNY/2018 dt. 08/11/2018 Chennai ITAT 30. Simi Verma vs. ITO ITA No.3387/DEL/2018 dt. 06/11/2018 Delhi ITAT 31. Manoj Kumar Gupta vs. ITO ITA No. 457/Del/2018 dt. 05/11/2018 Delhi ITAT 32. Madhu Killa vs. ACIT ITA No. 834/Kol/2018 Dt. 2/11/2018 Kolkata ITAT 33. Kanthilal Kamla Bai vs. ITO ITA No.1538/CHNY/2018 Dt. 29/10/2018 Chennai ITAT 34. K Praveen Kumar HUF vs. ITO ITA No.1539/CHNY/2018 Dt. 29/10/2018 Chennai ITAT 35. Rukmani Devi Manpuria vs. DCIT ITA No. 1724/Kol/2017 Dt. 24/10/2018 Kolkata ITAT 36. Bishwanath Agarwal vs. ITO ITA No. 2280/Kol/2017 Dt. 16/10/2018 Kolkata ITAT 37. Bhanshali Fincom Pvt. Ltd vs. DCIT ITA Nos. 59 & 60/Kol/2018 Dt. 10/10/2018 Kolkata ITAT 38. Sanjay Mehta vs. ITAT ITA No.1089/Kol/2018 Dt. 28/09/2018 Kolkata IT....
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....ging bogus LTCG @ 2%. It may be mentioned that nowhere in the report, charging of commission @ 2% by the brokers/entry operators, has been mentioned. The AO has calculated the rate of commission paid as 2% out of thin air. The assessee during assessment proceedings, specifically said that she has not paid any commission or brokerage outside the books. He questioned the basis for proposing the rate of commission to be adopted. 1.33 While making the addition, the AO baldly mentioned that during the course of investigation by the Wing, it was found that the beneficiaries paid 2% commission on acquiring accommodation entries for bogus LTCG. No such percentage has been specified in the report of the Investigation wing. The AO did not conduct any independent inquiry in this regard. He did not even deem it proper to at least name the persons who had said that the beneficiaries have paid 2% commission. It may be mentioned that no statements of any beneficiaries admitting payment of commission @ 2% was available with the AO. Even otherwise, if there existed any such statements, the confessions have been made by the beneficiaries in their own cases. These confessions cannot be gener....
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.... Devi wherein the Hon'ble High Court has also upheld the finding of the ld. CIT (A) and this Tribunal when the assessee produced all the relevant details and evidence in support of the transaction of purchase and sale of shares to establish the genuineness of the transaction and there is no contrary evidence to doubt the correctness of the evidences produced by the assessee, then treating the transaction of purchase and sale as sham is not justified. It may also be added that Hon'ble Rajasthan High Court in the case of PCIT vs. Arnav Goyal (DBIT 14/2024) vide its order dated 19.02.2024, has dismissed the appeal of the Revenue and confirmed the order of the ITAT. Ground of Appeal No. 4 - In this ground, the assessee has challenged the action of the AO alleging that there is a straight denial of a reasonable and sufficient opportunity viz. absence of cross examination of witnesses, a right the appellant legally deserves under the provisions of law. Submission of the assessee is as under: 2.1 The Ld.CIT(A) on the point of not providing the material used against the assessee and further in not providing an opportunity to cross examine the witness has sole....
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.... of allowing cross-examination of witnesses, whose statements are sought to be used against the assessee, is a sine qua none for validity of adjudication proceedings. The Ld. CIT(A) has unlawfully tried to dispense with this requirement by stating that unless and until the appellant shows and proves that she/he was prejudiced on account of such report/statement mere mentioning that non-furnishing of the report or non-availability of the person for cross examination cannot vitiate the proceedings. In this regard, it is submitted that such requirement is not a technical rule of evidence, but is one of the principles of natural justice which the Assessing Officer being a quasi-judicial authority is bound by law to follow. In the present case however, the impugned assessment order has been passed in violation of the principles of natural justice and therefore, is bad in law. 2.3 It is further submitted that the one of the main principles of Natural Justice is 'audi alteram partem', that is, 'hear the other side.' This principle makes cross examination as a sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unles....
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.... of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross- examine those dealers and what extraction the appellant wanted from them. 2.5 The appellant in support of his contentions further relies upon the following judicial authorities: (i) Kishinchand Chellaram (AIR 1980 SC 2117) (ii) State of M.P. v. Chintaman Sadashiva Waishampayan AIR 1961 SC 1623 (iii) Lakshman Exports Ltd. v. Collector of Central Excise (2005) 10 SCC 634 (iv) Rajiv Arora v. Union of India and Ors. AIR 2009 SC 1100 (v) CIT Vs. SMC Share Brokers Ltd., (2007) 288 ITR 345 (Del) (vi) Prakash Chand Nahta Vs. CIT, (2008) 301 ITR 134 (MP) (vii) Bangodaya Cotton Mills Ltd. vs. CIT [2009] 21 DTK 200 (Cal) (viii) CIT Vs. Sanjeev Kumar Jain (2009) 310 ITR 178 (P&H) ( (ix) CIT & Anr. Vs. Land Development Corporation (2009) 316 ITR 328 (Kar) (x) CIT Vs. Rajesh Kumar (2008) 306 ITR 27 (Del) (xi) Heirs & LRs of Late Laxmanbhai S. Patel Vs. CIT (2009) 222 CTR (Guj) 138 (xii) CIT Vs....
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..../s Dhanlabh Merchandise Ltd. which were acquired by her in F.Y. 2010-11 in September, 2010, for Rs. 53,000/- (@ Rs. 200/- each). M/s Dhanlabh Merchandise Ltd. later got merged with M/s Bakra Pratisthan Ltd. Post merger 10 shares of Bakra Pratisthan Ltd. were allotted against each share of Dhanlabh Merchandise Ltd., and consequentially the assessee received 2650 shares of Bakra Pratisthan Ltd. These shares were eventually sold in March, 2012, for Rs. 9,35,623/- (whereas the AO has wrongly taken the consideration to be Rs. 9,90,172/-), after holding the same for more than 12 months [more particularly around 18 months]. Consequent long term capital gain of Rs. 8,82,623/- (Rs.9,37,172/- wrongly worked out by the AO) earned from sale of these shares was declared in the return of income and as shares were of listed public limited company, sold through recognized stock exchange after holding for a period of more than one year and due STT [Securities Transaction Tax] was paid, long term capital gain was claimed exempt u/s 10(38) of Income Tax Act, 1961. These shares were purchased after making payment through account payee's cheque which stood debited in the bank account of the assessee. T....
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....rough them. There is no doubt that if the assessee has claimed LTCG from purchase and sale of shares, as exempt u/s 10(38) of I.T. Act, 1961, the primary onus is on the assessee to substantiate his claim by producing supporting evidences. On perusal of the details so submitted by the ld. AR of the assessee, it is seen by me that the assessee has furnished various documentary evidences in support of purchase and subsequent sale of the shares leading to earning of LTCG by the assessee, as mentioned in brief herein above and mentioned in detail in the submission of the ld. AR. The assessee has purchased 265 shares for Rs. 53,000/- and made payment through banking channel which stood debited in the bank account of the assessee. These shares were dematerialized on 22.01.2011 and deposited in the D- MAT account maintained by Zuari Investments Ltd., an independent third party. Thus, it is clear that 265 shares were purchased by the assessee and same is quite evident not only from the books on accounts of the assessee but also D- MAT account of the assessee maintained by independent third party, duly recognized by the concerned authorities. The amount of purchase consideration stood debite....
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....o be an incriminating material against the assessee which may reflect that the assessee has availed the accommodation entry of bogus long term capital gain. Mere uncorroborated statement of third person with which assessee has not at all dealt with in purchase and sale of share and even the person has not named the assessee being beneficiary from him / them or through his / their companies cannot be a ground for treating the transaction of purchase and sale of shares so made by the assessee as bogus, in absence of any cogent evidence or material brought on record by the AO. The statement of those third person about accommodation entry may be the starting point for doubting the transaction (though it is evident that assessee has not carried out any transaction through these persons or their companies) but for converting a doubt into certainty, the AO is required to produce the contrary material evidence and evidence produced by the assessee need to be controverted, but the AO has failed to do so. It is to mention here that evidence produced by the assessee is otherwise independently verifiable being the document in the shape of bank account, D-MAT account maintained by independent t....
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....not allowing the opportunity to cross examine the witness though the statement of those witness were made the basis of impugned order, is a serious flaw which makes the order a nullity is as much as it amounted to violation of principle of natural justice. The Ld. AO has ignored this binding decision of Hon'ble Supreme Court. On this issue, the Ld. CIT(A) has placed heavy reliance on the decision of Swati Bajaj of hon'ble Calcutta High Court and has highlighted the relevant portion of the judgement The assessee's have not been shown to be prejudiced on account of non-furnishing of the investigation report or non-production of the persons for cross examination as the assessee has not specifically indicated as to how he was prejudiced, coupled with the fact as admitted by the revenue, the statements do not indict the assessee and submitted that the judgement of Andaman Timber is not applicable to the facts of the case. In this regard ld. AR submitted that the Hon'ble Supreme Court has once again reaffirmed the importance of adhering to principles of natural justice in tax proceedings, in the case of PCIT vs. Kuntala Mohapatra. Hon'ble Rajasthan High Court in the case of PCIT vs. Sanj....