TaxTMI 
TaxTMI 
2026 (5) TMI 217
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.... on sale of shares. Of course, there is an ancillary issue of addition of commission paid on account of accommodation entry availed through bogus long term capital gain. 4. Briefly the facts relating to the disputed issues are, the assessee is a resident individual stated to be deriving income from salary, other sources and capital gain. The assessee acquired 15000 shares of Lifeline Drugs and Pharma Ltd. having face value of Rs. 10/- each at a premium of Rs. 50/- per share for a total consideration of Rs. 9,00,000/- on 31.03.2014 on preferential allotment basis. Subsequently, the shares were split to face value of Rs. 1/- on 19.11.2013. As a result, assessee came to hold 1,50,000 shares. During the Assessment Years 2014-15 and 2015-16, the assessee sold 53000 and 45750 shares respectively on Bombay Stock Exchange (BSE) platform through a share broker registered with Securities and Exchange Board of India (SEBI). Such sales resulted in net 'LTCG' of Rs. 95,58,164/- in Assessment Year 2014-15 and Rs. 1,07,84,798/- in AY 2015-16. The resultant capital gain was claimed as exempt u/s. 10(38) of the Act in the return of income filed for the assessment years under dispute. 5. In co....
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....e the Assessing Officer and learned First Appellate Authority. She submitted, without finding any deficiency in the documentary evidences, purely based on the report of the Investigation Wing the additions have been made by the Departmental Authorities. She submitted, while making the additions, the Assessing Officer has stated that BSE has suspended the sale of scrips of the company in August, 2015, which is much after assessee's transactions. Therefore, for that reason, the share transactions cannot be held as non-genuine. She submitted, the assessee is a regular investor in shares and during the relevant assessment years, the assessee has transacted in other scrips as well and nothing adverse has been found by the Assessing Officer in respect of those transactions. 8. Learned counsel submitted, in respect of other assessees who reported LTCG from sale of shares of Lifeline Drugs and Pharma Ltd., the ITAT has deleted similar additions made by the Assessing Officer. In this context she relied upon the following decisions: 1. Smt. Radhika Garg vs. ITO, ITA No. 4738/Del/2018. 2. Smt. Nishika Aggarwal vs. ITA No. 2429/Del/2018. 3. ITO vs. Smt. Radhika Ga....
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....circumstances, it requires consideration whether the share transactions can be held to be non-genuine. In this context, it is relevant to observe that the fact that assessee is a regular investor in shares and has undertaken share transactions is evident from the materials on record. Even, in the assessment years under dispute, the assessee had sold shares of various other companies and the Assessing Officer has not found them doubtful. Only in respect of shares of Lifeline Drugs and Pharma Ltd. the Assessing Officer has raised doubt. The primary reason for entertaining such doubt appears to be the Investigation Wing report and the fact that BSE suspended transaction in shares of the company in August, 2015. However, facts on record reveal that such suspension was for temporary period and subsequently transaction in shares had taken place. In this context, the following observations of the Coordinate Bench in case of Smt. Ritu Jain vs. ACIT (Supra) would be relevant: "18. It can be seen that during the F.Y. 2014-15, the assessee has earned short term capital gain of Rs. 79.72 lakhs and long term capital gain of Rs. 6.22 crores. However, the Assessing Officer chose only one....
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.... share capital and reserves and surplus were at Rs. 3,62,40,000/- and Rs. 17,65,16,912/- respectively. Trade payables were at Rs. 10,80,74,165/-. 24. These financials go to show that LDPL is not a shell company. SEBI has suspended trading in shares of LDPL w.e.f 28.08.2015 whereas the assessee has sold shares from May 2014 to December 2014, many months before suspension of the scrip. It is not the case of the Assessing Officer, nor there is any evidence on record to show that SEBI has declared all transactions done in scrip of LDPL prior to the suspension as null and void. It is a matter of fact that SEBI looks into irregular movements in share prices and warns investors against any such unusual increase in share price. No such warning was issued by SEBI. The Assessing Officer has failed to produce any material/evidence to dislodge or controvert the genuineness of conclusive documentary evidences produced by the assessee in support of his claim considering the fact that he is a genuine investor and is from past many years, as explained elsewhere. 25. Surprisingly, neither the assessee nor his brokers are named as illegitimate beneficiaries to bogus long term capit....
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....acceptable and the consequent disallowance resulting in addition to income made for Rs. 19,39,60,866/-, is directed to be deleted." 4. The ITAT by its judgment dated 16th May, 2014 relied on the self-same reasoning and dismissed the appeal of the revenue. Likewise, the High Court by the impugned judgment dated 5th July, 2017, affirmed the judgments of the CIT and ITAT as concurrent factual findings, which have not been shown to be perverse and, therefore, dismissed the appeal stating that no substantial question of law arises from the impugned order of the ITAT. 5. In these circumstances, the Review Petitions are dismissed." 28. On identical set of facts, the coordinate bench in the case of Deepak Nagar 73 ITR [Trib] 74 has allowed the appeal of the assessee. The relevant findings of the coordinate bench read as under: "22. For the sake of repetition, the entire assessment has been framed by the Assessing Officer without conducting any enquiry from the relevant parties or independent source or evidence but has merely relied upon the statements recorded by the INV Wing as well as information received from the INV Wing. It is apparent from the asse....
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....nce of any such finding that the material disclosed was untrustworthy or lacked credibility the assessing officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description of Section 68." 25. Considering the vortex of evidences, we are of the considered view that the assessee has successfully discharged the onus cast upon him by provisions of section 68 of the Act and as mentioned elsewhere, such discharge of onus is purely a question of fact and therefore, the judicial decisions relied upon by the ld. DR would do no good on the peculiar plethora of evidences in respect of the facts of the case in hand. We, accordingly, direct the Assessing Officer to accept the LTCG of Rs. 11,93,55,564/- declared as such. 26. Since we have accepted the genuineness of the LTCG, we do not find any merit in the consequential addition of Rs. 6,05,312/- and the same is also directed to be deleted. 29. in his written submissions, the Id. DR has referred to various judgments and heavily relied upon the decision of the Hon'ble High Court of Delhi in the c....