TaxTMI 
TaxTMI 
2023 (11) TMI 1355
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.... filed her return of income on 16.07.2015 declaring total income at Rs. Nil, which was completed under Section 143(3) of the Act upon determining total income at Rs. 2,16,59,190/- on 27.12.2016 upon making addition of Rs. 2,16,59,190/- under Section 10(38) of the Act disallowing the assessee's claim of exempted long term capital gains under Section 10(38) of the Act, which was further been confirmed by the First Appellate Authority. Hence, the instant appeal before us. 4. The brief facts leading to the case is this that the assessee received 1,60,000 shares of M/s. Kappac Pharma Ltd. as gift from her mother, namely, Smt. Meenaben Ashokbhai Shah, the same was acquired by her in F.Y. 200910 by making investment through account payee cheques in the preferential warrants of the said company. 5. On 09.06.2009, the mother of the appellant applied for 5000 warrant of convertible (equity shares) of M/s. Kappac Pharma Ltd. against payment of Rs. 54,80,000/- as an application money. On 27.08.2009, she paid Rs. 6,60,000/- as the first call money by way of drawing cheque on HDFC Bank, Ambawadi Branch, Ahmedabad and then paid Rs. 7,10,000/- by way of cheque drawn on HDFC Bank, Ambawadi Branch....
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....brokers and directors of companies were recorded on path In the statements they have categorically affirmed that they were indulging in arranging and providing accommodation entry to various clients through LTCG and the scrip of Kappac Pharma is also used for providing long term capital gain entry to the beneficiaries. This pre-arranged bogus capital gain income so earned through rigging of shares is claimed as exempt in the books of beneficiary it is further seen that Kappac Pharma itself has attracted regulatory action from SEBI Trading in scrip itself was suspended by BSE as a surveillance measure and is still remain suspended. The following chart shows the price of the scrip which was not real price but it was rigged one so as the alleged investors can be benefited by offloading their position at the high time. From the above it could be seen that the shares which was priced@ Rs. 10/- to Rs. 13.50 in 2009 were sold in the year 2013-14 @ Rs. 680 and above. 3. It is noticed that your mother Smt. Meenaben Ashokbhai Shah has received preferential warrants of Kappc Pharma @ Rs. 13.70 per warrant which were converted in to shares thereafter on 20-11-2010 out of which 160000 share....
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.... price but it was rigged one so as the allege investors can be benefited by offloading their position at the high time. From the above it could be seen that the shares which was priced @ Rs. 10/- to Rs. 13.50 in 2009 were sold in the year 2013-14 @ Rs. 680 and above. That in this Para your honour has relied up on the enquiries conducted by the Investigation Wing of the Income Tax Department at Kolkata, Statements of various brokers and directors of the companies recorded by the department and the findings arrived/based on such enquiries. However no such material/records and/or statements of brokers and directors of the companies recorded by the department have been provided to the assessee with the show-cause for her rebuttal. Hence your honour is kindly requested to provide the copy of such enquires, list of brokers and directors whose statements have been recorded, copies of such statements and their cross examination before taking any adverse inference in the case of the assessee while relying on the said enquiries/statements. From the plain reading of this Para, it seems that your honour has made the general statement as if the same would applied to all the persons who have c....
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....nd the surveillance measure by BSE which lead your honour to reach the conclusion that assessee has taken accommodation entries to route his unaccounted money, the same may please be specifically provided to the assessee for rebuttal and any adverse view taken without the said material/evidence for rebuttal is bad in the eye of law and against the principal of natural justice and equity. That as regards your honour's observation that shares which was priced at Rs. 13.50/- in 2009 was sold at Rs. 680/- in F.Y. 2013/2014, it is submitted that in the stock market in the commercial terms it is well known that the prices of the scrip are flown with the winds and the sentiments irrespective of the fundamentals of the scrip and therefore the price of the scrip has been gone substantially high after shares were purchased does not automatically mean that the transaction of the assessee in the said scrip is not genuine. Merely increase in the price of shares was higher does not mean that the transactions entered into by the assessee is not genuine and therefore to treat the said transactions as doubtful is merely on surmises, conjectures and personal presumption not supported by any co....
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.... accommodation entry and its price was rigged. The company whose shares have been sold by the assessee is a penny stock company also does not automatically mean that the transactions of the assessee in the said scrip is not genuine and in the nature of accommodation entry in absence of any cogent material/ evidences brought on record. The observations given in this Para is also noting but the wild presumption and therefore cannot be taken as base for drawing adverse inference in the case of assessee. Hence the proposed show-cause notice based on the observations given in this Para of the notice is also bad in law and mere suspicion and therefore required to be withdrawn. Facts of the case: 1. That the assessee has received 160000/- shares as gift from his mother Meena A. Shah on 25/03/14 which has been credited in her demat A/c with Indo Thai Securities Ltd. 2. That the mother Meena A. Shah of the assessee has made an application in 5,00,000 Convertible Preferential warrants of Kappac Pharma Ltd @Rs.13.70 per warrants in F.Y. 2009/2010 to be converted into equity shares of Rs. 10 each of the said company after 1 from the date of allotment of warrants. That she has made the....
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.... prove that the gift received by the assessee is not genuine and on the contrary the assessee has with best possible evidence has placed on record the complete material/evidences in support of the gift as well as investment in the shares of Kappac Pharma Ltd made by her mother. That your honour has forgotten the fact that without genuine purchase transaction genuine sale transaction not possible. 9. The assessee kindly invite the attention of your honour to the provisions of section 2(42A) defining the Short term Capital asset and section 10(38) of the Act being conditions for claiming exemption of LTCG which is reproduced herein below for ready reference purpose: "2(424) ["short-term capital asset" means a capital asset held by an assessee for not more than (thirty-six) months immediately preceding the date of its transfer-:] [Provided that in the case of a security (other than a unit) listed in a recognized stock exchange in India) (or a unit of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963) or (a unit of an equity oriented fund]] (or a zero coupon bond), the provisions of this clause shall have effect as if for the words "thirty-si....
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....ontrary evidence of connivance with either the stock exchange or depository or broker and parties as stated by your honour? Hence, the assessee is unable to understand as to on what basis your honour is suspecting the sales through the demat account and authorized channels are non-genuine. Further, your honour has also failed to appreciate the fact that the assessee has sold the shares though Stock Exchange and at prevailing market rates as on the date of respective sale and hence once again it is not understandable as to how the sale effected through the Stock Exchange and routed through demat A/c can be manipulated. The assessee hereby requests your honour to throw some light on the same with conclusive evidences establishing the allegation. In the considered opinion and facts of the case, the entire case has been built by your honour entirely on unsubstantiated suspicions which is wholly unjustified and bad in law. That apart, your honour has also not appreciated the fact that share market is driven by various sentiments and there are so many factors and reasons for increase in the value of the shares though notwithstanding to and in sharp contrast to the financial standing of t....
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....Share transactions] Assessment year 2004-05-Assessee filed return showing capital gain arising out of purchase and sales of shares done through a share broker - She furnished purchase and sale bills of share transaction-Since share brokers denied transaction, Assessing Officer concluded that share transaction was not genuine and, therefore, taxed it as income from undisclosed sources However, it was found that shares were in respect of a listed company and transaction was through Demat account as per recognized Stock quoted price - Whether there was no reason to hold such nature of transaction as non-genuine Held, yes [Para 5] [In favour of assessee) Vasantraj Birawat v. ACIT [2015] 61 taxmann.com 295 (Mumbai - Trib.) Where no incriminating material was found during search which could indicate that long-term capital gains arising out of sale of shares was bogus and assessment was completed without considering details of purchase of shares produced by assessee, assessment was void. Estimation of income (Share dealings) - Assessment years 2004-05 to 2006-07- Investigation Wing of Department had furnished statement recorded of a person named that he had issued bogus purchase bil....
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....ot such as would justify increase in share prices, held said transaction as bogus and having been done to convert unaccounted money of assessee to accounted income and, therefore, made addition under section 68- On appeal, Tribunal deleted addition observing that DMAT account and contract note showed credit/details of share transactions; and that revenue had stopped inquiry at particular point and did not carry forward it to discharge basic onus - Whether on facts, transactions in shares were rightly held to be genuine and addition made by Assessing Officer was rightly deleted Held, yes (Para 7] [In favour of assessee) CIT v. Smt. Sumitra Devi taxmann.com 37 (Rajasthan) Section 68, r.w.s. 45, of the Income-tax Act, 1961 - Cash credits (Share Transactions) - Assessment year 2006-07-Assessing Officer treated transaction of shares by assessee as bogus and accordingly profit on sale of shares declared by assessee was brought to tax as unexplained cash credit under section 68- Whether since Assessing Officer had failed to show that material documents placed on record by assessee like broker's note, contract note, relevant extract of cash book, copies of share certificate, de-mat....
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....al gains from such shares could not be denied. Section 10(38), read with section 153C, of the Income-tax Act, 1961 - Capital gains - Income arising from transfer of securities (Burden of proof) - Assessment year 2008-09-Assessee-HUF derived long-term capital gain from sale of shares of two companies and such capital gains was claimed as exempt under section 10(38) Assessing Officer having found that alleged purchaser of shares from assessee was engaged in fraudulent billing activities, treated transaction of shares as bogus and accordingly denied exemption under section 10(38) Whether since entire proof of purchase and sale of these shares were found in books of account of assessee and sale of shares was found genuine when Assessing Officer made enquiries from stock exchange directly, addition on account of undisclosed income and denial of exemption under section 10(38) could not be sustained Held, yes [Para 17] [In favour of assessee) DCIT v. Smt. Hansa Choudhary [2012] 23 taxmann.com 302 (Jodhpur- Trib.) Section 68 of the Income-tax Act, 1961- Cash credit Assessment years 2002- 03 and 2004-05- Where purchase of shares in question was not in dispute and on record showed that....
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.... that so called sale proceeds of shares were to be taxed as income from undisclosed sources. Held: that all such transactions had been taken into consideration while filing the returns for these years in the normal course and the department had also accepted such nature of transactions. It is very important to note that no Incriminating material had been found during the course of search which could have cast doubt on the genuineness of the transactions or could have indicated that it was a case of assessee's own undisclosed money utilized in the execution of such transactions. In the assessment order as well as at the first appellate stage and also before the Tribunal, the focus of the department was on the of the transactions entered into by the group a whole and, therefore, there was substantial merit in the view of the Commissioner (appeals) that it was this fact which had resulted into such action of the Assessing Officer. Voluminous documentary evidences had been filed by the assessee to prove its claim which supported the genuineness of the transaction. Thus on appreciation of the documentary evidences submitted by the assessee, the genuineness of the transactions appe....
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....- Held, yes [In favour of assessee) 3. It is contended that since the reopening of assessment for the year in question and the also proposed show-cause notice in the case of the assessee was based on the oral statements of third party; your honour is kindly requested to provide the Cross Examination of the said persons before taking any adverse inference in my case. It is contended that it is by now trite law that in absence of an opportunity of cross examination of a party whose statement is relied upon, no addition is warranted based on such statement. Reliance is placed on the following decisions in support of the above proposition of law. FOR PROVIDING OPPORTUNITY OF CROSS EXAMINATION Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II [2015]62 taxmann.com 3 (SC)/[2015] 52 GST 355 (SC) The assessee raised a plea that it was not allowed to cross-examine the dealers statements were relied upon by the Adjudicating Authority in passing the order. However, the Tribunal rejected the plea on the basis that "The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring....
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...., addition cannot be made for transactions which do not fall within block period under consideration Held, yes - Whether, where additions were made on basis of statements of persons who were not allowed to be cross examined by assessee, additions were not sustainable Held, yes Whether, investments could not be treated as unexplained, if they were reflected in books of account and of payments were available - Held, yes (Paras 4 to 15] [In favour of assessee] Commissioner of Income-tax, Central, Jaipur v. Supertech Diamond Tools (P.) Ltd. [2014] 44 taxmann.com 469(Raj.) Section 68 of the Income-tax Act, 1961- Cash credit (Share application money) - Assessment year 2004-05-Assessing Officer made addition under section 68 on account of amount received for share capital, its premium and amount paid as commission for arranging it on basis of statement made by third parties who were related to purchasing companies stating that these companies were engaged in providing accommodation entries in lieu of commission However, said party statement was made behind back of assessee and no opportunity of being heard or cross-examining third parties was provided to assessee Assessing Officer cou....
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....xamining the auditors who calculated and certified it or by some other proper proof, Depreciation, in some cases, would be of a large amount affecting materially the available surplus. Fairness, therefore, requires that an opportunity must be given to the employees to verify such figures by cross examination of the employer or his witnesses who have calculated depreciation amount. Notwithstanding the unions' challenge to the figure of depreciation claimed by the company, the only thing that the company did was to examine Verma, who admittedly had nothing to do with its calculation, and to produce through him the said certificate. In our view, that was neither proper nor sufficient. The proper course for the Tribunal in such a case was to insist upon the company adducing legal evidence in support of its claim instead of taking the figure of depreciation from the P & L account which was not worked out in accordance with the Income tax Act but under section 205 of the Companies Act, and saying that the company had failed to prove that it was a mistaken figure. In our view, the question as to the correct amount of depreciation must go back to the Tribunal for a fresh decision. The ....
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....finding that entry operators being M/s. Kappac Pharma Ltd. worked out an arrangement in which the share prices were rigged and sold at high price to arrive at tax free capital gains. In fact, during the transaction of purchase and sale of shares have not affected for commercial price but to credit artificial gains with a view to evade taxes. It was a product of design and mutual connivance on the part of the assessee and operators. The assessee resorted to a preconceived scheme to procure long term capital gain by way of price difference in share transactions not supported by market factors. The share transactions were devoid of any commercial nature and fell in realm of not being bonafide and therefore the same was not found to be allowable by the Ld. AO. Further that the referring SEBI came to a finding that the prices of those shares were determined artificially by manipulations and does not have any iota of doubt that the same is not a product of market factors or commercial principles. Apart from that the assessee has not been able to prove the unusual rise and fall of share prices to be natural and that too on the basis of market forces. It was found that such share transacti....
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....two counts that the order passed by the A.O. is bad in law being in violation of settled principles of natural justice inasmuch (i) as the assessment proceedings are initiated on the basis of alleged statement of one S/Shri Prateek Ramesh Chandra Shah & Other entities, when the appellant was never confronted with the alleged statement nor allowed to cross examine the deponent, the appellant cannot be put to any disadvantage on the basis of statement of a third party and that too recorded elsewhere; (ii) that for proper justice, the appellant be allowed cross examination of said S/Shri Prateek Ramesh Chandra Shah & Other entities in the course of present appellate proceedings through his authorized representative. 2.2 The Ld.CIT(A) has reproduced selective portion of appellant's written submission dated 07.03.2023, at para 5.2. The Ld.CIT(A) while recording his decision at para 2.3 has dealt with only one ground on merits of the case and leaving aside rest of the pleas raised by the appellant, the related legal grounds are dismissed in a casual manner vide para 6.14 of the appellate order. 2.3 Since the specific pleas of the appellant raised before the Ld. CIT(A) being in vi....
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....t for the sake of clarity it is stated that appellant was previously representing by M/s. Ashesh Alkesh & Co., CA till the brief of the case having been handed over to the present A.R. at the stage of appellate proceedings. Since the appellant being not very well versed with the taxation laws, he was dependent upon the then A.R. Unfortunately, the case of the appellant could not be properly represented before the A.O. With the result, neither a copy of the statement of said S/Shri Prateek Ramesh Chandra Shah & Other entities was asked for nor his cross-examination was demanded in crystal clear terms before the A.O., as a matter of right. (4) Without prejudice to what is stated as above, it is submitted that various courts have been taking a consistent view that an appellant should not suffer for mistake or failure on the part of the counsel/agent, particularly when the appellant is dependent upon him for his expert A few of them may be cited as under: (i) Mahaveer Prasad Jain v. CIT 172 ITR 331 (M.P.) From middle of page 332 "If we reject this appeal, as Mr. A.K. Sanghi invited us to do, the only one who would suffer would not be the lawyer who did not appear but the party wh....
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.... entertained without any reason. (5) Without prejudice to the above, the appellant would like to Invite your kind attention towards a recent Judicial Pronouncement by Hon'ble Kerala High Court wherein the issue of estoppel or waiver was under consideration before the Hon'ble Court. The relevant portion of the observation of the Hon'ble Court may be reproduced as under: "34. A waiver is an intentional relinquishment of a known right, but obviously an objection to jurisdiction, lays down the Supreme Court Dhirendra Nath Gorai v. Sudhir Chandra Ghosh, AIR 1964 SC 1300, cannot be waived, for consent cannot give a court jurisdiction where there is none. Even if there is inherent jurisdiction, certain provisions cannot be waived. Maxwell in his book "On the Interpretation of Statutes", 11th Edn., at p. 375, describes the rule: "Another maxim which sanctions the non- observance of a statutory provision is that cuilibet licet renuntiare juri pro se introducto. Everyone a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any p....
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....ng of an appeal, the [***] Commissioner (Appeals) may consider and decide any matter arising out of proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the [***] Commissioner (Appeals) by the appellant. vide Circular No. 14/2001 dated 09/11/2001 Para 78 of the clarificatory circular notes that the power of the Appellate Commissioner does not include the power to set aside the assessment. It was to finalize the assessment early and to avoiding prolonged litigation. The Appellate commissioner will not set aside the assessment and refer the case back to the Assessing Officer for making fresh assessment. But the Appellate Commissioner continues to have the powers under Section 250 to inquire further, or to direct the Assessing Officer to inquire and report the result to him. After receiving the Assessing Officers" enquiry report, the authority can rely on it or gather additional facts or evidence." (8) Having regards to the above and in the fitness of things, therefore, the appellant puts his humble demand that by exercising the powers so vested with your Honour, the A.O. may kindly be directed to supply the appellan....
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....ities/entry operators had been indulged in providing accommodation entries. On that basis, the A.O. straight away issue a show cause notice dated 21.12.2016, asking the appellant to show cause as to why amount of long term capital gain of Rs. 2,16,59,185/- on account of sale of shares of Kappac Pharma Ltd. should not be treated as appellant undisclosed income. 3.3 In response to the above notice, the appellant attended and submitted a fairly detailed written submission dated 26.12.2016 and also explained the nature of transaction and as to how the claim of the appellant is genuine and hence justified. It is submitted that during the course of assessment proceedings the appellant has submitted number of supporting/cogent material evidences, under various submissions so made before the A.O. inter alia: A. Documents submitted under letter dated 17.11.2016: (i). Copy of bank statement from Bank of India, along with bank passbook of Panchvati Branch, Ahmedabad (P.B.P. No. 33 to 36) (ii). Demat Account activation statement with Indo Thai Securities Ltd. (P.B.P. No. 53) (iii). Copy of ledger account for the period from 01.04.2013 to 31st March 2014 of broker Indo Thai Securitie....
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.... was sustained by BSE, the appellant would like to submit that the regulatory action from SEBI and the surveillance measure taken to suspend the scrip took place in 2015. That is after six years from the year of purchase and one year after sale of shares by the appellant. There are also numbers of companies which have been suspended by the stock exchanges on yet to yet for various reasons. It is therefore submitted that the period during which the investment made by mother and its subsequent sales by appellant, the company Kappac Pharma Ltd. was regular listed company at the recognized stock exchange of India. However, if your honor is in permission of any material/evidence regarding the outcome of such regulatory action from SEBI which lead your honor to reach the conclusion that appellant has take accommodation entries to route her unaccounted money the same may please be specifically provided to the appellant for rebuttal and any adverse view taken without providing the said material / evidence for rebuttal is bad in the eye of law and against the principle of natural justice and equity. Para 3: That the appellant has no objection as regards 1,60,000 shares of Kappac Pharma Lt....
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....tment, which are being relied upon by the A.O., nor the appellant is afforded an opportunity to cross-examine them, at all. Thus, the appellant has been deprived of his right to defend his case and submit proper rebuttal. 3.3.5 That in any case, the appellant was never confronted with the alleged statements of the referred third parties nor allowed to cross examine the deponents, the appellant cannot be put to any disadvantage on the basis of statements of third parties and that too recorded elsewhere. 3.4 As may be perused from aforesaid para 3.3 of the present SOF, by producing more than sufficient quantity of material details/supporting evidences, the appellant has established that the transaction of shares of the referred company has been quite genuine beyond doubt and thus, onus casted on the appellant has been fully discharged. However, without appreciating the facts of the case in proper prospective, the A.O. proceeded to disbelieve the explanation of the appellant in a quite pre- determined manner. 3.5 As may be perused from the impugned assessment order that vide para 4.1 to para 4.10of the order, the A.O., In the guise of 'giving a back ground of Investigation c....
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.... her by the appellant 25.03.2014 on 1,60,000 25.03.14 (acquired by way of gift from her mother) 5,000 28.03.14 27,000 31.03.14 2,16,59,185 (a) Long Term Capital Gain in shares of Kappac Pharma Ltd.: Sale value of shares 2,20,97,585 Less purchase cost (cost in the hands of previous owner Rs. 4,38,400 u/s 49(1) of the Act) LTCG Rs. 2,16,59,185 (b) In the statement of total income the appellant has shown Rs. 2,16,59,185 under the head "Long Term Capital Gains" and claimed has exempt u/s 10(38) of the Act. (c) It is pertinent to note that while making the assessment for the year under consideration, on one hand the A.O. has accepted the cost of acquisition in the hands of the appellant as well as sale value of shares as such: whereas on the other hand he has disbelieved the surplus being resulted into long term capital gain, net result. It is a classic illustration of blowing hot and cold at the same time by the A.O., without valid reasons. 4.1 It is submitted that although it appears to be a detailed and speaking appellate order so passed by the Ld. CIT(A), running into 64 pages, it is not so, briefly stated as under: para Contents/ particulars Page N....
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.... notarized gift deed. It is a matter of fact on record that her mother Smt. Meenaben A. Shah is a regular tax payer (PAN:APDPS3192P), in whose case assessment for the year under consideration has been made u/s 143(3) of the Act on 23.12.2016 without drawing any adverse inference. Meaning thereby, the department has accepted the transaction of gift of 1,60,000 shares of referred company in favour of the appellant. The shares were held by the appellant as investment and not as "stock- in-trade" and has shown capital gain in her return. Thirdly, that the transaction in purchase and sale of shares of Kappac Pharma Ltd. are carried out through the reputed broker and essentially through banking channel with STT paid transaction. The entity from whom the appellant has acquired shares and to whom shares are sold have confirmed the transactions as per material placed on record. Fourthly, the fact that transactions have been carried out in open market out of broker account M/s. Indo Thai Security Ltd. and the sale consideration is transferred to bank account of the appellant with Bank of India, Panchvati Branch. These facts have not been disputed by the A.O. Thus, A.O.'s observation is d....
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....lant has not been able to prove the unusual rise and fall of share prices to be natural and based on market forces. Appellant's submission in rebuttal That appellant has submitted authentic bills of broker M/s. Indo Thai Security Ltd. for acquisition and sales of shares of Kaррас Pharma Ltd. along with confirmation of the parties involved, the transactions have been through banking channel only and the A.O. has not brought any material on record to prove that the appellant has resorted to pre conceive scheme to procure long term capital gain to evade taxes by way of price difference. Therefore, the allegation that the appellant has failed to discharge his onus is wholly unfair. (e) Para 5.1 (c) (c): Reasoning of the A.O. That the net worth of the penny stock company is negligible and business activity of the company is negligible, the set prices have been artificially rigged high/low. Appellant's submission in rebuttal It is submitted that firstly the A.O. has not brought any material on record to allege that the referred company's net worth is negligible nor he has made any analysis on record about the alleged negligible it is bus....
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....the appellant, is nothing but mere wild presumption/suspicion not permissible under the law as per the settled legal principles. (h) Para 5.1 (c) (f) Reasoning of the A.O. The transactions entered by the appellant involve the series of preconceived steps, the true nature of share transactions lacked, commercial contents, entered into with the sold intent to evade taxes. Appellant's submission in rebuttal As may be perused from the table (supra) the appellant has received shares of Kappac Pharma Ltd. which is duly supported by valid gift deed and contract notes issued by the broker. Delivery of shares on sale have been given to broker through demat account. The appellant has duly paid STT and other government levies on sale of shares which is evident from the contract notes received from brokers. Hence, the allegation of the A.O., of appellant's involvement in series of preconceived steps, is mere presumption/assumption without any material having brought on record. The action of the A.O. is based on mere suspicion, own presumption, general in nature and self serving conclusion being drawn on the basis of so called report of the D.I. (Inv). Kolkata which is not perm....
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....f law. The appellant has, right from the beginning, categorically explained the genuineness of transaction carried out by him and strongly objected to A.O's show cause notice dated 21.12.2016 (Kindly P.B.P. No. 89 to 91) by way of fairly detailed explanation dated 26.12.2016. (Kindly P.B.P. No. 92 to 105) The finding of the A.O. is quite vague and baseless for the simple reason that neither the A.O. has provided copies of any of the persons who have deposed against the appellant nor afforded any opportunity to cross-examine them by enforcing their attendance. The A.O. has misdirected himself in coming to the conclusion that the claim of the appellant of Rs. 2,16,59,185/-, for long term capital gain is disallowable and added back u/s 68 of the Act. 5.9 Besides, it is stated that the assessing officer has not disputed the fact that 1,60,000 of M/s. Kappac Pharma Ltd. were gifted to the appellant under a duly notarized gift deed dated 20.03.2014 by her mother Smt. Meenaben Ashokkumar Shah and the same have been transferred to appellant's demat account with M/s. Indo Thai Securities Ltd. on 25.03.2014. 5.9.1 As may be perused from the flow chart in respect of shares of Kapa....
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....other of the appellant Smt. Meenaben Shah, when the scrip of M/s. Kappac Pharma Ltd. was not alleged as 'penny stock company'. In this connection, the appellant invites a kind attention of Hon'ble Jurisdictional High Court of Gujarat in the case of The Principal Commissioner of Income Tax 1 vs. Jagat Pravinbhai Sarabhai Tax Appeal No. 332 of 2022 (Gujarat HC) Facts: The assessee individual's return of income declaring total income of Rs. 3,11,490/- was processed u/s. 143(1). Subsequently, the assessment was reopened on receipt of information that the assessee indulged into scrip of shell company and had claimed LTCG on sale of shares of Devika Proteins Ltd. The A.O. treated the transaction as bogus and made addition of sale proceeds of shares u/s. 68 of the Act. Being aggrieved, the assessee carried appeal before CIT(A) who held that the shares were in nature of old investment, they could not be treated as penny stock by any stretch of imagination. The revenue carried the matter before ITAT who dismissed the appeal of the revenue. Relevant portion of the judgment is reproduced as under: "4. The Income Tax Appellate Tribunal further examined the question in appeal preferred b....
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....nouncements of Hon'ble Courts vide page-14 to 80 of the submission, how the ratios of Hon'ble Courts applies in the appellant's case and have also submitted copies of judgment/case laws relied upon by the appellant at page-120 to 348 of the indexed paper book. However, there is not a whisper in the appellate order as to how they are not applicable and/or distinguishable with the facts of the case of the appellant. To that extent, it is submitted that the order so passed by the Ld. CIT(A) is perverse and bad in law. 4.7 Regarding decision of Swati Bajaj of Hon'ble Kolkata High Court In this regard, it is submitted that the Ld. CIT(A) has misdirected himself in placing reliance on the order and ratio of Kolkata High Court's decision in the case of Swati Bajaj. 4.7.1 With due respect to the Hon'ble High Court, the appellant submits that the facts as compared to the case on hand are distinct, in as much as in the case of Swati Bajaj, the crux of the issues was as to whether not providing of the investigation report to the assessee violated the principles of natural justice and giving of cross-examination and whether it was necessary. That apart, peculiar facts involved in that ca....
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.... bank statements and all other related details. Therefore, the onus on the appellant stands adequately discharged. (e) Stock exchanges are regulated by SEBI: The appellant has categorically discharged her initial burden cast upon her, the moment the appellant has produced all documentary evidences in respect of share transactions. The so-called initial burden on the appellant, it is submitted that it does not include the burden to prove the genuineness of rise in the prices on the stock exchange(s), especially when the stock exchanges are regulated by the statute (SEBI Act, 1992) and a body constituted thereunder namely SEBI. (f) The appellant was under no obligation for manipulation: It is submitted that in the aforesaid circumstances, the appellant was under no obligation to prove that there was no manipulation "at the other hand", since the appellant has only earned capital gain which has been disclosed in the return of income so filed for the year under consideration, and that the capital gains earned by her on penny stock was not tainted. (g) The A.O. has relied on the order of SEBI about the surveillance measures taken to suspend the scrip of Kappac Pharma Ltd. whic....
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....ction of sale of share as accommodation entry, without conducting independent inquiries, especially, the appellant has discharged her primary onus. 5. Discharging onus casted upon the appellant u/s. 68 of the Act. 5.1 While passing the impugned appellate order, the Ld. CIT(A) has upheld the addition made by the A.O. u/s. 68 of the Act on account of disallowance of long term capital gain on sale of shares claimed by the appellant. It is submitted that even the appellant's case cannot be brought under ambit of provisions of section 68 of the Act, for the reason that as per the settled position in law, the appellant has to prove the identity of the party through whom sale consideration is received, creditworthiness and genuineness of the transaction. In this context, it is respectfully submitted that the appellant has received the sale consideration through a recognized broker M/s. Indo Thai Securities Ltd. being a member with BSE/NRD/NSE, bearing DPID12050900 whose contract notes and contra accounts are produced during the course of assessment proceedings. Thus, the identity is undoubtedly proved. Similarly, creditworthiness is also proved by placing contra account of the broker....
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....A.O. could not have formed such a bias opinion on the basis of report from the agency. The A.O. cannot treat a genuine transaction of sale of share as accommodation entry, without conducting independent inquiries, especially when the appellant has discharged his primary onus. 5.3 It is further submitted that while arriving at the conclusion, the A.O. did not consider it worthwhile to make concrete inquiry such as issuing commissions to the concerned A.Os assessing those entities, or issuing notices u/s 133(6) of the Act calling for material details. But he simply carried out arm - chair proceedings and based his order in a pre-conceived manner, without brining any cogent material on record. Neither the A.O. has supplied copies of statement of alleged entities whose names are referred to in his show-cause notice dated 23.12.2016 nor he has brought any material on record as to what action is taken by the department in their cases. The A.O. has simply relied upon intimation received from the internal agency and has concluded that the appellant was beneficiary of entry and has disallowed and added back total amount of Rs. 2,16,59,185/-. 5.4 Assuming without conceding or admitting e....
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....ted may be charged to income-tax as the income of the appellant of that previous year. 5.9 Having regard to the aforesaid peculiar facts and circumstances of the case of the appellant, there is absolutely no justification for making addition of Rs. 2,16,59,185/- in the hands of the appellant. The same deserved to be deleted. 5.10 In nutshell, the appellant says and states that (i) The A.O. has not disputed the purchase of shares during the course of proceedings for the year under consideration. It is matter of fact on record that the appellant has received 1,60,000 shares as gift from her mother Mina Shah on 25.03.2014 which have been credited in for demat account with Indo Thai Securities Ltd. The shares having been acquired under a valid gift, the cost thereof in the hands of previous owner has been accepted by A.O. in view of provisions of section 49(1) of the Act. (ii) The statement of third parties are said to have been taken by DI(Inv.) which are not made part of record, who have said anything having any relation with the appellant. The appellant is not at all named in the show-cause statement as evidenced from the selective portion extracted by the A.O. in the body o....
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....e. (xi) The stock market in the commercial terms, it is well known that the prices of the scrip are flown with the winds and the sentiments irrespective of the fundamentals of the scrip and therefore the price of the scrip has been gone high after the shares were purchased does not mean that the transaction of the appellant not genuine merely on surmises, conjectures and personal assumption in absence of cogent material. (xii) There is no material/evidence of whatsoever nature brought on record by the A.O. to arrive at a conclusion that there was involvement of the assessee to inflate the sale price in alleged connivance with the brokers and the price the shares were sold is not genuine price. The appellant submits that in the stock exchange, it is not a case that only the market price of the scrip of M/s. Kappac Pharma Ltd. sold by the appellant has gone substantially high but there is numerous scrip whose prices has gone high/low depending on market sentiments irrespective of its fundamentals. Hence, merely price of shares were gone high cannot prove that the transaction entered into by appellant are not genuine and more particularly when the holding period for shares was mor....
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.... of sale price as alleged or at all with the connivance with the brokers and the price at which shares were sold were neither genuine price. 14. Furthermore, there was no material and/or evidence brought on record by the Revenue in order to establish that the company has indulged in providing accommodation entries and the prices were rigged and the mother of the assessee or the assessee was involved in rigging of the price of shares. The case of the Revenue has been dealt with on entirely unsubstantiated suspicions is wholly unjustified and bad in law. The assessee at the time of hearing of the matter before the authorities below relied upon various judgments: FOR CAPITAL GAIN ON SALE OF SHARES CIT v. Himani M. Vakil [2014] 41 taxmann.com 425 (Gujarat) CIT v. Maheshchandra G. Vakil [2013 40 taxmann.com 326 (Gujarat) CIT v. Jitendra Dalpatbhai Shah [2014] 41 taxmann.com 523 (Gujarat) Meenadevi N. Gupta v. ACIT Circle -5, Surat [2013] 35 taxmann.com 211 (Ahd) Vasantraj Birawat v. ACIT [2015] 61 taxmann.com 295 (Mumbai - Trib.) Smt. Smita P. Patil v. ACIT [2015]55 taxmann.com 346 (Pune - Trib.) CIT vs. Shyam R. Pawar [2015]54 taxmann.com 108 (Bombay HC) CIT v. Smt.....
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....Gain as exempt income u/s 10(38) of the Act arising out of the transactions of sale of equity shares of Kappac Pharma Limited. 22. The assessees namely Prakash Javia HUF, Jayesh Kumar Javia HUF and Prajash Javia purchased equity shares of Kappac Pharma Limited totaling to 3000, 2000 & 3000 respectively in cash through offline mode from existing shareholder of Kappac Pharma Ltd. at Rs. 36000/- Rs. 24,000/- & Rs. 36,000/-. Subsequently, during the F.Y. 2013-14 all these equity shares were converted in DMAT form maintained by respective assessees with Kotak Securities Ltd. During F.Y. 2013-14 after holding the shares for more than 12 months, respective assessee(s) sold their holding of Kappac Pharma Ltd. through a registered broker namely Kotal Securities Ltd on the recognized stock exchange namely Bombay Stock Exchange Ltd and Long term Capital Gain calculated in each case have been shown in the income tax returns as exempt income u/s 10(38) of the Act. 23. During the assessment proceedings the assessing officer on the basis of report of the investigation carried out by the Investigation Wing of Income Tax Department at various brokers in other parts of the country, lack of infor....
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....cts etc. In the instant case, nothing on record is available to show that any enquiry was conducted by department at the business premises of Kappac Pharma Ltd. and its involvement in this alleged racket of managing bogus LTCG. Kappac Pharma Ltd. is registered with Registrar of Companies and is still live at the portal of Registrar of companies. All transfers of shares of particular listed company is well recorded in the Registrar of shareholders. Even the purchase of shares by assessee is directly from a shareholder company, being original allottee of equity shares of Kappac Pharma Ltd. which were subsequently transferred in the name of respective assessee(s). 26. We, further note that as far as conditions provided in section 10(38) of the Act are concerned the same are duly fulfilled in the instant case Section 10(38) of the Act reads as follows: "any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust where - a) The transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes in....
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....ccount with Kotak Securities Ltd. which is known to be a reputed company engaged in the providing services as share broker. Kotal Security is registered with Bombay Stock Exchange. Sale is effected on the portal operated and controlled by Bombay Stock Exchange. The seller has no idea as to who is the buyer on the other side. On the portal the payment for the sale is received by broker which in this case is Kotak Security Limited who after deducting the brokerage and other applicable tax including Security Transactions Tax remits the balance amount in the bank account of the assessee which is registered in the DMAT Account. In the instant case, no flaw or any inconsistency has been found by the Revenue authorities with all these transaction of purchase and sale. 31. Further the aspect that whether Kappac Pharma Ltd is a 'penny stock' company or not has been dealt in detail by I.T.A.T., Kolkata Bench in the case of Yogendra Dalmia (supra) wherein the Tribunal after considering another decision of Bangalore Tribunal in the case Canara Bank vs. JCIT held the transaction from sale of equity shares of Kappac Pharma Limited as genuine and also allowed the claim of assessee of LTCG from ....
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....gation wing or any enquiry conducted from 3rd persons were not made available to the assessee which thus grossly violates the principles of natural justice. As the assessee never got opportunity to go through these reports this action of the lower authorities was not justified in view of ratio laid down by Hon'ble Supreme Court in the case of Sona Builders (supra) wherein Hon'ble Court held that: Para 7 -" Having regard to the statutory limit within which the appropriate authority has to act and his failure to act in conformity with the principles of natural justice, we do not think we can remand the matter to the appropriate authority. We must set his order aside. Para 8 - "The appeal is, accordingly, allowed. The judgment and order under appeal is set aside. The order of the appropriate authority dated 31-5-1993 is quashed." [emphasis supplied] 33. We, therefore, in the totality of facts and in view of the ratios laid down by Hon'ble Courts and decision of Coordinate Benches squarely applicable on the instant issue raised before us, are of the considered view the alleged transaction of purchase and sale of equity shares of Kappac Pharma Ltd. are not bogus as th....
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....f Alang Industrial Gases Ltd. It is the case of the assessee that it sold only part of the shares and remaining shares have been held by the assessee in subsequent assessment year also. Thus following Jurisdictional High Court Judgment, the Ld. CIT(A) deleted the addition. 9.1. The Ld. D.R. could not produce any contra judgments in support of its case, whereas Ld. Counsel for the assessee submitted before us the following case laws: (i) CIT V/s. Himani M. Vakil [2014] 41 taxmann.com 425 (Gujarat) (ii) PCIT V/s, Ramniwas Ramjivan Kasat [2017] 82 taxmann.com 458 (Gujarat) (iii) CIT V/s. Maheshchandra G. Vakil [2013] 40 taxmann.com 326 (Gujarat) (iv) Meenadevi N. Gupta V/S, ACIT [2013] 35 taxmann.com 211 (Ahmedabad - Trib.) (v) CIT V/s. Odeon Builders (P.) Ltd. [2019] 110 taxmann.com 64 (SC), (vi) Chandra Prakash Jhunjhunwala in ITA No. 2351/Kol/2017 dated 09- 08-2019 (vii) Shashi Bala Bajaj - ITAT Kolkata in ITA No. 1547/Kol/2018 dated 16- 11-2018 (viii) PCIT V/s. Prem Pal Gandhi 401 ITR 253 (P&H) (ix) PCIT V/s. Dhawani Mahendra Shah - Tax Appeal No. 674/2017 dated 12-092017 Gujarat High Court (x) PCIT V/s. Bharati Somchand Shah - Tax Appeal No. 1023/2017 dated ....
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.... addition made by Assessing Officer - Whether since impugned order of Tribunal was based on appreciation of evidence on record, it did not require any interference." 11. Respectfully following the above Jurisdictional High Court judgments and also the fact that the assessee is a retaining Kappac Pharma shares as stock-intrade and the closing stock is valued at the market rate. Since the market rate is lower it has incurred a business loss of Rs. 53,02,455/-, though the shares are not sold. The difference is only because of valuation of shares which is as per the Accounting Standard and the share of Kappac Pharma are still forming part of closing stock of the assessee company as on 31.03.2019. Thus, we have no hesitation in deleting the disallowance made by the A.O. which was correctly deleted by the Ld. CIT(A). Thus the grounds raised by the Revenue is without any basis and the same is liable to be rejected." 19. We find that the Co-ordinate Bench while upholding the order passed by the Ld. CIT(A) in deleting addition made under Section 10(38) of the Act in respect of sale of scrip of M/s. Kappac Pharma Ltd. relied upon the judgment passed by the Jurisdictional High Court in the....
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.... is more than 55 months from the date of original investment made by the mother of the appellant when the scrip of M/s. Kappach Pharma Ltd. was not alleged as penny stock company. 4. The broking firm through which transaction are conducted is M/s Horizon Financial Consultant Pvt Ltd. The broking firm through which transactions are conducted is SEBI registered authorized broker M/s. Indo Thai Securities Ltd., Indore (MP) 5. The company Surabhi Chemicals and Investment Ltd is a Kolkata based company The company M/s. Kappac Pharma Ltd. is not Kolkata based company rather it is situated in Mumbai having registered office address at 22, Pragnya Society, above Dena Bank, Kandiwali (E), Mumbai-400101. 6. The documents in form of contract notes of purchase and sale of shares, Demat, Bank Statement were placed on record The documents in form of copy of Gift deed of shares of KPL in favour of the appellant, ledger account of broker M/s. Indo Thai Securities Ltd., demat slip of transfer of shares from demat account of mother to the demat account of the appellant, contract notes/bills of broker in respect of shares of KPL, Bank Statement were placed on record under appellant's let....
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....Supreme Court in the case of Vegetable Products Ltd. 88 ITR 192. (Kindly refer para-16 of decision dated 01.09.2023 in the case of M/s. Seema Holdings P. Ltd. v. ITO in ITA No. 67/GTY/2023 (ITAT Gauhati). (Kindly refer PBP- 373 to 386) The appellant has furnished before the A.O., all the requisite evidences in the form of Contract notes, details of payment and copy of demat account etc. to prove transactions vide her submissions dated 15.02.2022 and 23.03.2022 before the A.O. Hon'ble Bombay High Court while deciding the case in the case of Indravadan Jain has held that unless the complexity of the appellant in manipulating the shares is proved, the appellant could not be held responsible for the wrong done by the brokers for persons and thus granted relief to the appellant holding that where transactions are well documented and payments are routed through banking channels, the transactions of sale and purchase of shares cannot be doubted. (Kindly refer para-18 of decision dated 01.09.2023 in the case of M/s. Seema Holdings P. Ltd. V. ITO in ITA No. 67/GTY/2023 (ITAT Gauhati). 14. The documents in form of copy of Gift deed of shares of KPL in favour of the appellant, ....
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.... Appeal No. 366/2023. (Kindly refer bottom lines on page-23 of the case of M/s. Ice Worth Reality (Supra). 16 Where there is decision of Hon'ble Jurisdictional High Court as stated Supra, the same would prevail over the and no cognizance of Hon'ble non- jurisdictional High Court could be taken. The law is very well settled by the Hon'ble Supreme Court in the case of Union of India VS. Kamalakshi Finance Corporation Ltd. reported in 55 ETL 43 that the decision of jurisdictional High Court would have higher precedence value then the decision of Hon'ble Non-jurisdictional High Court on the Tribunal. The Hon'ble Apex Court has observed that utmost regard must be held by the adjudicating authorities and the appellate authorities to the requirement of judicial discipline. Moreover, where there are two conflicting decisions of various High Courts, Hon'ble Supreme Court in the case of Vegetable Products reported in 88 ITR 192 (SC) has held that construction that is favourable to the appellant should be adopted. Hence, by following this principle, the decision of Hon'ble Calcutta High Court and other need not be followed in the peculiar facts and circum....
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.... In the case of the appellant, direct irrefutable evidences are made available before the A.O. which are not rebutted by the A.O. However, the appellant was deprived off her legitimate right. (Kindly refer para-51 to 53 of decision dated 29.11.2022 in the case of DCIT vs. Shri Dilip B. Jiwrajka in ITA No. 2349/Mum/2021 & Ors. (ITAT Mumbai). (Kindly refer PBP-515 to 615) 19 Hon'ble Court at para-47 in the last line of page-87 has distinguished the decision of Hon'ble Supreme Court in the case of Odean Builders by observing that when the information was confronted with the assessee, the department has prima facie discharged burden. However, in the case of the appellant, direct irrefutable evidences are made available before the A.O. which are not rebutted by the A.O. In the appellant's case, she has made a specific request for copy of investigation report and copies of persons/entities and/or others whose statements are being relied by the A.O. at relevant time for no fault of appellant. The appellant cannot be made to suffer for no fault on her part. Therefore, the Judgment of Hon'ble Calcutta High Court is not applicable in the case on hand. The appellant is bas....
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....ase on hand are distinct inasmuch as: (i) in the case of Swati Bajaj, the crux of the issues was as to whether not providing of the investigation report to the assessee violated the principles of natural justice and giving of cross-examination and whether it was necessary. That also apart, peculiar facts involved in that case wherein 89 different appeals of different assessee's were disposed off by Tribunal in a single consolidated order without taking cognizance of specific facts involved in each case. The HC has not disturbed the settled position of law that circumstantial evidences can be looked into only when direct evidences are not available. (Para-69) In the present case, direct irrefutable evidences are made available before the A.O. which are not rebutted by the A.O. (ii) At page-142 of the judgment in the second last paragraph in that case, it is observed that where a witness has given directly incriminating statement and addition in the assessment is based solely and and mainly on the basis of such statement, in that eventuality, it is incumbent on the A.O. to allow cross-examination. In the case of the appellant, the appellant has requested before the Assessin....
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....company. The appellant has duly explained the factors and consideration which prevailed for making decision of the appellant in the scrips and it has not been the case that shares have been purchased off market privately. 1.2 Further peculiar facts vis-à-vis case Swati Bajaj (Supra) A perusal of factual matrix of the case of the appellant, it may kindly be appreciated that the distinguishable facts with reference to the case of Swati Bajaj, may be briefly stated as follows: (a) Case not subjected to search/survey: It is undisputed fact on record that neither any search proceeding u/s. 132 of the Act nor survey action has been carried out in the case of the appellant. (b) Name of the appellant not featuring in the report: With a due respect to the Hon'ble Court, it is submitted that in the report of investigation wing, appellant has not been named who were involved in the scam. Hence, the burden on the appellant is to prove genuineness of the transactions, which she had discharged by producing direct documentary evidences in her case. (c) Appellant's broker was not subjected to search: It is submitted that nowhere in the investigation report the name o....
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....h as the appellant has categorically demonstrated with all supporting documentary evidences including bank statements, invoice of brokers, contra accounts and statements of sale proceeds. It is reiterated that the receipt of money being sale proceeds on account of sale of shares are routed through banking channel only and in none of the account, cash was ever deposited to show circulation. It is also the fact that A.O has no evidentiary or corroborative value for the reason that the A.O has merely relied on the report of DI(Inv.), Kolkata. The A.O has framed the assessment order without conducting any inquiry from the relevant parties or independent source of evidence. Even the statement recorded by the Investigation has not been got confirmed or corroborated by the person during the assessment proceedings. The A.O has neither conducted any inquiry nor has brought any clinching evidences to disprove the evidences produced by the appellant. On the other hand, the case of the appellant is Icon much better footing as may be verified from the factual matrix of the case. The appellant has adduced more than adequate quantities of evidences, material which are sufficient to prove identiti....
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....As per Hon'ble Tribunal, the entire shares were dematerialized in April 2012 and sold in May 2013, hence, there is scope for suspecting the purchase of shares. In the appellant's case, the shares received as gift were dematerialized on 25.03.2014 and sold on 28/30.03.2014. 9 It was not shown by the A.O. that the assessee was aware of the exit providers or part of the group involved in rigging prices. It was not shown by the A.O. that the appellant was aware of the exit providers or part of the group involved in rigging prices. 10 Hon'ble ITAT noticed that the A.O. has not found fault with any of the documentary evidences furnished by the assessee to prove the purchase and sales of shares. The A.O. has not found fault with any of the documentary evidences furnished by the appellant to prove the purchase and sales of shares. 11 The Hon'ble Tribunal observed that the A.O. has not brought on record any material to show that the assessee was part of group which involved in manipulation of prices. Hence, there is no room to suspect purchase and sales of shares undertaken by the in assessee, relying upon the decision rendered by Hon'ble Bombay High Court in th....
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....ded in the hands of the assessee. As per A.O., the appellant had sold 32,000 shares of M/s. KPL and claimed long term capital gain of Rs. 2,16,59,190/-. The A.O. referring to investigation report held that the LTCG is bogus and added in the hands of the appellant. 3 The Hon'ble Tribunal observed that the assessee had invested in shares of 85 listed companies during the year under consideration. Therefore, if investment in 85 scrips were held investment in one scrip alone cannot be held to be bogus only on the ground that the price of such share rose substantially and the company had no financial fundamentals to justify such a steep price rise. The appellant has not invested in scrip of the company KPL but the shares have been received by way of valid Gift deed from her mother. 4 The Hon'ble Tribunal noticed that the department has brought nothing on record to prove that the assessee was involved in price rigging of the instant share or that any form of cash had flown back to the assessee. so as to create the instant gains as bogus LTCG. In the case of the appellant, the department has brought nothing on record to prove that the appellant was involved in price r....
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.... in ITA No. 220/2019 and CM No. 10774/2019 order dated 08.03.2019 (Kindly refer PBP- 714 to 724) distinguishable as compared to the facts of the appellant. S. No. Facts of the case of Udit Kalra Facts of the appellant's case 1 The assessee purchased 4000 shares of M/s. Kappac Pharma Ltd. @Rs.12 per share. The appellant has not invested and/or purchased scrips but she has received 1,60,000 shares of Kappac Pharma Ltd. as gift from her mother Smt. Meenaben Shah (PAN: APDPS3192P) under a duly notarized gift deed on 20.03.2014. In fact, the 2,56,654 equity shares were allotted to appellant's mother Smt. Meenaben Shah on 22.11.2010 and were placed in demat account with India Infoline Ltd., by the company. Out of which 1,60,000 shares were gifted to the appellant in her demat account with M/s. Indo Thai Securities Ltd. In the case of donor assessment for the year under consideration has been made u/s. 143(3) of the Act on 23.12.2016 by accepting the transaction of gift of 1,60,000 shares in the favour of the appellant. 2 The assessee's purchased transaction was done off market in physical form by paying cash and not through banking channel. There is no question of ....