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TMI Blog2021 (6) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... of long term capital gain as earned on sale of shares under section 68 of the Act without properly appreciating the facts of the case and submissions made before him more so when the appellant had filed ample documents so as to justify the genuineness of long term capital gain which are never disproved by the assessing Officer. 2. That, on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in maintaining the addition as made by the assessing officer on account of long term capital gain as earned on sale of shares on the basis of third party documents/statements which were never confronted with the appellant and against which an opportunity of cross examination was also not allowed to the appellant. 3. That, on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in calculating the tax liability by invoking the provisions of section 115BBE of the Act even when the source of amount as found credited was duly explained. 4. That, on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in maintaining the interest as charged by the assessing officer under section 234A and 234B of the Act. 5. The appellant res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply mutandis mutandis in the case of another assessee namely M/s Sanjay Onkarmal Agrawal (HUF). Both the assessee(s) as well as Ld. Departmental Representative has raised no objection in case the common issues are adjudicated in the light of the facts of assessee namely Smt. Shweta Agrawal. 5. Brief facts of the case as culled out from the records are that the assessee is an individual running sole proprietorship M/s Samarth Impex. Return of income filed on 31.3.2016 declaring income of Rs. 30,66,420/-. Assessee also claimed exemption u/s 10(38) of the Act towards Long Term Capital Gain at Rs. 18,65,616/-. Case selected for compulsory scrutiny by CASS followed by serving of notice u/s 143(2) and 142(1) of the Act. Ld. A.O called for the details of the transaction of purchase and sale of equity share giving rise to Long Term Capital Gain of Rs. 18,65,616/-. Assessee filed relevant details of purchase of 10000 shares of M/s Conart Traders Limited purchased on 16.01.2012 at Rs. 2,50,000/- and paid through banking channel. M/s Conart Traders Limited was subsequently merged with M/s Sunrise Asian Limited (In short 'SAL'). Assessee opened Demat account with Union Bank of India. 10,000 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before the Tribunal. 8. Ld. Counsel for the assessee referred to the detailed synopsis placed at page 527 to 573 of the paper book which forms part of the paper book running from page 1 to 573 and another paper book dated 4.2.2020 running from page 1 to 91. It was also submitted that the issue raised in this appeal are squarely covered by the decision of Co-ordinate Bench, Mumbai in the case of Dipesh Ramesh Vardhan Vs DCIT ITA No.7648/Mum/2019 dated 11.08.2020 which has been subsequently followed by the Co-ordinate Bench of Jaipur in the case of Ashok Agrawal V/s ACIT ITA No.124/JP/2020 dated 18.11.2020. He also submitted that there was no evidence found with regard to the assessee which could indicate that the assessee was engaged in the alleged racket of providing accommodation entries. Reliance was also placed on the judgment of Hon'ble Supreme Court in the case of M/s Andaman Timber Industries V/s CCE contending that no opportunity of cross examination was provided which thus violates the principles of natural justice rendering the proceedings as null and void. 9. Per contra Ld. Departmental Representative vehemently argued supporting the orders of both the lower autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her persons mentioned in the report has been found. So the basis of addition is primarily on the statement of third party as well as the information gathered from other sources. Perusal of the records shows that the assessee has not been provided any access to such report nor any opportunity was provided to cross examine those persons who accepted to have provided accommodation entries for the bogus LTCG to the assessee. 12. We observe that all the above stated facts and the issue of genuineness of LTCG and failure of the Ld. A.O to provide opportunity to cross examination by the assessee with regard to the addition made u/s 68 of the Act for the sale consideration received from sale of equity shares of M/s SAL has been dealt by the Co-ordinate Bench of Mumbai Tribunal in the case of Dipesh Ramesh Vardhan V/s DCIT (supra) and the same is squarely applicable on the instant appeals. The relevant extract of the decision of Co-ordinate Bench, Mumbai is reproduced below:- 6. We have carefully heard the rival submissions and perused relevant material on record. So far as the factual matrix is concerned, there is no substantial dispute regarding the same. The perusal of record would re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been disputed by the revenue. On the basis of all these facts, it could be gathered that the assessee had duly discharged the onus casted upon him to prove the genuineness of the stated transactions and the onus had shifted on revenue to rebut the same. 7. As against the assessee's position, the primary material to make additions in the hands of assessee is the statement of Shri Vipul Bhat and the outcome of search proceedings on his associated entities including M/s SAL. However, there is nothing on record to establish vital link between the assessee group and Shri Vipul Bhat or any of his group entities. The assessee, all along, denied having known Shri Vipul Bhat or any of his group entities. However, nothing has been brought on record to controvert the same and establish the link between Shri Vipul Bhat and the assessee. The opportunity to cross-examine Shri Vipul Bhat was never provided to the assessee which is contrary to the decision of Hon'ble Supreme Court in M/s Andaman Timber Industries V/s CCE (CA No.4228 of 2006) wherein it was held that not allowing the assessee to crossexamine the witnesses by the adjudicating authority though the statement of those witnesses were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange between the assessee and group entities of Shri Vipul Bhat. This is further evidenced by the fact that no substantial incriminating material / wealth of that magnitude has been found during the course of search operations on assessee which would corroborate such presumption and prove that the transactions were sham transactions, in any manner. 9. The fact that the assessee could not produce the concerned person of M/s SAL was rightly controverted by submitting that the aforesaid entity was not under the control of the assessee and the assessee was under no obligation to do so. The existence of M/s SAL is beyond doubt since it was a listed corporate entity and secondly, it was subject matter of scheme of amalgamation u/s 391 to 394. The scheme of amalgamation was duly been approved by Hon'ble Bombay High Court. Therefore, the existence of the said entity could not be doubted, in any manner. 10. The above conclusion is further fortified by the fact that in share sale transactions through online mode, the identity of the buyer of the shares would not be known to the assessee. Therefore, the adverse conclusion drawn by Ld. AO merely on the basis of the fact that the buyer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned additions in the hands of the assessee. Resultantly, the addition on account of alleged Long-Term Capital Gains as well as estimated commission against the same, stands deleted. The grounds of appeal, to that extent, stand allowed. 13. Subsequently Co-ordinate Bench of Jaipur in the case of Ashok Agrawal V/s ACIT in ITA No.124/JP/2020 dated 18.11.2020 has followed the decision of Hon'ble Mumbai Tribunal in the case of Dipesh Ramesh Vardhan (supra) while dealing with the same issue of Long Term Capital Gain from sale of equity shares of M/s Sunrise Asian Limited claimed to be exempt u/s 10(38) of the Act and decided in favour of the assessee and against the revenue observing as follows:- "23. In the aforesaid decision, it has been held that it is SESI who monitors and regulates the stock exchanges & stock market and when their investigation did not reveal any price or volume manipulation by the assessee and these transactions are in the normal course through proper & legal channels. Then the allegations of the IT Department fall flat and denial of deduction u/s 10(38) of the Act is arbitrary and addition of sale proceeds of shares of PAL u/s 68 is against the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase and sale of shares on the stock exchange have not been refuted by any adverse findings or material which could demonstrate involvement of the assessee or collusion with so called accommodation entry providers to obtain bogus LTCG as so alleged by the authorities below. 24. We also find that while analyzing sale of shares of similar scrip of M/s Sunrise Asian Ltd and claim of exemption of long term capital gains u/s 10(38), the Mumbai Benches of the Tribunal in case of Anraj Hiralal Shah (HUF) vs ITO (supra) has upheld the claim of the assessee's claim of exemption under section 10(38) of the Act and the relevant findings of the Coordinate Bench contained at Para 8 read as under:- "8. The assessee has earned speculation profit in the immediately preceding year through M/s Eden Financial Services also and the said profit has been used to purchase the shares of M/s Sunrise Asian Ltd. The assessee has offered the speculation profit for income tax purposes in the immediately preceding year and It has been accepted. Further the assessee has shown the purchase of impugned shares as investment in the Balance Sheet. Hence the purchase of shares has been accepted. Further the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition without any cogent material on record. Relevant extract of the judgment of Hon'ble Delhi High Court in the case of PCIT V/s Krishna Devi & Others is reproduced below:- "10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same for the reasons stated hereinafter. 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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