TaxTMI 
TaxTMI 
2026 (8) TMI 1771
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....ion of Rs. 1,16,284/- was made on account of an alleged commission paid @3% of LTCG for obtaining a bogus entry. 1.2 The assessee approached the Ld. CIT(A), where also he could not succeed on the basis of findings that such extraordinary profit within a relatively short period of one year could not be treated as realistic, and also because of allegedly suspicious facts and circumstances, both the additions were affirmed at first appellate stage. 1.3 The assessee has approached the ITAT with grounds challenging the assumption of jurisdiction and also the addition on merits. 2. Before us, the Ld. AR took us through the facts of the case by mentioning that the assessee had purchased 1500 shares in M/s LDPL on 16.04.2013 from one M/s Fair Wealth Securities Ltd. These shares were thereafter split into face value of Re 1 per share on 19.11.2013, leading to possession of 15000 shares. Eventually 15000 of these shares were sold in September 2014 through Bombay Stock Exchange (BSE). It was pointed out by the Ld. AR that all necessary documents from the time of purchase of shares to their payment and eventually to their listing in the depository of the assessee were furnished before....
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....h sales, are available for verification through adequate documentation. The authorities below have been swayed by the fact that there can be a share transaction which would yield a profit of 51700% in a single year and perhaps that is what has resulted in an adverse view taken against the assessee. We find that it is just such a matter that has been discussed in the case of Swati Bajaj (supra), the Hon'ble Calcutta High Court has held that such fantastical gains are beyond the realm of possibility and had held that the AO had rightly denied the benefit of LTCG to the assessee's under consideration. 3.1 We find that this case law and its applicability has been discussed in the case of Krishan Kumar reported in 170 taxman.com 12 (Del-Trib.), Tribunal order dated 19.12.2024, in which the share of M/s LDPL were subject matter of adjudication. The detailed discussion on the applicability of this case law has been discussed specifically in para 13 of this order, but for the sake of completeness, the entire discussion deserves to be captured as under: "12. We find that a statement on oath was recorded from the assessee on 28-11-2016 wherein a specific query was put by the lear....
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.... approving the merger. No action whatsoever or adverse inference drawn on the assessee in the year of purchase of shares. When those shares are kept in demat account which were sold by the assessee in the open market after duly suffering STT, the same cannot be doubted by the revenue. These facts have been taken due cognizance by the Hon'ble Jurisdictional High Court in the case of Pr. CIT v. Smt Krishna Devi [2021] 126 taxmann.com 80/279 Taxman 148/431 ITR 361 (Delhi). The relevant observations in that regard are reproduced hereinbelow:- "10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with 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 o....
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....ion 68 of the Act. It is recorded that "There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels. "The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed 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. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 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 t....
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....h the genuineness of rise of price of shares within a short period of time that too when general market trend was recessive. But we find that when there is a decision of Hon'ble Jurisdictional High Court as stated supra which is already in favour of the assessee, the same would prevail over this Tribunal and this Tribunal need not take 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 v. Kamalakshi Finance Corporation Ltd 1991(55) ELT 43 (SC) 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 emphasized 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 ....