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TMI Blog2024 (11) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue. The sale of shares has taken place in the online platform of the Stock Exchange and the sale consideration has been received through the stock broker in banking channels. Hence, in the facts of the case, the sale consideration cannot be considered to be unexplained cash credit in terms of sec. 68 - Accordingly, we hold that the sale consideration received on sale of shares cannot be assessed as unexplained cash credit u/s. 68 of the Act and the long term capital gains declared by the assessee cannot be doubted with. Accordingly, we set aside the order passed by the Ld.CIT(A) and direct the AO to delete the impugned addition made by him. Since we have held that the transactions of purchase and sale of shares are genuine in nature, the AO was not justified in estimating the commission expenses and adding the same. Appeal filed by the assessee is allowed. - Shri B.R. Baskaran, Accountant Member And Shri Raj Kumar Chauhan, Judicial Member For the Assessee : Shri Vimal Punmiya For the Revenue : Shri Ashok Kumar Ambastha, Sr.DR ORDER PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dated 28-03-2024 passed by Ld.CIT(A), NFAC, Delhi and it re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO came to the conclusion that the trading in shares of above company are controlled by various entry and exit operators in order to convert unaccounted money. 4. The AO also issued summons u/s. 131 of the Act to the assessee and recorded a statement from him. He noticed that the assessee could not identify the advisor who had advised him to buy the shares of M/s. Sunrise Asian Ltd. Since the AO was placing reliance on the statement given by Shri Anuj Agarwal (referred above), the assessee asked the AO to provide opportunity to cross examine him. However, the AO denied the same by observing that the statement from Shri Anuj Agarwal was taken by the Kolkatta Investigation Wing and hence the question of affording the opportunity of cross examination will not arise. Accordingly, he took the view that the entire sale consideration of Rs. 2.47 crores is liable to be taxed as unexplained income u/s 68 of the Act. The AO also took the view that the assessee would have incurred commission expenses in getting bogus long term capital gains. Accordingly, the AO estimated the commission expenditure @ 3% of the sale value of shares, which worked out to Rs. 7,41,921/-. The AO assessed the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions of purchase and sale of shares on surmises only, that too relying fully upon the generalized report of the Investigation Wing. Since it was not shown that the assessee was part of the group which was indulging in the manipulation of prices, the Ld.AR contended that the AO was not justified in assessing the sale consideration of shares as unexplained income of the assessee u/s. 68 of the Act. Further, the said action of the AO is not justifiable for the reason that the AO had accepted the purchases of shares as genuine in the earlier years. Accordingly, he contended that the AO was not also justified in making addition of estimated commission expenses. In support of his contentions, the Ld.AR placed his reliance on various case laws. 6. The Ld.DR, on the contrary, supported the orders passed by the tax authorities. He submitted that the assessee has purchased the shares in the off market. The tax authorities have noticed that financials and fundamentals of this company were very poor. Hence, the rise in the prices of shares was not commensurate with the financial strength of the company. The Investigation Wing has also conducted enquiries with various share brokers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase and sale of shares are bogus. We also notice that the assessee has - (a) purchased these shares by paying consideration through banking channels (b) dematerialized the shares and kept the same in the Demat account. (c) sold the shares through stock exchange platform (d) received the sale consideration through banking channels. 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. The assessee was not subjected to any enquiry by SEBI, meaning thereby, they were carried on by the assessee during the normal course of investment in shares. As noticed earlier, 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. The AO has also referred to a statement given by a person named Shri Anuj Agarwal before the Investigation Wing, Kolkatta, but did not provide opportunity to the assessee to cross examine that person. Hence, there is no reason to suspect the purchase and sale of shares undertaken by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 21 of his order, what was important and vital for the purpose of the present case was whether the transactions in shares were genuine or sham and bogus. If the purchase and sale of shares are reflected in the Assessee's DMAT account, yet they are termed as arranged transactions and projected to be real, then, such conclusion which has been reached by the Commissioner and the Assessing Officer required a deeper scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock Exchange records showed that the shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt.Ltd. is listed in the appraisal report and it is 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7. As a result of the above discussion, we do not find any substance in the contention of Mr.Suresh kumar that the Tribunal misdirected itself and in law. We hold that the Appeals do not raise any substantial question of law. They are accordingly dismissed. There would no order as to costs. 8. Even the additional question cannot be said to be substantial question of law, because it arises in the context of same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted or regular as such. The relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and pertaining to the addition of Rs. 25,93,150/-. Barring the figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For the same reasons, even this additional question cannot be termed as substantial question of law. 11. We may now refer to the decision rendered by the Hon ble Jurisdictional High Court in the case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck Exchange through registered share broker. In pursuance of purchase of shares the said broker had raised invoice and purchase price was paid by cheque and respondent s bank account has been debited. The shares were also transferred into respondent s Demat account where it remained for more than one year. After a period of one year the shares were sold by the said broker on various dates in the Kolkatta Stock Exchange. Pursuant to sale of shares the said broker had also issued contract notes cum bill for sale and these contract notes and bills were made available during the course of appellate proceedings. On the sale of shares respondent effected delivery of shares by way of Demat instruction slips and also received payment from Kolkatta Stock Exchage. The cheque received was deposited in respondent s bank account. In view thereof, the CIT(A) found there was no reason to add the capital gains as unexplained cash credit under section 68 of the Act. The Tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of Stock Exchange and not from the said broker, deliveries were taken, contract notes were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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