TaxTMI 
TaxTMI 
2025 (6) TMI 1135
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....group, all these appeals are clubbed and heard together and a consolidated order being passed. 3. We now take up the appeals relating to Ashok Kumar Agrawal in IT(SS) A No. 10/VIZ/2025 & ITA No. 136/VIZ/2025 for the A.Y.2006-07. These Cross appeals are filed by the revenue and assessee respectively, against order of the Ld. CIT(A) vide DIN & Order No. ITBA/APL/S/250/2024- 25/1072796023(1) dated 31.01.2025 for the A.Y. 2006-07. IT(SS)A No. 10/VIZ/2025 (A.Y. 2006-07) - REVENUE APPEAL 4. Briefly stated the facts of the case are, assessee being an individual deriving income from salary, capital gains and other sources, filed return of income for the A.Y. 2006-07 admitting a total income of Rs. 3,68,980/-. The return was summarily processed under section 143(1) of the Income Tax Act, 1961 [hereinafter in short "the Act"]. Assessee is the Chairman-cum- Managing Director of M/s. Maa Mahamaya Industries Limited. 5. M/s. Maa Mahamaya Industries Limited is a company engaged in the business of manufacturing of Steel and TMT Bars, filed its return of income for the AY 2012-13 on 30/09/2012 declaring a total income of Rs. 3,59,80,030/- under MAT provisions. The return of income was summarily....
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....nandHimghar Ltd., Calcutta Stock Exchange 9. Emrald Commercial Ltd., Calcutta Stock Exchange 7. Ld. AO on verification from the website of Security Exchange of Board of India (in short "SEBI") found that all the shares traded by the assessee were found to be suspicious and the brokers were penalized after due verification and investigation by SEBI. Ld. AO noticed the price of the stocks are artificially increased exponentially. Ld. AO after examining the SEBI reports which has levied penalty on the brokers involved in the trading observed that these were nothing but accommodation entries. He also referred to the statements recorded on oath by various stock brokers and concluded that assessee has declared bogus long term capital gains and has claimed exemption for the same during the impugned assessment year. Further, Ld. AO also observed that the shares held in DP Account for less than a period of one year and hence exemption claimed under section 10(38) of the Act is not valid in law. Ld. AO also observed that the Contract Notes were manipulated by the assessee. Ld. AO thus concluded that the assessee traded in connivance with the brokers and therefore issued a common show-ca....
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....re invested in A.Y. 2010-11. Ld.CIT(A) found that the assessee has not furnished the source of funds for investment in the share purchase for Rs. 87.50 lakhs and confirmed addition of Rs. 87.50 lakhs under section 69 of the Act, thereby giving relief of Rs. 16,62,50,000/-. Similar view was taken in the case of Shri Anunay Agrawal, Ld. CIT(A) observed that a sum of Rs. 47 lakhs was invested during the A.Y.2010-11 and not during the A.Y. 2006-07 and thereby deleted the addition of Rs. 4,70,00,000/- made by the Ld. AO. 11. On being aggrieved by the order of the Ld. CIT(A), revenue is in appeal before us by raising 36 grounds. Most of the grounds are argumentative in nature and the following issues emanate from the grounds raised by the revenue: - i. Deletion of addition of Rs. 16,62,50,000/- by Ld. CIT(A). ii. Deletion of addition of Rs. 4,70,00,000/- by Ld. CIT(A). 12. On this issue, Ld. Departmental Representative [hereinafter in short "Ld.DR"] submitted that assessee has invested in M/s. Maa Mahamaya Industries Limited and M/s. GVA Industries Pvt. Ltd., through Kolkata and Delhi based companies who initially invested at a huge premium of Rs. 90 Per share. He further submitted....
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....h Court in the case of PCIT v. Buniyad Chemicals Ltd., in Income Tax Appeal No. 1796/2018 dated 17.03.2025. 13. Ld. DR also submitted that if the search action under section 132 of the Act not conducted the fact of availing accommodation entries would not have come to light. He also stated that the assessee has failed to fulfil the onus cast upon him to prove the genuineness of the transaction and creditworthiness and identity of the investors to the satisfaction of the Ld. AO as held by the Hon'ble Supreme Court in the case of PCIT v. NRA Iron & Steel Pvt., Ltd., (Civil Appeal No. 29855 of 2018). Further he also relied on the following decisions: - i. NDR Promotors P. Ltd. v. PCIT [(2019) 103 taxmann.com 48 (SC)]. ii. JJ Development P. Ltd. v. CIT [(2018) 100 taxmann.com 102 (SC)]. iii. McDowell and Co. Ltd. v. Commercial Tax office [154 ITR 148 (SC)]. 14. Ld. DR also relied on the decision of Hon'ble Supreme Court in the case of SEBI v. Kishore R. Ajmera [(2016) 66 taxmann.com 288]. Further, Ld. DR placed heavy reliance on the decision of the Hon'ble Supreme Court in the case of Sumati Dayal v. CIT [(1995)214 ITR 801 (SC)] and CIT v. Durga prasad More [(1971) 82 ITR 540 (....
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....lhi based companies. The main grievance of the Ld. AO is that the assessee has paid an amount of Rs. 17.50 Crores by way of cash to the shell companies situated in Kolkata and Delhi which were later on invested by these companies by acquiring shares in M/s. Maa Mahamaya Industries Limited and M/s. GVA Industries Pvt. Ltd., at a huge premium. Further, the contention of the Ld. AO is that the shares were allotted to the Kolkata and Delhi based shell companies at a premium of Rs. 90 Per share. However, the shares were immediately acquired by the assessee and his family members during the period of A.Y. 2006-07 and A.Y.2010-11 by paying the face value of Rs. 10 per share. The contention of the Ld. AO is that the assessee has paid cash of Rs. 17.50 Crores and Rs. 4.70 Crores to these shell companies who has provided accommodation entries by taking the facilitation fees. However, from the detailed order of the Ld. AO, we find that the Ld. AO has relied on the sworn statement recorded during the search and seizure operations but has not corroborated with any evidences to prove that the assessee paid cash in order to avail accommodation entries for a facilitative fee. Further it also remai....
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....ition made by the Ld. AO during the A.Y. 2006-07. Ld. CIT(A) thus considered the fact that Shri Anunay Agrawal has not made any investment during the A.Y. 2006-07 and the revenue has not proved beyond doubt the transfer of cash to the shell companies by Shri Anunay Agrawal during the A.Y.2006-07 has rightly deleted the addition made by the Ld. AO amounting to Rs. 4,70,00,000/- which does not need any interference. Accordingly, grounds raised by the revenue is dismissed. 20. In the result, appeal filed by the revenue is dismissed. ITA NO. 136/VIZ/2025 (A.Y. 2006-07) - ASSESSEE APPEAL 21. With respect to the cross appeal filed by the assessee in ITA No. 136/VIZ/2025 for the A.Y. 2006-07, assessee has raised following grounds of appeal: - "1. On the facts and circumstance of the case, the Learned CIT(Appeals) erred in both law and facts while passing the order. 2. On the facts and circumstance of the case, the Learned CIT(Appeals) is not justified in dismissing the ground with regard to the claim that the Assessment Order dated 25.04.2019 for the Asst Year 2006- 07 is barred by limitation as per the Provisions of Section 153B of the Act. 3. On the facts and circumstance of th....
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....umstances, Ld.AR submitted that assessee cannot be penalised without his act of involvement in the rigging of shares. 27. Per contra, Ld. DR submitted that assessee has made investments in various penny stocks and has realised huge gains within the short span of time which is unnatural. He further submitted that these shell companies are investigated by SEBI for manipulating the prices. SEBI in its conclusion has levied penalty on the brokers which proves that the share prices are manipulated benefiting the assessee. He therefore pleaded that the order of the Revenue Authorities be upheld. 28. We have heard both the sides and perused the material available on record including the written submissions of the assessee. It is an undisputed fact that the assessee has traded in shares which was considered as "Penny Stock". However, the revenue has not brought any material on record to show that the assessee was involved in manipulating of the share prices of these companies. The assessee being an investor has gained in the process of price rigging by various brokers for which assessee has not acted in connivance with the other brokers. The Hon'ble supreme Court while dismissing the SLP....
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....ved through banking channels. The conclusions made by the Ld. AO is not based on any cogent material and was just purely assumptions based on conjecture by the Ld. AO. Ld. AO has placed reliance on the sworn statements of the various brokers without further corroborating with the cogent material and hence it does not justify his conclusion that the transaction is a sham. In these circumstances, we find that the Revenue Authorities is not justified in making the addition by disallowing the long-term capital gains claimed as exemption under section 10(38) of the Act and thereby we allow the ground raised by the assessee. 31. In the result, appeal of the assessee is allowed. ITA No. 150/VIZ/2025 (A.Y. 2006-07) - (APPEAL RELATING TO SANTOSH AGRAWAL). 32. Assessee has raised following grounds of appeal: - "1. On the facts and circumstance of the case, the Learned CIT(Appeals) erred in both law and facts while passing the order. 2. On the facts and circumstance of the case, the Learned CIT(Appeals) is not justified in dismissing the ground with regard to the claim that the Assessment Order dated 25.04.2019 for the Asst Year 2006-07 is barred by limitation as per the Provisions of ....