9911796707
TMI Blog2024 (6) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... not the case of the Revenue Department that M/s. NCL Research Financial Services Ltd. (scrip) has already been suspended by the SEBI and/or not in existence as on today. It is also not in denial that the assessee has duly filed the relevant documents such as purchase note/bills, copy of bank statements, highlighting the payment made towards acquisition, computation of LTCG and contract notes for sale of shares of M/s. NCL Research Financial Services Ltd. and copy of Form No.10DB showing details of Securities Transaction Tax (STT) collected by the broker from the assessee, ledger account of the assessee in the books of broker, Demat account statement for the period 01.04.2008 to 31.03.2011 etc. and it is also a fact that the AO has not doubted any of the documents filed by the assessee to substantiate his claim. Therefore it goes to show that the assessee has discharged its prima-facie onus casted upon him. As decided in Indravadan Jain HUF [ 2023 (7) TMI 1091 - BOMBAY HIGH COURT ] has also dealt with the identical issue as involved in the instant case and ultimately affirmed the deletion of the identical addition on account of disallowance of deduction claimed under section 10(38) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 10(38) of the Act. 2.2 Therefore, in order to verify, the AO issued the notice to M/s. VRP Financial Services Ltd. from whom the assessee had purchased the above shares and called for various details, however, M/s. VRP Financial Services Ltd. has not filed any information. Thereafter, the AO also issued notices under section 133(6) of the Act to the purchasers of the shares calling for details of the shares, sale/purchase with the assessee during the year under consideration, D-Mat account details, period of holding of shares, source of funds and return of income. The AO only received the reply from two persons/purchasers who refused to identify the assessee as well as transactions. The notices sent to the assessee remained un-replied with. Therefore, the AO, by considering the investigation carried out by the Investigation Wing at Kolkata and financials of the scrip i.e. M/s. NCL Research Financial Services Ltd. and reply/documents filed by the assessee and various judgments referred to by the assessee and the AO himself, ultimately disallowed the LTCG of Rs. 26,87,421/- which was claimed exempt under section 10(38) of the Act by concluding as under: 16. Findings and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of shares revealed that same were devoid of any commercial nature and fell in realm of not being bona fide and, hence, impugned long term capital gain is not allowable. iv. The order of SEBI reffered above has also given the similar finding that the prices of the shares were determined artificial by manipulations and cannot be a product of market factors and commercial principals. e. Failure of Assessee to discharge his onus: The assessee has not been able to prove the unusal rise and fall of share prices to be natural and based on the market forces. It is evident that such share transactions were closed circuit transactions and clearly structured one. f. Financial analysis of the penny stock companies: The networth of the penny stock company is negligible. Even though the networth of the company and the business activity of the company is negligible the share prices have been artificially rigged to unusual high. g. Cash trail in the accounts of the entry providers: The investigations in the fund flow analysed in the accounts of the entry providers have established that the cash has been routed from various accounts to provide accomodations to assessee. h. Arranged transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are on 02.04.2008 through off market from broker M/s. VRP Financial Services Ltd., Navi Mumbai as appears from sale bill/purchase bill dated 02.04.2008. The assessee, subsequently in October 2008 as claimed by the Ld. Counsel Ms. Ritu Kamal Kishor, dematerialized the shares and thereafter, after the gap of more than 2.5 years sold the said shares in part on 19.10.2010 (2500 shares on a consideration of Rs. 4,50,799/-) and 22.10.2010 (12500 shares on a consideration of Rs. 22,70,372/-) on a total consideration of Rs. 27,21,171/- and consequently earned total LTCG of Rs. 26,87,421/- and claimed in its return of income filed originally. Admittedly the case of the Assessee was reopened after expiry of four years and there is nothing on record to suggest that the assessee has failed to disclose material facts fully and truly qua said claim of deduction under section 10(38) of the Act and therefore on this count itself the reopening under section 147 of the Act is liable to be quashed. 4.1 However, coming to the merits of the case, we observe that admittedly the assessee though purchased the shares as involved through off market from share broker M/s. VRP Financial Services Ltd., Navi Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was held to be accommodation entries. A broker Basant Periwal Co. (the said broker) through whom these transactions have been effected had appeared and it was evident that the broker had indulged in price manipulation through synchronized and cross deal in scrip of RFL. SEBI had also passed an order regarding irregularities and synchronized trades carried out in the scrip of RFL by the said broker. In view thereof, respondent's case was reopened under section 148 of the Act. 4. The A.O. did not accept respondent's claim of long term capital gain and added the same in respondent's income under section 68 of the Act. While allowing the appeal filed by respondent, the CIT[A] deleted the addition made under section 68 of the Act. The CIT[A] has observed that the A.O. himself has stated that SEBI had conducted independent enquiry in the case of the said broker and in the scrip of RFL through whom respondent had made the said transaction and it was conclusively proved that it was the said broker who had inflated the price of the said scrip in RFL. The CIT[A] also did not find anything wrong in respondent doing only one transaction with the said broker in the scrip of RFL. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
