TMI Blog2019 (7) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned addition, has acted merely on suspicions and surmises and failed to produce any evidence whatsoever to prove that the proceeds received against the sale of shares represented the assessee s undisclosed income. AO has also failed to produce any material/evidence to dislodge or controvert the genuineness of the conclusive documentary evidences produced by the assessee in support of his claim. Surprisingly, neither the assessee nor his broker are named as illegitimate beneficiary to bogus LTCG in any of the alleged statements of the operators/brokers or reports/orders of SEBI or INV wing. In our considered view, the additions made by AO and confirmed by the CIT(A) are heavily guided by surmises, conjectures and presumptions and therefore, has no legs to stand on. Assessee has successfully discharged the onus cast upon him by provisions of section 68 and as mentioned elsewhere, such discharge of onus is purely a question of fact and therefore, the judicial decisions relied upon by the ld. DR would do no good on the peculiar plethora of evidences in respect of the facts of the case in hand. We, accordingly, direct the Assessing Officer to accept the LTCG - Decided in fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14,40,500 shares on various dates through recognised stock exchange on which he earned LTCG of ₹ 11,93,55,564/-. With these factual details, the assessee also furnished copies of the following documents: a) Proof of payment for acquisition of shares b) Copy of board resolution passed by the invitee company approving preferential allotment of shares c) Approval letter from BSE/SEBI for preferential allotment of shares d) Copy of share certificate e) D-mat account statement f) Proof of payment of Securities Transaction Tax g) Proof of receipt of sale consideration in bank. 5. Instead of examining the details furnished by the assessee, supported by documentary evidences, the Assessing Officer was simply carried away with the report of the DIT, INV, Kolkata in which large scale manipulations in the capital market on Bombay Stock Exchange trade stocks, Directorate of Income tax [INV], Kolkata who had conducted several searches and surveys on entry operators as a part of its exercise to unravel the modus operandi of the entry operators providing LTCG on penny st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of gain on the sale of shares and the proof of receipts of the sales consideration in the bank account. However, your goodself seeks to disallow the afore-said claim of exemption claim on the basis of some allegations made against the company, of which the assessee held shares, on the basis of Investigation Report of Pr. DIT (Inv) Kolkata and financial results of the investee company. 5. Further, it is respectfully submitted that the Assessee has purchased the shares after approval from the BSE and sold the same on the recognized stock Exchange after following the relevant applicable laws. The Assessee is no manner has been alleged and punished merely because the assessee has been able to earn profits on sale of shares of a company, he cannot be saddled with the unwarranted adverse tax consequences for certain activities of the company. It is simple case of profit booking which any ordinary and prudent person would do when his investment yields and handsome return. Therefore, no. addition can be made merely on the basis of surmises and conjectures. Also, pursuant to amendment in section 10(38) of the Income Tax Act, 1961, by Finance Bill 2017, CBD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own automatically in proportion with the ratio of split and one doesn t see anything adverse happening in the script. So, this practice was also apparently adopted by this company to avoid any hype on such rise in the prices of the shares. It is further noted that the shares of the company were very thinly traded and gradually jacked to a desired level in a period of one year or so to provide desired amount to selected beneficiaries. The movement in the price of the shares was not backed by any fundamentals of the companies. 7. The above set of facts and circumstances compelling to see the transactions entered into by the assessee in a larger frame of accommodation entry scam as reported by the Directorate of Income-tax (Inv.), Kolkata. Investments by the assessee in a company having no financial worth did not conform to normal behavior of an investor. In the present case what apparent does not appear real. In such a situation, view of Hon ble Supreme Court in the case of CIT Vs. Durga Prasad More [1971] 82 ITR 540 (SC) are relevant which observed that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the principle business of the appellant and its related entities to be called strategic investment and there was nothing in the books of this company to be considered valuable for investment. The statement of brokers recorded by investigation wing is one of great evidentiary value to prove that these brokers are acting as entry operators and managing the transactions of the companies mentioned by them including the one in which appellant had claimed to be transacted. The large scale evasion of taxes have been planned by professionals, executed by middlemen and benefitted by the individuals/entities through a device of the multiple transactions and manipulation of stock prices to provide a legally plausible cover in order to deceive the revenue and government authorities at the expense of common man and honest tax payers. The circumstantial evidences are very strong in this case indicating bogus accommodation entries of LTCG. Support Is drawn from the judicial pronouncements referred in para 7.5.5 and 7.5.6 of this order. 7.5.1 All the cases quoted by the AO in the assessment order and referred in para 7.5.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the said transactions are sham transactions and accordingly, the addition and the findings made by the AO in detail in the assessment order are confirmed. 11. In our considered opinion, whether the assessee has discharged the onus cast upon him by provisions of section 68 of the Act or not is purely a question of fact and therefore, judicial decisions relied upon by the representatives of both the sides will be considered on finding parity in facts with the facts of the case in hand. 12. Facts on record show that 2,50,000 shares of Malti Textile Mills Ltd were purchased on 13.02.2013 when certificates were received by the assessee on 22.03.2013 were demated on 30.4.2013, which means that immediately after receiving share certificates, the assessee dematerialised the same, which is evident from the demat statement exhibited at pages 10 to 12 of the paper book. 13. When Malti Textiles Mills Ltd became ETTL, the split shares were credited in the demat statement on 19.11.2003. 80,000 shares were sold on 31.07.2014. 85000 shares were sold on 06.08.2014. 2 lakhs each were sold on 22.09.2014 and on 13.10.2014, 2,50,000/- were sold on 29. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ETTL were ever suspended by SEBI. The Assessing Officer, by making the impugned addition, has acted merely on suspicions and surmises and failed to produce any evidence whatsoever to prove that the proceeds received against the sale of shares represented the assessee s undisclosed income. The Assessing Officer has also failed to produce any material/evidence to dislodge or controvert the genuineness of the conclusive documentary evidences produced by the assessee in support of his claim. Surprisingly, neither the assessee nor his broker are named as illegitimate beneficiary to bogus LTCG in any of the alleged statements of the operators/brokers or reports/orders of SEBI or INV wing. In our considered view, the additions made by the Assessing Officer and confirmed by the CIT(A) are heavily guided by surmises, conjectures and presumptions and therefore, has no legs to stand on. 18. The ld. DR has heavily relied upon the various judgments fo the co-ordinate benches, namely, Anip Rastogi Vs. ITO ITA No. 3809/DEL/2018 and Smt. M.K. Rajeshwari ITA No. 1723/Bang/2018. The ld. DR also drew our attention to the decision of the Hon'ble Delhi High Court in the case of Udit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transcedent Advisory Services Pvt Ltd 90,000 21. These facts clearly demonstrate that the assessee is a habitual investor and being a qualified professional [Chartered Accountant], is well aware of market trends of shares in the stock market. 22. For the sake of repetition, the entire assessment has been framed by the Assessing Officer without conducting any enquiry from the relevant parties or independent source or evidence but has merely relied upon the statements recorded by the INV Wing as well as information received from the INV Wing. It is apparent from the assessment order that the Assessing Officer has not conducted any independent and separate enquiry in this case of the assessee. Even the statement recorded by the INV Wing has not been got confirmed or corroborated by the person during the assessment proceedings. The Assessing Officer ought to have conducted a separate and independent enquiry and any information received from the INV Wing is required to be corroborated and reasserted/reaffirmed during the assessment proceedings by examining the concerned persons who can affirm the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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