TaxTMI 
TaxTMI 
2024 (11) TMI 1642
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....bogus accommodation entry, claimed as exempt u/s 10(38), while, (a) the documentary evidences submitted to prove the LTCG of Rs. 65,64,741/- on sale of shares have neither been controverted nor disproved by the ld AO. (b) the ld AO has not brought anything on record to prove that the assessee had routed her own unaccounted money in garb of LTCG. 2. That, on the facts and circumstances of the case and in law, PCIT has not cared/not pointing out the mistake in the 'Proforma of approval' that Jt. CIT has also given his approval who is not the appropriate authority u/s 151(1); the legislature had prescribed such 'Standard Proforma', clearly demarcating and defining the circumstances under which the approval had to be granted by Jt. CIT and the PCIT; the said defined circumstances cannot be rendered ostios by obtaining approval from both Jt. CIT as well as PCIT; impugned approval u/s 151 is invalid, as held in Kalpana Shantilal Haria (2017) (Bom). 3. That, on the facts and circumstances of the case and in law, approval granted by PCIT u/s 151(1) is invalid as it is mechanical, routine & casual manner without application of mind; it is ....
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....ng reasons based on unverified information; it is complete non application of mind by the PCIT while granting such mechanical approval u/s 151 would be invalid in the eyes of law; in absence of a valid approval u/s 151(1), reassessment made u/s 147 would be invalid and liable to be quashed; relied on Kalpana Shantilal Haria (2017) (Bom). 3. Brief facts of the case as stated are that the assessee, who is an individual had filed his return of income for the AY 2012-13, declaring a total income of Rs. 2,72,680/- on 30.03.2013. The case of assessee, thereafter, was re-opened u/s 147 of the IT Act. Notice u/s 148 of the IT Act was issued on 16.03.2019, in response, return u/s 139/148 of the IT Act was filed on 08.05.2019. Statutory notices u/s 143(2) and 142(1) were issued. Further, to investigate into the facts of the case, summon u/s 131 of the IT Act was issued on 13.12.2019 and the assessee was requested to attend the proceedings on 16.12.2019. On the date of hearing at 12:45 pm, the statement of the assessee on oath had been recorded in the office of Ld. AO. The reason for re-opening has been initiated, was that the assessee had sold shares of M/s Karma ISP(Karma) for the releva....
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....of bogus transaction. However, the ld. CIT(A) had not found any substance in the submission / contentions of the assessee, therefore, he dismissed the appeal of the assessee and sustained the addition made by the Ld. AO. 7. Dissatisfied with the order of ld. CIT(A), the assessee herein had resorted to the remedy available by way of filing an appeal before the ITAT, therefore, the present appeal has been instituted, which is under consideration. 8. At the outset, in order to explain the impugned transactions regarding the purchase / sale of share of 'Karma' and 'Praneta', Shri Sunil Agrawal, Chartered Accountant, the Authorized Representative of the assessee (in short "Ld. AR"), submitted that the order of Ld. CIT(A) contains errors qua the appreciation of facts and interpretation of law while passing the appellate order. To support his contentions, Ld. AR furnished before us a written submission dated 17.09.2024, which is extracted hereunder for the sake of completeness of facts and better interpretation of the issue: 1.2. Notice u/s 148 issued on 16-3-19 for reopening the case; as per the reasons recorded, there was information available with the AO ....
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....PB-1, Pg.31 & 32); 1.8. The assessee filed reply vide letter dt.29-8-16 before the AO during assessment proceedings, duly submitted on 30-8-16 (PB-1, Pg.38) that he has made investment of Rs.8,67,120 in listed equity shares of Stock Exchange during AY10-11 reflecting in his balance sheet as on 31-3-10 (PB-1, Pg.38); he has also submitted that he has paid cash to the member of the Stock Exchange, Mumbai; he has purchased shares through registered broker M/s. Sharukh N Tara, Mumbai, 'Contract Note cum purchase bill' of shares of 'Karma' & 'Prraneta' is submitted before the AO (PB-1, Pg.24 to 30); 1.9. the AO has alleged that some statement was recorded by Inv. Wing, Kol by the alleged entry providers wherein they had accepted to provide accommodation entries/ bogus LTCG etc. to various beneficiaries in lieu of certain commission; the AO has alleged that share price rigged up by manipulation; on the basis of that report of Inv. Wing, Kol & some statements recorded of alleged entry providers, the AO has made assumption that the assessee is involved in such imperious activities of bogus LTCG; 1.10. there is no adverse material/material ....
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....a, member in Stock Exchange, Mumbai on 6-2-10; 12-1-10 & 18-1-10 (mentioned in the statement recorded of the assessee u/s131 on 16-12-19 in Ans.No.4, found placed in the assessment order); the broker issued 'Contract Note/purchase bill' of shares on 12-1-10, 18-1-10 & 6-2-10 (i.e., investment made in AY10-11); then, it has been transferred to Demat account of the assessee; sold through registered broker i.e., M/s. Swastika Investmart Ltd, Mumbai; however, the assessee appeared before the AO on 16-12-19 and statement recorded of the assessee u/s 131 on 16-12-19 (placed in the assessment order in pg.2); however, the AO alleged for 'Inv. Wing Report' from DIT(Inv.) & various statements of various alleged entry operators & price rigging of share price (sharp rise in share price) in Stock Exchange; however, those alleged statements are not provided to the assessee; the CIT(A) has accepted in Para 10, Pg.33 of the appellate order dt.23-8-23 that no statement has been provided to the assessee; there no named of the assessee or his broker in the statement recorded of Shri Shiv Shankar by the Inv. Wing, Kolkata; even has not stated the name of the scrip of Karma & Prraneta; ....
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....sfied as to the genuineness of the same. The credit appearing in assessee's account is an amount of Rs. 2,89,43,383 by disallowing the exemption u/s 10(38) at Rs. 2,67,55,708 claimed by the assessee. The AO is not justified in invoking the sec 68. This also amounts to double taxation or double addition of the income in view of the fact that the same amount has actually been shown by the assessee as his income in his computation of income though the same has also been claimed as exempt u/s 10(38). In view of the above, the action of the Id CIT(A) in deleting the addition is justified and is hereby upheld. 20. Before concluding the issue, we would like to deal with 2 more contentions of the Deptt in the grounds of appeal raised in the present appeal. Firstly, there is a mention of applying the test of human probabilities as propounded in Durga Prasad More (1971) (SC) and Sumati Dayal (1995) (SC). We are aware of the proposition laid down by the Hon'ble SC and we humbly bow down before the same. However, in the facts and circumstances of the present case in the face of numerous documentary evidences crying for bona fide of the assessee as against only suspici....
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....s, it is discernible that ld AO had proceeded on the basis of analysis of the financials of the company. According to him, sharp jump in the share prices of the aforesaid scrip is not justified. He has relied upon the search and survey operations conducted by the Inv. Wing of the Deptt at various locations in respect of alleged penny stock which sets out the modus operandi adopted in the business of providing entries for bogus capital gains. The conclusion drawn by the Id AO of implicating the assessee is un-supported by any cogent material on record. The finding arrived at by the Id AO is thus, purely an assumption based on conjectures and surmises. In our thoughtful considerations to the facts and circumstances of the case, it is not in controversy that assessee has discharged his burden by submitting the relevant documents, details of which are already extracted above, forming part of the PB. 7.1. For our above observations and findings, we place reliance on Jamnadevi Agrawal (2012) (Bom HC), wherein it was held that transactions of purchase and sale of shares cannot be considered to be bogus, when the documentary evidences furnished by the as....
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.... the satisfaction of the Id AO. Time and again, Hon'ble Courts have held the requirement of establishing the identity and creditworthiness of the party and genuineness of the transaction to meet the said requirements of sec 68. In the present set of facts, as already stated above, operations and modus operandi of the regulated stock markets (BSE) does not in any way provide for any mechanism by which assessee can bring forth the identity of the buyers of his shares and their creditworthiness. Meeting this requirement is an act of impossibility of performance expected from the assessee for the transaction executed on SEBI regulated, digitally operated SE. For the third limb of genuineness of the transaction, sale proceeds are received through the SE process into the preidentified bank account of the seller i.e., the assessee. Further, it is not a case of mere book entry where a possibility of tainting it as bogus or sham exists but it is a case where actual movement of dematerialised shares has taken place from the DMAT account of the assessee. Furthermore, the said shares are being currently traded on the SE as demonstrated by the assessee from the screen shot....
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....see has transacted in cash. In this respect, in the absence of any corroborative material brought on record by the authorities below, we hold against drawing such inference or presumption. 11. We also note that ld AO did not allow the assessee to cross examination the parties whose statements were relied upon by him for drawing the adverse conclusion. Such an approach adopted by ld AO is not in compliance with the sec142(3) which is a statutory mandatory procedural requirement for making a valid assessment. We note that the required compliance with sec 142(3) has not been met. 12. As already noted above, Id AO has referred to the theory of preponderance of probability which according to us is applied to weigh the evidence of either side and draw a conclusion in favour of a party which has more favourable factor in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of fact that might go against the assessee. Once nothing has been proved against the assessee with the aid of any direct material, nothing can be implicated against the assessee on the presumption or suspic....
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....MAT account where shares remained for more than one year, contract notes were issued and shares were also sold on SE, there was no reason to add capital gains as unexplained cash credit u/s68" (iii) Shyam R Pawar (2015) (Bom HC) wherein it was held: "Where DMAT account and contract note showed details of share transaction, and AO had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income u/s 68." 14. Ld CIT(A) has without dealing with the facts and detailed documentary evidences placed on record by the assessee, dismissed the appeal by stating that issue is a covered matter by Swati Bajaj (Cal HC). In the said decision, it was held that assessee had to establish the genuineness of rise in price of shares within a short period of time that too, when general market trend was recessive. However, we note that there are several decisions of Hon'ble Jurisdictional HC as stated supra which are in favour of the assessee. Accordingly, the same would prevail on the issue before this Trib. In the present case, decision of the Hon'ble Non- Jurisdictional HC carries only a persuasive va....
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.... 1.16. It is submitted that Nilesh Jain (HUF) (2024) 163 taxmann.com 229 (MP HC) dt.30-4-24, held as under: "6. The brief facts of the case are that respondent had purchased shares on private placement from M/s. Santoshi Maa Lease and Finance and Investment P Ltd after due diligence and following sequence of events which has been narrated by Id ITAT in para 16 of the order. This company later was amalgamated with M/s. Sunrise Asian Ltd, a listed company on BSE under an order passed by Hon'ble Bom HC. 7. That, soon after amalgmation, there was sudden jump in the share price on the SE due to involvement of speculators and players of SE. Ld ITAT has admitted that respondent was not involved in manipulating the prices of the shares on stock market and it was only one time investment made by the Respondent of small amount. 8. That, the SEBI, all allegation of insider trading and rigging of the prices on SE, investigated and in its report dt.6-9-21 which was in respect of Sunrise Asian Ltd. found that the promoters and 89 other persons/ companies were involved in rigging of share prices on SE. It is submitted that the respondent is not named in th....
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....ing Suman Poddar (2019) 112 taxmann.com 330 (SC) and allowed the appeals by mentioning that lower authorities are not able to sustain the addition without any cogent material on record while sufficient justification accompanied by relevant evidences were given to prove that M/s. Sunrise Asian Ltd is nothing but penny stock Co. 11. Per contra, Id counsel for the assessee submitted that u/s10(38) the respondent has lawfully claimed exemption by complying the conditions to avail exemption which includes share should be listed on SE, Share should have been purchased through SE and through Banking Channel and STT has been paid thereon. The shares of Sunrise Asian Ltd are listed on BSE, shares have been purchased through D-mat Account and payment have been received through Banking Channel and STT has been paid by SE. Thus, all the conditions for availing exemption have been fulfilled. It is further contended that under IT Act there is no provision which requires the AO to investigate the genuiness of the shares because these share are listed, issued by the Company and records are maintained with the ROC. Thus, these shares cannot be said to be bogus sh....
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....justified and same was to be deleted. 14. For the aforesaid reasons, we have no hesitation in holding that no que of law, much less any substantial que of law arises from the order of the ITAT requiring consideration by this Court. There is no merit in the appeal. Thus, in our considered opinion, the present appeal does not involve any substantial que of law so as to meet the sec260A for admitting the appeal. [as extracted from Nilesh Jain (HUF) (2024) 163 taxmann.com 229 (MP HC)] 1.17. It is submitted that Mamta Rajivkumar Agarwal (2023) 155 taxmann.com 549 (Guj HC) dt.11-9-23, held as under: "3.3. The Trib confirmed the findings of the CIT(A) insofar as, it held in favour of the assessee. Findings of the Trib indicate that the assumption of the AO that the transaction carried out by the assessee are similar to the modus operandi of penny stock was misplaced. The Trib on facts observed thus: "11.1. ....... On analyzing the facts of the present case, we note that the AO on one hand has alleged that the entire transaction was bogus but on the other hand the AO himself has allowed the COA against the sale of shares, meaning thereby, the....
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....re were purchased by the determined buyer." 4. Hence, the Trib held, and in our opinion rightly so that there was no evidence available on record suggesting that the assessee or his broker was involved in rigging up of the price of the script of M/s. Shree Nath Commercial & Finance Ltd. The assessee had acted in good faith. The Trib, therefore, correctly held that the AO had acted only on assumption which was misconceived. The CIT(A) order dismissing the Revenue's appeal was confirmed." [as extracted from Mamta Rajivkumar Agarwal (2023) 155 taxmann.com 549 (Guj HC)] 1.18. It is submitted that Ziauddin A Siddique (2022) (Bom HC) dt.4-3-22, ITA No.2012 of 2017 held as under: "2. We have considered the impugned order with the assistance of the Id counsels and we have no reason to interfere. There is a finding of fact by the Trib that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd ("RFL") is done through SE and through the registered Stock Brokers. The payments have been made through banking channels and even "STT" has also been paid. The AO also has not criticized the documentation invo....
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....TCG and added the same in respondent's income u/s68. While allowing the appeal filed by respondent, the CIT(A) deleted the addition made u/s 68. The CIT(A) has observed that the AO himself has stated that SEBI had conducted independent enquiry in the case of the said broker and in the scrip of RFL through whom respondent had made the said transaction and it was conclusively proved that it was the said broker who had inflated the price of the said scrip in RFL. The CIT(A) also did not find anything wrong in respondent doing only one transaction with the said broker in the scrip of RFL. The CIT(A) came to the conclusion that respondent brought 3,000 shares of RFL, on the floor of Kol SE through registered share broker. In pursuance of purchase of shares the said broker had raised invoice and purchase price was paid by cheque and respondent's bank account has been debited. The shares were also transferred into respondent's Demat account where it remained for more than one year. After a period of one year the shares were sold by the said broker on various dates in the Kol SE. Pursuant to sale of shares the said broker had also issued contract notes cum bil....
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.... on which the AO had made the additions. While allowing relief to the assessee, the Id CIT(A) has specifically held that there is no adverse comment in the form of general and specific statement by the Pr. Officer of SE or by the Co. whose shares were involved in these transactions and he held that AO only quoted facts pertaining to various completely unrelated persons whose statement were recorded and on the basis of unfounded presumptions. He further held that the name of the appellants were neither quoted by any of such persons nor any material relating to the assessee was found at any place where Investigation was done by the Inv. Wing. The Id CIT(A) relying on various orders of Luck-Benches and other Benches has allowed relief to the assessee by placing reliance on the evidences filed by the assessee before AO. I do not find any adversity in the order of Id CIT(A) specifically keeping in view the fact that Luck-Benches in a number of cases after relying on Krishna Devi (2021) (Del HC) had allowed relief to various assessees." 6. The concurrent findings of fact has been recorded by the FAA and the ITAT. Thus, no substantial que of law is involved in t....
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....eld that the AO had not produced any evidence whatsoever in support of the suspicion. On the other hand, although the appreciation is very high, the shares were traded on the NSE and the payments and receipts were routed through the bank. There was no evidence to indicate for instance that this was a closely held Co. and that the trading on the NSE was manipulated in any manner. 5. In these circumstances, following the judgement in ITA No.18 of 2017, it must be held that there is no substantial que of law in the present appeal. [as extracted from Prem Pal Gandhi (2018) 94 taxmann.com 156 (P&H HC)] 1.23. It is submitted that Prakashmal Malraj Jain (2024) 165 taxmann.com 470 (Mum-Trib) dt.12- 8-24, ITA No.3271/Mum/2023; AY14-15, held as under: "2. The facts relating to the case are stated in brief. The assessee had filed its original ROI on 24-9-14, declaring a total income of Rs. 4,22,420. During the current year, the assessee had earned LTCG of Rs. 59,74,380 on sale of 32,000 shares of M/s. Moryo Industries Ltd for a consideration of Rs. 63,51,287. The assessee claimed the same as exempt u/s 10(38). 3. Subsequently, the AO received in....
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....gh SE and through the registered Stock Brokers. The payments have been made through banking channels and even "STT" has also been paid. The AO also has not criticized the documentation involving the sale and purchase of shares. The Trib has also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore, we find nothing perverse in the order of the Trib. 4. Mr. Walve placed reliance on NRA Iron & Steel (P) Ltd (2019) (SC) but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Trib has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that que as pressed raises any substantial que of law." 7. The decision rendered by Hon'ble Bom HC is applicable to the facts of the present case. We further notice that the Id CIT(A) has followed Srichand Chaturmal (HUF) (Mum- Trib) ITA No.6537/Mum/ 2018. Since the decision re....
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.... its returns as per law, then how the assessee's claim could be rejected without disproving the source of investment and genuineness of transactions done by him based upon the valid documentary evidence. 8. It is seen that the appellant had held the shares for a period of more than one year and sold them through recognized SE and paid STT, accordingly, complied all the conditions of sec 10(38), of exempt LTCG. The details of the shares sold are as under: Dates Scrip No of Shares Sold Amount (In Rs.) 14-5-12 PMC Fincorp Ltd 4,000 15,64,521 21-5-12 PMC Fincorp Ltd 3,000 11,56,981 11-6-12 PMC Fincorp Ltd 3,000 12,09,240 13-12-12 PMC Fincorp Ltd 5,000 26,94,330 Total 15,000 66,25,602 9. The Counsel contended that the following documents were also submitted during the Assessment and appellate proceedings, which establish that there was no such direct or indirect transaction was ever made with Raj Kumar Modi. Therefore, reliance upon Inv. Report where there is no mention of the name of the assessee is against the facts and circumstances of the case. The details of documents submitted i....
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....ara 2) (In favour of assessee). 13. In Mamta Rajivkumar Agarwal (2023) (Guj HC), the Hon'ble Guj HC has observed on exemption of capital gains u/s10(38) as under- "Sec10(38)- Capital gains- Income arising from transfer of long term securities (Share dealings) - AY13-14- Assessee had sold shares of SNCFL and earned LTCG- AO issued a SCN alleging that transaction was a penny stock deal aimed at illegitimately claiming LTCG exemption u/s 10(38)- AO treated purchase as bogus and added it to total income-CIT(A) examined all relevant documents provided by assessee, including bills of purchases, broker account copies, bills for sales, and bank statements and held that purchases were made through a recognized broker via cheque, establishing their genuineness and, thus, he directed AO to delete addition of LTCG claimed as exempt u/s 10(38)-Trib upheld CIT(A) decision stating that there was no evidence implicating assessee or broker in any wrong doing related to SNCFL script- Whether in view of concurrent findings of fact that there was no evidence available on record suggesting that assessee or his broker was involved in rigging up of price of script of SNCFL, addition....
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.... The assessee purchased 10,000 shares of Conart Traders Ltd and subsequently Conart Traders Ltd was amalgamated with Sunrise Asian Ltd. Such fact is not in dispute and shares of assessee were transferred to demat account. During the assessment the assessee filed detailed submissions and the evidences to prove the transaction, but the AO has not considered the submission of assessee and made addition with predetermined notions. The Id CIT(A) confirmed the action of AO without appreciation of facts in a single sentence. The Id AR for the assessee submits that assessee furnished completed details about LTCG earned on sale of shares held more than 12 months and payment made through banking channel. The assessee has paid STT and surplus earned on such sale was claimed as exempt income u/s 10(38). The sale of shares was made through BSE and all necessary evidence to substantiate the genuineness of such transactions were furnished before lower authorities. The AO has not given any finding on the evidence filed by the assessee. The AO mainly acted on the report of Inv. Wing, Kol, copy of such Inv. Wing was never supplied to assessee. The sale transactions were received th....
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....ht against such evidence. Nor the AO made adverse comment on such evidences. There is no allegation of AO that the broker through whom the assessee made transaction was involved in the price manipulation or in providing entry of penny stock. We find that Hon'ble jurisdictional HC in Himani M Vakil (Guj HC) held that where assessee duly proved genuineness of sale transaction by bringing on record contract notes of sale and purchase, bank statement of broker and demat account showing transfer in and out of shares, AO was not justified in bringing to tax capital gain arising from sale of shares as unexplained cash credit. We further find that Hon'ble jurisdictional HC in Parasben Kasturchand Kochar (Guj HC) also held that when assessee discharged his onus by establishing that transactions were fair and transparent and all relevant details with regard to transfer furnished by IT authority and the Trib have also taken the notice of fact that the shares remained in the account of assessee, the assessee also furnished demat account and details of bank transaction about the sale and purchase of shares, the addition was deleted. 12. We further notice that Indravadan Jain (2....
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....ligibility to claim LTCG/ exemption u/s 10(38) of Rs. 2,05,52,685 on sale of shares of M/s. Shaleen Textile Ltd. We further note that the AO has primarily placed reliance on the report given by the Inv. Wing of the IT Deptt, Kol in order to arrive at the conclusion that the LTCG claim made by the assessee is bogus in nature. We note that the Inv. Report prepared by Inv. Wing, Kol is a generalized report with regard to the modus operandi adopted in manipulation of prices of certain shares and generation of bogus capital gains. We find 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 racket manipulating share transactions in the SE i.e., it was not proved that the assessee/or his broker has carried out the transactions of purchase and sale of shares in connivance with the person/ entities which were involved in the alleged manipulation/rigging of prices of shares. The Id AR also brought to our notice that the regulator of stock market SEBI has not found any wrong doing on the part of assessee or his broker. 6. In the s....
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....inst the assessee because it has not been tested on the touchstone of cross-examination as held by Andaman Timber Industries (2015) (SC) and Odeon Builders P Ltd (2019) (SC). Therefore, nothing turns on these statements of brokers. Thus, we find that no infirmity in the order passed by Ld CIT(A) deleting the addition of Rs.2,30,79,975 + Rs. 4,61,600 by passing the impugned order. 10. The Id AR had rightly relied upon the Hon'ble jurisdictional Bom HC in Shyam R Pawar (2014) (Bom HC). In the decided case also, the assessee was purchasing and selling the shares through a broker in Mum, for purchase of shares of (i) M/s. Bolton Properties Ltd., (ii) M/s Prime Capital and (iii) M/s. Mantra; and he has transacted through the broker at Cal and 2 operators namely Mr. Sushil Purohit and Shri Jagdish Purohit, and one of them was the Director of M/s. Bolton Properties Ltd who had purportedly admitted to have manipulated the share price of M/s. Bolton Properties Ltd. Mr. Jagdish also reportedly floated several investment companies which were aggressively used in the entire deal with the broker M/s. Prakash Nahata & Co. According to AO, the shares off loaded by the beneficiaries t....
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.... Mantra Online Ltd for the total consideration of Rs. 25,93,150. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Trib in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal PB before the Trib showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the SE. From this material, in para 11 the Trib 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 Cal SE regarding client Code has been referred to. But the Trib concluded that itself, is not enough to prove that the transactions in the impugned shares were bogus/ sham. The details received from SE have been relied upon and for the purposes of faulting the Revenue in failing to discharge the basic onus. If the Trib proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus....
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.... rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Trib. 4. Mr. Walve placed reliance on NRA Iron & Steel (P) Ltd (SC) but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Trib has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that que as pressed raises any substantial que of law." 15. For the various reasons discussed in the foregoing and following the judgments cited above, AY12-13 more particularly of the binding jurisdictional HC in Shyam Pawar, Ziauddin A Siddique, Mukesh R Marolia & Jamna Devi Agarwal, we concur with the view of the Id CIT(A) and uphold the impugned order of the Id CIT(A) deleting the addition of Rs.2,30,79,975 & Rs.4,61,600. And we direct the AO to allow the LTCG/ exemption claimed by assessee u/s10(38) on sale of shares of M/s Shaleen Textile Ltd." [as extracted from Pavankumar Bachhraj Chandan (2024) 161 taxmann.com 674 (Mum-Trib)] ....
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.... the assessee has transacted or the assessee is the beneficiary of such rigging. 13. Further, in para 9 on p.46 of the assessment order, the AO alleged that there are certain parties who have taken the name of the assessee, however, there are neither any findings nor any reproduction or reference to the statements of such person in the assessment order who alleged that assessee was beneficiary of the bogus LTCG or was involved in this racket. From the perusal of the assessee's submission dt. 19-12-17, filed before the AO, forming part of the PB from pp.217-240, we find that the assessee specifically requested the AO to provide the details of the brokers who have given a statement that the assessee has taken accommodation entries in the form of bogus LTCG. Further, the assessee also requested for the statements recorded by the Revenue, which was alleged to have been provided in the pen drive as noted in the SCN reproduced from pp.2-21 of the assessment order. However, as evident from the record no such statement was furnished by the Revenue. Even during the hearing before us, the Revenue has not brought any such statement on record. Therefore, the nexus of any ....
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....bhai B Patel (Huf) (2023) 37 NYPTTJ 1198; ITA No.699 to 703/ Mum/2023 (Mum-Trib)] 1.28. It is submitted that Ritu Udaipuria (2024) 161 taxmann.com 554 (Ranchi-Trib) dt.29-2-24; ITA No.53/Ran/2020; AY13-14, held as under: "7. ........ Assessee has sufficiently explained her case with all the cogent evidence and material which have not been rebutted or controverted or found to be false. Having convinced with the submissions made by the Id counsel, we list down the summary of them to give our affirmation to the same and uphold the claims made by the assessee in respect of LTCG on sale of shares of CCL. Summary of said contentions is as under: Sr. No. Particulars (i) Investment and disinvestment in share of CCL cannot be treated as accommodation entries in the garb of LTCG when the transaction of sale and purchase of shares has been explained by placing sufficient documentary AY12-13 evidence on record. Revenue has not disproved the documentary evidences furnished by the assessee. No efforts have been made by the Id AO to examine the correctness of various proof, filed by the assessee by carrying out any Investigation. (ii) Off-market purchase transa....
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....ract note of the transactions which were discarded by the AO without any reason and without their being any evidence to rebut those contracts. 10. We have considered the submissions of the Id counsel for the parties and we are of the considered opinion that the ld AO was much influenced by the enquiry report which may has been brought on record by the efforts of the AO and that enquiry report was prepared by the SEBI and from the observations made by the AO himself, it is clear that after getting that enquiry report, the SEBI prima facie found involvement of some of the share brokers in unfair trade practices. Even in a case where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, if purchased the share from that broker innocently and bonafidely and if he show his bonafide in transaction by showing relevant material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair t....
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.... has to guide our decision in the matter or the general observations based on statements, probabilities, human behaviour and discovery of the modus operandi adopted in earning alleged bogus LTCG and STCG, that have surfaced during Investigations, should guide the authorities in arriving at a conclusion as to whether the claim is genuine or not. An alleged scam might have taken place on LTCG etc. But it has to be established in each case, by the party alleging so, that this assessee in que was part of this scam. The chain of events and the live link of the assessee's action giving his involvement in the scam should be established. The allegation implies that cash was paid by the assessee and in return the assessee received LTCG, which is exempt from IT, by way of cheque through banking channels. This allegation that cash had changed hands has to be proved with evidence, by the Revenue. Evidence gathered by the Director Investigation's office by way of statements recorded, etc. has to also be brought on recording each case, when such a statement, evidence etc. is relied upon by the Revenue to make any additions. Opportunity of cross-examination has to be provided to the asses....
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....suspicion however strong, cannot take the place of evidence. In this connection we refer to the general view on the topic of conveyance of immovable properties. The rates/ sale prices are at variance with the circle rates fixed by the Registration authorities of the Govt in most cases and the general impression is that cash would have changed hands. The Courts have laid down that judicial notice of such notorious facts cannot be taken based on generalisation. Courts of law are bound to go by evidence. 35. But in the present case, we noted that the AO has been guided by the report of the Inv. Wing prepared with respect to bogus capital gains transactions. The AO has not brought out any part of the Inv. Wing report in which the assessee has been investigated and/or found to be a part of any arrangement for the purpose of generating bogus LTCG. Nothing has been brought on record to show that the persons investigated, including entry operators or stock brokers, have named that the assessee was in collusion with them. In absence of such findings how is it possible to link their wrong doings with the assessee. In fact, the Inv. Wing is a separate Deptt....
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....e high denomination notes- this also was a pure conjecture or surmise on the part of the ITO. As regards the disclosed volume of business in the year u/s in the head office and in branches the ITO indulged in speculation when he talked of the possibility of the appellant earning a considerable sum as against which it showed a net loss of about Rs.45,000. The ITO indicated the probable source or sources from which the appellant could have earned a large amount in the sum of Rs. 2,91,000 but the conclusion which he arrived at in regard to the appellant having earned this large amount during the year and which according to him represented the secreted profits of the appellant in its business was the result of pure conjectures and surmises on his part and had no foundation in fact and was not proved against the appellant on the record of the proceedings. If the conclusion of the ITO was thus, either perverse or vitiated by AY 12-13 suspicions, conjectures or surmises, the finding of the Trib was equally perverse or vitiated if the Trib took count of all these probabilities and without any rhyme or reason and merely by a rule of thumb, as it were, came to the conclusio....
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.... are purchased for Rs. 4,24,200/- on 12.01.2010 and 18.01.2010, whereas such shares were sold with huge and abnormal gain within a short span of time by the assessee on sale consideration of Rs. 36,05,644/- and Rs. 38,26,217/-, respectively. In view of such facts, as the assessee herein had booked exorbitant profit in the garb of Long Term Capital Gain which does not commensurate with the financials and credentials of the impugned companies, therefore, the Ld. AO, after demonstrating the financials of the penny stock company, relying on the information received from investigation wing, Kolkata and in absence of any response by the concerned parties to whom notices for investigation u/s 133(6) were issued, had rightly made the addition treating the amount received as undisclosed funds of the assessee by adding such amount to the income of assessee under the relevant provisions of I.T. Act. Ld. Sr. DR further placed his reliance on the order of Ld. CIT(A), and have submitted that the Ld. CIT(A), had exhaustively dealt with the contentions of the assessee, considered the facts and circumstances of the case and have dismissed appeal of the assessee under proper appreciation of the tran....
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.... 68 of the Act essentially requires the assessee to explain the nature and source of the sum credited in his books of account to the satisfaction of the Id. Assessing Officer. Time and again, Hon'ble Courts have held the requirement of establishing the identity and creditworthiness of the party and genuineness of the transaction to meet the said requirements of section 68. In the present set of facts, as already stated above, operations and modus operandi of the regulated stock markets (BSE) does not anyway provide for any mechanism by which assessee can bring forth the identity of the buyers of his shares and their creditworthiness Meeting this requirement is an act of impossibility of performance expected from the assessee for the transaction executed on SEBI regulated, digitally operated stock exchange. For the third limb of genuineness of the transaction, sale proceeds are received through the stock exchange process into the preidentified bank account of the seller i.e., the assessee. Further, it is not a case of mere boo entry where a possibility of tainting it as bogus or sham exists but it is a case where actual movement of dematerialized shares has taken place from the ....
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....25 CTR (SC) 124: (1995) 214 ITR 801 (SC) . We are aware of the proposition laid down by the Hon'ble Supreme Court and we humbly bow down before the same. However, in the facts and circumstances of the present case in the face of numerous documentary evidences crying for bona Tide of the assessee as against only suspicion and surmises in favour of the Department, we do not hesitate to hold that the proposition laid down by the Hon'ble Supreme Court is not applicable in the present case. Even the AO has not been able to bring on record any adverse material, on his own investigations, the results have been in favour of the assessee. Suspicion, howsoever strong, cannot take part of the documentary evidences. second contention of the Department with respect to the prices being manipulated and later on the company delisted from the stock exchange, we want to add that the company was very much in existence at the time of transaction and whatever happen later on is of no relevance. The grounds of appeal raised by the Revenue are dismissed. 14. The second contention raised by the Ld. AR is that the assessee's name was not mentioned in the investigation report which is relied ....
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.... also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. Parasben Kasturchand Kochar (2021) 130 taxmann.com 177 (SC) 2. We take notice of the fact that the issue in the present appeal is whether the assessee earned long term capital gain through transactions with bogus companies. In this regard, the finding of fact recorded by the Tribunal in paras 9, 10 and 11 reads thus :- "9. In our considered opinion, in such case assessee cannot be held that he earned Long Term Capital gain through bogus company when he has discharged his onus by placing all the relevant details and some of the shares also remained in the account of the appellant after earning of the long term capital gain. 10. Learned A.R. contention is that no statement of the Investigation Wing was given to the assessee which has any reference against the assessee. 11. In support of its contention, learned A.R. also cited an order of Coordinate Bench in ITA No. 62/Ahd/2018 in the matter ....
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....proceedings nor filed by the department before ITAT or before this Court. It is settled law that no material can be used against the assessee without providing the assessee to examine it and, if required, to cross examine. Thus, there was violation of principles of natural justice. That on similar set of facts and in respect of the same share script of M/S Sunrise Asian Ltd. the Mumbai Bench of ITAT in case of (l) Narayan Ramchandra Rathiv. ITO[ IT Appeal No. 4811 (Mum.) of 2018, dated 8-8-2019] (Page nos.50 to 61), (2) Dipesh Ranmeshchandra Vardhan (Supra) (Page nos. 62 to 71) and, (3) Anraj Hiralal Shah v. ITO [IT Appeal No. 4514 (Mum.) of 2018, dated 16-7-2019] (page nos. 72 to 74) has dealt with the identical issue and decided in favour of the assessees. 13. Learned counsel for the respondent further submitted that as many as three High Courts i.e. Delhi High Court, Bombay High Court and Gujarat High Court also have dealt with the similar issues and has dismissed the appeal filed by the Revenue. The appellant (Revenue) had preferred SLP against an order of Gujarat High Court passed in the case of the Principal Commissioner of Income Tax-I v. Parasben Kasturchand Kochar....
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.... to the order of CIT(A) and also to the order of Tribunal and contended that in view of the finding reached, which was done through Stock Exchange and taking into consideration the revenue transactions, the addition made was deleted by the Tribunal observing as under :- "Contention of the AR is considered. One of the main reasons for not accepting the genuineness of the transactions declared by the appellant that at the time of survey the appellant in his statement denied having made any transactions in shares. However, subsequently the facts came on record that the appellant had transacted not only in the shares which are disputed but shares of various other companies like Satyam Computers, HCL, IPCL, BPCL and Tata Tea etc. Regarding the transactions in question various details like copy of contract note regarding purchase and sale of shares of Limtex and Konark Commerce & Ind. Ltd., assessee's account with P.K. Agarwal & co. share broker, company's master details from registrar of companies, Kolkata were filed. Copy of depository a/c or demat account with Alankrit Assignment Ltd., a subsidiary Of NSDL was also filed which shows that the transactions were made thr....
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....he 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." 15. In backdrop of the aforesaid judgments, our interpretations to the facts and circumstances of the present case are that, admittedly certain transactions of investment in shares and thereafter selling of such investments are carried out by the assessee. 16. From the facts on record, undisputedly, it is evident that the assessee had purchased 12,000 shares of 'Karma' on 06.02.2010 for Rs. 4,42,920/- i.e., @ Rs. 36.91 per share, these shares were sold by the assessee at an average of Rs. 300.47 per share for Rs. 36,05,644/-, the investments are disposed off in parts on 07.06.2011 (3000 shares @277.55 per share), 07.07.2011(3000 shares @317.07 per share) & 09.07.2011(6000 shares @303.63 per share) and have obtained capital gain of Rs.31,62,724/- (Rs. 36,05,644 - Rs. 4,42,920) i.e., 714% on the cost of investment. 17. Similarly, 60,000 shares of 'Praneta' are purchas....
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.... the price in a short span of time i.e., within 17-18 months, does not considered to be appropriate. 22. Herein, we may observe, drawing support from the decision of Hon'ble Allahabad High Court in the case of PCIT vs Renu Agrawal (supra), wherein Hon'ble Court has held that dehors any adverse comment from the stock exchange and officials of the company involved in the impugned transactions and no material relating to assessee was found in the investigation wing's report, addition made by Ld. AO cannot be sustained. The order of Hon'ble Allahabad High Court is decisive in the present case, as the same was challenged through a SLP by the revenue before the Hon'ble Apex Court, but the same was dismissed. 23. Under similar situation Hon'ble Mumbai HC in the case of Ziauddin A. Siddique (supra) have affirmed the findings of Tribunal that if the transaction of purchase / sales of shares of the alleged penny stock is done through stock exchange and through registered stock brokers, the payment is made through banking channel and the Stock Transaction Tax (STT) has been paid, the Assessing Officer has not criticised the documentation involving the sale / purc....
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.... purchase / sale of shares, assessee's account with share broker, company Master details from registrar of companies had been filed, transaction could not held to be not genuine or mere accommodation entry. 29. Adverting to the facts and circumstances of the present case, as the assessee had furnished all the necessary information in carrying out the transaction of purchase / sale of the shares, though the purchase by the assessee was offline by making the payment in cash but the same was not disputed by the Ld. AO, since the addition was made qua the amount of capital gain only. The documents furnished by the assessee before the Ld. AO to support the genuineness of the transaction are neither criticised nor any discrepancy therein which indicates that the documents are not genuine are pointed out by either of the authorities below. There was an allegation that the assessee failed to discharge the burden cast upon him, however, no explicit observation specifying the fault on the part of assessee in discharging of burden which the assessee was unable to furnish could be brought on record. 30. Ld. CIT(A) also relied on the doctrine of preponderance of human probabilities, p....
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....8 by adding the amount of capital gain of Rs. 65,64,741/-, earned by the assessee during the relevant year and claimed as exempted u/s 10(38), on the basis of mere assumptions and inferences without establishing that the assessee is guilty of being involved in price rigging or without establishing that the transactions and corroborative evidence furnished by the assessee are not genuine, cannot be sustained. We, thus, in terms of aforesaid observations direct to vacate the impugned addition of Rs. 65,64,741/- made u/s 68 of the Act. 32. In result, Ground no. 1 of the present appeal of the assessee has been rendered as allowed. 33. As the sole addition of Rs. 65,64,741/- made u/s 68 of the Act by the Ld. AO and confirmed by the Ld. CIT(A), challenged by the assessee has been deleted by us as narrated in the foregoing paras of this order, we, thus, refrain ourselves to deal with the other contentions challenging the validity and legality of the proceedings u/s 147/ 148 and approval u/s 151 assailed by the assessee, the same therefore, left open. 34. In result, the appeal of assessee is allowed, in terms of our observations. Order pronounced in the open court on 21/11/2024....