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TMI Blog2024 (6) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... ronic mode. The purchase payments were made in cash and not through the normal banking channel, therefore the same were not verifiable the authentic supporting details such as bank account /documents. The assessee is not a regular investor in shares. The assessee has failed to furnish the proof of source for the purchase transactions. The entire transactions are against human probability. See UDIT KALRA C/O DEV RAJ SHARMA [ 2019 (4) TMI 543 - ITAT DELHI] . CIT(A) has rightly confirmed the addition in dispute, which does not need any interference on our part. - Decided against assessee. - Dr. B.R.R. Kumar, Accountant Member And Sh. Sudhir Kumar, Judicial Member For the Appellant : Sh. Rakesh Sehgal, CA For the Respondent : Sh. Anshul, Sr. DR ORDER PER SUDHIR KUMAR, JM: This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-28, New Delhi [hereinafter referred to as CIT(A)] vide order dated 01.02.2019 pertaining to A.Y. 2014-15 and arises out of the assessment order dated 26.12.2016 under section 143(3) of the Act [hereinafter referred as the Act ]. 2. Aggrieved by the order of the lower authorities, the assessee is in appeal before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd realities are of no relevance at all, as per law, in deciding the issue of exemption of Capital Gain claimed by the appellant under section 10(38) of the Income Tax Act, 1961: (a) That the appellant failed to explain satisfactorily and divulge anything worthwhile about the activities of the company; and (b) That the company in which the appellant invested had no credibility and no prudent investor would make such an investment; and (c) The financials of the penny stock M/s Kappac Pharma Ltd. and movement of price is abrupt, unrealistic and not based upon any realistic parameter; and (d) That the sale of shares, given the high rates for such penny stocks, with no real buyers, are bogus (given the fact that the transaction of sale has taken place at the Recognized Stock Exchange at the Quoted price through a reputed registered broker viz. SBI Capital Securities) The above findings are despite the fact that (i) the appellant discharged his burden by filing all the documents in respect of purchase and sale of shares specifically the documents relating to the facts that the shares were sold through SBI Caps on prices prevailing on the stock exchange and STT deducted on such sale and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO and confirmed by Ld. Commissioner of Income Tax (Appeals) is bad in law being in violation of the principles of natural justice since the addition is based on third party documents [such as the said departmental investigation report, SEBI report etc. relied upon by the department and the same were not made available to the appellant for rebuttal in spite of the same being asked for. 6. The addition of Rs. 46,01,445/-, the sale proceeds of shares on account of unexplained cash deposit u/s 68 and confirmation of the same by the Commissioner of Income Tax (Appeals)-28, New Delhi, without contradicting any of the document placed by the appellant on record in respect of sale of shares of Kappac Pharma Ltd. or pointing out any defect therein and appellant being fulfilling all the conditions for claim of exemption u/s 10(38) of the Income Tax Act, 1961, is contrary to facts and law and therefore, the addition is liable to be deleted. 7. The appellant craves leave to add or amend any of the grounds of appeal. Whether there is any delay in filing of appeal (if yes, please attach application seeking condonation of delay). 2. The assessee has raised the following additional grounds of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and documents were also called for. 4. During the assessment proceedings, it was found that the assessee had claimed exempt income of Rs. 45,10,445/- on account of Long Term Capital Gain from transactions on which STT is paid. As per information available on record, the assessee sold 7000 shares of Penny Stock Kappac Pharma during the relevant F.Y. 2013-14. The sale value of the entire shares was Rs 4617600/-. The assessee had purchased these shares from Vishal Realty Management Limited on 26-09-2012 for Rs 91000/-. During the year under consideration, the assessee has declared income earned from long Term Capital Gain of Rs. 4601455/- on the sale of shares which has been claimed exempt u/s 10(38) of the Act. The AO held that the transaction was bogus or sham and nothing but a racket of accommodation entries, by way of long term capital gain exempt from tax, the amount of capital gain of Rs. 4610455/- claimed as LTCG exempt from tax was held to be not genuine and addition as made of the total cash credit of Rs. 4601455/- to the returned income of the assessee as per the provision of section 68 of the Act and provision of section 115BBE of the Act are also applied and this amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. 7. Ld DR has submitted that purchase transaction has been done off market in physical form by paying cash and assessee has purchased the shares M/s Kappac Pharma Ltd in physical form and therefore, the same have been converted into electronic mode and SEBI guidelines have been not adopted. It has further submitted that the purchase payments were made in cash and not through the normal banking channel, therefore, the same were non verifiable from the authentic supporting details, such as bank accounts/documents. Assessee has failed to furnish the proof of source for the purchase transactions. Thus the entire transactions are against human probability. Therefore, he further submitted that the order of CIT(A) be upheld. He relied the following authorities. 8. Ms Manvi Khandelwal ns ITO WARD -46(4) New Delhi the ITAT Delhi Bench held that; -Para 24- The findings of the Tribunal are favoured by the Hon ble Jurisdictional and are confirmed in ITA no 220/2019 on the file of the Hon ble Delhi High Court by order dated 8/3/2019 ,wherein the Hon ble High Court held that the company (M/S Kappac Pharma Ltd .which was even directed to be delisted from the stock exchange) had meagre resour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods. However, the case laws cited by the Ld. Counsel for the assessee are on distinguished facts, hence, not applicable in the instant case. The assessee has not raised any legal ground and argued only on merit for which assessee has failed to substantiate his claim before the lower revenue authorities as well as before this Bench. In view of above discussions, I am of the considered opinion that Ld. CIT(A) has rightly confirmed the addition in dispute, which does not need any interference on my part, therefore, I uphold the action of the Ld.CIT(A) on the issue in dispute and reject the grounds by the Assessee. 10. Udit Kalra vs ITO ward 50(1) Delhi ITA no 220/Del /2019/ Delhi, Hon'ble High Court held that ; This court has considered the submissions of the parties. Aside from the fact that the findings in this case are entirely concurrent A.O., CIT()A and the ITAT have all consistently rendered adverse findings what is intriguing is that the company (M/s. Kappac Pharma Ltd.) had meager resources and in fact reported consistent lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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