TaxTMI 
TaxTMI 
2025 (6) TMI 384
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.... main source of fund was share premium which itself was from questionable 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 explanatio....
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....ted securities, Share holding pattern of all share holders, Nature of loan/advance given to all business concerns, address, phone no. etc. During the search and post search 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 (....
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....erators have admitted that they were involved in the activity of giving bogus LTCG through different paper companies and that they have used the scrip viz. Essar (India) Ltd. for the purpose of giving such bogus entries to 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....
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....ts assessments. Anubhav has given loans to the Assessee by cheque which are duly reflected in his bank statements and balance sheet for AY 2014-15. The source of loan given is out of balance available in its bank account and also out of loan returned by the Assessee to Anubhav during the year. 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)....
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....yment for purchase of these shares was made by cheque bearing no.371452, drawn on Nagpur Nagrik Sahakari Bank Ltd. Investment in shares is duly shown in the Balance Sheet of the assessee for the relevant previous year. The shares of Esaar (India) Ltd. are duly listed on Bombay Stock Exchange. Delivery of shares was received in physical form along 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....
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....ully supported by Bill and the assessee has made the payment of the same through account payee cheque and has obtained physical delivery of shares. The shares were sent to the Registrar for transfer in assessee's name and they were duly transferred in assessee's name by Share Transfer Registrar. 18. The learned Counsel further submitted that in the assessment order, the Assessing 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); •....
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....ctness of the documentary evidences produced, the same cannot be rejected by the AO. The order passed by AO are bad in law in as much as addition of Rs. 95,60,988/- is made on basis of statements of one, Ashish Kumar Agarwal, Devesh Upadhyay and Anil Kumar Khemka (assessment order pages 3 to 13,) which have no evidentiary value as: i) firstly, these statements are not equivalent to "material" much less "incriminating material" in eyes of law and they are not corroborated by any iota of independent material; ii) secondly, these statements cannot bind the appellant, who was not subject matter of that investigation; iii) these statements were recorded by investigation wing, Kolkata and nowhere 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....
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....chase price was not paid by cheque but claimed to have been adjusted by speculation profit and the broker through whom shares were sold was indicted by SEBI for rigging of price of shares. In the appellant's case, no such facts are present.In the other case of Shri Ratnakar Pujari Vs. ITO 25(3) (3) Mumbai in ITA No.995/Mum/2012 relied by the AO, the facts therein is also distinguishable as in that case, the purchase of shares in AY 2005-06 made by cash payment was treated as bogus and non-genuine in the assessment order passed and this finding was accepted by the assessee and no appeal was preferred for that addition, hence the subsequent sale of same shares in AY 2006-07 was also treated as non-genuine. There are no such facts in the 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 t....