TaxTMI 
TaxTMI 
2025 (10) TMI 1472
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....l evidences. In view of the aforesaid, we are inclined to proceed ex-parte, qua the assessee and decide the appeal on merits based on the submissions made by learned DR, written synopsis filed by the assessee and materials available on record. 3. Briefly stated, the assessee is a resident individual and a qualified Chartered Accountant. For the assessment year under dispute, assessee filed his return of income on 01.09.2015, declaring NIL income after claiming exemption of long-term capital gain under section (u/s.) 10(38) of the Income Tax Act, 1961 (in short the 'Act'). The return of income so filed by the assessee was selected for scrutiny to verify "suspicious sale transaction in shares and exempt long term capital gain shown in return". Based on information furnished by the assessee, the Assessing Officer (AO) found that the assessee had purchased 1,32,000 shares of M/s. Pine Animation Ltd. at a face value of Rs.1/- per share, whereas, in the financial year relevant to the assessment year under dispute, the assessee had sold them at the price of Rs.65.43 per share and received total sales consideration of Rs. 86,37,050/-. The resultant long term capital gain of Rs. ....
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....res of M/S. Pine Animation Ltd. on purchase were credited to the Demat account of the assessee and were held in the said account till the date of the sale. The shares were sold on the Bombay Stock Exchange through a SEBI registered broker, M/s Allwin Securities Ltd. It is further evident, the purchases and sales were through banking channel and there is no cash transaction. Pertinently, in the statement recorded oath u/s. 131 of the Act, in reply to the specific question asked by the AO, the assessee has categorically stated that he had been investing/trading in equity market since last 25 years, which can be verified from the Demat account. The assessee had also furnished details of Demat account, the brokers through whom the purchase and sales transaction were made, the details of scrip purchased in the earlier as well as in the current assessment year, the details of transaction through banking channel etc. From the copy of the Demat account furnished before us, the statement of the assessee that he was regularly investing/trading in equity market stands corroborated. On a perusal of the Demat Account of the assessee, it is observed that the assessee is holding scrips of a numbe....
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....ssessment year 2015-16, the Coordinate bench while dealing with similar addition made in case of another assessee on account of sale of shares of M/s. Pine Animation Ltd. has held as under: "11. We heard rival contentions and perused the record. We notice that the AO has primarily placed reliance on the report given by the Investigation Wing of the Income-tax Department, Kolkatta in order to arrive at the conclusion that the Long Term Capital Gain reported by the assessee is bogus in nature. We notice that the investigation report prepared by Investigation Wing, Kolkatta 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 notice 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 manipulated transactions, i.e., it was not proved that the assessee has carried out the transactions of purchase and sale of shares in connivance with the people, who were involved in the alleged rigging of prices. We notice that the promoters and their associations of M/s. Pine A....
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....up, which involved in the manipulation of prices of shares. Hence, there is no reason to suspect the purchase and sale of shares undertaken by the assessee. 13. Both the parties relied on various case laws before us. We may refer to the some of the decisions rendered by Hon'ble jurisdictional Bombay High Court. In the case of Shyam Pawar (54 taxmann.com 108) (Bom), the Hon'ble Bombay High Court has observed as under :- "3. Mr. Sureshkumar seriously complained that such finding rendered concurrently should not have been interfered with by the Tribunal. In further Appeal, the Tribunal proceeded not by analyzing this material and concluding that findings of fact concurrently rendered by the Assessing Officer and the Commissioner are perverse. The Tribunal proceeded on the footing that onus was on the Department to nail the Assessee through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr. Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law....
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....on 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 brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme. 6. It is in that regard that we find that Mr. Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mant....
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.... the same reasons, even this additional question cannot be termed as substantial question of law." 14. In the case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022), the Hon'ble Bombay High Court has observed as under :- "2. We have considered the impugned order with the assistance of learned counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer 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 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 Tribunal. 4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commission....
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....cash credit under section 68 of the Act. The Tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of Stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of Stock Exchange. The ITAT therefore, in our view, rightly concluded that there was no merit in the appeal." 16. The Ld. DR has placed reliance on the decision rendered by the Co- ordinate Bench in the case of Hitendra C Ghadia(supra), wherein the Tribunal had confirmed the additions relating to long term capital gains arising on sale of penny stock. We have gone through the said order passed by the Tribunal. First of all, we notice that none of the binding decisions rendered by Hon'ble jurisdictional Bombay High Court has been referred to by the Tribunal. Secondly, it has been mentioned clearly that the decision has been rendered on the basis of facts prevailing in that case. There cannot be any dispute that the question as to whether the capital gain declared by the assessee is genuine or not has to be decided on the basis of facts prevailing in each c....