TMI Blog2019 (5) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on evidence is not sustainable. We therefore direct the Assessing Officer to delete the impugned addition by following above detailed reasoning mutatis mutandis . - Decided in favour of assessee. - ITA No.2359/Kol/2017 - - - Dated:- 8-5-2019 - Shri S.S.Godara, Judicial Member And Dr. A.L. Saini, Accountant Member For the Appellant : Shri Dhiraj Lakhotia, AR For the Respondent : Shri Robin Choudhury, Addl-CIT-DR ORDER PER S.S.GODARA, JUDICIAL MEMBER:- This assessee s appeal arises against the Commissioner of Income Tax (Appeals)-Siliguri s order dated 29.08.2017 passed in case No.49/CIT(A)/SLG/2016-17, involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short the Act . Heard both the parties. The assessee s detailed paper book comprising of bank statement (for the period of 01.04.2011 to 31.03.2012), share certificate in this taxpayer s name dated 31.12.2011, allotment letter of 15,000 shares of Cressanda Solutions after due approval of hon'ble Bombay high court dated 21.02.2013, show-cause notice, demat account with the broker firm and contract note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to M/s Cressenda Solution Pvt. Ltd. Perusal of the fact shows that the statement of Sh. Narendra Jain and Sh. Pankaj Agarwal provided to the appellant. The appellant has simply relied on the agreement that the duo have not taken the name of the appellant for bogus entry. The aforesaid argument of the appellant has not give in credence as the appellant was not regularly dealing in shares and he had shown very meager income from his business. It is also beyond human probability that appellant has earned only profit in his share transactions. Dealing and no loss has been incurred by the appellant in the case of share dealing. The Hon'ble Supreme Court in the case of CIT v.Durga Prasad More (1971) 82 ITR 540 (SC) has categorically held that the revenue is entitled to look into the surrounding circumstances, to find out the reality of the recitals made in the documents. The relevant observations and findings of Hon'ble Supreme Court, in the matter of discharge of on of proof and the relevance of surrounding circumstances of the case are that though an appellant s statement must be considered real unit it was shown that there were reasons to believe that the appellant was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The Court is not to be satisfied with form and leave alone the substance of the transactions. This view has been upheld by the Hon'ble Supreme Court, in Workman of Associated Rubber Industries Ltd. (1986) 157 ITR 77 (SC) and in Ess Ess Kay Engg. Co (p) Ltd. V CIT (1985) 15 ITR 636 (P H). The Hon'ble Kerala High Court in Onam Agarbati Co. V Dy.cit (2009) 310 ITR 56 (Ker) has held that though a taxpayer may resort to a device to divert the income before it accrues to him, the effectiveness of advice depends upon its genuineness. The substance of the transactions has to be assessed by applying the taxing Statute so as to ascertain whether it is a sham or make-believe transactions or one which is genuine. 14. Learned. DR placed reliance on the decision of the jurisdictional High Court in the case of Somnath Maini V CIT (2008) 306 ITR 411 (P H) and Balbir Chand Maini V CIT another (12012) 340 ITR 161 (P H) and contended that the issue in question is covered by these decisions. We have carefully perused and considered the facts and the ratio of the decisions of the jurisdictional High Court, in the case of Balbir Chand Maini (supra) and Somnath Maini V CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the revenue authority to look into the real nature of transaction and what happens in the real word and contextualize the same to such transactions in the real market situation. It is pertinent to state here, the judicial wisdom of Hon'ble Supreme Court in CIT V Arvinda Raju (TN) (1979) 120 ITR 46 (SC) wherein it was held that one day, in our welfare state geared to social justice, this clever concept of avoidance as against evasion may have to be exposed. In the present case, there is an obvious and plain transaction of tax evasion which has been clothed with the smoke-screen of subterfuges, by the assessee appellants. The facts of the present case clearly reveals that such trading transactions of purchase and sale of shares, had not been effected, for commercial purpose but to create artificial loss, with a view to reducing tax liability. The appellant resorted to readymade scheme for purchase and sale of shares which ultimately found their last destination, to the original seller i.e. the said unlisted company. Such transactions are not genuine and natural transactions but preconceived transactions, demonstrating creation of such short term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO, as recorded in the impugned assessment order, are restored. Keeping in view of the aforesaid fact and decision as referred above, the decision taken by the AO and keeping reference from the decision of Ratnakar M. Pujari Vs. ITO (ITAT Mumbai) ITA No.995//2012 the addition made by the AO is hereby upheld and ground of appeal is dismissed . 3. Both the parties reiterate their respective stands against and in support of the impugned addition arising from treatment of assessee s LTCG from sales of share held in M/s Creassanda Solutions Pvt. Ltd. as bogus unexplained cash credits. The Revenue places strong reliance on both the lower authorities findings quoting search / survey statement(s) of the two entry operators, Shri Narendra Jain and Shri Pankaj Agarwal in light of hon'ble apex court s landmark decisions in Sumati Dayal vs. CIT (1995) 80 Taxmann.89/2014 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC). 4. We find no merit in Revenue s instant arguments. The fact remains that neither the department had supplied copy of alleged entry operator statement nor there is any material on record that they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the report is not produced before this Bench. 10. I now discuss the case law on the subject. The Hon ble Calcutta High Court in the case of CIT, Kolkata-III vs. Smt. Shreyashi Ganguli reported in [2012] (9) TMI 1113 held as follows: 1. Whether on the facts and circumstances of the case, the order of the Ld.. Tribunal is perverse in law as well as on facts in deleting the addition made by the Assessing Officer as unexplained cash credit under section 68 of the Income Tax Act, 1961, by ignoring the facts on record. The ld. Tribunal after considering the material and hearing came to a fact finding which is as follows: The Assessing Officer has doubted the transaction since the selling broker was subjected to SEBI s action. However, the demat account given the statement of transactions from 01.04.2004 to 31.03.2005 i.e. relevant for the assessment year under appeal (2005-06) are before us. There cannot be any doubt about the transaction as has been observed by the assessing officer. The transactions were as per norms under controlled by the Securities Transaction Tax, brokerage service tax and cess, which were alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no iota of evidence over the transactions as it were reflected in demat account. The appeal filed by the revenue was dismissed. (iv) CIT V. Rungta Properties Private Limited [ITA No. 105 of 2016] (Cal HC) In this case the Hon ble Calcutta High Court affirmed the decision of this tribunal, wherein, the tribunal allowed the appeal of the assessee where the AO did not accept the explanation of the assessee in respect of his transactions in alleged penny stocks. The Tribunal found that the AO disallowed the loss on trading of penny stock on the basis of some information received by him. However, it was also found that the AO did not doubt the genuineness of the documents submitted by the assessee. The Tribunal held that the AO s conclusions are merely based on the information received by him. The appeal filed by the revenue was dismissed. (v) CIT V. Andaman Timbers Industries Limited [ITA No. 721 of 2008] (Cal HC) In this case the Hon ble Calcutta High Court affirmed the decision of this Tribunal wherein the loss suffered by the Assessee was allowed since the AO failed to bring on record any evidence to suggest that the sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of M/s. Alipine Investments in ITA No.620 of 2008 dated 26th August, 2008 wherein the High Court held as follows : It appears that there was loss and the whole transactions were supported by the contract notes, bills and were carried out through recognized stock broker of the Calcutta Stock Exchange and all the bills were received from the share broker through account payee which are also filed in accordance with the assessment. It appears from the facts and materials placed before the Tribunal and after examining the same, the tribunal allowed the appeal by the assessee. In doing so the tribunal held that the transactions cannot be brushed aside on suspicion and surmises. However it was held that the transactions of the shares are genuine. Therefore we do not find that there is any reason to hold that there is no substantial question of law held in this matter. Hence the appeal being ITA No.620 of 2008 is dismissed. 8.5. We note that the ld. AR cited plethora of the case laws to bolster his claim which are not being repeated again since it has already been incorporated in the submissions of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also pertinent to note that the assessee and / or the stock broker M/s P Didwania Co and Toshith Securities P Ltd., both registered share and stock brokers with Calcutta Stock Exchange had confirmed the transaction and have issued legally valid contract notes under the Law and such contract notes are available in pages 41-52 of the Paper Book. We find that the Hon ble Calcutta High Court in the case of Pr CIT Vs Rungta Properties Private Limited ITAT No 105 of 2016 dated 8th May 2017 in a similar issue dismissed the appeal of the Department by making the following observations: (11) On the last point, the Tribunal held that the Assessing Officer had not brought on records any material to show that the transactions in shares of the company involved were false or fictitious. It is finding of the assessing officer that the scrips of this company was executed by a broker through cross deals and the broker was suspended for some time. It is assessee s contention on the other that even though there are allegations against the broker, but for that reason alone the assessee cannot be held liable. On this point the Tribunal held As a matter of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 26th August 2008 wherein the Hon ble Court held as follows: It appears that the share loss and the whole transactions were supported by contract notes, bills and were carried out through recognized stockbroker of the Calcutta Stock Exchange and all the payments made to the stockbroker and all the payments received from stockbroker through account payee instruments, which were also filed in accordance with the assessment. It appears from the facts and materials placed before the Tribunal and after examining the same the Tribunal came to the conclusion and allowed the appeal filed by the assessee. In doing so, the Tribunal held that the transaction fully supported by the documentary evidences could not be brushed aside on suspicion and surmises. However, it was held that the transactions of share are genuine. Therefore, we do not find that there is any reason to hold that there is any substantial question of law involved in this matter. Hence, the appeal being ITA No.620 of 2008 is dismissed. 9.4. We also find that the various other case laws of Hon ble Jurisdictional High Court and other case laws also relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X
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