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TMI Blog2019 (6) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Wing is it seen that the assessee has indulged in any nefarious activities or her broker has carried out any stage managed/pre determined sale of the shares as contended by the AO. SEBI s report also does not in any way point out any wrong action against the assessee s broker or the scrips. We note that there is no specific evidence which have been collected by the AO in coming to a conclusion that the sale consideration from the sale of shares of M/s. GIFL is bogus. Lower authorities erred in holding the assessee s claim on LTCG from the sale of shares of M/s. GIFL as bogus. Therefore, we are inclined to allow the assessee s LTCG claim and, therefore, the appeal of assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... s. GIFL. The change was only in respect of name from M/s. ACFL to M/s. GIFL which is evident from the Certificate of Incorporation dated 28.02.2012 issued by Govt. of India, Ministry of Corporate Affairs. He also drew our attention to the fact that the AO erred in taking note that the assessee was not involved in the regular activities of transaction of shares. The Ld. AR drew our attention to page 9 of the paper book to show that the assessee in this assessment year itself was involved in investments of M/s. Ajanta Pharma Ltd., M/s. Asian Link as well as M/s. AKZO Nobel. So, according to Ld. AR, the AO erred in even taking note of the facts which were on record. According to him, with a prejudiced mind the AO being influenced by the Investigation Wing's report (general report) as well as the SEBI's observation in some other cases has denied the claim of the assessee without any material against the assessee/broker/scrips on which the sale consideration the assessee received. According to Ld. AR, there is no whisper in the entire assessment order against the assessee/broker/scrips. According to Ld. AR, assessee has filed the contract note, demat statement, bank statement etc. to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and later the assessee claims the amount which assessee gets as LTCG which is exempt from tax. This according to ld DR is nothing but a bogus claim, so the AO as well as the Ld. CIT(A) has taken note of these facts to deny the assessee her claim. For doing so, the Ld. DR relied on the following decisions: i) Balbir Chand Maini Vs. CIT (2011) 12 taxmann.com 276, ii) Chandan Gupta Vs. CIT (2015) 54 taxmann.com 10, iii) Smt. M. K. Rajeswari, ITAT, Bangalore dated 12.10.2018, iv) Vandana K. Mehta, ITAT, Mumbai dated 18.07.2013, v) Mahendra Kumar Bhandari Vs. ITO, Chennai, dated 06.04.2018, vi) Mr. Jayesh S Patel Vs. SEBI, Securities Appellate Tribunal, Mumbai, Appeal No. 456 of 2015 dated 25.04.2018, vii) Prem Jain Vs. ITO, ITAT, Delhi dated 26.03.2018, viii) Ratnakar M. Pujari, ITAT, D Bench, Mumbai dated 03.08.2016, ix) Ritu Sanjay Mantry Vs. ITO, ITAT, Mumbai dated 09.02.2018, x) SEBI Vs. Rakhi Trading Pvt. Ltd., civil Appeal No. 1969, 3174-3177 and 3180 of 2011 dated 08.02.2018, xi) Sanjay Bimalchand Jain Vs. Pr. CIT (2018) 89 taxmann.com 196, xii) Arvind Kumar Vs. ITO, ITAT, Chennai dated 08.11.2018, xiii) Arun Kumar Bhaiya Vs. ITO, ITAT Delhi dated 30.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced at page 19 of the paper book. We note that the AO has reproduced certain portions of the general report of Investigation Wing of the Income Tax Department. Nowhere from the general report of Investigation Wing is it seen that the assessee has indulged in any nefarious activities or her broker has carried out any stage managed/pre determined sale of the shares as contended by the AO. SEBI's report also does not in any way point out any wrong action against the assessee's broker or the scrips. We note that there is no specific evidence which have been collected by the AO in coming to a conclusion that the sale consideration from the sale of shares of M/s. GIFL is bogus. We note that the Tribunal had an occasion to examine the claim of an assessee on the same scrip namely, M/s. GIFL and has allowed the claim of the assessee, which we find at page 44 of the order passed in ITA No. 2260/Kol/2018 Aditya Saraf (HUF) Vs. ITO & Ors. dated 15.03.2019. We also note that the Tribunal in ITA No. 711/Kol/2018 Kanwarlal Agarwal (HUF) Vs. ITO for AY 2014-15 by order dated 01.02.2019 has taken into consideration the Ld. AR's submission and reliance placed by him on the decision of ITAT, Chenna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the assessee that the issue in question is covered by the above cited decisions of the Hon'ble Jurisdictional Calcutta High court and the ITAT. I am bound to follow the same." 7. Therefore, in the light of the aforesaid facts and circumstances, we do not find any material to hold that the assessee's claim of LTCG is bogus. For doing so, we rely on the decision in the case of ITA Nos. 1197, 1054 & 1198/Kol/2018 in Mr. Sanjiv Shroff Vs. ACIT & Ors for AY 2014-15 dated 02.01.2019 (though the scrip in that case was M/s. KAFL wherein on similar reasons the AO held the claim of LTCG as bogus) wherein it has been held as under: "20.We note that the sale of shares of M/s. KAFL which was dematerlized in Demat account has taken place through recognised stock exchange and assessee received money through banking channel. So, assessee has explained the nature and source of the money with supporting documents and thus has discharged the onus casted upon him by producing the relevant documents mentioned in para 15 (supra), accordingly, the question of treating the said gain as unexplained cash credit under section 68 of the Act cannot arise unless the AO is able to find fault/infir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumentary evidence. It is true that some of the transactions were off-market transactions. However, the purchase and sale price of the shares declared by the assessees were in conformity with the market rates prevailing on the respective dates as is seen from the documents furnished by the assessees. Therefore, the fact that some of the transactions were off-market transactions cannot be a ground to treat the transactions as sham transactions. The statement of the broker P that the transactions with the H Group were bogus has been demonstrated to be wrong by producing documentary evidence to the effect that the shares sold by the assessees were in consonance with the market price. On perusal of those documentary evidence, the Tribunal has arrived at a finding of fact that the transactions were genuine. Nothing is brought on record to show that the findings recorded by the Tribunal are contrary to the documentary evidence on record. The Tribunal has further recorded a finding of fact that the cash credits in the,bank accounts of some of the buyers of shares cannot be linked to the assessees. Moreover, yn the light of the documentary evidence adduced to show that the shares purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts of the assessee and were received through account payee cheque. The Tribunal was right in rejecting the appeal of the Revenue by holding that the assessee was simply a shareholder of the company. He had made investment in a company in which he was neither a director nor was he in control of the company. The assessee had taken shares from the market, the shares were listed and the transaction took place through a registered broker of the stock exchange. There was no material before the AO, which could have lead to a conclusion that the transaction was simplicitier a device to camouflage activities, to defraud the Revenue. No such presumption could be drawn by the AO merely on surmises and conjectures. In the absence of any cogent material in this regard, having been placed on record, the AO could not have reopened the assessment. The assessee had made an investment in a company, evidence whereof was with the AO. --Therefore, the AO could not have added income, which was rightly deleted by the CIT(A) as well as the Tribunal. It is settled law that suspicion, howsoever strong cannot take the place of legal proof. Consequently, no question of law, much less a substantial questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions in shares supported by broker's contract notes, confirmation of receipt of sale proceeds through regular banking channels and the demat account. 19. Accordingly, we direct the A.O. to treat the gains arising out of the sale of shares under the head capital gains- "Short Term" or "Long Term" as the case may be. The other grievance of the assessee becomes infructuous." 27. The assessee has furnished all evidences in support of the claim of the assessee that it earned LTCG on transactions of his investment in shares. The purchase of shares had been accepted by the AO in the year of its acquisition and thereafter until the same were sold. The off market transaction for purchase of shares is not illegal as was held by the decision of Co-ordinate Bench of this Tribunal in the case of Dolarrai Hemani vs. ITO in ITA No. 19/Kol/2014 dated 2.12.2016 and the decision by Hon'ble Calcutta High court in PCIT Vs. BLB Cables & Conductors Pvt. Ltd. in ITAT No. 78 of 2017 dated 19.06.2018 wherein all the transactions took place off market and the loss on commodity exchange was allowed in favour of assessee. The transactions were all through account payee cheques and reflected in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the formal evidences produced by the assessee to support huge losses claimed in the transactions of purchase and sale of shares were stage managed. The Hon'ble High Court held that the opinion of the AO that the assessee generated a sizeable amount of loss out of prearranged transactions so as to reduce the quantum of income liable for tax might have been the view expressed by the ld AO but he miserably failed to substantiate that. The High Court held that the transactions were at the prevailing price and therefore the suspicion of the AO was misplaced and not substantiated. iii)CIT V. Lakshmangarh Estate & Trading Co. Limited [2013] 40 taxmann.com 439 (Cal) - In this case the Hon'ble Calcutta High Court held that on the basis of a suspicion howsoever strong it is not possible to record any finding of fact. As a matter of fact suspicion can never take the place of proof. It was further held that in absence of any evidence on record, it is difficult if not impossible, to hold that the transactions of buying or selling of shares were colourable transactions or were resorted to with ulterior motive. iv) CIT V. Shreyashi Ganguli [ITA No. 196 of 2012] (Cal HC) - In this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by Bills, Contract Notes, Demat statements and bank statements etc., and when the transactions of purchase of shares were accepted by the ld AO in earlier years, the same could not be treated as bogus simply on the basis of some reports of the Investigation Wing and/or the orders of SEBI and/or the statements of third parties. In support of the aforesaid submissions, the ld AR, in addition to the aforesaid judgements, has referred to and relied on the following cases:- (i) Baijnath Agarwal vs. ACIT - [2010] 40 SOT 475 (Agra (TM) (ii) ITO vs. Bibi Rani Bansal - [2011] 44 SOT 500 (Agra) (TM) (iii) ITO vs. Ashok Kumar Bansal - ITA No. 289/Agra/2009 (Agra ITAT) (iv) ACIT vs. Amita Agarwal & Others - ITA Nos. 247/(Kol)/ of 2011 (Kol ITAT) (v) Rita Devi & Others vs. DCIT - IT(SS))A Nos. 22-26/Kol/2p11 (Kol ITAT) (vi) Surya Prakash Toshniwal vs. ITO - ITA No. 1213/Kol/2016 (Kol ITAT) (vii) Sunita Jain vs. ITO - ITA No. 201 & 502/Ahd/2016 (Ahmedabad ITAT) (viii) Ms. Farrah Marker vs. ITO - ITA No. 3801/Mum/2011 (Mumbai ITAT) (ix) Anil Nandkishore Goyal vs. ACIT - ITA Nos. 1256/PN/2012 (Pune ITAT) (x) CIT vs. Sudeep Goenka - [2013] 29 taxmann.com 402 (Allahabad HC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rigging or manipulation of price in CSE. The ld AR referred to the following judgments in support of this contention wherein under similar facts of the case it was held that the AO was not justified in refusing to allow the benefit under section 10(38) of the Act and to assess the sale proceeds of shares as undisclosed income of the assessee under section 68 of the Act :- (i) ITO vs. Ashok Kumar Bansal - ITA No. 289/Agr/2009 (Agra ITAT) (ii) ACIT vs. Amita Agarwal & Others - ITA Nos. 247/(Kol)/ of 2011 (Kol ITAT) (iii) Lalit Mohan Jalan (HUF) vs. ACIT - ITA No. 693/Kol/2009 (Kol ITAT) (iv) Mukesh R. Marolia vs. Addl. CIT - [2006] 6 SOT 247 (Mum) 31. We note that the ld. D.R. had heavily relied upon the decision of the Hon'ble Bombay High Court in the case of Bimalchand Jain in Tax Appeal No. 18 of 2017. We note that in the case relied upon by the ld. D.R, we find that the facts are different from the facts of the case in hand. Firstly, in that case, the purchases were made by the assessee in cash for acquisition of shares of companies and the purchase of shares of the companies was done through the broker and the address of the broker was incidentally the address of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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