TaxTMI 
TaxTMI 
2026 (4) TMI 724
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....M.C. Betala, FCA, appeared and furnished various details and documents. After examining, it was found that during FY 2014-15 relevant to AY 2015-16, assessee had been dealing in shares and claimed an amount of Rs. 1,52,76,467/- as Long Term Capital Gain exemption u/s 10(38) of the Act. The gain had arisen from sale of 36,100 scrips of the company HPC Bioscience for a sum of Rs. 1,49,14,984/-. Investigation made by the Income-tax Department had revealed that the scrip of HPC Biosciences Limited are used to book bogus long term capital gain. 3. On completion of proceedings, Ld. AO vide order dated 08.12.2017 made addition of Rs. 1,49,62,513/- u/s 68 of the Act. 4. Against the order dated 08.12.2017 of Ld. AO, the assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 31.05.2019. 5. Being aggrieved, the appellant-assessee preferred present appeal on following grounds of appeal:- 1. That on the facts and circumstances of the case, the learned CIT(A)-2, Guwahati erred in upholding assessment concluded by Ld. Income Tax Officer, Ward 4(1), Guwahati, at Rs. 1,49,56,620/- instead of returned income of Rs. 41630/- returned by the appellant. 2....
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....long term 'capital asset' was not includible in total income of the assessee in view of section 10(38) of the Act. 10. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the evidence tendered by the appellant to support the claim of sale of shares and hence, findings mechanically recorded on borrowed inference in disregard of evidence and based on irrelevant and extraneous considerations are misconceived and, misplaced. 11. That the erroneous addition by Ld. AO have been confirmed by Hon'ble CIT(A)-2, Guwahati despite the same having been made by LD AO grossly indulging in conjecture and surmises without there being any direct adverse material against the assessee, based only on suspicion. 12. That the addition has been confirmed despite the assessee bringing on record all evidences and material to prove the genuineness of the transaction. 13. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the addition despite the AO taking adverse inference, misinterpreting the statement of assessee recorded on oath. 14. That the learned Commissioner of....
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....49,56,620/- instead of returned income of Rs. 41,630/- of the assessee. Departmental Authorities erred in declaring Long Term Capital Gain on sale of shares as an unaccounted income and denying exemption u/s 10(38) as claimed by the assessee. Disallowance of exempted Capital gain on sale of shares of HPC Biosciences Ltd were made merely influenced by Generalized Investigation reports and SEBI orders when neither such reports or order contain assessee's name and the case of assessee is duly supported by documentary evidences not controverted by lower authorities without conducting any examination of record and misplacing the facts not applicable in the instant case. 7. Facts misplaced by Lower Authorities (a) Reliance on statement of not connected brokers Sh. Ashok Kumar Jalan and Sh. Sanjay Voha whereas the appellant never dealt through with such brokers and duly explained it only dealt through M/s. Divya Portfolio Pvt. Ltd (b) Entire transactions were conducted by M/s. Divya Portfolio Pvt. Ltd not done of the transaction through Sh. Ashok Kumar Jalan and Sh. Sanjay Voha (c) The Transactions though on-line trading at Bombay Stock Exchange not at al....
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....nal Vs. Income Tax Officer - [2024] 162 taxmann.com 892 (Gujarat) Principal Commissioner of Income-tax Vs. Shri Ambalal Chimanlal Patel - [2023] 152 taxmann.com 330 (Gujarat) Principal Commissioner of Income-tax Vs. Genuine Finance P. Ltd - [2024] 161 taxmann.com 476 (Gujarat) Principal Commissioner of Income-tax (Central) Vs. Affluence Commodities (P.) Ltd - [2024] 161 taxmann.com 606 (Surat-Trib.) Sanjay Kumar Damjibhai Gangani Vs. Assistant Commissioner of Income-tax (OSD) - [2024] 167 taxmann.com 157 (Ahmedabad-Trib.) Hemantkumar Mansukhlal Soni, HUF Vs. Income-tax Officer 9. Ld. Departmental representative relied on orders of Departmental Authorities. Hon'ble ITAT Delhi in Sangeeta Devi Jhunjhunwala Vs. ITO 70(1) in 152 taxmann.com 348 (Delhi ITAT) (18.05.2023). In this case the Hon'ble ITAT was dealing with issue relating to disallowance on claim of exemption u/s 10(38) of the Act on LTCG arising out of the sale of scrips of M/s HPC Biosciences Ltd. based on investigation carried out by Directorate of Investigation, Kolkatta on accommodation entry of LTCG and identified beneficiaries who have taken bogus entry of LTCG. The f....
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....facilitating payments and receipts filed before Ld. AO vide reply dated 15.05.2017 and 19.06.2017. Copy of Paper Book at Page No. 8A to 8K. The adverse inference of Ld. AO to treat investments made out of disclosed sources and genuineness of claims were made without any basis and contrary to the evidences produced by the assessee. 12. A Coordinate Bench in ITA No.752/Del/2024 titled as Reena Kumari Vs. Income-tax Officer [2025] 170 taxmann.com 430 (Delhi-Trib.) held as under:- 4. Heard and perused the record. The main issues involved is alleged bogus long term capital gains claimed by the Assessee in the following scrips: Sr. No. Scrip LTCG Claimed 1. HPC Biosciences Limited. (Scrip Code 535217) ("HPC") 5,16,89,108/- 2. Sunstar Realty Development Limited ("SRDL") 1,81,75,146/- 4.1 Ld. AR has submitted that the Revenue authorities have made the addition u/s 68 of the Act invoking the principle of human probabilities and suspicious surrounding only and on the basis of weak financials of these companies, SEBI Proceedings, Investigation wing, Kolkata, report and statement of Shri Sumit Kumar, the director of AMS Power Tronics Ltd. and hav....
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....amine the issue on merits and then consider that how far absence of this opportunity cross examination of witness or non-provision of documents was prejudicial to the 7. As with regard to the merits of case id. AR submitted that the Assessee was not a part of any sham transaction which is also evident by the investigations conducted by the Securities and Exchange Board of India. According to Ld. AR, the Assessee was specifically given a clean chit in that investigation. 8. Now as matter of fact the Assessee acquired 100000 (One Lakh) Pre-IPO Equity Shares of HPC Biosciences Limited @10/- per share for Rs. 10,00,000/-(Rupees Ten Lakh Only) on 04.02.2013 from AMS Powertronics Private Limited vide account payee Cheque No. 540577 dated 04.02.2013 drawn on Punjab National Bank and got the shares transferred in her name on 16.02.2013. The said shares were lodged for dematerialization and were dematerialized on 16.03.2014 with NSDL. The company's IPO was listed on BSE SME Segment on 19.03.2013 at an issue price of Rs. 35/- which opened at Rs. 37.25/- and closed at 39.10/-. The Assessee sold these shares starting from 27.03.2014 to 11.07.2014 at around Rs. 540 to Rs. ....
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....ng the securities market and buying, selling or dealing in securities, either directly or indirectly, in any manner, till further directions, name of the Assessee is at point 64 page number 404. Then by SEBI Order dated 17.02.2016 [Page No. 208 to 217 of PB), directions passed in Order dated 29.06.2015 were confirmed and the name of the Assessee is at Serial Number 40 at Page 215 of the Paperbook. It is pertinent to note that this Order was passed as the Assessee failed to file its objections before the SEBI. Then by SEBI Order dated 25.08.2016 [Page No. 261-367 of PB], is the confirmatory order against the remaining 107 entities. However, vide SEBI Order dated 06.09.2017 [Page No. 48 to 58 of PB; Relevant Para 3 & 4 at Page Number 53 of PB], the directions passed against the Assessee vide Order dated 29.06.2015 and confirmed vide Order dated 17.02.2016 were revoked after a detailed investigation by the SEBI. Assessee's name is at serial number 31, Page number 54. Relevant Para is reproduced herein below: "3. The. directions issued vide the ad interim ex parte order dated June 29, 2015 read with Corrigendum Order dated January 04, 2016 were confirmed vide orders dated ....
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.... though all the characteristics of the penny stock exists in the present case, still the revenue has not brought on record any materials linking the assessee in any of the dubious transactions relating to entry, price rigging or exit providers. Even in the SEBI report, there is no mention or reference to the involvement of the assessee. We can only presume that the assessee is one of the beneficiaries in these transactions merely as an investor who has entered in investment fray to make quick profit. Even the Assessing Officer has applied the presumptions and concept of human probabilities to make the additions without their being any material against the assessee. We observe that the Hon'ble Bombay High Court in the case of Pr. CIT v. Ziauddin A Siddique in [Income Tax Appeal No. 2012 of 2017, dated 4-3-2022] held as under: - "1. The following question of law is proposed: "Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in deleting the addition of Rs. 1,03,33,925/- made by AO u/s 68 of the IT. Act, 1961, ignoring the fact that the shares were bought acquired from off market sources and thereafter th....
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....he fact that the financials of these companies do not support the gains made by these companies in the stock exchange, as well as the fact that despite the notices issued by the AO, there was no evidence forthcoming to sustain the credibility of these companies, he argues that it can be safely concluded that the invest-ments made by the present Respondents were not genuine. He submits that the AO made sufficient independent enquiry and analysis to test the veracity of the claims of the Respondent and after objective examination of the facts and documents, the conclusion arrived at by the AO in respect of the transaction in question, ought not to have been interfered with. In support of his submission, Mr. Hossain relies upon the judgment of this Court in Suman Poddar v. ITO, [2020] 423 ITR 480 (Delhi), and of the Supreme Court in Sumati Dayal v. CIT, (1995) Supp. (2) SCC 453. 9. Mr. Hossain further argues that the learned ITAT has erred in holding that the AO did not consider examining the brokers of the Respondent. He asserts that this holding is contrary to the findings of the AO. As a matter of fact, the demat account statement of the Respondent was called for from the ....
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....ot take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unac-counted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that "There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from demat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry....