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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 ..... and on which STT was also paid. Moreover the Assessing Officer has not doubted any of the above documents. The only objection raised 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 Mohan Lal Agarwal (HUF) [ 2018 (11) TMI 1489 - ITAT DELHI] 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. Also see SHRI ACHAL GUPTA, SHRI UDIT GUPTA, SHRI RAKESH NARAIN GUPTA VERSUS INCOME TAX OFFICER-3 (1) , KANPUR. [ 2021 (1) TMI 896 - ITAT LUCKNOW] Therefore, following the above judicial precedents, we allow the appeals of the assessee on the merits. - I.T.A. Nos. 449 And 450/Lkw/2019 - - - Dated:- 5-1-2021 - A. D. Jain (Vice-President) And T. S. Kapoor (Accountant Member) For the Assessee : Swaran Singh , Chartered Accountant For the Department : Ajay Kumar , Departmental representative ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there being any order passed under section 127 of the Income-tax Act, 1961 therefore assumptions of jurisdiction is illegal and consequently the impugned assessment order is illegal and void ab initio and liable to be quashed. 5. That after erroneously relying on the provisions of section 292BB 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 issued under section 143(2) of the Income-tax Act, 1961 by the learned Assessing Officer in contravention to Central Board of Direct Taxes Instruction No. 1 of 2011 read with Central Board of Direct Taxes Instruction No. 6 of 2011, is valid. Therefore, the impugned assessment order is illegal, void ab initio and liable to be quashed. 6. That the learned Commissioner of Income-tax (Appeals)-I, Kanpur has erred in law and on facts in sustaining the addition of ₹ 49,13,833 made by the learned Assessing Officer as unexplained money under section 69A of the Income-tax Act, 1961. Therefore, the addition is liable to be deleted. 7. That the learned Commissioner of Income-tax (Appeals)-I, Kanpur has erred in law and on facts in sustaining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough banking channels and these were purchased through SEBI registered broker Chuknoo Securities Ltd. It was submitted that the shares were held in demat account and after holding for a period of more than one year, the same were sold through registered broker Chuknoo Securities Ltd. through screen based trading and the proceeds were credited to the bank account of the assessees. It was submitted that the Assessing Officer on the basis of some report of the Investigation Wing, which in fact did not relate to the assessees, held that the shares of the CCL International Ltd. was a penny stock and the assessee had managed long-term capital gain through managed transactions and therefore, he held the capital gain to be bogus and made the addition under section 69A of the Act. The learned counsel for the assessee submitted that the hon'ble Delhi Tribunal in the case of Mukta Gupta v. ITO in I. T. A. No. 2766/Delhi/2018 and in the case of Mohan Lal Agarwal (HUF) v. ITO in I. T. A. No. 2767/ Delhi/2018 for the assessment year 2014-15 vide order dated November 26, 2018, has examined the same share of CCL International Ltd. and after recording detailed findings has held that the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Delhi High Court in the case of Udit Kalra v. ITO (I. T. A. No. 220 of 2019, vide order dated March 8, 2019 has dismissed the appeal of the assessee under similar facts and circumstances. The learned Departmental representative further submitted that facts regarding this script being a penny stock and paper entity was already there in the possession of the Revenue and therefore, the authorities below have rightly made and sustained the addition. 5. The learned counsel for the assessee submitted that the hon'ble Tribunal in the case of Reeshu Goel v. ITO in I. T. A. No. 1691/Delhi/2019 has considered the case law of Udit Kalra and has distinguished the same and moreover it was submitted that the decision of the hon'ble High Court do not have precedential value as the hon'ble High Court has dismissed the appeal of the assessee by holding that no substantial question of law arises. 6. We have heard the rival parties and have gone through the material placed on record. We find that the assessees has taken various grounds of appeal which relate to legal aspects as well as on the merits of the case. However, at the time of hearing the learned counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 26 is the statement of demat account where 9,000 shares of CCL International Ltd. were credited from December 6, 2013 to January 2, 2014. Page 27 is statement of account of assessee for the period April 1, 2013 to March 31, 2014 with the broker Chuknoo Securities Ltd. where bills raised for purchase of shares and the receipt of payments is reflected. Page 28 reflects purchase rates and consolidated bill for purchase of 9,000 shares-pages 29 to 35 reflects the contract notes issued by Chuknoo Securities for purchase of 9,000 shares. Pages 36 to 38 reflects the payments made from Axis Bank for purchase of such shares. The evidence of sale of such 9,000 shares through Chuknoo Securities Ltd. showing deduction of service tax and securities transaction tax is placed at paper book pages 41 to 49. Paper book pages 39A shows that shares of CCL International Ltd. were in the demat account of asses see and the fact of these shares having been transferred to the account of brokers M/s. Chuknoo Securities Ltd. on account of sale is also apparent from this paper. The transaction statement placed in paper book also proves that the assessee was holding other scripts also. Paper book pages 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of the assessee and shown in the earlier years and the sale consideration is also supported by following evidence : (a) Contract note giving date, time settlement details, etc. (b) STT is paid on transaction (c) Transaction is through Trustline Securities (d) Sale is made on online market of Bombay Stock Exchange (e) Consideration is received electronically in bank through real time gross settlement (f) Shares are transferred from demat account. 9. Apart from that, it is not in dispute rather both the Assessing Officer and the learned Commissioner of Income-tax (Appeals) in their exhaustive order have incorporated the price movement of the said scrip right from February 6, 2010 to December 9, 2016 and on perusal of the same it is seen that there has been increase and decrease in the shares prices like a normal scrip and it is also not in dispute that the said shares were traded in all the years under the stock exchange. Before us, the learned counsel has also placed the assessment orders for the assessment years 2013-14 and 2014-15 in the case of M/s. CCL International Ltd. passed under section 143(3) to show that this company is genuine and regularly assessed to tax by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 pressed by the learned authorised representative as he requested to pass the order on merits and therefore, the same are dismissed as not pressed. Ground Nos. 5 to 8 relates to the addition under dispute regarding denial of exemption of long-term capital gain. Ground Nos. 9 and 10 are regarding addition under section 69 of the Act which the Assessing Officer had made on the basis that the assessee must have paid some commission for arrangement of bogus capital gain. The facts in brief are that the assessee sold shares of CCL International Ltd. and earned long-term capital gain. In support of long-term capital gain the assessee filed before the Assessing Officer the following documents (which is part of the paper book) : S. No. Nature of documents Paper book page No. 1. Copy of bank account of Federal Bank 15-16 2. Copy of Bill Suktara Trade Lin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 10 and paid consideration of ₹ 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 been taxed by the Assessing Officer. The assessee was allotted shares of M/s. AAR Infrastructure Ltd. and immediately thereafter, the assessee had dematerialised the shares on February 26, 2011 which is evident from the copy of demat account enclosed at pages 27 to 28 of the paper book. Later, M/s. AAR Infrastructure got amalgamated with M/s. CCL International Ltd. and according to amalgamation scheme, the assessee received 1,25,000 shares of M/s. CCL International Ltd. in the proportion of 250 equity shares ₹ 2 per share and ₹ 100 equity share of ₹ 10 per share. The shares which were allotted on February 17, 2011 have been sold after period of more than 18 to 20 mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy 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 had suspended the trade of the share for a brief period ; thirdly, he has pointed out the history of price rise between February 6, 2010 and November 25, 2014 and then has drawn adverse inference that price of these shares were manipulated and rigged in the stock exchange which was solely to provide accommodation entries to the various parties ; and lastly, he has also referred to certain inquiry report of Investigation Wing, Kolkata during the course of which certain brokers have admitted that they had provided accommodation entries in the scrip of M/s. CCL International. But nowhere in the entire assessment order, there is any reference to any material or evidence that the assessee or assessee's br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 Departmental representative on the order of Udit Kalra (supra), we find that the above case law has been held to be distinguishable by the hon'ble Delhi Tribunal in the case of Karuna Garg in I. T. A. No. 1069/Lkw/ 2019 and further in the case of Swati Luthra v. ITO in I. T. A. No. 6480/Delhi/2019, dated June 28, 2019, [2019] 76 ITR (Trib) 432 (Delhi). In these two cases the hon'ble Tribunal has again allowed relief to the assessee though from a different scrip but in the decisions they have held that the judgment of the hon'ble Delhi High Court in Udit Kalra was distinguishable as in that case the hon'ble High Court has only dismissed the appeal as the hon'ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 these circumstances and principally on the ground that the findings are entirely of fact, this court is of the opinion that no substantial question of law arises in the present appeal. This appeal is accordingly dismissed. 15. On going through the aforesaid judgment, we find that no question of law was formulated by the hon'ble High Court of Delhi in the said case and there is only dismissal of appeal in limine and the hon'ble High Court found that the issue involved is a question of fact as held by the hon'ble apex court in Kunhayammed v. State of Kerala reported in [2000] 245 ITR 360 (SC) and also in CIT v. Rashtradoot (HUF) reported in [2019] 41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticulars Paper book page 1. Copy of bank statement of Federal Bank from where the payment of ₹ 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 ₹ 82,500 for purchase of 25,000 equity shares was made 31 and 32 2. Copy of bill of Suktara Trade Link (P) Ltd. for purchase of shares 15 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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