TMI Blog2021 (3) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... n set aside by the Tribunal and there is no reason for the Tribunal to remand the matter to the Assessing Officer for a fresh consideration. There was no material, which necessitated the remand of the case to the Assessing Officer and it is a clear case where the Tribunal had failed to exercise its jurisdiction in the manner known to law.Tribunal, being a last fact finding Authority, is under the legal obligation to record a correct finding of fact. Where all the evidence had been produced and the CIT(A), after full investigation of the evidence and examination of the accounts, had given a definite finding on the question in issue, the Tribunal's order of remand was held to be invalid. Substantial questions of law framed are answered in favour of the Revenue - T.C.A.Nos.438 to 445, 447 to 449 & 452 of 2020 And C.M.P.Nos.14047, 14049, 14060, 14101, 14102, 14104, 14107, 14138, 14139, 14140 & 14245 of 2020 - - - Dated:- 25-1-2021 - THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM AND THE HONOURABLE MS.JUSTICE R.N.MANJULA For Appellant: Mrs.R.Hemalatha Senior Standing Counsel JUDGMENT T.S. SIVAGNANAM, J These appeals, filed by the Revenue under Section 260A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing its jurisdiction under Section 254 of the Act. The Hon'ble Supreme Court, in the case of Hukumchand Mills Ltd. Vs. CIT [reported in (1967) 63 ITR 232] held that the Tribunal had power to remand the matter back to the Income Tax Officer. This decision was followed by the Hon'ble Supreme Court in the case of Martin Burn Ltd. Vs. CIT [reported in (1993) 68 Taxmann 346]. 14. The question is as to when the power of remand can be exercised. For this proposition, it would be beneficial to refer to the decision of this Court in the case of Cholamandalam MS General Insurance Co. Vs. Royal Sundaram Alliance General Insurance Co. Ltd. [reported in (2013) 357 ITR 597] wherein the Division Bench held as follows: 17. In the background of the jurisdiction of the Tribunal as a fact finding authority, we feel that the Tribunal should have acted with greater circumspection to order a remand particularly when the Revenue itself does not dispute that the materials were all those that were considered by the Assessing Officer. Remand is not a power to be exercised in a routine manner and should be used sparingly as an exception only when the facts warranted such course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absolutely no justification on the part of the Tribunal to interfere with the facts recorded by both the Lower Authorities. The gist of the modus operandi done by the assessee as could be culled from the order of assessment as well as the order of the CIT(A) is as follows: The assessee had purchased 450 shares of Dhanalabh Mercantile Limited which later merged with M/s.Bakra Prathisthan Ltd and the said 450 shares originally held by the assessee were converted into 4500 shares. All the purchases were made through off market ie. after closing of share markets and the assessee had never heard of the name of the scrip before. The amount of investments was very meager in some cases and huge profits were made by the assessee on the sale of unknown company shares. The name of the person and his details were not known to the assessee and the assessee was not able to produce the person before the Assessing Officer from whom the said shares were said to have been purchased. The letters sent to the address of the seller were all returned unserved and details of the Company were also not known to the assessee. The share certificate issued to the seller from whom the assessee had purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going so as not to come under the scanner of the SEBI. The buyers of the shares from the beneficiaries were found to have common directors and common address and the shares were sold by the members of same family and same surname and same address or from the same town. Once the operators started rigging the prices of the shares through circular trading and increase the price of the shares with the help of brokers and bogus clients and arrived at optimum amount over a period of time. Once a period of one year was over (for claiming exemption) under long term capital gains under Section 10(38) the Operator asked the beneficiary to deliver the unaccounted cash. Once the unaccounted cash was delivered by the beneficiary, then the same was routed by the operator to the books of various papers/bogus companies which ultimately bought the shares belonging to the beneficiary at a very high price and these paper companies avoided direct cash trail. Thereafter the operator used to instruct the beneficiary to sell the shares with a particular lot on a particular day and time. In the present assessee s case, the assessee has originally purchased 450 shares of face value of ₹ 10/- e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the opinion of the Assessing Officer, not satisfactory. In such a case there is, prima facie, evidence against the assessee, viz., the receipt of money, and if he fails to rebut, the said evidence being unrebutted, can be used against him by holding that it was a receipt of an income nature. While considering the explanation of the assessee the Department cannot, however, act unreasonably. (See: Sreelekha Banerjee (supra) at p. 120). 20. The decision of the Hon'ble Supreme Court in the case of Sumati Dayal was followed in the decision of the High Court of Delhi in the case of Sanjay Kaul Vs. PCIT [reported in (2020) 119 Taxmann.com 470] wherein it was held that where the assessee was not a regular investor in shares and had only invested in high risk stocks of obscure companies with no business activity or asset, which were identified as penny stocks, the Assessing Officer had correctly concluded that the assessee had entered into a pre-arranged sham transaction so as to convert unaccounted money into accounted money in guise of capital loss and therefore, the alleged short term capital loss was rightly disallowed. 21. A similar view was taken in the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 938] laid down that the onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction and credit-worthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the assessee is not able to provide a satisfactory explanation of the nature and source of the investments made, it is open to the Revenue to hold that it is the income of the assessee and there would be no further burden on the Revenue to show that the income is from any particular source. 8.3. With respect to the issue of genuineness of transaction, it is for the assessee to prove by cogent and credible evidence that the investments made in share capital are genuine borrowings, since the facts are exclusively within the assessee s knowledge. The Delhi High Court in CIT v. Oasis Hospitalities Pvt. Ltd. [333 ITR 119 (Delhi) (2011)], held that : The initial onus is upon the assessee to establish three things necessary to obviate the mischief of Section 68. Those are: (i) identity of the investors; (ii) their creditworth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther (a) the assessee offers no explanation about the nature and source of such credits found in the books or (b) the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory. It is only then that the sum so credited may be charged to Income-tax as the income of the assessee of that previous year. The expression the assessee offers no explanation means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. The burden is on the assessee to take the plea that, even if the explanation is not acceptable, the material and attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature. (emphasis supplied) iii. The Delhi High Court in a recent judgment delivered in PR.CIT -6, New Delhi v. NDR Promoters Pvt. Ltd. (410 ITR 379) upheld the additions made by the Assessing Officer on account of introducing bogus share capital into the assessee company on the facts of the case. iv. The Courts have held that in the case of cash credit entries, it is necessary for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dited as Share Capital/Premium are : i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/subscriber, verify the identity of the subscribers and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit- orthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. ...... 13. The lower appellate authorities appear to have ignored the detailed findings of the AO from the field enquiry and investigations carried out by his office. The authorities below have erroneously held that merely because the Respondent Company assessee had file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this connection, the AR furnished the copy of sale bill dated 15.1.2010 of M/s.Excellent Barter Private Limited of Shaym Nagar WB 743127 wherein it is noticed that the assessee has purchased 450 shares of Dhanlabh Merchandise Limited @ ₹ 200 each per share for a consideration of ₹ 90,000/-. But the bill does not contain any distinctive numbers and it was stated 'as per Demat form'. The AR of the assessee also furnished the copy of transaction report from Motilal Oswal Securities as documentary evidence for purchase of these shares and later converted into M/s.Bakra Pratisthan Limited on 28.12.2011. ..... 2.2........On the perusal of the same, it is noticed that the closing balance as on 02.3.2010 was ₹ 5,607/-. On 03.3.2010, there was a credit entry of ₹ 90,000/- and a debit entry with narration 'manual chg' ₹ 90,000/-. As per the narration of the bankers, it is manual cheque only and the same was passed in clearing on the same day by Calcutta base company. It is not at all possible. .... 2.3. As it was held by the assessee the shares of M/s.Dhanlabh Merchandise Limited was purchased from M/s.Excellent Barter P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares not reported to BSE. Considering the above fact findings, it is established that the purchase of 450 shares of M/s.Dhanlabh Merchandise Limited from M/s.Excellent Barter Private Limited by the assessee is itself a sham transaction. Accordingly, the documentary evidence furnished by the assessee towards purchase of shares of 4500 M/s.Bakra Pratisthan Limited is not a genuine one and hence, the claim of exemption under Section 10(38) towards selling of the same is not entertained. .... 7.11. It can be seen from the client statement of Shri Ashok Kumar Kayan that not only the assessee but the following members of the HUF family members have also invested in the said impugned shares : SNo Name PAN Amount 01 Karuna A Jain AGTPJ5140K 25,46,855 02 Abhishek Jain AEUPJ3242F 15,93,300 03 Abhishek M Jain HUF AAJHA1645J 15,86,250 04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR admitted that the assessee purchased the shares of M/s.Dhanlab Merchandise Limited in off market. ..... 7.4. These shares were purchased through off market and not through Stock Exchange. The notice under Section 133(6) dated 28.9.2017 sent by the Assessing Officer to M/s.Excellent Barter Private Limited from which the assessee had purchased the shares of M/s.Dhanlab Merchandise Limited was returned unserved with remark 'not known'. Moreover, the assessee did not bring any other material on record to establish the genuineness of the purchase of shares. M/s.Bakra Pratisthan Limited did not pay dividend or did not issue bonus shares during the period of holding of these shares by the assessee corresponding to the increase in the price of the share of M/s.Bakra Pratisthan Limited. During this period, there has been no corporate announcement by M/s.Bakra Pratisthan Limited which suggests that the company is undertaking any substantial development activity. The above facts were not disputed by the appellant. These facts clearly establish that the share prices of M/s.Bakra Pratisthan Limited were artificially hiked. ..... 7.6. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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