TMI Blog2011 (7) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... which is evident from the share transactions submitted by the assessee. It is further observed that the AO has simply added the long term capital gain and commission ignoring the evidences which was already available with the Revenue authorities. Keeping in view of the above facts we are of the considered view that the ratio laid down by the Hon ble Apex Court in the case of SUMATI DAYAL VERSUS COMMISSIONER OF INCOME-TAX [ 1995 (3) TMI 3 - SUPREME COURT] , on which the Revenue has relied is not at all applicable to the present facts. Therefore, we set aside the orders of the Revenue authorities. Also, the Revenue s presumption is based on suspicion, capricious and probabilities and without any contradictory material against the one submitted by the assessee in respect of genuineness of the transactions - Decision in favour of Assessee. - IT(SS)A Nos. 22-26/(Kol) of 2011, IT(SS)A Nos. 27-30/ (Kol) of 2011, IT(SS)A Nos. 31-33/(Kol) of 2011, ITA Nos. 35-38/(Kol) of 2011, ITA Nos. 39-41/(Kol) of 2011, ITA Nos. 42-44/(Kol) of 2011, ITA Nos. 45-47/(Kol)of 2011, ITA Nos. 48-50/(Kol)of 2011 - - - Dated:- 14-7-2011 - Shri Mahavir Singh, Judicial Member Sri C.D.Rao, Accountant Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge and/or rescind any or all of the above grounds. 2.1. For other assessment years the amounts of capital gain as mentioned in ground no.3 is varying. Similarly in all other cases the grounds are common but the figures alleged are different for different assessment years. 3. The brief facts of the case are that while passing the order u/s 153A of the IT Act in the case of all the assesses for all the impugned assessment years the AO has treated the Long Term Capital gain declared by the assessee for all the assessment years as income from undisclosed sources and again an amount of commission of 2% on the Long term capital gain has also been treated as income from undisclosed sources by observing that :- In this case a search seizure operation was carried out in different business as well as residential premises of M/s. Maithan Group of cases on 20.09.2007 and on subsequent dates. The assessee belongs to this group. Her locker No.7193 with Calcutta Safe Deposit Volt, was searched and jewelleries worth ₹ 12,10,734/- was found. Accordingly, Notice u/s 153A of the I.T.Act was served upon the assessee. The assessee filed return u/s 153A dt. 10.10.2008 showing same inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 307% from the period from April, 2005 to November, 2005. Subsequently though the ban on trading on the scrip was revoked, the SEBI did not absolve the said two brokers from the charges framed against them. This two brokers as well as the company was engaged in manipulating of the share price since long back though the matter caught attention of the SEBI in the month of April, 2005. In reply the assessee has quoted the following case laws. 1) Hon ble Kolkata High Court in the case of CIT vs Korlay Trading Co. Ltd. (1998) 232 ITR 820 (Cal). 2) Hon ble ITAT in the case of ACIT vs Claridges Investment Finance Pvt Ltd. (2007) 18 SOT 390 (Mum) 3) Hon ble Kolkata Bench of the ITAT in the case of Anup Kumar Jayaswal in ITA Nos. 1678/Kol./2004 1679/Kol/2004 for A.Y. 2001-02. 4) Eastern Commercial Enterprise, (1994) 210 ITR 103 (Cal) 5) C.Vasantilal Co. (1962) 45 ITR 206 (SC). None of the case laws have ordered to accept the trading result of the scrip banned by SEBI and suspended the concerned brokers on the allegation of manipulating price of the scrip. Hon ble Kolkata High Court in the case of Korlay Trading Co.Ltd. (1998) 232 ITR 820 (Cal) has ordered that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by observing as under :- 4.8. In the above cycle of rise and fall of share prices, the assessee and his family members were always a winner. It is totally against the human probabilities and realities of human life . More over the unusual increase share prices of shares of certain companies were verified by SEBI and it was found that the brokers Shri Sunil Kedia and Sri Ashish Stock Broking Pvt. Ltd were mainly involved in jacking up the prices of the scripts in question . Accordingly Shri Sunil Kedia and M/S Ashish Stock Broking Pvt. Ltd were suspended from trading by interim order dated 30.11.2005 and subsequently the same was confirmed after affording opportunity of hearing vide SEBI orders dated 31.05.2006. In the said orders the modus operandi followed by the brokers and promoters of the Company to increase the share prices and motive behind it were discussed as under : Securities and Exchange Board of India (hereinafter referred to as SEBI) noticed sharp price variation in the shares of various companies (with low market capitalization) including Globe Stocks and Securities Limited (hereinafter referred to as the company) listed on Calcutta Stock Exchange Association ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich ultimately resulted in the creation of misleading appearance of trading in the securities market. The above facts and circumstances establish the full and active involvement of the Broker. It is already established that the trades of the Broker in the shares of the company inter alia created a misleading appearance of trading in the securities market and thereby, violated the provisions of FUTP Regulations as mentioned above in this order, it is sufficiently obvious that the Broker had failed to comply with his duties as expected of a SEBI Registered intermediary and instead became a party to the manipulation in the shares of the company to the detriment of genuine investors. 4.9. In the said orders of SEB1 the modus operandi followed by the borkers to increase the share prices of M/s Globe Stocks Securities Ltd were illustrated as under- 2.16 Globe Stocks Securities Ltd. is another of the small cap listed Companies at CSE which witnessed a significant price increase during the period under scrutiny. The share price of the company increased from ₹ 19. 10 to ₹ 77.65, i.e. a rise of 307% increase in 4 months 10 days. The shares of the company are also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3484800 0 98.45 0 0.00 0 0.00 (The percentage mentioned in the table is with respect to their total trades in the scrip during the relevant period (significant percentages shown in bold) 2.21. It is clearly evident from the above tables that the two stock brokers viz. Ashish Stock Broking and Sunil Kedia have been able to create an artificial market in the shares of the company by executing large volume of transactions among themselves. 4.10 The above facts and figure makes it crystal clear that the trading volumes in the shares of these companies have invariably been created by a few brokers trading among themselves and through matched transactions (i.e.clients allowed to place simultaneously both buy and sale orders of same quantity at the same price in the selected shares), often executed on a single terminal of the broker. Clearly, the ultimate objective behind the creation of a false market in these shares, was to legitimizing the gains of certain clients. The SEBI also after making through verification and analysis came on same conclusion as under - In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for which the assessee has paid price more and above the disclosed consideration. Accordingly the conclusion of the AO, that the assessee has made unaccounted expenditure in order to obtain the capital gain is held to be correct. Accordingly the addition of ₹ 11,11,263/- made by the AO is confirmed and ground no 2 3 taken by the appellant is dismissed. 3.3. Aggrieved by this the assessee is in appeal before us. 4. At the time of hearing the ld. AR appearing on behalf of the assessee has reiterated the submissions made before the Revenue authorities and further submitted that 6. A.O. has made the above-mentioned additions in the hand of the assessee relying on the folIowing evidences. (a) The deposition of Sri Subhas Chander Agarwala, the alleged key figure of M/s Maithan Group made u/s.132(4) of the I.T. Act in which he allegedly admitted to have introduced unaccounted income in the form of LTCG. (b) The statement of Sri Arun Khemka, Director of M/s Globe Stock and Securities Ltd. who reportedly claimed that he arranged accommodation entries in the form of bogus LTCG to the members of Maithan Group which included the assessee. (c) The assessee disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it is supported by other documentary evidences. It was further submitted that an assessee had right to retract from his statement recorded u/s. 132(4) of the I.T. Act provided he can prove that the statement so given was not the correct statement or it was not a voluntary statement. In support of this contention, the assessee relied on several case laws. As regards the admission by Sri Subhas Chander Agarwala, it was pointed out that his statement was retracted and was therefore not valid. Even otherwise, it was claimed that such admission may be applicable in the case of Sri Subhas Chander Agarwala himself but is not at all binding on the assessee. But the Ld. CIT(A) disregarded all these submissions of the A.R. and dismissed the assessee s all the five appeals. The assessee is now in second appeals before the Hon ble Tribunal. 8. The assessee makes the following submissions against the evidences on the basis of which the Ld. A.O./CIT(A) have treated the assessee s Long-term capital gain as her undisclosed income. (a) A copy of deposition of Sri Subhas Chander Agarwala made u/s. 132(4) of the I.T. Act was not provided to the assesee and the assessee was not given an opport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reportedly provided accommodation entries to the members of Maithan Group. This was a general statement and not specific in respect of the assessee. Consequently, the statement of Sri Khemka cannot also be utilized while framing the assessment order of the assessee. It may also be noted that Sri Khemka was a Director of M/s Globe Stock and Securities Ltd. But the assessee not only purchased / sold the shares of M/s Globe Stock Securities Ltd. but also the shares of M/s Off Shore Finvest Ltd. and M/s Shree Nidhi Trading Co. Ltd. with which Sri Khemka was not connected. Consequently, his statement cannot be taken into evidence in respect of assessee s LTCG arising on the sale of shares of these two companies. (c) The Ld. A.O. has also relied on the alleged order of SEBI dt.30. 11 .05. In this case also, a copy of the order was not furnished to the assessee. Again, even assuming but not admitting that SEBI took legal steps against the Share Brokers M/s Ashish Stock Broking Pvt. Ltd., Sunil Kedia and Sanjoo Kabra for manipulation in share prices, unless it is proved that the assessee also conspired with these persons, it cannot be said that she was a party for artificial increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Broker is suspended from trading in shares subsequently the assessees cannot be faulted for the same. In the instant case also, the assessee produced documentary evidences for purchase / sale of her shares by way of Contract notes, Demat Account etc. The purchases / sales were made through banking channels for which bank statements were also furnished beibre the Ld. A.O. Merely because SEBI conducted investigation against the Share Brokers for price manipulation and subsequently suspended them, the Ld. A.O. was not justified in holding that the assessee s share transactions were colourable device to introduce her undisclosed income in the form of LTCG. 10. The assessee also invites the kind attention of the Hon ble Bench to a copy of order in the case of DCIT vs Jagdish Prasad Goel in ITA No.542/Kol/201 0 dt. 13.4.11. In this case, the Ld. A.O. found that the assessee disclosed LTCG on sale of shares of M/s Bolton Properties Ltd. and M/s Bluechip. The A.O. collected a CD from Kolkata Stock Exchange and after comparing it with the Contract notes issued by Share Broker M/s Bubna Stock Broking Services Ltd. found some discrepancies in the numbers of shares sold and also the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt reason for treating the share transaction as not genuine. The Deptt. also failed to prove that the assessee conspired with them in creating an artificial high price. It may he that the assessee has taken advantage of the high price of these shares prevailing in the open market and sold the shares at that time as a prudent investor and earned a high capital gain. In the light of above submission and keeping in view the Hon ble Tribunal decision in the two similar cases referred to above, it is prayed that orders of the lower authorities may kindly be reversed and the additions made as the assessee s income from undisclosed sources in all the five Asstt. Years may kindly be deleted. 4.1. In addition to this he further filed the Calcutta Stock Exchange quotations in respect of all the transactions entered by all the assesses for all the assessment years. 5. On the other hand, the ld. DR appearing on behalf of the Revenue heavily relied on the orders of the revenue authorities and reiterated the findings which were already recorded by us in the preceding paragraphs and contended that the ld. CIT(A) has properly analysed the facts by applying the ratio of the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.12.2003 46001 13 8.00 9.00 8.00 9.00 15.10.2004 42001 17 178.00 185.00 170.00 170.00 01.11.2004 43000 24 188.00 189.00 188.00 188.00 02.11.2004 31000 25 189.00 189.00 188.50 189.00 M/s. Shree Nidhi Trading Co.Ltd. 16.11.2004 81100 17 6.00 6.00 6.00 6.00 16.12.2004 45850 18 20.00 22.80 19.90 22.80 22.12.2004 30000 10 30.20 30.20 30.00 30.20 24.12.2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.03.2003 192301 27 40.60 47.60 40.60 40.60 04.04.2003 48350 25 31.10 36.40 31.10 35.60 07.04.2003 25020 14 38.40 38.40 32.80 32.80 11.04.2003 15000 3 30.50 31.00 30.50 31.00 01.10.2003 30100 4 10.50 10.50 10.50 10.50 14.10.2003 39000 13 11.25 11.25 11.25 11.25 22.10.2003 28603 14 12.10 12.10 10.50 12.05 15.10.2004 42001 17 178.00 185.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee as well as family members of the assessee. In respect of M/s. Nidhi Trading Ltd. and M/s. Offshore Finvest Ltd along with M/s.Globe Stocks and Securities Ltd. As regarding M/s. Globe Stocks and Securities Ltd. also the period of investigation by the SEBI is for the period April, 2005 to November, 2005 whereas the assessee and her family members has made the transactions in the shares of M/s. Globe Stocks and securities Ltd. much prior to April, 2005 which is evident from the above table as well as the ld. CIT(A) s analysis. From this fact it is evident that the observations made by the ld. CIT(A) in the impugned order at para nos. 4.6 to 4.10 are misplaced by the Revenue. Since in our considered opinion the SEBI on which the Revenue placed reliance is not applicable to the facts of the present case. On the other hand, the undisputed facts which was admitted by the Revenue are that the assessee has submitted the requisite details and evidences including copies of contract notes, demat account, bank statements etc. which was filed before the AO to substantiate the genuineness of the Long term capital gain which was dis-regarded by the AO simply based on the statement of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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