TMI Blog2023 (12) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... ort his finding that there has been collusion or connivance between the broker and the assessee for the introduction of his own unaccounted money. In the present case, despite the assessee s specific request, no opportunity of cross examination was provided to the assessee on the basis of whose statements reliance has been placed to hold that the sale of shares was sham / bogus. ITAT Kolkata and ITAT Mumbai with respect to the very same stock i.e. M/s Global Infratech and Finance Ltd. in three separate judgments (Mukesh Sharma [ 2019 (5) TMI 1845 - ITAT MUMBAI] , Kaushalya Agarwal [ 2019 (6) TMI 297 - ITAT KOLKATA] and Mangilal Jain [ 2019 (5) TMI 1694 - ITAT KOLKATA] ) have decided the issue in favour of the assessee by holding that the assessee was not engaged in bogus purchase and sale of shares. Accordingly, looking at decisions were rendered with respect to the same stock i.e. Global Infratech and Finance Ltd. which the assessee had sold during the impugned assessment year, and the recent decision of Hon ble Supreme Court in the case of Renu Aggarwal [ 2023 (7) TMI 288 - SC ORDER] we are of the considered view the Ld. CIT(Appeals) has not erred in facts and in law in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Penny stock Company i.e. M/s Global Infratech Pvt. Ltd. erstwhile M/s Asianlak Capital and Finance Ltd., by not appreciating that the share price of the said company was rigged almost 100 times in span of 1 year (197 trading). This fact also substantiate that the said company was a penny stock company. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs. 9,67,73,500/- on account of bogus/non-genuine Capital Gain by sale of shares of Penny stock Company i.e. M/s Global Infratech Pvt. Ltd. erstwhile M/s Asianlak Capital and Finance Ltd., by not appreciating that the brokers have admitted that they were involved in providing accommodation entries in the form of Long Term Capital Gain by using the listed company i.e. M/s Global Infratech Finance Ltd. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 4,36,044/- on account of unexplained expenses when the assessee failed to substantiate the same with documentary evidence. 5. It is, therefore, prayed that the order the Ld. CIT(A)-12, Ahmedabad may be set aside/ and that of the AO ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide bogus long-term capital gains entries to various beneficiaries. The statements of Shri Raj Kumar Kedia, an accommodation entry provider at Delhi, Shri Subrata Halder, a close associate of an accommodation entry provided and a Shri Manoj and Shri Anup Kumar Maheshwari (both share brokers) were recorded on various dates, who admitted involvement in the business of providing accommodation entries on long-term capital gains by using the listed company M/s Global Infratech Finance Ltd. During the course of survey, statement of the assessee was also recorded on oath, who on being asked various questions to justify the reason for such huge investment in a penny stock company earning meager profits, stated that he had invested in this stock on the advice of his late father and took the risk in spite of being aware that financial status the company M/s Global Infratech Finance Ltd. was not up to the mark. Accordingly, the AO added a sum of Rs. 9,44,73,250/- to the total income of the assessee as bogus long-term capital gains. 4. In appeal, Ld. CIT(Appeals) allowed the appeal of the assessee on this ground that the assessee had invested in the shares on the advice of his late fath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FC Bank and the shares were allotted on such application in terms of Board's Resolution dated 19/01/2012. The share certificates were also issued to the appellant and those shares were in lock in period till 18/01/2013. \The copies of documents like share application, Board Resolution,' Shares certificate No: 0025287 with Distinctive numbers from 11320301 to 11495300 were furnished to the AO by the appellant along with his letter dated 10/10/2016. I also find from the copy of bank account of the appellant with the HDFC Bank that cheque number 318602 is cleared and debited to the account of appellant on 29/12/2011. These shares were then deposited for Dematerialisation as per letter of M/s. URJA INVESTMENT LIMITED and were also credited to the appellant's DEMAT account DPID No: 12057000 on 14/12/2012. These documents prove that the shares were acquired by the appellant by way of allotment on making payment of share application through banking channel and the same were also allotted in terms of a Board resolution. It is also seen that the shares were credited to DEMAT ACCOUNT of the appellant long before the sale of shares. In fact, the appellant later received shares of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re still quoted in the Stock Exchange. The AO has made observations based on general modus operandi adopted by entry operators, prudence of investment, abnormal rise in prices and the statements of some of such entry operators which, in my opinion, do not lead to the conclusion that the transactions of acquisition and sale of shares by the appellant are also non-genuine particularly in the wake of the above uncontroverted documentary evidences furnished by the appellant to him. 5.5 I am inclined to agree with the appellant that when the acquisition of shares acquired in earlier year and payment for which being also made by cheque duly debited at the time of acquisition, substantiated by the relevant share certificates which are further credited in appellant's DEMAT account, the genuineness of acquisition of shares is proved. The case of the appellant is of acquiring shares through allotment which is different than the case of an off market purchase making payment in cash which may raise eyebrows to doubt the genuineness of purchase. However, when the shares are allotted long back and payment of share application is made by cheque at the time of application of shares itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not have any financial standing so as to justify such a steep rise in the price of the aforesaid stock. Further, based on the applications received, the aforesaid company had passed resolution at the meeting of the Board of Directors on 19.01.2012 allotting 1,05,05,000/- equity shares to 49 persons from non-promoter group on preferential basis. Subsequently, the company allotted 1,75,000 shares to the assessee in physical form and subsequently on 19.11.2012, assessee applied for dematerialisation of the securities and same were dematerialised on 14.12.2012. The assessee sold 15,33,500 shares between 02.05.2013 and 05.08.2013. The DR submitted that the shares of the company were listed on the Bombay stock exchange for the first time on 18.11.2011. The company had no business activity and no past performance of giving good return to investors. Out of total sale consideration of Rs. 10,27,59,725/- received by the assessee, it may be observed that 5 companies purchased shares worth Rs. 7,46,76, 343/- and all the five companies were merely existing on paper and were used to artificially inflate the share price of M/s Global Infratech Finance Ltd. as was told by Mr Subrata Halder in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee also drew our attention to three judicial precedents, which pertained to the very same script i.e. M/s Global Infratech Finance Ltd and have held that the assessee has not been engaged in earning bogus long-term capital gains on sale of such scrip. Further, the counsel for the assessee also placed reliance on various judicial precedents, which have held that in absence of any concrete evidence that the assessee was specifically engaged in price rigging and that the aforesaid transaction was entered only with a view to earn bogus long-term capital gains or that investments in the aforesaid shares were made in cash etc. the long-term capital gains could not be held to be bogus. Further, there is no doubt that in the instant facts all investments were made through banking channels and necessary paper work was done at the time of making investments, which has not been doubted. Further, the company, M/s Global Infratech Finance Ltd is a listed company and the shares were sold on the Bombay stock exchange. Further, even subsequent to sale of shares by the assessee i.e. till 2019, the shares of the company M/s Global Infratech Finance Ltd still continued to be traded on the Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of company X to convert unaccounted cash under the guise of long term capital gain. When the matter was taken by the Revenue before the Hon ble Calcutta High Court it held that it has been established by the Revenue that the rise of prices of the shares was artificially done by adopting manipulative practices. Consequently, whatever resultant profit accrued from out of such manipulative practices, same were also to be treated as tainted. However, the assessee had opportunity to prove that there was no manipulation at the other end and whatever gains the assessee had reaped was not tainted. This has not been proved or established by the assessee. Therefore, the AO was well justified in coming to a conclusion that the so called explanation offered by the assessee was not to his satisfaction. Thus, the assessee having not proved the genuineness of the claim, the creditworthiness of the company in which the assessee had invested and the identity of the person from whom the transactions were done, the assessee had to necessarily fail. The court went on to observe further that in such a factual scenario, the AO had adopted an inferential process which was found to be a process which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee as bogus long-term capital gains. Further, in the instant facts, the assessee was not provided any opportunity of cross examination, which is an absolute necessity when such substantial addition amounting to Rs. 9,44,73,250/- is made to the income of the assessee by placing reliance on the statement of third parties. In the case of Andaman Timber Industries 62 taxmann.com 3 (SC), the Hon'ble Supreme Court held that when statements of witnesses are made basis of demand, not allowing assessee to cross-examine witnesses is a serious flaw which makes order nullity, as it amounts to violation of principles of natural justice. Further, three Tribunals on similar set of facts and with reference to the very same share i.e. M/s Global Infratech and Finance Ltd. have decided the issue in favour of the assessee by holding that the assessee was not engaged in bogus purchase and sale of shares ( Mukesh Sharma in ITA Number 6249/Mum/2018, Kaushalya Agarwal 194/Kol/ 2018 and Mangilal Jain 729/Kol/2018). It was also observed that the assessee sold the shares during the impugned Assessment Year (Assessment Year 2014-15), but trading in the said shares continued till Janu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention, learned A.R. also cited an order of Coordinate Bench in ITA No. 62/Ahd/2018 in the matter of Mohan Polyfab (P.) Ltd. v. ITO wherein ITAT has held that A.O. should have granted an opportunity to cross examine the person on whose statement notice was issued to the assessee for bogus long term capital gain. But in this case, neither statement was supplying to the assessee nor cross examination was allowed by the learned A.O. Therefore, in our considered opinion, assessee has discharged his onus and no addition can be sustained in the hands of the assessee. 3. Thus, the Tribunal has recorded the finding of fact that the assessee discharged his onus of establishing that the transactions were fair and transparent and further, all the relevant details with regard to such transactions were furnished before the Income-tax authorities and the Tribunal also took notice of the fact that some of the shares also remained in the account of the appellant. 10. In the case of Himani M. Vakil [2014] 41 taxmann.com 425 (Gujarat), the Gujarat High Court held that where assessee duly proved genuineness of share transactions by bringing on record contract notes for sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... despite the assessee s specific request, no opportunity of cross examination was provided to the assessee on the basis of whose statements reliance has been placed to hold that the sale of shares was sham / bogus. Further, the ITAT Kolkata and ITAT Mumbai with respect to the very same stock i.e. M/s Global Infratech and Finance Ltd. in three separate judgments ( Mukesh Sharma in ITA Number 6249/Mum/2018, Kaushalya Agarwal 194/Kol/2018 and Mangilal Jain 729/Kol/2018 ) have decided the issue in favour of the assessee by holding that the assessee was not engaged in bogus purchase and sale of shares. 14. Accordingly, looking into the facts of the instant case, and respectfully following the decisions in the case of Mukesh Sharma in ITA Number 6249/Mum/2018, Kaushalya Agarwal 194/Kol/2018 and Mangilal Jain 729/Kol/2018, which were rendered with respect to the same stock i.e. Global Infratech and Finance Ltd. which the assessee had sold during the impugned assessment year, and the recent decision of Hon ble Supreme Court in the case of Renu Aggarwal (supra) we are of the considered view the Ld. CIT(Appeals) has not erred in facts and in law in allowing the appeal of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the observations made by Ld. CIT(Appeals) in the appellate order. Accordingly, looking into the facts of the instant case, we are of the considered view that Ld. CIT(Appeals) has not erred in facts and in law in partly allowing the appeal of the assessee, after taking into consideration the facts of the case. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) so as to call for any interference. 20. In the result, Ground No. 4 of the Department s appeal is dismissed. 21. Ground Nos. 5 and 6 of the Department s appeal are general in nature and do not require any specific adjudication. 22. In the result, the appeal of the Department is dismissed for Assessment Year 2014-15. ITA No. 402/Ahd/2019 (A.Y. 2015-16):- 23. The Department has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs. 56,33,096/- on account of bogus/non-genuine Capital Gain by sale of shares of Penny stock Company i.e. M/s Global Infratech Finance Ltd. erstwhile M/s Asianlak Capital and Finance Ltd., by not appreciating the fact involved in this case that the said comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the ld. CIT(A) has erred in restricting the unaccounted expenses of Rs. 4,04.28,562/- (for A.Y. 2009-10 to 2016-17) to Rs. 1,03,57,436/without appreciating that the assessee failed to submit any documentary evidence, proving contrary to the evidences recorded in the seized material. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 2,52,81,900/- made on account of unexplained expenditure without appreciating that the assessee failed to submit any justification with documentary evidence. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 56,320/- made on account of unexplained receipts without appreciating that the assessee had admitted that the said cash receipts were not recorded in the books of account. 4. It is, therefore, prayed that the order the Ld. CIT(A)-12, Ahmedabad may be set aside and that of the AO may be restored to the above extent. 5. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal. 27. Grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
