9911796707
TMI Blog2018 (4) TMI 1620X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the income under section 68 of Income Tax Act 1961 is against the facts against law and circumstances of the case. 3. The assessee had claimed long term capital gain amounting to Rs. 80,25.291/- as exempt u/s 10(38) of the Act from the total sale proceeds amounting to Rs. 83,57,578/- with respect to the said share transaction. 4. The assessee submitted that he had purchased 800 shares of M/s Sharp Transport Limited(STL), a company base at Kolkata in December 2008. Subsequently, STL along with another company M/s Sakshi Vayapar Ltd. (SVL) merged into M/s Oasis Cine Communication Ltd.(OCL). Pursuant to the said merger, the assessee was allotted 27,200 shares of OCL in the ratio of 1:34, in Oct 2009 which were sold at CSE in May 2010 for Rs. 83 lakh (approx) The assessee claimed to have paid securities transaction tax (STT) on the transfer and returned LTCG as claimed exempt u/s 10(38) of the Act. 5. On considering the assessees contention regarding the long term capital gain, the AO was of the view that it cannot be normal in tune with the regular business transactions to have long-Term capital gains of Rs. 80,85,577/- within 1.5 years of buying shares worth Rs. 2,72,000/- of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing salary income from Saber Paper Books Pvt. Ltd. and income from investments. ii. The investment had taken care by his father Mr. Dinesh Soin . iii. The assessee has purchased 800 shares of M/s Sharp Transport Pvt. Ltd.(M/s STP Ltd.) on 02/12/2008 and received 27,000 shares of M/s Oasis Cini Communication Ltd.(OCC Ltd.) on amalgamation of M/s STP Ltd. which were sold. iv. The assessee has taken advice of consultants like Edelweiss consultants for investment in shares. v. No formal consultancy charges were paid by the assessee to the Edelweiss. vi. The assessee could not throw any light on the rationale given by the consultancy firm in respect of the investment in M/s STP Ltd. which is situated in Kolkata. vii. Net worth position of the company has not been examined by the assessee before investment. viii. The shares were purchased through the broker S.K. Khemka. ix. The shares were purchased in cash @ Rs. 10/- per share and Rs. 328/- as share premium. x. No details / dates of payment in cash to the broker could be established. xi. The assessee was in United States from 2009 to 2012 explains that the payments were made to one of the representative whose name co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eplies to question no. 20 & 40 makes it clear that the amount of Rs. 2,72,000/- was paid to one of the representative sent by the broker Sh. S.K. Khemka at the Delhi office of the company. As per the ledger account sent by Sh. S.K. Khemka it is seen that the said amount was received by Sh. S.K. Khemka on three different dates(01.12.08,03.12.08 AND 04.12.08) and it is beyond common logic as to why the broker from Kolkata would sent the representative on three different dates to collect money from Delhi for comparatively small amounts. The gist of the replies to question no. 20 & 40 also indicate that the representative was sent by the broker only once to the Delhi office. Therefore, this discrepancy adds to the claim of the undersigned that the purchase was bogus. (vi) The fact that it was first transaction with the share broker Sh. S.K. Khemka, and still the assessee favoured the transactions in cash even as in subsequent years there are transactions through banking channel with the same person indicate that no transactions has taken place during the year of purchase and all the affair is stage managed in back date. (vii) Most importantly when the assessee was asked about the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the lower authorities. It was argued that, I. The evidence of purchase of shares of M/s Sharp transport Pvt. Ltd. In the form of contract note and copy of account of assessee in the books of broker namely S K Khemka, which are enclosed at Page No. 1 and 2 of the Paper Book. II. The allotment advice allotment of shares of M/s Oasis Cine Communication Ltd. Pursuant to scheme of amalgamation in lieu of the shares of M/s Sharp transport Pvt. Ltd. enclosed at Page No. 3 of the Paper Book. III. The copies of share certificate of M/s Oasis Cine Communication Ltd. in the name of the assessee enclosed at Page No.4 to 5 of the Paper Book. IV. Demat account statement of the assessee enclosed at Page No. 7 to 9 of the paper book. V. Contract notes of sale of shares of M/s Oasis Cine Communication Ltd. through Calcutta Stock Exchange enclosed at Page No. 10 of the Paper Book. VI. Confirmed copy of account of the assessee in the books of broker enclosed at page No. 10 of the Paper Book. VII. Bank statement of assessee in Karnataka bank in which the sale proceeds of shares are credited and the balance sheets for the year ended on 31.03.2009 and 31.03.2011 enclosed at Page No. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 80 lakh on purchase of shares worth Rs. 2,72,000/- of a non descript, small and unknown company within one and half years cannot be accepted as the Assessing Officer has no evidence and is repeatedly giving thrust on the point that the whole transaction is a series of preplanned steps without any finding on record. In this regard, it was submitted that the transactions were carried out with the Registered Share Broker and in this regard, copy of contract notes, Demat A/c and copies of Bank Passbook evidencing the transactions taken place has been provided. The assessee has proved that the transactions are accounted for, STT has been charged, documented and supported by evidence then the same cannot be held to be bogus or colorful. The said evidences have not been rejected by the AO and rather the AO himself verified such transaction from the stock exchange and the same is clearly mentioned in his assessment order: 8.5 The Ld. AR brought to our notice the following judgments: "ITO vs. Haran Chandra Sarkar l.T.A No. 1740/Kol/2011" In this case, the complete details i.e. transaction were carried out with registered broker, copy of contract notes, assessee's demat account, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed market rates which was verified from the statements of the stock exchange, findings of the Tribunal that the loss in the share transactions was genuine was not perverse and the claim for loss was allowable. The Ld. AR further argued that, the A.O. did not bring in record any material to show any specific infirmity or falsity in the documents produced by the assessee in support of purchase and sale of shares. The AO could not assess the income without supporting evidences and simply could not assume the transaction to be bogus. The addition has been made by the AO. on the basis of the surmises and conjectures ignoring the evidence produced before him. Thus, the addition made on the doubt, surmises and conjectures have no legs to stand. 9. On the other hand Ld. DR vehemently argued that the assessee has grossly failed to prove the very fact of purchase of share at the first instance. Statement of the assessee recorded clearly proves that the assessee has only tried to camouflage the transactions as genuine inspite of the glitches in the statement recorded. The name of the representative of the broker of Kolkata who has received the money at Delhi from the assessee having busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. '...Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal. Therefore, the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ as to the reliability of a piece of evidence. But, in that sphere, the decision of the final fact-finding authority is made conclusive by law." 9.3 The Ld. DR has also relied on the test of human probabilities has been emphasized in yet another decision of the Hon. Supreme Court in the case of Sumati Dayal v. Commissioner Of Income Tax, Bangalore. [1995] 80 Taxman 89/214 ITR 801 (SC). It was held in this case that in view of Section 68, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of the previous year if the explanation offered by the assessee about the nature and source thereof, is, in the opinion of the Assessing Officer, not satisfactory. 9.4 The Ld. DR argued that this case is one of its s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax Vs. Anirudh Narayan Aggarwal (2013) 84 CCH028 All. HC:- In this case the assessee has made payment of share application money through account payee Demand Draft for purchase of shares. In the case of the assessee, the assessee has purchased shares in cash of which the assessee has failed to prove the source as well as payment to the Kolkata based broker from Ludhiana. (iii) Commissioner of Income Tax Vs. Udit Aggarvsal ITA No. 560 of 2009:- In this case, the assessee has made payment of share application money through account payee Demand Draft for purchase of Shares. In The case of the assessee, the assessee has purchased shares in cash of which the assessee has failed to prove the source as well as payment to the Kolkata based broker from Ludhiana. (iv) Commissioner of Income Tax Vs. Kundan Investment Ltd. It Ref. No. 24 of 1996:- In this case, the transaction was held ingenuine on the ground that purchase was sold immediately at loss and the share broker was produced in one group only not for the all four groups. But in the case of the assessee, the transaction has held in genuine on the ground that the assessee has failed to prove the source of investment, fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments in four different The broker is also based at Calcutta, therefore the theory of making transaction of a company the net worth of which is not known at all as it is not listed in any recognized exchange, the appellant was not at all experienced to know these kinds of investment. Most importantly, the appellant was out when these transactions took place. The assessing officer has also worked but with regard to a major fact that the appellant did not have the requisite source of investment during the relevant period of investment. 10.1 we observe, in CIT Vs. Frostair Pvt. Ltd. 26 Taxmann 11 (Del) it was held that the assessee has to establish the share holders identity and genuineness of the transaction. In this case the genuineness of the transaction could not be proved by the assessee. Similarly in the case of CIT Vs. Oasis Hospitality Pvt. Ltd. 333 ITR 119 (Del) (2011) it was held by the Honble Court that The initial onus is upon the assessee to establish three things necessary to obviate the mischief of Section 68. Those are: (i) identity of the investors; (ii) their creditworthiness/ investments; and (Hi) genuineness of the transaction. Only when these three ingredients ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has not paid any consultation fee leads to a conclusion that the entire transaction is synchronized and carefully planned only to defeat the purpose of revenue. The earnings @ 3072% over a period of 17 months breaks the ceiling of any record of return on investment which is beyond the human probability and beyond the business logics of any enterprise. 13. The fact of purchase of shares of the company with such a higher premium of Rs. 328 per share, whose net worth was not known by the assessee and the company is not listed with any Exchange cuts no ice . Another important factor considered is that the assessee has made transaction with share broker Sh. S.M. Khemka banking channels and subsequent years still the assessee has made transaction in cash for the year under consideration accords credence to the non reliability of the entire transaction of shares giving rise to such capital gains. 14. The ratio laid down by the Honble Supreme Court in the case of Sumati Dayal Vs. CIT [1995] 214 ITR 801 is squarely applicable in this case. Though the assessee has received the amounts by the way of account payee cheques, the assessee could nowhere prove the purchase of shares as cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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