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TMI Blog2022 (6) TMI 1484X X X X Extracts X X X X X X X X Extracts X X X X ..... w the appeal preferred by the assessee by deleting the addition made by the authorities below. Hence, assessee s appeal is allowed. - SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND Ms. MADHUMITA ROY, JUDICIAL MEMBER For the Assessee : Shri Ketan Shah, A.R. For the Revenue : Shri V. K. Singh, Sr. DR ORDER PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the assessee is directed against the order dated 16.01.2019 passed by the Commissioner of Income Tax (Appeals)-4, Ahmedabad arising out of the order dated 26.12.2017 passed by the ITO, Ward-4(2)(5), Ahmedabad under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for A.Y. 2015-16. 2. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 3. The sole issue raised by the assessee herein is against the addition of Rs. 73,48,101/- under Section 68 of the Act as bogus long term capital gain. 4. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that the issue is squarely covered in favour of the assessee by and under the judgment dated 29.10.2021 passed by the Coordina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Authorized Representative of the assessee submitted the written reply on 20.12.2017 vide letter dated 18.12.2017 and 20.12.2017. The same is reproduced hereunder for easy reference: Submission vide letter dated 18.12.2017 Your notices dated 07.12.2017 for Asst. Year 2015-16 in the case of Vijay K. Patel-HUFPAN No.: AADHV5398H- In reference to aforesaid matter, I have been instructed to submit as under: 1. In earlier submissions, we have submitted the following documents in support of the claim made by us. i. Income Tax Return for Asst. Year 2015-16 at page Nos. 1 to 4. ii. Copy of purchase invoice from Vijay Bhagwandas Co. dated 01.04.2013 having SEBI registration number and clearing No.77, which included payment of STT as per Page 5. iii. That, the share transfer certificate from Vijay Bnagwandas Shah is at Page No.6. iv. That, pool holding certificate dated 05.04.2014 is at Page No.7, and therefore, the shares were in possession of Vijay Bhagwandas Co. and has not been provided to us since it was mutually agreed to for pool holding account, and therefore, there is no question of any physical share certificate, which is at Page No.7. v. Detailed assessee s account in the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is reproduced hereinbelow: 6. The learned AR before us filed a two paper books running from pages 1 to 233 1 to 277 and contended that the assessee was not involved in reading of the price of the scripts. Likewise, there was no opportunity of cross-examination of the statements/details obtained by the investigation wing of Calcutta was provided. Thus, in the absence of such verification, there cannot be any addition to the total income of the assessee by treating the long-term capital gain as unexplained cash credit under section 68 of the Act. 7. On the contrary learned DR vehemently supported the order of the authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case the long term capital gain declared by the assessee on sale of shares of two companies namely M/s Life Line Drugs Pharma Ltd (LLDP) and M/s Mahavir Advance Remedies Ltd (MARL) was treated as bogus and manipulated, leading to the addition by the AO under section 68 of the Act. The view of the AO was based on certain factors which have been elaborated in the preceding paragraph. Subsequently, the learned CIT (A) upheld the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erials. The allegation as discussed above implies that cash was paid by the assessee and in return the assessee received LTCG, which is an income exempted from tax, by way of cheque through banking channels. This allegation that cash had changed hands, has to be proved with evidence, by the Revenue. 8.4 There is no dispute raised by the Revenue with respect to the following facts: (i) All the evidence of sale and purchase of shares, including contract notes were submitted. No fault with these documents has been found. (ii) The payments are received through account payee cheques on the sale of scripts. (iii) Transaction of sale is done through stock exchange after the payment of STT. The transactions have been confirmed by brokers. (iv) Inflow of shares is reflected in Demat account. Shares are transferred through Demat account. The assessee does not know the buyer. (v) There is no evidence that assessee has paid cash to purchase LTCG. (vi) The assessee is not a party in the alleged rigging up the prices of the shares. He has no nexus with the company, its directors or operators. He is not concerned with the activity of broker and has no control over the same. (vii) It may have got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income-tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned on sale of share of both companies is concern. 8.7 We also draw support and guidance from the judgment of Hon ble Punjab and Haryana High Court in the case of PCIT Vs. Prem pal Gandhi reported in 94 Taxmann.com 156 wherein it was held as under: the documents on which the Assessing Officer relied upon in the appeal were not put to the assessee during the assessment proceedings. The CIT (Appeals) nevertheless considered them in detail and found that there was no co-relation between the amounts sought to be added and the entries in those documents. This was on an appreciation of facts. There is nothing to indicate that the same was perverse or irrational. Accordingly, no question of law arises. 8.8 We also note that the co-ordinate bench Mumbai Tribunal in case of DCIT vs. M/s Jiana Investments bearing ITA No. 4286 to 4474/Mumbai/2019 where the assessee has loss on sale of Share of M/s MARL which was disallowed by the AO by holding the such script was penny stock and assessee employed operandi of penny stock and incurred losses to provide accommodation LTCG to beneficiaries. The AO in holding so relied upon the information received from the directorate of investigation wing. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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