TaxTMI 
TaxTMI 
2024 (6) TMI 1468
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.... shares were found to have been manipulated and the trading therein was also found suspended in BSE. The investigation wind had carried out investigation with regard to the price manipulations and generation of bogus long term capital gains in number of stocks, classified as penny stocks. The AO noticed that the shares of the above said company was also identified as one of the penny stocks. The AO noticed that the assessee has sold 1,55,755 shares for a consideration of Rs. 4.22 crores and declared Long term capital gains of Rs. 4.07 crores. Relying fully upon the report given by the Investigation wing, the AO took the view that the long term capital gain declared by the assessee on sale of shares of M/s Grandma Trading and Agencies Ltd was prearranged method employed by the assessee with the connivance of the operators in order to evade taxes. 3. The AO further noticed that the increase in the prices of shares of above said company was no commensurate with the financial results declared by the company and the net worth of the company was negligible. He also noticed that the trading in the above said company was controlled by certain brokers and in the statement taken from one of....
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....ssee is a pre-arranged method adopted to evade tax and to launder money. Accordingly, the AO took the view that the assessee has not discharged her burden to prove the genuineness of the long term capital gains. Accordingly, he took the view that the entire sale consideration of Rs. 4.68 crores is liable to be taxed as unexplained income u/s 68 of the Act. 5. The Ld CIT(A) entirely agreed with the view taken by the AO. Further, the Ld CIT(A) also held that the spectacular increase in the prices of shares of above said company is beyond the scope of human probability and hence the entire transactions resulting in long term capital gains should be considered as sham transactions. With regard to the test of human probability, the Ld CIT(A) referred to the decisions rendered by Hon'ble Supreme Court in the case of Sumati Dayal (214 ITR 801)(SC) and Durga Prasad More (1971)(82 ITR 540)(SC). Accordingly, the Ld CIT(A) confirmed the order passed by the AO. Aggrieved, the assessee has filed this appeal before the Tribunal. 6. The Ld A.R submitted that the assessee had purchased 2 lakhs shares of M/s Grandma Trading Agencies P Ltd under preferential allotment in February, 2012. It was pur....
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....023 dated 28- 02-2024)(Mum ITAT) (d) Shri Jignesh Desai (ITA No. 1263/Kol/2018 dated 26- 09-2018) 7. The Ld D.R, on the contrary, supported the orders passed by the tax authorities. He submitted that the assessee has purchased the shares through off market under the preferential allotment of shares. The preferential allotment is done to known persons and hence it is possible that the assessee was part of the group. The tax authorities have noticed that financials and fundamentals of this company were very poor. Hence the rise in the prices of shares was not commensurate with the financial strength of the company. The investigation wing has also conducted enquiries with various share brokers and they have confessed to have indulged in manipulating the prices of shares in order to provide bogus long term capital gains. The SEBI has also conducted enquiries on the transactions carried in the shares of this company and the Ld A.R furnished a copy of final order dated 31-01-2019 passed by SEBI in the matter of Grandma Trading and Agencies Ltd. Accordingly, the Ld D.R submitted that the order of Ld CIT(A) does not call for any interference. In support of his arguments, the Ld D.R plac....
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....s placed reliance on the said report without bringing any material on record to show that the transactions entered by the assessee were found to be a part of manipulated transactions, i.e., it was not proved that the assessee has carried out the transactions of purchase and sale of shares in connivance with the people who were involved in the alleged rigging of prices. It is stated by Ld A.R that the transactions carried on by the assessee were not subjected to scrutiny by SEBI at all. 10. We notice from the statement recorded by the AO from the assessee u/s 131 of the Act that the assessee was able to answer all the technical details relating to stock market. Further, it has been stated by the assessee that she has purchased and sold shares of other companies. In the statement, the assessee has also stated that she is not a regular investor and a long term investor, meaning thereby, she would not be watching the share price movements on day to day basis. With regard to the purchase of shares, she has stated that it was purchased through her broker named "Sharekhan", one of the reputed share brokers on the basis of market information. The Ld A.R also furnished copies of two market....
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....f unaccounted money into accounted one, then, the evidence should have been complete. Change of circumstances ought to have, after the result of the investigation, connected the Assessee in some way or either with these brokers and the persons floating the two companies. It is only, after the Assessee who is supposed to dealing in shares and producing all the details including the DMAT account, the Exchange at Calcutta confirming the transaction, that the Appeal of the Assessee has been rightly allowed. The Tribunal has not merely interfered with the concurrent orders because another view was possible. It interfered because it was required to interfere with them as the Commissioner and the Assessing Officer failed to note some relevant and germane material. In these circumstances, he submits that the Appeals do not raise any substantial question of law and deserve to be dismissed. 5. We have perused the concurrent findings and on which heavy reliance is placed by Mr. Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried out in paras 20, 20.1, 20.2 and 21 of his order, what was imp....
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....36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 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 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 and 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 as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparent on the face of the record either. 7. As a result of the....
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....ted any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law." In the case of CIT vs. Jamnadevi Agarwal (supra), the Hon'ble Bombay High Court held that the transactions of purchase and sale of shares cannot be considered to be bogus, when the documentary evidences furnished by the assessee establish genuineness of the claim. In the case of PCIT vs. Indravadan Jain (HUF) (supra), the broker through whom, the assessee had carried out the transactions have been alleged to have been indulged in price manipulations and the SEBI had also passed an order regarding irregularities and synchronized trades carried out in the shares by the said broker. However, the evidences furnished by the assessee with regard to purchase and sale of shares were not doubted. Under these set of facts, the Hon'ble Bombay High Court held as under:- "....The CIT(A) came to the conclusion that respondent bought 3000 shares of RFL, on the floor of Kolkatta Stock Exchange through registered share broker.....