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TMI Blog2024 (4) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... empt u/s. 10(38) to be non-genuine. Similarly, in the case of Pawanben Pannalal Gulecha, assessee has challenged the addition of Rs. 1,66,27,310/- on account of treating the long term capital gain on sale of shares of Prraneta Industries Ltd., after rejecting the claim of exemption of long term capital gain u/s. 10(38). 3. We will first take up the appeal in the case of Shri Pannalal Hastimal Gulecha. 4. The assessee is an individual engaged in trading of gold ornaments, standard gold, silver and platinum jewellery in the name of M/s. Manmandir Jewellers, as proprietor. The return of income was filed on 20/09/2012 declaring income of Rs. 16,67,580/-. The said return was selected for scrutiny and assessment was completed u/s. 143(3) at an income of Rs. 36,38,830/- by making addition of estimated gross profit on turnover. The assessee had declared long term capital gain of Rs. 8,58,32,977/- on sale of shares of Shri Ganesh Spinners Ltd. which was claimed to be exempt u/s. 10(38). Later on information was received from DGIT(Investigation) Ahmadabad that a search and seizure action was conducted in the case of Shri Shirish Chandrakant Shah, wherein it was found that Shri Shirish Chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.61 as on 18/08/2010 and rose to Rs. 45.85 on 08/07/2011 and then, thereafter, there was a shortfall from June, 2012. He has also given price chart from 01/04/2011 to 30/03/2023 showing the rise and fall of the shares. From this, he has deduced that it was a penny stock. Thereafter, he has discussed general modus operandi adopted by the entry operators for giving bogus long term entries in such kind of shares. 7.1 One fact which he has mentioned in the assessment order that this scrip has been proved to be penny stock by the SEBI, which has done substantial effort to investigate the persons and found about the manipulation of the price done in this scrip. However, this fact has been found to be incorrect at the time of hearing before us after we have enquired from both the parties, as SEBI has never found such manipulation of price or found to involve providing entries through exit providers. Accordingly, AO has concluded that assessee has made share transaction of Rs. 9,47,33,726/- as unexplained money and treated as unexplained investment and taxed the whole proceeds of sale of shares as unexplained investment u/s. 68. 8. Ld. CIT (A) has confirmed the addition on same reasonin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enny stock company, only used for providing accommodation entries. 11. However, from the perusal of the report and order of the SEBI in the matter of Gavit Industries Ltd., we find that there is no reference of price rigging or any adverse inference or ban on the trading of the scrip of Ganesh Spinners Ltd. and only certain consequential actions were taken against M/s. Gavit Industries. 12. We have heard the rival submissions and perused the relevant finding given in the impugned order as well as material referred to before us. First of all, it is seen that assessee has been making regular investments in shares which is evident from the details of investments in shares, which is part of the balance sheet of the assessee placed at page 240. Assessee has dealt in many shares and has been regular investor in many shares and this is not one off dealing in shares. In support of purchase and sale transaction of the shares of Ganesh Spinners Ltd, assessee has filed all the documentary evidences to corroborate the purchase and sale of the shares and that it was also reflected as investment in the year of purchase and sale of shares were made online in Bombay Stock Exchange, through regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be indulged in such activities. No direct evidence or material has been brought on record before us to substantiate the allegation made by the AO; or any kind of adverse information has been received from any external sources regarding the clandestine trading of the scrip or any direct evidence against assessee by the Investigation Wing. If that is not so, then based on documents submitted by the assessee presumption goes in favour of the assessee. 14. Exactly on similar kind of facts, he Hon'ble Bombay High Court in the case of Indravadan Jain HUF reported in (2023) 156 taxmann.com 605 order dated 12/07/2023, wherein the Hon'ble Court held that where shares were transferred through Demat account and through banking channels, contract notes were issued by the broker and the shares were sold on the stock exchange, there is no reason to treat capital gains as unexplained cash credits. Similarly, Hon'ble Delhi High Court in the case of Pr. CIT v. Karuna Garg [2023] 457 ITR 591 (Delhi) [ITA no. 477/2022 judgment dated 23-11-2022] held that mere astronomical increase in the share prices of a company which was not commensurate with the financial parameter of the said company is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eque in the month of November 2008 drawn on Bank of India. These shares were credited to Demat account on 21/01/2009; and were duly reflected in the balance sheet of the assessee. In support of the purchase of shares, assessee had filed copy of contract note evidencing the purchase from Network Stock Broking Ltd, copy of bank statements of Bank of India, copy of Demat account and copy of balance sheet. Thereafter, assessee sold these 7,00,000 shares in the months between December 2009 to February 2010 through Network Stock Broking Ltd on Bolt of BSE and the sale proceeds for the shares were received through banking channels. In support, assessee filed copy of contract note, bank statement, etc. 16. However, the ld. AO discarded all the documents and held that the price movement of these scrips shows that assessee had paid only Rs. 13,31,486/- and within the span of 13-15 months assessee received consideration of Rs. 1,86,20,779/- which is almost 13.98 times and against any human probability. After analyzing balance sheet of Prraneta Industries Ltd, he observed that its revenue from operation which was Rs. 4.16 Crores as on 31/03/2010 had reached to Rs. 264.54 Crores as on 31/03/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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