TaxTMI 
TaxTMI 
2025 (8) TMI 1805
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....eeds of sale of shares as Unexplained Cash Credits. ● The disallowance u/s 69C of the Act made on account of commission for obtaining LTCG entry amounting to Rs. 6,09,350/- 3. Briefly stated, the assessee, an individual and promoters of Sunteck Group, who is engaged in real estate developments .. He had filed his return of income on 03-08-2013 declaring total income at Rs. 82,93,490/- for the A.Y. 2013-14 with current year loss of Rs. 2,51,132. The return filed by the assessee was processed U/s 143(1). Later based on report from investigation wing, ld.AO has issued notice U/s 148 on 22-03-2021. Assessee filed return in response to 148 notice on 20-04-2021 without admitting any additional income. In the course of scrutiny assessment the income has been assessed at Rs. 2,92,14,511/-. Addition on account of LTCG and Commission 3.1. The ld. AO inter alia observed that assessee has declared exempt income derived by way of Long Term Capital Gains (LTCG) under section 10(38) of the Act on account of sale of shares of M/s ACI Infocom Ltd. On enquiry by the AO, the assessee submitted that he had purchased 1,50,000/- shares of ACI infocom on 15/02/2011 for a total con....
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....ense on notional basis. 4. In this regard, the learned Counsel submitted at the outset that the Long Term Capital Gains claimed as exempt under section 10(38) of the Act was fully supported by the documentary evidences for the purchase and sale of shares before the lower authorities and the Revenue authorities have blindly relied upon the investigation report which primarily narrates general modus operandi. The learned Counsel pointed out that the ld.AO has merely relied upon the investigation wing of the Income Tax Department, who has identified M/s ACI Infocom Ltd. as one of the penny stock on the basis of orders of the SEBI and stock exchange. But its matter of record that there is no such order of SEBI or Stock exchange passed against the said company or banning the trade of the scrip or any adverse finding has ever been received that there was any manipulation of price in stock exchange. He stated that ld.AO has wrongly narrated the facts of the SEBI order dated 27-03-2018, the said order on account of violation of SEBI Complaints Redress System as the said company has not addressed complaints of two investors. There is no reference of any price manipulation of price riggin....
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....d passed order dated 27-03-2018 against the company. The allegation is incorrect as no such investigation initiated by SEBI and order dated 27-03-2018 is for not resolving investor complain on time, copy of order submitted. Page 18 In Q No. 20 of Statement of director of ACI Infocom, investigation wing showing data of 2011 to 2013 and questioning him to justify the price movement from Rs. 2.63 to Rs. 21.90 during this period. The investigation wing relied upon wrong data to initiate the proceeding as the share price of ACI infocom was Rs. 35 in January 2011 which rose to Rs. 160 in January 2013 and in Feb. 2013 it was quoted at Rs. 16 due to slip of shares from face value of Rs. 10/- to Re. 1/- per share. Therefore, the base report based on which the case was reopened itself is on wrong facts. Page 30 para 8 In conclusion on top of page 31 AO noted "It is concluded that the losses booked by assessee in his books were pre- arranged method to evade taxes." Same thing again repeated while analysing the transaction - "(ii) the assessee resorted to a preconceived scheme to procure loss by way of price difference in share transaction not supported by m....
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....Where AO disallowed exemption claimed by assessee under section 10(38) and made additions, alleging involvement in penny stock which were being misused for providing bogus accomodation of LTCG, however, there was lack of adverse comments from stock exchange and officials of company involved in these transactions and no material relating to assessee was found in investigation wing report, additions made by AO had rightly been deleted 94 taxmann. com 156 (Punjab & Haryana) PCIT us Prem pal Gandhi The assessee purchased shares of a company during the assessment year 2006-2007 at Rs. 11/- and sold the same in the assessment year 2008-2009 at Rs. 400/- per share. In the above case, namely, Hitesh Gandhi (supra) also the assessee had purchased and sold the shares in the same assessment years. The Assessing Officer in both the cases added the appreciation to the assessees' income on the suspicion that these were fictitious transactions and that the appreciation actually represented the assessees' income from undisclosed sources. In Hitesh Gandhi's case (supra) also the CIT (Appeals) and the Tribunal held that the Assessing Officer had not produced any evidenc....
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.... scenario no vigilant investor will invest in such shares. He also referred the investigation report as relied by the AO and stated that AO is duty bound to make the addition as investigation wing has highlighted crucial facts in the trading pattern in the shares of ACI Infocom. 10. We have carefully considered the rival submissions and perused the relevant finding given in the impugned orders and material available on record and also the case laws cited have also been taken into account. As pointed out on behalf of the assessee, the transaction of existence of purchase and sale of M/s ACI Infocom Ltd. giving rise to LTCG claimed to be exempt under section 10(38) of the Act was fully corroborated by the documentary evidences, which is not in dispute. The shares have been credited in the demat account and transferred out of demat account at the time of sale. Both purchase and sale transactions are carried out through banking channel and by transfer of shares. The prima facie bonafides of existence of transaction executed cannot thus be doubted. It is not the case of the revenue that the capital gain arising to Assessee in not in the nature of LTCG as the shares were held by the a....
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.... whole basis of making the addition is standard modus operandi without there being any linkage with the assessee or any inquiry of the scrip or any adverse finding by agency like SEBI, which regulates the trading in stock exchange. It is trite law that additions merely on the basis of suspicious, conjectures or surmises could not be sustained in the eyes of law as held by Hon'ble Supreme Court in Omar Salay Mohamed Sait Vs CIT (1959 37 ITR 151). The suspicion however strong could not partake the character of legal evidence as held by Hon'ble Supreme Court in Umacharan Shaw & Bros. Vs CIT (1959 37 ITR 271). Therefore, we find that onus as cast upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The allegation of price rigging / manipulation has been levied without establishing the vital link between the assessee and various entities as stated by AO being exit providers. 13. In this backdrop and facts and circumstances of the facts on record and lack of inquiry by the AO, we are of the view th....