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TMI Blog2019 (5) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision in Mahavir Jhanwar V/s. ITO, [ 2019 (3) TMI 210 - ITAT KOLKATA] held that addition should be based on evidence and not on generalisation, human probabilities, suspicion, conjectures and surmises. Thus we conclude that such a disallowance has to be based on evidence rather as alleged suspicion circumstances. We accordingly direct the Assessing Officer to delete the impugned addition. - Decided in favour of assessee. - I.T. A No. 2360/Kol/2017 - - - Dated:- 17-5-2019 - Shri J. Sudhakar Reddy, AM And Shri S.S. Godara, JM For the Appellant : Shri Dhiraj Lakhotia, ld.AR For the Respondent : Shri C.J. Singh, JCIT, ld.DR ORDER SHRI S.S. GODARA, JM: 1. This Assessee s appeal for assessment year 2014-15 arises against the CIT(A), Siliguri s order dated 29-08-2017 passed in case no. 45/CIT(A)/SLG/2016-17 involving proceedings u/s 143(3)/153D/153A of the Act. Heard both the parties. Case file perused. 2. The assessee s sole substantive grievance raised in the instant appeal challenges correctness of both the lower authorities action adding her short term c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Oil Natural Gas Ltd 9,000 2013-14 24,68,852 2013-14 26,05,541 1,36,689 3 First Fin 2,75,000 17/7/13 81,61,087 14/01/14 22,86,664 (58,74,423) 4 Ashok Leyland 10,000 15/7/13 1,75,086 25/2/14 1,55,326 (19,760) 5. Rutron Int. 1,50,000 12/7/13 40,49,207 19/3/14 10,67,296 (29,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation u/s.132 of the LT. Act, 1961 was conducted by the Investigation Wing of the department in the office and residential premises of various Share Brokers, Entry Operators and Promoters across the country including at Mumbai and Kolkata on 12/04/2015 reveal that the above stated scripts viz. FIRST FIN and RUTRON INT. are penny stock companies which are bogus. The statement on oath given by one of the Entry Operator Shri Anil Agarwal the Promoter/Operator u/s.132(4) of the I. T: Act, 1961 on 12/04/2015 in answer to Q.7, Q.8, Q.9, Q.10 stated that trading were done on behalf of client/beneficiary to book bogus L.T.C;G or S.T.C loss as per their requirement. (In the course of a Search operation u/s 132 of IT Act 1961 on 12/04/2015 in the office and residence of one the Entry Operator Shri Anil Agarwal, who was the promoter. of companies viz. M/s First Financial Services Ltd. and Rutron International, in his statement recorded u/s 132(4), has! accepted such dubious and unscrupulous entries were done through the accounts of the companies managed or promoted by him. The modus operandi of how the Capital Gains or Losses are created as per the requirement of the benefici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, the entities which purchase the shares of the beneficiaries at high price book bogus short term capital loss by selling the shares when the prices fall. 09. Please explain in detail about yow role in providing bogus LTCG to the beneficiaries of the scripts Redford Global Limited, Fist Financial Services Limited and Rutron International Limited. Ans:- Sir, I knew three persons, namely, Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Join, of Mumbai, who are primarily involved in the business of providing entry of LTCG. I knew the directors of Mls Rutron International Limited and M/s First Financial Services limited and introduced them to Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain. I also came to know that Mls Redford Global Limited is also one such penny stock company which was operated by Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain. Some clients contacted me tot availing the entry of LTCG and I introduced them to Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain. Thereafter. as per the modus operandi the beneficiaries inverted in the penny stock of Mls Redford Global Limited, M/s Rutron International Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring, the AJR of the assessee in his submission has accepted this fact that above said two companies are lesser known companies. Further, it is far from the truth that how a simple elderly lady spends such a huge compensation money in the unknown shares of the unknown companies to incur huge losses. This was nothing but a willful intention to evade the tax by setting off such bogus loss with the capital gain made from Compensation amount received from Haryana Govt. Perusal of aforesaid observations of the AO and finding of investigation wing shows that the Entry Operator Shri Anil Agarwal, who was the promoter of companies viz. M/s First Financial Services Ltd. and Rutron International, in his statement recorded u/s 132(4), has accepted such dubious and unscrupulous entries were done through the accounts of the companies managed or promoted by him. In his 'statement Sh. Anil Agarwal stated that Shri Paras Chaplot, Shri Pankaj Shah and Shri Vijay Jain, of Mumbai, who are primarily involved .in the business of providing entry of LTCG were known to him. He also knew the directors of M/s Rutron International limited and Mls First Financial Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubber Industries Ltd. (1986) 157 ITR 77 (S.C) and in Ess Ess Kay Engg. Co.(P) Ltd. V CIT (1985) 15 ITR 636 (P H). The Hon'ble Kerala High Court in Onam Agarbati Co. V Dy.CIT (2009) 310 ITR 56 (Ker) has held that though a tax payer may resort to a device to divert the income before it accrues to him, the effectiveness of advice depends upon its genuineness. The substance of the transaction has to be assessed by applying the taxing Statute so as to ascertain whether it is a sham or make-believe transaction or one which is genuine. Ld. 'DR' placed reliance on the decision of the jurisdictional High Court in the case of Somnath Maini V CIT (2008) 3061TR 414 (P H) and Balbir Chand Maini V CIT another (2012) 340 ITR 161 (P H) and contended that the issue in question is covered by these decisions. We have carefully perused and considered the facts and the ratio of the decisions of the jurisdictional High Court, in the case of Balbir Chand Maini (supra) and Somnath Maini V CIT (supra) and found that the facts of the present case are squarely covered by this decision. The relevant and operative part of the decision in the case of Balbir Chand Maini (supra) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. It is pertinent to state here, the judicial wisdom of Hon 'ble Supreme Court in CIT V Arvinda Raju (TN) (1979) 120 ITR 46 (S. C) wherein it was held that one day, in our welfare state geared to social justice, this clever concept of 'avoidance' as against 'evasion' may have to be exposed. In the present case, there is an obvious and plain transaction of lax evasion which has been clothed with the smoke-screen of subterfuges, by the assessee appellants. The facts of the present case clearly reveals that such trading transactions of purchase and sale of shares, had not been effected, for commercial purpose but to create artificial loss, with a view to reducing tax liability. The appellant resorted to readymade scheme for purchase and sale of shares which ultimately found their last destination, to the original seller i.e. the said unlisted company. Such transaction are not genuine and natural transactions but preconceived transactions, demonstrating creation of such short term capital loss. Such transactions are mutually self-serving. It is mentioned that earning profit is a natural instinct ingrained in human beings, particularly m the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. financial services Ltd and dated 14.06.201f M/s. Rutron International Ltd where in its is held that M/s. first financial group misused stock exchange mechanism to exit at a higher price in order to tenure fictitious LTCG and sale thr se shares at free loan price within a period of one year using the stock exchange mechanism, therefore, by booking losses. (The order of SEBI is made as annexure-A.). The Hon'ble Suprr .ne Court, in the case of CIT V Durga Prasad More (1971) 82 ITR 540 (S.C) has categorically held that the revenue is entitled to look into the surrounding circumstances, to find out the reality of the recitals made in the documents. The relevant observations and findings of Hon'ble Supreme Court, in the matter of discharge of 'onus of proof' and the relevance of surrounding circumstances of the case are; that though an appellant's statement must be considered real until it was shown that there were reasons to believe that the appellant was not the real, in a case where the party relied on self-serving recitals in the documents, it was for the party to establish the transfer of those recitals. the taxing authorities were entitled to look into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmit that this taxpayer has filed all the relevant particulars in support of her impugned short term capital gain/loss. 5. The Revenue s case on the other hand supports the CIT(A) s finding under challenge that the assesse has failed to prove the genuineness of the shares transactions in view of overwhelming evidence indicating her to have engaged in dubious methods of scrips prices rigging alongwith entry operators. It refers to search statement of Shri Anil Agarwal, (supra) made before the Investigation Authorities that he had engaged in artificial price rigging of M/s. First Financial Services Ltd and M/s. Rutron International Ltd (supra). Learned department representative s case is that the assesse has failed to explain/prove the genuineness of her share transactions on both purchase and sale aspects. And also even lack of cross examination to assessee in such circumstances does not vitiate the entire proceedings. Mr. Singh lastly quotes hon ble Supreme Court s decisions in (1995) 214 ITR 801(Sc) Sumati Dayal V/s. CIT V/s. Durga Prasad More 82 ITR 540(Sc) that assessee s explanation has to be considered in the light of human probabilities by removing all blinkers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 250 ITR 539 CIT vs. Emerald Commercial ltd 23.03.2001 4. ITA No. 1236- 1237/Kol/2017 Manish Kumar Baid vs. ACIT 18.08.2017 5. ITA No. 569/Kol/2017 Gautam Pincha 15.11.2017 6. ITA No. 443/Kol/2017 Kiran Kothari HUF 15.11.2017 7. ITA No. 2281/Kol/2017 Navneet Agarwal vs. ITO 20.07.2008 8. ITA No. 456 of 2007 Bombay High Court. CIT vs.Shri Mukesh Ratilal Marolia 07.09.2011 9. ITA No. 95 of 2017 ( O M) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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