9911796707
TMI Blog2022 (6) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of Rs. 51,62,206 being the LTCG claimed as exemption. Total Tax Effect Rs. 17,03,527/-" 3. The brief facts of the case are that on 19-03-2013, the assessee purchased 1,50,000 shares of Kailash Auto Finance Ltd at the price of Rs. 2 per share. The shares were sold by the assessee on 09-09-2014, 10-09-2014 and 12-09-2014 at the total sale value of Rs. 51,62,206/-thus making capital gains of Rs. 48,62,206/-within a period of 18 months i.e. the value of shares increased to 17 times within 18 months. The assessee claimed exemption from payment of taxes on the above LTCG. The AO observed that from the website of BSE India that the share transactions of Kailash Auto Finance Ltd have been suspended as a surveillance measure on a 08-08-2016. The AO further observed that the shares of Kailash Auto Finance Ltd. were purchased in physical form on 19-03-2013 from a Kolkata-based company. The shares were then converted into demat format. The AO observed that the assessee has invested in shares of this company alone and has not invested in shares of any other company. In such facts, when the assessee is not a regular trading in shares, then it is surprising how he earned a phenomenal r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e raised through circular trading. In this case also, the prices have gone many times up due to the rigging in spite of the lower credential of the company. This is managed by the operator of the scrip who is a person who is managing the overall affairs of this scheme and who as contacted the entities who wise to take entry of bogus LTCG in the books. 3.6. From the above facts it is evident that the appellant has purchased the penny stock in the form of shares of Kailash Auto Finance Ltd. for a meager price of Rs. 1/- per share and even though the company had no credential, the assessee has managed to sale his shares at the average price of Rs.41.80/- per share. Looking to the fact that In spite of having very low credential of the company, prices of the shares have shot up to 41 times more than the original investment, which itself proves that there was rigging within the circuit created by the brokers and others. The offloading of shares by the promoters also indicates that the shares of the Kailash Auto Finance Ltd. were not worth for the price at which the shares were sold. The whole transactions of purchasing the shares at very meager price of Rs. 1/- and then rising the mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvation of Appellant that entire transactions are supported by various documentary evidences, AO has not proved that cash has been received by Appellant at the time of purchase nor any further cash payment was made against alleged long term capital gain along with various decisions referred in submissions. It is observed that shares in which Appellant has carried out transaction is penny stock and entire circumstantial evidences clearly suggest that Appellant has obtained accommodation entries." 6. The assessee is in appeal against us against the aforesaid order of Ld. CIT(Appeals). Before us, none appeared on behalf of the assessee despite several opportunities afforded to the assessee to present his case. The Ld. DR primarily relied upon the observations made by Ld. CIT(Appeals) and argued that in the instant facts, on the basis of circumstances on record, it is seen that such investment was clearly sham so as to claim bogus LTCG. Since the assessee remains un-cooperative, we are constrained to pass the order on merits on the basis of information available on record and the case put forth before us by the Ld. DR. In the present case, we are of the considered view, that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orthiness of the companies in which they had invested and the identity of the persons to whom the transactions were done, have to fail necessarily. * In such a factual scenario, the Assessing Officers, as well as the CIT(A), have adopted an inferential process which is a process which would be followed by a reasonable and prudent person. The Assessing Officers and the CIT(A) had culled out proximate facts in each of the cases, took into consideration the surrounding circumstances which came to light after the investigation, assessed the conduct of the assessee, took note of the proximity of the time between the buy and sale operations and also the sudden and steep rise of the price of the shares of the companies when the general market trend was admittedly recessive and thereafter arrived at a conclusion which in our opinion is a proper conclusion and in the absence of any satisfactory explanation by the assessee, the Assessing Officers were bound to make addition under section 68 of the Act. 6.1 In the case of Smt. M.K. Rajeshwari v. ITO [2018] 99 taxmann.com 339 (Bangalore - Trib.), the Tribunal held that where assessee claimed exemption under section 10(38) in respect of capi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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