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TMI Blog2021 (10) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied the material, despite the request of the assessee in his letter filed on 19.12.2017, and without supplying the said material made the addition of Rs. 28512276. Therefore, the addition is unlawful and be deleted. (3) That on the facts and in the circumstances of the case and in law, the additions have been made by the learned A.O and sustained by the learned CIT(A) on the basis of statement recorded in the search without appreciating/considering judiciously the submissions made and evidences produced in the course of assessment proceedings by the assessee. The assessee submits that the statement in the search was made due to coercion, pressure tactics and undue influence adopted by the search officials in the search and, therefore, the addition made in the assessment of the income is neither justified nor lawful and also contrary to the CBDT Instructions dated 10.03.2003 and 18.12.2014. Hence, the additions made at Rs. 28512276 & Rs. 800000 are bad in law and, therefore, be kindly deleted. (4) That on the facts and in the circumstances of the case and in law, the addition has been made/sustained by the learned lower authorities solely on the basis of retracted statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s business associates on 05.10.2015. Subsequently notice u/s 153A of the Act served upon the assessee for A.Y. 2010- 11 to 2015-16. Since the instant appeal pertains to A.Y.2015-16, we will confine our discussion only for A.Y. 2015-16. In response to the above notice the assessee filed return of income for A.Y. 2015-16 on 29.03.2017, declaring income of Rs. 29,39,750/-, Ld. AO served the assessee with notices u/s 143(2) & 142(1) of the Act along with the detailed questionnaire. During the course of assessment proceedings Ld. AO confronted the assessee with the statement given during the course of search wherein the assessee stated to have taken accommodation entry in the form of bogus Long Term Capital Gain of Rs. 2,85,12,276/-. The assessee did not offered the alleged Long Term Capital Gain (LTCG), to tax in the income tax return. Ld. AO observed that the assessee retracted the statement within five months of the date of search stating that no such accommodation entry was taken by him and the transaction of purchase and sale of Long Term Capital Gain falls under the provision of u/s 10(38) of the Act and the income is exempt. During the course of assessment proceedings Ld. AO refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containing 40 pages and also referred to relevant pages of the paper book with the help of the table reproduced below summarizing contentions made before us: Sr. No. Contentions Paper book (PB) and AO reference 1. Shares purchased - preferential allotment PB 6-9, 231-232 2. Shares sold - out of 2,00,000 shares only 96,256 shares sold i.e. unsold quantity is 1,03,744 which is 51.8% PB 11 3. Assessee invested in the shares of other companies PB 10-12 4. Addition made without reference to any incriminating material PB 42 5. Addition made merely on the basis of statement order PB 44-56, CIT(A) pg 8 6. Statement retracted within 5 months , before issue of notice u/s 153A PB 35-41 & 275 AO pg 33 para 7.36 7. Copy of the statements of alleged operators not provided CIT(A) PB 35, pg 11 para 16-21 8. No evidence on record to establish if there is any element of cash (Hon'ble Apex Court - Lalchand Bhagat Ambica Ram) PB 05 9. No credibility of list of 20 persons as it is a stock market transaction AO pg 23-31 10. Provisions of section 142(3) not complied with No opportunity of cross examination Copy of the statement not provided PB 35, CIT(A) pg 11 para 16-21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was also submitted that all the conditions enumerated in section 10(38) of the Act are duly complied. Placing reliance on the judgment of Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education (2017) 84 Taxmann.com 290 (Hon'ble Supreme Court) it was submitted that the additions cannot be made without referring to any incriminating material as in the instant case assessee was subjected to search. Further referring to the decision of this Tribunal in the case of Ultimate Builders ITANo.134/Ind/2019 dated 09.08.2019 it was submitted that the addition made in the instant case are merely based on statements recorded but there is no reference to any incriminating material or any other documents/report. It was also submitted that the provisions of section 68 of the Act were wrongly applied by the Ld. AO as the source of credit i.e. a sale consideration is through a recognized stock exchange wherein all the details of purchaser and seller are with the stock exchange and transactions are carried out on the online portal of recognized stock exchange and the sale consideration is directly received in the bank account linked with the Demat Account of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eight grounds raises three issues which are dealt as follows: 8. Ground No. 1,2 & 5, through which assessee has contended that the principles of natural justice were violated in the case of assessee as the material referred to by the ld. AO used to make addition in the hands of assessee were not supplied to the assessee nor any opportunity was provided to cross verify the persons whose statement were utilized against the assessee. 8a. We find that the assessee was subjected to search u/s 132 of the Act wherein it was found that the assessee has transacted in the purchase and sale of equity shares namely M/s Premier Capital Services Limited. As per the information available with the search team this company is alleged to be a Paper Company having poor financial strength and the share prices of this company were rigged with the help of few brokers based at Kolkata. Search team took the statement of assessee wherein he stated to have taken accommodation entry but subsequently, he retracted the statement. Nowhere in the assessment order any detail of alleged report of the Investigation wing is available nor copy of the same has been filed before us. It is also not proved that in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the information that this company is being used as a conduit for providing bogus LTCG to various persons. Assessee in his statement u/s 132(4) of the Act stated to have taken such accommodation entries which was subsequently retracted. During the assessment proceedings Ld. AO further made independent enquiries by calling details of the purchasers who purchased the shares from the assessee. Inspector report was also taken about the where about of the purchaser of such equity shares which were not found satisfactory. 9b. Under these given facts, we do not find any merit in the contention of the Ld. counsel for the assessee that the alleged addition is purely based on the statement recorded during the course of search. Ld. AO has extensively dealt with the issue by referring to various material gathered before the search, though not specifically related to the assessee but related to such type of transaction carried out in some other cases and in the statement during the course of search assessee has clearly spelt out to have accepted the accommodation entry and further ld. AO made enquiries about the purchasers of the equity shares, their bank accounts and other details as mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled as the shares purchased during the F.Y. 2012-13 were held by assessee for more than a year in the Demat Account and sale has been carried out on a recognized Stock Exchange after paying security transactions tax. 10b. So far as the revenue's claim that the M/s Premier Capital Services Limited is a bogus company engaged in the providing accommodation entry in the shape of LTCG, we find that the Coordinate Bench Mumbai in the case of Amit Mafatlal Shah - ITA No. 5793/MUM/2019 dated 20th April 2020 has dealt with the very same issue of the genuineness of claim of section 10(38) of the Act arising from sale of equity shares of M/s Premier Capital Services Limited and has held in favour of assessee allowing the claim of exemption u/s 10(38) of the Act observing as follows: 11. We have heard the rival submissions of both the parties and perused the material on record. The undisputed facts of the case are that the assessee purchased 20000 shares of M/s. Premier Capital Services Ltd. through preferential allotment at Rs. 75 with face value of Rs. 10 each on 04.09.2012. The said shares were transferred in the D-Mat account with Standard Chartered Securities India Ltd. on 15.12.2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Capital Services Ltd. However, it was never confronted to the assessee or any cross examination was allowed to find out the truth behind it. We note that assessee has purchased the shares and subsequently sold on the stock exchange through online trading portal and where it is very difficult to note about the subsequent buyer. The assessee also filed the following documentary evidences. 1. Profile of "Premier Capital Services ltd.," 2. Copy of Board Rsolution dated 2307.2012 of "Premier Capital Services ltd.. 3. Copy of Allotment of shares of "Premier Capital Services ltd.. dated 04.09.2012. 4. Copy of HDFC bank statement (highlighting payment) with copy of cheque (dated 18.08.2012.) 5. Copy of statement of account of Standard Chartered from 01.12.2012 till 30.06.2013 reflecting the purchased shares quantity. 6. Copy of sale contract note of "Premier Capital Services ltd.. Shares from PPJ Shroff Securities Pvt Ltd., from 01.06.2014 till 20.08.2014. 7. Copy of Bank of Baroda Bank Statemnt (highlighting receipts) 8. Copy of Transaction slips of Demat A/C from Standard Chartered. 9. Copy of statement of Account from Standard from 01.06.2014 to 31.08.2014 10. Cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeds of Rs. 1,41,08,484/- represented unexplained investment under section 69 of the Act and thus the order of the Tribunal was upheld by the Hon'ble High Court. The Hon'ble Supreme Court also dismissed the appeal of the Revenue filed against the Hon'ble Bombay High Court order. - Similarly, in the case of CIT vs. Mrs. Kesar A. Gada (supra) the ITAT deleted the addition by holding that the transaction of purchase and sale of shares made by the assessee were genuine and no addition under section 68 was called for by relying on the decision of Hon'ble Bombay High Court in the case of CIT vs. Mukesh Ratilal Marolia (2005) 12 TMI 457 ITAT, Mumbai. The High Court also dismissed the appeal of the Revenue by holding that no substantial question of law arises for reconsideration. -In the case of CIT vs. Sham R Pawar (supra) the Hon'ble Bombay High Court has decided the issue against the Revenue by upholding the order of ITAT wherein the Tribunal has held that the assessee has declared the capital gain on sale of shares and mere observation of the AO that transactions were done through brokers at Kolkata and the performance of the concerned company was not satisfactory as it would not ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005; Copy of the bank statement evidencing receipt of payment for sale of shares; Copy of STT paid statements on the hares of M/s Talent Infoways Ltd ; Copy of its account as appearing in the books of account of M/s Alliance Intermediateries & Network Pvt. Ltd. evidencing the sale of the shares of M/s Talent Infoways Ltd.; Copy of delivery instructions of shares to the depository for dematerialization of the shares; and Copy of the return of income alongwith the computation of income for A.Y. 2005-06, which revealed the speculation income of Rs. 15,975/-, and the fact of purchase of 10,200 shares of M/s Talent Infoways Ltd, alongwith the source of purchase. We find that the aforesaid substantial documentary evidence placed on record by the assessee, which as a matter of fact supported the entire chain of events of purchase and sale of 10,200 shares of M/s Talent Infoways Ltd. by the assessee, was however never rebutted by the A.O on the basis of any concrete and irrebutable evidence which could go to inescapably disprove the genuineness of the said documents which were brought on record by the assessee We find that the A.O had rather chosen to merely rely on the stand alone stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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