TaxTMI 
TaxTMI 
2025 (9) TMI 1792
X X X X Extracts X X X X
X X X X Extracts X X X X
....dering the facts and circumstances of the case. 2 On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing officer in disallowing the Long-Term Capital Gain claimed as exempt u/s. 10(38) of the Income Tax Act, 1961, without considering the fact & circumstances of the case. 3. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing officer in making an addition of 3 Rs. 1,72,05,856/- u/s 68 of the Income Tax Act, 1961 by treating the entire sale consideration of M/s. ACI Infocom Ltd as alleged unexplained cash credit, without considering the facts and circumstances of the case. 4. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing officer in making an addition of Rs. 5,16,176/- u/s. 69C of the Income Tax Act, 1961 on account of alleged commission paid (i.e. @3% on Rs. 1,72,05,856/-) to the entry provider of script of M/s ACI Infocom Ltd, without considering the facts and circumstances of the case." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee could not establish having any knowledge about the share traded and having any knowledge about the fundamentals of penny stock companies, therefore, was unable to substantiate her ignorance about shares and penny stocks companies. In terms of aforesaid observations, the ld. AO added the entire transaction value of Rs. 1,72,05,856/- along with 3% commission of Rs. 5,16,176/- on the said transaction to the income of the assessee u/s. 68 and u/s. 69C of the Act, respectively. 6. Aggrieved with the aforesaid additions, the assessee preferred an appeal before the ld. CIT(A). However, with no success, the appeal of the assessee has been dismissed by the ld. CIT(A) under the following observation: "6.4 Decision 6.4.1 The findings of the AO, the submission of the appellant and the overall factual matrix of the case has been considered. The appellant has quoted several decisions of different appellate forums. In this connection it is my considered view that the various case laws relied upon by the appellant are specific to the particular case and the ratio decidendi in these cases do not lay down any binding judicial principle that may be applied in a blanket....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of such instances. This finding of the SIT is an important aspect to be kept in mind while analysing the circumstantial evidences in penny stock cases. 6.4.4 Coming to the facts of the instant case. (i) the appellant has acquired the shares through the preferential allotment route but has not been able to furnish and explain as to how the appellant came to know about this preferential allotment nor did the appellant furnish any invitation letter or offer from the said company. (ii) The share in question, M/s ACI Infocom Ltd was not traded at all prior to the issue of preferential shares with the general public not being interested in it and thus there is no question of any market sentiment, future projections etc influencing the appellant to opt for the preferential allotment. (iii) The share was trading at Rs. 2.63/- in August 2011 and it went upto Rs. 22/- in February 2013. Thus, there was a whopping profit to the tune of 836% in this period when the general market sentiments were bearish and there was no such reflection in the Sensex. (iv) SEBI took note of the irregular trading pattern and conducted its own enquiry into the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1,72,05,856/- is hereby confirmed, and these grounds of appeal stands dismissed. 7. Ground No 4 pertains to the addition of commission payment of Rs. 5,16,176/- on account of arranging the long-term capital gain accommodation entry. This ground of appeal is consequential in nature and since the LTCG itself is bogus, there is no infirmity in the action of the AO in attributing commission payment to arrange it. The rate of 3% applied by the AO is also reasonable and in line with the market realities. In view of the same, the addition of Rs. 5,16,176/- done to the income of the appellant U/s 69C on account of payment of commission for arranging the accommodation entry is confirmed and the ground of appeal is dismissed." 7. Dissatisfied with the aforesaid observations of the ld. CIT(A), assessee preferred the appeal before the ITAT, which is under consideration before us. 8. At the outset, the ld. AR reiterated the facts from the orders of authorities below and has submitted that the assessee indulged into the present transaction under the normal course of her investment along with certain other investments, the transaction should not be treated as tented transaction. It....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AO. It is the submission by ld. AR that the apprehensions of the ld. AO that the alleged transactions of share were not governed by market factors, that the assessee resorted to preconceived scheme to procure loss by way of price difference in shares transactions were not supported by market factors. The ld. AO referred to cumulative events of such transaction of shares to reveal that the same are devoid of any commercial nature and fell in realm of not being bonafide and hence impugned trading loss is not allowable. The ld. AO also referred to the order of SEBI referred above and has arrived at similar finding that the price of shares was determined artificial by manipulations and cannot be a product of market factors and commercial principles. To the aforesaid findings of ld. AO, it was the submission by the Counsel of assessee that nothing could be proved by the ld. AO which is further relied upon by the ld. CIT(A) in his order. Therefore, the action of revenue authorities in making the addition and confirming the same is not in accordance with facts on records and the mandate of the law. The entire addition u/s. 68 as well as u/s. 69C, therefore, are liable to be deleted. Ld. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ision of ITAT, while allowing the appeal of having equal applicability in the present case is reproduced here under for the sake of reference: 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 assessee more than one & half years. The case of revenue is that such transactions is an accommodation entry and thus it is a sham, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. V/s 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 that the addition is not justified based on conjecture and surmise and the assessee is discharged primary onus which lay upon it. ....