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TMI Blog2018 (5) TMI 1915X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, that the assessee could be granted another opportunity to produce evidences in the form of producing the books involved in the transactions, their contemporary records, share transfer forms, the records of the company whose shares has been dealt with etc., for examination before the A.O, we are not inclined to restore this issue to the A.O as the assessee has not produced any convincing evidence to justify such re-adjudication by the A.O. - Decided against assessee. - ITA No. 2016/Chny/2017 - - - Dated:- 15-5-2018 - SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER For the Appellant : Mr. F.C.Jain, CA For the Respondent : Mrs. Vijaya Prabha, JCIT ORDER PER S. JAYARAMAN, ACCOUNTANT MEMBER: The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-16, Chennai, in ITA No.105/CIT(A)-16 dated 05.06.2017 for the AY 2014-15. 2. Smt. Vidya Reddy, the assessee, an Individual settled in USA, had shown Long Term Capital Gains of ₹ 45,79,550/- being profit on sale of 6000 shares of M/s Surabhi Chemicals and Investment P. Ltd., and claimed it as an exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies. She had failed to discharge subsequent Onus cast on her. She had failed to substantiate as to how penny stock companies would fetch huge return at such a short interval. Therefore, there are no infirmities in the findings of the AO that the share transactions were sham in nature and not genuine etc., and accordingly dismissed the appeal. Aggrieved against the order of the Ld. CIT (A), the assessee filed this appeal. 4. The AR submitted that the assessee is a bona fide investor, like other shares, she has invested in the shares of Surabhi Chemicals Investments Ltd on the advice and help of her grandfather. The AO and the Ld. CIT (A) did not appreciate the evidences furnished by the assessee and her explanation. The A O assessed the impugned sum as an income and the Ld.CIT (A) confirmed such assessment in appeal. The AR reiterated the same submissions made before the Ld. CIT(A) on the two aspects pointed out supra. 5. Per contra, the DR invited our attention to the orders of the Lower authorities wherein the modus operandi and pattern detected by the Investigation Wing, the SIT report on misuse of exemption on LTCG tax for money laundering and certain te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action. in its books to accommodate the other party. These transactions are accommodated entries mostly in lieu of cash of equal amount and commission charged over and above at certain fixed percentage for providing such accommodation entry. These accommodation entries are taken by various beneficiaries for introducing their unaccounted cash into their books of accounts without paying the due taxes. (ii) Penny stocks are those stocks which trade at very low price and whose market capitalization is very low. The low price of the penny stocks makes manipulation of the share price very easy. SEBI has recently barred more than 250 entities, including individuals and companies, from the securities market for suspected tax evasion and laundering of black money through stock market platforms. In one such instance price of a scrip rose from ₹ 10.20 to ₹ 489 in 150 trading days - a rise of 4694%. The SIT obtained the background details of these cases and studied them. A typical pattern is observed to be followed in such cases. A company with very poor financial fundamentals in terms of past income or turnover is able to raise huge capital by all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chart extracted in the assessment order. Successive bidding of order placed for large volume of shares like 18000 on 28-01-2014, 18000 on 03-02- 2014, 7000 on 10-02-2014 9000 in Feb., 2014 indicate that buyers are in collusion. Otherwise, execution of order placed is not possible particularly when trade price is static for various trades executed. All the trades have been executed at fraction of second. All these trading patterns show that LTCG admitted by the assessee is an arranged one. The payment of Security Transaction Tax was to paint creditworthiness to the transaction and claim exemption u/s. 10(38). In view of the information provided by the Investigation Wing, Kolkatta, the recommendations of SIT on Black money etc, the AO required the assessee to prove her claim of exemption. After considering her reply etc held, inter alia, that it is clear that the assessee has manipulated the sale of shares within a short span of time in collusion with the brokers in order to earn tax free exempt long term capital gains on sale of shares u/s. 10(38) etc. It is clear from the orders of the Lower authorities that the assessee has not placed any material to prove that her transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the Income-tax Officer is entitled to treat it as taxable income see A. Govindarajulu Mudaliar v. Commissioner of Income-tax 34 ITR 807 SC. On the above facts and circumstances, it is clear that the assessee has not established her case. Though it did cross in our minds, that the assessee could be granted another opportunity to produce evidences in the form of producing the books involved in the transactions, their contemporary records, share transfer forms, the records of the company whose shares has been dealt with etc., for examination before the A.O, we are not inclined to restore this issue to the A.O as the asessee has not produced any convincing evidence to justify such re-adjudication by the A.O. In the circumstances, the assessment made by the AO and confirmed by the Ld. CIT(A) is in accordance with the ratios of the Hon ble Apex Court (supra) and hence we dismiss all the grounds of the assessee s appeal. 7. In the result, the assessee s appeal is dismissed. Order pronounced in the Open Court on May 15, 2018, at Chennai. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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