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TMI Blog2020 (8) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... 14-15 relevant to the AY 2015-16, appellant earned long-term capital gain ('LTCG') of Rs. 4,15,67,925/- on sale of shares in unlisted companies. The appellant further incurred short-term capital loss ('STCL') of Rs. 1,57,23,872/- out of which a sum of Rs. 1,22,76,352/- related to purchase and sale of the shares of following three listed companies: S.No. Description STCL (Rs.) 1. Cressanda Solutions Ltd. 24,66,430 2. Kailash Auto Finance Ltd. 42,52,805 3. Matra Kaushal Enterprises Ltd. ('MKEL') 55,55,067 Total 1,22,76,352 3. The AO framed the assessment order dated 27.12.2017 under section 143(3) of the Act , making an addition of Rs. 1,22,76,352/- under Section 68 read with 115BBE and Rs. 3,06,908/- under section 69C of the Act, disallowing the STCL claimed as set off under Section 70 of the Act, in the computation of income on the ground that it was bogus. Aggrieved by the said order, the appellant filed first appeal under Section 246A of the Act before the CIT(A). Vide order dated 14.01.2019, the said appeal of the appellant was dismissed and the additions made under Section 68 and 69C of the Act were confirmed. In further appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit - 2(3), Kolkata wherein the general practice followed by the companies, brokers and operators for providing LTCG/STCL to beneficiaries has been explained. The involvement of the assessee in the entire chain of generating bogus entries of long-term capital gain/loss were taken into consideration. The AO concluded that the assessee was not a regular investor in shares and had invested only in high risk stocks which during investigation were found to be obscure companies with no business activity or asset and were identified as 'Penny Stocks'. The AO concluded that the assessee had entered into a sham transaction with full knowledge so as to convert unaccounted money into accounted money in the guise of capital loss. Further, the evidence in the nature of testimonies of person in-charge with the management and control of the aforenoted Penny Stock companies were also taken into account. This evidence forms the basis for the Assessing Officer to conclude that the STCL claimed by the assessee was not genuine or market driven but was a pre-arranged transaction noted in the accounts of the assessee in lieu of unaccounted cash. Although the AO and CIT (A) treated the capital loss as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpounded documents and made analysis of beneficiaries. The report prepared contains details of complete modus operandi, commission charged against accommodation entries, list of conduit companies, list of their bank accounts in the name of conduits. The said list contains names of companies in which the appellant dealt. Therefore, the findings in the case of Investigation wing corroborate the independent findings of the AO. Therefore, the AO was not required to allow the appellant the opportunity to cross-examine." 4.8 The Tribunal in the case of Ram Niwas Gupta, Dehradun Vs DCIT, Dehradun on 6th February, 2019 in ITA No.4881 to 4883/Del/2016 (Assessment Years: 2010-11, 2012-13 and 2013-14), after considering various decisions of the Hon'ble Supreme Court, including the decision in the case Andaman Timbers Industries Vs Commissioner of Central excise, Kolkata -II reported in 2015 (324) E.L.T. 641 (SC), 2017 (50) S.T.R. 93 (SC), 2016 (15) SCC 785 has held as under: "105. In our opinion right to cross-examine the witness who made adverse report, is not an invariable attribute of the requirement of the dictum, "audi alteram partem". The principles of natural justice do not req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f providing accommodation entry have been corroborated with the material, surround circumstances and preponderance of probability. We accordingly uphold the finding of the CIT(A) on that issue in dispute. The relevant grounds of the appeal of the assessee are accordingly rejected. xxx xxx xxx 5.1 After describing the general modus operandi of accommodation entry by way of bogus capital gain/loss, the Assessing Officer has highlighted the statement of the persons who claimed to have provided bogus capital gain/loss entries. The assessee was then asked to justify the investment in the relevant shares. The Assessing Officer has pointed out that these companies are not having any significant/real business as seen from the financial statement of those companies. The price movement of the shares was also found to be unrealistic by him. The Assessing Officer has particularly pointed out that price movement of the relevant shares transacted by the assessee, were not matching with movement of the share market in general and movement of the other scrips in the same line of the business. The Assessing Officer also pointed out that volume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 841/2019 Page 7 of 10 contract notes, cheques received against overwhelming evidences collected by Revenue regarding operation. of entire affairs of assessee. This cannot be case of intelligent investment or simple and straight case of tax planning to gain benefit of longterm capital gains. earnings @491% over period of 5 months is beyond human probability and defies business logic of any business enterprise dealing with share transactions. net worth of company is not known to assessee. Even brokers who coordinated transactions were also unknown to assessee. All these facts give credence to unreliability of entire transaction of shares giving rise to such capital gains. ratio laid down by Hon'ble Supreme Court in case of Sumati Dayal vs. CIT, 214 ITR 801 is squarely applicable to case. Though assessee has received amounts by way of account payee cheques, transactions cannot be treated as genuine in presence of overwhelming evidences put forward by Revenue. fact that in spite of earning such steep profits, assessee never ventured to involve himself in any other transaction which broker cannot be mere coincidence of lack of interest. Reliance is place on judgment in case of Nipun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Hon'ble Supreme Court, our decision is equally applicable to receipts obtained from all three entities. Further, reliance is also placed on orders of various Courts and Tribunals listed below. MK. Rajeshwari vs. ITO in ITA No. l7231Bang/2018, order dated 12.10.2018. Abhimanyu Soin vs. ACIT in ITA No. 951 1/Chd/2016, order dated 18.04.2018. Sanjay Bimalchand Jain vs. ITO 89 taxmann.com 196. Dinesh Kumar Khandelwal, HUF vs. ITO in ITA No. 58 & 591 Nagl2015, order dated 24.08.2016. Ratnakar M Pujari vs. ITO in IT No. 9951Muml2012, order dated 03.08.2016. ITA 841/2019 Page 9 of 10 Disha N. Lalwani vs. ITO in ITA No. 6398 / Mum / 2012, order dated 22.03.2017. ITO vs. Shamin. M Bharwani [20 16] 69 taxmann.com 65. Usha Chandresh Shah Vs ITO in ITA No. 6858 / Mum / 2011, order dated 26.09.2014. CIT vs. Smt. Jasvinder Kaur 357 ITR 638. 12. facts as well as rationale given by Hon'ble High Court are squarely applicable to case before us. Hence, keeping in view overall facts and circumstances of case that profits earned by assessee are part of major scheme of accommodation entries and keeping in view ratio of judgments quoted above, we, hereby decline to interfere in order of Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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