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TMI Blog2024 (4) TMI 1239X X X X Extracts X X X X X X X X Extracts X X X X ..... r share in physical mode and was later dematerilsed and credited in the D-mat account of the assessee. Subsequently the name of the above said company was changed into Sunrise Asian Ltd. The assessee sold all the shares during the period from August 2013 to March 2014 in various installments for an aggregate sale value of Rs. 88,49,785/-, which resulted in long term capital gain of Rs. 84,89,785/-. The assessee claimed the same as exempt u/s 10(38) of the Act. 3. The Assessing Officer noticed that the investigation wing of Kolkata has reported that the bogus capital gains were generated by rigging the price of shares of certain companies, which were named as "penny stocks". It was noticed that M/s. Sun Asian Ltd. was identified as one of the penny stocks. He examined the financial statements of Sun Asian Ltd. and took the view that the market value of shares was not commensurate with the actual fundamentals of that company. He also noticed from the report given by the investigation wing of Kolkata that the operators were rigging the prices of shares. The said report also included the statement taken from one of the operators named Shri Vipul Vidur Bhatt, wherein he had admitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .454 of 2018) (c) The ITO vs. M/s Ice Worth Reality LLP (ITA Nos. 565 & 566/Ahd/2020 dated 13-03-2023) (d) Vipul M Shahj (HUF) vs. The ITO (ITA No.130/Mum/2023 dated 16.10.2023) Referring to the case of M/s Ice worth Reality LLP, the Ld A.R submitted that the Tribunal has noted the fact that even Canara Bank has purchased the shares of this company. Accordingly, he submitted that the transactions of the assessee should not have been doubted merely on the basis of generalized report given by the investigation wing. He submitted that the AO did not carry on any other investigation to show that the transactions carried on by the assessee were not genuine. 6. The Ld D.R submitted that the report of the investigation wing clearly shows that the prices of M/s Sunrise Asian Ltd were manipulated. Further, the trading in the above said shares was suspended earlier. The fundamentals of this company were very weak and hence a prudent investor could not have invested in such kinds of shares. Further, one of the operators Shri Vipul Vidhur Bhatt has confessed that he was providing accommodation entries in sale of shares of M/s Sunrise Asian Ltd. He further submitted that the notices issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, Kolkatta in order to arrive at the conclusion that the long term capital gains reported by the assessee is bogus in nature. We notice that the investigation report prepared by Investigation wing, Kolkata is a generalized report with regard to the modus operandi adopted in manipulation of prices of certain shares and generation of bogus capital gains. We notice that the AO has placed reliance on the said report without bringing any material on record to show that the transactions entered by the assessee were found to be a part of manipulated transactions, i.e., it was not proved that the assessee has carried out the transactions of purchase and sale of shares in connivance with the people who were involved in the alleged rigging of prices. The Ld A.R also submitted that the regulator of stock market SEBI has not conducted any enquiry against the assessee. 9. We notice that the assessee has furnished reply to the notice issued by the AO and the AO could not find any adverse features from the said reply. Further, the AO also could not disprove the share transactions by bringing any material on record. We also notice that the assessee has (a) purchased these shares by paying con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ureshkumar seriously complained 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 Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the accounted income 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 tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 at hand, then, we do not think that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sale consideration of shares as unexplained cash credit u/s 68 of the Act. It is pertinent to note that the purchase of shares made in an earlier year has been accepted by the revenue. The sale of shares has taken place in the online platform of the Stock exchange and the sale consideration has been received through the stock broker in banking channels. Hence, in the facts of the case, the sale consideration cannot be considered to be unexplained cash credit in terms of sec. 68 of the Act. 14. We notice that, in the instant case, 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. Hence the ratio laid down in the above said cases by the jurisdictional Hon'ble Bombay High Court shall apply to the facts of the present case. Accordingly, we are of the view that the Ld CIT(A) was not justified in confirming the addition made by the AO. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the addition of sale proceeds of shares made u/s 68 of the Act. 15. In the result, the appeal of the assessee is allowed. Order pronounced on 05.04.2024. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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