9911796707
TMI Blog2021 (4) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... saction of the assessee was not genuine. The Ld. CIT(A) considering the details on record found that there is an increase in the turnover and profit of this company and this company has also declared substantial income and paid the taxes also. There were no basis for the A.O. to hold this company to be penny stock company. The Ld. CIT(A) also found that this company has declared dividend to the shareholders as well as have reputed customers. The assessee kept the shares for more than one year and sold the shares through recognized stock exchange on which STT is also paid. The assessee purchased the shares through banking channel as well as sold the shares through online trading platform of NSE. The payment is also received through banking channel. This company is actually engaged in manufacturing and has substantial assets also. No evidence has been brought on record by the A.O. as to how the assessee s transactions were not genuine. It was also brought on record that assessee is a habitual investor as is evident from the Demat Statement with the Bank. No justification to interfere with the Order of the Ld. CIT(A) in deleting the addition. - Decided in favour of assessee. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these shares 86,000 shares were sold-out through her broker M/s SS Corporate Securities Ltd from 13.03.2015 to 23.03.2015 for total consideration of ₹ 40,64,289/- (including STT of ₹ 4,075/-). The total sale consideration of all the shares of Eins Edutech Ltd was therefore ₹ 1,68,02,668/- which includes STT of ₹ 16,842/-. The purchase value of these shares was ₹ 6,45,765/-. The indexed cost of the purchase was ₹ 7,04,221/-. The LTCG claimed exempt under section 10(38) was ₹ 1,60,98,447/-. The purchase cost of the balance shares remained with the assessee had been ₹ 16,04,235/-. The AO after a detailed findings in his order considered these transactions as sham and disallowed the exemption claimed under section 10(38) of the Act and added total LTCG of ₹ 1,60,98,447/- to the income of the assessee. The income was assessed at ₹ 1,74,06,030/- against the returned income of ₹ 13,07,583/-. 4.1. The assessee challenged the addition before the Ld. CIT(A). The detailed written submissions of the assessee is reproduced in the appellate order in which the assessee briefly explained that assessee had discharged the onus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, no adverse inference can be drawn against the assessee. The sales were made by the broker through online trading platform of BSE and the broker realized the payment against the sale of shares from BSE and thereafter passed on the amount to the assessee through account payee cheques/RTGS. It was further submitted that share prices are always determined by the market mechanism at any given point of time because there is a robust system of the stock exchange which is transparent, open and equitable and the assessee has sold the shares on such platform at a price which was a reflection of the market demand and supply. The transactions on the online platform of stock exchange is a faceless transaction where the seller does not know who is buying the shares. Therefore, A.O. should not doubt the transaction and no material has been brought on record by the A.O. to create suspicion in the transactions carried-out by the assessee. The A.O. has merely suspected the transactions because huge capital gain has been earned by the assessee and that investigation have been conducted at Kolkata against the third parties. However, these are no the basis to make any addition aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid exempt u/s 10(38) to the extent of ₹ 1,60,98,447/- on account of sale of 43,051 shares of M/s Eins Edutech Ltd. The AO has considered the capital gain in the case M/s Eins Edutech Ltd as bogus, the sale consideration of which has been shown in the ITR at ₹ 1,68,02,668/- including STT of ₹ 16,842/- and the purchase cost at ₹ 7,04,221/- after indexation (before indexation 6,45,765). He made addition of ₹ 1,60,98,447/- to the income of the assessee being the bogus LTCG on sale of these shares and claimed exempt u/s 10(38) and introduced in the books of accounts being his unaccounted income introduced through this sham transaction. The assessee had invested ₹ 22,50,000/- by two cheques in purchase of 1,50,000 equity shares of M/s Eins Eductech Ltd in the month of July, 2013 through preferential allotment @ ₹ 15/- per share. These shares were credited in the demat account of the assessee on 25/11/2013. These shares remained in lock-in by order of the SEBI till 15/10/2014. Out of these shares 43,051 shares were sold out by the assessee in the months of October, 2014, November, 2014, February, 2015 and March, 2015 for a total consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement on oath. The show cause notice as well as statement have been reproduced by the AO in the order. The AO found the replies of the assessee as unconvincing because she had only basic knowledge of share market and did not have the understanding of the financials of the company before investment and also she could not reply the where about of the person who recommended the investment in M/s Eins Edutech Ltd. The AO inferred that she knows nothing about the preferential allotments of shares. As per him the assessee is a small time investor having very little exposer to the share market. Whereas the assessee stated that she trade and invest on advice of her husband only. The AO relying on the findings of investigation wing added the entire LTCG claimed exempt u/s 10(38) in ITR of ₹ 1,60,98,447/- to the income of the assessee u/s 68 of the Act. 6.1.4 The AR of the appellant during the appellate proceedings filed a detailed submission contesting the above addition and also submitted relevant documents in a paper book which included her bank statements, copies of the contract notes for sale of shares, copies of the documents relating to purchase of shares through cheques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LTCG. Mere reliance on the investigation report without directly pin pointing the role of the appellant in the transactions it is not justifiable to disallow her claim of exempt income u/s 10(38). In view of the submissions made by the appellant and her reliance on various case laws including decisions of jurisdictional ITAT under the identical facts eg. Sanjeev Jain vs ITO ITA No. 3381/Del/2017 etc. and that there is no direct evidence against the appellant is available I hereby delete the addition of ₹ 1,60,98,447/- made by the AO and direct him to allow the claim of LTCG u/s 10(38). In the result, these grounds 1 to 4 are allowed. 5. The Ld. D.R. relied upon the Order of the A.O. and submitted that the sale value was many times high as against the purchase value of the shares which clearly show that unaccounted cash is routed into the transactions which was rightly considered by the A.O. to be a sham transaction. He has submitted that Investigation Wing of Kolkata has examined the issue in detail of the penny stock companies and rightly came to the conclusion that assessee is also involved in sham transactions which have been ignored by the Ld. CIT(A), therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough the SEBI registered stock brokers which have not been doubted by the A.O. The sale proceeds were received through registered broker of the SEBI through banking channel and BSE has issued stamped contract note to show that transactions were traded online at BSE. It is also not in dispute that assessee has been regularly trading in shares in earlier years as well as in assessment year under appeal not only in respect of the impugned transactions, but, also traded in respect of other unlisted companies. Thus, the assessee is regularly trading in the shares. Whatever inquiry was conducted at Kolkata at the back of assessee was not confronted to assessee and assessee was never allowed to cross-examine to such statement, if recorded during the course of investigation by the Kolkata Wing. The statement recorded of Shri Devesh Upadhayaya and others have not been confronted to the assessee and no right of cross-examination have been given. Even it is not clarified how the statement of Shri Devesh Upadhayaya or other were incriminating in nature against the interest of assessee because they never made any allegation against the assessee. Therefore, such evidence would not be relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer was carried away by the report of the Investigation Wing and the exparte Ad-Interim order of the SEBI. It can be seen that the entire assessment order has been framed by the Assessing Officer without conducting any enquiry from the relevant parties or independent source or evidence but has merely relied upon the SEBI order without conducting any independent and separate enquiry in the case of the appellant. 18. It is provided u/s 142(2) of the Act that for the purpose of obtaining full information in respect of income of loss of any person, the Assessing Officer may make such enquiry as he considers necessary. 19. Similar facts were considered by the coordinate bench in the case of Smt. Karuna Garg ITA No. 1069 2772/DEL/2019, Smt Bindu Garg in ITA No. 1168 1169/DEL/2019, Smt Krishna Devi in ITA No. 1070/DEL/2019 and Har Dev Sahai Gupta in ITA No. 1264/DEL/2019. In these cases, the quarrel was in respect of scrip of M/s Esteem Bio Organic Food Processing Ltd, which is one of the four companies whose names are mentioned at Para 12 of this order. 20. In these cases also since the exparte interim order of the SEBI dated 29.06.2015 has named 239 persons and nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels. The abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the last factfinding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. 14. In this view of the matter, no question of law, much less a substantial question of law arises for our consideration. 21. In our considered view, whether the assessee has discharged his onus cast upon him by provisions of section 68 of the Act or not is purely a question of fact and considering the vortex of evidences, we are of the considered view that the assessee has successfully discharged the onus cast upon him by provisions of section 68 of the Act. As mentioned elsewhere, the discharge of onus is purely a question of fact, the judicial decisions relied upon by the ld. DR would do no good on the peculiar plethora of evidences in respect of facts in hand and hence the judicial decisions relied upon by both the sides, though perused, but not considered on the facts of the case in hand except the decision of the coordinate bench discussed elsewhere because the same exparte Ad-Interim order of SEBI was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yes Till date of this order 3 Ms. Madhu Anand AXTPA8813F Yes Till date of this order 4 Goldline International Finvest Ltd. AACCG6377M Yes Till date of this order 5 Shri. Madhukar Dubey its Proprietorship firm viz. N V Sales Corporation, Magnum Industrial Alliance Traders AIJPD7329J Yes Till date of this order 6 Shri. Satendra Kumar its Proprietorship firm viz. Nisha Traders AWWPK8525E Yes Till date of this order 7 Avisha Credit Capital Pvt. Ltd AAACA5715D Yes Till date of this order 8 Shri. Sumit Kumar its Proprietorship firm viz. Durga Prasad Co. ARUPK1589P Yes Till date of this order 9 Shri. Raj Kumar its Proprietorship firm v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case are that the assessee is an individual and filed return of income declaring income of ₹ 17,96,210/-. The assessee has shown income from business, capital gain and income from other sources. In assessment year under appeal the assessee has claimed long term capital gains as exempt under section 10(38) of the I.T. Act, 1961. The details of the same are as under : Capital gains Long term capital gains Shilpi Cable Technologies Ltd., (Exempt u/s.10(38) Full Consideration ₹ 15,26,38,102/- Less: Cost of Acquisition ₹ 2,33,97,620/- LTCG (Exempt u/s.10(38)) claimed ₹ 12,92,40,482/- 10.1. The A.O. considered the capital gains claimed by the assessee to be bogus. The A.O. discussed the modus operandi of the persons arranging the bogus long term capital gains through entry provider and through exit providers. The A.O. found that assessee has purchased the shares of Shilpi Cable Technologies Ltd., in physical form and thereafter same have been conver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring of specialized cables and had various manufacturing facilities as could be evident from the details of this company downloaded from internet. The audited financial data and other details would show that even Mutual Funds and Foreign Institutional Investors held shares of this Company. This company has also declared dividend to Investors. Shilpi Cable Technologies Ltd., is a company which was engaged in actual business of manufacturing of sale of specialized cable and its customers included reputed brand names like Vodaphone, Nokia, Tata, Videocon, ITI, Ashok Leyland, Eicher, TVS etc. The assessee purchased the shares of this company through account payee cheques in F.Y. 2012-2013 when the sales turnover of the company was to the tune of ₹ 957.07 crores and the same increased to ₹ 1752.94 in F.Y. 2013-2014. There was a quantum jump in sales turnover in F.Y. 2014-2015 when the turnover was reported at ₹ 3212.93 crores and in F.Y. 2015-2016 it increased to ₹ 3895.53 crores and then in F.Y. 2016-2017 it was reported at ₹ 3840.48 crores. This company is doing actual business and has substantial revenue from the sale of products manufactured by it. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores in F.Y. 2009-10 which has increased to ₹ 957.07 crores in FY 2012-13 when the assessee purchased the shares and has further increased to ₹ 3895 crores during the instant year when the assessee has sold the impugned shares. Similarly the company is found to be earning a profit before tax of ₹ 70.09 crores in assessment year 2013-14 when the assessee purchased the shares and its profit has risen to ₹ 197.22 crores in the instant year when the impugned shares were sold. It is also seen that Shilpi Cable Technologies Limited has been consistently paying income tax on its income right from assessment year 2010-11 to assessment year 2017-18. It is also seen that it has substantial fixed assets, long term borrowings from banks etc. It also has paid dividend to its shareholders in three years namely assessment year 2015-16 to assessment year 2017-18. I have also gone through the company profile available on Internet, copies whereof have been filed before me, according to which the company had two manufacturing units wherein various types of cables and wires were manufactured and the company claims to have customers like BSNL, MTNL, Vodafone, Nokia, Tata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase of shares of Shilpi Cable Technologies Ltd. by the appellant fully verifiable from the payments made by him through account payee cheques as also from his demat account. The shares sold by the appellant during the instant year are on online trading platform of stock Exchange when the same were sold on NSE through SEBI registered broker and STT was paid by the appellant as per time stamped contract notes available on record. The payments have been realized from stock exchange through the member brokers and the shares sold have been delivered out from the demat statement of the appellant. The shares sold by the appellant during the instant year were held by him for more than three years, thus he fulfilled all the conditions for allowance of exemption u/s 10(38) of the Act. vii. It is seen that none of these facts has been controverter by the AO. The AO has chosen to restrict himself to general modus operandi in the case of penny stocks without bringing on record any specific incriminating material that could link the shares of Shilpi Cable Technologies Etd. to any of such investigative reports. Thus there is no evidence on record to prove that the transactions carried ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R. submitted that exit provider are also family members of Gupta Family and Touch Stone Holding Pvt. Ltd., is held by Shri S.K. Jain Group of cases who are accommodation entry providers which was ultimately purchased by the Gupta family. The Ld. D.R. relied upon the following decisions : 1 Order of ITAT, Nagpur Bench, Nagpur in the case of Shri Sanjay Bimalchand Jain, Nagpur vs., ITO, Ward-4(2), Nagpur in ITA.No.61/Nag/2013 Dated 18.07.2016 2 Order of ITAT, Chandigarh Bench in the case of Shri Abhimanyu Soin, Ludhiana vs., ACIT, Circle- VII, Ludhiana in ITA.No.951/Chd/2016 Dated 18.04.2018 reported in 2018-TIOL-733-ITAT-CHD. 3 Order of ITAT, Delhi SMC-Bench, Delhi in the case of Udit Kalra, New Delhi vs., ITO, Ward-50(1), New Delhi in ITA.No.6717/Del.//2017, Dated 08.01.2019. 4 Order of ITAT, Delhi B-Bench, New Delhi in the case of Shri Sanat Kumar, Delhi s., ACIT, Circle- 36(1), New Delhi in ITA.No.1881/Del./2018 Stay No.233/Del./2019 Dated 14.06.2019 reported in 2019-TIOL-1296-ITAT-Del. 12. On the other hand, Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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