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TMI Blog2023 (11) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal Centre, Delhi order in not adjudicating on the core issue of character of the script of looks health services Ltd 2. on the facts and in the circumstances of the case and in law, the learned CIT (appeals) erred in deleting the disallowance made by the AO of the assessee's claim of long-term capital gain of Rs. 124,648,690/- overlooking the fact that the entire transactions were stage managed with the object to facilitate the assessee to plough back are unaccounted income in the form of fictitious long-term capital gain claimed as exempt under section 10 (38) of the income tax act 3. on the facts and in the circumstances of the case and in law, the learned CIT (appeals) erred in deleting the addition of Rs. 124,648,690/- made by the AO on account of unexplained cash credit under section 68 of the act, without considering the direct and circumstantial evidences on record 4. on the facts and in the circumstances of the case and in law the learned CIT (appeals) erred in ignoring the material on record and the surrounding circumstances which showed that the share price of Mrs looks health services Ltd was rigged on stock exchange and the assessee was one on several beneficia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase and sale of script namely Looks Health Services Ltd. It was also found that this was an arranged transactions by Mr. Patel to set off long-term capital gain of Rs 2.33 crore and thereby avoided payment of due tax. A detailed verification revealed that there was an abnormal spurt and thereafter decline in the price of the said script during the period 2012 - 16. A list of bulk deals in the script during the period 2012 - 16 was analysed and it was seen that there are 116 beneficiaries, including one Mrs. Sohni Deepak Tanna (PAN :ACETT3611J). Further report from investigation Wing, Ahmedabad dated 13/12/2016 is received wherein the rigging in the price of script namely M/s looks health services Ltd was intimated. Further, BSE limited intimated that investigation were carried out in the aforesaid script securities of the company looks health services (BSE script code 534422) for the period 8/1/2013 - 22/3/2014 and the report on the same was also submitted to SEBI. The analysis revealed a few categories of entities that entered into transactions. One such is the person with no buy but sell at higher brackets with an object of claiming short/long-term capital gain and purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o disclose fully and truly all the material facts necessary for the assessment. Further, the analysis of bank statement of HSBC Banks current account number 011320660001 reveal that there is a cumulative deposit of Rs 2 .83 crores during financial year 2013 - 14 relevant to the current assessment year 2014 - 15. Whereas the assessee has mentioned the total receipts as per the profit and loss account as Rs 2 .64 crore. Further, the amount of income earned during the year and claimed to be the exempt income is also not reflected in the bank statement available on record, thus the reason appellant variation in the amount is mentioned in the ITR, financial statements and the bank statement, which needs to be examined in detail. Further more the amount of bogus long-term capital gain coordinate with the modus operandi and the information received by the undersigned. 6. Reason to believe:- Considering the facts narrated above and the circumstances of the case, I have reason to believe that the taxable income of the assessee amounting to at least Rs. 125,952,029/- being bogus long-term capital gain has escaped assessment for this year for assessment year 2014 - 15 within the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that time was Monarch health services Ltd which was subsequently changed to looks health services Ltd on 8 March 2013. Thereafter this company got listed on the Bombay stock exchanges with a public offer of the securities. The assessee sold the shares in assessment year 2014 - 15 on BSE terminal through recognised broker in the open market at the price quoted on the terminal at the relevant time. Assessee also gave the name of the broker, number of shares sold, date of sale of security, settlement number and the amount received. Assessee substantiated the same with the application for purchase of shares under private placement, showing payment for purchase of shares, Demat account copies, bank statement copies along with the Ledger account of the broker, brokers note for sale of shares, details of letter indicating the change of name of the company. Therefore, assessee submitted that online purchase of shares would not have been made in this case. iii. The reopening is based on the information received during the assessment proceedings of third party wherein irregularity was found in claim of short-term capital gain. The reasons recorded by the AO based on third-party information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the submission of the assessee that she has not received any notice of communication from BSE/ SEBI that she had no role to play in the alleged price manipulation of shares of looks health services Ltd is not correct. The claim of the AO is that it is evident from the order of the SEBI that assessee has been held guilty and imposed apparently in the matter of said script looks health services Ltd which is subject matter of the instant assessment proceedings. Accordingly the contention of the assessee were rejected and addition on account of accommodation entry in the guise of bogus long-term capital gain claimed as income exempt under section 10 (38) of the act. The AO further noted that on the Ledger account submitted in respect of skyes and Ray equities private limited regarding total sales of Rs. 129,144,690/- and the purchase cost being Rs. 4,496,000 the total amount of accommodation entry of Rs. 124,648,690/- was added back to the total income of the assessee by passing an assessment order under section 143 (3) read with section 147 of the income tax act on 18/12/2019. 010. Assessee, aggrieved with the assessment order preferred an appeal before the learned CIT - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs has been levied on the assessee for violation of regulation 13 (3) of SEBI (provision of insider trading) regulations, 1992 and regulation number 29/2) of SEBI (substantial acquisition of shares and takeovers) regulations, 2011 for the reason that the shareholder holding voting right of 5% failed to intimate exchange in shareholding to the company and the exchange. However the assessee has made such disclosure but was not reflected on the website of SEBI and therefore the penalty was levied on assessee only for failure in compliance of disclosure norms and not for the purpose of price rigging in the price of looks health services Ltd. Looks health services are still listed on the exchange and are traded and never any violation was reported by the SEBI. Accordingly he deleted the addition of Rs. 124,648,619/-. With respect to reopening of the assessment and its validity he held that the issue is more academic in nature as he has already decided the issue on the merits of the case and therefore did not adjudicate on the same. Such appellate order was passed on 11/7/2022. Therefore, the learned assessing officer is aggrieved against the deletion of the addition and the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rima facie belief of escapement of income is required to be verified. At that particular time when the reasons were recorded, the learned assessing officer was not required to record the clear-cut and exact escapement of income, otherwise there is no requirement of making further assessment under section 147 of the act. He submitted that the return of income filed by the assessee was not scrutinised. After filing of the return of income there is a receipt of information that assessee is one of the beneficiaries of transaction in the above stated company wherein there is an abnormal rise and decline in the price of the above script. The return of income was verified and in paragraph number 3 the learned assessing officer has mentioned that assessee has reported huge exempt income amounting to Rs. 12.66 crore. Further the learned assessing officer in paragraph number 4 has made the enquiry on comparison of the various figures of the balance sheet. He further referred to paragraph number 5 stating that the bank statement of the assessee was also verified wherein it was found that there is a cumulative deposit of Rs 2 .83 crores whereas the total receipt as per the profit and loss acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in price rigging in looks health services Ltd was intimated. On verification of the details of sale of shares, the learned assessing officer on examination did not find any details of purchases of shares. The learned assessing officer also referred to the return of income filed by the assessee. He also made verification of bank statement of the assessee wherein he did not find the necessary credit of the above sum. In view of the above facts, the learned assessing officer in the form of information from other sources had a tangible material to reopen the assessment. On the details available in the form of information, the learned assessing officer also made his own enquiry by verification of the return of income as well as the bank statement of the assessee. The assessee also made his own enquiry on the tangible material received by him for reopening of the assessment. At the time of recording the reason only the prima facie belief is to be formed that there is a escapement of income. On careful reading of the reasons recorded by the assessee placed before us we find that the learned assessing officer has complied with all the necessary requirements of the law. The reasons are to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e No.489) of SEBI (Prohibition of Insider Trading) Regulations, 1992 and Regulation 29(2) (Page No.566) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. On perusal of said Regulations, it is appreciated that it merely cast an obligation on the shareholder holding voting right above 5% to intimate his change in shareholding to the Company and the Exchange. The appellant claimed in those proceedings that she did make the disclosure but was not reflected on official Website of SEBL Since her claim could not be proved she was imposed a penalty of Rs. 4,50,000 for failure in compliance of disclosure norms and nothing else and not at all for price rigging, which misappreciation led Ld.A.O. to believe that LTCG shown and claimed exempt was bogus, though, in fact, it was not so. 5.1.6 Copy of said adjudication order dated 27.11.2017 passed SEBI as also uploadedon ITBA (page no 473 to 480) was gone through carefully and it was found that it clearly showed as also vehemently argued by the Ld. A/R of the lady appellant that "Action taken by the SEBI against the Appellants was not related to the rigging/manipulation of the price" and it was only related to known d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate that by the learned assessing officer has made addition in the hence of the assessee to is necessary to look at the assessment order wherein in paragraph number 7 the addition has been dealt with as under:- "7. However, from the perusal of reply the scene that the assessee is only reiterated the facts narrated earlier while filing initial objections to the reopening and also during the course of assessment. Further it is seen from the Internet search on the official website of the securities and the board of India (SEBI) there is an adjudication order dated 22/11/2017 bearing number AO/JS/VRP/18/2017 in respect of the assessee Ms. Sohini Deepak Tanna in the matter of looks health services Ltd. The said adjudication order has been passed in pursuance of the investigation by SEBI in the script of looks health services Ltd during the period January 8, 2013 to March 22, 2014 and observed that Ms Sohini Deepak Tanna had violated the provisions of SEBI regulations. Show cause notice was issued and reply was filed by the new PC and thereafter by the aforesaid order SEBI found that ms Sohni Deepak tanna has violated the regulation and imposed a penalty of Rs. 4,050,000 (Four lakhs Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92Rs. iii. if so, what quantum of monetary penalty should be imposed on the notice considering the fact is stated in section 15 J of SEBI act 1992? 019. On the basis of the adjudication order, there is an allegation on the assessee that she has violated the provisions of regulation 13 (3) read with 13 (5 of CB (Prohibition of insider trading) regulations, 1992 and regulation 29 (2) of SEBI (substantial acquisition of shares in takeover) regulations, 2011. The allegation is that when the assessee has sold over lakh 49,600 shares the cumulative percentage of the shareholding triggered the transfer of 7.49% shares of the company in total and on two occasions it exceeded 5% of the total shareholding of the company therefore, as assessee has transacted in more than 5% of the share capital of the company, she should have filed disclosure to the company as well as to the securities and board of India. On all the three occasions in paragraph number three of that order it was found that declaration was filed late by the assessee. In response to the show cause notice, assessee submitted before the adjudicating authority that she has already filed disclosure along with her husband at appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract note of Skyes & rayes equities India private limited showing the date and time stamp of the securities traded. There is no allegation or enquiry of the learned assessing officer about the same. 023. The original acquisition of the shares were made by the assessee when the name of the above company is monarch health services (private) Ltd. No doubt the name of this company appears in the investigation report of the investigation wing. However when the shares were sold, the name of this company was looks health services Ltd. Naturally, there was no reference of sale of the shares in looks health services Ltd in the above report. 024. Regarding the claim of the learned assessing officer in the reasons were recorded that the consideration received by the assessee was not found credited in the bank account of assessee with HDFC bank, the assessee submitted that the above sum was credited in the account of the assessee in Indian bank account number 415206490 at Fort branch. The copy of the passbook submitted clearly shows that the above amount is credited in the bank account of the assessee. This bank account was jointly maintained by the assessee with her husband.. 025. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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