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TMI Blog2024 (11) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence, but the A.O. heavily relied upon the statement recorded by the Investigating Wing as well as information received from the Investigating Wing. Even the statement recorded by the Investigating Wing has not been confirmed or corroborated by the person during the assessment proceedings. In our opinion, the A.O. ought to have conducted a separate and independent enquiry and any information received from the Investigating Wing is required to be corroborated and confirmed during the assessment by the Assessing Officer by examining the concerned persons who can affirm the statement already recorded by any other authority or the Department. No allegation in the assessment order or the order of the CIT(A) that the Assessee was involved in any price rigging or price increase. Merely because a particular scrip is identified as a penny stock by the income tax department, it does not mean all the transactions carried out in that scrip would be bogus. So many investors enter the capital market just to make it a chance by investing their surplus monies. They also end up with making investment in certain scrips based on market information and try to exit at an appropriate time the moment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case, the Ld. CIT(A) has failed to appreciate that the assessment order being passed in violation of the principle of natural justice by not providing opportunity for cross examination of persons, whose statements have been relied upon by the AO, in spite of specific request made by the appellant in assessment proceedings as well as before CIT(A) and without giving adequate time and opportunity to the assessee to represent its case. 5. On the facts and circumstances of the case, the learned Ld. CIT (A) New Delhi has erred, both on facts and in law, in sustaining the assessment of the appellant at income of Rs. 1,12,16,378/- as against the income of (Rs. 13,36,590/-) declared by the appellant. 6. That the Ld. CIT(A) has erred, both on facts and in law, in sustaining the addition of Rs. 47,07,100/- 147 on account of LTCG on sale of shares without appreciating the facts of the case. 7. That the Ld. CIT(A) has erred, both on facts and in law, enhancing the income by of Rs. 1,97,595/- on account of alleged notional commission @2% paid for arranging the accommodation entries. 8. That the provisions of sections 234A, 234B and 234C of the Act are not at all applicable. 9. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) apart from sustaining the addition vide order dated 23/09/2022, also enhanced the income on account of a notional commission at 2% paid for arranging the accommodation entries. Aggrieved by the impugned orders of the Ld. CIT(A), the assessee preferred the captioned appeals on the grounds mentioned above. 6. Ld. Counsel for the assessee addressing on the grounds of appeal vehemently submitted that the Assessee produced all the relevant documents such as bank statement, contract notes, transaction account statement with the registered broker namely M/s. K.K. securities Ltd. to prove the legitimacy of the transaction. The Ld. AO only based on some investigation report, chosen to make addition by invoking the provision of Section 68of the Act. The additions have been made merely based on surmises and conjectures without considering that the fact that there is no connection of the alleged entry providers and without conducting any independent inquiry and without bringing on record any evidence against the assessee. Further submitted that the assessee is a regular investor and there is no adverse report of any of the authorities against the assessee or no allegation on the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed exemption under section 10(38) of the Act to the tune of Rs. 2,71,88,988/- being STT paid on it. 9. A search u/s 132 of the Act was conducted on M/s Radford on 09/04/2015, wherein as per the A.O, it was alleged that the shares of M/s Wagend Infra Ventures Ltd. were used as accommodation entries, therefore, the assessment of the Assessee has been reopened u/s 147 of the Act alleging that the Assessee has earned Long Term Capital Gain for both the Assessment Year 2012-13 and 2013-14 on the sale of shares of M/s Wagend Infra Ventures Ltd. and the same are bogus, accordingly, the A.O. also disallowed the cost of the acquisition of the sales and made addition u/s 68 of the Act. 10. During the assessment proceedings for the purpose of substantiating the transaction, the Assessee submitted bank statement, contract notes, transaction account statement with the registered broker namely M/s K. K. Securities for the purpose of proving the legitimacy of the transaction. The Assessing Officer has not pointed out the defect in any of the documents submitted by the Assessee. It is not in dispute that the payments are received through banking channels and the transactions were done through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a pre-planned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain s submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of Neutral Citation Number: 2022/DHC/005158 ITA 477/2022 the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar v. ITO (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Company of which shares have been dealt with at Bombay Stock Exchange and also the quantity which has been sold and the date on which such quantity was sold. The demat account statement, contains BSE settlement number which is very much matching with settlement number appearing in the contract note issued by the share broker. The Bank statement evidencing receipt of funds from the Share Broker has already been furnished in the course of assessment proceedings. The AO have not brought any material indicating that said amount proposed to be taxed has not been received from the Share Broker or the sum received is from the sources other than the sale consideration claimed against sale of shares. In view of these facts, we are of the view that addition should not be made under section 68 of the Act. 26. In the light of the documents and evidences submitted by the assessee, we find that there is absolutely no adverse material to implicate the assessee to the entire gamut of unfounded/unwarranted allegations leveled by the AO against the assessee, which in our considered opinion has no legs to stand and therefore has to fall. We take note that Id. DR could not controvert the facts whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 33,15,263. 28. Since, we have deleted the main addition of Rs. 33,15,263/-, therefore, the addition on account of commission payment of Rs. 3,29,188, which is consequential in nature, and hence the same is here by deleted. 13. During the assessment proceedings, the Assessee stated that he is a regular investor and making investments in the shares and the said fact has not been denied by the A.O. while passing the assessment order. Merely because alleged script to be a penny stock does not mean that actually that script is a penny stock as it is not the case where the Assessee had invested only in the said script. In the present case, the Assessee has produced the document to show that he has made a genuine transactions of the aforesaid script and sold the same when the prices are high and there is no allegation from the Department that there is any adverse report from SEBI or any other authorities against the said script. A perusal of the assessment order shows that the A.O. has relied on the report of the Investigating Wing during the assessment proceedings. The A.O. has not made any enquiry from relevant parties or independent source or evidence, but the A.O. heavily relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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