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TMI Blog2020 (7) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the shares were sold through a reputed stock broking company viz. M/s Joindre Capital Services Ltd. and shares were delivered by the appellant from her d-mat account and payment against sale of shares was received from the said broking company. 4. Without prejudice to ground no. 2 & 3 above, the learned Commissioner of Income Tax, Appeals - 45, Mumbai erred in law in holding that to claim exemption u/s 10(38), the STT is required to be paid on both the arms of the transaction i.e. purchase and sale of shares. 5. The learned Commissioner of Income Tax, Appeals - 45, Mumbai failed to appreciate that the statement recorded of Shri Mukesh Chokshi is a general statement and the name of the appellant has not been mentioned specifically in the said statements and no opportunity of cross examination has been provided as held by the Hon'ble Supreme Court in the case of Kishanchand Chellaram V. CIT[1980] 125 ITR 713 (SC). 6. The learned Commissioner of Income Tax, Appeals - 45, Mumbai erred in sustaining the addition of Rs. 17,40,000/- u/s 68 of the Income Tax Act, 1961 made by the AO on the basis of suspicion, surmises and conjectures. on account of sale of jewellery despi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given in succeeding paragraphs. Addition u/s 68 for Rs. 33.37 Lacs on account of Sale of Shares 2.1 Briefly stated, the assessee being resident individual was assessed for year under consideration u/s 143(3) r.w.s. 147 on 01/03/2013 wherein the income of the assessee was determined at Rs. 53.97 Lacs after certain additions as against returned income of Rs. 3.20 Lacs filed by the assessee on 17/05/2011 which was processed u/s 143(1). In the return of income, the assessee had reflected Long-Term Capital Gains of Rs. 28.94 Lacs on sale of 200 Shares of a scrip namely MMTC and the gains were claimed to be exempt u/s 10(38). 2.2 The assessee was subjected to reassessment proceedings pursuant to receipt of certain information that during search & seizure operations carried out by the department on 25/11/2009 in the case of M/s Mahasagar Securities Private Limited & its group concerns, it transpired that the assessee stood beneficiary of bogus capital gains on sale of 200 shares of a scrip namely MMTC for Rs. 28.94 Lacs. It was alleged that the assessee obtained bogus purchase bills to acquire the shares of MMTC for Rs. 4.43 Lacs. During the course of search proceedings, statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were stated to be made during August, 2007, however, the bank statement of corresponding period did not show any such payment. 2.6 In the above background, the entire transaction was termed as an accommodation route through which the unaccounted money of the assessee was converted into accounted money in the garb of Long-Term capital gains (LTCG).Therefore, the sale amount of Rs. 33.37 Lacs was treated as unexplained cash credit u/s 68 and added to the income of the assessee. 3.1 The Ld. CIT(A), while going through factual matrix, noted that M/s AINPL was not a sub-broker during the period 2007-2009 and it had not transacted through any stock exchange. The said entity, as per various decision of Tribunal, was accepted to be an entity engaged in providing accommodation entries. Further the provisions of Sec. 10(38) as introduced from AY 2005-06 mandated that the transactions should have been chargeable to securities transactions tax (STT) which would go against the argument of the assessee that the purchase of shares was through off-market purchases and therefore, the transactions had to attract STT. Since M/s AINPL was neither broker nor a sub-broker, the question of STT being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be termed as bogus transactions. 6.2 The Ld. AO, in the process of making additions, has heavily relied upon the statement of Shri Mukesh Chokshi without bringing on record any cogent material to establish that the sale transactions carried out by the assessee though M/s JCSL were bogus transactions. In fact, the lower authorities, in our opinion, has missed out the fact that the sale transactions had taken place through an independent broker namely M/s JCSL and not through M/s AINPL. Another aspect is that additions have been made merely by relying upon third party statements which were never confronted to the assessee in violation of principle of natural justice. 6.3 The assessee, in our opinion, discharged the primary onus of proving the stated transactions by submitting purchases bills, contract notes of purchase of shares, holding letter from the broker, bank pass book evidencing payment through banking channels towards purchase of shares, copy of ledger account in the books of share broker, sales bills and sale contract notes issued by M/s JCSL, copy of ledger account in the books of M/s JSCL, delivery position and global net position demat report, bank pass book ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to tax in the return of income. 5.2 During assessment proceedings, the assessee explained that the assessee sold old scrap of jewelry and ornaments through its relatives. It was also submitted that the payment of Jewellery was not received during the year but receivables were shown in the Balance Sheet as Sundry Debtors. The final payment was stated to be received during May, 2011. However, upon perusal of assessee's submissions, Ld. AO held that the assessee could not establish the fact that it was in possession of Jewellery of this worth. No wealth tax return was ever filed and no valuation report was filed by the assessee in support of possession of Jewellery. The copies of purchase bills were not provided. Therefore, the aforesaid claim was rejected and entire sale consideration of Rs. 17.40 Lacs was brought to tax as unexplained cash credit. 6. During appellate proceedings, the assessee submitted the name and addresses of the persons to whom the Jewellery / ornaments were sold. The submissions were subjected to remand proceedings. Confirmatory notices u/s 133(6) were issued to all these parties, however, the same were returned back undelivered. The assessee could only p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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