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TMI Blog2018 (3) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... t faulted by the AO. Lower authorities have not considered the aforesaid documents and rejected all the claims made by the assessee by relying on the report of the Investigation Wing and thereby made the addition, which is not sustainable in the eyes of law. Further find that the AO has given detailed explanation in the order regarding the modus-operandi of bogus LTCG scheme but failed to substantiate how the assessee fell in the purview of the same without bringing any material on record and proving that the assesssee was directly involved in the so called bogus transaction. The addition in dispute made by the AO and upheld by the CIT(A) u/s 68 as unexplained credit instead of long term capital gain as claimed by the assessee, however, the source identity and genuineness of the transaction having been established by documentary evidences and there is no case for making addition u/s 68 hence, the same deserve to be deleted. - Decided in favour of assessee. - ITA No. 6235/Del/2017 - - - Dated:- 19-3-2018 - SHRI H. S. SIDHU, JUDICIAL MEMBER For The Assessee : Sh. Ved Jain, Adv., Sh. Ashish Chadha, CA Ms. Devina Sharma, CA For The Revenue : Sh. V.K. Jiwani, SR. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) A copy of purchase bill dated 22.02.2010. ( ii) A copy of share transfer form in the favour of the assessee. ( iii) Copy of bank statement highlighting the payment made against the share purchased. ( iv) Transaction statement of the stock broker i.e. Pace Stock Broking Services (P) Ltd., account. ( v) Copy of bank statement in which sale proceed from the sale of shares received. ( vi) Copy of calculation of long term capital gain That the Assessing Authority has not considered the same just because the investigation was done against the stock broking entities, the assessee cannot be said to have entered into bogus transaction insofar as the assessee is not concerned with the activity of broker and has no control over the same. That it is submitted that a small amount invested in penny stocks gave rise to huge capital gains in a short period does not mean that the transaction is bogus if the documentation and evidences cannot be faulted. The nature of transaction does not change because there is an investigation. 4. That it is stated that Assessing Officer has reach on conclusion of that transaction of sale and purchase was not ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of accounts by arranging bogus long term capital gain. In this regard, the AO has relied upon the various judgments and assessed the income at 22,14,180/- u/s. 143(3) of the Act. In appeal, Ld. CIT(A) has confirmed the action of the AO holding that the transactions are sham transaction. 3. Aggrieved with the impugned order, Assessee is in Appeal before the Tribunal. 4. At the time of hearing, Ld. Counsel of the assessee has stated that revenue authorities erred in passing the orders, without considering the facts that the entire addition has been created by the Assessing Officer only on the basis of presumption and presuppositions, instead considering the documents/ information and explanation provided by the assessee. It was further stated that Assessing Officer failed to appreciate the fact of the case that the assessee made genuine sale and purchase of share and without correctly appreciating and understanding the transaction has made addition of ₹ 18,46,600/- in the income of the assessee. It was further stated that assessee has earned Long Term Capital Gain amounting to ₹ 18,46,600/- during the financial year 2013-14 which is exempt under Section 10(38) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustries Ltd increased suddenly. That the assessee invested in penny stocks gave rise to huge capital gains in a short period does not mean that the transaction is bogus as the appellant has all the documents and evidence. It was further stated that lower authorities rejected all the claims made by the assessee arbitrarily and without giving any cogent reasoning based on surmises and conjectures and relying solely on the report of the Investigation Wing and thereby made the addition, which is not tenable, hence, the claim of long term capital gain should be allowed. It was further stated by the Ld. Counsel of the assessee that the addition in dispute made by the AO and upheld by the Ld. CIT(A) u/s 68 as unexplained credit instead of long term capital gain as claimed by the assessee, however, the source identity and genuineness of the transaction having been established by documentary evidences and there is no case for making addition u/s 68. In support of his contention Ld. Counsel of the assessee has stated that the issue in dispute is squarely covered by the various decisions of the ITAT and the Hon ble High Courts including the recent decision dated 18.1.2018 of the Jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial year 2013-14 resulting in Long Term Capital Gain. The assessee has submitted various documentary evidences to prove the genuineness of the transaction of sale and purchase of shares which includes a copy of purchase bill dated 22.02.2010; a copy of share transfer form in the favour of the assessee; Copy of bank statement highlighting the payment made against the share purchased; Transaction statement of the stock broker i.e. Pace Stock Broking Services (P) Ltd., account; copy of bank statement in which sale proceed from the sale of shares received; copy of calculation of long term capital gain, which was not faulted by the AO. However, the lower authorities have not considered the aforesaid documents and rejected all the claims made by the assessee by relying on the report of the Investigation Wing and thereby made the addition, which is not sustainable in the eyes of law. I further find that the AO has given detailed explanation in the order regarding the modus operandi of bogus LTCG scheme but failed to substantiate how the assessee fell in the purview of the same without bringing any material on record and proving that the assesssee was directly involved in the so called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO on account of sham share transactions, whereas the CIT(A) himself had held that the assessee had not been able to substantiate the source of investment of ₹ 11,00,000/- in the said shares purchased during the financial year 2005-06 and the AO was directed to reopen the case of the assessee for the assessment year 2006-07 on this issue? ( iii) Whether the Hon ble ITAT has erred in ignoring an important aspect that in such cases of sham transactions of shares showing abnormal hike in their value, where the facts themselves speak loud and clear, the AO is justified to even draw an inference from the attendant circumstances? ( iv) Whether on the facts and in the circumstances of the case, the Hon ble Income Tax Appellate Tribunal has erred in law in upholding the order of the CIT(A) deleting the addition of ₹ 12,59,000/- made by the AO on the basis of seized document on the grounds that the AO has not pointed out as to how the figures of ₹ 12.59 lacs has been worked out ignoring the fact that the assessee himself in his reply to the AO had tried to explain the source of the receipts of ₹ 12,59,000/- instead of challenging the working out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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