9911796707
TMI Blog2018 (12) TMI 1960X X X X Extracts X X X X X X X X Extracts X X X X ..... n any of these arguments. The fact that remains right from assessment till date is that no such entry operator has named the assessee in any of his such statement nor the Revenue has filed any such evidence to this effect. We adopt the above detailed reasoning mutatis mutandis to delete the impugned sec. 68 addition of bogus LTCG. - Appeal of assessee allowed. - ITA No.1839/Kol/2017 - - - Dated:- 26-12-2018 - Shri S.S.Godara, Judicial Member and Shri, M. Balaganesh, Accountant Member Appellant : Shri Subash Agarwal, Advocate Respondent : Shri Robin Choudhury, Addl. CIT-DR O R D E R PER S.S.Godara, Judicial Member:- This assessee's appeal for assessment year 2014-15 arises against the Commissioner of Income Tax (Appeals)-22,Kolkata's order dated 10.05.2017 passed in case No.71/CIT(A)/22/Kol/14-15/16-17 involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short 'the Act'. Heard both the learned representatives. Case file perused. 2. The assessee's sole substantive ground challenges correctness of both the lower authorities' action treating its Long Term Capital Gains (LTCG) of ₹64,99,391/- to be unexpl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.06 0.04 0.03 Total Non current liabilities 0.59 0.68 1.02 1.63 1.62 Current Liabilities Short term borrowings 4.02 3.93 3.87 3.11 2.49 Trade payables 2.64 4.71 6.33 3.72 4.78 Other current liabilities 0.50 1.03 0.90 1.06 1.16 Short term provision 0.06 0.09 0.11 0.10 0.13 Total capital liabilities 20.14 22.71 24.25 21.52 21.89 ASSETS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.66 Total assets 20.14 ₹ 22.71 24.25 21.52 21.89 Tuni Textile Mills Previous Year Standalone Profit loss account .....in Rs. Cr.... Mar'15 Mar'14 Mar'13 Mar'12 Mar'11 Income Sales Turnover 29.76 24.52 19.32 22.01 18.30 Net sales 29.76 24.52 19.32 22.01 18.30 Other income 0.20 0.22 0.07 0.07 0.12 Stock adjustments -1.35 1.05 1.17 0.71 0.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reported net profit 0.05 0.25 0.10 0.20 0.32 Total value addition 3.08 3.50 3.11 2.35 0.10 0.10 0.23 1.99 Per share data (annualized) Shares in issue (lakhs) 1,306.3 1,306.31 1,306.31 1,306.31 1320.63 Earning per share (Rs) 0.00 0.02 0.01 0.02 0.18 Book value (Rs) 0.94 0.94 0.92 0.91 8.96 d. It is also noteworthy that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on 022.06.2015. The relevant extracts are as under follows. [quote] Statement on oath recoded of Shri Narendra Prabhudayal Sureka, aged 61 years S/o Late Prabhudayal C. Sureka, on 02/.06.2015 u/s 131 of the Income Tax Act, 1961., during the course of Survey proceedings u/s. 133A of the IT Act, 1961 in the case of M/s Tuni Textile Mills Limited, Room No.53/54, 3rd Floor,63/71 Dadiseth Aglary Lane, Kalbaadevi Road, Mumbai-400002. OATH ADMINISTERED swear in the name of God that I shall speak truth, only the truth and nothing but the truth . BEFORE ME Sd/- Sd/- Mantu Kumar Das Narendra Prabhudayal Surreka DDIT(Inv.)U-5(4), Mumbai DEPONENT Q.1 Please identify yourself and confirm that Oath has been administered on you and you were made aware of giving false statement under oath, before a public authority? Ans. I am Narendra Praphudayal Sureka, aged 61 years, S/o Shri Prabhudayal Surekha, residing at Ashray, 78, Hatkesh Society, 9th Road, JVPD Scheme, Vile Parle West, Mumbaii-54, I confirm that the oath has been administered to me and I have been made aware of the consequences of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reka. The factory premise at B-4/5, MIDC Murbad, hane is in the name of the company. Q.6 Please give the details of companies or Firms in which you are Director, Partner or Proprietor along with your share holding or share in the company and partnership firm respectively. Please also state your e-mail IDs and your passwords? Ans. I am Managing Director in M/s Tuni Textile Mills Ltd. My share holdings in this company are approximate 40 lakh shares. Other than the above company I am not a director or partner or proprietor in any other companies/firm. My official email-ID is [email protected] and the password is tunitextile 1234. Q.7 Please state from where the company M/s Tuni Textile Mills Ltd run from, Also state what is the business of the companies? Please also state where the books of account of the company are maintained? Ans. The Company is in the business of manu9facturing of cloths from Yam. The company is registered in Mumbai and the registered address is Room No.53/54, 3rd floor, 63/71, Dadiseth Aglary Lane, Kalabadevi Road,Mumbai-400002. The company also has a factory premise at B-4/5, MIDC Murabad, Thane. All the books of account are maintained in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I only look after the do day to day activities of the company. Shri Pradeep P Sureka looks after the marketing division of the company. the other directors have no participation in day to day affairs of the company. I brief them on a regular basis about the day to day affairs of the company and any other activity. Q.12 Please state whether the company M/s Tuni Textile Mills Ltd has issued shares on preferential basis? If so, please provide a list of all the entries/individu9als which have purchased the shares of M/s Tuni Textile Mills Ltd on a preferential basis? Ans. Sir, I am submitting the list of preferential allotees as Annaexutre-1 to this statement. A share capital of Rs.7,50,00,000/- was raise by issuing Rs.75,00,000/- at (Rs.10 face value) to 47 HUFs/individuals on 25.01.2010. Q.13 Please provide the original copy of the application form of preferential allottees as listed in Annexure-1 to this statement? Ans. Sir, I do not have any of the documents. Q.14. Please explain the measures that were taken by you for raising money through preferential allotment? Ans. Sir, I have not taken any measure to raise money through preferential allotment. Q.15. Please ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on preferential basis and you have never met any of them. You have also stated that these HUFs/Individuals invested in shares of M/s Tuni Textile Mills Ltd through Shri Manish Baid. Please confirm. Ans. Sir,I confirm that I do no t know the details of the HUFs/individuals which have invested in shares of M/s Tuni Textile Mills Ltd and I have never met any of them. I once again confirm that all the parties wre introduced to the company by Shri Manish Baid. Few of the investors including Shri Manish Baid (Sl.No.17,18,37,39 and 40 of Annaexure-1) though the route preferential shares allotment are the family members of Shri Manisih Baid. Q.21. Please produce the details of the AGMs that were held during last 6 years i.e. from FY 2009-10 in the case of M/s Tuni Textile Ltd, and please produce the minutes and attendance registers for the same. Please tell where these AGDMs were held? Ans. Sir, the AGMs were held as follows: Date of AGM Place of AGM Time of AGM 30.09.2010 FY 2009-10 63/71, Dadiseth Aglary Lane, 3 Floor, Kalbadevi Road,Mumbai-2 12.30 AM 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. This is a rise of 17806% within a span of two years. During this period there has been no corporate announcement by M/s Tuni Textile Mills Ltd which suggests that the company is undertaking any substantial development activity. Further there is no significant increase in turnover of the company. It is also seen from the trading details of M/s Tuni Textiles Mills Learned. Textile Mills Ltd that all the preferential allottees have sold their shares during the period when the price of the shares were hovering around its peak Le Rs.284.90 on 05.11.2012. Once the preferential allottees sold their shares the price of the shares of M/s. Tuni Textiles Mills Ltd took a dip and the current price of shares as on today Le 02.06.2015 is Rs.0.47/-. In light of these facts kindly explain the phenomenal rise In the price of the shares of M/s. Tuni Textiles Mills Ltd? Ans. Sir, M/s Tunl Textile Mills Ltd Is a penny stock company and the shares of the company have been used to provide entry of bogus Long Term Capital Gain to the preferential allottees. The entire scheme has been managed and controlled by Shrl Manlsh Baid. As stated earlier, Shri Manish Bald has brought the preferential sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tements of as follows: Shrl Sanjay Vora of Anand Rathi Share Broker Shrl Blkash sureke/subrata Halder of BSAS Securities Pvt. Ltd. Shrl Abhlsek Kayan of Dynamic Equities Services Ltd. Shri Praveen Agarwal of Gateway Financial Services Ltd. Shri Ashok Kayan of Kayan Securities Pvt. Ltd. Pradeep lain of Nkamlchi Securities Ltd. Pawan K. Kayan of PKC Commodities Ltd Subh Stock Broking Pvt. Ltd. Shrl Narendra Belasia of StllC Global Securities Ltd. Shri Sunil Kumar Kayan of Sunll Kumar Kayan Co. Shri Anll Agarwal of M/s Comfort Securities Ltd. The above mentioned parties In the statement within the provisions of Income - Tax Act,1961, under oath have stated that the scrip of M/s.Tuni Textile Mills Ltd. has been used to provide bogus Long Term Capital Gain and Short Term Capital l.oss. Further, the operators Shri Anil Khemka, Arun Kumar Khemka, Jagdish Purohit, Devesh Upadhyaya, Narendra Kr. lain, Navneet Slnghania, Prltam Berla, Praveen Agarwal and others in their swom statement within the provisions of the Income Tax Act,1961 under oath have accepted that they have used their paper companies for accommodation entries In Bogus Long Term Capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Ans. Sir, there are certain expenses paid to the workers which are yet to be entered in the books. As stated above, I will reconcile the same and provide you the details In due course. Q.35. It is seen from the trial balance (Annexure-3 to this statement) provided by you as on 02/06/2015, the cash In hand is Rs 35,96,019.36/-. However during the course of this survey action at this premise at 63/71, 3rd Floor, Dadiseth Aglary Lane, Kalbadevi Road, Mumbal-2, no physical cash has been found. Please explain the same. Please state, who is the authorized person in M/s Tuni Textile Mills Ltd to withdraw cash from the bank. Ans. Sir, we make salary and wages payments In cash. Salary and wages payments have been made to employees and factory labours, and the same has not been entered into the books in the tally system. I will reconcile the same Is provide the reconciled statement In due course. Sir, I am the authorized person In M/s Tuni Textile Mills Ltd to withdraw cash from the bank. Q.36. Please provide the month- wise cash book since 01/04/2014 to 31/03/2015 and daily cash book since 01/04/2015 to till date. Ans. Sir, I am providing you the same as Annexure-4 to this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssertion made should be accepted by the Assessing Officer unless for justification and reasons the assessing officer feels that he needs/requires a deeper and detailed verification of the facts alleged. The assessee in such circumstances should cooperate and furnish papers, details and particulars. This may entail Issue of notices to third parties to furnish and supply Information or confirm facts or even attend as witnesses. The Assessing Officer can also refer to Incriminating materials or evidence available with him and call upon the assessee to file their response. We cannot lay down or state a general or universal procedure or method which should be adopted by the assessing officer when verification of facts Is required. The manner and mode of conducting assessment proceedings has to be left to the discretion of the assessing officer, and the same should be just, fair and should not cause any harassment to the assessee or third persons form whom confirmation or verification is required. The verification and Investigation should be one with the least amount of Intrusion, inconvenience or harassment especially to third parties, who may have entered into transactions with the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word 'evidence' might recall the oral and documentary evidence as may be admissible under the Indian Evidence Act the use of word 'material' in Sec.143(3) showed that the assessing officer, not being a court could rely upon material, which might not strictly be evidence admissible under the Indian Evidence Act for the purpose of making an order of assessment. Court often took judicial notice of certain facts which need not be proved before them. The plain reading of section 142 and 143 clearly suggests that the assessing officer may also act on the material gathered by him. The ward 'material' clearly shows that the assessing officer is not fettered by the technical rules of evidence and the like, and that he may act on material which may not strictly speaking be accepted evidence in court of law. 4. The Hon'ble Supreme Court in CIT v. Durga Prasad More[1971] 82 ITR 540 at pages 545-547 made a reference to the test of human probabilities In the following fact situation : ... ... It Is true that an apparent must be considered real until It is shown that there are reasons to believe that the apparent Is not the real. In a case of the present kind a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on that person. Thus, this principle could be attracted to a set of circumstances that satisfies its conditions and was applicable to taxing proceedings. 6. After examining all the issue, I find myself in agreement with the Ld. AO that the transactions relating to the claim of LTCG as made by the Ld. AO come within the ambit of suspicious transactions , and therefore the rules of suspicious transactions would apply to the case. Payment through Banks, performance through stock exchange and other such features are only apparent features. The real features are the manipulated and abnormal price of off load and the sudden dip thereafter. Therefore, I have to reach the inevitable conclusion that the transactions as discussed by the Ld.AO fall in the realm of suspicious and dubious transactions. The Ld. AO has therefore necessarily to consider the surrounding circumstances, which he indeed has done in a very meticulous and careful manner. In the case of Win Chadha Vs CIT (International Taxation) in ITA No.3088 3107/Del/2005, the Hon'ble Delhi ITAT B -Bench has observed, on 31.12.2010 as under: SUSPICIOUS AND DIBIOUS TRASANCTION HOW TO BE DEALT WITH: 6.11. The tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. It would, at this stage, be relevant to consider the admissibility and use of circumstantial evidence in income tax proceedings. Circumstantial evidence is evidence of the circumstances, as opposed to direct evidence. It may consist of evidence afforded by the bearing on the fact to be proved, of other and subsidiary facts, which are relied on as Inconsistent with any result other than the truth of the principal fact. It is evidence of various facts, other than the fact in issue which are so associated with the fact In Issue, that taken together, they form a chain of circumstances leading to an inference or presumption of the existence of the principal fact. In the appreciation of circumstantial evidence, the relevant aspects, as laid down from time to time are - (1) the circumstances alleged must be established by such evidence, as In the case of other evidence (2) the circumstances proved must be of a conclusive nature and not totally Inconsistent with the circumstances or contradictory to other evidence. (3) although there should be no missing links in the case, yet It is not essential that every one of the links must appear on the surface of the evidence adduced i s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies like CBI, DRI, ED whose were in the Offing, as the relevant investigations were in process. In view of these observations, we do not accede to the assessee's pleas in this behalf. The Assessee's contentions and objections in this behalf that the material available on record was not admissible as evidence and that it cannot be relied on by the AO, are devoid of any merit and are rejected outright In view of the above discussion, I find no infirmity in the orders of the Ld. AO, confirm the same. Grounds 1 to 3 taken by the appellant stand dismissed. 3. We have given our thoughtful consideration to rival contentions. The assessee's paper book comprising of all details of its LTCG, copy of its bill dated 25.02.2012 in connection with purchase of shares of M/s Surabhi Chemicals Investments Ltd. and Panchshul Marketing Ltd, bank statement. The said latter entities amalgamated regarding merger with M/s Kailash Auto Finance, contract notes in respect of sale of share of M/s Surabhi Chemicals Investments Ltd. Similar contract notes regarding M/s Kailash Auto shares sold, bank statement reflecting payment receipts alongwith corresponding demat statements stand per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of shares of Nikki Global Finance Ltd, wherein it was held as under:- 3. Before us the Ld. AR submitted that the addition made by the AO and upheld by the Ld. CIT(A) was based on presumption and suspicion alone and, therefore, perverse in the eyes of law. In the course of hearing of the case, the Ld. AR referred to various documentary evidences furnished in the paper book in support of the claim of the assessee to prove the genuineness of the transactions relating to LTCG on sale of shares. The Ld. AR drew our attention to the order of the AO wherein the AO has erroneously recorded at para 3.1 that the assessee had purchased the shares of M/s. NFGL off market (not through established stock exchange) whereas the assessee had purchased the shares of M/s. NFGL through M/s. M. Prasad Co. Ltd. which is a recognized stock broker of Bombay Stock Exchange (BSE), through whom the assessee had made several investments in various scrips/shares and drew our attention to page 5 of paper book wherein the details of investment made by the assessee for the previous AY 2013-14 is given which shows that assessee has dealt with 30 nos. of different shares of companies including Reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is the Balance Sheet as on 31.03.2013 wherein the share investment of Rs.87,44,010.73 has duly been reflected and is tallying. ii) Contract Note for purchase of shares of M/s. NFGL is found placed at page 6 of the paper book. iii) Copy of the bank statement highlighted the payment of purchase of shares through bank (paper book page 18 19). iv) Copy of de mat holding statement and transaction statement highlighting the movement of shares from page 25 to 33 of the paper book. v) Copy of ledger of assessee in the books of the share broker pages 34 to 36 of the paper book. Following documents were filed before the authorities below in support of the sale of the shares: i) copy of contract note for sale of shares of M/s. NFGL page 7 to 17 of the paper book. ii) Copy of bank statement highlighting the receipt of sale consideration pages 20to 23 of paper book. iii) Copy of de mat holding statement and transaction of the statement which highlighting the movement of shares pages 24 to 33 of the paper book. 4. It was also pointed out by the Ld. AR that purchase of shares of M/s. NFGL in FY 2012-13 was duly recorded in the balance sheet and the return was proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares on surmises, suspicion and presumptions alone. It was submitted that the lower authorities have not brought any material or evidence on record to falsify the claim of the assessee or to hold that the share transactions were bogus. 5. The ld AR drew our attention to the fact that the purchase and sale of shares was made on the online platform of the stock exchange; therefore according to ld AR, the assessee did not know the names of the buyers and has no connection and/or relations with any such persons. The transactions of sale of shares were online trading system through his broker from whom he received the sale consideration. The broker also received payments for all his transactions from Stock Exchange. The seller and the buyer cannot know the names of each other as well as that of their respective brokers, who were involved in the trading transactions in the secondary platform. In such a situation according to ld AR, it cannot be presumed that there could be any transfer of cash between the buyers and sellers to convert their unaccounted money of the beneficiaries as alleged by the AO. The ld AR referred to the judgement of Hon'ble Bombay High Court in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its circulation. However, this presumption or suspicion how strong it may appear to be true but needs to be corroborated by some evidence to establish a link that GTC actually had some kind of a share in such secret money. It is quite a trite law that suspicion howsoever strong may be but cannot be the basis of addition except for some material evidence on record. The theory of 'preponderance of probability' is applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumptions of facts that might go against the assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigations have been carried out, then nothing can be implicated against the assessee . 7. The ld AR submitted that there is no direct evidence against the assessee brought on record by AO to hold that the assessee introduced his own unaccounted money by way of bogus LTCG. The ld AR submitted that although various investigations were carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible to record any finding of fact. As a matter of fact suspicion can never take the place of proof. It was further held that in absence of any evidence on record, it is difficult if not impossible, to hold that the transactions of buying or selling of shares were colourable transactions or were resorted to with ulterior motive. (iii) CIT V. Shreyashi Ganguli [ITA No. 196 of 2012] (Cal HC) - In this case the Hon'ble Calcutta High Court held that the Assessing Officer doubted the transactions since the selling broker was subjected to SEBI's action. However the transactions were as per norms and suffered STT, brokerage, service tax, and cess. There is no iota of evidence over the transactions as it were reflected in demat account. The appeal filed by the revenue was dismissed. (iv) CIT V. Rungta Properties Private Limited [ITA No. 105 of 2016] (Cal HC) - In this case the Hon'ble Calcutta High Court affirmed the decision of this tribunal , wherein, the tribunal allowed the appeal of the assessee where the AO did not accept the explanation of the assessee in respect of his transactions in alleged penny stocks. The Tribunal found that the AO disallowed the loss on tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2011 (Kol ITAT) (v) Rita Devi Others vs. DCIT - IT(SS))A Nos. 22-26/Kol/2p11 (Kol ITAT) (vi) Surya Prakash Toshniwal vs. ITO - ITA No. 1213/Kol/2016 (Kol ITAT) (vii) Sunita Jain vs. ITO - ITA No. 201 502/Ahd/2016 (Ahmedabad ITAT) (viii) Ms. Farrah Marker vs. ITO - ITA No. 3801/Mum/2011 (Mumbai ITAT) (ix) Anil Nandkishore Goyal vs. ACIT - ITA Nos. 1256/PN/2012 (Pune ITAT) (x) CIT vs. Sudeep Goenka - [2013] 29 taxmann.com 402 (Allahabad HC) (xi) CIT vs. Udit Narain Agarwal - [2013] 29 taxmann.com 76 (Allahabad HC) (xii) CIT vs. Jamnadevi Agarwal [2012] 20 taxmann.com 529 (Bombay HC) (xiii) CIT vs. Himani M. Vakil - [2014] 41 taxmann.com 425 (Gujarat HC) (xiv) CIT vs. Maheshchandra G. Vakil - [2013] 40 taxmann.com 326 (Gujarat HC) (xv) CIT vs. Sumitra Devi [2014] 49 Taxmann.com 37 (Rajasthan HC) (xvi) Ganeshmull Bijay Singh Baid HUF vs. DCIT - ITA Nos. 544/Kol/2013 (Kolkata ITAT) (xvii) Meena Devi Gupta Others vs. ACIT - ITA Nos. 4512 4513/Ahd/2007 (Ahmedabad ITAT) (xviii) Manish Kumar Baid ITA 1236/Kol/2017 (Kolkata ITAT) (xix) Mahendra Kumar Baid ITA 1237/Kol/2017 (Kolkata ITAT) 10. The ld AR further submitted before us that once the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing the assessee's claim of exemption under section 10(38) of the Act by concluding that the transactions of the assessee resulting in LTCG on sale of shares were bogus relying on the statements of various unknown persons recorded by Investigation Wing wherein these persons accepted to have provided accommodation entries of various natures including LTCG to different persons. The ld AR submitted that in the statement of third parties, the name of the assessee was not implicated. Even otherwise, no adverse inference could be taken against the assessee on the basis of untested statements without allowing opportunity of cross- examination. The ld AR referred to and relied on the following judgements in support of the aforesaid submissions:- (i) Andman Timber Industries vs. CCE - [2015] 62 taxmann.com 3 (SC) (ii) ITO vs. Ashok Kumar Bansal - ITA No. 289/Agr/2009 (Agra ITAT) (iii) ACIT vs. Amita Agarwal Others - ITA No. 247/(Kol) of 2011 (Kol ITAT) (iv) ITO vs. Bijaya Ganguly - ITA Nos. 624 625/Kol/2011 (Kol ITAT) (v) Ganeshmull Bijay Singh Baid HUF vs. DCIT - ITA Nos. 544/Kol/2013 (Kolkata ITAT) (vi) Rita Devi Others vs. DCIT - IT(SS))A Nos. 22-26/Kol/2p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;c' that the assessee purchased shares at Rs.865.97 per share ...... . It was pointed out by the Ld. AR that the assessee has purchased share of M/s. NFLG for Rs.128.25 per share which is reflected in page 6 of the paper book which is the contract note. According to Ld. AR this is nothing but cut paste of some other case and has nothing to do with the assessee's case and it exposes non-application of mind of the AO. We find that the AO has stated that the assessee has purchased the share at Rs.865 per share whereas the assessee had purchased the shares at Rs.128.25, therefore, we note that the AO erred in making the erroneous finding of the purchase value of the shares. We note that in this case the assessee was investing in different shares of the companies (30 different shares of companies ) as evident from perusal of page 5 of paper book and the purchase and sale of shares in M/s. NFGL is one among the 30 odd shares the assessee dealt with as an investment through a registered stock broker of Bombay Stock Exchange M. Prasad Co. Ltd. The assessee had purchased 25000 shares of M/s. NFGL on 13.06.2012 at a cost price of Rs.128.25 per share and remitted Security Tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee had sold the shares on 05.08.2013 5000 shares at the value of Rs.820/- per share and paid STT and received a consideration of Rs.40,82,079/- which the assessee received by account payee cheque which is reflected in page 21 of the paper book received on 24.08.2013. Like wise, the other sale transactions are reflected from pages 8 to 17 of the paper book for different rates from Rs. 845/- per share, Rs.865/- per share, Rs.920/- per share, Rs.921/- per share etc. and the assessee has received the said consideration through account payee cheque. It was pointed out by the Ld. AR that when a show cause notice was given by the AO on 09.12.2016 wherein the assessee was asked to explain why the sale consideration of Rs.2,16,49,202/- shall not be added back u/s. 68 of the Act as well as Rs.10,82,460/- being 5% of the said sum be added u/s. 69C of the Act, the assessee promptly replied to it. The AO acknowledges that the assessee had replied vide letter dated 22.12.2016 which the AO has stated to have been placed on record. However, it was brought to our notice that the AO has not made any adverse finding in respect to the submissions made by the assessee in justifying the LTCG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e note that AO while describing the modus operandi adopted by unscrupulous elements in the financial markets has made a vague statement that some accommodation entry provider has admitted that M/s. NFGL also indulged in wrong practices, however, we sought the Ld. DR's help to throw some light on this specific allegation made by the AO. However, other than the bald statement, nothing adverse could be found against the shares of M/s. NFGL. Even if for argument sake if there was such an adverse admission made by an accommodation provider against M/s. NFGL, then the AO in all fairness had to confront the assessee with the adverse material and given an opportunity to the assessee to meet it and the assessee should have been given an opportunity to explain it; and in case the assessee desires, she should have been allowed to cross examine the accommodation provider or else the adverse material cannot be acted upon to draw adverse inference against the assessee as held by the Hon'ble Apex Court in Andaman Timber Industries Vs. Commissioner of Central Excise 62 Taxman.com 3. It should be kept in mind that assessee cannot be kept in dark as to the material against her and it has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares have been sold on the online platform of the stock exchange and each trade of sale of shares were having unique trade number and trade time. It is not the case of the AO that the shares which were sold on the date mentioned in the contract note were not the traded price on that particular date. The AO doubted the transactions due to the high rise in the stock price and for that the assessee cannot be blamed unless there was any material/ evidence to prove that the assessee or any one on his behalf has rigged or manipulated the stock price. It should be noted that the stock exchange of SEBI are the statutory authority appointed by the Government of India to ensure that there is no stock rigging or manipulation. The AO has not brought any evidence on record to show that these agencies have alleged any stock manipulation against the assessee or the brokers or the companies in question. In absence of any relevant evidences it cannot be said that merely because the stock price moved sharply, the assessee was to be blamed for bogus transactions. It is pertinent to note that the assessee has purchased the stocks through registered brokers and thereafter the assessee has sold the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipulation of shares must therefore also fail. At the cost of repetition, we note that the assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions relevant to the purchase and sale of shares resulting in long term capital gain. These evidences were neither found by the AO nor by the ld. CIT(A) to be false or fictitious or bogus. The facts of the case and the evidence in support of the evidence clearly support the claim of the assessee that the transactions of the assessee were genuine and the authorities below was not justified in rejecting the claim of the assessee that income from LTCG is exempted u/s 10(38) of the Act. For coming to such a conclusion we rely on the decision of the Hon'ble Calcutta High Court in the case of M/s. Alipine Investments in ITA No.620 of 2008 dated 26th August, 2008 wherein the High Court held as follows : It appears that there was loss and the whole transactions were supported by the contract notes, bills and were carried out through recognized stock broker of the Calcutta Stock Exchange and all the bills were received from the share broker ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
