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TMI Blog2024 (9) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department on Naresh Jain and his associates. Neither the details of the report are part of the orders, nor appear to have been shared with the assessee. There is no mention of the manner in which Naresh Jain and his associates carried out/provided accommodation entries to the beneficiaries in the impugned orders, nor there is any finding as to how the assessee s case, therefore, fitted the bill of the modus operandi of Shri Naresh Jain. The assessee had demonstrated the transactions to have been taken place, which even the ld.DR agreed to. The assessee also demonstrated a gap of five to six years in the purchase and sale of shares with the shares being sold at varying rates. We agree with the ld.dcounsel for the assessee that there could not be any premediated transaction presumed to have taken place in such a long time gap of five to six years, that too at varying prices. It was the duty and onus of the Revenue to prove how the impugned transaction was pre-mediated. Merely stating and reiterating that it was a premediated transaction is not sufficient. The said fact has to be demonstrated with evidences, which the Revenue has miserably failed in the present case, relying onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was pointed out during the course of hearing before us and as is evident from the grounds being adjudicated before us, relates to the addition made to the income of the assessee on account of sale of shares of M/s Monotype India Ltd. of Rs. 59,93,278/- treating the transaction as penny stock transaction/mere accommodation entry taken by the assessee to infuse its own unaccounted income, rejecting the claim of the assessee that it was a genuine transaction of sale of shares resulting in long term capital gains returned as exempt from tax in terms of provisions of section 10(38) of the Act. 5. Both the parties were heard, with the contention of the ld.counsel for the assessee being that the assessee had duly discharged its onus of proving genuineness of the transaction and the Revenue had no basis for treating the same as a bogus pre-mediated transaction of sale of shares except for information gathered from its own investigation, details of which were not even revealed to the assessee. 6. The ld.DR, on the other hand, has vehemently opposed the contentions of the ld.counsel for the assessee relying on the orders of the authorities below, stating that the Department had sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this regard our attention was drawn to reply filed by the assessee during the assessment proceedings dated 15.2.2022 which was placed before us at PB Page No.22 to 25, making the following submissions and filling necessary documentary evidences as under: 2. In response to the financial transaction mentioned in the Return of Income we would like to state as under. a. We had shown the consolidated capital gain entry in the Return of Income for the A.Y. 2017-18 for the whole financial year. b. We are having trading account with Prominent Broker viz. Sharekhan Ltd since long time wherein we do the purchase and sales transactions of all the shares regularly and keep the Handy Records in excel wherein we regularly update the purchase and sale entries. The same had happened during the current financial year also. c. Further I am attaching herewith the copies of Bank statements, Contract notes, and purchase note related to the transactions of Monotype India Ltd ( earlier known as Gateway distributors Ltd) where it is clearly reflected that the purchase transaction have been carried out Properly and payment has been made by cheque and sales transactions have been carried through recognis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... varied rates at which shares were sold. 13. Our attention was also drawn to another reply filed by the assessee to the AO against show cause notice issued to the assessee making submissions to the above effect. The reply dated 23.3.2022 was filed before us in PB page no.80 to 86. Our attention was drawn to the submissions made therein as under (page no.80 to 83): This is in reference to the above captioned Notice where we have been required to furnish its reply that why the addition should not be made of Rs. 59,93,278/-to the total income for the Assessment Year 2017-18 on our wrong claim of exemption of long-term capital gains on the sale of shares of a listed company M/s Monotype India Ltd ( earlier known as Gateway distributors Ltd, now amalgamated vide Hon ble Calcutta High Court vide order dated 9th December, 2014). In this regard it is respectfully submitted that during the FY 2016-17 corresponding to the AY 2017-18, presently under consideration, we had earned Net Long-Term Capital Gain of Rs. 30,41,765 as per Income tax Return filed where Shares of M/s Monotype India Ltd was sold for Rs. 59,93,278/- (before deductions of Expenses and Tax), duly listed on a recognised stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompletion of the transaction as stated above purchase price is debited to the share broker of the purchaser which in turn recovers the same from the purchaser after adding the STT and other charges. Likewise, sale consideration of shares is credited to the account of the broker of the seller of shares which in turn credits the same to the account of the seller after deducting STT and other charges. It may be seen from the above that the purchaser and seller are not in a position to know each other. Any person having shares of a company can sell those shares and any person interested in purchase of shares can purchase the shares at the rate at which bids of sale is floating in the system. No human intervention is possible in the whole exercise of purchase/sale of shares as stated above. We are genuine and regular investor and have sold the shares through the mechanism of a recognised stock exchange. There is no evidence that the purchaser was related to us or even in known to us. Therefore, from the above stated factual propositions, it is crystal clear and duly evident that: 1. All the above stated transactions of purchase and sale of equity shares of M/s Monotype India Ltd. has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, is not at all in conformity with the established legal jurisprudence in this regard. 14. Our attention was also drawn to the copy of DEMAT account of the assessee reflecting the transaction of purchase of shares of Monotype India Ltd., (then known Gateway Distributors Pvt.Ltd.) on 21.6.2011 placed at page 91 of the PB and to the entry of sale of said shares in DEMAT account, copy of which was placed at PB Page no.102 and 103. 15. Thereafter, our attention was drawn to the order of the AO and the Ld.CIT(A) and it was pointed out therefrom that except for some investigation report available with the Revenue purportedly revealing the assessee to be beneficiary of the accommodation entry provided by Shri Naresh Jain and associates, no other material was either placed on record nor relied upon by the Revenue for finding the assessee to be beneficiary of the accommodation entry by way of selling scrips of Monotype India Ltd. It was stated therefore that the entire case of the Revenue, treating the transaction of sale of shares of M/s Monotype India Ltd. as pre-mediated bogus transaction was built on mere presumptions and assumptions. Our attention was drawn to page no.24 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also contended that after the assessee had filed documentary evidences proving the genuineness of the transactions no case was made out by the Revenue to show that the assessee s mode of carrying out the transactions of purchase and sale of scrips of Monotype India Ltd. was in accordance with/ fitted into the modus operandi adopted by the accommodation entry providers. He pointed out that, in fact, the orders of the authority below contained no whisper of modus operandi adopted by the alleged accommodation entry providers. The ld.counsel for the assessee contended therefore that the finding of the authorities below that the assessee had failed to discharge its onus of proving genuineness of the transaction was highly unjustified and addition made to the income of the assessee of the consideration received on the sale of shares of Monotype India Ltd. amounting to Rs. 59 lakhs needed to be deleted. 17. The ld.DR, on the other hand, contended that it was an admitted fact that the assessee sold shares of Monotype India Ltd. which the investigation wing of the Department had found to be a mere penny stock; that all the documents filed by the assessee only proved the transaction havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed by the Revenue. Even, the ld.DR admits to the above facts, but contended that it only demonstrates the undertaking of the impugned transactions and did not prove the genuineness of the same. 21. We are not in agreement with the contentions of the ld.DR, because the assessee having demonstrated to have carried out the transaction as admitted by the ld.DR, the Revenue in its part has failed to point out why the transaction was not genuine. As is evident from the order of the authorities below, the entire case of the Revenue rests on merely the report of the investigation carried out by the Department on Naresh Jain and his associates. Neither the details of the report are part of the orders, nor appear to have been shared with the assessee. There is no mention of the manner in which Naresh Jain and his associates carried out/provided accommodation entries to the beneficiaries in the impugned orders, nor there is any finding as to how the assessee s case, therefore, fitted the bill of the modus operandi of Shri Naresh Jain. The Revenue authorities, AO/Ld.CIT(A) have merely stated that the assessee has failed to justify unusually higher price of the sale of shares without poi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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