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TMI Blog2024 (11) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... on had revealed that the trading in the said penny stock was a manipulated affair to generate entries of bogus LTCG facilitating tax evasion by large number of persons. It was informed that the appellant had made transaction of 10,000 shares in the scrip of Global Capital Markets Ltd. and became a beneficiary to the tune of Rs. 1,77,391/-. Since the assessee did not respond to the notices issued u/s 148, 142(1) & 144 of the Act, the assessment was completed u/s 144 read with Section 147 of the Act by making an addition of Rs. 1,77,391/- as bogus transaction. Aggrieved with the assessment order, the assessee had appeared before the ld. CIT(A) and the assessee filed written submission in the course of hearing. It was contended before the ld. CIT(A) that the assessee furnished the reply by India Post as well as by hand directly on 21.12.2018 before the ld. AO. Further notice received on 20.12.2018 requiring to file the reply on or before 19.12.2018 at 12:45 PM was also responded but the reply was not considered. Before the ld. CIT(A) the assessee could not succeed and has preferred appeal before this Tribunal. 2. Rival contentions were heard and submissions made have been considered. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... away by the report of the Investigation Wing, Kolkata and the entire assessment has been framed by the ld. AO without conducting any enquiry from the relevant parties or independent source or evidence and he has merely relied upon the statements recorded by the Investigation Wing as well as information received from the Investigation Wing. Neither any independent and separate enquiry has been conducted in the case of the assessee nor the statement recorded by the Investigation Wing has been confirmed or corroborated by the person during the assessment proceeding. The assessee relied upon the judgment of Hon'ble Delhi High Court in the case of Synfonia Tradelinks Pvt. Ltd. vs. ITO in W.P.(C) 12544/2018 wherein the Hon'ble Court has held as under: "...The reasons which lead to the formation of opinion or belief that the assessee's income chargeable to tax has escaped assessment should be inextricably connected. In other words, the reasons for the formation of opinion should have a rational connection with the formation of the belief that there has been an escapement of income chargeable to tax (See: ITO v Lakhmani Mewal Das, 19763 SCO 757]" 2.2. The finding of ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the judgment of Hon'ble Delhi High Court in the case of Suman Poddar vs. ITO which was later upheld by the Hon'ble Supreme Court. Ld. CIT(A) held that on the basis of the judicial pronouncements, he was of the considered view that the transaction in scrip was colourable device in guise of investment in listed shares and accordingly, the addition made on account of bogus transaction in penny stock amounting to Rs. 1,77,391/- was confirmed and the appeal was dismissed. 3. Before us, the only effective ground of appeal is regarding the addition of Rs. 1,77,391/-. It was stated before us that the return of income was filed on 15.07.2011 showing total income of Rs. 7,85,146/- and as regards ground no. 2 relating to bogus LTCG, it was stated that the assessee had not even sold the shares during the year and the required contract notes etc. were put up before the ld. CIT(A) and the same also find a mention on page 25 of the paperbook. The submissions made in this regard are as under: "The Ld. AO has passed his order u/s 144/147 of the Act (Page No. 20-24) alleging that the assessee is a beneficiary of Rs.1,77,391/- in respect of transaction undertaken in the scrip of Global ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant supporting his contentions are carefully gone through. It is observed that during the assessment proceedings, the Assessing Officer has noted that within a short span to time the appellant managed to sell the shares with increased value of acquisition. It appears that there were several such transactions which led to an investigation being commenced by the Directorate of Income Tax Investigation, Kolkata. The modus operandi has been set out in the report, the types of penny stocks companies, the entities involved in the transactions, the different stages of the transactions, the merger method. The report further states that BSE listed penny stocks have been identified after which several search and survey operations were conducted in office premises of share broking entities who have accepted that they were actively involved in bogus LTCL/STCL scam. Surveys were also conducted in the office premises of many accommodation entry providers and their statements were recorded in which they have admitted their role in the scam. This led to recording statements from the share brokers who have accepted that the said cash has been used for providing accommodation entries of bogus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AO failing to issue notice u/s 143(2) of the Act and failing to serve the proper show cause notice on the assessee thus, making the order passed defective. Similarly, ground no. 6 relates to the ld. AO not supplying the copy of the report of Investigation Wing/PMO based upon which the proceeding was initiated. However, since relief has been granted on merit as the transaction did not pertain to the year under consideration, therefore, these grounds become merely academic in nature and do not require any separate adjudication.
6. Ground no. 7 relates to incorrect credit of TDS of Rs. 81,500/-. The ld. AO is directed to verify the same and the assessee is also directed to furnish necessary evidences for the same before the ld. AO who shall allow the credit in accordance with law as this ground of appeal has not been adjudicated upon by the ld. CIT(A). The same was specifically raised as ground no. 12 (additional ground) before him.
7. Ground nos. 1 & 8 are general in nature which do not require any separate adjudication.
8. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 19th November, 2024. X X X X Extracts X X X X X X X X Extracts X X X X
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