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TMI Blog2019 (1) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... o how the claim of assessee was sham or bogus. The assessee thus, satisfied the conditions of Section 10(38) of the I.T. Act - decided in favour of assessee - ITA.No.4738/Del./2018 And TA.No.2429/Del./2018 - - - Dated:- 1-1-2019 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER For The Assessee : Shri Somil Aggarwal, Advocate For The Revenue : Shri S.L. Anuragi, Sr. D.R. ORDER ITA.No.4738/Del./2018 of the Assessee has been directed against the Order of the Ld. CIT(A), Faridabad, Dated 28.05.2018, for the A.Y. 2015-2016, challenging the addition of ₹ 26,40,725/- under section 69 of the I.T. Act, on account of alleged bogus sale of shares. 2. ITA.No.2429/Del./2018 of the Assessee has been directed against the Order of the Ld. CIT(A)-1, Gurgaon, Dated 22.01.2018, for the A.Y. 2014-2015, challenging the addition of ₹ 28,14,180/- under section 68 of the I.T. Act, in not allowing exemption under section 10(38) of the I.T. Act, 1961. 3. This Order shall dispose-of the above appeals filed by different Assessees on an identical question with regard to addition under sections 68/69 of the I.T. Act, 1961 on account of claim of long term capital gains. Since, comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee explained that she has purchased shares of the aforesaid company from her source which were sold through broker M/s. SMC Global Services Ltd. Sale consideration has received in the bank account of assessee on which brokerage and STT have been paid. The shares have been sold electronically on recognized Stock Exchange i.e., Bombay Stock Exchange in accordance with SEBI guidelines. All the details were submitted and shares were sold as per Rules on which tax have been paid. The amount of sale consideration have been received through banking channel which was received in the account of assessee. The A.O. recorded statement of assessee under section 131 of the I.T. Act, in which also she has confirmed purchase and sale of the shares in question to earn capital gain. The statement of the broker Shri Sanjay Vora was confronted to assessee. However, in her statement she denied having any knowledge about the same. The A.O. did not accept the contention of assessee and referred to the rule of preponderance of probabilities and noted the financials of the aforesaid company in the assessment order and held that it was a sham transaction which was aimed only to bring unaccounted money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee filed all the documentary evidences before A.O. to prove genuineness of the transaction in the matter. The assessee filed copy of the computation, bank statements and details of long term capital gains. The assessee purchased the shares directly which was sold through recognized Stock Exchange through the Broker. All the payments have been received through banking channel and on the sale, STT have been paid. The Ld. CIT(A) noted in the appellate order that transaction was conducted through Stock Exchange with payment of STT after getting these shares dematerialized. The documentary evidences furnished by assessee clearly supports the claim of assessee that assessee entered into genuine transaction of sale of shares through recognized exchange upon which STT has also been paid. The A.O. relied upon statement of Shri Sanjay Vora, Broker to prove that he had provided accommodation entries of M/s. Lifeline Drugs and Pharma Ltd., in question. However, it is an admitted fact that his statement was not subjected to cross-examination on behalf of the assessee. Therefore, such statement cannot be read in evidence against the assessee. I rely upon the decision of Hon ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( Respondent) ITA.No.6459/Del./2018 Assessment Year 2014-2015 Smt. Pooja Yadav, New Delhi 110 070. PAN AHXPY2139G C/o.Shri Kapil Goel, Advocate, F-26/124, Sector-7, Rohini, Delhi 110085. Vs The Income Tax Officer, Ward-33(5), New Delhi. ( Appellant) ( Respondent) For Assessees : Shri Kapil Goel, Advocate For Revenue : Shri S.L. Anuragi, Sr. D.R. Date of Hearing : 08.12.2018 Date of Pronouncement : 12.12.2018 ORDER This Order shall dispose-of all the above five appeals filed by different Assessees on an identical question with regard to addition under section 68 of the I.T. Act, 1961, on account of claim of long term capital gains. 2. I have heard the Learned Representatives of both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the events are not as simple as described in assessee's submissions. There are several important circumstantial as well as direct evidences that lead to the conclusion that the exempt Long-Term Capital Gain claimed by assessee on sale of shares of EBFL is not genuine but is pre-arranged collusive transaction in form of accommodation entry without real substance. The A.O. noted that the assessee has earned windfall gain within a short span of time that too with the investment in a relatively unknown company. The financial figures of the above company are noted in the Order to show that net profit on turnover have declined. There is unreasonable and inexplicable rise in the share prices of the Company within a short span. The transactions are carried-out with predetermined understanding, plan. Increase of share price of the Company did not commensurate with its financial results and fundamentals. There is unrealistic returns on the investment. The DIT (Investigation), Kolkata carried-out countrywide investigation to un-earth organized racket/ syndicate for generating bogus entries of long term capital gains which is exempt from tax. Statement of several entry operators we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is paid and received through banking channel. No information of any inquiry made from the broker have been provided. Oral evidence cannot prevail over documentary evidence. M/s. Esteem Bio Organic Food Processing Ltd., has been very much a going concern company, an acting Company on MCA website allowed till recently to trade on recognized stock exchange by the SEBI. No copy of report of Investigation Wing have been provided. Assessee has no control over activity of the company in question whether its price rig etc., The SEBI after detailed investigation pronounced its order dated 06.09.2017 that there is no irregularity found in the case of M/s. Esteem Bio Organic Food Processing Ltd., Therefore, interim order was revoked. This company still listed with BSE and shares of the company are being traded regularly. The assessee purchased 6000 shares through public issue and payment for this is made through banking channel, out of which, part shares have been sold and remaining are still with the assessee. The shares were directly transferred to Demat account, copy of which is also filed. The assessee held shares for more than the period specified by the Act to claim long term capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi Bench in the case of ITO vs. Jatin Investment Pvt. Ltd., in ITA.Nos.4325 4326/Del./2009, Dated 27.05.2015 in which similar addition has been deleted, in which it was held that on sale of investment, provisions of Section 68 will not be applicable . He has submitted that the said decision has been confirmed by the Hon ble Delhi High Court in the case of Pr. CIT-5 vs. Jatin Investment Pvt. Ltd., 2017-TMI-342-Del-HC. He has submitted that the Tribunal following this decision decided the issue in favour of the assessee. Learned Counsel for the Assessee also relied upon the Order of the ITAT, Delhi Bench in the case of Smt. Shikha Dhawan, Gurgaon vs. ITO, Ward-4(2), Gurgaon in ITA.No.3035/Del./2018, Dated 27.06.2018 in which the Tribunal following its earlier decisions as well as decision of Hon ble Punjab Haryana High Court in the case of PCIT (Central), Ludhiana vs. Prem Pal Gandhi in ITA.No.95 of 2017, Dated 18.01.2018, decided similar issue in favour of the assessee. Copies of the Orders are placed on record. Learned Counsel for the Assessee, therefore, submitted that the issue is covered by the aforesaid decisions of the Tribunal. 7. On the other hand, Ld. D.R. rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the relevant records available with me, especially the orders of the revenue authorities and the case law cited by both the parties. I note that assessee has earned Long Term Capital Gain amounting to ₹ 18,46,600/- during the financial year 2013-14 and the same has been claimed exempt under Section 10(38) of Income Tax Act, 1961. The assessee had purchased of 45,000/- shares of Unisys Software Holding Industries Ltd amounting ₹ 9,38,600/- at a premium of ₹ 20.85 per share in physical form. Out of the aforesaid 45000/- Shares assessee sold of 8000 Shares only i.e. 17.77%. Thus, the major part of the Shares i.e. 82.33% are still in the hand of the assessee. In my view the assessee just wanted to enter into the transaction to earn exempted capital gain, but the assessee did not sell all the share 45000 shares instead of sale of a part i.e. 8000 shares only when that time was the best price ever. All the transaction were made through account payee cheque/banking channel and assessee had purchased share in financial year 2009-10 and sold the same in the financial year 2013-14 resulting in Long Term Capital Gain. The assessee has submitted various documentary ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of Punjab Haryana in the case of PCIT (Central), Ludhiana vs. Prem Pal Gandhi passed in ITA No. 95 of 2017 wherein it has been held as under:- 2. The following questions of law have been raised:- (i) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal has erred in upholding the order of the CIT(A) deleting the addition of ₹ 4,11,77,474/- made by the AO on account of sham share transactions ignoring an important aspect that the transaction of shares showing their purchase price at ₹ 11,00,000/- and sale consideration at ₹ 4,23,45,295/- within a period of less than two years / purchases of shares made in cash not cheque that too before shares got dematerialized / worth of the company at the time of purchase / sale of shares not proved- All suggest non- genuineness of the said transaction? (ii) 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 ₹ 4,11,77,474/- made by the AO on account of sham share transactions, whereas the CIT(A) himself had held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely held company and that the trading on the National Stock Exchange was manipulated in any manner. 5. In these circumstances, following the judgment in ITA- 18-2017, it must be held that there is no substantial question of law in the present appeal. 6. Question (iv) has been dealt with in detail by the CIT(A) and the Tribunal. Firstly, the documents on which the AO relied upon the appeal were not put to the Assessee during the assessment proceedings. The CIT(A) nevertheless considered them in detail and found that there was no corelation between the amounts sought to be added and the entries in those documents. This was on an appreciation of facts. There is nothing to indicate that the same was perverse or irrational. Accordingly, no question of law arises. 7. In the circumstances, the appeal is dismissed. 7. Keeping in view of the facts and circumstances of the case as explained above and respectfully following the precedent, as aforesaid, the addition amounting ₹ 18,46,600/- made by the AO and confirmed by the Ld. CIT(A) is hereby deleted and ground raised by the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. 6.1. He has, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench, Delhi in the case of Meenu Goel vs ITO (supra) following the decision of Jurisdictional Hon'ble P H High Court in the case of Pr.CIT vs Prem Pal Gandhi (supra) deleted the similar addition. Therefore, the issue is covered in favour of the assessee by the order of ITAT, Delhi Bench in the case of Meenu Goel vs ITO (supra) followed by judgment of Jurisdictional P H High Court which is binding. There is no other material available on record to rebut the claim of the assessee of exemption claimed u/s 10(38) of the Act. 9. Keeping in view of the above discussion and the material on record, in the light of the order of the Tribunal in the case of Meenu Goel vs ITO (supra), I set aside the orders of the authorities below and delete the addition of ₹ 19,51,357/-. The appeal of the assessee is, accordingly, allowed. 10. In the result, the appeal of the assessee is allowed. 8.1. The ITAT, Delhi SMC Bench, in the case of Arun Kumar, Delhi vs. ACIT, Circle-1, Noida (supra) following several decisions of various Benches of the Tribunal and following the decision of ITAT, Delhi Bench in the case of ITO, Ward-4(2), New Delhi vs. Jatin Investment Pvt. Ltd., New Delhi and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) making the similar deletion was upheld by observing in para 6 as under :- We are of the view that the assessee had produced copies of accounts, bills and contract notes issued by M/s. MKM Finsec Pvt. Ltd., and had been maintaining books of account as per Companies Act. The assessee had also demonstrated the purchase and sale of shares over a period of time as seen from the balance sheet's. In our opinion, the Assessing Officer has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee. The assessee has also produced best possible evidence to support its claim. Consequently the addition made by the Assessing Officer cannot be sustained. 14. We, therefore, considering the totality of the facts do not see any valid ground to interfere with the findings of the Ld. CIT(A). Accordingly, we do not see any merit in this appeal of the department. In ITA no. 4326/Del./2009 of the assessment year 2004- 05 identical issue having similar facts is involved, the only difference is in the amount of addition which was deleted by the Ld. CIT(A). Therefore, our findings given in former part of this order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition is merely made on presumption and assumptions of certain facts which are not part of the record. The issue is, therefore, covered in favour of the assessee by several Orders of the Tribunal including the case of Smt. Shikha Dhawan, Gurgaon vs. ITO, Ward- 4(2), Gurgaon (supra). There is no other material available on record to rebut the claim of assessee of exemption claimed under section 10(38) of the I.T. Act. Keeping in view of the above discussion and material on record in the light of above decisions of the Tribunal and Hon ble Delhi High Court, I set aside the Orders of the authorities below and delete the addition of ₹ 14,61,585/-. The appeal of Assessee is accordingly allowed. 9. In the result, ITA.No.5882/Del./2018 of the Assessee is allowed. ITA.No.5883/Del./2018 Shri Amarnath Goenka, Delhi: 10. This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-7, New Delhi, Dated 08.08.2018, for the A.Y. 2015-2016 challenging the addition of ₹ 7,00,793/- under section 68 of the I.T. Act on account of long term capital gains. The facts in this care are similar as have been considered in the case of Shri Amar Nath Goen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has purchased 4000 shares of M/s Kappac Pharma Ltd., on 25.06.2012 by paying amount of ₹ 48,000/- which were purchased through M/s. Sarala Space Manager Pvt. Ltd., These shares were sold through National Stock Exchange from 03.02.2014 to 18.03.2014 through broker M/s. F6 Fineserve Pvt. Ltd., The assessee received an amount of ₹ 28,14,180/-. The A.O. similarly referred to Investigation conducted by Kolkata Investigation Wing team. The statement of Brokers Shri Nikhil Jain and Shri Anil Kumar Khemka recorded by Investigation Wing, Kolkata have been referred in the assessment order in which they have admitted to have provided accommodation entries of various companies and assessee was also found as one of the beneficiary. After explanation of assessee, A.O. made addition of ₹ 28,14,180/-. 12.1. The assessee submitted before Ld. CIT(A) that all the documentary evidences were filed in respect of the genuine transaction. The assessee filed copies of the share certificates and purchase bills, copy of annual return from ROC records of M/s. Kappac Pharma Ltd., regarding share transactions indicating claim of assessee, copy of the Demat Account with HDFC, ledger acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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