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TMI Blog2024 (11) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... han, Judicial Member For the Assessee : Shri Shashank Mehta. For the Revenue : Shri Umesh Chandra Sinha. ORDER PER B.R. BASKARAN, A. M : The assessee has filed this appeal challenging the order dated 26-07-2024 passed by the Ld. CIT(A), NFAC, Delhi and it relates to the Assessment Year (AY.) 2014-15. The assessee is aggrieved by the decision of the Ld. CIT (A) in confirming the validity of reopening of assessment, addition made u/s. 68 of the Income Tax Act, 1961 ("the Act") and the addition made u/s. 69C of the Act. 2. The facts relating to the case are discussed in brief. During the year under consideration, the assessee had sold 11,100 shares of M/s. SRK Industries Ltd., for a sum of Rs. 38,45,045/- and earned long term capital gains of Rs. 37,86,288/-. The assessee had claimed the same as exempt. 3. The Assessing Officer (AO) noticed that the shares of above said company has been identified as "penny stock" by the Investigation Wing, Kolkata, in which prices of the shares have been rigged in order to generate bogus capital gains/capital losses. The AO also noticed from the report prepared by the Investigation Wing of Kolkata that the prices of shares of cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in the alleged prices rigging of the shares. Accordingly he submitted that the tax authorities are not justified in disbelieving the transactions of shares carried on by the assessee. In support of his submission, he placed reliance on various case laws. 6. On the contrary, the Ld. DR heavily placed reliance on the order passed by the AO. He submitted that the Investigation Wing has conducted inquiry in respect of the above said company and has come to the conclusion that the prices of the shares of above said company are being rigged. Further, the financial performance and fundamentals of these companies were not supporting the price rise and hence the same shows that the prices were rigged. Accordingly, the Ld. DR submitted that all these transactions of purchase and sale of shares have been preconceived and artificially structured with the sole intention to evade tax. Accordingly he contended that the order passed by the Ld. CIT (A) should be confirmed. 7. In the rejoinder, the Ld. AR further submitted that the Hon'ble Supreme Court in the case of PCIT Vs. Smt. Renu Aggarwal (456 ITR 249) has affirmed the decision rendered by the Hon'ble Allahabad High Court, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained that such finding rendered concurrently should not have been interfered with by the Tribunal. In further Appeal, the Tribunal proceeded not by analyzing this material and concluding that findings of fact concurrently rendered by the Assessing Officer and the Commissioner are perverse. The Tribunal proceeded on the footing that onus was on the Department to nail the Assessee through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr. Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, therefore, be admitted. 4. Mr. Gopal, learned Counsel appearing on behalf of the Assessee in each of these Appeals, invites our attention to the finding of the Tribunal. He submits that if this was nothing but an accommodation of cash or conversion of unaccounted money into accounted one, then, the evidence should have been complete. Change of circumstances ought to have, after the result of the investigation, connected the Assessee in some way or either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the present Assessee utilized the scheme. 6. It is in that regard that we find that Mr. Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs. 25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There is a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commissioner of Income tax (Central)-1 vs. NRA Iron & Steel (P) Ltd (2019)(103 taxmann.com 48)(SC) but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces furnished by the assessee to prove the purchase and sale of shares, payment made/received, entry/exit of shares in the demat account of the assessee etc., were not doubted with. 12. In the case of PCIT vs. Smt Krishna Devi (supra), the Hon'ble Delhi High Court has noticed that the reasoning given by the AO to disbelieve the capital gains declared by the assessee, viz., astronomical increase in the price of shares, weak fundamentals of the relevant companies are based on mere conjectures. Accordingly, the Hon'ble Delhi High Court affirmed the decision rendered by ITAT in deleting the addition of capital gains. 13. Accordingly, in the facts and circumstances of the case, we are of the view that the decisions rendered by the jurisdictional Hon'ble Bombay High Court in the cases cited above shall apply to the present case, since the AO has not established that the assessee was involved in price rigging and further the AO did not find fault with any of the documents furnished by the assessee. Since we have held that the sale transactions of shares cannot be doubted with, the addition made by the AO with regard to estimated commission expenses is also liable to be deleted. 14. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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