TMI Blog2019 (12) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... sh aside the orders of the authorities below. Both the authorities below have the cogent reasons for reaching the conclusions and we find it difficult to interfere with the same. With this view of the matter, we dismiss the grounds of. - Decided against assessee. - I.T.A. No.3212/Del/2018 - - - Dated:- 26-11-2019 - SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER Assessee by : Shri K. Sampath, Advocate Shri V. Rajakumar, Advocate Department by : Smt. Rinku Singh, Sr.DR ORDER PER K. NARASIMHA CHARY, JM Aggrieved by the order dated 26.3.2018 passed by the Commissioner of Income-tax (Appeals)-16, New Delhi ( CIT(A) for the Assessment Year 2014-15, Ms Manvi Khandelwal ( the assessee ) preferred this appeal. 2. Brief facts of the case, as could be culled out from the record, are that the assessee is an individual and has been deriving income from business of trading and commission and from other sources. For the Assessment Year 2014-15, he had filed his return of income on 8/1/2015 declaring an income of ₹ 3,26,210/-. The case was picked up for scrutiny under CASS for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a well planned and executed scheme in which the company, the brokers and the buyers and sellers of the Scrips worked in tandem to achieve the predetermined objectives. Learned Assessing Officer referred to a catena of case law and finally by order dated 29/12/2016 held that the amount of ₹ 84,38,907/- credited by the assessee out of the purported receipts on account of sale of M/s Kappac Pharma Ltd during the financial year 2013-14, namely, Assessment Year 2014-15 was his income and remained unexplained cash credit under section 68 of the Act. He accordingly brought a sum of ₹ 89,92,852/-to tax and assessed the total income of the assessee at ₹ 93,19,062/-. 6. Aggrieved by the said addition of ₹ 89,92,852/-, assessee preferred an appeal before the Ld. CIT(A) and contended that the assessee is an honest taxpayer for the past several years and has never indulged in any type of malpractice and when she purchased the shares there was no investigation on this company, even when the shares were sold there was no such investigation on the company or the brokers and, therefore, the purchase of shares by the assessee was in good faith. It is also her case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer had rightly added the sum of ₹ 84,38,907/-as undisclosed income of the assessee. 9. Felt aggrieved by the findings of the authorities below, assessee preferred this appeal contending that the assessee is an innocent investor in M/s Kappac Pharma Ltd and never has it been said by the Department against the assessee that she indulged in any type of malpractice in any of the past several years. Ld. AR also raised so many questions before us which were wise before the Assessing Officer in the letter dated 22/12/2016 and submitted that the Revenue does not possess any material evidence on record to disprove the evidence produced by the assessee, in the absence of which it is not open for the Revenue to consider the intent of the assessee is mala fide acting under surmises and conjectures or on presumptions not supported by evidence. It is also further contended that when the assessee had duly paid the consideration on purchase of shares against the valid receipts, shares were duly transferred to the assessee s name, shares duly deposited to demat account, shares were duly and legally transferred to the buyer through valid transfer dates, consideration received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Long Term Capital Gain on sale of shares (inputs from investigation wing) and during the verification of facts it was found that the assessee has earned a return of approximately 6300% over a very short period of just over 12 months, which ignited the curiosity of the Assessing Officer to delve deeper into the facts of the case by examining the financials of M/s Kappac Pharma Ltd in the light of SEBI surveillance measures and also the trading data of the exit providers. She submitted that the statements recorded by the investigation wing Kolkata are not the sole basis for the assessing officer to reach any definite conclusion to hold that the share trader transaction by the assessee is a bogus one. It is the independent investigation done by the learned Assessing Officer as is revealed in the assessment order that led to the conclusions reached by the Assessing Officer and, therefore, no prejudice is caused to the assessee by not affording an opportunity to her to cross examine the persons whose statements were recorded by the Investigation Wing, Kolkata. She submitted that the Assessing Officer did the best he can do and his conclusions are firmly entrenched into the record and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee which is akin to the modus operandi of bogus LTCG shares as is indicated by the Director of Investigations, Kolkata who carried out a countrywide investigation to under the organised racket of generating bogus entries of Long Term Capital Gain (LTCG) which is exempt from tax. On a comparison of the facts and circumstances involved in these matters, learned Assessing Officer reached the conclusion that the modus operandi adopted by the operators was to make the beneficiaries by some shares of predetermined penny stock company controlled by them and the modus operandi adopted by the assessee is fitting in the order of the things. Learned Assessing Officer therefore reached a conclusion that the transaction of deriving Long Term Capital Gain (LTCG) s by the assessee is a bogus one. 16. It is pertinent to note that the assessee does not dispute any of the facts stated in the immediately preceding paragraph. It remains an admitted fact that having purchased 12,000 shares of M/s Kappac Pharma Ltd at ₹ 11/-share, the assessee sold the same at ₹ 750/-per share within a span of 12 months and realised the capital gains to the tune of ₹ 83,06,907/-and prec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uspended w.e.f. 07/01/2015 by BSE as a surveillance measure pursuant to the directions issued by SEBI. It is also important to note that the learned Assessing Officer verified the trade data pertaining to the sellers of shares of M/s Kappac Pharma Ltd and found that there were three parties, namely, Abhinna Vyapar Private limited, Eash Vyapaar Private limited, and Prerna Vyapaar Private limited who purchased the shares from the assessee and provided her the exit entries. Further, on verification of the annual income and return filing details of these three entities, by obtaining the inputs from the investigation wing of the income tax Department, it was found that these three entities were non-taxpayers with the income below the taxable limits; that the financial capacity of these three entities is not at all commensurate with the huge investment made by them in purchase of this particular scrip; and, therefore, based on the inputs from the investigation wing, it was evident that these buyers were mere accommodation entry providers who indulged in these transactions on behalf of the scheme operators for exchange of commission. 20. It is at this juncture, learned Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e such an investment. What the assessee did was something improbable for novice investor without any substantial share transaction in earlier subsequent years. Generally the investment takes place with the motive of profit earning, and what was the hope of the assessee is exclusively known to her and to none else. When the transaction created a reasonable doubt, it is for the assessee to clarify the circumstances which prompted her to make such an investment. The satisfaction of the assessee in respect of the prospects of earning profits by such an investment is a psychological fact and within her exclusive and personal knowledge. Unless and until, the assessee comes out with an explanation that there was reason for her to make such an investment and the circumstances under which such an investment was made, out of her personal knowledge, learned Assessing Officer has no reason not to pursue the reasonable doubt he had in respect of the transaction which he analysed in the light of the attendant circumstances like the financials of the company and the transaction data of the exit providers. Without doing so, she cannot shift the burden to the learned Assessing Officer. As rightly o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticulously planned and framed, is without the framework of law and a colourable device, which cannot be part of tax planning and it would be wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods. 24. The findings of the Tribunal are favoured by the Hon ble jurisdictional and are confirmed in ITA No.220/2019 on the file of the Hon ble Delhi High Court by order dated 8/3/2019, wherein the Hon ble High Court held that the company (M/s Kappac Pharma Ltd, which was even directed to be delisted from the stock exchange) had meagre resources and in fact reported consistent losses and in the circumstances, the astronomical growth of the value of company s share naturally excited the suspicion of the Revenue. Hon ble High Court declined to interfere with the findings of the Tribunal and dismissed the appeal. 25. In the case of Sanat Kumar (supra), a coordinate Bench of this Tribunal dealt with a similar situation, and made an observation that though the assessee meticulously completed the paperwork by routing his entire investments through banking channel, when the result of an altogether beyond human properties, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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