9911796707
TMI Blog2019 (9) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant were bogus in nature and were merely accommodation entries without appreciating the fact that a) the appellant had earned capital gains on shares listed on recognized stock exchange by paying the SIT and receiving the sale consideration through its bank accounts. b) The Ld. CIT(A) had simply relied on specific information/findings received from the Investigation Wing without verifying whether it is applicable to the assessee or not. The Appellant craves leave to add to and/or amend and/or delete and/or modify and/or alter the aforesaid grounds of appeal as and when the occasion demands. u/s 68 of the Act. The appellant prays that no adverse view may please be taken." 4. The brief facts of the case are that the assessee filed the return of income for the A.Y. 2015-16 on 30.09.2015 declaring total income to the tune of Rs. 14,47,860/-. The case was selected for scrutiny under CASS for examining suspicious long term capital gain on share on the basis of inputs from Investigation Wing, Kolkata. The investigation carried out by the Directorate of Investigation, Kolkata has established that a racket generating bogus entries of Long Term Capital Gain which was claimed as exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry at a very nominal price through preferential allotment of off-line sale to save STT. The beneficiary holds the share for the statutory period and when the price reaches the desired level, the beneficiary who bought the shares at a low or normal price, is made to sell at an exorbitant profit and claimed LTCG exemption u/s.10(38). The operators rig the price of the stock and gradually raise its price many times, often 500 to 1000 times. Accordingly, the AO denied the claim of long term capital gain of Rs. 21,92,278/- and the same is added as unexplained cash credit u/s.68 of the Act. (ii) From the findings of the Directorate of Investigation, Kolkotta, it cannot be denied that the appellant has purchased penny stock through operators/brokers and after rigging the price, the same was sold and also claimed L1CG exemption u/s.10(38) of the Act. The modus operandi carried out by these operators is in public domain and most importantly, SEBI and BSE have also taken action against such operators and barred these entities to trade in stock exchanges. In the cases of penny stock including the Scrip of M/s.HPC 810 Ltd. a detailed enquiry was conducted on entry providers, riggers, ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,336 entities and had suspended trading in the shares of 203 companies and reduced the price band of 168 companies to the lowest band. (v) In the instance case, regarding the purchase and sale of M/s. HPC Bio Ltd. scrip, the AO has elaborately discussed from Para 9 to Para 18 in the assessment order. Even in the appellate proceedings, the AR of the appellant has only explained what was explained before the AO and has also not rebutted the findings made by the Directorate of Income-Tax(Investigation) Kolkata, SEBI surveillance team, and also, BSE has suspended the trading in the securities of the following companies including M/s. HPC Bio Ltd. (535217) in pursuance of the_ directions received from SEBI. (vi) As discussed from Para 09, in the assessment order, the details of purchase and sale of shares of M/s. HPC Bio Ltd. are as followspurchased 4000 shares for Rs. 1,40,000/- on 07.03.2013 and sold 3900 shares on 09.06.2014 for Rs. 21,92,278/- including the financial positions of the company starting from 2011-2012 to 2013-14 which clearly shows that the operators/entry providers in connivance with the main persons of company has rigged the share prices and the beneficiaries hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the door will be left wide open to evade The Hon'ble Court also observed that the taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those document and the matter has to be considered by applying the test of human probabilities. It was argued that the scrip in which investment was made by the appellant is admittedly a penny stock and the said stock by its very nature and functioning is mysterious. Normally, in the share market an investment is always made only in good stock and the good stock is identified in the market where it has sound fundamentals with a good target record of giving dividend over a period of time. The share in question it was argued is definitely not a stock in that category. The penny stock it was argued basically always exhibit a cyclic pattern where both the buyer and seller seek an advantage of an artificially created market situation to exploit and avoid taxation. (ix) A reference may gainfully be made to the following judicial pronouncement of the Hon'ble Supreme Court. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
