TMI Blog2019 (8) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... al Shaw [ 2009 (1) TMI 303 - ITAT CALCUTTA-B] in respect of sale of shares of M/s QFSL. As inclined to set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital on sale of shares of M/s QFSL and also the commission expenses as bogus and delete the consequential additions. Therefore, the appeal of assessee is allowed. Addition on account of commission payment for earning the LTCG u/s. 69C - HELD THAT:- Since, we have allowed the assessee s claim of LTCG, the consequential expenses incurred by the assessee in this regard is also allowed. - I.T.A. No. 1096/Kol/2018 - - - Dated:- 23-8-2019 - Shri A. T. Varkey, JM For the Appellant : Shri Subash Agarwal, Advocate For the Respondent : Shri Sankar Halder, JCIT, Sr. DR ORDER PER SHRI A.T.VARKEY, JM This is an appeal preferred by the assessee against the order of Ld. CIT(A), Siliguri dated 09.04.2018 for AY 2013-14. 2. Ground nos. 1 and 2 of assessee s appeal is against the action of Ld. CIT(A) in confirming the addition of ₹ 16,19,881/- made by the AO u/s. 68 of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The A.O. also alleged that the sale price of the shares was abnormally high, which led him to doubt the genuineness of sale transactions. However, according to Ld. AR, there is no material on record which could lead to a conclusion that the transactions were a device to camouflage activities to defraud the revenue. The Ld. AR placed reliance on various judicial pronouncements and pleaded that the assessee s claim to be allowed. Per contra, the Ld. DR drew our attention to the AO s observation in assessment order that the assessee is one of the Bogus LTCG uncovered by the Investigation Wing of the Department in it's survey of the businesses of Prakash Jajodia, an entry operator in Kolkata. The statement of Prakash Jajodia u/s. 131 was recorded and he has stated as follows - Sir, Name of my company through which I have provided accommodation entry as bogus long term capital gain is, QUEST FINANCIAL SERVICES LTD. This company is listed with Calcutta Stock Exchange. Registered office of this company is centre point 21, Hemanta Basu Sarani, Room No. 230, 2nd floor, Kolkata-01. Myself is the managing director of this company. I decide all the affairs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cited 23 case laws which I will discuss infra. 4. I have heard rival submissions and gone through the facts and circumstances of the case. At the time of hearing it was brought to my notice by the Ld. AR that this Tribunal in the case of Acchyalal Shaw Vs. ITO in ITA No. 1977/Kol/2008 , AY 2003-04 dated 16.01.2009 have accepted the scrips of M/s. QFSL as not bogus and held that the LTCG claim of the assessee needs to be allowed: On hearing the rival submissions, perusing the case record along with the case laws and placing reliance on various decisions it transpires that in a transaction like this (all offmarket transactions) any enquiry from the stock exchange will not yield result in favour of the Revenue. The Revenue has to see whether the sale has been effected or not as per the documents and as per the acceptance and admission of the respective stock brokers. As it has been assertively argued by the learned Authorised Representative in this case that both the stock brokers had not denied the transactions and the capital gain has been shown, the AO simply by casting doubt for alleged purchase of house property for ₹ 11,00,000 cannot t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were taken behind the back of assessee; and neither the copy of which was given to the assessee nor an opportunity to cross examine the makers of the statement make the reliance of the statement by AO bad in law as held by the Hon ble Supreme Court in case of CCE vs. AndamanTimber Industries 127 DTR 241(SC) and cannot be the basis to disallow the claim and without finding fault with the evidences furnished by the assessee. 5. It is noted that the facts of the case of the assessee are identical with the facts in the above case wherein the co-ordinate bench of the Tribunal has deleted the addition in the case of Acchyalal Shaw (supra) in respect of sale of shares of M/s QFSL. I, therefore, respectfully following the same and the facts in the instant case as taken note in para 2 supra and discussions, am inclined to set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital on sale of shares of M/s QFSL and also the commission expenses as bogus and delete the consequential additions. Therefore, the appeal of assessee is allowed. 6. Ground no. 2 is in respect of confirming the addition of ₹ 80,9945/- on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 10,39,289/- for bogus speculation profit during the financial year 2007 -08. It was further found by the AO that the assessee has paid cash of equivalent amount and received back by cheque and bogus contract notes and bills for the transactions not actually rooted through stock exchange. It is noted that the ITAT, Mumbai had relied upon and followed the judgment of Hon'ble Bombay High Court in Sanjay Bimalchand Jain v. PCIT, Order dated 10.04.2017 (Bom.), being judgment of Jurisdictional High Court. However, in this case, the AO observed that the assessee had taken entries and paid cash of equivalent amount and received back by cheque. And on the basis of such adverse inference, the Tribunal confirmed the addition made by the AO. However, in the present case in hand, there is no such finding made by the AO. Further. It is noted that the abovementioned judgment of ITAT, Mumbai Bench has been considered and distinguished by the ITAT, Kolkata Benches and other Benches of the Tribunal, inter-alia, in the following cases: a. Satyanarayan Saria vs. ITO [ITA No.1224/KoIl2016, Order dt. 28.06.2019 (Kol ITAT)] b. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition observing that the purchase of shares was off market purchase not reported in the stock exchange. Further, it was observed by the Tribunal that the purchase was through a back date contract note in cash and, there was no trail. Thus it is noted that Tribunal in this case confirmed the addition on a factual finding that the purchase was through a back dated contract note in cash and, there was no trail. This fact is not applicable in the present case. Further, it is noted that the abovementioned judgment of Tribunal, Mumbai Bench was considered/distinguished by the Mumbai ITAT in its following judgments while allowing similar issue in favour of the Assessee: a. DCIT vs. Anil Kainya [ ITA Nos.4077 4078/MUM/2013, Order dt. 22.03.16 Mum ITAT)] b. Anjali Pandit vs. ACIT [2017] 88 taxmann.com 657 (Mumbai - Trib.) Further, it is noted that lthe said judgment has been considered/distinguished by the Kolkata and other Benches of the Tribunal, inter-alia, in the following cases while allowing similar issue in favour of the assessee. a. Kaushalya Agarwal vs. ITO [ITA No.194/Kol/2018, Order dt. 03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had brought sufficient material on record to demonstrate that unaccounted money was introduced in the books of account through long-term capital gain by adopting such method. It is noted that in the aforesaid case, the Tribunal confirmed the addition on a factua1 finding that the department had brought sufficient material on record to demonstrate that unaccounted money was introduced in the books of account through long-term capital gain by adopting such method. This fact is not applicable in the present case. Further, the abovementioned judgment has been considered/distinguished by this Tribunal, inter-alia, in the following cases while allowing similar issue in favour of the Assessee: a. Kaushalya Agarwal vs. ITO [ITA No.194/Kol/2018, Order dt. 03.06.2019 (KoI ITAT)] b. Yogesh Dalmia vs. ACIT [ITA No.113/Kol/2018, Order dt. 03.06.2019 (KoI ITAT)] c. Navin Kumar Kajaria vs. ACIT [ITA No.1254-55/Kol/2018, Order dt. 03.04.2019 (Kol- Trib) d. Soumitra Choudhury vs. ACIT [ITA No.256/Kol/2019, Order dt. 15.03.2019 (Kol ITAT)] 6. Coming to the case of Abhimanyu Soin [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares. Once the transaction of purchase and sale was found to be bogus then the sale proceeds had to be added as income of the assessee under Section 68 of the Act because the money received on the basis of bogus transaction had been credited by the assessee in the books of account which remained unexplained. 9. In view of the findings of fact recorded by the authorities below which could not be demonstrated to be erroneous or perverse in any manner, no interference is called for. However, in the instant case of the Assessee company all relevant documents were furnished to support and prove beyond all doubts, purchases as well as sale of shares. Further this judgment has been considered and distinguished by this Tribunal and other Benches of the Tribunal, inter-alia, in the following cases while allowing similar issue in favour of the Assessee: a. Kaushalya Agarwal vs. ITO [ITA No.194/Kol/2018, Order dt. 03.06.2019 (Kol, ITAT)] b. Kamal Singh Kundalia vs. ITO [ITA No.2359/Kol/2017, Order dt. 08.05.2019 (Kol ITAT)] c. Meenu Goel vs. ITO [2018] 94 taxmann.com 158 (Del-Trib) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support its transactions of purchase and as well as sale of shares and the AO had failed to point out any defect and/or lacuna in the said documents, materials and/or evidence. Further, this Tribunal in its orders had decided similar issue in favour of the assessee by relying on binding judicial pronouncements. Reference is also made to the recent judgment dated 1st July, 2019 rendered by the Tribunal in the case of Aparna Miwsra, supra wherein the Tribunal had relied upon the following jurisdictional Calcutta High Court judgments to decide similar issue in favour of the assessee. i) M/s Classic Growers Ltd. vs. CIT [ITA No. 129 of 2012] ii)CIT vs. Lakshmangarh Estate Trading Co. Limited [2013] 40 taxmann.com 439 (Cal) iii) CIT V. Shreyashi Ganguli [ITA No. 196 of 2012] iv) CIT V. Rungta Properties Private Limited [ITA No. 105 of 2016] v) CIT V. Andaman Timbers Industries Limited [ITA No. 721 of 2008] vi) CIT V. Bhagwati Prasad Agarwal [2009- TMI-34738-ITA No. 22 of 2009, Order dt. 29.4.09] 11. Coming to the cases given below P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of penalty under section 271(1)(c) of the Act in the facts where the Assessee had withdrawn/surrendered his/her claim of exempt L TCG u/s. 10(38) of the Act and paid taxes on the gains arising from sale of shares. All these judgments are irrelevant and has no application to the facts of the instant case before the Tribunal. 13. Coming to the case of SEBI v. Rakhi Trading P. Ltd [Civil Appeal No.1969 of 2011, Judgment dated 8th February, 2018 (of the Hon ble Supreme Court ) It is noted that the Hon'ble Supreme Court was concerned with a case where SEBI had initiated actions against few traders and brokers for violation of Regulations 3(a), (b) and (c) and 4 (1), (2)(a) and (b) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 ( the PFUTP Regulations ). In the said case, the Hon'ble Apex Court upheld the action initiated in the case of traders as the said traders have admitted of being involved in synchronized trade to manipulate the prices of shares. There is no such admission by the Assessee in the instant case that it has involved in any price manipula ..... X X X X Extracts X X X X X X X X Extracts X X X X
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