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TMI Blog2024 (8) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of exempted long term capital gain of Rs. 27,38,020 under section 68 of the Act merely based on information from the DDIT (Investigation) Kolkata without having any corroborative evidence. 3. The Id. CIT(A) erred confirming addition of long term capital gain though the Id. ITO had not given the various reports and statements relied for making addition of Rs. 27,38,020 to total income to the assessee for rebuttal or cross examination. 4. The Id. CIT(A) erred in not taking cognizance of confirmation of Bombay Stock Exchange confirming trade details of the assessee, contract notes of the broker, global report, demat account and other evidences submitted/uploaded confirming the genuineness of the share transactions of the assessee. 5. The Id. CIT(A) erred in confirming addition of Rs. 4,17,980 under section 69A being cost of purchase of shares recorded in the books of account on the assumption that the investment in shares is unexplained and unrecorded in the books of account without any corroborative evidence. 6. Without prejudice to above, the learned Commissioner of Income-Tax (A) (Id. CIT(A)) erred in confirming reopening of the assessment under section 147 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO came to the conclusion that the shares traded value of Rs. 31,56,000 in the scrip of M/s Regency Trust Ltd was a pre-arranged method employed by the assessee in connivance with operators to evade taxes. The AO further alleged that 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 accommodations to the assessee. Accordingly, the AO added the investment amount of Rs. 4,17,980 under section 69A of the Act, and added the long term capital gains of Rs. 27,28,020, claimed as exempt, under section 68 of the Act. 5. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee by observing as under:- 5.2. "During the course of appellate proceedings it is submitted by the appellant that he has declared exempted long term capital gain of Rs. 27,38,020/- on transfer of 32000 shares of Regency Trust Ltd. under sec. 10(38) of the Income tax Act. The assessee submitted the evidences to prove the genuineness of the transactions of purchase, sale, demat details, payment and receipt of shares of regency Trust Ltd. 5.2.1 The evidences confirm the genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the beneficiaries are bought by these bogus entities from the money which is the unaccounted money of the beneficiaries. 5.3.2 To understand the nature of transaction, it is imperative to look 'through' the transactions. The documentation arranged by the appellant cannot be substitute for the truth which is emerging clearly from the circumstances surrounding the transaction. Hence, the principle of 'substance over form' is applicable in the instant case. There are various cases and relevant case laws where the Hon'ble Courts have lifted the corporate veil and look through the transactions thus, highlighting the 'substance over form'. The ratio of the decision in the case CIT vs Nova Promoters and Finlease Pvt. Ltd. 18 taxmann.com (Delhi) is of relevance here. The Hon'ble Delhi High Court made important observation with respect to accommodation entry providers. It is clear from the assessment order that the appellant had adopted a suspect modus operandi which has been described in detail in the assessment order. 5.3.3 There are a plethora of case laws which are relevant in the matter of establishing the settled proposition of law that the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are income of the appellant from other sources is not based on evidence." b. CIT, WB-II Vs Durga Prasad More (1971) 82 ITR 540: "As laid down by this court the apparent must be considered the real until it is shown that there are reason to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities.... Now we shall proceed to examine the validity of an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies with another company, viz., Khoobsurat Limited did not qualify an investment and rather it was an adventure in the nature of trade. It was held by all the authorities that the motive of the investment made by the assessee was not to derive income but to earn profit. Both the brokers, i.e., the broker through whom the assessee purchased the shares and the broker through whom the shares were sold, were located at Kolkata and the assessee did not have an inkling as to what was going on in the whole transaction except paying a sum of Rs. 65,000/- in cash for the purchase of shares of the two penny stock companies. The authorities found that though the shares were purchased by the assessee at Rs. 5.50 Ps. Per share and Rs. 4/- per share from the two companies in the year 2003, the assessee was able to sell the shares just within a year's time at Rs. 486.55 Ps and Rs. 485.65 Ps per share. The broker through whom the shares were sold by the assessee did not respond to the assessing officer's letter seeking the names, addresses and the bank accounts of the persons that had purchased the shares sold by the assessee. The authorities have recorded a clear finding of fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re us. 6. During the hearing, the learned Authorised Representative ("learned AR") submitted that the assessee purchased and sold the shares of M/s Regency Trust Ltd on the Bombay Stock Exchange ("BSE"). The learned AR submitted that unlike various cases of claim of bogus long term capital gains, in the present case there is no preferential allotment, issue of bonus shares, or split up of shares, and the entire transaction of purchase and sale of shares was on the floor of the stock exchange. The learned AR further submitted that the assessee furnished various evidences to prove the genuineness of the transaction. However, there is no adverse remark against them by the lower authorities. It was further submitted that no cash was paid by the assessee for the purchase of shares of M/s Regency Trust Ltd. The learned AR also submitted that the AO neither examined the broker of the assessee nor issue any summons to the stock exchange, despite specific request of the assessee. 7. On the other hand, the learned Departmental Representative vehemently relied upon the orders passed by the lower authorities. 8. We have considered the submissions of both sides and perused the material avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the DEMAT transaction statement on pages 20-22 of the paper book. From the brokers confirmation of assessee's ledger account for the financial year 2009-10, forming part of the paper book on pages 40-41, we find that the amount credited into its account were used for purchase of shares of M/s Regency Trust Ltd. We also find that the aforesaid amount credited in its account arose from the sale of shares of Sesa Goa and Balarpur Chinni Mill held by the assessee. From the copy of ITR for the assessment year 2010-11, we find that the assessee also declared the aforesaid purchase transaction of shares of M/s Regency Trust Ltd while filing its return of income. From the copy of DEMAT holding statement of the assessee for the year ending 31/03/2010 and 31/03/2011, forming part of the paper book on pages 35 and 36, we find that the assessee's shareholding in M/s Regency Trust Ltd was retained at 32,000. We further find that on 05/04/2011, the assessee sold 20,000 shares and on 06/04/2011, the assessee sold remaining 12,000 shares of M/s Regency Trust Ltd., for a total consideration of Rs. 31,56,000, after payment of the STT. The aforesaid sales transaction was duly reflected in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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