TaxTMI 
TaxTMI 
2024 (9) TMI 1705
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....n confirming the addition made u/s. 68 of the Income Tax Act, 1961 at Rs. 1,80,23,875/- on the basis of amount found credited in the bank account of appellant without adjudicating the legal plea raised that the appellant was neither required under the provisions of the tax law nor has maintained any books of accounts for the assessment year under appeal hence addition made u/s. 68 is bad in law. 3. The learned CIT (Appeals) has erred in confirming the addition u/s. 68 at Rs. 1,80,23,875/- solely relying on the findings of the investigation and not considering the factual and legal submission filed by the appellant. 4. The learned CIT (Appeals) has erred in confirming the disallowance of exemption claim made u/s. 10(38) at 1,65,23,875/- in respect of long-term capital gain earned on sale of listed equity shares sold through recognized stock exchange which has duly been subjected to Security Transaction Tax (S.T.T). 5. The appellant prays that, the order of the Ld. AO on the above grounds be set aside. 6. Any other relief, which the Hon. Tribunal may deem fit. 2. The brief facts of the case that the assessee is an individual and derives income f....
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....on the various factual aspects of share trends, modus operandi and report of the Kolkata Investigation Wing statements recorded, ITDA data, BSE data and has doubted the earning of long term capital gains on shares. Further the AO has issued summons u/sec 131 of the Act on the assessee on 09.11.2017 and a statement was recorded. Further the AO find that there is no correlation of price rise and the financial/ fundamental statements of the company. Finally the AO was not satisfied with the explanations and material information and observed that the transactions are not genuine and made addition of sale proceeds u/sec 68 of the Act of Rs. 1,80,23,875/- and assessed the total income of Rs. 1,90,70,340/- and passed the order u/sec 143(3) of the Act dated 25.12.2017. 4. Aggrieved by the order, the assessee has filed an appeal with the CIT(A), whereas the CIT(A) has considered the grounds of appeal, submissions of the assessee, findings of the AO in respect of addition u/sec 68 of the Act and has confirmed the action of the AO and dismissed the assessee appeal. Aggrieved by the order of the CIT(A), the assessee has filed appeal with the Hon'ble Tribunal. 5. At the time of hearing, t....
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....essee was allotted 15,00,000 shares of Rs. 1/- paid up value on 20 March 2014 placed at page 16 to 31 of the paper book and these shares were credited to demat account. During May 2014 and June 2014, the assessee has sold 6,18,250 equity shares for a consideration of Rs. 1,80,23,875/- and claimed exemption of Long term capital gains u/s 10(38) of the Act. The assessee has sold the shares in the financial year 2014-15 through a SEBI registered, BSE & NSE broker M/s SIC Stocks & Services Pvt Ltd. The Ld. AR referred sale cum bills contract notes, securitisation tax (STT) paid at page 38 to 48 of the paper book. Similarly the demat account statement and ledger account reflecting the details of sale of shares page 33 to 37 of the paper book. The Ld. AR also referred to the share purchase/ allotment letter at page 15 of the paper book in F.Y 2012-13 to justify the genuineness of the purchases. The shares are sold through recognized stock exchange where the STT has been paid in respect of listed shares and held for more 12 months. The Ld.AR demonstrated the sales cum contract notes, computation of long term capital gains and copy of the bank statement reflecting the payment for purchase ....
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.... Income Tax Appellate Tribunal "SMC" Kolkata Bench, Kolkata Mangilal Jain v.s. Income Tax Officer Ward- 3(3), Nr. Lal Kothi ITA No. 729/Kol/2018, AY-2014-15 7. In The Income Tax Appellate Tribunal "A" Bench, Mumbai Anita Sanjay Agarwal Versus ITA No. 2399/Mum/2023 Income Tax Officer Ward 24(1)(2), ITA No. 2399/Mum/2023, AY-2014-15 8. In the Supreme Court Of India, Principal commissioner Of Income Tax Vs Kuntala Mohapatra. SLP (Civil) Dairy Nos. 5269 of 2024 AY-2014-15 9. In The Income Tax Appellate Tribunal "C" Bench, Mumbai Chirag Tejprakash Dangi Versus Income Tax Officer Ward 26(1)(5), ITA No. 3256/Mum/2022 AY-2014-15 10. PCIT-31 Mumbai Vs Indravadan Jain Huf ITA No. 454 OF 2018 dated 12-07-2023. 11. PCIT VS Renu Aggarwal(2023)(456 ITR 249)(SC) 12. Shri Abhishek Doshi Vs Acit -19(1) ITA. NO 3122/M/2022. 13. Vipul M Shah Vs. The ITO 17(3)(5) Mumbai. ITA No. 1030 /Mum/2023 14. Sanjay Basudeo Agarwal Vs ITO ward 25(1) Mumbai ITA. No. 2398/Mum/2023. A.Y. 2014-15. )))))) 15.. DCIT, Central Circle-6(2) Vs. Shri Dilip B. Jiwrajka ITA No. 2349/Mum/2021. 16. Shri Yogesh P. Thakkar Vs. The DCIT, CC-3....
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....e and respondent's bank account has been debited. The shares were also transferred into respondent's Demat account where it remained for more than one year After a period of one year the shares were sold by the said broker on various dates in the Kolkata Stock Exchange. Pursuant to sale of shares the said broker had also issued contract notes cum bill for sale and these contract notes and bills were made available during the course of appellate proceedings. On the sale of shares respondent effected delivery of shares by way of Demat instructions slip and also received payment from Kolkata Stock Exchange. The cheque received was deposited in respondent's bank account. In view thereof, the CIT[A] found there was no reason to add the capital gains as unexplained cash credit under Section 68 of the Act. The tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of Stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of Stock Exchange. The ITAT therefore, in our view, rightly concluded that there was no merit ....
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....romoters/directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not cared forward by the revenue. A copy of the DMAT account, placed before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available which gave details of the transactions. The contract note is a system generated and prescribed by the stock exchange. From this material, the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client code has been referred to. But the Tribunal concluded that same, by itself, is not enough to prove that the transactions in the impugned shares were bogus sham. The details received from stock exchange have been relied upon for the purposes of faulting the revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed ....
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.... had passed very reasoned and speaking order-Dividend amount was received with regard to holding of shares and said amount was disclosed by assessee in his return of income and exemption was claimed accordingly-Thus, addition being without any logical basis was deleted-Revenue's appeal dismissed. Held: The CIT(A) examined the matter and the comments of the Assessing Officer in the remand report. It has been recorded by the CIT(A) that the purchase of shares in the financial year 2006-07 for an amount of Rs. 11 lakhs had been physically transferred in favour of the assessee in the books of the company namely GeeFCee Finance Limited. Further, the said shares were dematerialized and credited in the assessee's account maintained with depositary participant i.e. HDFC on 16.10.2006. The dividend amount of Rs. 1,50,000/- had been received with regard to aforementioned holding of shares on 23.10.2007. The said amount had been disclosed by the in his return of income and exemption was claimed accordingly. Thus, the addition being without any logical basis was directed to be deleted. (Para 4) Assessee had sold shares through MTL shaes and Stock Brokers Limi....
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....lar companies through the same broker cannot be a ground to hold that the transactions are sham and bogus, especially when documentary evidence was produced to establish the genuineness of the claim. From the documents produced, it is seen that the shares in question were in fact purchased by the assessees on the respective dates and the company has confirmed to have handed over the shares purchased by the assessees. Similarly, the sale of the shares to the respective buyers is also established by producing documentary evidence. It is true that some of the transactions were off-market transactions. However, the purchase and sale price of the shares declared by the assessees were in conformity with the market rates prevailing on the respective dates as is seen from the documents furnished by the assessees. Therefore, the fact that some of the transactions were off-market transactions cannot be a ground to treat the transactions as sham transactions. The statement of the broker P that the transactions with the H Group were bogus has been demonstrated to be wrong by producing documentary evidence to the effect that the shares sold by the assessees were in consonance with the market pr....
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....imed by the assessee is nothing but unaccounted income which was rightly added u/s 68 of the IT. Act, 1961?" 2. We have considered the impugned order with assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd. ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgment of the Apex Court in Principal Commissioner of Income-tax (Central)-1 vs. NRA Iron & Steel (P) Ltd.' but that does not help the revenue in as much as the facts in that case were entirely different. ....
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.... follows: "JUDGMENT Heard Sri Krishna Agarawal, learned counsel for the appellant. This appeal under section 260A of the Income-tax Act, 1961 has been filed challenging the order dated January 17, 2022, passed by the Income- tax Appellate Tribunal, Lucknow Bench 'SMC' Lucknow in IT. A. No. 205 of 2020 (assessment year 2014-15). The basic question involved in the present appeal is with regard to deletion of some amount which was added by the Assessing Officer on the allegation of penny stock. The appeal of the respondent-assessee was allowed against the assessment order The appeal filed by the assessee was allowed by the Commissioner (Appeals)Against the appellate order the Revenue had filed the aforesaid income-tax appeal which has been dismissed by the Income-tax Appellate Tribunal. After detailed discussion, the Income-tax Appellate Tribunal has recorded the following findings of fact The above findings recorded by the learned Commissioner (Appeals) are quite exhaustive whereby he has discussed the basis on which the Assessing Officer had made the additions While allowing relief to the assessee, the learned Commissioner (Appeal....
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....hand Jain vide order dated 10/04/2017 reported in 89 taxmann.com 196 which is against assessee. In this regard, we find that in the facts of Sanjay Bimalchand Jain, that assessee had indulged in dubious share transactions and the broker through which shares were sold did not respond to the notices issued by the ld. AO. However, in the case of the assessee herein, all the materials in support of the share transactions were duly placed on record and are in order and the ld. AO had not drawn any adverse inference on the said documents to treat them as false or fictitious. Hence this crucial distinguishing fact of Sanjay Bimalchand Jain makes it inapplicable to the facts of the case before us. Moreover, we find that the Hon'ble Jurisdictional High Court in the recent case of PCIT vs Ziauddin A Siddique in Income Tax Appeal No. 2012 of 2017 dated 04/03/2022 had held as under:- 2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramakrishna Fincap Ltd ("RFL") is done through....
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....ing within its jurisdiction so that judicial discipline would be maintained in order to give effect to orders of the higher appellate authorities. The Hon'ble Apex Court has observed that utmost regard must be had by the adjudicating authorities and the appellate authorities to the requirement of judicial discipline. Hence we deem it fit and appropriate to follow the decisions of Hon'ble Jurisdictional High Court referred supra wherein the impugned issue is decided in favour of the assessee. Moreover, when there are two conflicting decisions of various High Courts, the Hon'ble Supreme Court in the case of Vegetable Products reported in 88 ITR 192 (SC) had held that Construction that is favourable to the assessee should be adopted. Hence by following this principle, the decision of Hon'ble Calcutta High Court and other decisions that are rendered against the assessee, need not be followed by this Court in the peculiar facts and circumstances of the instant case." 5.15. ........... 5.16. Considering the totality of the facts and circumstances of the instant case and respectfully following the judicial precedents relied upon hereinabove, we are not inclined to accept....
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.... and the transactions status. The AO has doubted the purchase and sale of shares and observed that the price rise is not commensurate with the financials of the investee company. The assessee has substantiated with all the details and information and the AO has relied on the investigation report of income tax department and treated the long term capital gains on sale of shares as not genuine. Further the A.O. has not made any enquiry or independent investigation or cross examination but relied only on the investigation report and the assessee's name is not included in the list of investigation report. The fact remains that the assessee has submitted the requisite details in respect of purchase and sale of shares and were not disproved. The assessee has filed the SEBI order dated 26-03-2020 placed at page 63 to 109 of the paper book-II in particular Para 43 to 47 highlighting on the facts that the assessee name was not included and he was only a investor and was not involved/connected in price manipulation of scrip. The Ld.AR has referred to the Audited financial statements in the Annual report 2014-15 placed at Page 9 to 62 in particular financial results summary at page 20 of the ....