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TMI Blog2025 (1) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... he could not find any fault with the assessee. AO has only observed that the assessee could not explain as to why he invested in the shares of company, whose fundamentals are weak. However, the assessee had stated that she has made investment on the basis of market information that the future of this company is bright. In our view, the rationale of making investment may not be relevant to arrive at the conclusion that the transactions of purchase and sale of shares are bogus. AO has also referred to a statement given by a person named Shri Rakesh Somani before the Investigation Wing, but did not furnish the same to the assessee to rebut it. He also did not provide opportunity of cross-examination to the assessee. It was not known as to whether Shri Rakesh Somani has stated that the transactions entered by the assessee were bogus. Another important aspect is that the assessee has sold only a part of shares of above said company, i.e., 5,20,000 shares. The remaining 14,80,000 shares are still held by the assessee. Further, the assessee is also a regular investor holding shares of other companies also. Hence, it is not a case of isolated transaction of purchase and sale of shares. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has sold 5,20,000 shares for a consideration of Rs. 3.28 crores and declared long term capital gains of Rs. 3.21 crores. Relying fully upon the report given by the Investigation Wing, the AO took the view that the long term capital gain declared by the assessee on sale of shares of above mentioned company was pre-arranged method employed by the assessee with the connivance of the operators in order to generate bogus long term capital gains. 3. The AO noticed that the Investigation Wing had reported that the increase in the prices of shares of above said company was not commensurate with the financial results declared by the company and further, the net worth of the company was negligible. The Investigation Wing also reported that the trading in the above said company was controlled by certain brokers and in the statement taken from one of such persons named Shri Rakesh Somani, he had confessed to have provided accommodation entries for generating long term capital gains in the shares of above said company. Based on the statements so given by the above said person, the AO came to the conclusion that the trading in shares of above company are controlled by various entry an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He did not allow opportunity of cross-examination to the assessee; despite a request made by the assessee to cross-examine the above person. Hence, the AO could not have placed reliance on the said statement without providing opportunity of cross examination in order to enable the assessee to rebut the same. Accordingly, the Ld.AR contended that the AO has disbelieved 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 long term capital gains as unexplained income of the assessee u/s 68 of the Act. In support of his contentions, the Ld.AR placed his reliance on various case law. He submitted that the ratio of decisions rendered by the Hon ble Bombay High Court is applicable to the facts of the present case. 7. The Ld.DR supported the orders passed by the tax authorities. He submitted that the assessee has purchased the shares in the off market on preferential basis. The tax authorities have noticed that financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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 Rakesh Somani before the Investigation Wing, but did not furnish the same to the assessee to rebut it. He also did not provide opportunity of cross-examination to the assessee. It was not known as to whether Shri Rakesh Somani has stated that the transactions entered by the assessee were bogus. An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner and the Assessing Officer failed to note some relevant and germane material. In these circumstances, he submits that the Appeals do not raise any substantial question of law and deserve to be dismissed. 5. We have perused the concurrent findings and on which heavy reliance is placed by Mr.Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried out in paras 20, 20.1, 20.2 and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from Stock Exchange have been relied upon and for the purposes of faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparent on the face of the record either. 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been alleged to have been indulged in price manipulations and the SEBI had also passed an order regarding irregularities and synchronized trades carried out in the shares by the said broker. However, the evidences furnished by the assessee with regard to purchase and sale of shares were not doubted. Under these set of facts, the Hon ble Bombay High Court held as under:- .The CIT(A) came to the conclusion that respondent bought 3000 shares of RFL, on the floor of Kolkatta Stock 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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