TaxTMI 
TaxTMI 
2025 (6) TMI 384
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....sources. 2. The Ld. CIT(A) had erred in deleting the addition of Rs. 95,60,989/- made by Ld. AO u/s 68 of the I. T. Act, 1961 on account of Long Term Capital Gain claimed as exempt income u/s 10(38) without appreciating that it was a bogus accommodation entry." 3. The facts, as culled out from the statement of facts furnished by the Department are as under:- "The issue under consideration pertains to unsecured loans taken by the assessee. During the course of the search, it was found that during the A.Y. 2014-15, the assessee had taken unsecured loan of Rs. 3,30,00,000/- from Anubhav Vinimay P. Ltd The assessee was asked to submit the details of the unsecured loans especially taken from the above said company. The assessee was also asked to prove with documentary evidence the identity and creditworthiness of the above said company, advancing the loans and also prove the genuineness of the transactions. The assessee failed to establish the creditworthiness of the company advancing the loan and the genuineness of the transaction even after repeated opportunities given him. In its explanation, the assessee claimed that transactions were done through banking channels. It was mere ....
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....earch proceedings, the assessee was asked to produce Ledger extract of all shareholders, Ledger extract of all parties, who gave loans/advance. The assessee did not provide the details called for. vii) In the assessment proceedings, again, the AO had provided an opportunity to the assessee to establish the genuineness of the amount received from the Kolkata base companies. The assessee had failed to avail the opportunity and not provided the desired information. It is clear that the assessee has not furnished any of the above said details, explaining the identity, creditworthiness and genuineness of the Kolkata based companies during the search, post search proceedings and assessment proceedings. viii) Thus, it is seen that the assessment was made on basis of seized documents & the statement recorded during the search operation, which had incriminating value. During the assessment proceedings, more information was collected, which was marshaled to arrive at logical end. 2. Bogus LTCG Claim (Penny Stock) During the assessment proceedings, it was noticed that assessee had declared long term capital gains of Rs. 94,60,989/- and claimed the same as being exempt U/s 10(38) of IT....
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....the desired assessees. The exit providers/Jamakharchi companies in the case of family members of the Agrawal and the operator of the same those companies are mainly under control of operators such as Mr. Devesh Upadhyay & Arun Kumar Khemka. Devesh Upadhyay admitted in his statement recorded u/s 131 of the I. T Act, 1961 the detailed modus operandi for providing bogus LTCG and also that he has indulged in providing accommodation entry for LTCG through the above companies controlled by him." 4. With the above factual backdrop, ground-wise adjudication is take up as under. 5. The issue arose out of ground no.1 is, whether or not the learned CIT(A) was justified in deleting the addition of Rs. 3.30 crore made by the Assessing Officer on account of unexplained cash credit under section 68 of the Income Tax Act, 1961 ("the Act"). 6. During the course of hearing, the learned Counsel, Shri Kapil Hirani, appearing for the assessee invited our attention to Page-92 of the Paper Book which is a copy of loan confirmation given by M/s. Anubhav Vinimay Pvt. Ltd. to the assessee. the transactions are summarised in the books of the assessee as follows:- Loan due as on 01/04/2013 Rs. 11.75....
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.... 6.7. The Appellant has thus satisfactorily discharged the onus cast upon him U/s 68 of the I.T Act, 1961. The Appellant has satisfactorily proven the identity, creditworthiness and genuineness of the transaction. The addition U/s 68 thus deserves to be deleted on facts as well. * Moti Adhesives Pvt. Ltd. Vs. ITO (ITA No. 3133/Del/2018) 6.8. Reliance further placed on Umbrella Projects Pvt. Ltd. Vs. ITO (ITA No. 5955/Del/2014) wherein it has been held that if the assessee has discharged the initial onus regarding the identity, creditworthiness and genuineness, the onus shifts to the AO to bring material or evidence to discredit the same. Further there must be material to implicate the assessee in a collusive arrangement with person who are accommodation entry providers. 9. Reliance further placed on PCIT Vs. Paradise Inland Shipping Pvt. Ltd. (Bombay HC) (ITA No. 66 of 2016) wherein it has been held that Companies which invest share capital cannot be treated as bogus if they are registered and have been assessed. Once the assessee has produced documentary evidence to establish the existence of such companies, the burden shifts to the Revenue to establish their case. 6.10. R....
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....ong with share transfer form duly signed by previous owner of shares. The assessee sent the share certificate and share transfer form duly filled and stamped to share transfer agent of the company M/s Purva Registry (India) Pvt. Ltd., Mumbai, for transfer of shares in assessee's name. On 15/2/2012, the shares were transferred in assessee's name. Copy of share certificate along with covering letter of share transfer agent dated 09/03/2012, are placed on record which forms part of the paper book. 13. The shares were then subdivided by the company into face value of Rs. 1 per share and new share certificate bearing number 0050390 for 2,00,000 shares were issued to the assessee. Thereafter, the shares were deposited into De-mat account number 1201090003795322 of the assessee with M/s Motilal Oswal Securities Ltd. The shares were sold in March 2014 on Bombay Stock Exchange. Copy of contract cum bill of the broker for the sale of shares giving all the details enclosed which forms part of the paper book. The assessee received Rs. 95,59,988, on sale of shares by cheque from its broker which was deposited into the back account of the Assessee. 14. The learned Counsel further submi....
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....ing Officer has made addition merely on suspicion that the phenomenal rise in price of shares is an arranged transaction to earn long term capital gain. It is a settled law that suspicion, however, strong enough be a substitute for evidence. 19. The learned Counsel relied upon the following judicial pronouncements which are also part of submission made before learned CIT(A) and which have been reproduced in the order of the learned CIT(A) along with the gist of the same which support the case of the assessee in full. * Ms. Farrah Marker Vs. ITO - ITA No. 3801/Mum/2011; * DCIT Vs. Sunita Khemka (ITA No. 714 to 718/Kol/2011); * ITO Vs. Indravadan Jain HUF (ITA No. 4861/Mum/2014); * Dolarrai Hemani Vs. ITO 183 TTJ 433 (ITAT Kolkata); * Sunita Jain Vs. ITO (ITA No. 501 and 502/Ahd/2016); * Sunil Prakash Vs. ACIT (ITA No. 6494/Mum/2014); and * Dharampal Agrawal Vs. ACIT (ITA No. 146/Nag/2008). 20. Further, the learned Counsel submitted that in the present case there is no evidence on record that the transaction of purchase and sale of shares is not genuine or bogus and on facts of the case the additions made by the Assessing Officer under section 68 of the Act is unjusti....
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....where independently found to be connected with the appellant; further, these statements cross- examination; are not put to acid test of the most relevant reason being that the appellant never made the transaction through the persons whose statements are recorded by Investigation Wing, Kolkata and relied by AO; iv) lastly, it is no body's case that these general statements talk about the appellant's particular transaction. 4.5 The Hon'ble Supreme Court in the case of Omar Salav Mohamed Sait reported in (1959) 37 ITR 151 (S C) had held that no addition can be made on the basis of surmises, suspicion and conjectures. In the case of CIT(Central), Kolkata vs. Daulat Ram Rawatmull reported in 87 ITR 349, the Hon'ble Supreme Court held that, the onus to prove that the apparent is not the real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences, which would directly prove the fact of bogusness or establish circumstance unerringly and reasonably raising an inference to that effect. The Hon'ble Supreme Court in the case of Umacharan Shah & Bros. Vs. CIT 37 ITR 271 held that s....
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....case of the appellant. The AR's arguments in this respect are acceptable. 4.8 To sum up, the evidences on record of the purchase of shares establishes the fact that transactions are genuine and these have not been found non-genuine by the AO, and are further corroborated with legal evidences which are part of record. The sale of such shares is through recognized stock exchange and all necessary evidences for the same is also part of the record, and these have not been refuted or controverted by the AO. Considering all these evidences, the receipt of sale proceeds of shares stands established and cannot be considered to remain unexplained credit at the hands of the appellant. The provisions of sec. 68 are inapplicable to sale proceeds of shares that are supported by legally accepted evidences on record. In fact, the requisite conditions for claim of exemption u/s 10(38) of I.T. Act 1961 are satisfied and the claim of appellant is found as correct and justified. The A.O. has made the addition merely on the basis of findings of the Investigation Wing, Kolkata, without bringing on record any adverse findings directly related to the appellant. For the detailed reasons enumerated i....