TaxTMI 
TaxTMI 
2025 (8) TMI 1575
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....st Rs. 84,78,409/- made by the AO as per formula laid down in the Rule 8D(2)(iii). 2. That on the facts and circumstances of the case and in law, the ld. CIT(A) erred in directing the AO to treat the amount of Rs. 4,68,87,073/- as income from business and profession and deleting the addition of Rs. 6,35,23,711/- made by the AO on account of transactions in the shares of Sulabh Engineers & Services Ltd. 3. That on the facts and circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition of Rs. 31,76,185/- on account of disallowance of commission expenses u/s 69C with respect to share transactions of Sulabh Engineers & Services Ltd." 4. The grievance of the assessee reads as under:- "The ground or grounds of appeal are without prejudice to one another. 1.a) On the facts and in the circumstances of the case and in law, the Id. AO erred in confirming the addition to the extent of Rs. 7,78,22,886/- made by the AO to the income of the Appellant by way of disallowing proportionate interest of Rs. 76,66,092/- under rule 8D(2)(ii) and administrative expenses of Rs. 1,56,794/- under rule 8D(2)(iii) alleged to have been incurred r....
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....y to the Appellant to cross examine those parties who have been suspected to provided accommodation entries to the Appellant. c) In reaching to the conclusion and confirming such addition, the ld. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. 3. On the facts and in the circumstances of the case and in law, the Id. AO erred in not disposing off the Ground No.5 raised by the Appellant disputing the addition of Rs. 1,61,44,501/- to the book profit by way of adding back disallowance made u/s.14A r.w.r. 8D and thereby erred in enhancing the book profit artificially. 4. The Id. CIT(A) erred in not disposing off the Ground No.6 raised by the Appellant disputing levy of interest u/s. 234B of the Income Tax Act, 1961. 5. The ld. CIT(A) erred in not disposing off the Ground No. 7 raised by the Appellant disputing initiation of the penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961. The Appellant craves leave to add, alter, amend or delete any or all of the above grounds of appeal." 5. From the above gr....
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....nditure at Rs. 1,56,794/-, therefore, disallowance as per Rule 8D(2)(ii) was restricted to this amount and gave part relief to the assessee. 10. We have carefully perused the assessment order. We find that the AO has neither recorded any dissatisfaction, insofar as the suo moto disallowance of Rs. 1,10,711/- is concerned nor the AO has recorded any satisfaction for computing the disallowance as per the provisions of Section 14A r.w.r. 8D, having regard to the accounts of the assessee. The Hon'ble Supreme Court in the case of Godrej & Boyce Manufacturing Company Ltd. v. Deputy Commissioner of Income-tax [2017] 394 ITR 449 (SC), on similar facts, held as under:- "37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the for....
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....equent year." 39. In the above circumstances, we are of the view that the second question formulated must go in favour of the assessee and it must be held that for the Assessment Year in question i.e. 2002-2003, the assessee is entitled to the full benefit of the claim of dividend income without any deductions." 11. Considering the facts of the case in totality, in light of the judicial decisions discussed hereinabove, we do not find any merit in the impugned disallowance made by the AO and on facts, the suo moto disallowance made by the assessee should suffice. Accordingly, the impugned ground in revenue's appeal is dismissed and that in the assessee's is allowed. 12. Coming to the next common grievance, while scrutinising the return of income, the AO noticed that the assessee has shown short term capital gains of Rs. 52,13,313/- which was adjusted against the brought forward loss of AY 2007-08. The AO also found that the assessee has shown long term capital gain of Rs.4,16,73,760/- which was claimed as exempt u/s 10(38) of the Act. The assessee was asked to furnish the details. On going through the details, the AO noticed that the assessee has dealt with the shares....
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....he case of the revenue that the assessee has purchased cheques of accommodation entries by paying cash to the market operators. 15.2. The entire assumption and presumption of the AO revolves around the report of Securities and Exchange Board of India (SEBI). SEBI had conducted investigation in the group of SESL based on the letter received from Pr. Director of Income Tax (Investigation), Kolkata dated 27/04/2015, alleging that certain entities generated bogus long term capital gains through stock exchange mechanism and SESL is one of such scrips mentioned in the aforesaid letter. In view of this, it was alleged as follows:- "a. With regard to Noticee No. 1 to 8, it was alleged that these Noticees themselves (along with other connected Noticees) indulged in manipulation of the price of the scrip, created false and misleading appearance of trading in the securities market and also carried out an act/practice which operated as a fraud or deceit in the market. Further, they derived benefit out of the price manipulation by selling the shares at such manipulated price. b. With regard to Noticee No. 9 and 10, it was alleged that they being the new promoters of the com....
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....de out in the SCN and the submissions made by the Noticees, I find that following issues require consideration in the present case: Issue 1: Whether the Noticees were directly or indirectly connected to Sulabh or the promotors/directors of Sulabh? (b) Whether the trades carried out by connected noticees in Patch 1A, 1B and 2 of the IP have resulted in violation of Regulation 3(a) (b)(c)(d), 4(1), 4(2)(a), (b), (e) and 4(g) of the SEBI (PFUTP) Regulations, 2003, as applicable? (c) Whether the company, its promoters, directors orchestrated scheme to manipulate the price of scrip of Sulabh? Issue 2: Does the violation, if any, attract penalty under Section 15HA of the SEBI Act, 1992? Issue 3: If so, what would be the monetary penalty that can be imposed taking into consideration the factors mentioned in Section 15J of SEBI Act, 1992? ****** ******** ******* ****** ****** ****** ****** The above Noticees, in order to determine their role in the present manipulative scheme, can be divided into the following groups: a. Group A of Noticees who are connected to the company through its promoter directors (PDs) ....
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....nected to Mr. Anil Khemka, entities named by Mr. Anil Khemka or entities connected to the entities named by him have traded in the scrip of Sulabh. Considering that Mr. Anil Khemka is connected to Mr. Subodh Agarwal, as seen above, it becomes imperative to consider that the said Noticees were connected through Mr. Anil Khemka as Connected Noticees. 30. Noticees in Group D and E are neither directly nor indirectly connected with the company, PD, Mr. Subodh Agarwal or Mr. Anil Khemka, albeit they are connected to other Noticees who traded in the scrip. Since the impugned manipulative scheme was hatched by the company along with PDs and few other Noticees, it is important that the Noticee should be directly or indirectly connected with the company or any PD to establish any substantial connection. In view of the above, a benefit of doubt is given to Noticees of the aforesaid Group and hence they shall not be considered Connected Noticee. 31. With regards to the Noticees who were the Preferential Allottees and are also part of one of the five groups mentioned above, they can be directly considered as connected noticees as held by the Hon'ble SAT in Som Prakash Goe....
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....00 Narinder Kumar HUF (Noticee No. 148) Non-Promoter AAEHN5960N 125000 Mahabir Pershad HUF (Noticee No. 143) Non-Promoter AAEHM9343L 125000 Sajan Kumar Agarwal (Noticee No. 147) Non-Promoter AAKPA5957G 75000 Som Prakash Goenka (Noticee No. 126) Non-Promoter AAQPG0238C 400000 + 70000 Surendra Kumar Gupta (Noticee No. 8) Non-Promoter AAQPG0240E 400000 + 70000 Raj Kumar (Noticee No. 144) Non-Promoter AHAPK7548Q 130000 + 70000 Manoj Kumar Agarwal (Noticee No. 123) Promoter ABBPA2306H 150000 Sanjeev Sanghi (Noticee No. 132) Non-Promoter ABTPS2464C 65000 Vivek Karwa (Noticee No. 139) Non-Promoter AJLPK0941J 70000 Divya Agarwal (Noticee No. 2) Non-Promoter ACUPG5212E 135000 Manish Kumar Garg (Noticee No. 4) Non-Promoter AFDPG9852J 70000 Deepak Kumar Agarwal (Noticee No. 134) Non-Promoter ABSPA2276K 70000 Vinay Kumar Agarwal (Noticee No. 125) Non-Promoter ACAPA3335N 70000 Praveen Kumar Mishra (Noticee No. 7) Non-Promoter AFYPM1852K 70000 Pranveer Singh (Noticee No. 6) Non-Promoter AGIPS4486N 70000 Sanjay Kumar....
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..... is not supported by the financials and, therefore, the amount of LTCG of Rs. 1,03,33,925/- claimed by the assessee is nothing but unaccounted income which was rightly added u/s 68 of the I. T. Act, 1961?" ****** ******** ******* ****** ****** ****** ****** 2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd. ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgment of the Apex Court in Principal Commission....
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.... recorded a finding that the source of funds for acquisition of the shares was the agricultural income which was duly offered and assessed to tax in those Assessment Years. The Assessee has produced certificates from the aforesaid four companies to the effect that the shares were in fact transferred to the name of the Assessee. In these circumstances, the decision of the ITAT in holding that the Assessee had purchased shares out of the funds duly disclosed by the Assessee cannot be faulted. 6 Similarly, the sale of the said shares for Rs. 1,41,08,484/- through two Brokers namely, M/s Richmond Securities Pvt. Ltd. and M/s. Scorpio Management Consultants Pvt. Ltd. cannot be disputed, because the fact that the Assessee has received the said amount is not in dispute. It is neither the case of the Revenue that the shares in question are still lying with the Assessee nor it is the case of the Revenue that the amounts received by the Assessee on sale of the shares is more than what is declared by the Assessee. Though there is some discrepancy in the statement of the Director of M/s. Richmand Securities Pvt. Ltd. regarding the sale transaction, the Tribunal relying on the statemen....