TMI Blog2018 (10) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of suspicion without any cogent material to show that the assessee has brought back his own unaccounted income in the shape of long term capital gain, the said action of the AO is not sustainable. The authorities below qua this issue and delete the addition made by the AO on this account. - Decided in favour of assessee - ITA No. 133/JP/2016 - - - Dated:- 16-7-2018 - Shri Vijay Pal Rao, JM And Shri Bhagchand, AM For the Assessee : Shri Rajeev Sogani and Shri Rohan Sogani (CAs) For the Revenue : Smt. Seema Meena (JCIT) ORDER PER VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 17th December, 2015 of ld. CIT (A) for the assessment year 2010-11. The assessee has raised the following grounds of appeal :- 1. That on the facts and in the circumstances of the case the ld. CIT (A) is wrong, unjust and has erred in law in confirming finding recorded by the assessing officer that the appellant has failed to prove existence of long term capital gain of ₹ 2,65,27,020/- on sale of listed shares on recognized stock exchange and thereby upholding addition of said ₹ 2,65,27,020/- to the income of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Well Pack 20204 21/10/2008 129471 26/10/2009 20204 5607765 5478294 370 4 Well Pack 9796 21/10/2008 62774 27/10/2009 9796 2722581 2659806 371 5 Well Pack 22000 28/10/2008 140948 29/10/2009 22000 6116609 5975660 366 6 Well Pack 21000 28/10/2008 134542 30/10/2009 21000 5849565 5715023 367 Total 98000 627582 98000 27154602 26527020 In this case the assessee has recorded the purchase transactions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he abnormal increase in the market price of the shares. He has further contended that the AO has relied upon the statement of Shri Mahesh Pancholi of M/s. Arihant Capital Market Ltd. However, the said person was not in the employment of the company when the transaction of purchase of shares of M/s. Well Pack Papers Containers took place in the month of November, 2008. The AO himself has accepted this fact that Shri Mahesh Pancholi is in employment of M/s. Arihant Capital Market Ltd. only for four years when the statement was recorded in the month of March, 2013, whereas the transaction of purchase of shares took place prior to the four years in the month of November, 2008. Further, mere denial of having transaction is not sufficient when the assessee produced all the documentary evidences. Thus the ld. A/R has contended that in the absence of any contrary evidence to prove the transaction to be bogus, the denial of claim by the AO on the basis of suspicion and doubt is not proper and justified. He has further contended that the AO even not provided the opportunity to the assessee to cross examine the Inspector who has conducted the enquiry or Shri Mahesh Pancholi whose statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands of the assessee if no direct evidence has been brought on record by the AO to hold that the assessee introduced his own unaccounted money by way of bogus long term capital gain. He has also relied upon following decisions :- Principal CIT vs. Prem Lal Gandhi 94 taxmann.com 156 (P H) Principal CIT vs. Shri Hitesh Gandh ITA No. 18 of 2017 (P H) CIT vs. Smt. Pooja Agarwal, DBIT Appeal No. 385/2011 (Raj.HC) CIT vs. Carbo Industrial Holdings Ltd. 116 Taxman 159 (Cal.) CIT vs. Emerald Commercial Ltd. 120 Taxman 282 (Cal.) Hence, the ld. A/R has submitted that in the absence of any finding by the Investigation Wing holding the transaction as bogus and assessee being part of any racket of the entry providers, disallowance made by the AO is unjustified. The AO has not rebutted the documentary evidence produced by the assessee and further AO placed reliance on the statement of witness, report of the ITO Investigation, Indore without giving an opportunity of cross examination to the assessee before the order passed by the AO is not sustainable. 3.1. On the other hand, the ld. D/R has submitted that the assessee has not proved the genuineness of the payment for purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sale of Shares (Nov Dec, 09) ₹ 7408697/- Quantity Rates Transaction date Sd on Del + STT + Service tax + turnover tax Total 923 Rs.327.18 Nov, 26 991.06 561559 797 Rs.326.93 Nov, 26 4780 Rs.311.22 Dec, 02 2620 1485010 2000 Rs.309.42 Dec, 04 500 Rs.308.63 Dec, 04 1362.12 771792 5000 Rs.318.20 Dec, 15 9000 Rs.334.16 Dec, 15 8104 4590335 7408696 Less cost/purchase of 2300 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded the transactions of purchase of shares in the books of accounts and as per the Balance Sheet as on 31st March, 2009 these shares have been shown in the Investment schedule of the assessee. The balance sheet as on 31st March, 2009 has been annexed by the AO to the assessment order and, therefore, it is part of the assessment record which shows the shares shown in the Balance Sheet as on 31st March, 2009. The facts of showing these shares in the Balance Sheet of the assessee for the preceding year and sale of these shares in the subsequent year in the month of November and December, 2009 is also not in dispute as the AO as well as the ld. CIT (A) has accepted this fact. The ld. CIT (A) has allowed the purchase consideration paid by the assessee from the addition made by the AO which shows that the purchase consideration was accepted by the ld. CIT (A). The ld. CIT (A) in para 4.2 of the impugned order has accepted this fact that the AO has not disputed the sale transaction pertaining to the above shares and only the purchase of shares is the tainted transaction. Para 4.2 and 4.2(e) of the ld. CIT (Appeals) are reproduced as under :- 4.2. The Assessing Officer has not dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to a public limited and fresh certificate was issued by the Registrar of company on 05.02.2011 which is placed at page 43 of the paper book. Therefore, there is no reason to disbelief the fact of fresh certificate issued by the Registrar of companies on 05.02.2011 and hence, the date mentioned in the order of the Hon ble Kolkata High Court as 18.04.2011 appears to be typographical mistake. Even otherwise these two dates do not have any effect on the genuineness of the transactions of purchase of equity shares by the assessee of M/s Gravity Barter Pvt. Ltd. The assessee though produced all the relevant records and evidences right from the purchase bills, certificate issued by the Registrar about the change of name, the communication between the assessee and the seller of the shares and thereafter, the amalgamation of M/s Gravity Barter Ltd. with M/s Oasis Cine Communication Ltd. which was duly approved by the Hon ble High Court vide order dated 28.8.2011. The assessee in the mean time got the physical share certificate dematerialized into Demat account on 16.02.2012. There is no reason to doubt the allotment of the shares to the assessee after amalgamation took place between M/s G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation paid in cash which is not in case of the assessee. The assessee has paid purchase consideration through cheque and therefore, even if the said consideration is found to be very less in comparison to the sale price at the time of sale of shares in the absence of any material or other facts detected or brought on record by the AO that the assessee has brought back his own unaccounted money in the shape of long term capital gain and has used the same as a device to avoid tax, the purchase consideration paid by the assessee cannot be doubted in the absence of any corroborating evidence. The Assessing Officer has not disputed that the fair market value of the shares of M/s Gravity Barter Ltd. was more than the purchase price claimed by the assessee. It may be a case that ensuring merger/amalgamation of the said company with M/s Oasis Cine Communication Ltd. the assessee might have anticipant the exceptional appreciation in the share price due to extraordinary event of merger/ amalgamation. However, the same cannot be a reason for doubting genuineness of the transaction if the motive of purchase of the share is to earn an extraordinary gain because of some internal information avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the decision of the AO holding the transaction as bogus and denying the claim of long term capital gain under section 10(38) of the Act is based on suspicion without any material evidence to controvert or disprove the evidence produced by the assessee. The enquiry conducted by the ITO Investigation Indore is not a conclusive finding of fact that the transaction of purchase of shares by the assessee is bogus particularly in view of admitted fact that these shares were held by the assessee and were duly materialized in the d-mat account. Therefore, until and unless a finding is given that the shares were acquired by the assessee from the person other than the broker claimed by the assessee, the mere suspicion how so ever strong may be, cannot be a basis of addition or disallowance of claim. As regards the statement recorded by the ITO Investigation Indore of one Shri Mahesh Pancholi, it is recorded by the AO that the said person was in the employment only for the past four years and further the said witness has not denied the confirmation issued by the broker, but has given a vague statement of having any knowledge of such transaction of shares sold to the assessee. Even otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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