TMI Blog2018 (5) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... le and purchase of shares, there is no question of payment of commission and hence, the said claim of assessee has been rightly rejected by authorities below. Levy of penalty u/s. 271(1)(c) - non specification of charge - Held that:- The charge for levy of penalty u/s. 271(1)(c) has to be specifically conveyed to the assessee at the time of recording satisfaction, otherwise, the principles of natural justice are offended. The assessee should know the charge which he has to meet while defending levy of penalty. Thus, in view of the defect in recording satisfaction for levy of penalty, the impugned order is set aside and penalty in both the assessment years 2005-06 and 2006-07 is deleted. - ITA No.6360/MUM/2009, ITA No.846/MUM/2010 And ITA Nos.716 And 717/MUM/2012 - - - Dated:- 6-4-2018 - SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : NONE For The Revenue : Dr. Vivek Aggarwal ORDER PER VIKAS AWASTHY, JM : These four appeals have been filed by the assessee. ITA No. 6360/MUM/2009 is directed against the order of Commissioner of Income Tax (Appeals)-37, Mumbai dated 09-11-2009 for the assessment year 2005-06. ITA No. 84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is a partner in M/s. D.K. Associates. The assessee in its return of income for assessment year 2005-06 has disclosed Long Term Capital Gain on sale of shares. The assessee claimed exemption u/s. 54F of the Act on the part of Capital Gains earned and offered the balance at lower rate of tax i.e. @ 10% u/s. 112 of the Act. During the course of scrutiny assessment proceedings the Assessing Officer observed that the assessee has purchased 38500 shares of Fast Track Entertainment (hereinafter referred to as the FTE ) through M/s. Vijay Bhagwandas Co. on 08-04-2003 and 11-04-2003 for ₹ 28,948/- and ₹ 15,929/-, respectively. The said shares were subsequently sold during the Financial Year 2004-05 at unusually high rate. These penny stock shaers of FTE were split into 1:10 ratio and cost of acquiring the said shares to the assessee came to ₹ 1.16 only. The shares of FTE were sold for consideration of ₹ 27,02,033/-. Thus, the share of FTE purchased @ ₹ 1.16 per share were sold @ ₹ 70.18 per share. There was huge appreciation in the value of shares, i.e. approximately 60.5 times increase in a short span. The Assessing Officer asked the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es amounting to ₹ 31,33,577/- as unexplained cash credit u/s 68 of the Income Tax Act as against income from capital gain from the sales of shares. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in considering the amount of sales proceeds wrongly at ₹ 31,33,577/- as against the sales proceeds of ₹ 27,02,033/-. 4. On the facts and in the circumstances of the case and in law, the Ld. C.I.T. (A) erred in taking into consideration voluminous material from SEBI without confronting the same to the appellant. 5. On the facts and in the circumstances of the case, Ld. C.IT. (A) erred in confirming the addition of Rs.I,56,678/- on account of alleged commission paid for accommodation entries. 6. On the facts and in the circumstances of the case, the Assessing Officer erred in levying interest u/s. 234B and 234C. 7. The Appellant craves to add, alter or delete all or modify any or all the above grounds of appeal. 5. Dr. Vivek Aggarwal representing the Department submitted that the assessee has indulged in bogus sale and purchase of shares. The assessee has not been able to show from cogent evidence, the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of assessee has been rightly rejected by authorities below. Accordingly, ground No. 5 raised in appeal by assessee is dismissed. 8. In ground No. 6 of the appeal the assessee has impugned charging of interest u/s. 234B and 234C of the Act. Charging of interest u/s. 234B and 234C is consequential and mandatory, hence, ground No. 6 raised in appeal by assessee is dismissed being devoid of any merit. 9. The ground No. 7 is general in nature, hence, requires no adjudication. 10. In the result, the appeal of assessee for the assessment year 2005-06 is dismissed being devoid of any merit. ITA No. 846/MUM/2010, (A.Y. 2006-07) 11. The facts in assessment year 2006-07 are similar to assessment year 2005-06, except that instead of shares of Fast Track Entertainment (FTE) the assessee has shown Long Term Capital Gain of ₹ 13,07,407/- from sale of 6500 shares of Praneeta Industries Limited (hereinafter referred to as the PIL ). As was in assessment year 2005-06 the assessee has failed to furnish any cogent evidence to show the purchase and sale of shares. The shares of PIL were allegedly purchased by assessee through M/s. DPS Shares Securities Pvt. Ltd. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in assessment year 2006-07. 17. The ld. DR has vehemently supported the order of Commissioner of Income Tax (Appeals) in confirming levy of penalty u/s. 271(1)(c) of the Act. 18. A perusal of assessment order for assessment years 2005-06 and 2006-07 shows that while recording satisfaction for initiating penalty proceedings the Assessing Officer has not specified the charge for levy of penalty u/s. 271(1)(c) of the Act. The Assessing Officer has merely mentioned that the penalty proceedings u/s. 271(1)(c) are separately initiated in respect of this addition . In respect of both the additions, i.e. (i) Addition of sales proceeds of shares as unexplained cash credit u/s. 68; (ii) Disallowance of commission paid for accommodation entries, satisfaction has been recorded in similar manner in assessment years 2005-06 and 2006-07. However, while concluding the assessment orders the Assessing Officer has mentioned that proceedings u/s. 271(1)(c) for concealment of income/furnishing of inaccurate particulars of income are initiated separately. Thus, the manner in which satisfaction has been recorded clearly indicates that there was vagueness and ambiguity in the mind of Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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