9911796707
TMI Blog2024 (8) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... in the foregoing paragraph. There is also no reference to the any portion of sworn statements, wherein any adverse observation against the assessee has been noted by the Investigation Wing. The price fluctuation of shares of the entities in which the assessee has transacted also does not support the case of the Revenue, as no material has been brought on record to show that the assessee was involved in such price manipulation even after purchasing and selling the shares on the stock exchange through a SEBI registered stock-broker. Therefore, in the present case, it is sufficiently evident that the AO without finding any fault with the evidence submitted by the assessee proceeded to treat the transaction as non-genuine and the long-term capital gains earned by the assessee as bogus. AO did not issue any summons to the BSE or examine the broker of the assessee, despite specific request by the assessee vide its letters. Therefore, we find no merits in the impugned order upholding the addition made u/s 68 and disallowing the exemption of long-term capital gains claimed by the assessee. Similarly, we also do not find any merit in the disallowance of the investment made by the AO under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw any of the above grounds of appeal before or at the time of hearing of the appeal, if necessary. 3. The sole grievance raised by the assessee, in the present appeal, pertains to addition made under sections 68 and 69A of the Act by treating the transaction in shares by the assessee as bogus. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a Hindu Undivided Family ( HUF ), and for the year under consideration filed its return of income on 30/07/2012 declaring a total income of Rs. 3,74,650. The return filed by the assessee was processed under section 143(1) of the Act. Subsequently, on the basis of the information received from the DDIT(Investigation), Unit 3(2), Kolkata, that an organised racket of generating bogus entries of long term capital gains in penny stock has been unearthed as a result of investigation carried out, and the assessee has sold shares of M/s Regency Trust Ltd for a consideration of Rs. 31,56,000 during the year under consideration, proceedings under section 147 of the Act were initiated, and notice under section 148 of the Act was issued on 31/03/2018. In response to the aforesaid notice, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant along with the documentary evidences. It is confirmed by the appellant that it had traded in the script of M/s. Regency Trust Ltd. in the A.Y. 2012-13. This traded value was found suspicious and detailed investigation of this issue was undertaken by the DDIT (Inv), Kolkata. Various tools available including ITD data, BSE data, money control website, taxman, court rulings, internet as well as investigation wing report and findings of the SEBI were used to decide the true nature of transactions executed by the assessee. The basic aim of this dubious scheme was to route the unaccounted money earned from explained / undisclosed sourced by the Beneficiaries into their account/ books in the garb of exempt long term capital gain. This entry of LTCG is taken by selling the shares on the stock exchange and registering the proceeds arising out of the sale of shares into the books as exempt LTCG. For implementing this scheme, shares of some penny stock companies were used. The same modus operandi adopted by providing accommodation entry of bogus loss. 5.3.1 It is further seen from the Investigation report that in this scheme, the shares of the penny stock companies are acquired by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on: a. Sumati Dayal Vs CIT (1995) 80 Taxmann 89 (SC) It is no doubt true that in all cases in which a receipt is sought to be taxed as income, the burden lies upon the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within an exemption provided by the act lies upon the assessee. But, in view of section 68 of the Act, where any sum is found credited in the book of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the assessing officer, not satisfactory. In such a case there is, prima facie, evidence against the assessee, viz., the receipt of money, and if he rails to rebut it the said evidence being un- rebutted, can be used against him by holding that it was a receipt of an income nature. While considering the explanation of the assessee the Department cannot, however, act unreasonable. ....As laid down by this court the apparent must be considered the real until it is shown that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n those documents. 5.3.4 Having being put to the test of fact finding, it is observed that the transactions have failed the test, more so when read with the test of probability and human conduct, so essential, to arrive at facts. The confirmation documentation remains mere documents and self serving, and they fail as evidence. In the case of DCIT Vs Smt. Phoolwati Devi (2009) 314 ITR (AT) 1 (Delhi) the Hon'ble judges have observed at page 9 that In our opinion, despite the documentation supporting the claim of the assessee superficially, the evidence cannot be accepted in view of the surrounding circumstances and human probabilities Taking a view of the matter, the assessee's claim that the TDS renders the transactions genuine is rejected as being devoid of merit in the light of the surrounding circumstances. 5.3.5 It is seen that merely documenting transaction do not render them genuine, more so in the face of overwhelming findings that they have been and are established to be make-believe. A taxing authority has always to give precedence of substance over form, and is not bound to recognize a transaction merely because it may have been routed through a negotiable instrume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explain as to how the shares in an unknown company worth Rs. 5/- had jumped to Rs. 485/- in no time. The Income Tax Appellate Tribunal held that the fantastic sale price was not at all possible as there was no economic or financial basis as to how a share worth Rs. 5/- of a little known company would jump from Rs. 5/- to Rs. 485/-. The findings recorded by the authorities are pure findings of facts based on a proper appreciation of the material on record. While recording the said findings, the authorities have followed the tests laid down by the Hon'ble Supreme Court and this Court in several decisions. The findings do not give rise to any substantial question of law. The judgments reported in (2012) 20 Taxman.com 529 (Bombay) (Cit Versus J mnadevi Agarwal), (1957) 31 ITR 294 (Bombay) (Puranmal Radhakishan Versus CIT), (1970) 77 ITR 253 (SC) (Raja Bahadur Versus CIT) and (2015) 235 Taxman 1 (Bom) (CIT versus Smt. Datta M. Shah) and relied on by the learned counsel for the assessee are distinguishable on facts and cannot be applied to the case in hand. Since no substantial question of law arises in this appeal, the appeal is dismissed with no order as to costs. The facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of the assessee. On verification of the information, it was noticed by the AO that the assessee has invested in the shares of M/s Regency Trust Ltd and sold the same at the sale value of Rs. 31,56,000. By taking into consideration the information received from the Investigation Wing, the AO alleged that the trading in scrip of M/s Regency Trust Ltd by the assessee was manipulated affair to generate entries of bogus long term capital gain facilitating tax evasion. The AO also alleged that during the course of search action in the penny stock companies, sworn statements of key persons were recorded, modus operandi was revealed, and it was admitted that they were in the business of providing accommodation entries only. It was further alleged that the assessee is one such person who has availed accommodation entries of bogus capital gain on sale of shares of M/s Regency Trust Ltd. The AO also analysed the variation in price of shares of M/s Regency Trust Ltd over the years. It was also alleged that the cash has been routed from various accounts to provide accommodation entry to the assessee of bogus long term capital gains. Accordingly, the AO not only disallowed the investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was paid by the assessee for purchase of 32,000 shares of M/s Regency Trust Ltd, and the entire purchases and sales transaction was carried out on the floor of the stock exchange through a SEBI registered stock-broker. We further find that the BSE vide email dated 06/11/2023 confirmed the aforesaid purchase and sales transaction by the assessee in the shares of M/s Regency Trust Ltd. We find that all the above evidences were furnished by the assessee to prove the genuineness of the share transaction before the AO. However, the AO without commenting on any of the evidence submitted by the assessee placed reliance upon the report of the Investigation Wing, Kolkata, and the price fluctuation of shares of the entities in which the assessee has transacted. The findings of the Investigation Wing, as noted on pages 3-4 of the assessment order, appears to be mere general findings of the investigation without any adverse observation regarding the assessee or the scripts in which the assessee has transacted. Further, the Revenue has failed to prove as to how the said findings have any relevance to the present case in view of the facts and circumstances as noted in the foregoing paragraph. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
