TaxTMI 
TaxTMI 
2024 (6) TMI 1591
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....d the same is taxed under the head business income. 2. On the facts and circumstances of the case and in law, the learned CIT (A) has confirmed addition of Rs 1,11,69,765/- as unexplained cash credit u/s 68 on the basis of suspicion, conjectures and surmises as he has failed to find any fault with the ample documentary evidences produced in support of purchase and sale of shares. 3. On the facts and circumstances of the case and in law, the learned AO has erred in making addition of Rs. 1,11,69,765/- as unexplained cash credit u/s 68 by overlooking the decisions of Bombay High Court and Mumbai ITAT on similar issue which are in favour of assessees faced with similar situation as that of the present appellant 4. On the facts and circumstances of the case and in law, the learned AO has erred in making addition of Rs. 1,11,69,765/- as unexplained income u/s 68 by not providing the specific statements/information (pertaining to alleged activities) supplied by Investigation wing to the Appellant and thereby denying the opportunity of cross examination of those parties who might have made statements before Investigation wing about the scrip sold by the Appellan....
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....transaction value under section 69C towards commission. Aggrieved, the assessee filed further appeal before the CIT(A) who confirmed the addition made by the AO. The assessee is in appeal before the Tribunal against the order of the CIT(A). 3. The ld. Authorized Representative (AR) submitted that the assessee has purchased 20,000 shares of Kaushalya Global Ltd. (KGL) which subsequently got merged with M/s Matra Kaushal Enterprises Ltd. The ld. AR further submitted that the payment for purchase of shares of KGL was made by the assessee to Pranjal Trading Co. Pvt. Ltd. through A/c payee cheque on 26.11.2012 and in this regard our attention was drawn to the invoice raised by the broker and the bank statement (page 31 to 33 of the Paper Book). The ld. AR also submitted that the said shares were credited to the demat account on 13.12.2012 (page 34 of Paper Book) and that these shares were subsequently sold in various tranches during the year under consideration through registered broker in the Bombay Stock Exchange after paying the STT. The broker's statements and the credit in the bank account of the assessee were submitted by the ld. AR to substantiate the claim (page 35 to 43 ....
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....ss. ⮚ The AO has passed speaking assessment order after thoroughly examining the financials of M/s.Matra Kaushal Enterprises Ltd 5 years and the price movement of the shares of the scrip. There is an unusual rise in the share price of the Scrip to Rs.558/- per each share (The price at which the assessee has sold shares)in a short period without any corresponding increase in the fundamentals and profitability of the said Company. ⮚ From the BSE website, it is seen that the trading in this particular scrip has been suspended due to Penal Reasons and the price of the Scrip is meagre Rs.2.16 only. It was Rs.7.25 on 1.03.2015 and has consistently fallen thereafter. ⮚ The Ld. CIT(A) in his Appellate order in Para-5 has mentioned that the Directorate of Investigation, Kolkata report clearly indicated that M/s. Matra Kaushal Enterprises Ltd was one of the penny stock company engaged in providing accommodation entries for generating bogus long-term capital gains. ⮚The Directorate of Investigation, Kolkata is a detailed 500 page report on Bogus LTCG/STCL through BSE Listed Penny Stocks and mentions modusoperandi in detail. ....
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....he stock market. The ld AR further argued that in the month in which the assessee sold her shares the high price of the shares was Rs. 587/- per share whereas the assessee sold the shares at Rs.558 which proves that the assessee was not part of alleged group which were manipulating the prices, hence otherwise the assessee would have sold the shares at the highest price mentioned above. Therefore the ld AR submitted that the assessee has acted as investor only and hence the allegations made by the Ld. DR are liable to be rejected. 6. With regard to the SEBI report relied on by the ld DR, it was submitted that the SEBI conducted investigation to enquire whether there are any disclosure violations in the SEBI regulations regarding the changes in Promoter/Shareholding patter under SEBI only and penalty was levied on the promoter /shareholder for such violations. However, it was pointed out that neither any investigation nor any inquiry has been conducted by SEBI in case of trading in the scrip of M/s MatraKaushal Enterprises Limited. The ld. AR further submitted that the SEBI report relied on by the ld. DR does not contain any adverse comment about the assessee but only names the co....
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.... paper book) that the assessee is holding shares other than the impugned shares. The ld AR during the course of hearing also drew our attention to the table containing the details of all the investments in shares of the assessee to submit that the impugned shares forms part only 4% of the entire investments in shares held by the assessee (page 153 & 154 of paper book). 9. We notice that the coordinate bench in the case of Pankaj Kantilal Shah (supra) while considering the issue of sale of shares of M/s Matra Kaushal Enterprises Limited under similar facts has held that - 21. We heard rival contentions and perused the record. We noticed that the assessee has furnished all the details in support of purchase and sale of shares of M/s Matra Kaushal Enterprises Ltd and the said fact has also been noticed by the AO in the assessment order. We noticed that the assessee has purchased the shares by paying Rs.10.00 lakhs through banking channels. Subsequently, the assessee became owner of 10,00,000 shares in the above said company after merger, split etc. During the year under consideration, the assessee has sold 4,14,500 shares through stock exchange. We notice that the assessin....
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....sued by the CBDT. The case laws relied upon by the Ld D.R with regard to the addition made on the basis of sworn statements, in our opinion, are not applicable to the facts of the present case, in view of the discussions made supra. 23. Before us, the Ld D.R placed reliance on various case laws in support of the addition made by the AO. In our view, those decisions have been rendered on the basis of facts prevailing in those cases and hence they cannot considered as a straight jacket formula to decide the issue under consideration, i.e., the decision has to be taken on the basis of facts available in each of the cases. In any case, we are dealing with some case laws later. In the instant case, we noticed that the assessing officer has mainly relied upon the report given by the investigation wing of the Income tax department, which included the statements given by the alleged entry operators and exit providers. We noticed that the AO did not carry out any independent enquiry in order to find out whether the assessee was part of ring which indulged in the alleged price rigging. The AO, in particular did not examine the brokers/persons from whom/through whom the assessee has ....
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....nt orders because another view was possible. It interfered because it was required to interfere with them as the Commissioner and the Assessing Officer failed to note some relevant and germane material. In these circumstances, he submits that the Appeals do not raise any substantial question of law and deserve to be dismissed. 5. We have perused the concurrent findings and on which heavy reliance is placed by Mr. Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried out in paras 20, 20.1, 20.2 and 21 of his order, what was important and vital for the purpose of the present case was whether the transactions in shares were genuine or sham and bogus. If the purchase and sale of shares are reflected in the Assessee's DMAT account, yet they are termed as arranged transactions and projected to be real, then, such conclusion which has been reached by the Commissioner and the Assessing Officer required a deeper scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock Exchange records showed that the shares were purchased for c....
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.... Tribunal concluded that itself, is not enough to prove that the transactions in the impugned shares were bogus/sham. The details received from Stock Exchange have been relied upon and for the purposes of faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparent on the face of the record either. 7. As a result of the above discussion, we do not find any substance in the contention of Mr. Sureshkumar that the Tribunal misdirected itself and in law. We hold that the Appeals do not raise any substantial question of law. They are accordingly dismissed. There would no order as to costs. 8. Even the additional question cannot be said to be substantial question of law, because it arises in the context of same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted ....
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....ered by the coordinate bench in the case of Mukesh Ratilal Marolia (6 SOT 247)(Mum), wherein it was held that the personal knowledge and excitement on events should not lead the AO to a state of affairs where salient evidences are overlooked. We notice that the above said decision of the Tribunal has been approved by Hon'ble Bombay High Court, vide its order dated 07-09-2011 passed in ITA No.456 of 2007. It is also noticed that the special leave petition filed by the revenue before Hon'ble Supreme Court has been dismissed vide SLP No.20146 of 2012 dated 27-01-2014. Since the assessee has furnished all the documents in support of purchase and sale of shares of M/s Matra Kaushalya Enterprises Ltd and since the said documents have not been doubted with, it was necessary for the AO to carry out deeper scrutiny of the transactions, if he felt that there was something wrong. Admittedly, the AO did not carry out any further investigation in the matter. As held by Hon'ble Bombay High Court, it was necessary for the AO to show that the assessee herein had participated in the price rigging in the market. No such finding has been reached by the AO. 26. In the case of Shri Yogesh P Th....
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....the same for the reasons stated hereinafter. 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investiga....
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....anged hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar case (supra) and Sumati Dayal case (supra) is of no assistance. Upon examining the judgment of Suman....
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....ake cognizance of the Hon'ble Non-Jurisdictional High Court. The law is very well settled by the Hon'ble Supreme Court in the case of Union of India vs Kamalakshi Finance Corporation Ltd reported in 55 ELT 43 (1991) that the decision of Hon'ble Jurisdictional High Court would have higher precedence value than the decision of Hon'ble Non-Jurisdictional High Court on the Tribunal. The Hon'ble Supreme Court emphasised therein that the orders of the Tribunal should be followed by the authorities falling within its jurisdiction so that judicial discipline would be maintained in order to give effect to orders of the higher appellate authorities. The Hon'ble Apex Court has observed that utmost regard must be had by the adjudicating authorities and the appellate authorities to the requirement of judicial discipline. Hence we deem it fit and appropriate to follow the decisions of Hon'ble Jurisdictional High Court referred supra wherein the impugned issue is decided in favour of the assessee. Moreover, when there are two conflicting decisions of various High Courts, the Hon'ble Supreme Court in the case of Vegetable Products reported in 88 ITR 192 (SC) had held that Construction that is favo....
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.... material was brought on record by the AO to prove that the assessee has indeed availed only accommodation entries. With regard to questions as to why the shares of the above said company was purchased, the assessee has explained that the said decisions were taken by his late father and hence he could not explain the reasons. It was not shown that the said explanation was incorrect and hence, in our view, the same cannot be rejected. 30. Another important point that was placed before us is the chart of price movement of above said shares. The share price movement was taken out by the assessee from the website of Stock exchange. A perusal of the same would show that the assessee did not sell the shares, when the prices were at peak. The assessee has sold the shares when the prices have started falling, which is the usual tendency of the investors. Had he been part of the wing, which triggered the prices, he would know the peak price and would have sold the shares at that price only. It was the case here and hence, this fact shows that the assessee was not part of that group. We further notice that the assessee is a regular investor in the shares and held shares in many comp....
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....r rejected the same ⮚ The assessee is a regular investor in shares and the impugned shares constitute only 4% of the total investments in shares ⮚ In the statement recorded under section 131 of the Act the assessee has stated that she invested in the shares of M/s Matra Kaushal Enterprises under advise from her father and that she has no knowledge of the financial position of the company ⮚ The AO has relied on the report of the investigation wing stating that M/s Matra Kaushal Enterprises Limited is a penny stock company providing accommodation entry and that the AO has not recorded any specific adverse finding with regard to the assessee ⮚ The AO has done a detailed analysis of the financial statement of M/s Matra Kaushal Enterprises to conclude that the same does not support the price at which the shares of the company are traded ⮚ The SEBI report relied on by the assessee does not contain the name of the assessee and nothing has been brought on record to show that the assessee in any way is involved in either the price rigging or in the trading strategy of the shares of M/s Matra Kaushal Enterprises ....