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TMI Blog2021 (4) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of share brokers, promoters and exit providers were shown and confronted to the appellant, whereas no such statements were ever confronted to the appellant during the assessment proceedings. (b) That during the assessment proceedings statements of share brokers, promoters and exit providers were shown and confronted to the appellant, whereas no such statements were ever confronted to the appellant during the assessment proceedings. 2. That after erroneously relying on the provisions of section 124(3) of the Income-tax Act, 1961, the learned Commissioner of Income-tax (Appeals)-I, Kanpur has erred in law and on facts in holding that the notice under section 143(2) of the Income-tax Act, 1961 was validly issued, by the Income-tax Officer-1(2), Kanpur on August 10, 2016, inspite of the fact that the jurisdiction over the case at that time was admittedly exercised by the Assistant Commissioner of Income-tax-I, Kanpur. 3. That the learned Commissioner of Income-tax (Appeals)-I, Kanpur failed to appreciate that the notice under section 143(2) of the Income-tax Act, 1961 was issued by the Income-tax Officer-1(2), Kanpur on August 10, 2016, however as per the order sheet entrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of third party's documents/ statement, without confronting these documents/statement relied upon and without providing opportunity of cross-examination to the persons, the entire exercise being contrary to the provisions of law. 10. That the learned Commissioner of Income-tax (Appeals)-I, Kanpur has erred in law and on facts in sustaining the addition of Rs. 98,277 being alleged commissions brokerage which is baseless on surmises, conjectures, and assumptions and being contrary to the provisions of law. 11. That the learned Commissioner of Income-tax (Appeals)-I, Kanpur has decided the appeal in a biased manner by antedating the appellate order and without providing adequate opportunity to the appellant. Therefore the impugned appellate order is illegal and unsustainable in law. 12. That the written submission filed on ITBA website on July 6, 2019 were not considered by the learned Commissioner of Income-tax (Appeals)-I, Kanpur before issuing the first appellate order by July 7, 2019 on ITBA portal. 13. That the order passed by the learned Commissioner of Income-tax (Appeals)-I, Kanpur is bad in law, illegal, void ab initio and liable to be quashed. 14. That a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the learned counsel for the assessee invited our attention to paper book pages 26 to 51 in I. T. A. No. 449 and from pages 26 to 54 in I. T. A. No. 450 where the copies of transaction statements and statement of account of Chuknoo Securities Ltd. along with the copy of contract notes, copy of bank account from where the payments were made and proceeds were received were placed. It was submitted that all these documents were placed before the Assessing Officer also and in this respect our attention was invited to para 2 of the assessment order where the Assessing Officer has noted that the assessee had attended the proceedings from time to time and had submitted necessary documents, evidence and written submissions as were required in the questionnaire. The learned counsel for the assessee further submitted that broker of the assessee was not investigated and neither the broker examined by the Investigation Wing of the Department was made available to the assessee for cross-examination and therefore also the addition sustained by the learned Commissioner of Income-tax (Appeals) is not sustainable. 4. The learned Departmental representative, on the other hand, vehemently argued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 450. 29-35 29-34 3. Copy of Axis Bank statement for the period 1-11-2013 to 4-3-2014 36-39 35-38 4. Copy of transaction statement and statement received from Chuknoo Securities Ltd. for the period from 1-4-2014 to 31-3-2015 40-41 39-41 5. Copy of contract notes received from Chuknoo Securities Ltd. for sale of shares of CCL International Ltd. dated 28-11-2014, 8-12-2014, 5-1-2015 and 7-1-2015 in I. T. A. No. 449 and dated 24-11-2014, 25-11-2014, 8-12-2014, 5-1-2015 and 7-1-2015 in I. T. A. No. 550 42-49 42-51 6. Copy of Axis Bank statements from 1-12-2014 and 31-1-2015 in I. T. A. No. 449 and from 1-11-2014 to 31-1-2015 in I. T. A. No. 550 50-51 52-54 6.1 The above documents clearly demonstrates that the assessee had purchased shares through SEBI registered brokers through screen based trading and for which the payments were made through banking channels. The assessee had sold shares through authorized stock brokers through screen based trading and payments were received through banking channels after deduction of STT. In I. T. A. No. 449, page 26 is the statement of demat account where 9,000 shares of CCL International Ltd. were credited from December 6, 2013 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, the assessee has purchased 10,000 shares on May 11, 2009 at 16.30 per share for total amount of Rs. 1,63,000 out of which Rs. 20,000 was paid in cash and balance amount of Rs. 1,43,000 through cheque which was duly reflected in the statement of affairs in the return of income, filed for the assessment year 2010-11. Later on, the said shares were sub-divided into 50,000 shares in August, 2011. These shares were stated to be purchased from the direct allottee, Mr. Himanshu Pokhariyal and such shares were transferred directly from demat account of the said person to the demat account of the assessee through e-transfer with Allied Services Pvt. Ltd. Out of 50,000 shares, 20,000 shares were sold in previous year and balance amount of 30,000 shares have been sold in the relevant assessment year. It has not been brought on record that the sale of similar shares in the earlier assessment year has been doubted or not. It is not in dispute that, in so far as purchase of shares through cheque is concerned the same were duly reflected in the bank account of the assessee and shown in the earlier years and the sale consideration is also supported by following evidence : (a) Contract note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n onus shifts upon the Department to prove that all these evidence are only make believe documents and certain minimal inquiry is required to rebut all these evidence. As stated above, nowhere it has been found that the 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 the account of the assessee is from sale of shares and accordingly benefit of long-term capital gain on sale of such listed equity shares have to be given. 11. In the result, the appeal of the assessee is allowed." 7. We further find that the Lucknow Bench of the Tribunal in the group cases vide order dated December 16, 2020 in the case of Achal Gupta v. ITO (I. T. A. Nos. 501, 502, 504 and 505/Lkw/2019 has allowed relief to the assessee in the same scrip of CCL International Ltd. by holding as under : "6. We have heard the rival parties and have gone through the material placed on record. We find that ground Nos. 1 to 4 were not pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the authorities below is that the scrip from which the assessee had earned long-term capital gain has been held by the Investigation Wing of the Revenue to be a paper entity and which has further held that this scrip was being used for creating artificial capital gain. We find that the hon'ble Tribunal in the case of Reeshu Goel has examined this aspect and after recording detailed findings has held this scrip to be a genuine scrip and has held that the scrip is not a paper entity. The detailed findings of the Tribunal, as contained from para 16 are reproduced below : '16. We have heard the rival submissions and also perused the relevant finding given in the impugned orders as well as material referred to before us. As stated above, the assessee has applied for 50,000 shares of M/s. AAR Infrastructure Ltd. for face value of Rs. 10 and paid consideration of Rs. 5 lakhs vide cheque No. 169799 dated January 13, 2011. The said purchase has been recorded in the accounts of the earlier year and is also reflected from the copy of bank statement placed at paper book page 25. The purchases made in the earlier years have been accepted as only net long-term capital gain has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following at the time of assessment proceeding : (a) Copy of allotment letter issued by M/s. AAR Infrastructures Limited (page 25) (b) Copy of bank statement reflecting the payment made for the purchase of 50,000 equity shares. (page 26) (c) Copy of demat account of the appellant. (page 27) (d) Copy of statement of broker reflecting the credit of 50,000 equity share through preferential allotment. (page 28) (e) Copy of order of Delhi High Court, dated October 8, 2011 in the matter of amalgamation of M/s. AAR Infrastructure Limited into M/s. CCL International Limited. (pages 29-44) (f) Copy of contacts notes reflecting the sale proceeds. (pages 45-50) (g) Copy of transaction statement reflecting the increase in the number of shares. (page 51) (h) Copy of bank statement of the appellant reflecting the amount received on sale of shares. (page 54). 18. The entire premise of the Assessing Officer for treating the entire transaction to be a bogus long-term capital gain and making addition under section 68 is that, firstly, M/s. CCL International Ltd. did not have much financial worth to justify such a price rise ; secondly, the SEBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat such a trans action was in the nature of bogus or colourable transaction, there has to be some inquiry or material to nail the assessee that she was some kind of a beneficiary in some accommodation entry operation. No defect has been pointed out in the documents submitted by the asses see nor has the broker of the assessee been inquired upon. Simply relying upon the general modus operandi and statement of some brokers recorded by the Kolkata Investigation Wing does not mean that all the transactions undertaken of the scrip M/s. CCL International Ltd. through the country by millions of subscribers are bogus. Thus, in the absence of any material or evidence against the assessee, we do not find any reason as to why the claim of long-term capital gain from sale of such share should be denied. Consequently, the addition on account of commission is also deleted. Accordingly, we delete the addition made by the Assessing Officer.' 6.2 The above findings of the Tribunal clearly demonstrate that the Tribunal has held the scrip of CCL International Ltd. to be a genuine scrip and has therefore, allowed the appeal of the assessee. 6.3 As regards the reliance placed by the learned De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel appearing for the assessee relied upon the orders of the co-ordinate Bench of the Tribunal, in respect of the same company, i. e., M/s. Kappac Pharma Ltd., and pointed out that the tax authority's approach in this case was entirely erroneous and inconsistent. The main thrust of the assessee's argument is that he was denied the right to cross-examination of the two individuals whose statements led to the inquiry and ultimate disallowance of the long-term capital gain claim in the returns which are the subject matter of the present appeal. This court has considered the submissions of the parties. Aside from the fact that the findings in this case are entirely concurrent- Assessing Officer, the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal have all consistently rendered adverse findings-what is intriguing is that the company (M/s. Kappac Pharma Ltd.) had meagre resources and in fact reported consistent losses. In these circumstances, the astronomical growth of the value of the company's shares naturally excited the suspicions of the Revenue. The company was even directed to be delisted from the stock exchange. Having regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in I. T. A. No. 501 is partly allowed. 9. Now coming to appeals in I. T. A. Nos. 502, 504 and 505, the facts and circumstances in all these appeals are similar and there is also the same scrip of CCL International Ltd. and in these cases also the only objections of the Assessing Officer is that the scrip was a penny stock. In these cases also the assessee had filed complete details before the Assessing Officer which is apparent from the paper books. For the sake of completeness, we reproduce the relevant documents in these appeals filed before the Assessing Officer : I. T. A. No. 502 S. No. Particulars Paper book page 1. Copy of bank statement of Federal Bank from where the payment of Rs. 8,25,000 shares was made 4 to 5 2. Copy of bill of Suktara Trade Link (P) Ltd. from whom shares were purchased 6 3. Copy of transaction statement issued from NSDL 7 to 14 4. Copy of contract notes issued by Edelwise Financial Advisors 15 to 21 5. Copy of transaction statement from NSDL 30 to 47 I. T. A. No. 504 1. Copy of account with State Bank of India from where payment of Rs. 82,500 for purchase of 25,000 equity share ..... X X X X Extracts X X X X X X X X Extracts X X X X
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