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TMI Blog2019 (6) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... ments referred to in para 4 (supra) and the facts discussed above and in view of the above ratio in a similar case in the case of M/s KAFL, reverse the orders of the lower authorities and allow the claim of assessee. - I.T.A. No. 1993/Kol/2018 - - - Dated:- 12-6-2019 - Shri A. T. Varkey, JM For the Appellant : Shri Subash Agarwal, Advocate For the Respondent : Shri Rabin Choudhury, Addl. CIT, Sr. DR ORDER This appeal filed by assessee is against the order of Ld. CIT(A) - 13, Kolkata dated 01.08.2018 for AY 2014-15. 2. In this case the assessee has raised as many as four grounds of appeal but the sole issue involved in this appeal of assessee relates to confirming the addition of Long Term Capital Gain of ₹ 18,75,000/- being gross sale consideration of shares claimed by the assessee. 3. Briefly stated facts as observed by the AO are that the assessee claimed long term capital gain of ₹ 18,18,520/- on sale of shares named M/s Kailash Auto Finance Ltd. (M/s. KAFL) which was claimed exempt u/s 10(38) of the Income Tax Act, 1961 (hereinafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no history of share transaction. It was concluded by the AO that assessee has only made investment in this scrip anticipating a windfall which the assessee was liable to explain. A written reply was submitted by the assessee on 25.11.2016. After considering the reply of the assessee the AO concluded that the assessee has not purchased or sold any other share except the said transaction and he is not a regular share trader. The assessee has only made investment in this scrip anticipating a windfall and claimed a substantial amount of LTCG which is totally exempt u/s. 10(38) of the Act. According to AO, in the light of the information received from the DGIT (Inv.), as well as detailed investigation made by SEBI it transpires that the share transaction of the assessee is a kind of sham transaction to evade taxation and to channelize its fund from unexpected sources to a legitimate form of income. Hence, the claim of the assessee in respect of exempt income under the head LTCG, according to AO, is a bogus and therefore, a sum of ₹ 18,75,000/- being gross sale consideration of shares as credited in the books of the assessee was added back to the total income of the assessee under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., which is a registered broker at the Bombay Stock Exchange on which STT was remitted, so the assessee claimed LTCG of ₹ 18,18,521/- (copy of contract note and payment through account payee evidenced from contract note found placed at page 12 and Bank Statement at page 14 of the paper book). The Ld DR for the Revenue vehemently opposed the contentions of the assessee and took us through the AO s order and Ld. CIT(A) s order and submitted that scrips of M/s. KAFL was artificially rigged to provide LTCG to the assessee which cannot be allowed and supported the impugned order and relied on the order of Hon ble Bombay High Court in the case of Binod Chand Jain in Tax Appeal No. 18 of 2017 and so he does not want us to interfere with the impugned order. After his arguments he has also filed a written submission which is as under: In this case purchase of the stock of Careful projects Advisory Ltd. was not an investment decision. Assessee never came out with any explanation as to why he choose to purchase this company's share in large number and at a time involving substantial amount, and how that company was an investment destination an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;. On appeal, the Commissioner (Appeals), as well as, the Hon'ble Tribunal upheld the decision of the Assessing Officer. In view of the above it is submitted that assessee's dealing with this stock may be considered as an adventure in the nature of trade and so, profit derives from such activity may kindly be considered as income from business or other sources. 5. It is noted by me that the issue is no longer res integra. And it is noted that this Tribunal in the following cases have decided that the scrips of KAFL are not bogus and the LTCG claim of the assessee needs to be allowed: i) Manish Kumar Baid Vs. ACIT, ITA Nos. 1236 1237/Kol/2017 dated 18.08.2017 ii) Rukmini Devi Manpria Vs. DCIT, ITA No.1724/Kol/2017 dated 24.10.2018 iii) Jagmohan Agarwal Vs. ACIT, ITA No.604/Kol/2018 dated 05.09.2018. 6. We note that similar issue arose in Manish Kumar Baid (supra) wherein the Tribunal allowed the claim of assessee in respect of LTCG from sale of scrips of M/s. KAFL has held as under: 6. We have heard both the rival submissions and perused the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee way back on 20.12.2011 and pursuant to merger of CPAL with KAFL, the assessee was allotted equal number of shares in KAFL, which was sold by the assessee by exiting at the most opportune moment by making good profits in roder to have a good return on his investment. We find that the assessee and / or the broker Ashita Stock Broking Ltd was not the primary allottees of shares either in CPAL or in KAFL as could be evident from the SEBI s order. We find that the SEBI order did mention the list of 246 beneficiaries of persons trading in shares of KAFL, wherein, the assessee and / or Ashita Stock Broking Ltd s name is not reflected at all. Hence the allegation that the assessee and / or Ashita Stock Broking Ltd getting involved in price rigging of KAFL shares fails. We also find that even the SEBI s order heavily relied upon by the ld AO clearly states that the company KAFL had performed very well during the year under appeal and the P/E ratio had increased substantially. Thus we hold that the said orders of SEBI is no evidence against the assessee, much less to speak of direct evidence. The enquiry by the Investigation Wing and/or the statements of several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance is placed on the decision of the Hon ble Supreme Court in Lalchand Bhagat Ambica Ram vs CIT (1959) 37 ITR 288 (SC) wherein it relied on its earlier judgement rendered in the case of Omar Salav Mohamed Sait (1959) 37 ITR 151 (SC) where it was held that no addition can be made on the basis of surmises, suspicion and conjectures. Further, it the case of CIT (Central) Calcutta vs Daulat Ram Rawatmull (87 ITR 349) the Hon ble SC has held that the onus to prove that the apparent is not the real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing evidences which would either directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an interference to that effect. Though the AO refers to deposition made by some brokers which is nothing but general modus operandi but neither the AO furnished a copy of those statements nor provided any opportunity to cross examine them is afforded to the assessee, so it cannot be used against the assessee to draw adverse inference. In this regard, reliance is placed upon the following judgement: Andman Timber Industries vs CCE (2015) 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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