TaxTMI 
TaxTMI 
2024 (4) TMI 1388
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....d earned long term capital gains on sale of shares of M/s Rutron International Ltd, which was identified as one of the penny stocks by the Investigation wing of Kolkata. As per the information received from the Investigation wing, certain brokers were involved in manipulating the prices of small companies (called "penny stock companies") in order to generate bogus capital gains/losses. It was noticed that the assessee had purchased 5,00,000 shares of Rs. 10/- each of M/s Rutron International Ltd for a consideration of Rs. 50.00 lakhs on 05.12.2012. The same was credited to the demat account of the assessee. The face value of shares was reduced to Rs. 1.00 per share due to split on 26.11.2013 and hence the assessee got 50 lakh shares. The assessee sold all the shares in January, 2014 for an aggregate value of Rs. 8.60 crores. Since the shares were held for more than one year, the assessee claimed the capital gain of Rs. 8.08 crores as exempt u/s 10(38) of the Act. The assessing officer extensively relied upon the report given by the investigation wing in order to arrive at the conclusion that the long term capital gains declared by the assessee is not genuine. He observed that the f....
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.... of shares of M/s Rutron International ltd in the case of Ramprasad Agarwal vs. ITO (ITA No. 4843/M/2018 & 1228/M/2018 dated 30-11-2018) and deleted the addition, following the decision rendered by Jaipur bench of Tribunal. The Ld A.R submitted that the assessee has not been subjected to any enquiry by the SEBI. With regard to the fines imposed by SEBI on the broker M/s Arcadia Share & Stock brokers Ltd, the Ld A.R submitted that the same is with reference some other activities of the broker and not with regard to the transactions carried on with the assessee. The Ld A.R further submitted that the AO has not brought on record any material to show that the assessee was part of the group which was manipulating the prices of the shares. Accordingly, the Ld A.R submitted that the AO has disbelieved the transactions of purchase and sale of shares of M/s Rutron International Ltd on surmises without conducting further enquiries and also merely relying upon generalized report given by the Investigation wing. He submitted that the Ld CIT(A) also did not find any fault with the documents furnished by the assessee. Accordingly, he prayed that the additions made by the AO may be deleted. 4.....
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....tion report prepared by Investigation wing, Kolkata is a generalized report with regard to the modus operandi adopted by the brokers to manipulate the prices of certain shares to suit their requirement in generating bogus capital gains/capital losses. We notice that the AO has placed reliance on the said report without bringing any material on record to show that the transactions entered by the assessee were found to be a part of manipulated transactions, i.e., 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. The Ld A.R submitted that the SEBI, who is regulator of stock market operations, has not conducted any enquiry with the assessee. We notice that the enquiry conducted with the broker through whom the transactions of purchase and sale were effected, was on different issues. 7. From the demat account copy furnished by the assessee, we notice that the assessee is a regular investor, i.e., she is holding shares of other companies also. Thus, the impugned transactions are not isolated transactions of purchase and sale. Hence the version of the asse....
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....non-genuine or there was any adverse mention about the transaction in question in statement of Sh. Pawan Purohit. Simply because in the sham transactions bank a/c were opened with HDFC Bank and the appellant has also received short term capital gain in his account with HDFC Bank does not establish that the transaction made by the appellant were non-genuine. Considering all these facts the share transactions made through Shri P K Agarwal cannot be held as non-genuine. Consequently denying the claim of short term capital gain made by the appellant before the AO is not approved. The AO is, therefore, directed to accept claim of short term capital gain as shown by the appellant." The Jaipur bench has also followed the decision rendered by Special bench of ITAT, Mumbai in the case of GTC Industries vs. ACIT (1998) (65 ITD 380)(Mum), wherein it was observed as under:- "....However this presumption or suspicion how strong it may appear to be true, but needs to be corroborated by some evidence to establish a link that GTC actually had some kind of a share in such secret money. It is quite a trite law that suspicion howsoever strong may be but cannot be the basis of addition exc....
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....sons 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, yet they are termed as ....
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....em 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. Suresh kumar that the Tribunal misdirected itself and in law. We hold that the Appeals do not raise any substantial question of law. They are acc....
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.... 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 view thereof, the CIT(A) found there was no reason to add the capital gains as unexplained cash credit under section 68 of the Act. The Tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of Stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of Stock Exchange. The ITAT therefore, in our view, rightly concluded that there was no merit in the appeal." In the instant case also, we noticed that the evidences furnished by the assessee to prove the purchase and sale of shares, payment made/received, entry/exit of shares in the demat account of the assessee etc., were not doubted with. 11. In the case of PCIT vs. Smt Krishna Devi (supra), the Hon'ble Delhi High Court has noticed that the reasoning given by the AO to disbelieve the capital gains d....