TaxTMI 
TaxTMI 
2026 (1) TMI 1124
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....Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi on following amongst other grounds, each of which are without prejudice to any other: - 1.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the validity of notice u/s. 148, issued in absence of tangible material, without independent application of mind and without having reason to believe of escapement of income; 2.0 On facts and circumstances of the case and in law, Ld. CIT(A), upon holding the transactions of purchase and sale of shares as non-genuine, erred in sustaining the addition u/s. 68 of Short term capital loss on shares of Purti Sakhar Karkhana Ltd of Rs. 70,84,000/- and Short term Capital gain on s....
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....ed 18/08/2014. Notice was issued based on information received from Investigation Wing of the Department, Vidarbha, Nagpur, that during the course of enquiries in the case of Purti Power and Sugar Ltd., Nagpur (PPSL) on 30/11/2009 it was noticed that 12 companies of Mehta Group, Nagpur, transferred 4.73 Cr. Shares of PPSL to 14 companies. 2.1. It was further noticed that these transfers did not take place directly but through five layers of companies and that, layers - 2, 3 &4 had booked huge losses. The investigation wing further observed that at layer-3, other three companies of Mehta Group, Nagpur were involved and it was found that the losses booked by them were set off against the profit on sale of lands/properties in the same year ....
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.... capital loss of the same amount i.e. Rs. 70,84,000/-. Therefore, the AO as elaborated in the assessment order disallowed short-term capital loss and added the same u/s. 68 of the Act. Further, the AO made addition of Rs. 70,84,000/-which was disclosed by the appellant as short-term capital gain, thereby determining the assessed income at Rs. 1,41,68,6571-. Coming to the facts of the instant case, the appellant ought to have discharged the burden of proof by establishing the genuineness of the transactions with M/s Purti Sakhar Kharkana Ltd., & M/s Sperm Tracom Pvt. Ltd., 8.3. Under the circumstances, I am of the considered opinion that the short term capital loss/gain introduced in the books of accounts by way of purchase....
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....ench the additions are confirmed for all the assessment years under consideration since the loan amount has been treated as unaccounted money of the assessee for payment of interest of such loan amount claimed as unexplained and added by the AO is also confirmed." In view of aforementioned factual matrix of the case and respectfully following the decision of hon'ble ITAT, Mumbai, I am of the considered opinion that, in the instant case, the appellant failed to establish the genuineness of the transactions to the extent of Rs. 1,41,68,000/- and therefore, the addition made by the AO is treating the same as unexplained cash credit is upheld. The appellant relied on numerous case laws in which the facts are different from the inst....
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....wherein similar transactions of a layered company was involved and analysed by this Tribunal in case of M/s. Rishi Realcom Pvt. Ltd. vs. ITO in ITA No. 1152/Mum/2017 for AY 2010-11vide order dated 14/03/2019.He submitted that, in the said decision, this Tribunal confirmed the disallowance of 2% of the gross transactions value as profit of assessee as was observed by Ld.CIT(A) in that case. The Ld.AR also submitted that, it is not the case of revenue that assessee had earned any commission in this kind of transactions. Ld.AR thus, submitted that, disallowance may be restricted to 2% of the gross transactions. 5.2. On the contrary, Ld.DR vehemently submitted before us that assessee admittedly indulged in accommodation entries which was pro....
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....es of this Tribunal that the assessee cannot be taxed on the entire value of the purchase and sale of shares, but only on the embedded commission or profit element earned for facilitating such transactions. This is for the reason that the principal amounts involved in the transactions do not partake the character of income in the hands of the conduit entity, but merely pass through it, with only the marginal commission retained representing real income. 6.2. In view of the foregoing discussion, while we concur with the finding of the Ld.CIT(A) that the transactions in shares of M/s. Purti Power and Sugar Ltd and M/s. Sperm Tracom Pvt. Ltd. were non-genuine and pre-arranged, we do not approve the action of taxing the entire value of the p....