9911796707
TMI Blog2024 (10) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... against the assessee and that the AO had only cited statements of unrelated persons on basis of unfounded presumptions. On these given facts, the Hon ble High Court upheld the order of lower authorities deleting the addition made in relation to LTCG derived on sale of shares. For the various reasons discussed in the foregoing and following the judgments cited above, more particularly of the binding jurisdictional High Court in the cases of Shyam Pawar [ 2014 (12) TMI 977 - BOMBAY HIGH COURT] , Ziauddin A Siddique [ 2022 (3) TMI 1437 - BOMBAY HIGH COURT] , Mukesh R Marolia [ 2011 (9) TMI 919 - BOMBAY HIGH COURT] Jamna Devi Agarwal [ 2010 (9) TMI 81 - BOMBAY HIGH COURT] , we uphold the impugned action of Ld. CIT(A) in deleting the addition and also the addition on account of commission. And we direct the AO to verify and allow the correct LTCG/exemption claimed by assessee u/s 10(38) of the Act on sale of shares - Decided against revenue. - SHRI ABY T. VARKEY, JM AND SHRI S RIFAUR RAHMAN, AM For the Assessee: Shri Vimal Punmiya For the Revenue: Shri Ashok Kumar Ambastha (Sr. AR) ORDER PER ABY T. VARKEY, JM: This is an appeal preferred by the revenue against the order of the Ld. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of entry operators who controlled and managed these entry providers revealed that these entities (exit providers) are bogus/paper entities, which are not doing any real business and used only for providing accommodation entries. According to the AO, these exit providers forty one (41) named in page no. 19 20 of the assessment order, had purchased shares worth Rs. 167crs out of the total trade of Rs. 246cr. So according to AO purchases facilitated by exit providers were only accommodation entries. Thereafter, the AO discussed about the share brokers at para no. 7.8 at page no. 21 of the assessment order wherein he noted that survey actions were conducted by the Directorate of Investigation, Kolkata on share brokers (i) Shri Anuj Agarwal/Director of Korp Securities Ltd (ii) Pravin Agarwal/Director of M/s. Gateway Financial Services Ltd and (iii) Subrata Haldar/Promoter of BSAS Securities Pvt. Ltd and (iv) Soumen Sen/(D.B Co.) who all accepted their role in the entire scheme of providing accommodation entry in the form of bogus LTCG. Thereafter, the AO concluded that the entire LTCG claim of assessee was bogus, and such an act was resorted to by assessee for converting her black ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.10 per equity share and on a premium of Rs.2/- [and paid Rs.24 Lakhs by cheque] (copy of share certificate dated 11.02.2013 placed at page no. 44 of PB) and filed relevant documents to prove the allotment of equity shares which are found placed at page no. 30 to 44 of PB. And also brought to the notice of the AO that the shares of M/s. Marigold allotted to her were dematerialized (M/s. IL FS Securities Ltd dematerialization form page no. 45 to 46). And also the statement of Demat Account showing credit of the share to the demat account of the depository participant (M/s. IL FS Securities Ltd at page no. 48 to 51 of PB). Thereafter, there was a split of share on 07.06.014 and by virtue of it 2,00,000 shares became 20 Lakh shares which fact is evident from the copy of demat statement at page no. 52 to 53 of PB. Thereafter, the assessee sold 20 Lakhs share in Bombay Stock Exchange (BSE) from 08.06.2014 to 19.12.2014 and received the total sale consideration of Rs. 5,96,25,721/- and the assessee claimed LTCG of Rs. 5,72,25,721/- which assessee claimed as exempt u/s 10(38) of the Act. As noted (supra), when the AO asked assessee to prove the purchase share of M/s. Marigold, she produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld i.e share application form, share certificate, bank statement highlighting the payment made for purchase of shares, demat statement etc. To prove the event of sale of shares of M/s. Greencrest (earlier known as M/s. Marigold) assessee has filed primary evidences like Broker s ledger, Contract notes issued by the broker, bank statement highlighting the sales consideration and STT remitted on such sales. Thus we find that assessee has filed the primary/relevant documents to prove the purchase and holding of shares for the statutory period by dematerializing it and sale of shares through BSE in the electronic platform through the recognized broker M/s. Harjivandas Nemidas Securties Pvt. Ltd. And that the consideration for purchase/sale of shares happened through banking channel and STT has been remitted on sale of shares. Thus, we find that assessee has fulfilled the conditions necessary for making the claim of LTCG as exempt u/s 10(38) of the Act; and it is not the case of AO that there is any infirmity/deficiencies in the relevant/primary documents filed by the assessee as noted (supra). Thus, we find that assessee has discharged her burden to prove the LTCG claim on sale of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crest Financial Services Ltd). And since the shares were demated and both considerations (i.e. share purchase sale consideration) have passed through banking channel and the sale has happened through the electronic platform of BSE; and there was no material/evidence to show the involvement of assessee or her broker in the modus operandi for converting her unaccounted money in the form of bogus LTCG; or there was any evidence to suggest that assessee or her broker had any connection with unscrupulous entry operators named by AO, the Ld. CIT(A) was pleased to delete both the additions which action has been assailed by revenue before us. 8. We find that the main plea of the assessee before the Ld. CIT(A) was that addition made by AO u/s 68 of the Act was not legally sustainable in the light of the fact that assessee has discharged the burden of proving the genuineness of her claim regarding LTCG on sale of share of M/s. Greencrest (earlier known as M/s. Marigold) by submitting primary documents to substantiate the claim (LTCG). The assessee in order to prove the transaction which led her to claim the LTCG/exemption u/s 10(38) of the Act had proved the events of allotment/purchase of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services Ltd) and the same is not repeated for sake of brevity. Thus, we find that assessee had filed primary documents found placed at page 30 to 54 of the PB, which shows that assessee had applied/allotted the shares of M/s. Marigold (later known as M/s. Greencrest Financial Services Ltd on 11.02.2013 and sold the shares of M/s. Greencrest (between Aug, 2014 to Dec, 2014.) through Bombay Stock Exchange through broker M/s. Harjivandas Nemidas Securties Pvt. Ltd. and STT paid on the sale transaction. Thus, sale of shares cannot be held as bogus. The share certificate of M/s. Marigold (renamed as M/s. Greencrest) allotted to assessee proves the allotment of shares; and demat statement of holding of shares with M/s. IL FS Securities Services Ltd proves that shares of M/s. Marigold was held by the assessee from allotment to sale of the same. Thus, when shares were allotted; and later sold through BSE (after remitting STT); and consideration having passed through proper banking channel (both allotment/sales), the LTCG claim of assessee on sale of shares of M/s. Marigold/M/s. Greencrest cannot be disallowed, unless there is any contrary material brought on record to show that it was a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to the revenue and thus AO erred in placing reliance on such report to draw adverse inference against assessee; and Ld CIT(A) rightly appreciated the facts and judicial precedents and allowed the claim and deleted the addition made by AO. 10. The Ld. AR has brought to our notice that similar case came up before this Tribunal (LTCG claim on sale of shares of M/s. Marigold) wherein Tribunal in the case of Shri Yogesh P. Thakkar (ITA. No.1612/Mum/2021 dated 03.02.2023) held in favour of assessee (and drew our attention to page 27 28, para 11) and directed the AO to allow the LTCG/exemption claim of the assessee and deleted the addition by holding as under: - 11. We have heard the rival submissions and perused the materials available on record. The findings given by us hereinabove for the AY. 2014-15 in the case of the assessee shall apply mutatis mutandis to AY. 2015-16 also, save that during the AY. 2015-16, there was no interim order passed by SEBI on both the scrips; that there was only final order passed by SEBI dated 05.06.2020 wherein the name of the assessee or his registered share broker was not reflected as defaulters or persons involved in artificial price rigging of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated to be involved in the modus-operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the 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 Properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for the year under appeal, the purchase of flat at Colaba for a consideration of Rs. 2,06,72,904 was reflected. The assessee s contribution in the purchase of the flat was @ 70 per cent for which the investment amounted to Rs. 1,44,71,033. The source of investment was, among other things, the sale proceeds of shares of Rs. 1,41,08,484. This amount has been questioned by the revenue authorities. 10.1 The assessee has purchased the shares of four companies viz., Allan Industrial Gases Ltd., Mobile Telecom, Rashee Agrotech and Centil Agrotech, during the previous years relevant to the assessment years 1999-2000 and 2000-01. The books of account maintained by the assessee for both the years clearly reflected the purchase of those shares. The shares are reflected in the balance sheets filed by the assessee along with the returns of income for the assessment years 1999-2000 and 2000-01. Therefore, it is seen that as a prima facie evidence, the purchases of shares have been contemporaneously entered into the books of account of the assessee. 10.2 The assessee has been declaring agricultural income in his returns of income for the assessment years from 1990-91 to 2001-02. The tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de it very clear that the transactions were not concluded on the floor of the Stock Exchange. The matter being so, there is no probative value for the negative replies solicited by the assessing authority from the respective Stock Exchanges. We are of the considered view that the materials collected by the assessing authority from the Stock Exchanges are not valid to dispel or disbelieve the contentions of the assessee. 10.5 The next set of evidences relied on by the assessing authority are the statements obtained from various parties. When certain persons like Radha Ashok and Sandeep D. Shah made negative statements against the assessee, persons like Satish Mandovara and Mangesh Chokshi had given positive statements in support of the contention of the assessee. But, the assessing authority sought to pick and choose the statements given by various parties. While accepting and rejecting such statements given by the parties, the Assessing Officer has made a mistake of accepting irrelevant statements and rejecting relevant statements. During the relevant period in which the assessee transacted in shares, persons like Radha Ashok and Sandeep D. Shah were not carrying on their business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, should not lead the Assessing Officer to a state of affairs where salient evidences are over-looked. In the present case, howsoever unbelievable it might be, every transaction of the assessee has been accounted, documented and supported. Even the evidences collected from the concerned parties have been ultimately turned in favour of the assessee. Therefore, it is, very difficult to brush aside the contentions of the assessee that he had purchased shares and he had sold shares and ultimately he had purchased a flat utilizing the sale proceeds of those shares. 10.8 For a moment, even if all the above evidences are ignored, one cannot overlook the pressure of the evidence coming out of the survey carried out by the department in the business premises of the assessee. There was a survey carried out by the department in the business premises of the assessee. In the course of survey, contract notes for sale of shares, copies of bills thereof, photocopies of share certificates etc., were found. The purchase and sale of shares were also found recorded in the books of account. The department has no case that the survey was a staged enactment. A survey is always unexpected. So, it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. On a perusal of those documentary evidence, the Tribunal has arrived at a finding of fact that the transactions were genuine. Nothing is brought to our notice that the findings recorded by the Tribunal are contrary to the documentary evidence on record. 14. The Tribunal has further recorded a finding of fact that the cash credits in the bank accounts of some of the buyers of shares cannot be linked to the assessees. Moreover, in the light of the documentary evidence adduced to show that the shares purchased and sold by the assessees were in conformity with the market price, the Tribunal recorded a finding of fact that the cash credits in the buyers' bank accounts cannot be attributed to the assessees. No fault can be found with the above finding recorded by the Tribunal. 15. Reliance placed by the counsel for the Revenue on the decision of the apex court in the case of Sumati Dayal [1995] 214 ITR 801 is wholly misplaced. In that case, the assessee therein had claimed income from horse races and the finding of fact recorded was that the assessee therein had not participated in races, but purchased winning tickets after the race with the unaccounted money. In the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegation against 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 judgment of the Apex Court in Principal Commissioner of Income-tax (Central)-1 vs. NRA Iron Steel (P.) Ltd.1 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. 17. It is noted that similar questions were also put up for consideration before the Hon ble Rajasthan High Court in the case of Pr.CIT Vs Gaurav Bagaria (453 ITR 513) which read as follows:- ''(I) Whether on the facts and in the circumstances of the case, the Learned ITAT was justified in deleting the addition of Rs. 7593444/- made on account of unexplained credit u/s 68 of the Act when the assessee was unable to justify equity trading by picking the sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i High Court in the case of Suman Poddar vs ITO (112 taxmann.com 330) cited by the lower authorities, it is noted that the Hon ble Delhi High Court in their later judgment in the case of Pr. CIT v. Smt. Krishna Devi (431 ITR 361) had considered the various proposition laid down in case of Suman Poddar (supra) and noted that the decision in that case was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. The Hon ble Delhi High Court in Krishna Devi (supra) taking note of the entire conspectus of case and the evidence brought on record before the Tribunal, unlike the case of Suman Poddar (supra), the assessee had successfully discharged the initial onus cast upon it to substantiate the transaction conducted in shares. It was further noted that there was evidence whatsoever to allege that money changed hands between the assessee and the broker or any other person, or further that some person provided accommodation entry to assessee, as alleged. The Hon'ble Court had further held that the theory of human behaviour an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o provide the necessary trail. The Tribunal also noted the assessee to be an inactive investor having meagre investment portfolio and therefore doubted the genuineness of the purchase of such unknown shares in cash. In the present case however, both the lower authorities have not doubted the contemporaneous evidences furnished by the appellant in support of purchase of shares, which took place through proper banking channel. Also, as noted earlier, the appellant was an active investor having portfolio holding in excess of Rs.900 lacs and thus cannot be said to have purchased the shares of TTL out of the blue. Hence, this decision cited by the Revenue is found to be distinguishable. 24. Likewise, in the case of Satish Kishore v ITO (supra) also, the act of purchase of shares in question were doubted, as the assessee could not substantiate the same with relevant documentary evidences, which is not the case before us .Further, unlike the appellant, in the decided case, the assessee was unable to corroborate the increase in the prices of the shares with the financials of the company .Similarly, the decision rendered in the case of Sanat Kumar Vs ACIT (supra), is also found to be on com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has not admitted the question of law, and has dismissed the appeal, then it is a case of dismissal in liminie. Even on merits and facts, the judgment of Udit Kalra vs ITO (supra) is distinguishable as in that case the company was into consistent losses, where as, the scrip in which assessee has dealt is a growing and high turnover company and dividend paying company. As TTL was having turnovers of Rs. 117.39 crores (AY 2014-15); Rs. 150.59 crores (AY 2015-16); Rs 154.88 crores (AY 2016-17); and Rs. 146. 23 crores (AY 2017-18). The financial statements of said company are available in public domain, which have also been placed at Pages 325 to 370 of PB II by assessee. That further, the interim order of SEBI in the case of TTL banning trading has been uplifted and cooled down by subsequent order of SEBI vide order dated 31.10.2018 placed before us at Pages 305 to 324 of PB II by assessee. Thus, the growth in prices of TTL was backed by sound financials and as such, the case of Udit Kalra vs ITO relied by ld. DR is clearly distinguishable on facts and is not applicable to the facts of assessee. Thus, we hold that the case of assessee is factually and materially distinguishable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) 6. We have considered the rival submissions as well as the relevant material on record. The assessee purchased 20,000 shares of M/s. Trinity Tradelink Ltd. @ Rs. 10/- each for a total consideration of Rs. 2,00,000/-. The assessee has produced the share certificate of the shares whereby the shares were initially issued in the name of M/s. Amarkantak Procon Pvt. Ltd. and were transferred in the name of the assessee vide endorsement dated 31st October, 2012. As per the sale bill dated 07.10.2012 the payment of purchase consideration has been acknowledged by the seller. Even otherwise, the said payment was reflected in the bank account of the assessee through clearance of cheque no. 788048 on 31st October, 2012. This payment of Rs. 2,00,000/- paid to M/s. Amarkantak Procon Pvt. Ltd. is duly reflected in the bank account of the assessee and, therefore, the said evidence which can be independently verified cannot be disputed in the absence of any material brought on record to show that the payment was not in respect of purchase of shares but for some other transaction. The assessee has produced the sale bill, certificate of transfer of shares in the name of the assessee. These documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years 2012 to 2014. Thus, we find that the said comparison of the AO of the prevailing price in the year 2012 with the price of the shares of amalgamated company in the year 2014 is misconceived. The AO has not conducted any independent enquiry or investigation to verify the genuineness of the transaction but has referred the investigation conducted by the department and a report received by the AO. It is pertinent to note that the said report as referred by the AO and reproduced in the assessment order is nothing but a narration of modus operandi of the various entry operators involved in providing the bogus accommodation entries of long term capital gain, etc. The statement as referred by the AO of Shri Vikrant Kayan recorded under section 133A on 09.06.2014 is subsequent to the sale of shares by the assessee and, therefore the said statement does not refer to the transaction of shares of M/s. Trinity Tradelink Ltd. prior to its amalgamation and listing. The said statement at the most can relate to the transaction after the amalgamation of the unlisted company with M/s. Omnitech Petroleum Ltd. and subsequently changing the same to M/s. Trinity Tradelink Ltd. as a listed company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f amalgamation was duly approved by the Hon'ble High Court. Thus there is an extraordinary event in this case of amalgamation of unlisted company with a listed company and consequently there is a sudden increase in the price of the shares of amalgamated entity (B) Jyoti Gupta Vs. ITO (supra) 11. I have carefully perused the orders of the authorities below and relevant documentary evidences brought on record. Allotment of Equity Shares of M/s Trinity Tradelink Ltd is at page 7 of the paper book. Payment has been made through ING Vysya bank and the bank statement is at page 8 of the paper book. Share certificate and demat statement are at pages 9 to 11 of the paper book. The sale transactions are documented at pages 14 and 15 of the paper book. Payment has been received through banking channel, which is evident from the bank statement at page 13 of the paper book. 12. These direct clinching evidences cannot be ignored. The transactions have been done by BSE through proper banking channels evidenced by supporting documentary evidences. Moreover, securities transactions tax has also been paid. 13. Merely on the strength of statement of third party i.e. Shri Vikrant Kayan cannot jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of unfounded presumptions. He further held that the name of the appellants were neither quoted by any of such persons nor any material relating to the assessee was found at any place where investigation was done by the investigation Wing. The ld. CIT(A) relying on various orders of Lucknow Benches and other Benches has allowed relief to the assessee by placing reliance on the evidences filed by the assessee before Assessing Officer. I do not find any adversity in the order of ld. CIT(A) specifically keeping in view the fact that Lucknow Benches in a number of cases after relying on the judgment of Hon'ble Delhi High Court in the case of Krishna Devi and others had allowed relief to various assessees. 6. The concurrent findings of fact has been recorded by the first appellate authority and the ITAT. Thus, no substantial question of law is involved in the present appeal. The matter is concluded by findings of fact. 29. For the various reasons discussed in the foregoing and following the judgments cited above, more particularly of the binding jurisdictional High Court in the cases of Shyam Pawar (supra), Ziauddin A Siddique (supra), Mukesh R Marolia (supra) Jamna Devi Agarwal (s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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