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TMI Blog2019 (4) TMI 1665X X X X Extracts X X X X X X X X Extracts X X X X ..... the law and any colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods. The assessee are on distinguished facts, hence, not applicable in the instant case. The assessee has not raised any legal ground and argued only on merit for which assessee has failed to substantiate his claim before the lower revenue authorities as well as before this Bench. - Appeal of the Assessee is dismissed. - SHRI H.S. SIDHU, JUDICIAL MEMBER For The Appellant : Shri K.P. Gaunguli, Adv. For The Respondent : Shri S.L. Anuragi, Sr. DR ORDER This appeal filed by the Assessee is directed against the order dated 23.07.2018 of the Ld. CIT(Appeals)-40, Delhi relevant to assessment year 2014-15 on the following grounds of appeal: - 1. That, on the facts and in the circumstances of the case and in law, CIT(A)-40, New Delhi was not justified in confirming the addition of ₹ 23,68,313/- as income of the assessee due to the amount received from Kappac Pharma Limited. 2. That on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were rigged and were raised through circular trading. The Assessing Officer discussed the modus operandi in detail in the assessment order. As per the information available with the Assessing Officer, the shares of Kappac Pharma Ltd. were found to be heavily traded through the top brokers whose activities were being scrutinized by the Investigation Wing. The Investigation Wing, Kolkata recorded the statement of such brokers and sub-brokers who were involved in purchasing of the scrips. A detailed analysis of the financials, price and volume of the shares of the company was also done by the Assessing Officer who then concluded that the transactions showing long term capital gain, which has been claimed by the assessee as exempted under section 10(38), were sham transactions as the surrounding circumstances and the statement of various share brokers prove these facts. After a detailed analysis of the investigation report with the materials available on record in the case of the assessee and on further examination of the financials of Kappac Pharma Ltd., the Assessing Officer concluded that the modus operandi adopted by the assessee followed the pattern discovered by the Investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in the case of Sumati Dayal Vs. CIT (214 ITR 801). It was held that transactions showing exempt Long Term Capital Gain under section 10(38) though appear to be real but as a fact were sham transactions. It was also noted that it has been held by the Hon ble Kolkata High Court in the case of CIT Vs. Precison Finance Pvt. Ltd. (208 ITR 465) that payment through account payee is not sacrosanct. It was held that it is apparent that the assessee has adopted a colorable device of LTCG to avoid tax by relying on the decision of the Hon'ble Supreme Court in the case of Mac Dowell Co. Vs. CTO (154 ITR 148). Tire assessee was required to show cause as to why the credit of ₹ 20,23,990/- + ₹ 3,44,322/- amounting to ₹ 23,68,313/- by way of Long Term Capital Gain should not be treated as bogus and added to the income. It was submitted that all the necessary documents in respect of the purchase and shares have been submitted. It was held that the transaction is a bogus or sham transaction and the amount of capital gain of ₹ 23,68,313/- claimed as exempt Long Term Capital Gain was not genuine and addition of ₹ 23,68,313/- was made to the return income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other hand, Ld. DR relied upon the orders of the authorities below. He further stated that assessee has not substantiated his claim before the revenue authorities. He further submitted that the documents submitted as evidences to prove the genuineness of transaction are themselves found to serve as smoke screen to cover up the true nature of the transactions in the facts and circumstances of the case as it is revealed that purchase and sale of shares are arranged transactions to create bogus profit in the garb of tax exempt long term capital gain by well organized network of entry providers with the sole motive to sell such entries to enable the beneficiary to account for the undisclosed income for a consideration or commission. He further stated that the case laws relied upon by the AO as well as Ld. CIT(A) may be read as his arguments including the decision of the Hon ble Supreme Court of India in the case of Mc Dowell and Company Limited, 154 ITR 148. 5. I have heard both the parties and perused the records especially the impugned order. I find that AO after a detailed analysis of the investigation report with the materials available on record in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record and analysis of information from various sources, the findings of the Assessing Officer are also based on strong surrounding circumstances, preponderance of probability and human conduct in the light of detailed analysis of the modus operandi adopted by brokers and operators engaged in the business of providing entries of long term capital gains to the interested beneficiaries which has come to surface as a result of deep and wide investigation. Initial investment in a company of unknown credentials and subsequent jump in the share price of such a company cannot be an accident or windfall but was possible, as clearly brought on record by the Assessing Officer, because of the manipulations in the price of shares in a pre-planned manner by the interested broker and entry operators. The insistence of the assessee that the transactions leading to long-term capital gains are supported by documents such as sale and purchase invoices, bank statements etc. cannot be accepted in view of the fact and circumstances of the case brought on record by the Assessing Officer after proper examination of the material facts and after taking into account the findings of SEBI and corroborating ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the appellant who had made the claim that she had earned genuine long term capital gain, all the facts were especially within her knowledge. Section 102 of Indian Evidence Act makes it clear that initial onus is on person who substantially asserts a claim. If the onus is discharged by him and a case is made out, the onus shifts on to deponent. It is pertinent to mention here that the phrase burden of proof is used in two distinct meanings in the law of evidence viz, 'the burden of establishing a case', and 'the burden of introducing evidence'. The burden of establishing a case remains throughout trial where it was originally placed, it never shifts. The burden of evidence may shift constantly as evidence is introduced by one side or the others. In this case, once the evidence that assessee has claimed bogus long term capital gain was introduced by the Assessing Officer, the burden of evidence shifted to the assessee. During the assessment proceeding and eveir during the assessee proceeding, the assessee has failed to produce any evidence to prove that the long term capital gain claimed by her was genuine. In the present case, it is seen that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one earlier. 15. In view of the detailed discussion above, and keeping in view the entirety of the facts and circumstances and specific peculiarity of the instant case and the judgments quoted above, we decline to interfere in the order of the Ld. CIT (A). 16. In the result, appeal of the Assessee is dismissed. 5.1 On the issue of circumstantial evidence and in the matters related to the discharge of 'onus of proof' and the relevance of surrounding circumstances of the case, the Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More [(1972) 82 ITR540], have observed as under: ... that though an appellant s statement must be considered real until it zvas shown that there were reasons to believe that the appellant was not the real, in a case where the party relied on self-sewing recitals in the documents, it was for the party to establish the transfer of those recitals, the taxing authorities zvere entitled to look into the surrounding circumstances to find out the reality of such recitals. Science has not yet invented any instrument to test the reliability of the evidence placed before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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