TaxTMI 
TaxTMI 
2024 (12) TMI 637
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....d amount Rs. 1,49,14,984/- as culled out from the assessment order is as under:- LTCG amount Name of penny stock Quantity of penny stock sold Sale consideration Rs. 1,49,14,984/- HPC Bioscience Ltd. 36100 Rs. 1,52,76,467/- 3. Against the aforesaid action of the AO, Assessee appealed before the Ld. CIT(A). 4. Upon assessee's appeal, Ld. CIT(A) by passing an elaborate order, confirmed the addition, by holding as under:- "Notwithstanding the above reasons for confirming the addition made by the AO, in this case, I note that the Appellant has claimed LTCG which the AO has found to have been earned/arisen from transactions in penny stocks. I have carefully considered the facts of the case and decisions of the Hon'ble Courts. The Assessing Officer has shown the involvement of all the persons in the rigging of the price of the shares in which the appellant had invested. The relevant question is not on the legal formalities related to purchase and sale of the shares but its motive and design. The shares from whose investments, the Appellant has claimed the purported income are penny stocks and there was phenomenal increase in the price of....
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....of revenue or in terms of capital, It certainly hints at certain illegitimate planning having the garb of legal forms. No investigation is required to prove such a conspicuous fraudulent activity. The case was so glaring that even a lay man could easily judge the real facts of the case. There are no comprehensible market forces or international trends responsible for huge fluctuation in the price of the shares of this company. Even the sensex was not so volatile during this period. There are no sentimental, national or international factors responsible for the so called growth. Arguments of the Appellant do not help because there are no apparent reasons of any kind which can give an iota of substance to the phenomenal rise of the value of the aforesaid penny stocks. There may be absence of direct evidence that cash was introduced for obtaining the accommodation entry but circumstantial evidence is the evidence of various facts and if taken together, they may form a chain of circumstances leading to an inference or presumption of the existence of the principal fact. In the clandestine operations and transactions it is impossible to have direct evidence or demonstra....
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....ns of Sh. Tarun Goyal. As per the statement of auditors, the employees of Sh. Tarun Goyal were directors of the companies run by them, also they could not ascertain the so called shore capital subscribed by Sh. Tarun Goyal as documentary proof of the same was lacking. v. During the course of search, all the passbooks, cheque books, PAN Cards etc. were always in possession of Sh. Tarun Goyal. On his directions all the employees signed all the documents. vi. All the bank account opening forms appear to be in the handwriting of Sh. Tarun Goyal. vii. All the books of accounts of all the companies have been retrieved from the computers/laptop of Sh. Tarun Goyal. viii. Sh. Tarun Goyal has given letters for the release of bank accounts of companies put under restraints after search. No such application was rece/ved from so called directors of the companies. ix. Sh. Tarun Goyal appears in all the scrutiny assessments as well as appeals of his companies himself before various income' tax authorities. From verification carried out in respective wards/ circles where the above mentioned companies are assessed, it is' evident that Sh. Tarun G....
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....evidence and in the matter related to the discharge of onus of proof and the relevance of surrounding circumstances of the case, the relevant observations and findings of Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More [82 ITR 540], are: "That though an appellant's statement must be considered real until it was shown that there were reasons to believe that the appellant was not the real, in a case where the party relied on self-serving recitals in the documents, it was for the party to establish the transfer of those recitals, the taxing authorities were entitled to look Into the surrounding circumstances to find out the reality of such recitals. Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal. Therefore, the Courts and the Tribunals have to judge the evidence before them by applying the test of human probability. Human minds, may differ as to the reliability of piece of evidence, but, in the sphere, the decision of the final fact finding authority is made conclusive by law." The above ratio laid down by the Hon'ble Supreme Court has been reiterated and applied by the ....
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....nsactions of sole and purchase of the shares to be genuine, burden of proving that the said transactions were not genuine, was on the Department and in the absence of any material on record, holding the transactions to be not genuine, was not permissible. We are unable to accept the submission made. The burden of proving that income is subject to tax is on the Revenue but on the facts, to show that the transaction is genuine, burden is primarily on the assessee. The AO is to apply the test of human probabilities for deciding genuineness or otherwise of a particular transaction. Mere leading of evidence that the transaction was genuine, cannot be conclusive. Such evidence is required to be assessed by the AO in a reasonable way. Genuineness of the transaction can be rejected even if the assessee leads evidence which is not trustworthy, even if the Department does not lead any evidence on such an issue. In view of the above, we are of the view that the finding recorded by the Tribunal is a finding of fact and cannot be held to be perverse. No substantial question of law arises. The appeal is dismissed." In the above case, the relevant decision of Hon'ble ITAT Chandigarh ....
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.... brokers from whom shores were purchased and sold and came to the conclusion that share transactions were genuine overlooking the material gathered by the AO from the statements recorded of broker M/s S.K. Sharma & Co. and the other facts and circumstances that volume of transactions of Jaipur Stock Exchange is only 600 shares and 1000 shares. Payments have been received from the brokers only in instalments over a period of 6-7 months. It is true that when transactions are through cheques, It looks like real transaction but authorities are permitted to look behind the transactions and find out the motive behind transactions. Generally, it is expected that apparent is real but it is not sacrosanct. If facts and circumstances so warrant that it does not accord with the test of human probabilities, transactions have been held to be nongenuine, it is highly improbable that share price of a worthless company can go from Rs. 3 to Rs. 55 In a short span of time. Mere payment by cheque and receipt by cheque does not, render a transaction genuine. Capital gain tax was created to operate in a real world and not that of make belief. Facts of the case only lead to the inference that these tran....
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.... The opinion of the Assessing Officer Is required to be formed objectively with reference to the material avallable on record. Application of mind is the sine qua non for forming the opinion." In the case of Sanjay Bimalchand Jain vs. Pr. CIT it was held/ averred, as follows, by the Hon'ble Bombay High Court: "(iii) On hearing the learned counsel for the assessee and on a perusal of the orders of the Income tax authorities, it appears that there is no scope for interference with the said orders in this appeal. By referring to the aforesaid facts, which are narrated in the earlier part of this order, the authorities found that the assessee had made investment in two unknown companies of which the details were not known to her. It was held that the transaction of sale and purchase of shares of two penny stock companies, the merger of the two companies with another company, viz. Khoobsurat Limited did not qualify an Investment and rather it was an adventure in the nature of trade. It was held by all the authorities that the motive of the investment made by the assessee was not to derive income but to earn profit. Both the brokers, le, the broker through whom the ....
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....he tax authorities - including the lower appellate authorities rejecting its claim for a long term capital gain reported by it, to the tune of Rs. 13,33,956/- and Rs. 14,34,501/- In respect of 4,000 shares of M/s Kappac Pharma Ltd. The assessee held those shares for approximately 19 months; the acquisition price was Rs. 12/- per share whereas the market price of the shares at the time of their sole, was Rs. 720/. It is contended that the assessee was not granted fair opportunity. Mr. Rajesh Mahna, learned counsel appearing for the assessee relied upon the orders of the co-ordinate Bench of the tribunal, in respect of the same company i.e. M/s Kappac Pharma Ltd., and pointed out that the tax authority's approach in this case was entirely erroneous and inconsistent. The main thrust of the assessee's argument is that he was denied the right to cross-examination of the two individuals whose statements led to the inquiry and ultimate disallowance of the long term capital gain claim in the returns which are the subject matter of the present appeal. This court has considered the submissions of the parties. Aside from the fact thát the findings in ....