TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 128
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....dicates the appellant's involvement. The CA) failed to appreciate that statements recorded during the search proceedings are credible and were supported by circumstantial incriminating evidence suggesting irregular financial activities. 3. "The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 2. At the very outset, the Ld.AR submitted that, identical issue was considered by Co-ordinate Bench of this Tribunal in the case of assessee's brother in ITA No. 3726/Mum/2025 and ITA No. 3777/Mum/2025 for assessment year 2012-13. He submitted that, facts in the present appeal as well as the order passed by the Coordinate Bench (supra) are identical in terms of the transaction of purchase and sale of shares in M/s. Banas Finance Ltd.. 3. Brief facts of the case are as under:- The assessee field its return of income for the year under consideration on 19/12/2012 declaring total income of Rs.16,64,980/-. Subsequently, the Ld.AO received information from the investigation unit Mumbai wherein, it was informed that in the investigation carried out by Mumbai and Kolkata Investigation unit, it was revealed that M/s Banas Finance L....
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.... 63,15,994.73 1,13,787 401 07-02-2012 Banas Finance Ltd 20,35,085.01 36,213 402 21-02-2012 Banas Finance Ltd 69,40,502.01 1,50,000 416 22-02-2012 Banas Finance Ltd 65,39,937.50 1,50,000 417 24-02-2012 Banas Finance Ltd 60,69,512.24 1,40,000 419 28-02-2012 Banas Finance Ltd 58,17,063.10 1,50,000 423 01-03-2012 Banas Finance Ltd 32,68,888.49 1,00,000 425 06-03-2012 Banas Finance Ltd 44,38,978.32 1,50,000 430 Total 4,14,25,961.40 10,00,000 All the above transactions have been done through recognised Stock Broker, duly registered with SEBI. The copies of the Broker Contract Notes and Statement of Purchase & Sale of Shares, Settlement Accounts with the Brokers, D-Mat A/c containing complete details in relation to each sale & purchase transaction of shares as above, viz. contract note No., quantity, scrip name, price per unit, scrip- wise transactions, date of transactions, amounts of sale & purchase, holding etc. have been submitted by the appellant for your kind perusal. It is also pertinent to mention that sales proceeds from the sale of ....
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....channel. One lakh shares of face value of Rs. 10 each were issued at a premium of Rs. 10 per share to the assessee. To substantiate the same, the assessee furnished a copy of letter showing allotment of preferential shares by M/s Banas Finance Ltd. Post allotment of shares, the same were dematerialized immediately which is evident from the demat account. Thereafter, the shares of Banas Finance Ltd were split in the ratio of 1:10 on 12.09.2011 and accordingly total 10 lakh shares were allotted. Subsequently, the shares were sold in the year under consideration for Rs. 4,14,25,961/-. All the transactions have been done through recognized stock exchanges and copies of broker's note, statement of purchase and sale, settlement account with broker, demat account, contract note, etc., have been furnished. It is further contended that the shares were sold at average price of Rs. 450 per share whereas the price of these shares rose up to Rs. 565 per share. The appellant has also requested for the opportunity to cross-examine the persons on whose statement the AO is relying. 7. After considering the submission of the appellant, the AO noted that the price rise of this scrip M/s ....
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....r confidence and driving up the share prices. It is further submitted that the statement of the appellant was recorded during the survey/search conducted on the appellant and from this statement, no adverse inference can be drawn. No incriminating document whatsoever has been found during the survey/search. The appellant further submitted that the assessment in the case of M/s Banas Financial was completed wherein the AO had treated the investment received by this company as bogus. The Hon'ble ITAT has decided this issue vide order dated 02.01.2019, wherein the Hon'ble ITAT has held these investments as genuine. Thus, the investment made by the appellant for purchase of preferential shares of this company was already held by the Hon'ble ITAT as genuine. It is further submitted that the reliance of the AO on the order for SEBI is also erroneous as the period of investigation covered by SEBI was from November 2010 to Sep 2011, whereas the appellant has sold these shares in February and March 2012. Further, it can be seen from SEBI's order that it has penalized the entities involved for the violations of guidelines of SEBI and in this order, the name of the appellant is not appear....
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....d 65,39,937.50 1,50,000 24-02-2012 Banas Finance Ltd 60,69,512.24 1,40,000 28-02-2012 Banas Finance Ltd 58,17,063.10 1,50,000 01-03-2012 Banas Finance Ltd 32,68,888.49 1,00,000 06-03-2012 Banas Finance Ltd 44,38,978.32 1,50,000 Total 4,14,25,961.40 10,00,000 The appellant has shown LTCG of Rs. 3,94,25,951/- from the sale of these shares and the same is claimed as exempt u/s 10(38) of the I.T. Act. From the above, it is seen that the appellant has purchased the preferential shares of M/s Banas Financial Ltd and for the same payment of Rs. 20 lakh has been made through the banking channels. Subsequently, these shares were sold on the stock exchange and the receipts are reflected in the bank account. 11. Now, coming to the observations of the AO that the price of the shares is not supported by the fundamentals of the company. The appellant has submitted the financials of this company and has contended that when this company started its operation in A.Y 2010-11, the turnover was only Rs. 2 lakhs which has increased to Rs. 7 crores in the AY 2011-12 and 2012-13 showing revenue growth at 350 times.....
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....d the assessee. 5.2 It is noted that the addition has been made as unexplained cash credit u/s 68 which cast onus on the assessee to demonstrate fulfilment of three primary conditions viz. identity of the investor is established by the assessee, the investors had creditworthiness to make those investment and the transactions were genuine. So far as the fulfilment of these primary ingredients of Section 68 is concerned, we find that the assessee has successfully demonstrated the fulfilment of the same which is evident from the orders of both the lower authorities. The transactions have duly been confirmed by the investors in response to notice u/s 133(6). The assessee has filed voluminous documentary evidences before both the lower authorities which prove the fulfilment of these conditions. Even the assessment order u/s 143(3) of an entity who made an investment of Rs.290 Lacs has been placed on record wherein no adverse view has been taken against the investor. The Share allotment has been made after following due procedure of law and after obtaining statutory approval from the concerned government agencies SEBI & Stock Exchanges. The complete details of the same, as required by la....
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....from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore, it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre-proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identify and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders ie, they are bogus. The Apex Court in Lovely Exports (P) Ltd. (supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share a....
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....hich there is no adverse findings are made in order passed by Securities and Exchange Board of India [SEBI], the transactions cannot be treated as bogus, merely by relying on the probability angle and third party statements. The Ld.CIT(A) thus deleted the addition made by Ld.AO in respect of purchase and sale of shares of Banas Finance Ltd. Aggrieved by the order of Ld.CIT(A), assessee is in appeal before this Tribunal. 5. The Ld.AR has relied on the decision of Co-ordinate Bench of this Tribunal in the case of assessee's brother (supra) wherein on identical facts and circumstances, this Tribunal upheld the order of Ld.CIT(A). Before us, Ld.AR also relied on the order passed by SEBI placed at page 36 (relevant finding at page 65) of the paper-book vide order dated 27/04/2018 wherein, SEBI issued notice to Banas Finance Ltd., for certain non-disclosure under Rule 7(1) of SEBI Regulations, 1997. The order of SEBI does not allege that Banas Finance Ltd., was indulged in price rigging. It is thus very clear that SEBI had not considered Banas Finance Ltd., to be involved in rigging of prices that led to the steep increase in the share prices. Nowhere in the SEBI order there is a m....