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TMI Blog2024 (7) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... plained cash under section 68 of the Act. The prime evidence against the assessee is presence of the exit provider namely Mr. Rohidas Sarjine, has admitted and filed a submission that there was no genuine activity through his account, that his account was managed and operated completely by Mr. Naresh Jain. This fact on the record remained unchallenged by the assessee and there is not even a whisper about it in addition to the fact that the share price of the share was moved from 1.82 per share in April 2011 and rigged to the peak of Rs. 1,425/- per share in August 2014, which again came down to Rs. 0.88 per share in March 2016. Grounds taken by the assessee are dismissed. - Shri Anikesh Banerjee, Judicial Member And Shri Gagan Goyal, Accountant Member For the Appellant : Shri K. Gopal Shri Om Kandalkar , Ld. AR For the Respondent : Shri Ajay Chandra Shri Manoj Kumar, Ld. DR ORDER PER GAGAN GOYAL, A.M: These cross appeals by Revenue and Assessee are directed against the order of Ld. CIT (A) 48, Mumbai dated 14.05.2021 and 11.04.2023 respectively passed u/s. 250 of the Income Tax Act, 1961 (in short the Act ) for A.Y. 2014-15 and 2015-16. The revenue has raised the following ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance made under section 68 of the Act is unjustified and therefore deserves to be deleted. 5. The Ld. CIT (A) is not justified in upholding the disallowance made under section 68 of the Act amounting to Rs. 5, 03, 98,853/- on account of alleged bogus long term Capital Gains without providing any opportunity to the Appellant to cross examine the parties whose statements were relied upon during the course of search action conducted under section 132 of the Act on the premises of M/s. Risa International Limited. Thus, the disallowance made is in severe breach of the principles of natural justice and therefore, the disallowance may be deleted. 6. The Ld. CIT(A) is not justified in upholding the disallowance made under section 68 of the Act without appreciating the facts that the Appellant has discharged the primary onus cast upon him by the provisions of section 68 of the Act by providing all the details regarding the sale and purchases of shares so as to explain the nature, source and genuineness of the said transaction. In view of the same, the disallowance made under section 68 of the Act is not justified and therefore, the same may be deleted. 7. the Appellant seeks le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Subsequently, a notice u/s. 153C of the Act was issued on 04.03.2021 and assessee again filed a return in response to the same on 12th February 2021 declaring total income at Rs. 38,34,930/-. We have observed in the order passed by the AO u/s. 143(3) r.w.s. 153C of the Act that, same figure of addition i.e. Rs. 5, 03, 98,853/- was made and in addition to this an amount of commission amounting to Rs. 16,27,013/- was also made on account of expenses on alleged bogus LTCG. The assessee being aggrieved with this order of AO preferred an appeal before the Ld. CIT (A), who in turn allowed the appeal of the assessee. The relevant extracts of the findings of the Ld. CIT (A) are reproduced herein below as under:- 6.14 Conclusion- The aforesaid detailed discussion with respect to various judicial decisions clearly laid down the following principles (1) The assessments which have been concluded u/s. 143(3) of the Act and not pending at the time of search proceedings, do not abate. (ii) For this purpose, intimation u/s. 143(1) of the Act would constitute an assessment, relying on the decision of Hon'ble Bombay High Court in CIT V/s. Gurinder Singh Bawa (79 taxmann.com 398) (iii) the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation u/s. 132 of I.T. Act was conducted by DIT Unit 3(2), Mumbai, Mangal Group on 01.10.2013. The Mangal Group is owned by Mr. Meghraj Jain, Mr Ajit Jain family members of them. They hold major shareholding and directorship in companies of Mangal group. The Ld. AO has made additions related to transaction with Naresh Manakchand Jain group in way of unsecured loan/ share application money/ bogus purchase to whichever parties covered in Mangal Group. ii) Then, Your Honourable Predecessor CIT (A) has deleted the addition made by the lad. AO in Assessment Year 2013-14 in case of Mr. Meghraj Jain who is part of Mangal Group. Further, the revenue has filed appeal against this order. Then, Hon'ble ITA T Mumbai Bench D, in its order Ref ITA No-4703/M/2017 dated 29th Aug. 2019 have dismissed the revenue's appeal. It is seen that issue facts of the deleted addition are identical in your appellant matter. iii) Both of the respected authorities have noticed that the appellant furnished the copies of the account confirmation of the lender companies, acknowledgement of income tax return of lender companies, and their audited financial statement, bank account of lender companies and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case that the assessee has filed the relevant pages of inventory listing the documents during the course of search u/s. 132 for establishing the fact that the documents mentioned above have been seized and are in the possession of the assessing officer. The above documents are enough to establish the credibility and the genuineness of the transactions. So far as present status of the investing companies is concerned, the assessee has filled data of Company Master Data from the website of Ministry of Corporate Affairs (MCA). Such data are in respect of investing company Alka Diamond Industries Ltd. The state of the Investing Company as on 25.10.2017 is active. Therefore, the company is still in existence and active. The master data also discloses that Balance sheet up to 31.03.2016 has been filed in respect of each of the companies mentioned above. Therefore, there cannot be any doubt about the identity of the company. The amounts have been received from investing company have Come through banking channel which are duly reflected in the Balance sheet of the assessee company. Therefore, there cannot be any doubt about the genuineness of the transaction. So far as credit worthin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the relevant pages of inventory listing the documents during the course of search u/s. 132 for establishing the fact that the documents mentioned above have been seized and are in the possession of the assessing officer. The above documents are enough to establish the credibility and the genuineness of the transactions. So far as present status of the investing companies is concerned, the assessee has filed data of Company Master Data from the website of Ministry of Corporate Affairs (MCA). Such data are in respect of investing company Alka Diamond Industries Ltd. The state of the investing company as on 25.10.2017 is active. Therefore, the company is still in existence and active. The master data also discloses that Balance sheet up to 31.03.2016 has been filed in respect of each of the companies mentioned above. Therefore, there cannot be any doubt about the identity of the company. The amounts have been received from investing company have Come through banking channel which are duly reflected in the Balance sheet of the assessee company. Therefore, there cannot be any doubt about the genuineness of the transaction. So far as credit worthiness is concerned the investing compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Risa International Ltd for a total consideration of Rs. 5,12,46,602/- and long term capital gain on sale of such shares amounting to Rs 5,03,98,853/- was treated as exempt income u/s. 10(38) of the Act. The Appellant was in receipt of notice u/s. 148 of the Act dated 07.03.2019 in response to which he had e-filed the return of income on 03.04.2019. The Ld. AO had provided the reasons for reopening of the assessment to the Appellant on 17.06.2019 (attached herewith as Annexure 3 (Refer Page No. 31- 35 of Paper Book)), against which it has filed its objections vide letter dated 09.07.2019 on 11.07.2019 (attached herewith as Annexure 4 (Refer Page No. 36-43 of Paper Book)). The Ld. AO has vide his letter dated 18.10.2019 set aside the objections raised by the Appellant (attached herewith as Annexure 5 (Refer Page No. 44-45 of Paper Book)) and proceeded to complete the assessment on the basis of the information received from the investigation wing and the documents submitted by the Appellant. The reasons for Reopening of assessment are, on the basis of the information received in the office of DDIT (Inv) Unit 6(2), Mumbai from the office of DOIT (Inv), Pune, which was forwarded to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out by the Appellant during the year under consideration. M/s. Risa International Ltd had vide letter dated 29.11.2019 denied having undertaken any transactions with the Appellant during the year under review. 12. The report submitted by the Investigation department could not be thrown out on the grounds urged on behalf of the assessee. The assessee have not been shown to be prejudiced on account of non-furnishing of the investigation report or non-production of the persons for cross examination as the assessee has not specifically indicated as to how he was prejudiced, coupled with the fact as admitted by the revenue; the statements do not indict the assessee. That apart, the investigation has commenced targeting the individuals who dealt with the penny stocks and after examining the modus seeing the cash trail the report has been submitted recommending the same to be placed before the DGIT (Investigation) of all the States of the country. It is thereafter the concerned Assessing Officers have been informed to consider as to the bonafideness and genuineness of the claims of LTCG/LTCL of the respective assessee qua the findings which emanated during the investigation conducted on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and circumstances surrounding the allegations/charges made and levelled and when direct evidence is not available, it is the duty of the AO/ CIT (A) and ITAT to take note of the immediate and proximate facts and circumstances surrounding the events on which the charges/allegations are founded so as to reach a reasonable conclusion and the test would be what inferential process that a reasonable/prudent man would apply to arrive at a conclusion. Further proximity and time and prior meeting of minds is also a very important factor especially when the income tax department has been able to point out that there has been a unnatural rise in the price of the scrip of very little known companies. Furthermore, in all the cases, there were minimum two brokers who have been involved in the transaction. It would be very difficult to gather direct proof of the meeting of minds of those brokers or sub-brokers or middlemen or entry operators and therefore, the test to be applied is the test of preponderance of probabilities to ascertain as to whether there has been violation of the provisions of the Income-tax Act. In such a circumstance, the conclusion has to be gathered from various circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot dispute the fact that the shares of the companies which they have dealt with were insignificant in value prior to their trading. If such is the situation, it is the assessee who has to establish that the price rise was genuine and consequently they are entitled to claim LTCG on their transaction. Until and unless the initial burden cast upon the assessee is discharged, the onus does not shift to the revenue to prove otherwise. It is incorrect to argue that the assessee have been called upon to prove the negative in fact, it is the assessee s duty to establish that the rise of the price of shares within a short period of time was a genuine move that those penny stocks companies had credit worthiness and coupled with genuineness and identity. The assessee cannot be heard to say that their claim has to be examined only based upon the documents produced by them namely bank details, the purchase/sell documents, the details of the D-Mat Account etc. The assessee have lost sight of an important fact that when a claim is made for LTCG or STCL, the onus is on the assessee to prove that credit worthiness of the companies whose shares the assessee has dealt with, the genuineness of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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