9911796707
TMI Blog2023 (9) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... who filed his return of income on 25.07.2015 declaring income of Rs. 3,00,620/-. In the said return, the assessee has claimed exemption under section 10(38) of the Act for long-term capital gain of Rs. 47,25,995/- from sale of equity shares of Sulabh Engineers & Services Limited. The case selected for scrutiny through CASS in AST module by valid serving of notices under section 143(2) and 142(1) of the Act. During the course of assessment proceedings, the ld. Assessing Officer observed that during F.Y. 2014-15, the assessee purchased 25,000 equity shares of Sulabh Engineers & Services Limited on 15.03.2013 and total purchase price was at Rs. 14,97,708/-. During the year under consideration, the assessee sold 25,000 shares (20,000 shares on 26.05.2014 & 5000 shares on 29.05.2014)) of Sulabh Engineers & Services Limited for a total consideration of Rs. 62,23,703/- thereby earning long-term capital gain of Rs. 47,25,995/-. The ld. Assessing Officer called for the details of financial statements of Sulabh Engineers & Services Limited which indicated poor results not commensurate to the steep increase in price of equity shares. He also observed that name of this company appears in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This company is in the list of 84 companies, which has been found to be penny stock company. The assessee had made huge gain due to price increase, in comparison to the purchase price, but the increase in price of shares is not commensurate to the financials of the company as observed by the lower authorities. 6. It is also pertinent to observe that recently Hon'ble Jurisdictional High Court has examined the issue of bogus capital gain claim made by a large number of assessees in Kolkata. This issue has been examined in the case of Swati Bajaj & Others (2022) 139 taxmann.com 352(Cal.) pronounced on 14.06.2022. A large number of assessees have claimed long-term capital gain/loss. The Income Tax Department has carried out search/survey upon different entities, which unearthed that certain companies and professionals were providing such claim in the shape of accommodation by manipulating the stocks of certain shell companies. The Hon'ble Court has made a detaile d analysis of the material found during the course of search and survey on the premises of third entities and set aside the orders of the ITAT in a group of appeals by holding that such claim by the assessees for long-term ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted above for the present appeals under consideration before us. Hon'ble jurisdictional High Court by taking the report of the Directorate of Investigation of the Department as the basis, gave its observations and findings, which are summarized hereunder. 5.1. There are two category of cases dealt with by the Hon'ble High Court, viz. first category being those arising out of the order of Tribunal dated 26.06.2019 in which 90 appeals filed by the assessees were allowed and second category is of those cases where1 assessee has challenged the assumption of jurisdiction by CIT under section 263 of the Act. In the present set of appeals before us, we are concerned with the first category whose relevant observations and findings by the Hon'ble High Court are noted below: a) From the assessment order passed in the case of the assessee Smt. Swati Bajaj, we find that the genesis of the issue commenced from an investigation report submitted by the Directorate of Income Tax, Investigation, Kolkata (DIT). The investigation report has been prepared by the Deputy Director of Income Tax, Investigation Unit -II and III, Kolkata. [para 43] b) The assessee were conscious of the fact that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the transactions are shown to be very complex, the meeting of minds of the 'players' can never be established by direct evidence and therefore the surrounding circumstances was required to be taken note of by the Tribunal which exercise has not been done. [para 99] i) The assessee had opportunity to prove that there was no manipulation at the other end and whatever gains the assessee has reaped was not tainted. This has not been proved or established by any of the assessee. [para 99] j) The tribunal being the last fact finding authority was required to go deeper into the issue as the matter have manifested large scale scam. Thus, the orders of the tribunal are not only perfunctory but perverse as well. The exercise that was required to be done by the tribunal is to consider the totality of the circumstances because the transactions are shown to be very complex, the meeting of minds of the "players" can never be established by direct evidence and therefore the surrounding circumstances was required to be taken note of by the tribunal which exercise has not been done. [para 99] k) In such factual scenario, the Assessing Officers as well as the Commissioner (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jurisdictional High Court, dismiss the appeals of the assessee and restore the order of the respective ld. AO as affirmed by the respective ld. CIT(A)". 8. On going through the above decision of this Tribunal, wherein ratio laid down by the Hon'ble Jurisdictional High Court in the case of Swati Bajaj & Others (supra) has been referred and relied. Hon'ble Court has held such transactions of earning of long-term capital gain of penny stock companies as bogus based on the test of preponderance of probability gathered from various circumstances like volume from trade, period of persistence in trading in the particular scrip, particulars of buy and sale orders, steep increase in the price of the equity shares not commensurate with the financial of the alleged penny stock companies and also rigged of entry operators, who have accepted of being providing accommodation entries in the form of bogus long-term capital gain. We find that the said judgment of the Hon'ble Jurisdictional High Court in the case of Swati Bajaj & Others (supra) is completely applicable on the facts of the instant case. So far as the reliance placed by the ld. A.R. on the decision of this Tribunal in the case of M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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