TaxTMI 
TaxTMI 
2024 (7) TMI 1792
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....nd style of M/s. N.C. Enterprises and M/s. Sankalp Safety Solution. In the return of income filed for the year under consideration, the assessee had declared long term capital gains of Rs. 49,24,339/- on sale of shares of M/s. PS IT Infrastructure & Services Ltd and claimed the same as exempt under Section 10(38) of the Act. The Assessing Officer noticed that the above said shares have been identified as one of the penny stocks by Investigation Wing, Income Tax Department, Kolkata. It is the case of the Investigation Wing that the share prices of the above said company have been rigged by certain interested persons in order to generate bogus capital gains/capital loss. Based on the investigation report of the Investigation Wing, the Assessing Officer entertained the view that the long term capital gains declared by the assessee is also bogus in nature. Accordingly, the AO recorded a statement from the assessee under Section 131 of the Act. The Karta of the HUF appeared before the Assessing Officer and he gave replies to the questions posed by the Assessing Officer. However, the Assessing Officer noticed that the price of the shares of the above said company was jacked upto Rs. 910/....
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....art of shares only during the year under consideration and the remaining shares were available with the assessee as at the end of the year. He submitted that the assessee has (a) furnished all the documents evidencing purchase of shares and sale of shares. (b) furnished demat account evidencing holding of shares. (c) made the payments for purchase of shares and received amounts on sale of shares through banking channels only. He submitted that the AO did not find fault with any of the above said documents. The Ld.AR further submitted that the assessee is not subject to any enquiry by SEBI and it was not shown that the assessee be the part of group, which rigged the prices of the shares of the above said company. He submitted that the AO has simply placed reliance on the report given by the investigation wing. Accordingly, the Ld.AR submitted that the assessee has purchased the shares in the normal course and hence, the tax authorities are not justified in dis-believing the transactions of purchase and sale of shares. Accordingly, he submitted that the tax authorities have made this addition on mere surmises and conjunctures. Accordingly, he prayed that....
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....f shares, i.e., the assessee has (a) purchased these shares by paying consideration through banking channels (b) dematerialized the shares and kept the same in the Demat account. (c) sold part of the shares through stock exchange platform (d) received the sale consideration through banking channels. Further, the shares have entered and exited the demat account of the assessee. We notice that the AO himself has not found any defect/deficiencies in the evidences furnished by the assessee with regard to purchase and sale of shares. The assessee and its broker were not subjected to any enquiry by SEBI, meaning thereby, the transactions were carried on by the assessee during the normal course of investment in shares. As noticed earlier, the AO has not brought on record any material to show that the assessee was part of the group which involved in the manipulation of prices of shares. Hence, we are of the view that there is no reason to suspect the purchase and sale of shares undertaken by the assessee. 8. We may now refer to certain decisions rendered by Hon'ble Bombay High Court on identical issue. In the case of Shyam Pawar (supra), the Hon'bl....
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....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 code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt. Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and ....
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.... 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 or regular as such. The relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and pertaining to the addition of Rs.25,93,150/-. Barring the figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For the same reasons, even this additional question cannot be termed as substantial question of law." 9. We may now refer to the decision rendered by Hon'ble Jurisdictional High Court in the case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022) and relevant discussions made by Hon'ble Bombay High Court are extracted below:- "2. We have consi....