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TMI Blog2023 (10) TMI 1505X X X X Extracts X X X X X X X X Extracts X X X X ..... so it continues to be listed in the stock exchange till date.
Nothing has been brought on record that SEBI or any other agency has banned the trading or any adverse finding has been given against the scrip. AO has not even conducted any enquiry from either the broker of the assessee Hornic Investment Pvt. Ltd. or from the exit provider. Simply relying upon the information from the Investigation Wing of some of the brokers who have provided accommodation entry in this scrip cannot be the sole reason of adverse inference unless AO himself carries out any enquiry or there is some other information or material on record that this scrip was banned or debarred in trading of the shares.
As perused the judicial pronouncements relied upon by the ld. Counsel and observe that on similar facts and identical issue in respect of shares of Sunrise Asian Ltd. have decided the issue in favour of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... sale proceeds received through bank. However, the AO has not agreed with the submission of the assessee and referred the statement of Shri Vipul Bhatt and fact of unusual rise in the price of shares, therefore, made an addition of Rs. 199,34,702/- u/s 68 as unexplained credit comprising amount of capital gain and unexplained expenditure. 3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 4. During the course of appellate proceedings before us the ld. counsel contended that assessee was a regular investor in the shares and securities and in this regard he referred copy of balance sheet and statement showing that assessee has made investment in various script totalling to Rs. 9,19,43,80.04/-. Therefore, the ld. Counsel submitted that it cannot be presumed that assessee has only invested in one script. The ld. counsel further submitted that AO has merely relied on the statement of Shri Vipul V. Bhatt which has been retracted on 02.09.2016 by way of affidavit therefore, same cannot be the sole basis for making addition. The ld. Counsel further submitted that all documents pertaining to sale and purchase of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ITAT Ahmedabad (ITA No. 1442/Ahd/2013 & Co. No. 209/Ahd/2013) AY. 2005-06 5. Surya Prakash Toshniwal HUF vs. ITO (ITAT Kolkata) ITA No. 1213/Kol/2016 Assessment Year :2005-06 6. CIT vs. Mukesh Ratilal Marolia (Bombay High Court) INCOME TAX APPEAL NO. 456 OF 200 7 7th September 2011 7. Smt. Sunita Jain, V/s. Income Tax Officer, Ward 10 (3), Ahmedabad ITA. Nos: 501 & 502/AHD/2016 Assessment Year: 2008-09 8. ITO-24(3)(1) V/s M/s Arvind Kumar Jain HUF ITA No. 4862/MUM/2014 Assessment Year: 2005-06 9. Kamla Devi S. Doshi V/s. The Income Tax Officer Ward 16(3)(1), I.T.A. No. 1957/Mum/2015 Assessment Year: 2006-07 10. Shri Sunil Prakash V/s. ACIT -15(2) I.T.A./6494/Mum/2014, Assessment Year: 2005-06 11. Pramod Kumar Lodha Vs. ITO (ITAT Jaipur) 12. Navneet Agarwal Vs. ITO (ITAT Kolkata) 13. ACIT Vs. Vineet Sureshchandra Agarwal (ITAT Ahmedabad) 14. Meenu Goel vs. ITO (ITAT Delhi)." Reliance is also placed on the following case law: 1. Hon'ble Supreme Court in the case of M/s Mehta Parikh & Co., 30 ITR 181 Reliance is also placed on the following case law: 1. M/s Andaman Timber Industries Vs. CCE Civil Appeal No. 4228 of 200 2. Lalchand Bhagat Ambica Dav Vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as on 31.03.2014 the assessee has made investment of Rs. 9,19,43,80.04/- in 26 different scrips as per statement of investment placed at page no. 5 of the paper book which demonstrate that assessee had not made investment in only one scrip but assessee was regular investor. Apart from the fact that assessee was a regular investor in many scrips, even for this particular scrip also it seems that this scrip was listed in stock exchange at the time of purchase as well as at the time of sale and also it continues to be listed in the stock exchange till date. Nothing has been brought on record that SEBI or any other agency has banned the trading or any adverse finding has been given against the scrip. AO has not even conducted any enquiry from either the broker of the assessee Hornic Investment Pvt. Ltd. or from the exit provider. Simply relying upon the information from the Investigation Wing of some of the brokers who have provided accommodation entry in this scrip cannot be the sole reason of adverse inference unless AO himself carries out any enquiry or there is some other information or material on record that this scrip was banned or debarred in trading of the shares. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner has taken cognizance on account of this fact that the Sunrise Asian Ltd. has been marked in the list of penny stock company but nowhere has proved or discussed that the transaction with the penny stock company is against law and facts. The law relied upon the Ld. representative of the DR speaks about the submissions of evidence which were not sufficient to meet out the query raise by AO but in the instant case sufficient evidences have been submitted by the assessee before the AO. There is nothing on record in which circumstances, the order dated 29.11.2016 can be branded as erroneous and prejudicial to the interest of the revenue. It is mandatory on the part of the commissioner to arrive at this conclusion that the order dated 29.11.2016 as passed by AO is erroneous, which he did not hold. In this regard, we also find support of law in CIT Vs. Nirav Modi (supra) which has been confirmed by Hon'ble Supreme Court and reported at 77 Taxmann.com 15(SC) 2017. Further, it is apparent on record that the AO has asked the query which was properly replied by assessee along with necessary documents, therefore, after his satisfaction, the AO nowhere made an adverse remark in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below have not pointed out any evidence on record to hold that the assessee has obtained bogus entries in connivance with entry operators and brokers etc., in order to claim bogus LTCG. As pointed out by the Ld. counsel, the assessee was not given an opportunity to cross examine the witnesses whose statements were relied upon and on the basis of their statements it was concluded that the transaction in question was a part of penny stock scam. So, in view of the cases discussed in the foregoing paras, particularly the ratio laid down by the Hon'ble Supreme Court in the case of M/s Andaman Timber Industries (supra), we are of the considered view that the Ld. CIT (A) has wrongly confirmed the assessment order passed by the AO in violation of the principles of natural justice. Hence, the impugned order passed by the Ld CIT (A) suffers from legal infirmity. We, therefore, allow the sole ground of appeal of the assessee and set aside the impugned order passed by the Ld. CIT (A). Accordingly, we direct the AO to allow the claim of the assessee." 6. The ld. Departmental Representative has failed to controvert the findings of Tribunal in the case of Shri Narayan R. Rathi whos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share. The transactions took place through online mechanism after complying with all the formalities and procedure including payment of STT. The delivery of the shares was through clearing mechanism of the stock exchange and sale consideration was received through banking channels. The transactions are duly evidenced by contract notes, demat statements, bank statements and other documentary evidences. The key person of assessee group, in his statement, maintained the position that trading transactions were genuine transactions carried out through stock exchange following all process and legal procedures. The assessee also filed trading volume data and price range of the scrip for a period of more than 2 years i.e. from Jan, 2013 to July, 2015. The shares reflected healthy trading volume and the price range reflected therein was in the range of Rs. 360/- to Rs. 600/- per share. The price range was stated to be in the same range for 15 months after the period of sale of shares by the assessee, which has not been disputed by the revenue. On the basis of all these facts, it could be gathered that the assessee had duly discharged the onus casted upon him to prove the genuineness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. 8. The allegations of Ld.AO that the assessee was part of the group which indulged in rigging or manipulation of prices of shares in connivance with Shri Vipul Bhat is not backed by any independent material. Firstly, there is nothing on record which establishes the fact that the assessee was acquainted with Shri Vipul Bhat or any of his entities and secondly, the onus casted upon assessee to prove the genuineness of the transactions was already discharged by the assessee. Shri Vipul Bhat, in his statement, stated that one Shri Sandeep Maroo acted as intermediary who introduced Vardhan family to him. However, no further investigations have been carried out to establish this vital link between the assessee and Shri Vipul Bhat. We do not find any independent investigations by Ld. AO to bring on record any tangible material to corroborate the same. There are no evident or even allegation of any cash exchange between the assessee and group entities of Shri Vipul Bhat. This is further evidenced by the fact that no substantial incriminating material / wealth of that magnitude has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares and ultimately purchased a flat utilizing the sale proceeds of those shares and therefore, the co-ordinate bench chose to delete the impugned additions. We find that this decision was firstly been approved by Hon'ble Bombay High Court vide ITA No. 456 of 2007 on 07/09/2011 and thereafter, special leave petition against the said decision has been dismissed by Hon'ble Supreme Court vide SLP No. 20146 of 2012 dated 27/01/2014 which is reported as 88 CCH 0027 SCC. The SMC Bench of Tribunal in Anraj Hiralal Shah (HUF) V/s ITO (ITA No. 4514/Mum/2018 dated 16/07/2019) held that in the absence of any evidence to implicate the assessee or to prove that the transactions were bogus, the Long-Term Capital Gains declared by the assessee could not be doubted with. This case was dealing with gains earned by the assessee on sale of same scrip i.e. M/s Sunrise Asian Ltd. 13. Therefore, considering the entirety of facts and circumstances, we are not inclined to accept the stand of Ld. CIT(A) in sustaining the impugned additions in the hands of the assessee. Resultantly, the addition on account of alleged Long-Term Capital Gains as well as estimated commission against the same, stands delete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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