Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home

2018 (5) TMI 1915

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... at the assessee could be granted another opportunity to produce evidences in the form of producing the books involved in the transactions, their contemporary records, share transfer forms, the records of the company whose shares has been dealt with etc., for examination before the A.O, we are not inclined to restore this issue to the A.O as the assessee has not produced any convincing evidence to justify such re-adjudication by the A.O. - Decided against assessee. - ITA No. 2016/Chny/2017 - Dated:- 15-5-2018 - SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER For the Appellant : Mr. F.C.Jain, CA For the Respondent : Mrs. Vijaya Prabha, JCIT ORDER PER S. JAYARAMAN, ACCOUNTANT MEMBER: The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-16, Chennai, in ITA No.105/CIT(A)-16 dated 05.06.2017 for the AY 2014-15. 2. Smt. Vidya Reddy, the assessee, an Individual settled in USA, had shown Long Term Capital Gains of ₹ 45,79,550/- being profit on sale of 6000 shares of M/s Surabhi Chemicals and Investment P. Ltd., and claimed it as an exempt income u/s. 10(38). The assessee was asked to furnish details like mode of paym .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... iate as to how penny stock companies would fetch huge return at such a short interval. Therefore, there are no infirmities in the findings of the AO that the share transactions were sham in nature and not genuine etc., and accordingly dismissed the appeal. Aggrieved against the order of the Ld. CIT (A), the assessee filed this appeal. 4. The AR submitted that the assessee is a bona fide investor, like other shares, she has invested in the shares of Surabhi Chemicals & Investments Ltd on the advice and help of her grandfather. The AO and the Ld. CIT (A) did not appreciate the evidences furnished by the assessee and her explanation. The A O assessed the impugned sum as an income and the Ld.CIT (A) confirmed such assessment in appeal. The AR reiterated the same submissions made before the Ld. CIT(A) on the two aspects pointed out supra. 5. Per contra, the DR invited our attention to the orders of the Lower authorities wherein the modus operandi and pattern detected by the Investigation Wing, the SIT report on misuse of exemption on LTCG tax for money laundering and certain terms in relation to these transactions are mentioned. The relevant portion is extracted as under :- The modu .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ission charged over and above at certain fixed percentage for providing such accommodation entry. These accommodation entries are taken by various beneficiaries for introducing their unaccounted cash into their books of accounts without paying the due taxes. (ii) Penny stocks are those stocks which trade at very low price and whose market capitalization is very low. The low price of the penny stocks makes manipulation of the share price very easy. SEBI has recently barred more than 250 entities, including individuals and companies, from the securities market for suspected tax evasion and laundering of black money through stock market platforms. In one such instance price of a scrip rose from ₹ 10.20 to ₹ 489 in 150 trading days - a rise of 4694%. The SIT obtained the background details of these cases and studied them. A typical pattern is observed to be followed in such cases. • A company with very poor financial fundamentals in terms of past income or turnover is able to raise huge capital by allotment of Preferential allotment of shares is made to various entities. • There is a sharp rise in price of scrip once the preferential allotment is done. This is nor .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... in Feb., 2014 indicate that buyers are in collusion. Otherwise, execution of order placed is not possible particularly when trade price is static for various trades executed. All the trades have been executed at fraction of second. All these trading patterns show that LTCG admitted by the assessee is an arranged one. The payment of Security Transaction Tax was to paint creditworthiness to the transaction and claim exemption u/s. 10(38). In view of the information provided by the Investigation Wing, Kolkatta, the recommendations of SIT on Black money etc, the AO required the assessee to prove her claim of exemption. After considering her reply etc held, inter alia, that it is clear that the assessee has manipulated the sale of shares within a short span of time in collusion with the brokers in order to earn tax free exempt long term capital gains on sale of shares u/s. 10(38) etc. It is clear from the orders of the Lower authorities that the assessee has not placed any material to prove that her transactions are genuine. She has also not placed any material to prove that her claim of exemption u/s 10 (38) is genuine and valid. Since, the right to exemption must be established by tho .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Site Map - Recent || Site Map ||