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2023 (1) TMI 206

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..... ddition made by the AO. The findings of the ld.CIT(A), we find are very detailed, who has made further inquiry with respect to the issue and found entire transaction to be bogus. Since the assessee has not come before me in support of his appeal, have no option but to confirm the concurrent finding of both the Revenue authorities on the issue. Accordingly, grounds of appeal of the assessee are rejected. - ITA No.338/Ahd/2019 - - - Dated:- 28-9-2022 - SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER Assessee by : None Revenue by : Shri Mukesh Thawani ORDER The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeals)-4, Ahmedabad (in short referred to as ld.CIT(A)) under section 250(6) of the Income Tax Act, 1961 ( the Act for short), dated 18.2.2019 pertaining to Asst.Year 2015-16. 2. None appeared on behalf of the assessee. It has been noticed from order sheet entries of hearings conducted before us that the assessee has remained un-represented from 9.7.2021 to 19.9.2022. All notices were served on the assessee and due postal receipts have been placed on record. In fact a perusal of entries in the order she .....

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..... stock cases. The assessee is engaged in the business of real estate developer. The relevant portion of the assessment order giving basic facts, of the case, is reproduced as under: - The above modus operandi was found during the course of such u/s. 132(1) of the IT Act conducted by DDIT, Investigation Wing, Patna on 13.01.2016 in the case of Penny: Stock Indian Infotech Software Ltd (INDINFO). The shares of the above company have been rigged Gain to various beneficiaries. Accommodation entry of LTCG to the! tune of Rs. 1418 Crore have been provided to various beneficiaries, through this Scrip, in lieu of cash commission. During the course of search, entry operators as well as! beneficiaries have accepted that shares of Indian Infotech Software Ltd (INDINFO), j have been rigged up to provide bogus accommodation entry of Long Term Capital Gain. In the instant case, the assessee has also adopted the above modus operand/ by taking accommodation entries and claimed the long term capital gain of Rs.1496591/- in respect of sale of Life fine Drugs Pharma Ltd the same is claimed as exempt income. Further, the source of purchase are also not explainable. As shown the above .....

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..... d is treated as undisclosed income and the same is added to total income of the assessee. Penalty proceedings u/s. 271(l)(c) of the IT Act are initiated for furnishing inaccurate particulars of income. Therefore, the mode of payment for purchase of shares was necessary to be enquired along with circumstantial evidences. In fact, in such investigation there is no doubt on the sale of shares as same is normally done through banking channel and through recognized stock brokers. Such evidences for sale of shares are credible which encourages the assessees to claim deduction u/s.10(38). Therefore, jurisdictional ratio in the case of Jute Corporation of India Ltd. -187 ITR 688 (SC) has been applied. Hence, the real issue is to verify the purchase of shares and to know as to how much independent evidences are available to support the case of appellant. As credible information about the purchase of shares was not available or verified or reflected properly in assessment order, the same was asked during appellate proceedings and is reproduced as under:- The perusal of information in table above indicates that the shares were purchased in cash and not explainable as to why .....

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..... ile segments. The AO has considered many of the case laws now relied by the appellant and specifically commented on the formal opportunity for cross examination with the comment that the lead evidence is an integral part of quasi judicial adjudications. The issue of cross examination is stated that In respect of the request of cross examination is concerned, it is stated that the Income Tax proceedings are semi judicial proceedings. The necessary evidence has been provided to the assessee. The same should be considered as fair and reasonable opportunities of being heard. The reliance is placed for the issue, on the decision of Hon'ble Supreme Court recorded in 82 ITR 540 (SC), 181 ITR 667 (SC), 214 IR 801, in which the Hon ble Supreme Court has held as under: In the income tax cases the suit is that of a Civil case in which one has to go by the preponderance of probability and not by an evidence to prove it to the guilt, it has been observed by the than Apex Court that the Courts will not be obvious to the notorious fact of life.... ; The contention of the AO on cross examination is accepted in view of Hon'ble Supreme Court Judgments recorded at 82 ITR 540 (SC .....

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..... he transaction, the question always is what is the real character of the transaction and not what parties call it. Sundaram Finance Ltd. - 1966 AIR 1178 (SC): Where terms of transaction are embodied in a document the true effect of transaction may be determined from the terms of the. document/agreement considered in light of surrounding circumstances. CIT vs. Panipat Woollen ills - 103 ITR 66 (SC): A party can't escape the consequences of law merely by describing an agreement in a particular term through in essence and in substance it may be a different transaction. Union of India vs. Gosalia Shipping Pvt. Ltd. - 113 ITR 307 (SC) One must have regard to substance of the matter and if necessary to tear the veil in order to see whether the true character of a payment was something other than what by a clever device of drafting it was made to appear. Workmen vs. Associated Rubber Industries - 157 ITR 77 (SC): It is duty of the Court in every case where ingenuity is expressed to avoid taxing and welfare legislation to get behind the smoke screen and discover the true state of affairs. In view of the ratio laid down by t .....

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..... in the DEMAT. The ld.CIT(A) also noted that broker s name was prominently reflected in the investigation report of the Department, and further noted that shares were kept in pool holding of the broker. The ld.CIT(A) noted that as per SEBI rules, if full payment of shares purchased was made, then the broker had to transfer the shares to the client s DEMAT within 24 hours. In the case of the assessee shares were converted into DEMAT form only after seven days. He therefore rejected the assessee s pleading that the shares were kept in the pool account of the broker, since his explanation was not correct in accordance with the SEBI rules in this regard. The Ld.CIT(A) held that there was no credible evidence to say that the assessee was having shares till 8.8.2014 and why the shares were with the broker till they were sold was not known. He accordingly held the entire evidences self-serving and stagemanaged, and therefore, upheld the addition made by the AO. 9. The findings of the ld.CIT(A), we find are very detailed, who has made further inquiry with respect to the issue and found entire transaction to be bogus. Since the assessee has not come before me in support of his appeal, I .....

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