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TMI Blog2023 (12) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... n of purchase and sale of shares is through banking channel. Hon'ble Tribunal in the case of Sangeeta Newal Agarwal [2022 (11) TMI 1545 - ITAT MUMBAI] dealt on the same scrip of share and for the same assessment and has granted relief to the assessee.
Accordingly, we direct the AO to delete the additions and allow the grounds of appeal in favour of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany for Rs. 2 lakhs through cheque on 9-09-2011 as per purchase invoce bill. Subsequently equity shares of M/s Asianlak Capital & Finance Ltd were split in the ratio of (1:10) i.e 20,000 equity shares of Rs. 10/- paid up are split into 2 lakh shares of Rs. 1/-paid up each on 14.12.2012 and the name of the company was changed from M/s Asianlak Capital & Finance Ltd to M/s Global Infratech & Finance Ltd. Further the assessee has dematerialized the shares on 24.09.2013 and during the F.Y 2013-14, the assessee has sold 32,000 shares on 10.02.2014 for a consideration of Rs. 24,68,800/- and claimed exemption of Long term capital gains u/s 10(38) of the Act. The AO has dealt on the purchase confirmation, sale contract notes, bank statement and demat account, statements in respect of shares purchase and relied on the various factual aspects of share trends, modus operandi and report of the Investigation Wing ITDA data, BSE data and report of the kolkata Investigation Wing, statements recorded U/sec131 of the Act and has doubted the earning of long term capital gains on shares. Whereas the AO find that there is no correlation of price rice and the financial statements of the investee comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has furnished the information with evidences of purchase price, financial statements and summary of shares sold in F.Y 2013-14, ledger account copy, copies of bank account statement, copy of the contract note and sale of the shares, demat account statement and copy of physical share certificate. The Ld. AR contentions are that the assessee has purchased 20,000 shares of M/s Asianlak Capital & Finance Ltd at Rs. 10/- per share from KKJ Stock & company for Rs. 2 lakhs through cheque on 9-09-2011 as per purchase bill. Subsequently equity shares of M/s Asianlak Capital & Finance Ltd were split in the ratio of (1:10) i.e 20,000 equity shares of Rs. 10/- paid up are split into 2 lakh shares of Rs. 1/- paid up each on 14.12.2012 and the name of the company was changed from M/s Asianlak Capital & Finance Ltd to M/s Global Infratech & Finance Ltd. Further the assessee has dematerialized the shares on 24.09.2013 and during the F.Y 2013-14, the assessee has sold 32,000 shares on 10.02.2014 for a consideration of Rs. 24,68,800/- and claimed exemption of Long term capital gains u/s 10(38) of the Act. The assessee has sold the shares in the financial year 2013-14 through a SEBI registered broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs Indravadan Jain Huf ITA NO. 454 OF 2018 dated12-07-2023. 10. PCIT VS Renu Aggarwal(2023)(456 ITR 249)(SC) 11. Shri Abhishek Doshi Vs Acit -19(1) ITA.NO 3122/M/2022. 12. Vipul M Shah Vs. The ITO 17(3)(5) Mumbai. ITA No. 1030 /Mum/2023 7. Further the facts and circumstances of the present case is similar and identical and pertains to the A.Y 2014-15 dealt by the Coordinate Bench of the Tribunal in ITA No. 194/Kol/2018 in the case of Kaushalya Agarwal Vs ITO and granted relief observing at page 5 Para 6 to 8 of the order as under: "6. Having heard both the parties and carefully perusing the documents on record, we note that the assessee had purchased 40,000 shares of M/s. ACFL on 13.09.2011 from M/s KKJ Staocks & Co (the Contract Note is available at page 13 of assessee's paper book wherein quantity of 40,000 shares of M/s. ACFL had been purchased by assessee for an amount of Rs. 4,00,000/- dated 13.09.2011 is found). We note that the payment was made by account payee bank transaction on 13.09.2011 which is evident from page 14 of the paper book which is the bank statement of the assessee maintained at Vijaya Bank. We note that M/s. ACFL changed its name to M/s. GIFL on 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Vs. ITO & Ors. dated 15.03.2019. We also note that the Tribunal in ITA No. 711/Kol/2018 Kanwarlal Agarwal (HUF) Vs. ITO for AY 2014-15 by order dated 01.02.2019 has taken into consideration the Ld. AR's submission and reliance placed by him on the decision of ITAT, Chennai Bench in the case of M/s. Pankaj Agarwal & Sons (HUF) Vs. ITO & Ors. in ITA No. 1413/CHNY/2018 & Ors. dated 06.12.2008 as well as the Hon'ble Bombay High Court decision in Sanjay Bimalchand Jain Vs. Pr. CIT 89 taxman.com 196, wherein the Tribunal vide para 6 and 7 has observed as under: "6. Regarding the case laws relied upon by the Id. Departmental Representative, I find that, in the case of M/s. Pankaj Agarwal & Sons (HUF)(supra), the issue was decided against the assessee for the reason that, the assessee could not justify his claim as genuine by producing evidence and was only arguing for the matter to be set aside to the lower authorities on the ground of natural justice. As similar arguments were not raised before the lower authorities by the assessee, the ITAT rejected these arguments. In the case on hand, all evidences were produced by the assessee. In the case of Sanjay Bimolchand Jain, legal heir of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thus has discharged the onus casted upon him by producing the relevant documents mentioned in para 15 (supra), accordingly, the question of treating the said gain as unexplained cash credit under section 68 of the Act cannot arise unless the AO is able to find fault/infirmity with the same. We note that the source of the receipt of the amount has been explained and the transaction in respect of which the said amount has been received by assessee has not been cancelled by the stock exchange/SEBI. So, it is difficult to countenance the action of AO/Ld. CIT(A) in the aforesaid facts and circumstances explained above. 21. Even assuming that the brokers may have done some manipulation then also the assessee cannot be held liable for the illegal action of the brokers when the entire transactions have been carried out through banking channels duly recorded in the Demat accounts with a Government depository and traded on the stock exchange unless specific evidence emerges that the assessee was in hand in gloves with the broker for committing the unscrupulous activity to launder his own money in the guise of LTCG is brought on record by the AO. 22. There is also nothing on record whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence on record. The Tribunal has further recorded a finding of fact that the cash credits in the, bank accounts of some of the buyers of shares cannot be linked to the assessees. Moreover, yn the light of the documentary evidence adduced to show that the shares purchased and sold by the assessees were in conformity with the market price, the Tribunal recorded a finding of fact that the cash credits in the buyers' bank accounts cannot be attributed to the assessees. No fault can be found with the above finding recorded by the Tribunal. Therefore, the decision of the Tribunal is based on finding of facts. No substantial question of law arises from the order of the Tribunal.-Asstt. CIT vs. Kamal Kumar S. Agrawal (Indl.) & Ors. (2010) 41 DTR (Nag) (Trib) 105: (2010) 133 TTJ (Nag) 818 affirmed; Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124: (1995) 80 Taxman 89 (SC) distinguished." 12. The Hon'ble High Court of Rajasthan in CIT vs. Smt. Pushpa Malpani - reported in (2011) 242 CTR (Raj.) 559; (2011) 49 DTR 312 dismissed the appeal of department observing 'Whether or not there was sale of shares and receipt of consideration thereof on appreciated value is essentially a question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the AO could not have added income, which was rightly deleted by the CIT(A) as well as the Tribunal. It is settled law that suspicion, howsoever strong cannot take the place of legal proof. Consequently, no question of law, much less a substantial question of law, arises for adjudication.- C. Vasantlal & Co. vs. CIT (1962) 45 ITR 206 (SC), M.O. Thomakutty vs. CIT (.1958) 34 ITR 501 (Ker)) and Mukand Singh vs. Sales Tax Tribunal (1998) 107 STC 300 (Punjab) relied on; Umacharan Shaw &Bros. vs. CIT (1959) 37 ITR 271 (SC) Applied; Jaspal Singh vs. CIT (2006) 205 CTR (P & H) 624 distinguished" 26. The Co-ordinate Bench of Ahmedabad in ITA Nos. 501 & 502/Ahd/2016 had the occasion to consider a similar issue which was wherein the assessment was framed on the strength of the statement of a broker. The relevant part reads as under:- "14. The entire assessment is based upon the statement of Shri Mukesh Choksi. It is an undisputed fact that neither a copy of the statement was supplied to the assessee nor any opportunity of cross-examination was given by the Assessing Officer/CIT(A). The Hon'ble Supreme Court in the case of Andaman Timber Industries in Civil Appeal No. 4228 of 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 16. On the strength of the aforementioned decision of the Hon'ble Supreme Court, the assessment order has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B Cables & Conductors Pvt. Ltd. in ITAT No. 78 of 2017 dated 19.06.2018 wherein all the transactions took place off market and the loss on commodity exchange was allowed in favour of assessee. The transactions were all through account payee cheques and reflected in the books of accounts. The purchase of shares and the sale of shares were also reflected in Demat account statements. The sale of shares suffered STT, brokerage etc. In the facts and circumstances of the case, it cannot be held that the transactions were bogus. The following judgments of Hon'ble Jurisdictional High Court:- (i) The Hon'ble Calcutta High Court in the case of Principal Commissioner Of Income vs M/S. Blb Cables And Conductors; ITAT No. 78 of 2017, GA No.747 of 2017; dt. 19 June, 2018, had upheld the order of the Tribunal by observing as follows:- "4. We have heard both the side and perused the materials available on record. The ld. AR submitted two papers books. First book is running in pages no. 1 to 88 and 2nd paper book is running in pages 1 to 34. Before us the ld. AR submitted that the order of the AO is silent about the date from which the broker was expelled. There is no law that the off mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence on record, it is difficult if not impossible, to hold that the transactions of buying or selling of shares were colourable transactions or were resorted to with ulterior motive. iv) CIT V. Shreyashi Ganguli [ITA No. 196 of 2012] (Cal HC) - In this case the Hon'ble Calcutta High Court held that the Assessing Officer doubted the transactions since the selling broker was subjected to SEBI's action. However the transactions were as per norms and suffered STT, brokerage, service tax, and cess. There is no iota of evidence over the transactions as it were reflected in demat account. The appeal filed by the revenue was dismissed. v) CIT V. Rungta Properties Private Limited [ITA No. 105 of 2016] (Cal HC) - In this case the Hon'ble Calcutta High Court affirmed the decision of this tribunal , wherein, the tribunal allowed the appeal of the assessee where the AO did not accept the explanation of the assessee in respect of his transactions in alleged penny stocks. The Tribunal found that the AO disallowed the loss on trading of penny stock on the basis of some information received by him. However, it was also found that the AO did not doubt the genuineness of the documents submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITA No. 201 & 502/Ahd/2016 (Ahmedabad ITAT) (viii) Ms. Farrah Marker vs. ITO - ITA No. 3801/Mum/2011 (Mumbai ITAT) (ix) Anil Nandkishore Goyal vs. ACIT - ITA Nos. 1256/PN/2012 (Pune ITAT) (x) CIT vs. Sudeep Goenka - [2013] 29 taxmann.com 402 (Allahabad HC) (xi) CIT vs. Udit Narain Agarwal - [2013] 29 taxmann.com 76 (Allahabad HC) (xii) CIT vs. Jamnadevi Agarwal [2012] 20 taxmann.com 529 (Bombay HC) (xiii) CIT vs. Himani M. Vakil - [2014] 41 taxmann.com 425 (Gujarat HC) (xiv) CIT vs. Maheshchandra G. Vakil - [2013] 40 taxmann.com 326 (Gujarat HC) (xv) CIT vs. Sumitra Devi [2014] 49 Taxmann.com 37 (Rajasthan HC) (xvi) Ganeshmull Bijay Singh Baid HUF vs. DCIT - ITA Nos. 544/Kol/2013 (Kolkata ITAT) (xvii) Meena Devi Gupta & Others vs. ACIT - ITA Nos. 4512 & 4513/Ahd/2007 (Ahmedabad ITAT) (xviii) Manish Kumar Baid ITA 1236/Kol/2017 (Kolkata ITAT) (xix) Mahendra Kumar Baid ITA 1237/Kol/2017 (Kolkata ITAT) 29. The ld AR also brought to our notice that once the assessee has furnished all evidences in support of the genuineness of the transactions, the onus to disprove the same is on revenue. He referred to the judgement of Hon'ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case in hand. Firstly, in that case, the purchases were made by the assessee in cash for acquisition of shares of companies and the purchase of shares of the companies was done through the broker and the address of the broker was incidentally the address of the company. The profit earned by the assessee was shown as capital gains which was not accepted by the A.O. and the gains were treated as business profit of the assessee by treating the sales of the shares within the ambit of adventure in nature of trade. Thus, it can be seen that in the decision relied upon by the ld. DR, the dispute was whether the profit earned on sale of shares was capital gains or business profit. 32. It is clear from the above that the facts of the case of the assessee are identical with the facts in the cases wherein the co-ordinate bench of the Tribunal has deleted the addition and allowed the claim of LTCG on sale of shares of M/s KAFL. We, therefore, respectfully following the same, and set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital as bogus and delete the consequential addition." So, respectfully following the decisions of Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocks. Thus, we notice that the AO has simply placed his reliance on the report given by the investigation wing of the department in order to disbelieve the claim of long term capital gain earned by the assessee. Hence, there is merit in the submission of Ld A.R that the assessee has invested in the shares of M/s Global Infratech and Finance Ltd as an ordinary investor on the basis of some market information. 8. We notice that an identical case of allegation that the assessee has availed accommodation entries by way of capital gains in order to convert unaccounted money into accounted one, was examined by the Hon'ble jurisdictional Bombay High Court in the case of Shyam Power (2015)(54 taxmann.com 108)(Bom). The decision rendered by Hon'ble Bombay High Court in the above said case is extracted below:- "3. Mr. Sureshkumar 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt. Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to 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 Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and pertaining to the addition of Rs. 25,93,150/-. Barring the figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For the same reasons, even this additional question cannot be termed as substantial question of law." In the instant case also, we noticed that the AO has simply relied upon the report of the investigation department and held that the long term capital gains declared by the assessee are not genuine. We noticed that the shares were purchased on 13.09.2011 through stock-trade KKJ Stocks & Company having office in Chennai. The name of this broker does not find mention in paragraph 9.11 of the assessment order wherein in the name of stock brokers, who have admitted to providing accommodation entry of bogus long term capital gains have been mentioned. It is also not the case of the Revenue that the Appellant was a part of syndicate of people that acted as accommodation entry providers. On perusal of the extract of the statement of the Appellant recorded during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atus. The AO has doubted the purchase and sale of shares and observed that the price rise is not commensurate with the financials of the investee company. The assessee has substantiated with all details and information and the AO has relied on the investigation report of income tax department and treated the long term capital gains on sale of shares as not genuine. Further the A.O. has not made any enquiry or independent investigation and relied on the statement of the parties and the assessee's name is not included in the list of investigation report. The fact remains that the assessee has submitted the requisite details in respect of purchase and sale of shares and were not disproved. The transaction of purchase and sale of shares is through banking channel. Further as discussed in the above paragraphs the Hon'ble Tribunal dealt on the same scrip of share and for the same assessment and has granted relief to the assessee. Accordingly, considering facts, circumstances, ratio of judicial decisions, submissions, evidences and rely on the judicial precedents and set aside the order of the CIT(A) and direct the assessing officer to delete the additions and allow the grounds of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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