TaxTMI 
TaxTMI 
2023 (11) TMI 1355
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....ntaining books of accounts on mercantile basis 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....
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.... by the Investigation Wing of Income Tax Department at Kolkotta statements of various share 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 @ ....
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....rading in scrip itself was Suspended by BSE as a surveillance measure and is still remain suspended. The price of the scrip which was not real market 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/statemen....
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....le of shares on which LTCG has arisen. However if your honour is in possession of any material/evidence regarding the outcome of such regulatory action from SEBI and 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 b....
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....ng of the price of the shares. Merely financials of the company is not matched with the price of the shares quoted on stock exchange does not mean that the said company is indulged in providing the 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....
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....been duly fulfilled by the assessee. 8. The assessee would like to submit that your honour has not disputed the sale made by the assessee through registered broker and recognized stock exchange. Further, your honour has not brought any material on record to 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 ....
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....and therefore bad in alw and requires to be withdrawn. Legal Contention/submission: 1. It is contended that the when it is an undisputed fact that the sale of shares of Kappac Pharma Ltd is through demat A//c, how the genuineness of such sale transactions can be question by your honour and on what basis in absence of any contrary 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 ....
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....ed short-term capital gain declared by assessee as unexplained credit Whether finding recorded by Tribunal being a finding of fact, no substantial question of law arose there from Held, yes [Para 4) [In favour of assessee) Meenadevi N. Gupta v. ACIT Circle -5, Surat [2013] 35 taxmann.com 211 (Ahd) Section 45, read with section 68, of the Income-tax Act, 1961 Capital gains - Chargeable [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 durin....
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....ssing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income under section 68. Section 68 of the Income-tax Act, 1961 Cash credit (Share dealings) Assessment years 2003-04 to 2006-07-Assessee declared capital gain on sale of shares of two companies Assessing Officer, observing that transaction was done through brokers at Calcutta and performance of concerned companies was not 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....
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....gh CSE after paying Securities Transaction Tax Whether on facts, transactions of purchase sale of shares were to be regarded as genuine in and, therefore, assessee's claim was rightly allowed-Held, yes [Para 23] [In favour of assessee) Ramesh Kumar Jain (HUF) v. DCIT [2013] 36 taxmann.com 524 (Jodhpur-Trib) Where assessee produced proof of purchase and sale of shares and genuineness of sale of shares was established from stock exchange, exemption under section 10(38) on long-term capital 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 ....
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....icer relying on the statement of one 'p', a stock broker, and for the reason that some of the stock brokers were not traceable at the address on record, formed an opinion that the transactions were not genuine. The Assessing Officer also found that the transactions had been done off the market and in some cases the brokers had not informed the stoke exchange regarding this transaction and that the transactions of sale resulted into purchase of shares by the buyers at a huge loss. Thereafter, the Assessing Officer rejected the transactions and held 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....
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....f said shares in demat account; and as purchase on that date was not accounted for in books of account, it had to be treated as unaccounted purchase and entire purchase amount became unexplained investment in shares - Whether dematerialization of shares from physical holding is a lengthy process and, takes considerable time and, therefore, when there was no dispute to dematerialization of shares before date of sale, it was clear that shares were purchased much prior to date of sale Held, yes Whether therefore, purchase amount of shares could not be treated as unexplained investment - 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 follow....
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....ied upon by revenue in disallowing amount paid by assessee to said companies to carry out promotional and advertisement activities, same was breach of principles of natural justice and accordingly issue was to be restored for fresh disposal. CIT v. Indrajit Singh Suri [2013] 33 taxmann.com 281 (Gujarat) Section 69, r.w.s. 68, of the Income-tax Act, 1961- Unexplained investments- Undisclosed Income Block assessment 1-4-1996 to 6-9-2001- Whether, where assessee had proved identity and creditworthiness of donor and genuineness of transaction, gift from assessee's mother could not be added as undisclosed Income Held, yes Whether, 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.)....
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.... P & L accounts would equally apply to statements made in the auditors' certificates prepared on the instructions and information supplied to them by employers. Mere production of auditors' certificate, especially when it is not admitted by labour, not by the auditor but by the employees of the company who admitted not to have been concerned with its preparation or the calculations on which it was based, would not be conclusive. We do not say that in such a case the Tribunal should insist upon proof of depreciation on each and every item of the assets. It should, however, insist on some reasonable proof of the correctness of the figure of depreciation claimed by the employer either by examining 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 th....
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....ons and therefore exempt under the provisions of section 10(38) of the Act in absence of any material/evidences brought on record by your honour to prove contrary. Hence the show-cause notice and addition proposed therein is required to be quashed. In case of a contrary view, kindly revert back for further rebuttal along with an adequate opportunity of personal hearing for which the assessee shall remain obliged. Thanking you, Yours Faithfully, ------------------- Shivani Shah" 10. It is the opinion of the Ld. AO that long term capital gain booked by assessee in her books of account were pre-arranged to evade taxes and launder money. Considering the finding of the Investigation Wing, particularly, the Director of Investigation, Kolkata, the Ld. AO came to a 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 co....
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.... of exempted long term capital gain u/s. 10(38) of the Act. 1.3 Being aggrieved and dissatisfied, the appellant had preferred an appeal before the Ld.CIT(A) who has dismissed the appeal of the appellant as per impugned appellate order dated 27.04.2023. 1.4 Being aggrieved further, the appellant has preferred the present appeal before the Hon'ble Tribunal, for getting due justice while deciding appeal of the appellant in the interest of justice and equity. 2. Regarding the order being bad in law and perverse. 2.1 During the course of the appellate proceedings before the Ld. CIT(A), the appellant has submitted fairly detailed written submissions duly indexed paper book dated 07.03.2023, furnished under e- proceeding response acknowledgment No. 977780201090323. To be precise, the appellant has raised specific pleas on 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 statem....
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.... a show cause notice dated 21.12.2016 asking the appellant as to why amount of long term capital gain as claimed on account of sale of shares of Kappac Pharma Ltd. should not be treated as appellant's undisclosed Income. The assessment proceedings are solely based on alleged statement of said entities without offering an opportunity of cross-examining her. (2) The Ld. CIT(A) has erred in law and on facts in outrightly ignoring and not adjudicating and deciding a special plea taken before him vide para-5.14 of appellant's written submission whereby a specific demand has been made before the Ld. CIT(A) for making the statements of the referred persons available to the appellant by AO and demanded that the appellant may be allowed to cross-examine the third parties at this stage i.e. appellate proceedings before the Ld. CIT(A). (3) Without prejudice to the above and without conceding but 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 th....
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....he appellant had been proved by the facts and circumstances of the case because: (1) merely because some omission or wrong statement was made in the original return, proceedings u/s 271(1)(c) might not be attracted; (ii) the revised return having been accepted, the appellant could not be considered guilty and (iii) the fault, If any, was with his tax counsel; and even the tax counsel, could not be said to have acted in mala fide manner, the tribunal was right in holding that penalty was not exigible." (4) Therefore, the had seized the very first available opportunity I.e. before the Ld. CIT(A) raising issue of non grant of cross-examination by the A.O., in the form of detailed written submission before the Ld.CIT(A), for getting due justice. In the fitness of things, therefore, the appellant has puts his humble demand that the appellant may be allowed to cross-examine said S/Shri Prateek Rameshchandra Shah & Other entities. However, the same has not been 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....
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.... 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." (7) Needless to add here that the scope of appeal and the powers of appellate authority are wide enough under the provisions of section 251 of the Act as extracted below: "Section 251 of the Act spells out the powers of the Commissioner (Appeals). Before the amendment by Finance (No.2) Act, 2014, the provision read: 251. Powers of the [***] Commissioner (Appeals).- (1) In disposing of an appeal, the [***] Commissioner (Appeals) shall have the following powers- (a) in an appeal against an order of assessment he may confirm, reduce, enhance or annul the assessment; [***] Explanation.- In disposing of an appeal, the [***] Commissioner (Appeals) may consider and decide any matter arising out of proceedings in which the order appealed agains....
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....nd No. 3) 3.1 For the year under consideration the appellant has submitted his e- return of income on 21.07.2015, disclosing total income of Rs. NIL. The case of the appellant having been selected for scrutiny under CASS, a notice u/s 143(2) of the act was issued on 27.06.2016. This being a formal notice no hearing took place. Subsequently, due to change of incumbent, a notice u/s 142(1)/129 of the Act was issued on 30.08.2016. In response to the same the appellant attended and submitted requisite details as called for under appellant's letter dated 17.11.2016. 3.2 During the course of assessment proceedings, the A.O. noticed that the appellant has claimed long term capital gain of Rs. 2,16,59,185/- on sale of 32,000 shares of Kappac Pharma Ltd. Also taking a note from the report of the Investigation Wing of I.T., Kolkatta allegedly informing that there was search and seizure conducted by D.I. (Inv.) with respect to the trading of the scrips of M/s Turbo Tech Engineering Ltd. group and other so-called entry operators/ share brokers of Kolkata. As per the A.O. certain entities/entry operators had been indulged in providing accommodation entries. On that basis, ....
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....harma Ltd. (P.B.P. No. 72 to 82) 3.3.1 Without prejudice to the above, it is respectfully submitted in compliance to A.O.'s show cause notice dated 21.12.2016, the appellant has strongly objected to the A.O.'s proposed action to treat the long term capital gain of Rs. 2,16,59,185/- on sale of shares of Kappaс Pharma Ltd. as appellant's undisclosed income and specifically requested the A.O. in not less than the following words:- "Para 2: That the appellant is hereby kindly request your honor to provide complete details and material/information gathered by both the authorities and available with your honor's office for rebuttal of the appellant in the principle of natural justice and equity. In absence of providing such material/evidences, reliance cannot be placed on the same in order to treat the transactions in the scrip of Kappac Pharma Ltd. as non genuine. Your honour is also kindly requested to give the cross examination of the persons whose statements have been relied upon for drawing adverse inference in the case of the appellant. That as regard your honor's observation that the company itself attracted regulatory action from SEBI a....
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.... notice is also bad in law suspicion and therefore required to be withdrawn." 3.3.2 From the aforesaid it may kindly be appreciated that the A.O. has relied on the statements of number of persons/broker/directors allegedly recorded on oath, and therefore, the A.O. was requested to provide with the coples of all the statements referred above and also allow opportunity to cross-examine them; Further, A.O. was also specifically requested to supply with all other material which he intended to use against the appellant to frame the assessment with an opportunity to submit in rebuttal so as to avoid multiple round of litigations. 3.3.3 Although, the A.O. has taken a specific note of the appellant's referred submissions dated 26.12.2016 as well as reproduced in entirety at para 4 of the assessment order; But, he has tacitly ignored/overlooked the appellant's such submissions, and has suppressed the material facts and proceeded to frame the assessment order in a quite pre determined manner arbitrarily. 3.3.4 From the above, it may kindly be appreciated that the A.Ο. has neither provided any statements of various brokers and directors of the compan....
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....wed the claim of the appellant and added back as income u/s 68 of the Act. For drawing such an illogical conclusion, the A.O. has not brought any material evidence on record to prove that the appellant has taken alleged entry by paying un-accounted income. 3.6 It is submitted that the appellant has not invested and/or purchased and scrips of Kappac Pharma Ltd. but as may be perused from material on record that the appellant's mother Mina Shah has gifted 1,60,000 shares of Kappac Pharma Ltd. to the appellant under a duly notarized gift deed on 20.03.2014 and the same had been transferred to her demat account with Indo Thai Securities Ltd. on 25.03.2014. Out of the same, she has sold 32,000 shares in open market out of broker account with STT paid transaction. As a result she has earned long term capital gain of Rs. 2,16,59,185/-.For the sake of completeness; the appellant would like to furnish details of purchase and sale of shares of Kappac Pharma Ltd., resulting into capital gain during the previous year as follows: Sl. No. Name of scrips Purchased No. of shares date Sold No. of shares date Long Term Capital gain (Rs.) 1 Kappac Pharma Ltd. The ....
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....e a passing remark "inquiry and analysis made by A.O. in his order and ratio of above quoted Kolkata High Court Decision in the case of Swati Bajaj", he has concluded to uphold the addition made by the A.O. 4.4 With regard to inquiry and analysis made by the A.O. in his order, it is submitted that this is nothing but an eye wash and a short cut method to ignore/overlook the material facts by the appellant. In fact, neither any independent enquiry nor any alleged analysis has been made by the A.O. in his order, except reproducing selective portion of the report of the Investigation Wing, Kolkata. In fact, vide para-5.7 of the written submission before the Ld, CIT(A), the appellant has submitted point to point rebuttal to alleged reasoning of the A.O. at para-5 of his assessment order, as being reproduced below. "(a) Para 5.1 (a): Reasoning of the A.O. The appellant has purchased the shares on 22.03.2013 and same are sold on 28.03.2014 & 31.03.2014, resulting into capital gain of Rs. 2,16,19,185/-, which is the increase in the cost price and rise in the share prices is not holding to any commercial principle and market factors. Appellant's subm....
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....their cross- examination before taking any adverse inference in the case of the appellant, despite specifically demanded under appellant's letter dated 26.12.2016. (Kindly P.B.P. No. 92 to 105) The A.O. has nowhere stated the name of person in whose statement name of the appellant reflected as one of the beneficiaries for which allegation being made. Hence, the observation of the A.O. is devoid of any merit and baseless. (c) Para 5.1 (c): Reasoning of the A.O. That such trading transaction of purchase sales shares have not been effected for commercial purpose but to create artificial gains/losses with a view to evade taxes. Appellant's submission in rebuttal That the observation of the A.O. is baseless for the reason that the transaction a shares of Kappac Pharma Ltd. and long term capital gain incurred thereon are genuine transactions as they are supported by valid debit/credit notes, share certificates, both transactions are duly reflected books of account and confirmed by contra accounts, physical delivery of shares have been received/given and the A.O. has not pin-paintedly detected any irregularity in the transactions. In fact, no co....
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....efore, the reasoning/finding of the A.O. is nothing but mere allegation. (f) Para 5.1 (c) (d) Reasoning of the A.O. That SEBI has passed an order where the operators and M/s Kolkata Stock Exchange are said to be indulging in share manipulations. Appellant's submission in rebuttal It is stated that the appellant has carried out the transaction to open market through reputed broker account with STT; these facts have not been disputed by the A.O. Since, the appellant is having no connection either with the Kolkata Stock Exchange or any broker based at Kolkata, hence the reliance being placed on so called order of the SEBI passed in the case of alleged promoter/operators cannot be taken as basis for drawing adverse inference in the case of the appellant. The A.O. has neither placed copy of alleged order of SEBI in the impugned assessment order nor provided to the appellant during the course of the assessment proceedings for its rebuttal. (g) Para 5.1 (c) (e) Reasoning of the A.O. The investigations in the fund flow analyzed in the accounts of entry providers have established that cash has been routed from various accounts to pro....
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....i Ashok Hiralal Shah. In that case, in A.Y.2014-15, 24100 shares of M/s. Kappac Pharma Ltd. were sold by him for Rs. 1,68,00,655/- which resulted into capital gain of Rs. 34,32,024/-, the same was disclosed in the return of income. The case has also been scrutinized and regular assessment has been completed u/s 143(3) of the on 29.12.2016 by the very same Assessing Officer i.e. ITO, Ward- 5(2)(3), Ahmedabad, accepting the sale of referred company's share as genuine and as such no addition on this count case made in his hands. Although the principle of resjudicata does not apply to tax proceedings, when the facts are identical, the Revenue Department in expected to adopt a consistent approach during finalization of the assessment. Otherwise, also it is not open to the Revenue Department to keep on changing its stand in respect of the same nature of transaction. There is absolutely no justification in disallowing the claim of the appellant for capital gain arose on account of sale of shares of very same company in the hands of the appellant. (The date of assessment order in the appellant's case is 27.12.2016 i.e. just two days prior to the order of appellant's father). In....
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....nsfer the same to her demat account No. 12050900-00038673 with M/S. Indo Thai Securities Ltd. on 25.03.2014. 5.9.2 It is stated that Smt. Meenaben Ashokbhal Shah has maintained regular books of accounts on mercantile basis and has been assessed to tax in her individual capacity bearing PAN ADSPS3192P. As may be perused from the Stock Summary being part of the balance sheet as on 31.03.2011, Smt. Meenaben Shah held total number of 79,93,744 shares of different companies including aforesaid 5,00,000 shares of M/s. Kappac Pharma as stock-in-trade. Same number shares of Kappac Pharma were continued as her holding till 31.03.2013 and out of the referred shares, she gifted to the appellant on 25.03.2014, leaving balance of 96,500 shares of M/s. Kappac Pharma with her as on 31.03.2014 as stock-in-trade. 5.9.3 The appellant has accounted for the referred 1,60,000 shares in her books of accounts @Rs.695.70 (closing rate of BSE) valued at Rs. 11,13,12,000/-. These shares were in dematerialized form on 25.03.2014 and they were entered into demat account on 25.03.2014. Out of these shares, the appellant sold total number of 5000 shares on 28.03.2014 and 27000 shares on 31.03.....
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....ent trading in short span. 6. The finding recorded by the appellate authority and confirmed by the appellate tribunal is based on material before them. They are in the realm of findings of fact. No error could be noticed in the findings and conclusion that the investment was long standing and genuine and was not penny stock on the basis of which the capital gain was wrongly claimed." In so far as the case of the appellant is concerned, that the shares in question were initially allotted to appellant's mother on 22.11.2010 and the said shares came to be gifted to the appellant on 25.03.2014 and the shares were sold by the appellant on 28/31.03.2014 i.e. after long time from the initial year of acquisition in the hands of previous owner. Besides, the genuineness of the transaction of acquisition in the hands of the appellant is substantiated by producing copy of a notarized gift deed of her mother, flow chart in respect of shares of the company right from 09.06.2009 till completion of transaction. The shares were essentially retained for more than 55 months and were sold after such long time. In the circumstances and having regard to the ratio laid down by Hon'ble C....
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....eciated 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 u/s. 133A of the Act 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 of the appellant's broker namely Indo Thai Securities Ltd. figures whose cases were covered u/s. 132/133A of the Act. (d) The appellant was not party to/or responsible for unreasonable rise in prices of scrip. Although, the appellant who has earned and offered LTCG on penny stock was certainly not a p....
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....the facts of the case on hand are quite distinct and distinguishable with the facts of the case of Swati Bajaj and therefore, no adverse inference could be drawn in the case of the appellant. 4.7.3 In nutshell, 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 statement of Shri Prateek Ramesh Chandra Shah & Others which is being strongly relied by the 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 Wing 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 clinch....
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.... case of the appellant is covered by the decision of Hon'ble Gujarat High Court in the case of Rohini Builders reported in [2002] 256 ITR 360 (Guj). The Hon'ble Supreme Court has dismissed the special writ petition filed by the revenue against this judgment. Furthermore, the decision of Hon'ble Gujarat High Court in the case of Dharmdev Finance P. Ltd. reported in [2014] 43 Taxmann.com 395 (Guj) also supports the contention of the appellant wherein the Hon'ble High Court has held as under: From the head note: Section 68 of the I.T. Act, 1961 - cash credit (burden of proof)- various additions were made to the assessee's income on account of cash credit-it was found that in respect of said credits the assessee had filed PAN of creditors, their confirmation and their bank statement which established their creditworthiness. Moreover, transactions were made through banking channel- whether any addition could not be made u/s. 68 of the Act? - Held, Yes 5.2 At the cost of repetition it is stated that the appellant has categorically demonstrated with all supporting documentary evidences including bank statement, invoices of brokers, contra accounts and statement ....
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....to prove and established the complete nexus between the parties concerned to prove the same. The appellant says and states that he does not know the alleged master-mind i.e. entry providers and has never met him and the A.O. has also not established the same otherwise. 5.5 At the cost of repetition, it is submitted that the credit entries in the appellant's bank account has been by way of ECS from the brokers. In support of the same the appellant has submitted detailed transaction statement from the brokers i.e. M/s. Shah Investor Home Ltd. as well as contra account from the said brokers. Thus, the source of such entry is not only established but the source of source is also established beyond doubt. Thus, not only the initial burden but the whole of the burden is discharged by the appellant. 5.6 In the light of the decisions of the Hon'ble Supreme Court in the case of Andaman Timber Industries and others and considering the facts in totality, the claim of the appellant cannot be denied on the basis of presumption and surmises in respect of penny stock by disregarding the direct evidences on record relating to the sale/purchase transactions in shares supported....
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....ose shares have been received as gift from her mother and sold by the appellant during the year under consideration is existing company and duly listed on BSE. (vi) No notices u/s 133(6) of the Act are issued by the A.O. to cross verify the dealing of appellant and obtain details from share brokers through whom the share transaction is undertaken by the appellant; nor such notice issued for obtaining details from company whose shares have been purchased or sold by the appellant.; nor any details gathered under such notice from stock exchange. (vii) As submitted above all the payments in respect of shares sold are through banking channel only and the A.O. has not pin-pointedly detected any entries in cash either prior or subsequent to the dates of sales. In all fairness, the A.O. was duty bound to make some efforts to bring some evidence on record to disbelieve the appellant's claim. (viii) The A.O. has not brought any material on record to show that the appellant was carrying on any business which could be sourced to earn any such un-disclosed income. (ix) There is no cash credit introduced in the books of account, but what the appellant has disc....
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....rities below are therefore liable to be quashed and addition so made and being sustained by the Ld. CIT(A) be deleted in the interest of justice and equity." 12. It is the case of the assessee that a copy of the enquiries, list of brokers and Directors whose statements were recorded during investigation at Kolkata were neither given to the assessee prior to taking any adverse inference in the case of the assessee. In spite of repeated request made by the assessee for affording opportunity to cross examine witnesses. It is the further case of the assessee that the trading of these scrip was suspended by SEBI as a surveillance measure and it is not the case of the Revenue the regulatory action taken by SEBI in this regard was during that material point of time when the shares were purchased by the Mother of the assessee and transfer to the assessee and in turn sold by the assessee. Moreso, since the company, namely, M/s. Kappac Pharma Ltd. was a regular listed company at the recognized stock exchange of India, the trading in shares of the said company was done like any other scrip and the events happened post facto to the transactions done by the assessee's mother or the assessee ....
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....ann.com 302 (Jodhpur- Trib.) Astt. CIT v. Kamal Kumar S. Agarwal (Indl.) [2010] 133 TTJ 818 (Nag.) Jafferali K. Rattonsey v. DCIT[2012] 23 taxmann.com 21 (Mum.) 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) R.W. Promotions (P.) Ltd. v. ACIT [2015] 61 taxmann.com 54(Bombay) CIT v. Indrajit Singh Suri [2013] 33 taxmann.com 281 (Gujarat) Commissioner of Income-tax, Central, Jaipur v. Supertech Diamond Tools (P.) Ltd. [2014] 44 taxmann.com 469(Raj.) Kishinchand Chellaram v. CIT [1980] 125 ITR 713 (SC) 15. The Ld. DR has not been able to controvert the contention made by the assessee at this stage of the hearing of the matter. 16. It was further argued by the Ld. Counsel appearing for the assesse that the scrip of M/s. Kappac Pharma Ltd. was found to be genuine in very many cases in appeal by the ITAT itself. One of such matter is Shri Prakash Javia Huf vs. ITO & Ors. in ITA No. 464/Ind/2019 & Ors. and ACIT vs. M/s. Affluence Commodities Pvt. Ltd. in ITA No. 593/Ahd/2020. In that view of....
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....price of Kappac Pharma Ltd. which in no way could termed as a fair market value looking to the financial position, gross sales and income shown by the listed company KPL and based on all these observations concluded that the alleged transactions of sale of equity shares of KPL are bogus, Kappac Pharma Ltd. is a penny stock company, and the assessee has adopted a colorable devise to convert unaccounted money into accounted money by arranging bogus LTCG. 24. As far as, the contention that share prices of Kappac Pharma Ltd. saw abnormal rise which is not commensurate to the financial results/position of the company, we find that this tribunal has dealt with this issue recently in the case of Aditya Mundra (supra) observing as follows: Para 37 - "On the other hand all the relevant documents to prove the purchase and sale were before the Ld. A.O. Purchases were at the fair market value at Rs. 12/-. Sales have been effected through registered broker after payment of security transaction tax and sold at the prices appearing at the recognized stock exchange. Merely observing that the prices of the equity shares have been increased drastically cannot be a evidence in itsel....
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....pter............." xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 27. From perusal of above section we observe that following conditions are to be satisfied to claim income exempt u/s 10(38) - a. Asset transferred should be a long term capital asset b. Asset transferred should be either equity share or units of equity oriented fund or units of a business trust c. Transaction of sale of such equity share or units of equity oriented fund or units of a business trust is entered into on or after 01st October 2014 d. Securities transaction tax (STT) is paid (which is possible only when the transaction is carried out on a registered stock exchange) 28. Ongoing through the facts of the case, we find that the assets are in the nature of equity shares which are not part of a business stock and have been held for more than 12 months so will comes under the category of Long Term Capital Asset. The equity shares are sold through recognized stock exchange (Bombay Stock Exchange) and security transactions tax have been paid on this transaction. 29. Now coming to the part of purchase and sale: Purchase is off line and made in cash. Ld....
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....of Kappac Pharma Ltd. and also deleted the alleged commission expenditure added by Ld. AO for arranging the bogus LTCG. The relevant extract of decision of Coordinate Bench Kolkata in the case of Yougendra Dalmia (supra) is reproduced below: Para 6 - "Next comes assessee's latter appeal ITA No. 775/Kol/2018 seeking to reverse both the lower authorities action treating his sale proceeds amounting to Rs. 1,81,009/- derived from sale of shares in M/s GCM Securities Pvt. Ltd and Kappac Pharma Ltd. has to be in the nature of unexplained cash credits. Both the lower authorities have further disallowed the alleged commission expenditure @ 5% thereupon with coming to O1,81,009/- u/s. 69C of the Act. The CIT(A)'s detailed discussion under challenge to this effect reads as under:-..........." Para 7 - "We have given our thoughtful consideration to rival contentions. There can hardly be any dispute that assessee has placed on record his supportive documentary evidence comprising of relevant purchase bills of shares allotment, certified copies, contract notes, brokerage details etc. We put up a specific query as to whether any of entry operators searched or survey has quoted ....
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.... Pharma Ltd. are not bogus as the respective assessee(s) have duly charged there onus to prove the genuineness of purchase and sale of equity shares of listed company KPL (listed in Bombay Stock Exchange) by placing necessary documents to prove that the purchase are directly from the shareholder and sold through a registered broker and nothing adverse has been found by the revenue authorities and KPL is not held to be a penny stock company. 34. Further, with regard to the alleged addition we find that the it is purely based on the report of the investigation wing carried out in the case of other persons finding no mention or the involvements of assessee(s) in any of such report and thus, the claim of the LTCG has been rightly made as exempt income u/s 10(38) of the Act. We, thus, set aside the finding of the Ld. CIT(A) in all the instant appeals and direct the Ld. Assessing Officer to allow the claim of LTCG made u/s 10(38) of the Act made by the respective assessee(s) and also delete the disallowance of brokerage expenses of Rs. 61,380/- made in the case of Prakash Javia. 35. In the result, all grounds raised by the assessee(s) are allowed and appeals filed by th....
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....ppeal No. 674/2017 dated 12-092017 Gujarat High Court (x) PCIT V/s. Bharati Somchand Shah - Tax Appeal No. 1023/2017 dated 22-01-2018 Gujarat High Court (xi) Shantaben Parasmal Jain V/s. DCIT ITAT Ahmedabad in ITA No. 726/Ahd/2017 dated 15-10-2018 10. The Jurisdictional High Court of Gujarat in the case of Himani M. Vakil (cited supra) held as follows: "Assessee filed her return declaring certain amount as short term capital gain arising from sale of shares - Assessing Officer taking a view that share transactions were bogus, added amount of capital gain to assessee's taxable income as unexplained cash credit - Tribunal, however, concluded that genuineness of transactions was duly proved by contract notes for sale and purchase, bank statement of broker, demat Account showing transfer in and out of shares, as also abstract of transactions furnished by CSE - accordingly, addition made by Assessing Officer was deleted - Whether since finding recorded by Tribunal was based on appreciation of material on record, no substantial question of law arose therefrom." 10.1. In the case of Ramniwas Ramjivan Kasat (cited supra) held as follows: ....
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....n 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 case of Maheshchandra G. Vakil (supra). 20. It appears that the holding period is more than 55 months in case of the assessee before us too which facts cannot be brushed aside and therefore, the judgment passed by the Jurisdictional High Court in the case of PCIT vs. Jagat Pravinbhai Sarabhai Tax Appeal No. 332 of 2022 seems to be applicable. 21. So far as the judgment relied upon in the case of PCIT vs. Swati Bajaj, reported in [2022] 446 ITR 56 (HC. CAL.) by the Ld. CIT(A) while confirming addition, we find that the assessee made a contradiction statement distinguishing the fact made out by Revenue appearing at Page Nos. 349 to 372 of the paper book filed before us. The crux of the same is as follows: BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, 'D' BENCH, AHMEDABAD In ITA No. 517/Ahd/2023 A.Y. 2014-15 Shivani Ashokbhai Shah PAN: FKIPS 1172J Panchwati Circle, Ambawadi, Ahmedabad - 380006 V. Income Tax Officer, Ward-5(2)(3), Aayk....
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....ount 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 letters dated 17.11.2016 and 18.12.2016 (Kindly refer PBP-3). 7. The company Surabhi chemicals and Investment Ltd. matched all the features of the companies proving bogus LTCG In the case of appellant, nothing is brought on record to prove that M/s. Kappac Pharma Ltd. is providing bogus LTCG to the appellant. 8. Investigation Report specifically named that Surabhi Chemicals and Investment Ltd is a penny scrip company. Only few observation has been made by the A.O. at para 4.1 to 4.6 of the assessment order, without making the alleged investigation report of DI Wing, Kolkata as part of record. In absence of such report having been placed on record, it cannot be proved that the company KPL was a penny scrip company. 9. The findings are based on Investigation report submitted by Kolkata DIT That the company is not a Kolkata based company and so the findings of investigation report submitted by Ko....
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....els, 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, 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 letters dated 17.11.2016 And 18.12.2016 (Kindly refer PBP-3). There is no iota of negative features like "purchase/sale through off market", "purchase/sale in cash", "short holding of shares", "holding in demat account just few days immediately before sale" (Kindly refer para-6 of the decision dated 28.04.2023 in the case of JCIT vs. Shri Amardeep Singh Bhatia in ITA No. 744/IND/2023 (ITAT Indore). (Kindly refer PBP-387 to 396) 15 Assessee had never mentioned before the A.O. that he wanted copy of investigation report or the statement and therefore assessee's plea regarding non-availabi....
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....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 circumstances of the case. (Kindly refer para-5.14 of decision dated 03.02.2023 in the case of Shri Yogesh P. Thakkar vs. DCIT In ITA No. 1605/Mum/2021 & others (ITAT Mumbai). (Kindly refer PBP-436 to 489) 17 The purchases were made off the stock market/private placements and there were orders of SEBI suspending the scrip and/or wherein concerned traders were Found guilty of price manipulation. Further, there were statements recorded from the brokers who had indulged in price manipulation and hence, adverse view was taken. The appellant had received 1,60,000 shares by way of Gift from her mother under a duly notarized gift deed dated 20.03.2014 out of 2,56,654 shares allotted to her mother on 22.11.2010 and were placed in demat account. Which were sold by the appellant through authorized stock exchange and that there has been no adverse statement ....
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....equest 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 based in Gujarat. All the courts/Tribunals within the jurisdiction of Hon'ble Gujarat High Court are bound by decision of Hon'ble Gujarat High Court. Hon'ble Calcutta High Court has not held that the report of Investigation Wing can be conclusive for making additions in any assessment proceedings and it has not at all held that the evidences submitted by the appellant need to be ignored. At par-65 on page-103 or the order of Hon'ble Calcutta High Court, it is observed that "nothing prevented the assessee from mentioning that unless and until the report is furnished and the statements are provided, they would not in a position to take part in the inquiry which is being conducted by the assessing officer in scrutiny assessment u/s. 143(3) of the Act." In the appellant's case, specific request was made categori....
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....42 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 Assessing Officer to provide material documents and the appellant has not been named by any of the persons whose statements are being relied by the A.O. (iii) In the referred case, there was a reference to search and there was reference to 84 BSE listed penny stock companies along with 32 share broking entities who have accepted that they were actively involved in bogus LTCG along with cash trail of Rs. 500 crore (Kindly refer to para-3 of the judgment). Therefore, there was a direct evidence indicating that transaction in question was in the nature of accommodation entry and cash trail. In the case of the appellant, there is neither search u/s. 132 of the Act nor survey conducted by the department. Besides, in the report of investigation wing on KPL, there is neither any ....
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.... 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 of the appellant's broker namely M/s. Indo Thai Securities Ltd. figures whose cases were covered u/s. 132/133A of the Act. (d) The appellant was not party to/or responsible for unreasonable rise in prices of scrip. Although, the appellant who has earned and offered LTCG on penny stock was certainly not a party for such unreasonable rise nor there is any evidence to that effect. The persons responsible for manipulations of such unreasonable rise in prices were the company whose shares were being traded and the operators involved therein. Therefore, the burden is not on the appellant to prove the steep rise in prices of scrip. Therefore, once the appellant had ....
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.... 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 identities of the parties through whom the appellant has transacted. Eventually, the appellant has fully discharged the onus casted upon him u/s. 68 of the Act. Therefore, there is no reason to disbelieve and/or doubt so far as the share transactions are concerned. The A.O could not have formed bios opinion on the basis of report from the internal agency. The A.O cannot treat a genuine transaction of sale of share as accommodation entry, without conducting independent inquiries, especially, the appellant has discharged her primary onus. 2. Comparative chart as to how the facts of the case of Rehana Anwar Shaikh vs. A.O. NFAC ....
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....AT 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 the case of Shyam Pawar. The A.O. has not brought on record any material to show that the appellant 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 appellant. The ratio laid down by Hon'ble HC squarely applies to the case of the appellant. 12 The Hon'ble Tribunal concluded that the A.O. has not established that the assessee was involved in price rigging and further the AO did not find fault with any of the documents furnished by the assessee. ....
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....n 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 rigging of the instant share or that any form of cash had flown back to the appellant so as to create the instant gains as bogus LTCG. 5 The Hon'ble Tribunal observed that the assessee was not provided any opportunity of cross-examination which is absolutely necessary when such substantial addition is made to the income of the assessee by placing reliance on statement of third parties, relying upon Apex Court's decision in the case of Andaman Timber Industries. In the case of the appella....
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....n 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 purchase transaction, since the scrips in the hands of the appellant has been by way of gift from her mother Smt. Meenaben Shah, as stated above and the donor was original subscriber of the shares since 22.11.2010. 3 Thereafter, same have been converted into electronic mode. The shares were received by way of gift and through demat slip for transfer to in her demat account under electronic mode. 4 The appellant sold 4000 shares @Rs.720 per s....