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TMI Blog2024 (8) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... that the promoters and their associations of M/s. Pine Animation Ltd., were initially debarred from accessing stock market, but the same has been revoked by the SEBI. We noticed earlier that the assessee has sold the shares during the period from June 05, 2014 to September 15, 2014. Thus, the transactions of purchase and sale of shares by the assessee have happened prior to the passing of initial order by SEBI, which has been later revoked. Hence, we are of the view that the transactions of purchase and sale of shares of M/s. Pine Animation Ltd., by the assessee would not be affected by the above said orders of the SEBI. In the statement recorded from the assessee, she has stated that she was guided by her husband in making the investment, who is a Chartered Accountant by profession. Further, the shares have entered and exited the demat account of the assessee. We notice that the AO himself has not found any defect/deficiencies in the evidences furnished by the assessee with regard to purchase and sale of shares. Further, the AO has not brought on record any material to show that the assessee was part of the group, which involved in the manipulation of prices of shares. Hence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held for more than one year, the assessee claimed the capital gain of Rs. 4,37,82,238/- as exempt u/s. 10(38) of the Act. 4. During the course of assessment proceedings, the AO extensively relied upon the report given by the Investigation Wing. He observed that the financial results of the company do not justify steep rise in the prices of shares of above said company. He also noticed that the above said company was declaring very low income. The AO also referred to the price movement charts prepared by the Investigation Wing, wherein it was observed that the price movements in the form of ups and downs has happened in batches, which was considered as manipulation of price movements. The AO also noticed that the shares sold in this shares have been purchased by certain entities only, who were identified as Exit Providers and these exit providers have also facilitated manipulation in the prices of shares. He further noticed that the Investigation Wing has conducted enquiries with certain brokers and Exit Providers and they have confirmed about providing accommodation entries in various companies. 5. Based on the above said information, the AO sought explanations from the assessee. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce on those statements. He also noticed that the AO did not show the cash trail of the transactions, i.e., the cash has been exchanged between the assessee and the operators. Accordingly, the Ld.CIT(A) deleted both the additions and hence the Revenue has filed this appeal. 9. The Ld. DR submitted that the assessee has purchased shares offline from a company, which was related to the promoters of M/s. Pine Animation Ltd. She submitted that the AO has shown that the financials of above said company do not justify the market price of shares. Ld.DR further submitted that this company has declared meagre profits. She further submitted that the assessee did not have much knowledge of share transactions as evidenced from the replies given by her in the statement taken from her. She submitted that the SEBI has conducted enquiries with promoters and their associates of M/s. Pine Animation Ltd., with regard to manipulation of prices of shares of that company and they have been debarred from accessing share market. The Ld. DR further placed reliance on the decision rendered by the Co-ordinate Bench in the case of Sri Hitendra G Ghadia vs. DCIT (ITA No.621/Mum/2021 dated 20-03-2023), Abhinav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance on the report given by the Investigation Wing of the Income-tax Department, Kolkatta in order to arrive at the conclusion that the Long Term Capital Gain reported by the assessee is bogus in nature. We notice that the investigation report prepared by Investigation Wing, Kolkatta is a generalized report with regard to the modus operandi adopted in manipulation of prices of certain shares and generation of bogus capital gains. We notice that the AO has placed reliance on the said report, without bringing any material on record to show that the transactions entered by the assessee were found to be a part of manipulated transactions, i.e., it was not proved that the assessee has carried out the transactions of purchase and sale of shares in connivance with the people, who were involved in the alleged rigging of prices. We notice that the promoters and their associations of M/s. Pine Animation Ltd., were initially debarred from accessing stock market, but the same has been revoked by the SEBI, vide its order dated 19th September, 2017. The following observations made by the SEBI in the above said order are worth noting:- 10. Considering the fact that there are no adverse findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y High Court has observed as under:- 3. Mr.Sureshkumar seriously complained that such finding rendered concurrently should not have been interfered with by the Tribunal. In further Appeal, the Tribunal proceeded not by analyzing this material and concluding that findings of fact concurrently rendered by the Assessing Officer and the Commissioner are perverse. The Tribunal proceeded on the footing that onus was on the Department to nail the Assessee through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr.Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, therefore, be admitted. 4. Mr.Gopal, learned Counsel appearing on behalf of the Assessee in each of these Appeals, invites our attention to the finding of the Tribunal. He submits that if this was nothing but an accommodation of cash or conversion of unaccounted money into accounted one, then, the evidence should have been complete. Change of circumstances ought to have, after the result of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme. 6. It is in that regard that we find that Mr.Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs. 25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commissioner of Income tax (Central)-1 vs. NRA Iron Steel (P) Ltd (2019)(103 taxmann.com 48)(SC) but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra), wherein the Tribunal had confirmed the additions relating to long term capital gains arising on sale of penny stock. We have gone through the said order passed by the Tribunal. First of all, we notice that none of the binding decisions rendered by Hon ble jurisdictional Bombay High Court has been referred to by the Tribunal. Secondly, it has been mentioned clearly that the decision has been rendered on the basis of facts prevailing in that case. There cannot be any dispute that the question as to whether the capital gain declared by the assessee is genuine or not has to be decided on the basis of facts prevailing in each case. In the earlier paragraphs, we have followed the binding decision rendered by Hon ble Bombay High Court. Hence, the Ld.DR cannot place reliance on the decision rendered by Hon ble Kolkatta High Court in the case of Swati Bajaj (supra). Accordingly, we are of the view that the decision rendered in the above said case cannot be taken support of by the Revenue. 17. In view of the foregoing discussions, we are of the view that the Ld CIT(A) was justified in deleting the addition of value of sale consideration arising on sale of shares of M/s. Pine Animation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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