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TMI Blog2019 (6) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... 1074 - ITAT KOLKATA] and PCIT Vs. BLB Cables Conductors Pvt. Ltd. [ 2018 (8) TMI 525 - CALCUTTA HIGH COURT] 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 books of accounts. The purchase of shares and the sale of shares were also reflected in Demat account statements. The sale of shares suffered STT, brokerage etc. In the facts and circumstances of the case, it cannot be held that the transactions were bogus.- Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... nk Account Statement was submitted to show that the said amount was paid by account payee cheque. The assessee also produced and filed the copy of the Demat account to show that the said 5,000 shares of M/s. CCL International Ltd. were credited in assessee's Demat account. The said 5,000 shares were sold through Vardhaman Capital Pvt Ltd, a registered share and stock broker. The assessee also produced and filed the copies of contract note in support of sale of 5,000 shares as aforesaid and also submitted relevant extract of his bank account statement to show that the sale consideration was credited to his bank account. It was also shown that the sales of those shares are reflected in the Demat statement of the assessee. The period of holding of such shares being more than 12 months was also brought to the notice of AO by the assessee from the aforesaid documentary evidences. 4. On perusal of the submission of the assessee, the AO found that the assessee had purchased scrip of M/s . CCL International Ltd. of 5,000 units. These were sold during the F.Y. 2014-15 having capital gain of ₹ 21,96,793/-. The assessee has taken this amount as exempt long term capital gain in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(38) of the Act amounting to ₹ 21,96,793/- is found to be fictitious claim of assessee and is nothing but assessee's income from other-sources brought back in his books in the form of exempted income. So, the AO issued show cause why not the above amount of ₹ 21,96,793/- as claimed to be exempted should not be added back to assessee's total income and taxed thereon. After considering the reply of the assessee, the AO observed that the assessee tried to prove the veracity of the said transactions but he failed to provide any reasonable explanation regarding the above facts of suspicious transaction of long term capital. In view of the above, the AO observed that the long term capital gain claimed to be exempted u/s. 10(38) of the Act amounting to ₹ 21,96,793/- was found to be fictitious claim on assessee's part is nothing but his income from other sources brought back in his books in the form of exempted income. So, the above amount of ₹ 21,96,793/- as claimed to be exempted was added back to the total income of the assessee by the AO. Aggrieved, assessee preferred an appeal before the Ld. CIT(A), who confirmed the action of AO. Aggrieved, assessee is before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Paper Book at Page Number 13). It is taken note that the payment was made through an account payee cheque and copy of money receipt alognwith the bank statement evidencing the payment made to M/s Goodshine Commerce Pvt. Ltd. for such share purchase is enclosed in the Paper Book at Page Number 14 to 15. It is taken note that the assessee lodged the said shares with the DP M/s. Vedika Securities Ltd. on 19.07.2013 (i.e. within a month & 10 days). The said shares were subsequently dematerialized (copy of demat statement of enclosed in the Paper Book at Page Number 18).Thereafter it is noted that in the relevant year, the assessee had sold the shares at a consideration of ₹ 494.70 per share ₹ 24,56,793/- and remitting STT through M/s. Vardhaman Capital Ltd. which is a registered broker at the BSE and claimed Long Term Capital Gains of ₹ 21,96,793/-(Copy of contract notes in connection with sale of shares alongwith the bank statement reflecting the receipt of sale consideration is enclosed in the Paper Book at Page Number 16 to 17).It is noted that the AO at the time of assessment proceedings described after taking note of the Investigation Report of Investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ITO, ITA Nos. 2766- 2767/Del/18, order dated 26.11.2018 [Scrip Name - CCL International Ltd. - at page 1 to 12 of the compilation of judgment] 9. It was also brought to our notice that in a case decided by the Tribunal, Delhi Mukta Gupta vs ITO & Mohan Lal Agarwal (HUF) vs ITO in ITA Nos. 2766-2767/DEL/2018 dated 26.11.2018 in AY 2014-15 wherein the assessee placed the assessment orders for AY 2013-14 and 2014-15 in the case of M/s. CCL International Ltd. passed u/s. 143(3) of the Act which goes on to show that the scrips of M/s. CCL International Ltd. cannot be called as bogus wherein it has been held as under: "8. We have heard the rival submissions and also perused the relevant findings given in the impugned orders as well as mater referred to before us. As discussed above, assessee has purchased 10,000 shares on 11.05.2009 @ 16.30 per share for total amount of ₹ 1,63,000/- out of which ₹ 20,000/- was paid in cash and balance amount of ₹ 1,43,000/- through cheque which was duly reflected in the statement of affairs in the return of income filed for Assessment Year 2010-11. Later on, the said shares were sub-divided into 50,000 shares in August, 2011. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as accepted similar transaction of sale of shares of M/s. CCL International Ltd. 10. Nowhere the evidences filed by the assessee has been rebutted or any inquiry whatsoever has been conducted by the Assessing Officer or by the ld. CIT(A) to prove that assessee was involved in any clandestine manner for routing its own unaccounted money. If the assessee has filed the entire evidences relating to purchase which is mostly through cheque shown in the earlier years and also filed all the details of sale transactions and the shares which have been routed through Demat account and sold through stock exchange on a quoted price on that date, then onus shifts upon the Department to prove that all these evidences are only make believe documents and certain minimal inquiry is required to rebut all these evidences. As stated above, nowhere it has been found that assessee was in any manner found to be beneficiary of any accommodation entry under any inquiry or investigation. Once all these transactions are duly proved by trading from stock exchange, then to hold the sale of shares as unexplained credit or as unexplained money cannot be upheld. Accordingly, we hold that the money credited in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be held as bogus transaction merely on the basis of statement of third party recorded by the Investigation Wing, Kolkata wherein there is a general statement of providing bogus long term capital gain transaction to the clients without stating anything about the transaction of allotment of shares by the company to the assessee. 12. We note that the sale of shares of M/s. CCL International Ltd 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 7 (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/infirmity with the same. We note that the source of the receipt of the amount has been explained and the transaction in respect of which the said amount has been received by assessee has not been cancelled by the stock exchange/SEBI. So, it is difficult to countenance the action of AO/Ld. CIT(A) in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 and sold by the assessees were in conformity with the market price, the Tribunal recorded a finding of fact that the cash credits in the buyers' bank accounts cannot be attributed to the assessees. No fault can be found with the above finding recorded by the Tribunal. Therefore, the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 question of law, arises for adjudication.- C. Vasantlal & Co. vs. CIT (1962) 45 ITR 206 (SC), M.O. Thomakutty vs. CIT (.1958) 34 ITR 501 (Ker)) and Mukand Singh vs. Sales Tax Tribunal (1998) 107 STC 300 (Punjab) relied on; Umacharan Shaw &Bros. vs. CIT (1959) 37 ITR 271 (SC) Applied; Jaspal Singh vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial 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 Adjudicating Authority to presuppose as to what could be the subject matter of the crossexamination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm" as the case may be. The other grievance of the assessee becomes infructuous." 19. 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 books of accounts. The purchase of shares and the sale of shares were also reflected in Demat account statements. The sale of shares suffered STT, brokerage etc. In the facts and circumstances of the case, it cannot be held that the transactions were bogus. The following judgments of Hon'ble Jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 the Hon'ble Calcutta High Court held that the Assessing Officer doubted the transactions since the selling broker was subjected to SEBI's action. However the transactions were as per norms and suffered STT, brokerage, service tax, and cess. There is no iota of evidence over the transactions as it were r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents 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) (xi) CIT vs. Udit Narain Agarwal - [2013] 29 taxmann.com 76 (Allahabad HC) (xii) CIT vs. Jamnadevi Agarwal [2012] 20 taxmann.com 529 (Bombay HC) (xiii) CIT vs. Himani M. Vakil - [2014] 41 taxmann.com 425 (Gujarat HC) (xiv) CIT vs. Maheshchandra G. Vakil - [2013] 40 taxmann.com 326 (Gujarat HC) (xv) C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed 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) 23. 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 company. The profit earned by the assessee was shown as capital gains which was not accepted by the A.O. and the gains were treated as business profit of the assessee by treating the sales of the shares within the ambit of adventure in nature of trade. Thus, it can be seen that in the decision relied upon by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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