TaxTMI 
TaxTMI 
2025 (12) TMI 789
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....ing it under section 115BBE of the Income Tax Act, 1961. 2. Whether on the facts and circumstances of the case and in law, the Ed. CIT(A) has erred in not appreciating the findings unearthed during enquiries and an action under section 133A and section 132 of the Income Tax Act, 1961, by the DDIT(Inv.) Kolkata. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating dated 30.03.2015. Shri Anil Kumar Khemka confessed to facilitating accommodation entries through the manipulation of scraps, including MISHKAFIN and outlined the modus operandi where beneficiaries were provided bogus Long Term Capital Gains (LTCG) entries by inflating share prices through synchronized trading. The assessee in this case is one such beneficiary who allegedly benefited from this operation by selling shares of MISHKAFIN for Rs. 1,00,53,500/-. 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in dismissing the findings from the investigation and ignoring the fact that the entire scheme was a manipulated setup to create bogus LTCG. The accommodation entry provider had confessed to this....
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....ved by the order of Ld.AO, assessee preferred appeal before Ld.CIT(A) challenging the validity of notice u/s. 148 as well as validity of re-assessment proceedings, and on merits, it claimed that all the conditions required for claiming exemption u/s. 10(38) of the Act has been fulfilled by the assessee and reference made to judicial precedents wherein the Hon'ble Courts as well as Co-ordinate Benches have decided the issue in favour of the assessee holding that long term capital gains from sale of equity share of MFTL is genuine. Ld.CIT(A) after detailed examination of facts and judicial precedents, allowed the assessee's appeal. Aggrieved by the order of Ld.CIT(A), now Revenue is in appeal before this Tribunal. 5. Ld. Departmental Representative (DR) vehemently argued supporting the order of the Ld.AO. 6. On the other hand, learned counsel for the assessee referring to the written submissions stated that assessee has made a claim of LTCG u/s. 10(38) of the Act for the capital gain earned on sale of equity shares of MFTL. After filing of the return on 31/07/2014, assessee was served with summons u/s. 131 of the Act, dated 09/04/2015, to which reply was filed and again two....
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....ave heard rival contentions and perused the records placed before us. The Revenue is aggrieved with the finding of Ld.CIT(A) deleting the addition made by the Ld.AO u/s. 69A of the Act at Rs. 1,00,08,500/-. Alleged sum has been shown by assessee as LTCG from sale of 200000 equity shares of a company, namely MFTL and claimed exemption u/s. 10(38) of the Act. We observe that assessee challenged the validity of the notice issued u/s. 148 of the Act, dated 28/03/2020 and also the validity of re-assessment proceedings carried out which concluded on 28/09/2021 on the ground that assessee had already been subject to examination by Investigation Wing on the very same issue by serving the assessee with notice u/s. 131 of the Act. We note that assessee had already gone through one round of reassessment proceedings initiated, for the same information and after due consideration of the details filed by the assessee, such proceedings were dropped. It has been claimed that there being no independent enquiry made by the Ld.AO and no other fresh material was available with the Ld.AO prior to issue of alleged notice u/s. 148 of the Act, dated 20/03/2020 and, therefore, the alleged reassessment proc....
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.... * Statement of holding shares * Statement issued by CDSL confirming shares sold * Bank statement depicting receipt of money after sale of shares Further, the appellant also asked for cross examination of the material being used against her to claim such capital gain as bogus. 6.5 The appellant also contested that trading was done through online portal wherein she was not aware of the counter party to the transaction and price fluctuation to stock was beyond her control. 6.6 The Ld. AO has made the adjustment by forming opinion on search conducted by some other assessee. He has not performed due diligence in specific to the appellant's case LING 6.7 The Ld. AO has not mentioned any shortcoming in broker notes, bank payments and other supporting documents filed by the appellant. He has also not proved that cash was involved in the appellant's transaction. He passed the order merely under suspicion. Moreover, the Ld. AO has also not provided opportunity of cross examination. 6.8 The Ld. AO alleged that the appellant could not prove why there was surge in volume of stock. Whereas the trading was done through s....
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....t is also a matter of record that the assessee furnished all evidences in the form of bills, contract notes, demat statements and the bank accounts to prove the genuineness of the transactions relating to purchase and sale of shares resulting in LTCG. These evidences were neither found by the Id AD to be false or fabricated. The facts of the case and the evidences in support of the assessee's case clearly support the claim of the assessee that the transactions of the assessee were bonafide and genuine and therefore the id AD was not justified in disallowing the assessee's claim of exemption under section 10(38) of !.he Act." Kiran Kothari Vs ITO [ITA 443/Kol/2017] "we note that the assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions. relevant to the purchase and sale of shares resulting in long term capital gain. Neither these evidences were found by the AO nor by the Id. CIT(A) to be false or fictitious or bogus. The facts of the case and the evidence in support of the evidence clearly support the claim of the assessee that the transactions of the ....
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.... am of the considerate view that the appellant had submitted all the relevant documents before the AO to establish genuineness of purchase and sale of shares A perusal of assessment order reveals that not a single piece of evidence - direct or circumstantial has been brought on record by the AO which can establish that the appellant or even his broker had indulged in arrangement of accommodation or bogus LTCG or they were in any way involved in price manipulations in any manner. There is no reference to any material whatsoever in the order of assessment in relation to the case of appellant or its broker supporting the allegations levelled by the AO against the appellant. There is no confessional statement referred by the AO either given by the appellant or the broker which may indicate that the aforesaid transaction was undertaken to shift alleged artificial gains to the appellant. I find that the assessee has filed all the evidences comprising summary of sale and purchase of shares, contract notes/broker notes, of Demat account/transaction statement, copies of purchase/sale bills, evidences of payment through banking channels along with bank statements etc. which....
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....nd tripping of cash in the underlined capital gain. It is also a settled position of law that addition cannot be made merely on the basis of suspicion, conjectures and surmises. It is a settled position of law that mere suspicion, howsoever strong, cannot take the place of legal proof. Thus, addition made on the basis of mere suspicion and conjecture is bad in law and deserves to be quashed. Therefore, the additions made by the Ld. AO for sum of Rs. 1,00,08,355/- on account of bogus capital gain are deleted. Accordingly, the appeal made by the appellant is allowed." 9. From going through the above findings of the Ld.CIT(A) and the decisions referred therein and also taking note of the facts brought on record before us by the learned counsel for the assessee, we note that assessee while filing return of income, has mentioned the particulars giving rise to LTCG u/s. 10(38) of the Act at Rs. 1,00,08,500/-. Further, the assessee has been issued summons u/s. 131 of the Act, dated 09/04/2015 by the Investigation Wing. The assessee has given reply on two occasions and again certain more information was called for vide letters dated 02/06/2015 and 07/08/2015 t....
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....d u/s. 148 of the Act, dated 20/03/2020 and quashing the assessment order u/s. 147 r.w.s. 144B of the Act dated 28/09/2021 needs no interference. 12. So far as merits of the case are concerned, we observe that in order to claim exemption u/s. 10(38) of the Act, the assessee is required to fulfill the conditions provided under section 10(38) of the Act, which are that the capital asset being equity shares or a company or a units of equity oriented fund is held by the assessee for more than a one year, the transaction of sale of equity shares is carried out on a recognized stock exchange and such transaction is chargeable to STT. The assessee in the instant case has fulfilled all the relevant conditions as provided u/s. 10(38) of the Act. Ld.AO has held the claim of LTCG is bogus based on his observation about steep increase in the prices of equity shares and poor financial of the company and mainly referring to report of the SEBI restraining trading of the equity shares of MFTL on the stock exchange. Before us, learned counsel for the assessee has referred to plethora of judgments in assessee's favour where the genuineness of claim of LTCG from sale of equity shares of MFTL has c....
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.... at S.No. 1-104 in Table No. 2 with respect to their role in the price manipulation/prima facie violations for which Interim Order dated April 17, 2015 was passed and subsequently confirmed in the scrip of Mishka." A copy of this report was sent to AO as per Rule 46A and remand report dated 22.11.2017 has been received. In para-3 of remand report, the AO has simply mentioned that the share transaction has been skillfully manipulated to claim the exemption u/s. 10(38). In this connection, it is verified that the payment for purchase of shares was made through banking channel, shares were in demat account of the appellant for more than 12 months before they were sold through BOLT of BSE and the proceeds have been received through banking channel, STT has been paid. The main stand of the AO which was picked up from SEBI interim report has also been decimated by the final report of the SEBI itself. The relevant portion of para 8 of SEBI report dated 05.10.2017 is reproduced as under:: "8. Considering the fact that there are no adverse findings against the 104 entities mentioned at S.No.1104 in Table No.2 with respect to their role in the price manipulation/ prima faci....
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....of the case, Revenue fails to succeed. Effective grounds of appeal raised by the Revenue are dismissed. 16. In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on 28.11.2025. ============= Document 1 Sr No. Name of the Case Citation Court Details Script Involved 1 PCIT vs Kalawati Sharma 57/2021 Highcourt- Rajasthan- Jaipur Mishka Finance and Trading Limited 2 PCIT vs. M. S. Gokuldham Enterprise Lip 427/2023 Highcourt- Gujarat- Ahmedabad Mishka Finance and Trading Limited (MFTL for Short) 3 PCIT vs Neelu Mahansaria 683/2024 Highcourt- Gujrat Mishka Finance and Trading Limited 4 Bril Bhushan Singal vs. ACIT 1412/2018 ITAT-Delhi MFTL, M/s Pine Animation Ltd. M/s First Financial Services Ltd., M/s Radford Global Ltd 5 Dy. CIT Vs. Smt Kalawati Sharma 781/2019 ITAT-Jaipur Mishka Finance and Trading Limited M. S. Gokuldham Enterprise Lip 675/2018 ITAT- Ahmedabad MFTL/Pyramid Trading and Finance Ltd. 7 Gateway Financial Services Ltd vs. ACIT 982/2018 ITAT-Kolkata M/s Radford Global Ltd. Mahendra Prakash Vs. ACIT 1566/2023 ITAT-Mumbai Mishka Finance and Trading Limited Natwarlal Daga vs. CIT(A) 396/2....