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TMI Blog2023 (2) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed by the ld. 1st Appellate Authority. We do not find any merit in this ground of appeal also. It is rejected. Appeal of the assessee is dismissed. - I.T.A. No. 1530/KOL/2018 - - - Dated:- 19-1-2023 - Shri Rajpal Yadav, Vice-President (KZ) And Shri Rajesh Kumar, Accountant Member Shri A.N. Keshri, A.R., appeared on behalf of the Assessee None, appeared on behalf of the Revenue ORDER Per Rajpal Yadav, Vice President ( KZ ) : - The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals)-10, Kolkata dated 18.04.2018 passed for A.Y. 2014-15. 2. The assessee has taken five grounds of appeal. In Ground No. 1, she has submitted that ld. CIT(Appeals) has erred in confirming the addition of Rs. 69,57,000/-, which was added by the ld. Assessing Officer under section 68 of the Income Tax Act. In Ground No. 2, she has pleaded that ld. CIT(Appeals) has erred in confirming the addition of Rs. 1,66,794/- and in Ground No. 3, the assessee has challenged charging of interest under section 234A 234B of the Income Tax Act. In Grounds No. 4 5, the assessee has raised supporting argument qua earlier three ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingle rupee of tax. The Ld. AO has very carefully analyzed the information received from the Investigation Wing, and has recorded the noteworthy features of the Company whose shares were purchased/sold by the assessee-individual. The economic parameters of the said company over the impugned period has also been brought on record, in the analysis. The rise and fall of the prices as recorded had been brought out by the Ld. AO to be artificial and not commensurate with the normal market, as the Company had no business at all. The Ld. AO has also brought forth information that the Regulatory Authority SEBI has also after investigating such abnormal price increases of certain stocks investigated the matter and suspended trading in certain scripts. It is very clear that the prices of these scripts fell sharply after the offloading of these scripts by pre-arranged and manipulated transactions. The entire transactions were carried out on the Stock Exchange to give it a color of real transactions. 2. I also find that all the submissions made by the appellant during the course of the appeal point towards the elaborate documentation, meaning thereby that the appellant has produced papers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound credited in the books of the assessee for any previous year, the same may be charged to income tax as the income of the assesses of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such a case, there is prima facie, evidence against the assessee viz. the receipt of money, and if he fails -to rebut, the said evidence being un-rebutted, can be used against him by holding that it was a receipt of an income nature. In the case of Sajjan Das Sons vs. CIT (2003) 264 ITR 435 (Delhi), their Lordships of the High Court of Delhi, while considering a case in which gifts were received by the assessee through banking channels laid importance on the capacity of the donor for making the gift and his identity as well as importance of relationship between the donor and donee in determination of genuineness of gift held as under: That a mere identification of the donor and showing the movement of the gift amount through banking channels was not sufficient to prove the genuineness of the gift. Since the claim of the gift was made by the assessee, the onus lay on him not only to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the decision should take into consideration the entire material, which is germane and which should not be ignored and exclude that which is irrelevant. Certain facts or aspects may be neutral and should be noted. These should not be ignored but they cannot become the bedrock or substratum of the conclusion. The provisions of Evidence Act are not applicable, but the assessing officer being a quasi judicial authority, must take care and caution to ensure that the decision is reasonable and satisfies the canons of equity, fairness and justice. The evidence should be impartially and objectively analyzed to ensure that the adverse findings against the assessee when recorded are adequately and duly supported by material and evidence and can withstand the challenge in appellate proceedings. Principle of preponderance of probabilities applies. What is stated and the said standard, equally apply to the Tribunal and indeed this Court. The reasoning and the grounds given in any decision or pronouncement while dealing with the contentions and issues should reflect application of mind on the relevant aspects, When an assessee does not produce evidence or tries to avoid appearance before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erwise it will be very easy to make self- serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favor then the door will be left wide-open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents......... 6. It is a well settled principle of law as declared by the Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT (214 ITR 801)(SC) that the true nature of transaction have to be ascertained in the light of surrounding circumstances. It needs to be emphasized that standard of proof beyond reasonable doubt has no applicability in determination of matters under taxing statutes. In the present case, it is clear that apparent is not the real as evidenced from the investigation report. Further, the Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l available on record, surrounding circumstances, human conduct, preponderance of probabilities and nature of incriminating information/evidence available with AO. 6.12. In the case of Sumati Dayal V. CIT (1995) 80 Taxman 89 (SC), the Hon'ble Supreme Court has dealt with the relevance of human conduct, preponderance of probabilities and surrounding circumstance, burden of proof and its shifting on the Department in cases of suspicious circumstances, by following observations: .....It is, no doubt, true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act lies upon the assessee. But in view of section 58, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those inferences or presumptions, the Authorities must have regard to the common course of natural events, to human conduct and their relation to the facts of the particular case, (5) The circumstantial evidence can, with equal facility, be resorted to in proof of a fact in issue which arises in proceedings for the assessment of taxes both direct and indirect, circumstantial evidence can be made use of in order to prove or disprove a fact alleged or in issue. In fact, in whatever proceedings or context inferences are required to be drawn from the evidence or materials available or lacking, circumstantial evidence has its place to assist the process of arriving at the truth. 6.14. It will also be worthwhile to consider the nature of burden of proof on the AO for proving a fact or circumstance in the income tax proceedings. The questions raised about the tax liability by the AO are to be answered by the assessee by furnishing reasonable and plausible explanations. If assessee is not forthcoming with proper or complete facts or his statement or explanation is contradictory, drawing of suitable Inferences and estimation of facts is inevitable. Courts generally will not inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also pertinent to note that the alleged Speculation transaction carried out earlier to the purchase of shares of Prime Capital Markets Ltd. was also claimed to have been carried in off market transaction. Another important point is that the assessee did not possess copies of Share certificates or copies of Share transfer forms The broker M/s. Khandelwal Co., has expressed its inability to furnish copies of contract notes available with it and also failed to furnish its books of account to substantiate the transactions of purchase of shares by the assessee. Since the Impugned transaction was an off market transaction, the purchase transaction could not be confirmed by the Kolkatta Stock exchange. The said shares were earlier held by M/s. Brightsun Merchants (P) Ltd. and the assessee had purchased the shares from them. The notice issued to M/s. Brightsun Merchants (P) Ltd. was returned unserved by the postal authorities with the remark unknown . In this regard, the assessee had replied that the name of the company was wrongly mentioned by the AO as M/s. Brightsuns (P) Ltd. and hence the notice got returned. But there is not comment about the address, meaning thereby, the AO had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hes of Tribunal in the case of Shri Avinash Kantilal Jain (supra) and Mr. Shyam R. Pawar (supra). Hence, in our view, the assessee cannot take support from the above said decisions. We further notice that the ld. CIT(A) has placed reliance on the decision dated 04.1.2011 rendered by ITAT Delhi in the case of Haresh Win Chaddha Vs. DDIT, wherein the Tribunal has expressed the view that there is no presumption in law that the AO is supposed to discharge an impossible burden to assess the tax liability by direct evidence only and to establish the evasion beyond doubt as in criminal proceedings. Further it was held that the AO can assess on consideration of material available on record, surrounding circumstances, human conduct, preponderance of probabilities and nature of incriminating information/evidence available on record. 13. In the case of Smt. Jamnadevi Agrawal (supra), the Hon'ble Bombay High Court has upheld the order of Tribunal on the reasoning that no fault can be found with the findings recorded by the Tribunal. A perusal of the above said order would show that the revenue in the above said case had contended that the assessees In the group have purchased and sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e onus to produce necessary evidences to convincingly show that the shares were purchased and sold at the prices claimed always lies upon the assessee. Our view finds support from the decision rendered by Hon'ble Guwahati High Court in the case of CIT Vs. Smt. Jasvinder Kaur (357 ITR 638). 16. In view of the foregoing discussions, we are of the view that the decisions relied upon by the assessee cannot be taken support of by the assessee for the reasons discussed supra. Accordingly, we are of the view that the Ld. CJT(A) was justified in confirming the order of the assessing officer by applying the test of human probabilities. 17. In the result, the appeal filed by the assessee is dismissed [nquote] 9. Reliance is also placed in the case of Somnath Maini Vs ITO (226) 100 TTJ 917 wherein the Hon'ble Chandigarh bench of ITAT held that if facts and circumstances so warrant that it does not accord with the test of human probabilities, transactions have to be held to be non-genuine. [Quote] 3. The relevant facts briefly stated are that during the course of assessment proceedings, the AO observed that assessee had incurred a long-term capital loss on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of assessee much after the sale to M/s. S.K. Sharma Co. The learned CIT(A) deleted the addition on the ground that both the brokers from whom the shares have been purchased and sold were called under Section 131 by the AO. Both have confirmed the sale and purchase of said shares. Other aspect of the facts and circumstances raised by the AO was not discussed by the CIT(A) in his order. 4. In appeal before us, the learned Departmental Representative contended that it is highly improbable that shares of a company go up so high in few months' time. The learned Departmental Representative took us through various pages of the assessment order and the paper book wherein sale bill of the shares with the said M/s. S.K. Sharma Co. were also filed. The learned Departmental Representative pointed out that shares have been sold at Ludhiana when actually stock exchange was not functional - a fact which is also recorded by the AO. The learned Departmental Representative also pointed out that shares have been sold to M/s. S.K. Sharma Co. on 9th Feb., 1998 and 23rd March, 1998, whereas from the statement of account of M/s. S.K. Sharma Co., payments have been received by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Stock Exchange and the way in which different, instalment payments have been received from the brokers and non-availability of the records of the brokers and the shares remaining in the name of assessee even long after the sale of the shares does not stand the test of probabilities. As rightly pointed out by the learned Departmental Representative, these types of companies function in the capital market whose sale price is manipulated to astronomical height only to create the artificial transaction in the form of capital gain, Surrounding circumstances differ from the normal share market transactions in which they are ordinarily carried out. Taking all the steps together, final conclusion does not accord with the human probabilities. The Hon'ble Supreme Court in the case of CIT v. Durga Prasad More held as under: It is a story that does not accord with human probabilities. It is strange that High Court found fault with the Tribunal for not swallowing that story. If that story is found to be unbelievable as the Tribunal has found and in our opinion, rightly that the decisions remains that the consideration for the sale proceeded from the assessee and therefore, it must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Pr. CIT by their order dated 10th April, 2017 have upheld the orders of the Hon'ble ITAT, Nagpur Bench dated 18.07.2016 in ITA No. 61/Nag/2013 in Sanjay Bimalchand Jain Vs ITO, Ward-4(2), Nagpur, wherein it was held that on the facts emergent in the case, and the preponderance of probabilities, entire Capital Gains claims were to be treated as fictitious and bogus. Bogus LTCC from Penny stocks: The assessee has not tendered cogent evidence to explain how the shares in an unknown company worth Rs. 5 had jumped to Rs. 485 in no time. The fantastic sale price was not at all possible as there was no economic or financial basis to justify the price rise, the assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain. The gain has accordingly to be assessed as undisclosed credit u/s. 68. In view of the above discussion, I find no infirmity in the orders of the Ld. AO, and I confirm the same, holding the claim of LTCG of Rs. 69,57,000/- to be bogus. As a natural corollary, I also hold that the Ld. AO was also correct in adding back an amount of Rs. 1,66,794/- under Sec 69Cof the Income Tax act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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