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TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 307
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....facts that the assessee failed to prove the genuineness of the whole transaction? (b) Whether in facts and in the circumstances of the case the Ld. Income Tax Appellate Tribunal was not justified in law in deleting the disallowance of Rest. 51,33,870/- on account of share trading, without considering the principle which has been laid down by the Hon'ble Supreme Court in the case of Pr. CIT (Cen)-1 Kolkata Vs. NRA Iron and Steel Pvt. Ltd. (412 ITR 161) reported in (2020) 117 taxmann.com 752(SC) and by Hon'ble Calcutta High Court in the case of Pr. CIT (Cen)-2, Kolkata Vs. M/s. BST Infratech Ltd. in ITAT/67/2024 dated 23.04.2024 reported in (2024) 161 taxman.com 668 (Calcutta)? (c) Whether in facts and in the circumstances of the case the Ld. Income Tax Appellate Tribunal was not justified in law in coming to the conclusion that the assessee had discharged the initial onus which lay upon him in terms of Section 68 of the Act? (d) Whether in facts and in the circumstances of the case the Ld. Income Tax Appellate Tribunal was not justified in law to provide the verdict in favour of the assessee based on the tax effect of Rs. 16,27,963/- i.e. below the prescribed limit as determin....
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....r of shares of the aforementioned companies. Furthermore, the assessing officer noted that the particular scripts which were purchased by the assessee were listed in the list of "bogus capital loss claims". The information which the assessing officer was able to ascertain was informed to the assessee more particularly, the details of the investigation report and the allegations made therein. Subsequently, two showcause notices were issued dated 05.10.2016 and 31.10.2016 calling upon the assessee to explain as to why the claim of the abovementioned scripts should not be disallowed and added to the total income. In response thereto, the reply was submitted by the assessee, among other things, contending that they have purchased and sold shares in the companies in the normal course of their business through share brokers in Demat Form in recognized stock exchanges and the payment was made through proper banking channels. Further the assessee stated that they are regular traders/investors in shares and securities and they had purchased the shares of the two companies in anticipation of profit and at times, the justification of the investment in some shares fail due to reasons beyond th....
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....d that everything was pre-arranged and desired goals were achieved through circular trading in which common persons/entities were found to be involved. 5. Further it was ensured by the operators that the shares are not available for purchase or sell to any person outside the syndicate and as many as 84 listed companies and 5000 paper companies and 25 entry operators were involved in the racket. The report takes note of the statements of the entry operators where they accepted rigging the price of the shares and managing the market to bring desirable results which suited their client and they accepted to do the same with a commission of 50 paisa to Rs. 1 per Rs. 100. Furthermore, it was found that the scripts of the two companies also follow the uneven pattern of rise and fall. Thus, the assessing officer concluded that the facts clearly show that the transactions were sham and were done through stock exchanges to provide a proper veil and the genuineness could validly be tested on the ground of principle of pre-ponderance of human probabilities which could form a valid ground or a parameter for determining the genuineness. In support of such conclusion, reliance was placed on the ....
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....nso referred to the decisions of this court in the case of Principal Commissioner of Income Tax Versus Swati Bajaj (2022) 446 ITR 56 (Cal) and had quoted the relevant paragraphs of the said decision. It was thus held that the contention of the assessee alleging violation of principles of natural justice is not acceptable. Thereafter the appellate authority proceeded to consider the matter on merits, discussed about two companies, the modus operandi, the order passed by the Security and Exchange Board of India (SEBI) which was affirmed by the Security Appellate Tribunal (SAT) against Runicha Merchants Private Limited for manipulations in shares of Radford Global. In the said order, it has been held that various entities including Runicha Merchants indulged in intra group trading with a manipulative intent to increase the share price of Radford Global and violated the provisions of SEBI Regulations and the SEBI Act, 1992. Further the appellate authority also took note of the financial strength of Shreenath Commercial and found that there is no justification for the assessee for having purchased the shares of the company in 2013. The appellate authority referred to the decisions of th....
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.... this issue. The learned Senior Advocate appearing on behalf of the appellant revenue submitted that the Board has issued a recent Circular in Circular No. 5 of 2024 dated 15.03.2024 which is in supersession of the communications issued by the Board in respect of departmental appeals to be filed before the tribunal, the High Courts and the Hon'ble Supreme Court. Para 3.1 of the circular states the monetary limits given with regard to the filing appeal/SLP shall be applicable to all cases including those relating to TDS/TCS under the Act. With the exceptions set out therein, where the decision to file appeal/SLP shall be taken on merits, without regard to the tax effect and the monetary limits. The revenue seeks to bring the case on hand under Exception (h) in para 3.1 of the Circular which deals with cases involving organized tax evasion including cases of bogus capital gains/loss through penny stocks and case of accommodation entries. It is submitted by the learned advocate appearing for the respondent that there is nothing to indicate that the assessee was involved in an organized tax evasion and therefore the revenue cannot seek to maintain this appeal by referring to the except....
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....in the penny stocks but targeting individuals who dealt with those penny stocks. Thus, the facts of the case on hand would clearly reveal that it is those two companies in whose shares were traded by the assessee are in the list of bogus capital loss claim companies and it is undoubtedly the case involving organized tax evasion. Therefore, the revenue are entitled to maintain this appeal by referring to the exception as provided in para 3.1 (h) of the Circular No. 5 of 2024 dated 15.03.2024. Accordingly, substantial questions of law (e) is answered in favour of the revenue. 13. As observed earlier, the learned tribunal did not examine the merits of the matter, did not go into the facts of the case, did not touch upon the correctness of the reasoning given by the CIT(A) or that of the assessing officer but referred to the decision of the Coordinate Bench of the tribunal in the case of Namokar Builders Private Limited, extracted the entire judgment running to be more than 15 pages and in the last paragraph, the tribunal states that the facts of the case of the assessee are also "substantially" similar and therefore the appeal was allowed. There is nothing to indicate as to how the t....
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....ion of principles of natural justice and also the persons from whom statement were recorded were not made available for cross examination. The Court held as follows:- 1. The investigation report states that the investigation has not commenced from the individuals but it has commenced who had dealt with the penny stocks, concept of working backwards. This is a very significant factor to be remembered. Therefore, there has been absolute anonymity of the assessee in the process of investigation. The endeavour of the department is to examine the "modus operandi" adopted and in that process now seek to identify the assessees who have benefited on account of such "modus operandi". Therefore, considering the factual scenario no prejudice has been established to the assessee by not furnishing the investigation report in its entirety nor making the persons available for cross examination as admitted by the department in substantial number of cases the assessees have not been specifically indicted by those persons from whom statements have been recorded. 2. We are conscious of the fact that there may be exceptions however nothing has been brought before us to show that there was an excep....
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....e assessments have commenced by the assessing officers calling upon the assessee to explain the genuineness of the claim of LTCG/ LTCL made by them. In all the assessment orders, substantial portion of the investigation report has been noted in full. A careful reading of the some would show that the assessee has not been named in the report. If such be the case, unless and until the assessee shows and proves that she/he was prejudiced on account of such report / statement mere mentioning that non-furnishing of the report or non-availability of the person for cross examination cannot vitiate the proceedings. The assessees have miserably failed to prove the test of prejudice or that the test of fair hearing has not been satisfied in their individual cases. In all the cases, the assessees have been issued notices under Sections 143(2) and 142(1) of the Act they have been directed to furnish the documents, the assessee have complied with the directions, appeared before the assessing officer and in many cases represented by Advocates/Chartered Accountants, elaborate legal submissions have been made both oral and in writing and thereafter the assessments have been completed. Nothing prev....
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.... scrips of very little known companies. 15. The appellate authority has not only considered the investigation report but examined the facts relating to the two companies in which the assessee had transacted and has noted the transactions done by the assessee in paragraph 6.2.3 of the order dated 23.01.2024. On analysis of the data, the appellate authority found that the pattern of purchases of Radford Global shows that the assessee purchased the shares at a high price of Rs. 79.85 and Rs. 79.95 per share on the same date, i.e. 18.04.2013 from two persons Dilip Chotalal Morzaria and Sureshkumar Sukalchand Lodha and sold the same on 30.10.2013 within about six months at a price of Rs. 14 per share to Runicha Merchants Private Limited about 10 shares sold to Sidhiman Vyapar Private Limited on the same day. So far as the Runicha Merchants Private Limited are concerned, the SEBI has passed an order against them for manipulation in shares of Radford Global, this order has been affirmed by the appellate tribunal and in the order passed by the learned tribunal, it has been held that the fund transactions and off market transaction between two entities are conclusive evidentiary proof whic....
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....for the respondent assessee placed reliance on the decision in the case of Principal Commissioner of Income Tax Versus Smt. Krishna Devi (2021) 126 Taxman.com 80 (Del) to support the contention that when it is not disputed that the shares were purchased through stock exchanges and were routed through Demat Account and considerations was received through banking channels addition could not have been made by the assessing officer under Section 68 of the Act treating such long terms capital gains as bogus. This decision was rendered on January 15, 2021 prior to the decision in Swati Bajaj which was delivered on 14.06.2022 wherein several decisions of the Hon'ble Supreme Court were considered and in-depth analysis was made as regards the impact of the investigation report. 18. In Smt. Krishna Devi, the court found that the assessing officer did not make a deep enquiry into the allegations of infusion of unaccounted money and the notice issued under Section 133(6)/131 did not yield any result and notice issued to the entity which effected payment was returned unserved and the assessing officer did not take the matter any further. In any event, the decision cannot be binding on us and a....