9911796707
TMI Blog2021 (11) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... ian Ltd. [earlier named as M/s Santoshima Lease Finance And Investments (India) Ltd.]. Shorn of unnecessary details, the assessee had in its return of income claimed to have sold 5000 shares of M/s Sunrise Asian Ltd. (supra) for a consideration of Rs. 24,48,344/- after holding the same for a period of 2¼ years (approx). Long Term Capital Gain (LTCG) of Rs. 23,23,343/- on the aforesaid sale transaction was claimed by the assessee as exempt u/s 10(38) of the Act. After deliberating at length on the facts of the case, the A.O dubbed the assessee's claim of LTCG as an accommodation entry and added the entire sale consideration of Rs. 24,48,344/- as an unexplained credit u/s 68 of the Act. Also, the A.O made a further addition u/s 69C of Rs. 92,933/- i.e @4% of the amount of LTCG towards unaccounted commission which as per him the assessee would have paid for obtaining the aforesaid accommodation entry. Accordingly, the A.O vide his order u/s 143(3) dated Nil assessed the income at Rs. 31,32,580/-. 4. Aggrieved, the assessee carried the matter before the CIT(A). Although the CIT(A) principally concurred with the view taken by the A.O, however, he restricted the addition u/s 68 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted company & convenient share allotment at the time of merger are the circumstantial evidences that the operators/promoters are determined to benefit the beneficiaries by arranging LTCG. b. Sale of shares and unusual rise in the price: Further the assessee has sold these 5000 shares for a sale consideration of Rs. 24,48,344/- in F.Y 2013-14 which is 19 times the increase of the cost price. It is pertinent to mention here that the normal returns on savings were 7.80% for F.Y 2012-13 and 18.70% for F.Y 2013-14 for BSE/Sensex. Whereas, the assessee has earned 1900% (approx.) of returns on investments in this scrip., that too when sensex, gold returns are far behind the strong performance of M/s Sunrise Asian Ltd. without having any supporting financial itself is a circumstantial evidence to show that the LTCG on sale of shares of M/s Sunrise Asian Ltd. is not genuine one. c. Findings of Investigation wing: The findings of the Directorate of Investigation of Mumbai and Kolkata as discussed above have proved that the assessee had worked out an arrangement in which the shares were acquired by the asessee, the share prices were rigged and then with the help of entry operators by rout ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ Rs. 25/- per share. Thereafter, the shares were sent for demat to his DP account and the same were credited much prior to the date on which the sale transaction was executed. As per the order of the Hon‟ble High Court of Bombay the company i.e M/s Santoshima Tradelinks Limited was amalgamated with M/s Sunrise Asian Limited on 28.06.2013 and the shares of M/s Sunrise Asian Limited were directly credited in the assessee's demat account. After holding the shares for a period of about 2 ¼ years (approx.) the assessee sold the same on the floor of BSE through his regular broker i.e M/s Nirmal Bang Securities Limited and received the sale proceeds from the broker on payout. On a perusal of the records, we find that the assessee in order to substantiate the authenticity of the aforesaid transaction of purchase/sale of shares of M/s Sunrise Asian Ltd. [earlier named as M/s Santoshima Lease Finance And Investments (India) Ltd.] had in the course of the assessment proceedings placed on record supporting documentary evidences, viz. (i). debit note, dated 17.11.2011 of M/s P. Saji Textiles Limited w.r.t 5000 shares of M/s Santoshima Tradelinks Limited purchased by him; (ii). ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with the sensex wherein the normal returns were 7.80% for F.Y 2012-13 and 18.70% for F.Y 2013-14 for BSE/Sensex; and the financials of the company also did not show any reason for the extraordinary performance of its stock. In our considered view, though the aforesaid data gathered by the A.O being based on the facts cannot be faulted on our part, but we are unable to persuade ourselves to concur with him that for the said reason the assessee is to be held to have evaded taxes and laundered his unaccounted money by booking a bogus claim of LTCG that is exempt u/s 10(38) of the Act. Although, the A.O had at length discussed in his order the information that was shared with him by the Investigation wing of Mumbai and Kolkata i.e the modus operandi adopted by beneficiaries with the help of entry operators to obtain tax free capital gains, however, we are afraid that nothing concrete has been brought on record which would prove to the hilt the falsity of the assessee's claim of having carried out genuine transactions of purchase/sale of shares under consideration, and therein prove that he in the garb of a bogus transaction had only procured an accommodation entry of capital gain. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxes and laundering his unaccounted money in the garb of exempt LTCG u/s 10(38) of the Act is supported by the judgment of the Hon‟ble High Court of Delhi in the case of Pr. CIT & Ors. Vs. Krishna Devi & Ors. (2021) 110 CCH 9 (Del). In its aforesaid order it was observed by the Hon‟ble High Court, as under : 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjectures made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provision of Section 68 of the Act. It is recorded that "There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sale shares of M/s Sunrise Asian Ltd. (supra) could not be held to be bogus. In the case before the Tribunal, as in the case of the assessee before us, the A.O was tipped by the Investigation wing that the assessee had traded in shares of M/s Sunrise Asian Ltd. which fell within the category of suspicious transactions. The Tribunal while vacating the addition made/sustained by the lower authorities which had declined his claim for exemption u/s 10(38) of the Act, observed as under : "7. I have heard rival contentions and perused the record. I notice that the AO has received information about suspicious share transactions and on the basis of the same; he has disbelieved the claim of long term capital gains. I notice that the assessee has purchased shares through a broker named M/s Eden Financial Services and sold shares through Intime Equities Ltd. Thus, I notice that the purchase and sale of shares have been carried out through two different brokers. It is not the case of the AO that both the share brokers referred above have been identified as tainted brokers involved in fraudulent transactions. 8. The assessee has earned speculation profit in the immediately preceding year ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
