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TMI Blog2018 (5) TMI 2073X X X X Extracts X X X X X X X X Extracts X X X X ..... is directed against an order passed by the learned Commissioner of Income Tax (Appeals)-10, Kolkata (in short the ld. CIT(A) ], which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 ( in short the Act ), dated 21.12.2016. 2. The grounds of appeal raised by the assessee are as follows: 1. The ld. CIT(A) was not justified in upholding the addition made by the ld. A.O. u/s 68 of the Act in respect of sale proceeds of shares of Sulabh Engineering and Services Ltd. amounting to ₹ 1,12,13,010/- treating thesame as income from undisclosed sources after rejecting the assessee s claim of Long Term capital gains (LTCG) on sale of those shares. 2. The ld. CIT(A) was not justified in upholding the action of the ld. A.O. in treating the transactions in shares of Sulabh Engineering and Services Limited resulting in Long Term Capital Gain as bogus and thereupon making addition u/s 69C on the presumption that commission @0.5% was paid for arranging the aforesaid bogus long Term. 3. The appellant craves leave to add/or amend any grounds of this appeal. 3. The brief facts qua the issue are that the assessee has f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l gain to avoid taxation on such amount. This report is based on several surveys and search actions conducted by the directorate on Entry operators (companies with huge transactions but having no actual worth) which were used for artificially rigging the price. It is reported that various enquiries has been conducted by the Directorate of Investigation, Kolkata, on a project basis, which has resulted into the unearthing of a huge syndicate of Entry Operators, share brokers and money launderers, involved in providing house accommodation of long term capital gain and short term capital loss. It has come to light that large scale manipulation has been/ is being done in market price of shares of certain companies listed on the Bombay Stock Exchange by certain person working as a syndicate in order to provide entries of tax exempt bogus long term capital gains to large number of persons in lieu unaccounted cash. The basis objective of this racket is to convert black money into white without payment of income tax. The unaccounted cash of such persons (beneficiaries) is utilized to purchase shares of such companies at a very high artificially inflated market price. This practice is genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Investigation Wing, and has recorded the noteworthy features of the Company whose shares were purchased/sold by the assessee-Individual. The rise and fall of the prices as recorded had been brought out by the ld. AO to be artificial and not commensurate with the normal market, as the Company had no business at all. The Ld. AO has also brought forth Information that the Regulatory Authority SEBI has also after investigating such abnormal price increases of certain stocks investigated the matter and suspended trading in certain scripts. It is very clear that the prices of these scripts fell sharply after the offloading of these scripts by pre-arranged and manipulated transactions. The entire transactions were carried out on the stock exchange to give it a color of real transactions. The ld DR pointed out that in these circumstances, the addition made by AO should be suatained. 7. We have heard both the parties and perused the material available on record. We note that the assessee has submitted before us the statement showing purchases and sale of long term capital gain on sale of equity shares (PB-1). The assessee submitted allotment advice for 75,000 shares of M/s Sulabh Engin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions have been done through recognized exchange through the authorized broker and all relevant supporting documents have been submitted before the learned Assessing Officer. Further, learned Assessing Officer has also added ₹ 56,065/- on account of undisclosed commission payment @ 0.5% of the Long Term Capital Gain that had been assumed to be incurred to arrange bogus Long Term Capital Gain amounting to ₹ 1,12,13,010/-. We note that the scrips / equity shares of M/s Sulabh Engineering and Services Ltd. has been dealt with by the SMC Bench of this Tribunal in the case of Vasudha Jain, in ITA No.1018/Kol/2018, for A.Y. 2015-16, order dated 15.02.2019, wherein the SMC Bench of this Tribunal held that addition has been made by AO mainly on the basis of suspicion and probability . No price rigging established by AO. The ld AO as well as ld CIT(A), were guided by the report of the Investigation Wing, which is general in nature and no specific findings for the assessee, and hence based on these facts the SMC Bench deleted the addition, observing the following. 13. The ld AR also brought to our notice that once the assessee has furnished all evidences in suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Bimalchand Jain in Tax Appeal No. 18 of 2017. We note that in the case relied upon by the ld. D.R, we find that the facts are different from the facts of the case in hand. Firstly, in that case, the purchases were made by the assessee in cash for acquisition of shares of companies and the purchase of shares of the companies was done through the broker and the address of the broker was incidentally the address of the company. The profit earned by the assessee was shown as capital gains which was not accepted by the A.O. and the gains were treated as business profit of the assessee by treating the sales of the shares within the ambit of adventure in nature of trade. Thus, it can be seen that in the decision relied upon by the ld. DR, the dispute was whether the profit earned on sale of shares was capital gains or business profit. 16. It is clear from the above that the facts of the case of the assessee are similar with the facts in the cases wherein the co-ordinate bench of the Tribunal has deleted the addition and allowed the claim of LTCG on such sale of shares Therefore, respectfully following the same ratio, I am inclined to set aside the order of Ld. CIT(A) and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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