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TMI Blog2025 (1) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... ber For the Assessee : None For the Revenue : Shri Aashish Rajesh Rewar, Sr. D.R. ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the order dated 06.12.2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as CIT(A) ), arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Year 2015-16. 2. Brief facts of the case are that the assessee is Kartha of HUF and filed his Return of Income for A.Y.2015-16 on 10.12.2015 declaring total Income of Rs. 9,42,510/-. The case was selected for Complete Scrutiny assessment and notice u/s 143(2) of the Act was issued on the assessee. 2.1. On verification of computation of income, the AO observed that during the financial year, the assessee has claimed exemption u/s 10(38) of the Act, long-term capital gain of Rs. 92,01,732/- in respect of sale of shares of M/s. Kailesh Auto Finance Limited. The assessee claimed that 3,00,000 shares of M/s. Careful Projects Advisory Ltd. had been purchased on 13.03.2013 @1/-per share. Subsequently, M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uto Finance Ltd. share are not genuine transaction and is only accommodation entries in the form of Long Term Capital Gain. Therefore the Ld. A.O. requested to sustain the addition made u/s. 68 of the Act. The Ld. CIT(A) considered the above submissions and confirmed the addition made by the Assessing Officer by observing as follows: ..7.2 Grounds no. 1 and 2 relate to holding the LTCG as bogus and bringing to tax the sale consideration of Rs. 95,01,732/- u/s 68 as unexplained cash credit. Facts in brief are that during the year under consideration, the appellant had earned Long- Term capital gain of Rs. 92,01,732/- on sale of shares of Kailash Auto Finance Ltd. The LTCG was claimed as exempt u/s 10(38) of the IT Act. The facts related to the transaction have been discussed in detail in para 4 to 4.3 above, 300000 shares of Careful Projects Advisory Ltd. had been purchased in March 2013 @ Rs. 1/- per share. Subsequently, Careful Projects Advisory Ltd. was merged with Kailesh Auto Finance Ltd. In a scheme of amalgamation. 7.3 Kailash Auto Finance Company Ltd. has been identified as a 'penny stock' company. The modus operandi of penny stock companies and the entire process of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nus is on the AO making the addition to adduce proof for the addition and the AO has failed to do so. 7.5 At this juncture it is relevant to refer to the decision rendered by the Hon'ble High Court of Kolkatta in the case of PCIT v/s Swati Bajaj [2022] 139 taxmann.com 352 (Calcutta). Relevant extracts are reproduced below: 3. ..The assessing officer noted that within a short span to time of 17 to 21 months, the assessee managed to sell the shares with increased value of about 2823% that to when the general market trend was recessive. It appears that there were several such transactions which led to an investigation being commenced by the Directorate of Income-tax Investigation, Kolkata. A report in this regard was submitted by the Deputy Director of Income-tax Investigation, Unit II (3), Kolkata dated 27-4-2015 which report was furnished to the Director General of Income-tax Investigation in Mumbai, Delhi, Ahmedabad, Bengaluru, Bhopal, Chandigarh, Chennai, Delhi, Hyderabad, Jaipur, Kochi, Kolkata, Lucknow, Patna, Pune and Director General (International Taxation) Mumbai. The investigation report dated 27-4- 2015, which is available in the public domain narrates the modus operan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from financial year 2009-2010 up to 2013-2014 and it is rather peculiar to note that from December, 2011 to August 2013, the share market were almost flat and even the investments in peers have not resulted into any gain but the shares of Surabhi Chemicals had risen to such a level without any fundamentals which is beyond anyone's imagination. . 75. While it may be true that M/s. Swati Bajaj, Mr. Girish Tigwani or other assessees who are before us could have been regular investors, investors could or could not have been privy to the information or modus adopted. In our considered view, what is important is that it is the assessee who has to prove the claim to be genuine in terms of section 68 of the Act. Therefore, the assessee cannot escape from the burden cast upon him and unfortunately in these cases the burden is heavy as the facts establish that the shares which were traded by the assessees had phenomenal and fanciful rise in price in a short span of time and more importantly after a period of 17 to 22 months, thereafter has been a steep fall which has led to huge claims of STCL. Therefore, unless and until the assessee discharges such burden of proof, the addition made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a penny stock and this decision was affirmed by the Hon'ble Supreme Court in Suman Poddar (supra). 3.1. Further Ld. CIT(A) considered the Judgment passed by Hon ble Delhi High Court in the case of Sanjay Kaul and confirmed the sale transaction of M/s. Kailash Auto Finance Ltd. as penny stock and dismissed the appeal filed by the assessee. 4. Aggrieved against the same, the assessee is in appeal before us raising the solitary Ground of Appeal: 1. The Ld. CIT (Appeal) has erred on law as well as in fact while confirming the addition of Rs. 95,01,732/- made by Ld A.O. in the assessment order u/s 143(3) on ground of unexplained cash credit u/s 68 on sale of shares. The Addition is confirmed on conjecture and surmises and on the basis of law and fact of the case the same is required to be deleted. 2. The Ld. CIT has not passed speaking order as the Ld. CIT has not considered the facts of the case and purely on presumption passed appellate order. 5. Today is the 10th time of hearing of this appeal, none appeared on behalf of the assessee and no Authorization given in favour of any Representative. Even in the previous occasion only stereo-typic adjournment letters were filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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