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TMI Blog2022 (8) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... son and in making further addition of Rs 1,91,545/- as unexplained expenditure u/s 69 of the IT Act, 1961 being 5 % of sale proceeds. The appellant submits that Assessed Income under the head Income from Other Sources be deleted and be assessed under the head capital gains consisting short term capital gain amounting to Rs 5,13,591/- and Long Term Capital Gain amounting to Rs 29,27,313/- and additions on account of cost of purchase of equity shares of Rs 3,90,000 and addition of Rs 191545/- being unexplained expenditure be deleted." 3. The brief facts of the case are that the assessee Smt. Hitesh Loonia efiled her return of income on 28-08-2015 declaring total income at Rs. 5,55,180/- after claiming deduction under Chapter VIA of Rs. 92,433/-. During the previous year, the assessee earned both Short Term and Long Term Capital Gain and also income from other source comprising of interest income. The assessee has also claimed exempt income of Rs. 29,26,170/- u/s. 10(38) of the Act. During the course of assessment, Ld. Assessing Officer found that the assessee purchased 6000 shares of GCM Securities Ltd. off line from one Mr. Chrag Shah for Rs. 3,90,000/- on 07-06-2013 by issuing a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m other sources. Further, a sum of Rs. 1,91,545/- being commission @ 5% of the LTCG was also added as unexplained expenditure under section 69 of the Act to the income of the assessee. 4. In appeal, Ld. CIT(A) confirmed the addition with the following observations: 4.27 The ratio laid down in the above decision of Hon'ble Supreme Court and various HC and tribunals others, it is crystal clear that the apparent should be real. It is further held that the assessee has to prove the genuineness of the transaction beyond doubt. It is evident that in the appeal under consideration that the appellant could not established the genuineness of the transaction as there is no justification for purchase of share from unknown person and of the unknown company having no financial credentials. In present case Appellant was involved in buying the penny stock, which is similar to shell companies for which various investigations were already carried out by Kolkata Investigation Wing and SEBI Order referred supra hence long term capital in present case is nothing but preconceived scheme to convert the unaccounted money of the appellant. The entire sequence of transaction is sufficient to establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment order, nothing tangible has been brought on record to show that the assessee was engaged in sale of bogus shares. In response, Ld. Departmental Representative relied upon the observations made by the Ld. Assessing Officer and Ld. CIT(A) in their respective orders. 6. We have heard the rival contentions and perused the material on record. We note that in the case of Smt. Aparna Misra ITA 161/Kol/2019, the ITAT Kolkata has given relief to the assessee in respect of the same shares in which the assessee has sold during the impugned assessment year. The relevant extracts of the decision are reproduced for reference: 4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the assessee has purchased 6400 number of shares of GCM Securities Ltd. The assessee has purchased shares of Rs. 1,20,000/- (6400 x 18.75) vide Cheque No. 170916 dt. 20.03.2013 in the Initial Public Offer by the said company made in conformity with the provisions of the Companies Act, 1956 and SEBI regulations. The same transaction has been duly reflected in the assessee's ICICI Bank Account no. 107001503576. A copy of bank account for the period fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r authorities could not bring to our attention any material to show that the documents placed before us were sham, bogus or there was any factual infirmity therein. The ld. D.R. also could not controvert the ld. A.R's submissions that the disallowance was made solely on the basis of the report of the Investigation Wing in the shares of M/s KAFL. The ld. D.R. could not bring to our attention any material or evidence from which one could infer that the transactions in shares of M/s GCM Securities Limited were either manipulated or sham or that any enquiry was conducted either by the Investigation Wing or by the AO in respect of assessee's transactions in shares of M/s GCM Securities Limited. 13. For the reasons set out in the foregoing therefore we hold that both the lower authorities were not justified in not allowing the appellant's claim for exemption u/s 10(38) amounting to Rs. 39,19,157/- in respect of the profit derived by the, appellant on sale of 6400 ITA No. 161/Kol/2019 Smt. Aparna Misra, AY 2015-16 shares of M/s GCM Securities Limited. We accordingly set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital gain as bogus and delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of some report of the Investigation Wing and/or,the, orders of SEBI in case of entirely different scrip. Moreover it was submitted before us by Ld AR that the Ld. CIT(A) was not justified in taking an adverse view against the assessee on the ground of abnormal price rise of the shares. The Ld AR referred to the following judgments in support of this contention wherein under similar facts of the case it was held that the AO was not justified in refusing to allow the benefit under section 10(38) of the Act and to assess the sale proceeds of shares as undisclosed income of the assessee under section 68 of the Act. We note that' in order to create a tax liability in a case of this nature, the AO has to prove and establish the cash trail and the allegations, particularly in respect of the appellant, which is yet to be proved in the instant case. Similar view has been pronounced by Hon'ble Delhi High Court in the case of Pr. CIT vs Jatin Investment (P) Ltd. (2017 (2) TMI 342 - DELHI HIGH COURT) wherein it was observed "A transaction cannot be treated as fraudulent if the appellant has furnished the documentary proof and proved the identity of the purchaser and no discrepa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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