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TMI Blog2024 (8) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Assessing Officer is not in compliance with the provisions of section 142(3) of the Act which is a statutory mandatory procedural requirement for making a valid assessment. We note that the required compliance with section 142(3) has not been met. AO has referred to the theory of preponderance of probability which according to us is applied to weigh the evidence of either side and draw a conclusion in favour of a party which has more favourable factor in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of fact that might go against the assessee. Once nothing has been proved against the assessee with the aid of any direct material, nothing can be implicated against the assessee on the presumption or suspicion, howsoever, strong it might appear to be true. Thus, we uphold the finding arrived at by the CIT(A) and accordingly delete the addition made u/s 68 towards proceeds of sale of listed shares which gave rise to Long Term Capital Gain on the said sale, claimed exempt by the assessee u/s 10(38). Accordingly, grounds taken by the Revenue in this respect are dismissed. Commission for arranging alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR-80, CIT v. Durga Prasad More 82 ITR-540 (S.C.), SLP. No. 26864/2019 Suman Poddar v. Income Tax Officer (S.C.) and PCIT v. Swati Bajaj (2022)139 Taxmann.com352(Calcutta H.C) and coming to a conclusion only on the basis of the arguments advanced by the assessee. 6. This appeal is being filed as it is covered under the exception provided in CBDT's Circular No.23 of 2019 dated 06.09.2019. 2.1. Grounds taken are in respect of deletion of addition made under section 68 by denying exemption claimed under section 10(38) of the Act for the sale proceeds of listed equity shares alleged as penny stock amounting to ₹ 62,45,275/- on the scrip Surbhi Chemicals Investments Ltd. and for addition of ₹ 1,87,358/- under section 69C as unexplained expenditure towards commission estimated @ 3% on the sale proceeds of the said alleged scrip. 3. Brief facts of the case are that assessee filed her return of income on 31.03.2016 reporting total income at ₹ 8,61,890/-. Case of the assessee was taken up for reassessment by issuing notice u/s.148 of the Act, dated 28.09.2016 based on information from the Investigation Wing of the Department that she had transacted in certain shares c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en shares certificates in case of Surbhi Chemicals Investments Lid with distinctive numbers 789801-790800. vi. Copy of Demat statement for DP 1D: IN302679 showing one Lakh shares in case of Surbhi Chemicals Investments Ltd. vii. Copy of Sale bills in case of Surbhi Chemicals Investments Ltd. viii. Copy of relevant bank statement highlighting sale transactions in case of Surbhi Chemicals Investments 3.3. The chronology of events and transaction of purchase and sale as explained by the assessee is tabulated below: Dates Events 07.02.2012 Assessee saw an ad in the newspaper from Akriti Advisory dealing in unlisted shares 17.02.2012 Assessee made off-market purchase of 1000 shares of Surabhi Chemicals and Investments Ltd 22.06.2012 Physical Transfer of shares happened. 18.07.2012 Requested for dematerialization of shares 20.07.2012 Dematerialization request accepted: Shares appearing in demat 30.07.2012 Bonus Shares were issued in ratio of 9:1, i.e. 9000 shares were issued against the 1000 held. Total shares held = 10,000 10.04.2013 Shares split happened from Rs. 10/- to Rs. 1/-. Now the assessee held 1,00,000 shares. 18.10.2013 Sale of 15000 Shares @57.25 23.10.2013 Sale of 20000 Shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction of sale of shares in the aforesaid scrip. Ld. Assessing Officer also estimated unexplained expenditure towards commission @ 3% of the sale proceeds to make an addition of Rs. 1,87,358/- u/s. 69C of the Act. Aggrieved, assessee went in appeal before the ld. CIT(A), who deleted the same. While doing so, he noted in para-5.14 about ld. Assessing Officer not carrying out findings which are specific to the assessee and also not providing opportunity for cross examination which is against the principles of natural justice. Aggrieved, assessee is in appeal before the Tribunal. 5. In the course of hearing, ld. Sr.DR had placed reliance on the order of ld. Assessing Officer and referred to adjudication orders passed by SEBI and asserted that the share transactions undertaken by the assessee are of tainted scrips which were investigated and subjected to penalties. 5.1. Before us, ld. Counsel for the assessee has reiterated the submissions made before the authorities below. He has also placed on record all the relevant documents and evidences in the form of paper book, details of which are already noted above, backed by judicial precedents of the Hon ble jurisdictional High Court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. Assessing Officer is thus purely an assumption based on conjectures and surmises. In our thoughtful considerations to the facts and circumstances of the case, it is not in controversy that assessee has discharged her burden by submitting the relevant documents, details of which are already extracted above, forming part of the paper book. 7.1. For our observations and findings, we place reliance on the decision in the case of CIT vs. Jamnadevi Agrawal [2012] 20 taxmann.com 529 (Bom), wherein it was held that transactions of purchase and sale of shares cannot be considered to be bogus, when the documentary evidences furnished by the assessee establish genuineness of the claim. We also draw our force from the decision of Hon ble High Court of Delhi in the case of PCIT v. Krishna Devi [2021] 126 taxmann.com 80 (Del) wherein the Hon ble Court noticed that the reasoning given by the Assessing Officer to disbelieve the capital gain declared by the assessee, viz. astronomical increase in the price of shares, weak fundamentals of the relevant companies are based on mere conjectures. 7.2. Reliance placed by the ld. Assessing Officer on the report of investigation wing without further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mechanism by which assessee can bring forth the identity of the buyers of his shares and their creditworthiness. Meeting this requirement is an act of impossibility of performance expected from the assessee for the transaction executed on SEBI regulated, digitally operated stock exchange. For the third limb of genuineness of the transaction, sale proceeds are received through the stock exchange process into the pre-identified bank account of the seller i.e., the assessee. Further, it is not a case of mere book entry where a possibility of tainting it as bogus or sham exists but it is a case where actual movement of dematerialised shares has taken place from the DMAT account of the assessee. In our considered view, assessee cannot be put to the rigors of section 68 in respect of sale proceeds received for sale of shares on the stock exchange (BSE) and gain arising thereon. 9. Further, assessee is a regular investor since year 2001 with investment in shares of other companies as affirmed by her in the statement recorded by the ld. Assessing Officer in the course of impugned assessment. From the perusal of the statement of assessee recorded by the ld. Assessing Officer during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iddique [Income-tax Appeal No. 2012 of 2017, dated 4-3-2022] held as under:- 1. The following question of law is proposed: Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in deleting the addition of Rs. 1,03,33,925/- made by AO u/s 68 of the I.T. Act, 1961, ignoring the fact that the shares were bought/acquired from off market sources and thereafter the same was DMATed and registered in stock exchange and increase in share price of Ramkrishna Fincap Ltd. is not supported by the financials and, therefore, the amount of LTCG of Rs. 1,03,33,925/- claimed by the assessee is nothing but unaccounted income which was rightly added u/s 68 of the I. T. Act, 1961? 2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd. ( RFL ) is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ( STT ) has also been pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we note that there are several decisions of Hon'ble Jurisdictional High Court as stated supra which are in favour of the assessee. Ld. Counsel had also placed on record the decision of Coordinate Bench of ITAT, Mumbai in the case of Chirag TejPrakash Dangi vs. ITO in ITA No.3256/Mum/2022, dated 20.02.2024 wherein the decision was held in favour of assessee in respect of long term capital gain earned by him on the same scrip, i.e. Surbhi Chemicals Investments Ltd. as in the present case for which the claim of exemption u/s. 10(38) was allowed. Accordingly, the same would prevail on the issue before this Tribunal in the present case. Further, decision of the Hon'ble Non-Jurisdictional High Court carries only a persuasive value. The law is very well settled by the Hon'ble Supreme Court in the case of Union of India vs Kamalakshi Finance Corporation Ltd reported in 55 ELT 43 (1991) that the decision of Hon'ble Jurisdictional High Court would have higher precedence value on the Tribunal than the decision of Hon'ble Non-Jurisdictional High Court. Hon'ble Supreme Court emphasised therein that the orders of Tribunal should be followed by the authorities falling wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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