TaxTMI 
TaxTMI 
2023 (10) TMI 1505
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.... 2. Fact in brief is that return of income declaring total income of Rs. 9,41,580/- was filed on 30.07.2014. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 18.09.2015. During the course of assessment the assessing officer noticed that assessee has earned long term capital gain of Rs. 191,34,702/- which was claimed as exempt u/s 10(38) of the Act. On query, the assessee explained that they were allotted shares on September, 2011 of Santhoshima Lease Finance & Investment (I) LTd. and subsequently this company was amalgamated with Sunrise Asian Ltd. vide order dated 08.10.2012 and the assessee has been allotted 40,000 shares of Sunrise Asin Limited in 1:1 in demat account. During the course of assessment the assessing officer has taken into consideration the investigation made by the Directorate of Investigation Kolkata indicating bogus LTCG/STCL entries claimed by a large number of beneficiaries from the number of companies including Sunrise Asian Limited. During the course of assessment the AO has also mentioned the statement of Shri Vipul V. Bhatt one of the operators and intermediaries recorded by the Mumbai Investigation Wing in whic....
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....rm provided by the recognised stock exchange and delivered the shares in demat thorough the stock exchange clearing house and also received the sale consideration from recognised stock exchange. The ld. Counsel further submitted that neither seller was knowing the purchase nor the purchaser were knowing the seller. The ld. Counsel also submitted that shares of the sold company had continuously been in the range of Rs. 360 - 600 per share from 2/2013 to July 2015 for a period of more than 2 years. The ld. Counsel has placed reliance on the various decision of ITAT, Mumbai wherein the addition made on the similar script was decided in favour of the assessee. "1. In the case of Mr. Arun S. Tripathi V. PCIT, ITA No. 2560/Mum/2018 dated 28.11.2018 2. In the case of Anjana Sandeep Rathi Vs. ACIT, ITA No. 4369/Mum/2018 dated 20.07.2020 3. In the case of Dipesh Ramesh Vardhan V. DCIT, ITA No. 7648/Mum/2019 dated 11.08.2020 4. In case of Mr. Anraj Hiralal Shah HUF V. ITO 19(1)(1) ITA No. 4514/Mum/2018 dated 16.07.2019 5. In the case of M/s Adhemshree Financial Vs. Pr.CIT-19 ITA No. 326/Mum/2021 dated 30.11.2021 6. In the case of Narayan ....
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....nd also the assessee had paid cash commission of Rs. 5,74,041/- to obtain such long term capital gain. During the course of assessment the assessee explained with relevant supporting evidences that they have made investment in the equity shares in Santoshima Trade link Ltd, in F.Y. 2011-12. Subsequently, with the approval of the Hon'ble Bombay High Court this company was amalgamated with another company M/s Sunrise Asian Ltd. in pursuance to the scheme of amalgamation vide order dated 22.03.2013. As per the scheme of amalgamation the assessee has received shares of the transferor company M/s Sunrise Asian Ltd. in the ratio 1:1 and the shares were credited in the demat account of the assessee company. The said company was listed on the Bombay stock exchange and was classified in group A category. The assessee had sold the shares during the month of September, 2013 to February, 2014 from a price range of Rs. 490/- to Rs. 506/- per shares and the price of the shares were in the same range for next 15 Month even after the shares were sold by the assessee. Even the price of the shares had gone to Rs. 615/- during the year 2015 one year later. The assessee had submitted the relevant docu....
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....n of ITAT, Mumbai in Mr. Arun S. Tripathi V. PCIT Vide ITA No. 2560/Mum/2018 dated 28.11.2018 is reproduced as under: "14. Undoubtedly, the AO raised the specific query which was replied specifically alongwith relevant documents by the assessee. The AO being satisfied with the query so raised and the documents so filed in support of various contentions did not make any adverse observation in the assessment order. Merely non discussion of the issue in the order nowhere make the assessment order as erroneous and prejudicial to the interest of the revenue. In response to the enquiry during asst. proceedings, the assessee vide letter dt. 21.11.2016 submitted the details of working of long term capital gains alongwith relevant supporting documents and explained that the sale of equity shares was through recognized stock exchange and STT was also paid on the said sale. The AO thereafter raised a query with regards to difference in sale consideration, as reported in ITS statement and as per the brokers ledger account submitted by the assessee. The assessee submitted explanation for the same vide letter dt. 29.1.1.2016 and reconciled the apparent difference of Rs. 1,80,480/- to be....
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....ecord in which the transaction has duly been disclosed and accepted by the revenue authorities. Taking into account, all the facts and circumstances, we are of the view that the order passed by the CIT in question dated 16.03.2018 is wrong against law and facts and is not liable to be sustainable in the eyes of law. Accordingly, we set aside the same and allowed the appeal of the assessee." The relevant extract in the case of Anjana Sandeep Rathi Vs. ACIT, ITA No. 4369/Mum/2018 dated 20.07.2020 is reproduced as under: "5. We have heard the submissions made by rival sides and have perused the orders of authorities below. The assessee in appeal has assailed the findings of CIT (A) in disallowing benefit of section 10(38) of the Act on long term capital gain arising from sale of shares. The assessee during the relevant period had sold shares of M/s. Sunrise Asian Ltd. for a consideration of Rs. 14,99,917/-. The authorities below held the sale transaction in aforementioned scripts as bogus and thus, made addition under section 68 of the Act. We find that similar disallowance was made in the case of Narayan R. Rathi (father-in-law of the present assessee/appellant) for the a....
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....ledge by the Department. Thus, for the parity of reasons, addition made under section 68 of the Act deserves to be deleted. Further, the Assessing Officer is directed to allow the benefit of section 10(38) of the Act to the assessee. The relevant extract in the case of Dipesh Ramesh Vardhan Vs. DCIT, ITA No. 7648/Mum/2019 dated 11.08.2020 is reproduced as under: "6. We have carefully heard the rival submissions and perused relevant material on record. So far as the factual matrix is concerned, there is no substantial dispute regarding the same. The perusal of record would reveal that the assessee purchased certain shares of an entity namely M/s STL as early as September, 2011. The shares were converted into demat form in assessee's account during the month of March, 2012. The transactions took place through banking channels. The investments were duly reflected by the assessee in financial statements of respective years. The copies of financial statements of M/s STL for FYs 2009-10 & 2010-11 which led to investment by the assessee in that entity was also furnished during the course of assessment proceedings. Subsequently, M/s STL got merged with another entity viz. M/s S....
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....entities. The assessee, all along, denied having known Shri Vipul Bhat or any of his group entities. However, nothing has been brought on record to controvert the same and establish the link between Shri Vipul Bhat and the assessee. The opportunity to cross examine Shri Vipul Bhat was never provided to the assessee which is contrary to the decision of Hon'ble Supreme Court in M/s Andaman Timber Industries V/s CCE (CA No. 4228 of 2006) wherein it was held that not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statement of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounts to violation of principal of natural justice because of which the assessee was adversely affected. The whole basis of making the addition is third party statement without there being any tangible material. It is trite law that additions merely on the basis of suspicious, conjectures or surmises could not be sustained in the eyes of law as held by Hon'ble Supreme Court in Omar Salay Mohamed Sait V/s CIT (1959 37 ITR 151). The suspicion however strong could not partake the character of legal....
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....The existence of M/s SAL is beyond doubt since it was a listed corporate entity and secondly, it was subject matter of scheme of amalgamation u/s 391 to 394. The scheme of amalgamation was duly been approved by Hon'ble Bombay High Court. Therefore, the existence of the said entity could not be doubted, in any manner. 10. The above conclusion is further fortified by the fact that in share sale transactions through online mode, the identity of the buyer of the shares would not be known to the assessee. Therefore, the adverse conclusion drawn by Ld. AO merely on the basis of the fact that the buyer of the shares were group entities of Shri Vipul Bhat, could not be sustained. The fact that there were independent buyers also would rebut the same and weaken the conclusion drawn by Ld. AO. 11. The Ld. AR has relied on plethora of judicial pronouncements in support of various submissions, which we have duly considered. These decisions would only support the conclusions drawn by us that once the assessee has discharged the onus of proving the genuineness of the transactions, the onus would shift on the revenue to dislodge assessee's claim and bring on record contrary evide....