TaxTMI 
TaxTMI 
2025 (6) TMI 233
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and has received a sum of Rs. 22,58,450/- by way of proceeds on sale of shares of M/s. Gemstone Investment Limited. Basis the said information, the reasons were recorded and notice u/s. 148 was issued and duly served upon the assessee. The assessee thereafter filed her return of income in response to notice u/s. 148 declaring income of Rs. 30,05,669/-. The reasons so recorded were sought by the assessee which were provided by the AO, thereafter, the assessee filed her objections which were disposed off by the AO vide order dated 20.11.2019. Thereafter, notices u/s. 143(2) and 142(1) were issued and information was called for from the assessee. Thereafter, the AO has recorded his findings stating that considering the findings of the search/survey enquiry conducted in the case of brokers, operators, entry providers and exit providers and on the basis of SEBI and NSE findings, the transactions entered into by the assessee in respect of shares of M/s. Gemstone Investment Limited is not genuine and accordingly the sale consideration of Rs. 22,58,450/- was treated as unexplained income and brought to tax u/s. 68 of the Act. Separately, an amount of Rs. 45,169/ being 2% of Rs. 22,58,250/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eopening as well as on the merits of the case. However, the order so passed by the AO was confirmed by the ld CIT(A) and against the said order, the assessee is in appeal before this Tribunal. 5. In the aforesaid background, it was submitted by the ld AR that firstly, as per the reasons so recorded, the AO has stated that the assessee has traded in the scrip of M/s. Gemstone Investment Limited during F.Y. 2012-13 i.e A.Y. 2013-14. It was submitted that as the information pertained to A.Y. 2013-14, there could be no reason to believe that the income for the year under consideration i.e A.Y. 2012-13 has escaped assessment. It was further submitted that in para 3 of the reasons so recorded, the AO stated that the assessee has filed her return of income for A.Y. 2012-13 and in para 2 of the reason so recorded, the AO stated that information was received that the scrip i.e M/s. Gemstone Investment Limited was used to facilitate introduction of unaccounted income in the form of exempt capital gains or STCL. However, the reasons so recorded do not specify whether the assessee has claimed exempt income u/s. 10(38) or has claimed Short Term Capital Loss. It was submitted that it is there....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce of the Ld. CIT(A), however, no such record was provided to the assessee even at the appellate stage and the Ld. CIT(A) merely held that the AO has followed the proper procedure and has dismissed the contention so raised by the assessee. It was submitted that as the principle of natural justice has been violated, the order so passed by the AO deserve to be set aside. 7. Regarding merits of the addition so made by the AO u/s. 68, it was submitted that the assessee has purchased 10,000 shares of M/s. Gemstone Investment Limited on 13.04.2009 for Rs. 227,500/- inclusive of STT service tax. Thereafter the assessee purchased additional 15,000 shares of M/s. Gemstone Investment Limited on 16.04.2009 for Rs. 338,450/ inclusive of STT and service tax, and said transactions are duly reflected in the summary report prepared by the broker. It was further submitted that the assessee has duly disclosed the said investment in her balance sheet prepared for the financial year ended 31.03.2010, 31.03.2011 and 31.03.2012. It was submitted that the said shares amounting to Rs. 25,000/- were later on split and in respect of the existing shares held by the assessee, the assessee received 250,000/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taxmann.com 834, Hon'ble Rajasthan High Court in case of PCIT V. Gaurav Bagaria 453 ITR 513, Hon'ble Gujarat High Court in case of PCIT V. Sandipkumar Parsottambhai Patel 457 ITR 368 and Hon'ble Madhya Pradesh High Court in case of CCIT V. Nilesh Jain 163 taxmann.com 229. 9. In light of the aforesaid submission, it was submitted that the addition made by the AO and confirmed by the Ld. CIT(A) u/s. 68 be directed to be deleted and consequentially the addition made u/s. 69C be also directed to be illegal. 10. Per contra, the Ld. DR has relied on the order so passed by the lower authorities. It was submitted that the AO was in position of tangible information basis investigation carried out by the Investigation wing that the assessee has transacted in shares of penny stock company i.e M/s. Gemstone Investment Limited and basis the said information and after examining the return of income, the AO has recorded the reasons stating that the income to the extent of Rs. 22,58,450/- has escaped assessment. It was accordingly submitted that the reasons were duly recorded after due application of mind by the AO. 11. It was further submitted that the AO has noticed that investigation i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ual rise and fall share prices to be natural and based on market principles; weak financial health and defunct and inoperative status of the company etc. The analysis of transactions reveals that these were not governed by market factors prevalent at relevant time of such trades, but governed by pre-determined and pre-conceived design and connivance on the part of various beneficiaries including appellant and other operators. 15. It was submitted that during the appellate proceedings before the ld CIT(A), the detailed findings and observations of the AO were not controverted by the assessee by placing any material evidence. While dealing with the issue of long term capital gain accrued to the appellant in short span, one has to look at the financials of the scrip whose shares were rigged within a short time. In the instant case, the financials of the scrip reveals that company is meagre and not at all worth to be invested therein. With such weak financials, it is beyond comprehension how there can be manifold increase in the price of the shares. In view of the short duration of these transactions and the weak financials of the scrip whose shares were transacted, the AO has right....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ARWPS1310C 531137 2258450/- TOTAL:- 2258450/- 5. In view of the above facts and circumstances of the case and after application of my mind, I have reason to believe that income of the assessee, HETAL DAKSHESH SHAH, chargeable to tax for the assessment year 2012-13 amounting to Rs. 2258450/- has escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment in this case in terms of provisions of section 147 of the I.T Act, 1961." 17. In this regard, the ld AR has contended that as per the reasons so recorded by the AO, the assessee has traded in the scrip of M/s. Gemstone Investment Limited during F.Y. 2012-13 and it was submitted that as the information pertained to F.Y. 2012-13 i.e, A.Y. 2013-14, there could be no reason to believe that the income for the year under consideration i.e A.Y. 2012-13 has escaped assessment. We find that the factual position that the assessee has traded in the scrip of M/s. Gemstone Investment Limited during F.Y. 2011-12 i.e A.Y. 2012-13 having trade value of Rs 22,58,450/- has not been disputed, therefore, it is more of a clerical mi....