9911796707
TMI Blog2022 (11) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... from her own account. 3. It is, therefore, prayed that the order of the ld.CIT(A) may be set aside and that of the Assessing Officer be restored. 3. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 39,37,423/- made by the AO representing bogus long term capital gain. 4. The facts in brief are that the assessee is an individual and deriving income from business and profession and also derived income form investment in shares and from other sources. The assessee for the year under consideration declared taxable income of Rs. 5,86,980/- and also declared exempted long term capital gain under section 10(38) of the Act for Rs. 39,37,423/- only. The AO during the assessment proceeding observed that the assessee as on 8th March 2011 purchased 40,000 share of M/s Shree Nath Commercial & Finance Ltd. through Networth Stock Broking Ltd at price of Rs. 22.25 per share at a total investment of Rs. 8,94,323/- only. Subsequently i.e. as on 22nd March 2011, M/s Shree Nath Commercial & Finance Ltd allotted bonus share to its shareholder in the ratio of 1:1 per share. Accordingly the assessee gets 40000 bonus shares of M/s Shree Nath Commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m other sources. 7. The aggrieved assessee preferred an appeal to the learned CIT(A). 8. The assessee before the learned CIT(A) submitted that the investment was made based on the information gathered in group discussion with friend that the impugned company was going to allot bonus shares. The shares were purchased through broker on the recognized stock exchange and payment for the same was made through banking channel. The share were duly dematerialized with the D-mat account. When the price increased, the shares were sold through stock exchange on different date and proceeds of the same received in bank account after paying STT. Hence, the transaction of purchase and sale are duly supported by the documentary evidences. The AO merely on basis of assumption alleged that the transaction are in the nature of penny stock. There was no finding or information available with the AO suggesting that the impugned scrip was a penny stock. Therefore, the action of the AO treating the long term capital gain as bogus without having corroborative material or information required to be quashed. The learned CIT(A) after considering the facts in totality deleted the addition made by the AO by o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before me. 10. Both the learned DR and the learned AR before me vehemently supported the order of the authorities below as favourable to them. 11. I have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the long term capital gain declared by the assessee on sale of shares of M/s Shree Nath Commercial & Finance Ltd. for Rs. 39,37,423/- was treated as bogus and manipulated, leading to the addition by the AO as income from other source. The view of the AO was based on certain factors which have been elaborated in the preceding paragraph. However, the ld. CIT-A, subsequently, was pleased to delete the addition made by the AO, holding the impugned long term capital gain as genuine. 11.1 The 1st controversy arises before us whether the name of the script M/s Shree Nath Commercial & Finance Ltd. is appearing in the investigation report carried out by investigation wing of income tax department or during any proceeding carried out by the Revenue or other agencies. In this regard, we note that the allegation by the AO has not made any referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o financial base/business activity/profitability certainly gives rise to the doubt about such increase in the price. But in our considered view, this cannot be a sole criteria for reaching to the conclusion that the bogus long-term capital gain was generated which is exempted under section 10(38) of the Act. Such observation during the assessment proceedings provides reasons to investigate the matter in detail and the same cannot take the place of the evidence. But in the case on hand, there was no finding that the enquiry conducted either by the SEBI or the stock exchange with respect to rigging up of share price of M/s Shree Nath Commercial & Finance Ltd. Similarly, there was no finding with subsequent market price of the impugned scrip. We also note that there was no dispute raised by the Revenue with respect to the following facts: 1. Shares were purchased through broker on recognized stock exchange. 2. Purchase consideration of share was made through cheque. 3. Share was duly dematerialized in D-mat account. 4. Shares were sold through stock exchange after the payment of STT. The transactions have been confirmed by brokers. 5. The payments were received through ECS i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income-tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. 11.5 Respectfully following the judgment of Hon'ble Delhi High Court (Supra), we hold that in absence of any specific finding against the assessee, the assessee cannot be held to be guilty or linked to the wrong acts merely on basis of surmises and assumptions. In view of the above discussion, we hold that the capital gain earned by the assessee cannot be held bogus merely on the basis of some assumption of the AO unless cogent material is brought on record. Therefore, we don't find any reason to disturb the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the grounds of Revenue's appeal is hereby dismissed. 12. The next issue raised by the Revenue is that the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - and issue revised demand notice and challan 15. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before me. 16. Both the learned DR and the learned AR before me vehemently supported the order of the authorities below as favourable to them. 17. I have heard the rival contentions of both the parties and perused the materials available on record. There is no dispute to the fact that the assessee has purchased the house property along with the husband jointly and likewise the money was borrowed by the assessee along with husband jointly. Likewise, there is no ambiguity to the fact that the payment of interest for the housing loan was paid by the husband of the assessee alone. In other words, the payment towards the interest for the housing loan was not made by the assessee in the present case. Thus the question arises whether the assessee is eligible for the deduction of the interest cost incurred on the housing loan of which the payment was made by her husband. In this regard, we have referred to the provisions of section 24(b) of the Act which reads as under: 24. Income chargeable under the head "Income from house property" shall be computed after m ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
