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TMI Blog2023 (1) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... the Long Term Capital Gain on sale of shares as unexplained cash credit is hereby directed to be deleted. Appeal filed by the assessee is allowed. - ITA No. 249/JP/2022 - - - Dated:- 11-1-2023 - HON BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER For the Assessee : Shri Rajendra Agarwal, CA For the Revenue : Mrs. Monisha Choudhary, JCIT ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 28-09-2021, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2012-13 wherein the assessee has raised the following grounds of appeal. On the facts and circumstances of the case:- 1. The ld. CIT(A) erred in dismissing the ground of appeal that ld. AO erred in reopening the assessment. 2. That the ld. CIT(A) erred in dismissing the ground of appeal that the ld. AO erred in making huge addition of Rs.6,12,367/- stating bogus LTCG claimed u/s 10(38) in the ROI held to be income from undisclosed sources. 2.1 Apropos Ground No. 1 and 2 of the assessee, the facts as emerges from the order of ld. CIT(A) are as under:- Ground No.1 2 3.0 These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation, it is crystal clear that the appellant had indulged in bogus long term capital gain and claimed the amount as exempt u/s 10(38) of the I.T. Act by way of taking accommodation entry. The purchase of shares is an off market transaction. The appellant had made investment through the derecognized broker and had earned excessive return within a shortspan of period which is extremely unusual. 3.5 In support of his view, the appellant had submitted its reply before the AO. The AO had found the reply not satisfactorily. What is at dispute is that whether this was really the Long Term Capital Gain earn from such scrip? As laid down by the Hon'ble Apex Court, apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. This abnormal gain can't be explained by applying the test of human probability. The reliance in this regard is being placed on Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough broker had not been transferred even at time of making enquiry by Assessing Officer and same continued to be registered in name of assessee In those circumstances, Assessing Officer held that transaction of sale of shares was an ingenuine transaction and made addition of alleged sale consideration to assessee's income as income from undisclosed sources - Whether on facts, addition made by Assessing Officer was justified-Held, yes 4. Usha Chandresh Shah Vs ITO [2014-TIOL-1459-ITAT-MUM where Hon'ble ITAT Mumbai held that in this case the assessee could not produce the copies of share certificates and copies of share transfer forms. The transaction of purchase of shares could not be cross verified. The shares of the company was declared as Penny Stock by SEBI and the broker Sanju Kabra, through whom the shares were sold by the assessee was indicted for manipulating the prices of penny stock shares. The tax authorities have rightly applied the test of human probabilities to examine the claim of purchase and sale of shares made by the assessee. The CIT(A) was justified in confirming the order of the AO by applying the test of human probabilities 5. Ratnakar M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty combined bill of settlement for sale of shares (PB-5) purchase bill of shares were furnished before the Ld. AO. Reliance has been placed on the following judgements:- 1. (JP-Trib) 2021 ITL 2057 Nilesh Agrawal HUF v.ITO ITA No.222-223/JP/2020 Dt. of Order 09.02.2021 wherein it has been decided by the Hon le bench that the mere suspicion cannot be a ground for treating the transaction as bogus in the absence of any evidence or material on record. Accordingly, in view of the facts and circumstances as discussed, when the assessee has produced all the relevant documentary evidences to establish the genuineness of the transaction and there is no contrary evidence to doubt the correctness of the evidences produced by the assessee then treating the transaction of purchase and sale as sham by the assessing officer is not justified. Therefore, all these facts established the genuineness of the transaction. Hence we do not find any error in assessee's claim of exemption of long term capital gains and the addition made by the assessing officer under section 68 of the Income Tax Act by treating the Long Term Capital Gain on sale of shares as unexplained cash credit is hereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Directorate Income Tax Investigation Wing, Kolkata is dated 27.04.2015 whereas the impugned sales transactions took place in the month of March, 2014. The exparte ad interim order of SEBI is dated 29.06.2015 wherein at page 34 under para 50 (a) M/s. Esteem Bio Organic Food Processing Ltd was restrained from accessing the securities market and buying selling and dealing in securities either directly or indirectly in any manner till further directions. A list of 239 persons is also mentioned in SEBI order which are at pages 34 to 42 of the order the names of the appellants do not find any place in the said list. At pages 58 and 59 the names of pre IPO transferee in the scrip of M/s. Esteem Bio Organic Food Processing Ltd is given and in the said list also the names of the appellants do not find any place. At page 63 of the SEBI order-trading by trading in M/s. Esteem Bio Qrganic food Processing Ltd a further list of 25 persons is mentioned and once again the names of the appellants do not find place in this list also. As mentioned elsewhere the brokers of the assessee namely ISG Securities Limited and SMC Global Securities Limited are stationed at New Delhi and their name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were found and seized and the AO on this basis that the assessee received an accommodation entry from M/s Singhal Securities Pvt. Ltd. issued the notice u/s 148 of the Act while recording the reasons on 28.03.2013 that the assessee received accommodation entry from M/s Singhal Securities Pvt. Ltd. (copy of the said reasons recorded is placed at page no. 8 of the assessee's paper book). It is also noticed that on same date i.e. 28.03.2013, the AO of M/s Singhal Securities Pvt. Ltd., framed the assessment u/s 153C/153A of the Act at the same figure of the loss amounting to ? 51,528/- which was declared by the said assessee in its return of income. It is also noticed that Sh. S.K. Jain in whose premises search took place was not a shareholder of M/s Singhal Securities Pvt. Ltd. and was also not connected with the assessee. In the present case, when the assessment of M/s Singhal Securities Pvt. Ltd. from whom the assessee received share application money was assessed at the same figure of the loss which was declared by the said assessee, on the same date when the AO recorded the reasons that the income of the assessee escaped assessment for a sum of ? 14,00,000/- i.e. the amount r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H Highcourt and ITAT, Mumbai as mentioned by him in his appeal order page No. 8 9 but the facts of these cases are different and not applicable when the issue is already covered by the various decisions of Hon le ITAT bench and Hon le Rajasthat High Court. Ground No.2:- The Ld.AO arbitrarily alleged that the humonogous gains i.e., Rs.6,12,900/- (Rs.6,13,400/- minus Rs.500/-), which is around 1225.8 times of the original investment, made by the assessee in a penny scrip defies any logic or human probabilities and therefore cannot be genuine. Further the ld.AO hold that the amount of Rs.6,12,900/- introduced/credited by the assessee out of these purported share sale receipts during the F.Y.2010-11 (A.Y.2011-12) as his income from other sources and added the same to the total income of the assessee. During the course of assessment proceedings, detailed computation of income (PB-2) explaining all the sources of income and various activities done by the assessee, datewise statement of long term capital gain on sale of shares (PB-2) having the complete datewise details of purchases and sales of shares, copies of contract notes (PB-3) in support of sales and purchases, cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transactions made in the scrips of M/s Blueprint Securities Limited through the broker M/s. Badri Prasad Sons. On verification of the record, it was found that the assessee has shown exempt income from LTCG from transactions on which STT was paid amounting to Rs.6,12,900/-. During the course of assessment proceedings, the AO noted that the assesee had purchased 50 shares of unlisted company M/s. Ranisati Commotrrade Pvt. Ltd. for a very meager amount of Rs.500/- in cash from M/s. Pushpanjali Commotrade Pvt. Ltd., Kolkata and then got converted these shares through amalgamation into shares of M/s Blueprint Securities Limited and received Rs.6,12,900/- as humongous long term capital gain. The AO observed that the assesee has not dealt in any other trading activities in shares or made investment on other shares during the year under consideration and thus claimed capital gain as exempted u/s 10(38) of the Act which has been treated by the AO as undisclosed income of the assessee. Conclusively the AO held that the amount of Rs.6,12,900/- introduced/credited by the assesse out of these purported share sales receipts during the year under consideration as her income from undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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