TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 1856
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....me was processed u/s. 143(1) of the Income Tax Act, 1961 ('the Act'). Subsequently, the AO received information from Investigation Wing that bogus capital gains are generated by rigging prices of shares certain companies, called as penny stock companies. It was noticed that, during the year relevant to AY. 2011-12, the assessee has purchased and sold shares of M/s Nivya Infrastructure & Telecom Services Ltd (Earlier known as S.V Electricals), which was identified as one of the penny stocks. The assessee had declared short term capital gains of Rs.80,58,939/- (the AO has taken it as Rs.81,88,118/-) from those transactions. On the basis of information received from Investigation wing, AO took the view that above transactions of purchase and sale of shares of above said company as bogus in nature. Accordingly, the AO entertained belief that there was escapement of income and accordingly, reopened the assessment of the AY. 2011-12 by issuing notice u/s. 148 of the Act. 4. In the year relevant to AY. 2011-12, the assessee had purchased 1,49,800 shares of above company in the month of November, 2010 for a sum of Rs.2.10 crores in the stock exchange platform. The assessee sold 1,48,400....
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.... of the above said companies have been rigged by vested interests through a syndicate of operators and exit providers. He also submitted that the trading in shares of M/s Nivya Infrastructure & Telecom Services Ltd was suspended by SEBI subsequently. In view of the foregoing, the AO has held that the capital gains declared by the assessee from sale of above said shares is bogus in nature. Accordingly, he contended that the addition made by the AO should be sustained. 8. The Ld.AR, however, submitted that the assessee has purchased the shares of both the companies from the Stock Exchange platform and also sold them in Stock Exchange platform only. Both the purchases and sales were carried out at prevailing market prices in the stock exchange. Further, the assessee has purchased & sold the shares in the normal course of making investments. The shares have entered into and exited from Demat account of the assessee. He further submitted that the assessee has purchased and sold shares of other companies also. Accordingly, he submitted that these transactions undertaken by the assessee cannot be considered to be bogus, merely on the reason that the said share has been identified as on....
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....reliable or he has to show that the assessee was part of the group, which were indulging in rigging of prices. 10. We notice that the AO has placed reliance on the investigation report only, i.e., he did not bring any material on record to show that the documents furnished by the assessee are defective and deficient in nature. The AO has also not shown that the assessee was part of the group which were manipulating the prices of the shares of above said company. It was also not shown that the transactions entered by the assessee were found to be a part of manipulated transactions. Thus, it was not proved that the assessee has carried out the transactions of purchase and sale of shares in connivance with the people who were involved in the alleged rigging of prices. Further, the Ld. AR submitted that the transactions carried on by the assessee were not subjected to scrutiny by SEBI at all. 11. We notice that the assessee has purchased the shares from Stock exchange platform and also sold the shares in the stock exchange platform. Both the transactions have been carried out at the prevailing market rates only. The assessee has furnished evidences to prove the factum of purchase....
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....hese brokers and the persons floating the two companies. It is only, after the Assessee who is supposed to dealing in shares and producing all the details including the DMAT account, the Exchange at Calcutta confirming the transaction, that the Appeal of the Assessee has been rightly allowed. The Tribunal has not merely interfered with the concurrent orders because another view was possible. It interfered because it was required to interfere with them as the Commissioner and the Assessing Officer failed to note some relevant and germane material. In these circumstances, he submits that the Appeals do not raise any substantial question of law and deserve to be dismissed. 5. We have perused the concurrent findings and on which heavy reliance is placed by Mr. Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried out in paras 20, 20.1, 20.2 and 21 of his order, what was important and vital for the purpose of the present case was whether the transactions in shares were genuine or sham and bogus. If the purchase and sale of shares are reflected in the Assessee's DMAT account,....
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....ontract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, is not enough to prove that the transactions in the impugned shares were bogus/sham. The details received from Stock Exchange have been relied upon and for the purposes of faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparent on the face of the record either. 7. As a result of the above discussion, we do not find any substance in the contention of Mr.Sureshkumar that the Tribunal misdirected itself and in law. We hold that the Appeals do not raise any substantial question ....
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.... law." 14. We notice that the decision rendered by Hon'ble Bombay High Court in the case of Indravadan Jain (HUF) (supra) will squarely apply to the facts of the present case. In the above said case, the Hon'ble Bombay High Court held as under:- "....The CIT(A) came to the conclusion that respondent bought 3000 shares of RFL, on the floor of Kolkatta Stock Exchange through registered share broker. In pursuance of purchase of shares the said broker had raised invoice and purchase price was paid by cheque and respondent's bank account has been debited. The shares were also transferred into respondent's Demat account where it remained for more than one year. After a period of one year the shares were sold by the said broker on various dates in the Kolkatta Stock Exchange. Pursuant to sale of shares the said broker had also issued contract notes cum bill for sale and these contract notes and bills were made available during the course of appellate proceedings. On the sale of shares respondent effected delivery of shares by way of Demat instruction slips and also received payment from Kolkatta Stock Exchage. The cheque received was deposited in respondent's bank account. In ....