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TMI Blog2019 (8) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... pport of purchase and sale of shares of M/s. SRK on which LTCG was claimed. From the details/evidences the AO found that 5994 shares of the company was purchased for Rs. 13,500/- on 08.08.2012 and just after completion of one year, it was sold for Rs. 10,82,212/- on 25.10.2013 and 11.11.2013. Thus according to AO the assessee has managed an increase in profit of almost 7916% in a short span of time of 14-16 months and that too when the general market trend was recessive during the relevant period of time. Therefore, the AO was of the opinion that the prices was jacket up/rigged purposefully and the sales were all pre-arranged and stage managed by players who were running it as a racket to launder the ill gotten money of the assessee through such nefarious activities. So, he added the entire amount of Rs.,10,68,061/- u/s. 68 of the Act and also made an addition of Rs. 5340/- as commission of LTCG. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to confirm the action of AO. Aggrieved, the assessee is before this Tribunal. 4. The Ld. AR assailing the action of the Ld. CIT(A) brought to our notice that the assessee submitted that the assessee had purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to him, there is no material evidence for the A.O. to conclude what is apparent is not real. In the absence of any link between the assessee and the alleged admissions of the directors and brokers, human probability is being used as a vague and convenient medium for the Departments conjectures. Blaming the assessee by vague observations and drawing an adverse inference without any admissible evidence on record, on the part of the lower authorities is not justified in the eyes of law. In this connection, he placed reliance on the following decisions: i) Lalchand Bhagat Ambica Ram vs. CIT [1959] 37 ITR 288 (SC); ii) CIT (Central) Calcutta vs. Daulat Ram Rawatmull (87 ITR 349) iii) Andman Timber Industries vs. CCE - [2015J 62 taxmann.com 3 (SC) (iv) P.S. Abdul Majeed vs. Agricultural Income-Tax and Sales Tax Officer And Others 209 ITR 821 (Ker.) (v) CIT vs. Eastern Commercial Enterprises 210 ITR 103 (Cal) (vi) Asst. CIT vs Ajnara India Ltd (2011) 49 DTR 273 (Del-Trib) (vii) Calcutta High Court in S.K.Bothra & Sons (HUF) vs ITO (2011) 62 DTR (Cal)234 (viii) Delhi High Court in CIT vs Rajesh Kumar (2008) 306 ITR 27 (ix) CIT vs. Carbo Industries Holdings Ltd. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may please be allowed. 5. Per contra, the Ld. DR supported the order of Ld. CIT(A) and AO and according to him, the investigation report of department has shown that assessees were indulging in their illegal activities to launder their ill gotten unaccounted money. And these, according to him, are stage managed, pre-arranged, rigged transaction, which is beyond human probabilities and relied on the decision of the Hon'ble High court of Bombay order in Sanjay Bimalchand Jain Vs. Pr. CIT, Nagpur dated 10.04.2017 and CIT Vs. Independent Media (P) Ltd. and Smt. M. K. Rajeshwar Vs. ITO (Bangalore ITAT) dated 12.10.2018 and the Hon'ble High Court of Punjab & Haryana in the case of Chandan Gupta Vs. CIT dated 16.09.2014 and wants us to confirm the order of Ld. CIT(A) and does not want us to interfere with the order of Ld. CIT(A) and cited few more cases which I will deal with infra. 6. After hearing the rival submissions and going through the facts and material available on record, it is noted that the assessee had purchased 1350 numbers of shares of M/s. Transcend Commerce Ltd. on 08.08.2012 at a total consideration of Rs. 13,500/- from Jintan Vanijya Pvt. Ltd. . (copy of the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odus operandi which has been brought out by the Investigation Wing of the Department and some SEBI studies. I find that there is no evidence/material to suggest that the aforesaid documents filed by the assessee are false or fabricated. All the transactions of purchase and sale have happened through stock exchange through online platform and through banking channel at the prices quoted at BSE on the date of purchase/sale of scrips. The shares were held in demat account for more than a year, therefore, without any material to suggest that the assessee/broker had indulged in any activity like stage managed and/or pre-arranged as suggested by the AO, it cannot be held that the assessee's LTCG claim is bogus. Therefore, we overturn the decision of the authorities below and direct the AO to allow the claim of LTCG of the assessee. 9. For coming to aforesaid conclusion I rely on certain judicial decisions on similar facts:- 10. The case of the assessee's is similar to the decision of Hon'ble Bombay High Court, Nagpur Bench in CIT vs. Smt. Jamnadevi Agrawal & Ors. dated 23rd September, 2010 reported in (2010) 328 ITR 656 wherein it was held that: "The fact that the assessees in the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1995) 80 Taxman 89 (SC) distinguished." 12. The Hon'ble High Court of Rajasthan in CIT vs. Smt. Pushpa Malpani - reported in (2011) 242 CTR (Raj.) 559; (2011) 49 DTR 312 dismissed the appeal of department observing 'Whether or not there was sale of shares and receipt of consideration thereof on appreciated value is essentially a question of fact. CIT(A) and Tribunal have both given reasons in support of their findings and have found that at the time of transactions, the broker in question was not banned by SEBI and that assessee had produced copies of purchase bills, contract number share certificate, application for transfer of share certificate to demat account along with copies of holding statement in demat account, balance sheet as on 31st March, 2003, sale bill, bank account, demat account and official report and quotations, of Calcutta Stock Exchange Association Ltd. on 23rd July, 2003. Therefore, 'the prese/itdppeal does not raise any question of law, much less any substantial question of law." 11. The Hon'ble High Court of Punjab and Haryana in the case of Anupam Kapoor 299 ITR 0179 has held as under:- "The Tribunal on the basis of the material on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r:- "14. The entire assessment is based upon the statement of Shri Mukesh Choksi. It is an undisputed fact that neither a copy of the statement was supplied to the assessee nor any opportunity of cross-examination was given by the Assessing Officer/CIT(A). The Hon'ble Supreme Court in the case of Andaman Timber Industries in Civil Appeal No. 4228 of 2006 was seized with the following action of the Tribunal:- "6. The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static. Since we are not upholding and applying the ex factory prices, as we find them contravened and not normal price as envisaged under section 4(1), we find no reason to disturb the Commissioners orders." 15. The Hon'ble Apex Court held as under:- "According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 16. On the strength of the aforementioned decision of the Hon'ble Supreme Court, the assessment order has to be quashed. 17. Even on facts of the case, the orders of the authorities below cannot be accepted. There is no denying that consideration was paid when the shares were purchased. The shares were thereafter sent to the company for the transfer of name. The company transferred the shares in the name of the assessee. There is nothing on record which could suggest that the shares were never transferred in the name of the assessee. There is also nothing on record to suggest that the shares were never with the assessee. On the contrary, the shares were thereafter transferred to demat account. The demat account was in the name of the assessee, from where the shares were sold. In our understanding of the facts, if the shares were of some fictitious company which was not listed in the Bombay Stock Exchange/National Stock Exchange, the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard both the side and perused the materials available on record. The ld. AR submitted two papers books. First book is running in pages no. 1 to 88 and 2nd paper book is running in pages 1 to 34. Before us the ld. AR submitted that the order of the AO is silent about the date from which the broker was expelled. There is no law that the off market transactions should be informed to stock exchange. All the transactions are duly recorded in the accounts of both the parties and supported with the account payee cheques. The ld. AR has also submitted the IT return, ledger copy, letter to AO land PAN of the broker in support of his claim which is placed at pages 72 to 75 of the paper book. The ld. AR produced the purchase & sale contracts notes which are placed on pages 28 to 69 of the paper book. The purchase and sales registers were also submitted in the form of the paper book which is placed at pages 76 to 87. The Board resolution passed by the company for the transactions in commodity was placed at page 88 of the paper book. On the other hand the ld. DR relied in the order of the lower authorities. 4.1 From the aforesaid discussion we find that the assessee has incurred losse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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. vi) 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 shares by the Assessee were not genuine. vii) CIT V. Bhagwati Prasad Agarwal [2009- TMI-34738 (Cal HC) in ITA No. 22 of 2009 dated 29.4.2009] - In this case the Assessee claimed exemption of income from Long Term Capital Gains. However, the AO, based on the information received by him from Calcutta Stock Exchange found that the transactions were not recorded thereat. He theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36/Kol/2017 (Kolkata ITAT) (xix) Mahendra Kumar Baid ITA 1237/Kol/2017 (Kolkata ITAT) 15. The ld AR also brought to our notice that once the assessee has furnished all evidences in support of the genuineness of the transactions, the onus to disprove the same is on revenue. He referred to the judgement of Hon'ble Supreme Court in the case of Krishnanand Agnihotri vs. The State of Madhya Pradesh [1977] 1 SCC 816 (SC). In this case the Hon'ble Apex Court held that the burden of showing that a particular transaction is benami and the appellant owner is not the real owner always rests on the person asserting it to be so and the burden has to be strictly discharged by adducing evidence of a definite character which would directly prove the fact of benami or establish circumstances unerringly and reasonably raising inference of that fact. The Hon'ble Apex Court further held that it is not enough to show circumstances which might create suspicion because the court cannot decide on the basis of suspicion. It has to act on legal grounds established by evidence. The ld AR submitted that similar view has been taken in the following judgments while deciding the issue relating to exemption cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal has deleted the addition and allowed the claim of LTCG. We, therefore, respectfully following the same ratio, set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital gain and short term capital loss as bogus and to allow the same and so, delete the consequential addition. 19. Before I part, the judicial pronouncements cited by the Ld. DR in his support. I note that the said judicial pronouncements are all distinguishable on facts as well as on law. The said decisions are dealt with herein below in seriatim as under: 1. Ratnakar M. Pujari vs. Assessee -ITA No.995/Mum/2012, Order dt. 3rd August, 2016 [AY 2006-07] -ITAT Mumbai In this case the ITAT, Mumbai Bench were considering a case where the purchases of shares were treated as bogus and sham transactions by the Revenue in the immediately preceding financial year 2005-06 and the said findings of the AO with respect to bogus and sham purchases were not challenged by the Assessee. In such facts of the case the Tribunal had treated the exempt long term capital gains arising on sales of shares as bogus and sham. However, there is no such finding of fact in the instant case and thus the facts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meenu Goel vs. ITO [2018] 94 taxmann.com 158 (Del-Trib) Reference is also made to the recent judgment dated 01.07.2019 rendered by this Tribunal in the case of Aparna Misra Vs. ITO (ITA No. 161/Kol/2019) 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] 3) Coming to the case of ITO vs. Shamim M. Bharwani (2016) 69 taxmann.com (Mum ITAT), Order dt. 27.03.2015 of Mumbai Triabunal, the brief facts in this case was that the assessee purchased 2500 shares of Emrald Commercial Ltd. (ECl). The purchase was in cash. According to the AO since the purchase was made in cash, the same was not verifiable. Further, the A.O. found that said transaction was not through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition made on the ground that the assessee has not placed any material before the lower authorities to prove that her transactions are genuine. The Tribunal observed "She has also not placed any material to prove that her claim of exemption u/s. 10(38) is genuine and valid." However, in the case of the assessee company all relevant documents were furnished to support purchases as well as sale of shares. Further, the Chennai Tribunal had relied upon and followed the judgment of Hon'ble Bombay High Court in Sanjay Bimalchand Jain Vs. PCIT, order dated 10.04.2017, which judgment has been considered and distinguished by Kolkata and other Benches of the Tribunal, inter-alia, in the following cases: a. Satyanarayan Saria vs. ITO [ITA No.1224/Kol/2016, Order dt. 28.06.2019 (Kol ITAT)] b. Kaushalya Agarwal vs. ITO [ITA No.194/Kol/2018, Order dt. 03.06.2019 (Kol, ITAT)] c. Meenu Goel vs. ITO [2018] 94 taxmann.com 158 (Del-Trib) Reference is also made to the recent judgment dated 1st July, 2019 rendered by the Tribunal in the case of Aparna Misra vs. ITO [ITA No.161/KoIl2019] wherein the Tribunal had relied upon the Jurisdictional Calcutta High Court judgments, as mentioned hereinabo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the case of Balbir Chand Maini Vs. CIT (2011) 12 taxmann.com 276 (P&H) - The Hon'ble Punjab & Haryana High Court had confirmed the addition made by Assessing Officer on the basis of finding of fact by the Tribunal: "10. The Tribunal while adjudicating the issue against the assessee had recorded a finding of fact that the transaction of sale and purchase of shares of M/s. Ankur International Ltd., was not a genuine transaction, a part where of relevant to the present issue, mentioned in para Nos. 27 and 28 of the order, reads as under ...." However, in the case of the Assessee Company all relevant documents were furnished to support, and prove beyond all doubts, purchases and 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) 8. Coming to the case of Chandan Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Justice without doing so, and when assessee placed all documentary evidences before the AO/Ld. CIT(A), the assessee cannot be again sent back before AO and the decision to send back to AO is decided when proper opportunity has not been given by AO during assessment stage and that is not the case here in the case in hand. 10. Coming to the following cases. I note that in these cases given below Mahendra Kumar Bhandari vs. ITO [Order dt. 06.04.2018] Aravind Kumar, Chennai vs. ITO [Order dt. 08.11.2018] Vikram Dughar, Chennai vs. ITO [Order dt. 13.11.2018] Sadhana, Bangalore vs. ITO [Order dt. 26.05.2017] Arun Kumar Bhaiya, New Delhi vs. ITO [Order dt. 30.08.2018] Natti Singh HUF, Jaipur vs. ACIT [Order dt. 31.10.2018] Vinod J. Sharma, Thane [Order dt. 28.10.2015] All the matters were set aside to the file of the AO for fresh consideration and/or to confront the Assessee with the adverse materials used against him. The matters in each of the said cases were set aside in the specific facts and circumstances of each of the cases were set aside in the specific facts and circumstances of each of the cases wherein all facts were not available on record and/or where in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid order has been considered by this Tribunal while deciding similar issue in favour of an assessee in the case of Kaushalya Agarwal Vs. ITO (ITA No. 194/Kol/2018, order dated 03.06.2019 (ITAT, Kol). More particularly, the judgment of Hon'ble Bombay High Court in Sanjay Bimalchand Jain V. PCIUT, order dated 10.04.2017 (Bom HC) had been considered and distinguished by this Tribunal and other benches of the Tribunal, inter-alia, in the following cases: a. Satyanarayan Saria vs. ITO [ITA No.1224/Kol/2016, Order dt. 28.06.2019 (Kol ITAT)] b. Kaushalya Agarwal vs. ITO [ITA No.194/Kol/2018, Order dt. 03.06.2019 (Kol, ITAT)] c. Meenu Goel vs. ITO [2018] 94 taxmann.com 158 (Del-Trib) 12. Coming to the cases given below: ACIT vs. Madhuri Sunil Kotecha [ITAT, Pune, Order dt. 28.03.2018] Charu Agarwal, Meerut vs. ITO [ITAT, Delhi, Order dt. 10.09.2018] Dayaram Khandelwal vs. PCIT [MP High Court, Order dt. 01.03.2018] Sourabh Khandelwal vs. PCIT [MP High Court, Order dt. 01.03.2018] It is noted that in all of these cases relates to imposition of penalty under section 271(1)(c) of the Act in the facts where the Assessee had withdrawn/surrendered his/her claim of exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 05.10.2018. xi. Premlata Agarwal vs. ITO in ITA No.874/KoI/2018, Order dt. 05.10.2018. xii. Sunil Kumar Ladha vs. ITO in ITA No.851/KoI/2018, Order dt.05.10.2018. xiii. Balram Gupta vs. ITO in ITA No.817/KoI/2018, Order dt.05.10.2018. xiv. Alka Changoiwala vs. ITO in ITA No.634/KoI/2018, Order dt.05.10.2018. xv. Santosh Choraria vs. ITO in ITA NO.521/KoI/2018, Order dt.05.10.2018. xvi. Sonal Bajaj vs. ITO in ITA No.239/KoI/2018, Order dt.05.10.2018. xvii. Sudha Khandelwal v. ITO in ITA No.86/KoI/2018, Order dt. 05.10.2018. xviii. Bina Agarwal vs. ITO in ITA NO.1403/KoI/2018, Order dt.05.1 0.2018. xix. Harish Jain vs. ITO in ITA No. 1404/Ko1/2018, Order dt.05.10.2018. Thus, it is noted that aforesaid decision of the Hon'ble Supreme Court, Hon'ble Bombay High Court and Tribunal are distinguishable and so the ratio is not applicable to the case/cases in hand. And for the facts discussed in para 6 to 8 supra I am inclined to allow the appeal of the assessee. 20. Since I have ordered the deletion of the addition made by AO which has been confirmed by Ld. CIT(A) on account of claim of LTCG, the consequential addition in respect of commission payment is also hereby d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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