AI Drafter 
TaxTMI 
TaxTMI 
2025 (4) TMI 263
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.... common issue. Therefore, both the appeals are heard together and are adjudicated by this common order. ITA No.4647/Mum/2023 is taken as the lead case. The assessee has taken the following grounds: - ITA No.4647/Mum/2023: "1. ON NATURAL JUSTICE: 1.1. In the facts and circumstances of the case and in law the Learned Commissioner of Income Tax (Appeals) ["the Ld. CIT(A)"] erred in confirming the action of the Learned Assessing Officer ["the Ld. AO"] who in turn made huge additions to the returned income and passed the Assessment order in gross violation of principles of natural justice. 2. In the facts and circumstances of the case and in law the order passed by the Ld. CIT(A) deserves to be quashed for being passed in gross violation of principles of natural justice and also being based on extraneous considerations while ignoring the relevant, material, considerations and submissions made by the Appellant. 2.ON VALIDITY OF THE PROCEEDINGS 2.1 In the facts and circumstances of the case and in law, the Assessment orderpassedby the Ld. AO and affirmed by the Ld. CIT(A) is bad in law, voidand deserves to be quashed since the same is pas....
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.... grounds of Appeal." 3. The brief facts of the case are that the assessee is into the business of commission agent of LIC and FAO trading derivatives in share market and earning income from business, capital gains and Income from other sources. During the impugned assessment year, the assessee earned long term capital gains of trading the scrip, M/s PSIT Infra & Services Ltd and claimed exemption under section 10(38) of the Act, in the return of income filed under section 139(1) of the Act. The assessee purchased the share of Rs.50,000/- and sold the share in the value of Rs.26,78,632/- through stock exchange in both the transactions. Bu the Ld.AO has treated this transaction as bogus capital gain and added back the same under section 68 of the Act. Further, for the bogus transaction, the Ld.AO calculated the commission expenses amount ofRs.80,359/- which was added back with the total income of the assessee. The aggrieved assessee filed an appeal before the ld. CIT(A). The Ld.CIT(A) upheld the assessment order. Being aggrieved on the appeal order, the assessee filed an appeal before us. 4. The Ld.AR argued and filed a written submission which is kept in the record. The Ld.AR ....
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.... allegation and suspicious in general and not applicable to the company M/S PS IT Infra & Services Ltd. In the case of your assessee since there was a public share holding amounted to 60.23% of total share capital held amongst 1813 share holders as on 12/07/2013 and a public share holding amounted to 97.56 % of tool share capital held amongst 225-4share holders as on 31/03/2014 as per record on BSE Copy is enclosed. On these facts it cannot be said that the company is controlled as a closely held co by promoters and operators. The allegation of price rigging is mere assumption, presumption, surmises and suspicious as no action is taken either by regulatory authority SEBI or TheStock Exchange for manipulation of price against the company or brokers. (3) In this Para statistical detail is given in relation to investigation for which no reply is required. However, it is mentioned in example that bank account there would be a cheque deposit of RS 50,00,000 paid by the paper company that buys the shares is not correct as much as per system seller received payment through share broker who in turn received amount from clearing house of stock exchange in aggregate for days's transactio....
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....was made on the basis of surmises and conjectures. There is no specific observation of the Ld.AO. He further argued that the modus operandi adopted by operators is stated as investigated in general term but, nothing direct or specific against the assessee. There is no specific proof or evidence to establishthat unaccounted cash of theassessee changed hands. General modus operandi stated in the impugned assessment ordercannot apply unless there is specific evidence. It is noted that the assesseeholds the shares for nearly period of two years and more therefore, the statement that beneficiary hold shares for one year as per statutory period prescribed u/s 10(38) is not applicable in this case. Though, it may create suspicious but, no shelter can be taken under general information to fasten any liability by disbelieving the transaction unless there is specific and cogent evidence to that effect. 7. He argued and mentioned about rigging of price by operators and it is alleged that operators are rigging price to desire level in case of controlled company, but it is stated that it is mere allegation and suspicious in general and not specifically applicable to the company M/S PSIT infr....
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....was reported that during the initiation of proceedings there was 178 entities of various sort against whom action was undertaken and ultimately vide order referred above dropped the action against 114 entities as there is no adequate evidence to prove allegations and in respect of balance entities investigations is still under way. At this juncture it is pertinent to note the conclusion of SEBI in the case of Pine animation Ltd. "Upon completion of investigation by SEBI, the following are noted as regards 114 entities who were identified as Preferential Allottees, Exit Providers and LTP Contributors vide the interim order: SEBI's investigation did not find any adverse evidence against them to show any connection/nexus with PAL or its Promoters/Directors or Promoter related entities or any role in price manipulation volume manipulation in the scrip of PAL. Hence, violation of provisions of SEBI Act, SCRA, PFUTP Regulations, etc., were not observed in respect of the following 114 entities." 10.It is alleged that the assessee is not at all acquaintance with share market or in absence of any regular share trading therefore, it is assumed and presumed that the d....
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....ee because of his connection with the marker he knows various brokers, persons, investors and traders. As a generally known facts that the gossip, Murmur, discussions, various recommendations, tips, information are discussed/shared in brokerage house and/or amongst parties related to stock exchange in relation to scrips, company, forth coming issues and events. The traders and investors are utilizing the same to turn his fortune by taking risk of trading and investing. Though, such stock/shares present a high risk for investor and traders who are often lured by the hope of large and quick profit. It was come to the knowledge of the assessee because of his relations in the market that shares of M/S Swift IT Infrastructure and Services Limited available off market from investors having good future andreturn. So, with intention to get profit he decided to invest in the said shares as an investor by taking risk of his fund to turn his fortune. Accordingly, after primary inquiry found the company was profit making having good future, he negotiated with the original share holder and member of the company M/S M/S Rigmadirappa Investments Pvt Ltd and decided to purchase 10000 shares of M/S....
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....and accommodation entry as alleged by the ld. AO. The impugned addition made under section 68 proceeds of listed shares was to be deleted. 12. The Ld.DR argued and fully relied on the order of the revenue authorities. 13. We heard the rival submission and considered the documents available in the record. We note that the share scrip, M/s PS IT Infra & Services Ltd is stated as a tainted scrip by the Ld.AO relying on the investigation report of DDIT Inv 3(3) Kolkata but no such specific evidence was brought in the record. The Ld.AO only on the basis of the surmises and conjectures, made the addition under section 68. The assessee is a regular trader of the shares and also dealt with the market. There is no evidence that assessee is involved in the price rigging with any or about the scrip mentioned by the SEBI. The nature of company is public limited and huge amount is invested by the public. The assessee himself regular trader of share and continued the same profession since long. The evidence which are submitted by the assessee is never be discarded by any of the revenue authorities. We respectfully relied on the order of Renu Agarwal (supra) and Vikram N Chandan (supra). Re....