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TMI Blog2024 (12) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.05.2019, relating to assessment year 2015-16. In this appeal, the assessee has raised as many as 21 grounds, however, the solitary ground in this appeal is Ground No. 1, which reads as under:- That on the facts and circumstances of the case, the ld. CIT(A)-2, Guwahati erred in upholding assessment concluded by Ld. Income Tax Officer, Ward 4(1), Guwahati, at Rs. 1,49,56,620/- instead of returned income of Rs. 41,630/- returned by the appellant. 2. The brief facts of the case are that the addition of Rs. 1,49,14,984/- has been made on account of Bogus LTCG from penny stock. The details of the transaction leading to the aforesaid amount Rs. 1,49,14,984/- as culled out from the assessment order is as under:- LTCG amount Name of penny stock Quantity of penny stock sold Sale consideration Rs. 1,49,14,984/- HPC Bioscience Ltd. 36100 Rs. 1,52,76,467/- 3. Against the aforesaid action of the AO, Assessee appealed before the Ld. CIT(A). 4. Upon assessee s appeal, Ld. CIT(A) by passing an elaborate order, confirmed the addition, by holding as under:- Notwithstanding the above reasons for confirming the addition made by the AO, in this case, I note that the Appellant has claimed LTCG which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant cannot wash his/her hands from the gamut of the plans giving colour of genuine transactions. The manipulation was possible only by the beneficiary and its aides. It was highly improbable to get that much of capital gain by investing in a company which neither had substantive past nor a promising future. The whole of the case against the Assessee is that there was a well planned maneuvering to take the transactions look genuine. The question arises as to how a person can judge the growth of the company which has negligible presence in the market in terms of revenue or in terms of capital, It certainly hints at certain illegitimate planning having the garb of legal forms. No investigation is required to prove such a conspicuous fraudulent activity. The case was so glaring that even a lay man could easily judge the real facts of the case. There are no comprehensible market forces or international trends responsible for huge fluctuation in the price of the shares of this company. Even the sensex was not so volatile during this period. There are no sentimental, national or international factors responsible for the so called growth. Arguments of the Appellant do not help because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sh. Tarun Goyal is, on record, whereby they have clearly stated that they signed on the papers produced before them by Sh. Tarun Goyal. They do not know about the basic details of the companies like shareholding patterns, nature of business of these companies etc. iv. The statement of auditors of Sh. Tarun Goyal is on record. They have stated to have never meet (sic) the directors of the companies and audited the accounts only on the directions of Sh. Tarun Goyal. As per the statement of auditors, the employees of Sh. Tarun Goyal were directors of the companies run by them, also they could not ascertain the so called shore capital subscribed by Sh. Tarun Goyal as documentary proof of the same was lacking. v. During the course of search, all the passbooks, cheque books, PAN Cards etc. were always in possession of Sh. Tarun Goyal. On his directions all the employees signed all the documents. vi. All the bank account opening forms appear to be in the handwriting of Sh. Tarun Goyal. vii. All the books of accounts of all the companies have been retrieved from the computers/laptop of Sh. Tarun Goyal. viii. Sh. Tarun Goyal has given letters for the release of bank accounts of companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be no order as to costs. Clearly, the ratio laid down in the above judgment is also applicable to the facts of the instant case. The Appellant failed to rebut the observations of the Assessing Officer stated above. The Appellant rather beats about the bush to defend the present case. With respect to the circumstantial evidence and in the matter related to the discharge of onus of proof and the relevance of surrounding circumstances of the case, the relevant observations and findings of Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More [82 ITR 540], are: That though an appellant's statement must be considered real until it was shown that there were reasons to believe that the appellant was not the real, in a case where the party relied on self-serving recitals in the documents, it was for the party to establish the transfer of those recitals, the taxing authorities were entitled to look Into the surrounding circumstances to find out the reality of such recitals. Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal. Therefore, the Courts and the Tribunals have to judge the evidence before them by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee, which was upheld by the CIT (A) as well as by the Tribunal. 4. Learned counsel for the assessee submitted that the view taken by the Tribunal is perverse. The assessee having discharged the burden of proving the transactions of sole and purchase of the shares to be genuine, burden of proving that the said transactions were not genuine, was on the Department and in the absence of any material on record, holding the transactions to be not genuine, was not permissible. We are unable to accept the submission made. The burden of proving that income is subject to tax is on the Revenue but on the facts, to show that the transaction is genuine, burden is primarily on the assessee. The AO is to apply the test of human probabilities for deciding genuineness or otherwise of a particular transaction. Mere leading of evidence that the transaction was genuine, cannot be conclusive. Such evidence is required to be assessed by the AO in a reasonable way. Genuineness of the transaction can be rejected even if the assessee leads evidence which is not trustworthy, even if the Department does not lead any evidence on such an issue. In view of the above, we are of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court has taken a superficial view of the onus that lay on the Department. 6. The learned CIT(A) only got swayed by the issuance of notice by the AO under Section 131 to both the brokers from whom shores were purchased and sold and came to the conclusion that share transactions were genuine overlooking the material gathered by the AO from the statements recorded of broker M/s S.K. Sharma Co. and the other facts and circumstances that volume of transactions of Jaipur Stock Exchange is only 600 shares and 1000 shares. Payments have been received from the brokers only in instalments over a period of 6-7 months. It is true that when transactions are through cheques, It looks like real transaction but authorities are permitted to look behind the transactions and find out the motive behind transactions. Generally, it is expected that apparent is real but it is not sacrosanct. If facts and circumstances so warrant that it does not accord with the test of human probabilities, transactions have been held to be nongenuine, it is highly improbable that share price of a worthless company can go from Rs. 3 to Rs. 55 In a short span of time. Mere payment by cheque and receipt by cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer Is required to be formed objectively with reference to the material avallable on record. Application of mind is the sine qua non for forming the opinion. In the case of Sanjay Bimalchand Jain vs. Pr. CIT it was held/ averred, as follows, by the Hon'ble Bombay High Court: (iii) On hearing the learned counsel for the assessee and on a perusal of the orders of the Income tax authorities, it appears that there is no scope for interference with the said orders in this appeal. By referring to the aforesaid facts, which are narrated in the earlier part of this order, the authorities found that the assessee had made investment in two unknown companies of which the details were not known to her. It was held that the transaction of sale and purchase of shares of two penny stock companies, the merger of the two companies with another company, viz. Khoobsurat Limited did not qualify an Investment and rather it was an adventure in the nature of trade. It was held by all the authorities that the motive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows, by the Hon'ble Delhi High Court: The assessee is aggrieved by the concurrent findings of the tax authorities - including the lower appellate authorities rejecting its claim for a long term capital gain reported by it, to the tune of Rs. 13,33,956/- and Rs. 14,34,501/- In respect of 4,000 shares of M/s Kappac Pharma Ltd. The assessee held those shares for approximately 19 months; the acquisition price was Rs. 12/- per share whereas the market price of the shares at the time of their sole, was Rs. 720/. It is contended that the assessee was not granted fair opportunity. Mr. Rajesh Mahna, learned counsel appearing for the assessee relied upon the orders of the co-ordinate Bench of the tribunal, in respect of the same company i.e. M/s Kappac Pharma Ltd., and pointed out that the tax authority's approach in this case was entirely erroneous and inconsistent. The main thrust of the assessee's argument is that he was denied the right to cross-examination of the two individuals whose statements led to the inquiry and ultimate disallowance of the long term capital gain claim in the returns which are the subject matter of the present appeal. This court has considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods. As a result of the above discussion, all the above grounds of Appeal of the Appellant, as impugned herein are, hereby, dismissed. 5. Against the aforesaid order of the Ld. CIT(A), assessee is in appeal before us. 6. None appeared on behalf of the assessee. On perusal of the order sheets, it reveals that from the last several occasions, the assessee is not appearing on the date of hearing, despite issue of notices, hence, we are disposing of this appeal ex-parte qua assessee, after hearing the Ld. DR and perusing the records. We find that this a classic case of penny stock transaction. We further find that Ld. CIT(A) has passed a well reasoned order by taking care of each and every argument of the assessee. Hence, in our considered opinion, there is no need to interfere in the order of the Ld. CIT(A), therefore, we affirm the action of the ld. CIT(A) and accordingly, reject the grounds raised by the Assessee. 7. In the result, the Assessee s appeal is dismissed. Order pronounced on 05/12/2024. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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