TMI Blog2019 (8) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... has duly placed on record the relevant contract notes, share certificate(s), detailed corroborative documentary evidence indicating purchase / sale of shares through registered brokers by banking channel, demat statements etc., The Revenue s only case as per its pleadings and both the lower authorities unanimously conclusion that there is very strong circumstantial evidence against the assessee suggesting bogus STCL accommodation entries. I find that there is not even a single case which could pin-point any making against these assessees which could be taken as a revenue nexus. CBDT s circular dated 10.03.2003 has itself made it clear that mere search statements in the nature of admission in absence of supportive material do not carry weight. I notice that this tribunal s coordinate bench s decision in Mahavir Jhanwar vs. ITO [ 2019 (3) TMI 210 - ITAT KOLKATA] has taken into consideration identical facts and circumstances as well as latest developments on legal side whilst deleting the similar bogus LTCG addition Coupled with this, hon'ble jurisdictional high court s other decisions in CIT vs. Rungta Properties Pvt. Ltd. [ 2017 (6) TMI 521 - CALCUTTA HIGH COURT] to hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) s detailed discussion whilst treating the impugned STCL pre-arranged bogus loss in the instant lead case vide the following lower appellate discussion:- 3. Grounds No. 1 to 5 of the appeal are directed against the action of the A.O. to disallow appellant's claim of Long Term Capital Gain/ Short Term Capital Gain u/s 10(38) and hold it as bogus Long/Short Term Capital Gain for ₹ 36,48,564/ -. The A.O. has discussed the facts of the case of his assessment order. In nut shell, the appellant on 09.90.2011 privately purchased 100,000 shares @ ₹ 1/- per share of M/s Careful Projects Advisory Ltd. from M/s Sanskriti Vincom Pvt. Ltd. for a total consideration of ₹ 1,00,000/-. Later M/s Carful Projects Advisory Ltd merged with Kailash Auto Finance Ltd. Subsequently, on different dates during F.Y 2013-14, the appellant sold shares @ ₹ 37.20 per shares for consideration of ₹ 37,48,564/- and thereby had a capital gain of ₹ 36,48,564/- which he has claimed to be totally exempt under the provisions of section 10(38) of the Act. The sale was made through broker M/s Guiness Securities Ltd. The A.O. in the meanwhile had received info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. There is a common pattern in the trading of such scripts and the pattern is that they represent a bell shape in their trading. (Page no.8 of the assessment order) b. From Balance Sheet of the listed penny stocks it is found that they have no actual financial credentials to support their share movement pattern. Almost all the companies have no fixed assets, no turnover, no profitability,(Pages no. 8-10 of the assessment order). a. No such event of growth happened for which investment in shares could have jumped around 37 times in a very short span of time of 18 months. b. In the whole project total 84 listed penny stock companies were identified and worked upon. After that, number of search and surveys were conducted in the Office premises of more than 32 share broking entities who have accepted that they were involved in the bogus LTCG / STCL scam. Surveys were also conducted in the office premises of many accommodation entry providers and their statements recorded. All have accepted their role in the seam. c. Out of 84 listed penny stocks which have been used for generating bogus LTCG/STCL, M/s Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng channel does not constitute the transactions to be genuine transaction since the banking documents are merely self serving recitals. None of the material produced by the appellant is enough to justify the huge gains as claimed under the head LTCG. 3.4 In a penny stock which has no business activity or any plan or initiative or any prospect for growth, investors normally sell off such stock whenever price has appreciated to some extent and there is total uncertainty to hold such stock for fabulous appreciation when the investment is not backed by any fundamental of the company, its business policy and future prospect. In absence of any such fact the person who is sure for huge appreciation in value of such stock is probably the person who knows beforehand that its price is being manipulated in a concerted way and he is part of such system. Price movement and volume movement of this stock indicates such fact. This defies all logic of human probability. In this context the Hon'ble Supreme court in the case of CIT vs. Durga Prasad More (82 ITR 540) has held that the surrounding circumstances must be seen to find out the reality of the recitals made in the docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Office, Ward-3, Raichur, date 12.10.2018, in para no. 8 9 of the order as under:- The AO has also examined the SEBI s findings about the accommodation entry providers obtained on the basis of various investigations and has brought out sufficient material on record to demonstrate that the transactions are not genuine and he accordingly concluded that the on term capital gain booked by the assessee in the books were pre-arranged method to evade taxes and laundered money. The findings and observations of the AO were not controverted by the assessee by placing any evidence. He placed reliance upon the various judicial pronouncements in support of his contention that once the assessee has placed the evidences with regard to payments and the identity of the persons and the credit worthiness of the creditors, no addition under section 68 is called for. Since the as has placed the contract note, payment through cheques denying the company whose shares were transacted, the genuineness of claim of long term capital gain should not have been doubted. We do not find merit in these contentions of the assessee in the light of the facts that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant arguments. The fact remains that the assessee has duly placed on record the relevant contract notes, share certificate(s), detailed corroborative documentary evidence indicating purchase / sale of shares through registered brokers by banking channel, demat statements etc., The Revenue s only case as per its pleadings and both the lower authorities unanimously conclusion that there is very strong circumstantial evidence against the assessee suggesting bogus STCL accommodation entries. I find that there is not even a single case which could pin-point any making against these assessees which could be taken as a revenue nexus. I make it clear that the CBDT s circular dated 10.03.2003 has itself made it clear that mere search statements in the nature of admission in absence of supportive material do not carry weight. I notice that this tribunal s coordinate bench s decision in ITA No. 2474/Kol/2018 in Mahavir Jhanwar vs. ITO decided on 01.02.2019 has taken into consideration identical facts and circumstances as well as latest developments on legal side whilst deleting the similar bogus LTCG addition as follows:- 2. The sole issue that arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment Year 2015-16, order dt. 12/10/2018. 5. After hearing both sides, I find that in a number of cases this bench of the Tribunal and Jurisdictional Calcutta High Court has consistently held that, decision in all such cases should be based on evidence and not on generalisation, human probabilities, suspicion, conjectures and surmises. In all cases additions were deleted. Some of the cases were, detailed finding have been given on this issue, are listed below: - Sl.No. ITA No.s Name of the Assessee Date of order/judgment 1 ITA No.714 to 718/Kol/2011 ITAT, Kolkata DICT vs. Sunita Khemka 28.10.2015 2 214 ITR 244 Calcutta High Court CIT vs. Carbo Industrial Holdings Ltd. 3 250 ITR 539 CIT vs. Emerald Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that the assessee has filed all necessary evidences in support of the transactions. Some of these evidences are (a) evidence of purchase of shares, (b) evidence of payment for purchase of shares made by way of account payee cheque, copy of bank statements, (c) copy of balance sheet disclosing investments, (d) copy of demat statement reflecting purchase, (e) copy of merger order passed by the High Court , (f) copy of allotment of shares on merger, (g) evidence of sale of shares through the stock exchange, (h) copy of demat statement showing the sale of shares, (i) copy of bank statement reflecting sale receipts, (j) copy of brokers ledger, (k) copy of Contract Notes etc. 7. The proposition of law laid down in these case laws by the Jurisdictional High Court as well as by the ITAT Kolkata on these issues are in favour of the assessee. These are squarely applicable to the facts of the case. The ld. Departmental Representative, though not leaving his ground, could not controvert the claim of the ld. Counsel for the assessee that the issue in question is covered by the above cited decisions of the Hon ble Jurisdictional Calcutta High Court and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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