TMI Blog2021 (9) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... tive evidences - AO has predominantly went on the basis of theory of human behavior and preponderance of probabilities for the reason that the assessee was never involved in purchase and sale of shares, but has done isolated transaction of purchase and sale of a particular company . The said finding of the AO is contrary to facts, because, the assessee was a regular investor in shares which is evident from Demat account furnished before us, as per which along with this script, the assessee had purchased and sold number of other scripts. AO as well as CIT(A) were erred in treating consideration received for sale of shares as unexplained cash credit u/s.68 of the Act. Hence, we direct the Assessing Officer to delete additions made u/s.68 - Decided in favour of assessee. - I.T.A.No.2507 & 2508/Chny/2018 - - - Dated:- 8-9-2021 - Shri V.Durga Rao , Judicial Member And Shri G.Manjunatha, Accountant Member For the Appellant : Mr. D.Anand, Advocate For the Respondent : Mr.Suresh Periasamy,JCIT ORDER PER G.MANJUNATHA, AM: These two appeals filed by the assessee are directed against separate, but identical orders of learned CIT(A)-10, Chennai, both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen that there is absolutely no adverse material to implicate the Appellant was involved in manipulation of shares or that the transaction of purchase and sale of sale was bogus to disallow the appellants claim of relief under section 10(38) of the Income Tax Act. The learned CIT(A) appeals erred in disallowing the claim of the appellant under section 10(38) of the Income Tax Act and consequently failed to follow the dictum laid by the supreme court in the case of TEJUA ROHITKUMAR KAPADIA while confirming the addition made under section 68. The learned Assessing officer and the CIT(A) erred in assessing the income from purchase and sale of shares under the head un explained credit under section 68 and not as income exempt under section 10(38) of the Income Tax Act as claimed by the appellant despite the fact that the appellant produced salient evidences to prove the genuineness of the transaction. The said uncontroverted evidences are overlooked both by the assessing officer and CIT(A) without any rhyme of reason and orders passed in a stereo typed manner on the basis of suspicion and surmise without application of mind to the facts of the appellants case. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer noticed that the assessee had purchased 2000 shares of M/s. Tuni Textile Mills Ltd. for financial year 2010-11 in two lots, one 950/- shares @ ₹ 116.59 per share and another for 1050/- shares @ ₹ 122.41 per share. The Assessing Officer further noticed that subsequently the company has split its equity shares having face value of ₹ 10/- per share, into face value of ₹ 1 per shares, consequently, 2000 shares held by the assessee became 20,000 shares of M/s. Tuni Textile Mills Limited. These shares were subsequently sold on 05.03.2012 in the financial year relevant to assessment year 2012-13 @ ₹ 95.50 per share for total consideration of ₹ 19,05,200/-. The assessee has computed long term capital gain and claimed exempt u/s.10 (38) of the Act. 7. The Assessing Officer examined claim of long term capital gain u/s.10(38) and has not accepted explanation furnished by the assessee and according to him, assessee is one the beneficiary of bogus long term capital gain derived from penny stocks. The Assessing Officer has discussed the issue at length in light of financial statements of M/s. Tuni Textile Mills Limited, and opined t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial strength has split its equity shares in the ratio of 1 : 10 and further, failed to explain how price of shares was quoted at a record 9400% growth rate in a short span of two years. Therefore, he opined that mere furnishing certain evidences, including broker notes to prove purchase and sale of shares through online platform and further payment or receipt of consideration through proper banking channel is not sufficient to prove genuineness of transaction, when other circumstantial evidences show that transaction of shares trading is not genuine. Therefore, he has rejected arguments of the assessee and confirmed additions made by the Assessing Officer. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us. 9. The learned AR for the assessee submitted that the learned CIT(A) has erred in upholding additions made by the AO towards consideration received for sale of shares u/s.68 of the Income Tax Act, 1961, without appreciating fact that the assessee never involved in rigging sale price of shares in the market and also the AO has not brought on record any evidence to prove that the assessee is part of group of people, who are involved in rigging of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He further submitted that no doubt, the assessee has filed necessary evidences to prove that she has purchased and sold shares through recognized stock exchange, but what is to be seen is whether the assessee is a regular investor in shares or has made an isolated transaction of one purchase and sale in particular scrip. In this case, it is abundantly clear that the assessee was never into purchase and sale of shares, but entered into one isolated transaction of purchase and sale of shares of a specific company M/s. Tuni Textile Mills Ltd. and said company was named as penny stocks, upon consideration of facts gathered during the course of investigation . Therefore, there is no merit in the arguments taken by the assessee that long term capital gain derived from sale of shares is genuine transaction. 11. We have heard both the parties, perused material available on record and gone through orders of the authorities below along with various case laws cited by both the sides. There is no dispute with regard to facts that the assessee has purchased shares of M/s. Tuni Textile Mills Ltd. through recognized stock exchange and paid consideration by cheque. It is also not in dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s kept under watch list by the SEBI for fraudulent and unfair trade practices relating to Securities Market Regulations, 1995. We find that basis on which the Assessing Officer has concluded his finding to hold the assessee is a beneficiary of bogus long term capital gain is not supported by any corroborative evidences. No doubt, broker may be kept under watch list for some fraudulent activities, but whether the assessee is part of that fraudulent activity or not has to be seen. Moreover, there is no evidence on record to show that assessee was part of the organized racket of rigging price of shares in the market. The findings of the Assessing Officer is purely based on suspicious and surmise manner. Therefore, we are of the considered view that unless the Assessing Officer brings certain evidences to support his finding that the assessee is also involved in rigging share price to get undue benefit of exemption u/s.10(38) of the Income Tax Act, 1961, the transactions of sale and purchase of shares through recognized stock exchange cannot be treated as unexplained cash credit u/s.68 of the Act. In this case, the Assessing Officer has predominantly went on the basis of theory of huma ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
