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2022 (1) TMI 1258 - AT - Income TaxBogus LTCG - Addition u/s 68 - deception of stock market transaction - Penny stock purchases - Burden of proof - scope of “preponderance of probability" - HELD THAT:- All the enquiries conclusively proved that the trades have been manipulated and the gains or the losses made by the beneficiaries cannot be said to be genuine.The mere fact that payments have been received through cheque cannot give any credence so as to genuineness of the transactions. Taking cue from the judgment of PCIT-7 Vs. Bikram Singh [2017 (8) TMI 1138 - DELHI HIGH COURT] we hold that the transactions in the present appeal are yet another example of the constant use of the deception of stock market transaction to bring unaccounted money into banking channels. This device of stock transactions of unworthy stocks with no profits continues to plague the legitimate economy of our country. As seen from the facts narrated above, the transactions herein clearly do not inspire confidence as being genuine and are shrouded in mystery, as to why the so-called transactions lead to exorbitant returns which are made tax free. As in the case of CIT Vs Korlav Trading Company Ltd. [1998 (2) TMI 104 - CALCUTTA HIGH COURT] and CIT Vs Precision finance P. Ltd.[1993 (6) TMI 17 - CALCUTTA HIGH COURT] had observed and held that mere filing of confirmation and transaction through the banking channel is not enough to prove the genuineness. On this issue we hold that preponderance of the evidence is one type of evidentiary standard used in a burden of proof analysis. Under the preponderance standard, the burden of proof is met when the party with the burden convinces the fact finder that there is a greater chance that the claim is true. This is the burden of proof in a civil trial. The theory of “preponderance of probability‟ is applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. Prima facie, it may appear to be a case made on preponderance of probabilities but not beyond reasonable doubt. However, in this case a deeper examination of the facts reveal that in a scam of such massive scale many players and layers involved hence the judgments of Hon’ble Apex Court that the standards of proof required to prove such fraudulent conduct would necessarily be less stringent is squarely applicable and in the instant case the evidences cannot be said to be even less stringent rather they more strong. We are certainly not on the probability theory while dealing the issue before us and certainly we have not been carried away by the single point of profits earned. The facts have been examined holistically with reference to enquiries and the entire operation of the stocks, method of investment, regularity of the investments, enquiries conducted by SEBI , evidences produced by the assessee. In light of the above facts and material brought on record by the AO and the statement of the assessee himself goes to prove that the case of the AO is not based on any suspicion or surmises. One very important fact which is clearly distinguishable from the judgments relied upon by the ld. Counsel of the assessee that, not only in the case of M/s Unno Industries Ltd. the SEBI has suspended the trading of the shares in BSE but also the two brokers through whom the assessee has purchased shares have been found doing irregularities by the SEBI. Another important fact is that, the Director of one of the company, Galore Suppliers Pvt. Ltd. who has bought the shares of M/s Unno Industries Ltd. from the assessee had categorically admitted that not only the M/s Unno Industries Ltd. was penny stock but also involved in providing accommodation entries in this share. This fact alone demolishes the argument of the ld. Counsel that entire transaction of sale of shares was genuine. - Decided against assessee.
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