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TMI Blog2019 (4) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... njeev, CA, Sh. Madhur Aggarwal, Adv. For the Revenue : Sh. Surender Pal, Sr. DR ORDER PER N. S. SAINI, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order of Commissioner of Income Tax (Appeals)-6, New Delhi dated 18.09.2018. 2. The assessee has raised the following grounds of appeal: A. That the learned CIT (Appeals) has erred in upholding the addition of ₹ 1,69,12,820/- made to the taxable income of the assessee by the Assessing Officer on the allegation of unexplained cash credit u/s 68 of the Act. B. That the learned CIT (Appeals) has erred in holding that the onus to prove the source of funds amounting to ₹ 1,69,12,820/- was not discharged by the assessee. C. That the learned CIT (Appeals) has further erred in holding that the documents submitted as evidence by the assessee to prove the genuineness of transactions are a smoke screen to cover up the true nature of the transactions. D. That the learned CIT(Appeals) has erred in drawing adverse inference against the assessee merely on the basis of general modus operandi of certain persons with whom the assessee has never transacted and with whom no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2011-12, the Authorized Paid-up Capital of M/s Dhanleela Investment Trading Company Limited was ₹ 20,00,000/- which substantially increased in the Financial Year 2012-13 to ₹ 9,47,00,000/-. Thus, an amount of more than ₹ 9 crores was collected by M/s Danleela Investment Trading Company Limited during Financial Year 2012-13 by making preferential allotment for which no particular reason can be deduced from the financial results of the company or any other parameter in the Annual report or disclosure made by the company. Thus, the sudden increase in share capital without any cogent reason raises a suspicion that the increase is predetermined action with specific intention. Further in the Balance Sheet there is no fixed Asset or any tangible Asset having value to support that any business activity was ever conducted by the company. 7. The Assessing officer observed that the share price of M/s Danleela Investment Trading Company Limited sky rocketed without having any financial result. The parameters which are essential for increase of price of share are not present. In absence of backing financial results it can be concluded that the increase is due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of intimation of outcome of EOGM to Bombay Stock Exchange, Letter of allotment of Bonus shares by the Company dated 15.02.2013 alongwith the certified true copy of the resolutions passed in EOGM by the shareholders of the company, Letter intimating Sub-division of Equity Shares of the company dated 15.10.2013 along with the proceedings of the AGM of the Company held on 11.09.2013, Bank Statement showing payment of purchase consideration dated 29.10.2012, Contract notes for trading in shares of M/s Danleela Investment Trading Company limited, Demat Statement from Pee Aar Securities Ltd. from 01.04.2012 to 20.12.2016, indicating the movement of shares of M/s Danleela Investment Trading Company limited, Statement showing Volume and price movement in shares of M/s Danleela Investment Trading Company limited from 01.04.20012 to 31.12.2016, Bank statement showing realisation of sale proceeds of M/s Danleela Investment Trading Company limited during 2013-14, Bank Statement of Share Broker, Annual Accounts of M/s Danleela Investment Trading Company limited for the Financial Years 2011-12, 2012-13 and 2013-14. The copies of all these documents are placed in the paper Book filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved that the issue of preferential shares by M/s Dhanleela Investment Trading Co. Ltd. raises a suspicion. The movement in price of shares of that company was without backing of financial performance of that company. 16. In our considered view, the above at best are a pointer or cause for careful scrutiny of the transaction by the Assessing Officer but from this it cannot be concluded that transactions were sham. It is a matter of common knowledge that prices of shares in the share market depends upon innumerable factors and perception of the investor and not alone on the financial performance of the company. 17. In the instant case, the assessee pointed out that the financial performance of the said company improved a lot in the financial year 2012-13 compared to financial year 2011-12. It was pointed out that in the financial year 2012-13, the total Revenue of the company increased to ₹ 1719 lakhs from ₹ 10.25 lakhs. Further, the company witnessed a turn around and secured net profit of more than ₹ 31 lakhs as compared to loss in the immediately preceding year. Thus, the business of the company increased around 171 times which shows that the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that SEBI has barred dealing in shares of M/s Dhanleela Investment Trading Co. Ltd. However, Authorized Representative of the assessee contended that no such ban has been imposed. The Departmental Representative in support of his contention filed copy of SEBI order dated 19.12.2014. However, a perusal of the said order, particularly para no. 32 at page 16 shows that amongst others M/s Dhanleela Investment Trading Co. Ltd. was prohibited till the final order from dealing in shares of Radford Global Ltd. Thus, it is observed that the said order has not prohibited any person from dealing in shares of M/s Dhanleela Investment Trading Co. Ltd. 23. The assessee pleaded that substantial shares were still retained by assessee as all shares were not sold which shows bonafide of assessee that she entered into genuine transaction. Thus, principle of preponderance of probabilities will not apply to the case. 24. In the above facts and circumstances, we find that the transaction of the assessee of deriving long term capital gains of ₹ 1,69,12,820/- by selling shares of M/s Dhanleela Investment Trading Co. Ltd. was treated as bogus by the Revenue only on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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