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TMI Blog2023 (3) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... ment passed u/s.143(3) & 143(3) r.w.s.147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 22/03/2017 & 23/03/2017 by the ld. Dy. Commissioner of Income Tax, Central Circle 5(4), Mumbai (hereinafter referred to as ld. AO). ITA No. 2533/Mum/2021(AY:2015-16),2532/Mum/2021 (AY:2014-15) & CO No.95/Mum/2022 (Arising out of ITA No.2532/Mum/2021 (AY: 2014-15) These appeals in ITA No. 2533/Mum/2021 & 2532/Mum/2021 & CO No.95/Mum/2022 for A.Yrs.2015-16 & 2014-15 respectively arise out of the order by the ld. Commissioner of Income Tax (Appeals)-53, Mumbai in appeal Nos.CIT(A)-53, Mumbai/10003/2017-18 & CIT(A)-53, Mumbai/10001/2017-18 dated 07/09/2020 & 04/09/2020 respectively (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) & 143(3) r.w.s.147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 22/03/2017 by the ld. Dy. Commissioner of Income Tax, Central Circle 5(4), Mumbai (hereinafter referred to as ld. AO). ITA No.2528/Mum/2021(Assessment Year :2015-16) This appeal in ITA No. 2528/Mum/2021 for A.Yr.2015-16 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-53, Mumbai in appeal Nos.CIT(A)-53, Mumbai/10004/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as electronically filed for the A.Y. 2015-16 u/s.139(1) of the Act on 31/08/2015 showing total income of Rs 3,64,760/-. The ld. AO observed that during the A.Y. 2015-16, the assessee had sold the shares of Pine Animation Ltd (formerly known as Four K Animation Ltd) and claimed the long term capital gains thereon as exempt u/s 10(38) of the Act in the return of income. In the opinion of the ld. AO, the said scrip of Pine Animation Ltd is categorised as Penny Stock and hence the long term capital gains derived from sale of such scrip is to be treated as bogus. Accordingly, the ld. AO sought to examine the purchase and sale details of those shares from the assessee. The details of purchase and sale of shares together with the respective date, number of shares, mode of payment for purchase of shares, name and address of the broker through the shares were sold in recognised stock exchange and computation of long term capital gains were duly furnished by the assessee before the ld. AO. The entire details in this regard are captured in the following table hereinbelow:- PRIYANKAMIGLANI PAN No:ARIPS3477L Assessment Year: 2015-16 Sr. no Particulars Remarks 1 Number of Shares Purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old 1200000 shares and in A.Y. 2015-16 , the assessee sold 961000 shares. The balance 2089000 shares are still lying with the assessee as is evident from the holding statement submitted by the ld. AR as on 27.02.2023. The assessee has sold 961000 shares between 10.04.2014 to 12.12.2014 on BSE through the broker namely Destimoney Securities Pvt Ltd for a consideration of Rs 7,86,28,300/-. During the year under consideration, the assessee earned Long Term Capital Gains (LTCG) of Rs 7,74,80,198/- on sale of shares of Pine Animation Ltd, which has been claimed as exempt u/s 10(38) of the Act. It is not in dispute that the shares of Pine Animation Ltd were purchased by the assessee as per the decision and guidance of Shri Rajinder Miglani, father in law of the assessee and he is the main person in the family who takes investment decisions on behalf of the entire family. Shri Rajinder Miglani in his statement recorded by the investigation wing had stated that he was advised by one of his friend Shri Rajkumar Surekha to invest in the preferential issue of shares of Pine Animation Ltd. The ld. AO had made reference to various third party statements such as Shri Anuj Agarwal, Shri Jagdish P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Animation Ltd intimating that the shares have been allotted to the assessee on 13.12.2012. e) Copy of Demat statement of the assessee of February 2013 showing inward entry of shares of Pine Animation Ltd. f) Copy of details of investments as on 31.03.2015 of the assessee showing investment in the shares of Pine Animation Ltd among others. g) Documentary evidences for Sale of shares of Pine Animation Ltd from 10.04.2014 onwards to Dec 2014 in the form of (a) Registered Share Broker's Contract Notes ; (b) Copy of Demat account evidencing debit (outward entries) of sold shares ; (c ) Copy of Bank statement showing amounts received from the share broker in respect of shares sold and (d) Details of Securities Transaction Tax (STT) paid on sale of shares through recognized stock exchange in BSE Platform. h) Details of long term capital gains earned by the assessee. 4.3. There was an Ad Interim Ex-parte order dated 08.05.2015 passed by SEBI in case of Pine Animation Ltd wherein it was alleged that the LTCG earned by various allottees on preferential basis were not genuine. The assessee's name being preferential allottee, was also included in the said order. Accordingly, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e completion of final investigation by SEBI. The main grievance of the ld. AO is that rise in share price of Pine Animation Ltd is devoid of commercial principle or market factors ; that transactions are based on mutual connivance on part of assessee and operators ; that assessee resorted to preconceived scheme to procure bogus long term capital gains and hence the transactions are not bonafide ; that SEBI also passed an interim order in the case of Pine Animation Ltd holding that share prices were determined artificially by manipulations ; that these are close circuit transactions and are prestructured; that assessee had failed to discharge her onus cast on her ; that net worth of Pine Animation Ltd is negligible and that its share prices were artificially rigged ; that investigations prove that cash is routed through various accounts to provide these bogus long term capital gain entries. The ld. AO by making these observations proceeded to treat the sale proceeds of the shares as unexplained cash credit u/s 68 of the Act. Since the receipt of sale proceeds was treated as bogus, the ld. AO also proceeded to add estimated commission @ 6% on LTCG amount for arranging the said bogus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the Demat account of the assessee. The transaction of holding the shares are reflected in Demat account and sale of shares are through Demat account. More so , when there is no dispute regarding the purchase price and sale price of shares. Our view is further fortified by the decision of Hon'ble Jurisdictional High Court in the case of CIT vs Jamnadevi Agarwal reported in 328 ITR 656 (Bom) wherein it was held that - "From the documents produced before the Court it was seen that the shares in question were, in fact, purchased by the assessees on the respective dates and the company had confirmed to have handed over the shares purchased by the assessees. Similarly, the sale of the shares of the respective buyer was also established by producing documentary evidence. It is true that some of the transactions were off-market transactions. However, the purchase and sale price of the shares declared by the assessees were in conformity with the market rates prevailing on the respective dates, as was seen from the documents furnished by the assessees. Therefore, the fact that some of the transactions were off-market transactions could not be a ground to treat the transactions as sham tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited. As regards remaining entities in the scrip of PAL, violations under SEBI Act, SCRA, PFUTP Regulations, etc., were observed and SEBI shall continue its proceedings against them. Hence, the directions issued vide Orders dated July 05, 2016, August 22, 2016, and June 02,2017 against the remaining 62 entities shall continue. 5.5.1. We find that the name of the assessee is reflected in Serial Number 38 which is part of 114 entities acquitted by SEBI, on whom clean chit has been given. 5.6. We find that the assessee had held the shares in the instant case for 16 months in the case of Pine Animation Ltd and then sold the shares in the open market at prevailing market prices. From the above order of SEBI , it is very clear that SEBI, based on its investigations and replies given by various parties, had ordered either to take action against certain parties or had acquitted certain parties on the ground that they are not involved in the price manipulation. In any case, the assessee has been duly discharged by SEBI on the ground that she is not involved in price manipulation of scrip of Pine Animation Ltd. Hence it could be safely concluded that the assessee herein is merely a gul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment in certain scrips (read penny stocks) based on market information and try to exit at an appropriate time the moment they make their profits. In this process, they also burn their fingers by incurring huge losses without knowing the fact that the particular scrip invested is operated by certain interested parties with an ulterior motive and once their motives are achieved, the price falls like pack of cards and eventually make the gullible investors incur huge losses. In this background, the only logical recourse would be to place reliance on the orders passed by SEBI pointing out the malpractices by certain parties and taking action against them. Since assessee has been finally discharged in the list of 114 entities in final order of SEBI dated 19.09.2017 after its detailed investigations, the transaction carried out by the assessee cannot be termed as bogus. We find that the revenue had primarily relied SEBI interim order dated 08.05.2015 passed in the case of Pine Animation Ltd. This SEBI Interim order is subsequently revoked on 19.09.2017 duly acquitting the assessee as stated supra. Before the first appellate proceedings, the assessee had furnished the SEBI final or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein. Now another issue that arises is as to whether the ld. AO merely on the basis of Kolkata investigation wing report could come to a conclusion that the transactions carried out by the assessee as bogus. In our considered opinion, the ld. AO is expected to conduct independent verification of the matter before reaching to the conclusion that the transactions of the assessee are bogus. More importantly, it is bounden duty of the ld. AO to prove that the evidences furnished by the assessee to support the purchase and sale of shares as bogus. This view of ours is further fortified by the decision of Hon'ble Delhi High Court in the case of PCIT vs Laxman Industrial Resources Ltd in ITA No. 169/2017 dated 14.03.2017. It is well settled that the suspicion however strong could not partake the character of legal evidence. Hence the greater onus is casted on the revenue to corroborate the impugned addition by controverting the documentary evidences furnished by the assessee and by bringing on record cogent material to sustain the addition. No evidence has been brought on record to establish any link between the assessee herein with the entry operators who were allegedly involved in price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock Exchange records showed that the shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt. Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme. 6. It is in that regard that we find that Mr. Gopal's contentions are well founded. The Tribunal concluded that there was somet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted or regular as such. The relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and pertaining to the addition of Rs.25,93,150/-. Barring the figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For the same reasons, even this additional question cannot be termed as substantial question of law. 5.12. We are conscious of the decision of Hon'ble Delhi High Court in the case of Suman Poddar vs ITO reported in 112 taxmann.com 329 dated 17.09.2019 where the decision was rendered in favour of the revenue. The Special Leave Petition filed by the assessee before the Hon'ble Supreme Court in this case was dismissed by the Hon'ble Apex Court vide its order dated 22/11/2019. But we find that there is yet another decision of Hon'ble Delhi High Court in the case of PCIT vs Krishna Devi and others in ITA 125/2020 ; 130 & 131/2020 dated 15.01.2021 reported in 126 taxmann.com 80 (Delhi HC) wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent's unaccounted money, but he did not dig deeper. Notices issued under sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal (supra) too turns on its own specific facts. The above-stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. 14. In this view of the matter, no question of law, much less a substantial question of law arises for our consideration. 15. Accordingly, the present appeals are dismissed. (emphasis supplied by us) 5.13. The transactions of sale of shares were done in online pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumptions of facts that might go against the assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigations have been carried out, then nothing can be implicated against the assessee. 5.15. We find that the ld. CIT(A) had called for a remand report twice from the ld. AO before passing the appellate order. The remand report of the ld.AO is reproduced in pages 35 and 36 of the order of ld. CIT(A). In the remand report, while defending the assessment, the ld. AO relied on various case laws in favour of the revenue. We find that the assessee in her rejoinder had distinguished each and every case law on facts. This rejoinder is enclosed in pages 43 and 44 of the order of ld. CITA. After this, one more remand report was called for by the ld. CITA from the ld. AO. The second remand report dated 24.01.2019 was submitted by the AO reiterating the findings of the assessment order. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramakrishna Fincap Ltd ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commissioner of Income Tax (Central)- 1 vs. NRA Iron & Steel (P) Ltd (2019) 103 taxmann.com 48 (SC) but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f transactions entered into by the assessee have been proved, accounted for, documented and supported by evidence. It was also found that the assessee produced the contract notes, details of demat accounts and produced documents showing all payments were received by the assessee through banks. On these facts, the appeal of the revenue was summarily dismissed by Hon'ble High Court. In the instant case of the assessee before us, no such enquiries were even sought to be made by the ld. AO with the stock exchange to understand whether the transactions carried out in online platform of BSE were genuine or not. Hence the assessee's case before us stands on a better pedestal. 5.21. We find that the Hon'ble Punjab & Haryana High Court in the case of PCIT (Central), Ludhiana vs Prem Pal Gandhi reported in 401 ITR 253 (P&H) in Para 4 & 5 of its order and the PCIT (Central), Ludhiana vs Hitesh Gandhi in ITA NO. 18 of 2017 dated 16.02.2017 (P&H) in Para 5 & 6 of its order had rendered the similar decisions in favour of the assessee on identical facts and circumstances. 5.22. We find that the Hon'ble Jharkhand High Court in the case of CIT vs Arun Kumar Agarwal HUF reported in 210 taxman 405 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r few years when the share will start rising steeply. In present case even there was no reason for such suspicion when the shares were purchased years before the unusual fluctuation in the share price. Here in this case, we have given example of one of the Tax Appeal wherein the shares were purchased in the year 2004 and were sold in the year 2006, which is said to be one of the case wherein the gap in the purchase and sale of the shares was narrowest. In other cases as we have noticed from the various orders of the C.I.T(Appeals) that, the shares of some of the companies were purchased by the assessees even five years ago from the time of sale and those purchasers were already disclosed in the Balance Sheet of the assessee, then from any angle, it is proved that the assessees had held the shares much prior to 12 months of the sale of the shares. 12. Hence, these Appeals are dismissed. 5.23. We find that the ld. DR before us vehemently relied on the recent decision of Hon'ble Calcutta High Court in the case of PCIT vs Swati Bajaj reported in 139 taxmann.com 352 (Cal) which is an elaborate decision rendered after considering various decisions of various High Courts on the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee before us. Hence reliance placed on this decision by the ld. DR does not advance the case of the revenue. 5.25. The ld. DR relied on the decision of Hon'ble Delhi High Court in the case of CIT vs Jansampark Advertising & Marketing (P) Ltd reported in 375 ITR 373 (Del) in support of his contentions. On perusal of the said judgement, it only postulates that the appellate authority should conduct enquiry on its own or by calling a remand report from the ld. AO and cannot merely brush aside his co-terminus powers by stating that the ld. AO had not carried out any enquiry. This decision was rendered in the context of lack of proper enquiries by the ld. AO, which is not the facts of the case in the instant appeal before us. It is settled law that the ld. CIT(A) has got enhancement powers and he could do what ld. AO had not done with regard to the issue in dispute before him. We hold that the ld. DR before this tribunal would be entitled only to defend the case of the ld. AO and cannot improve the case of the revenue. No power is vested in the statute for the same. The tribunal, being a second appellate authority, could only adjudicate the disputed order before it i.e. the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the instant case and respectfully following the judicial precedents relied upon hereinabove, we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee by deleting the impugned additions on account of denial of exemption for long term capital gains u/s 10(38) of the Act and estimated commission @ 6% against the same. Accordingly, the grounds raised by the revenue are dismissed. 6. We find that the ld. AR before us, without preferring any cross objections or cross appeal, raised a preliminary argument that the appeal of the revenue is to be dismissed in limine, as the ld. PCIT had not objected to the order of the ld. CIT(A) by bringing in any illegality in the said order, which is the mandate of provisions of section 253(2) of the Act. According to ld. AR, the ld. PCIT while giving the authorization to the ld. AO to prefer appeal had merely expressed his grievance on the order of the ld. CIT(A) and had not given his objections to the order of ld. CIT(A). Accordingly, he argued that the appeal of the revenue is to be dismissed inlimine. This argument of the ld. AR , in our considered opinion, is very far fetched, and cannot be accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer erred in re-opening the assessment u's 147 of the Act by solely placing reliance on the information received from investigation wing and without conducting independent examination to form a belief that income has escaped assessment 2) In the facts and circumstances of the case and in law, the learned Assessing Officer erred in re-opening the assessment u/s 147 of the Act by relying on the statements of various unrelated parties recorded by Investigation Wing without placing on record any corroborative evidence That the order of CIT(A) is correct in law and in facts of the case and must be upheld. That the respondent craves leave to delete, modify or amend any of the above cross objections or add a new cross objection at any time before or during the course of the hearing 11.1. We have heard the rival submissions and perused the materials available on record. We find that the original return of income for the A.Y. 2014-15 was electronically filed by the assessee on 29.07.2014 declaring total income of Rs 46,076/-. Later the assessment was sought to be reopened u/s 148 of the Act on 29.09.2016 after duly recording the reasons for reopening. The reasons recorded f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the Covid-19 pandemic with regard to the limitation for preferring appeals , we are inclined to condone the delay in filing of appeal before us by the revenue and admit the appeal for adjudication. 14. The facts of this assessee and issues involved in the appeal of the revenue for A.Y. 2015-16 are identical with facts and issues prevailing in the case of Priyanka Ankit Miglani in A.Y. 2015-16. Hence the decision rendered by us in A.Y. 2015-16 in ITA No. 2531/Mum/2021 for Priyanka Ankit Miglani shall apply mutatis mutandis to this assessee also for A.Y. 2015-16 also, except with variance in figures and dates. Accordingly, the grounds raised by the revenue are dismissed for the A.Y.2015-16. 15. In the result, the appeal of the revenue in the case of Archana Anuj Miglani in ITA No. 2533/Mum/2021 for A.Y. 201516 is dismissed. Archana Anuj Miglani - ITA No. 2532/Mum/2021 - Asst Year 2014-15 - Revenue Appeal 16. At the outset, there is a delay of 291 days in filing of appeal by the revenue before us. We find that the order of ld. CIT(A) was passed during the covid pandemic period and appeal was preferred before us by the revenue on 31.12.2021. Pursuant to relaxation grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are inclined to condone the delay in filing of appeal before us by the revenue and admit the appeal for adjudication. 22. The facts of this assessee and issues involved in the appeal of the revenue for A.Y. 2015-16 are identical with facts and issues prevailing in A.Y. 2015-16 in the case of Priyanka Ankit Miglani in ITA No. 2531/Mum/2021. Hence the decision rendered by us in A.Y. 2015-16 in ITA No. 2531/Mum/2021 shall apply mutatis mutandis to this assessee also for A.Y. 2015-16 also, except with variance in figures and dates. Accordingly, the grounds raised by the revenue are dismissed for the A.Y.2015-16. 23. In the result, the appeal of the revenue in the case of Anuj Rajinder Miglani for A.Y. 2015-16 in ITA No. 2528/Mum/2021 is dismissed. Ankit Rajinderkumar Miglani - ITA No. 2529/Mum/2021 - Asst Year 2015-16 - Revenue Appeal 24. At the outset, there is a delay of 291 days in filing of appeal by the revenue before us. We find that the order of ld. CIT(A) was passed during the covid pandemic period and appeal was preferred before us by the revenue on 31.12.2021. Pursuant to relaxation granted by the Hon'ble Supreme Court considering the Covid-19 pandemic with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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