9911796707
TMI Blog2019 (6) TMI 1659X X X X Extracts X X X X X X X X Extracts X X X X ..... & 2208/Kol/2018, 2341 & 2432/Kol/2018, 1803/Kol/2018, 1808 & 1814/Kol/2018, 2206 & 2213/Kol/2018, 2209/Kol/2018, 2459/Kol/2018, 1738 & 1739/Kol/2018, 2607/Kol/2018, 2370/Kol/2018, 1813/Kol/2018, 250/Kol/2019, 2226/Kol/2018, 2164/Kol/2018, 1769/Kol/2018, 2331 & 1825/Kol/2018, 2428 & 2429/Kol/2018, 2153 & 2317/Kol/2018, 2221/Kol/2018, 1725/Kol/2018 For the Appellant : Shri Subash Agarwal, Advocate, Shri S.L. Kochar, Advocate & Shri Aryan Kochar, Advocate, Shri Soumitra Choudhury, Advocate, Shri Somnath Ghosh, Advocate, Shri M.K. Shawar, FCA, Mr. Anuj Musaddi, FCA & Shri Aakash Kumar, FCA and Ors. For the Respondent : Shri Pravash Roy, JCIT-D., Shri A.K. Bandhopadhay, JCIT-DR and Ors.. ORDER These assessees have filed their instant appeals involving different assessment year(s) against the respective Commissioner of Income-tax (Appeals) separate order(s) affirming the Assessing Officer(s) identical action treating varying sums of Long Term Capital Gains (LTCG) / Long/Short Term Capital Loss (LTCL); as the case may be as involving unexplained cash credits u/s 68, involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short 'the Act'. 2. I have heard these appeal(s) toge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arply after the offloading of these scripts by pre-arranged and manipulated transactions. The entire transactions were carried out on the Stock Exchange to give it a color of real transactions. 2. I also find that the submissions made by the appellant during the course of the appeal point towards the elaborate documentation, meaning thereby that the appellant has produced papers relating to application for the shares, the allotment of the shares, the share certificates payments by cheque and the necessary papers filed before the Registrar of companies, where the name of the assessee has been reflected as a shareholder. The appellant has also filed proof of amalgamation of the companies wherein the shareholding has changed hands. It is also the contention of the appellant that it has provided copies of the bank statement, bank contract notes and delivery instructions to the broker by way of proof that an these transactions were genuine. However, In my view of the matter, it is precisely this elaborate paperwork that strengthens the matter relating to the bogus benefit of the LTCG, which clearly has been schemed, pre-planned and executed with mala fide intelligence and precision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as importance of relationship between the donor and done in determination of genuineness of gift held as under: "That a mere identification of the donor and showing the movement of the gift amount through banking channels was not sufficient to prove the genuineness of the gift. Since the claim of the gift was made by the assessee, the onus lay on him not only to establish the identity of the person making the gift but also his capacity to make a gift and that it had actually been received as a gift from the door."In my considered view wherever documents are relied upon they should pass the test of normal behaviour of the assessee in the curse of business viz., human conduct, preponderance of probability and surrounding circumstances. In my considered view, even if documentary evidence is produced, the same must pass the test of human probabilities and surrounding circumstances if they do not, then addition justified. Reliance on such matters is placed on the case of Smt. Phoolwati Devi 314 ITR (AT) 1 (Del). 3. It must also be stated here that in Commissioner of Income Tax vs NR Portfolio Pvt Ltd on 22 November, 2013, the Hon'ble Delhi High Court has held... ... "The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies. What is stated and the said standard, equally apply to the Tribunal and indeed this Court. The reasoning and the grounds given in any decision or pronouncement while dealing with the contentions and issues should reflect application of mind on the relevant aspects. When an assessee does not produce evidence or tries to avoid appearance before the Assessing Officer, it necessarily creates difficulties and prevents ascertainment of true and correct facts as the Assessing Officer is denied advantage of the contention or factual assertion by the assessee before him. In case an assessee deliberately and intentionally falls to produce evidence before the Assessing Officer with the desire to prevent inquiry or investigation, an adverse view should be taken." 4. In this connection, I also wish to refer to the decision of the Hon'ble ITAT Bombay Bench 'B' ITA(No.614/Bom/87 A.Y. 1983-84) in the case of M/s. Mont Blane Properties and Industries Pvt. Ltd., which was upheld by the Hon'ble Supreme Court. The Hori'ble Tribunal herd that the word 'evidence' as used in sec. 143(3) covered circumstantial evidence also. The word 'evidence' as used in sec. 143 (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the light of surrounding circumstances. IT needs to be emphasized that standard of proof beyond reasonable doubt has no applicability in determination of matters under taxing statutes. In the present case, it is clear that apparent is not the real as evidenced from the investigation report. Further, the Hon'ble Supreme Court, in the case of Chuhar Mal Vs CIT (1988) 172 ITR 250, highlighted the fact that the principle of evidence law are not to be ignored by the authorities, but at the same time, human probability has to be the guiding principle, since the AO is not fettered, by technical rules evidence, as held by the Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills v CIT (1954) 261 TR 775. The Hon'ble Supreme Court, in the case of Chuhar Mel V CIT (supra) held that what was meant by saying that evidence Act did not apply to the proceedings under Income-tax Act,1961, was that the rigors of Rules of evidence, contained in the Evidence Act was not applicable; but that did not mean that when the taxing authorities were desirous of invoking the principles of Evidence Act, in proceedings before them, they were prevented from doing so. It was further held by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such case there is prima facie eYid~l1ce against the assessee, vtz., the receipt of money, and if he falls to rebut the same, the said evidence being un- rebutted, can be used against him by holding that il' is a receipt of an income nature. While considering the explanation of the assessee, the department cannot, however, act unreasonably. ... ... Having regard to the conduct of the appellant as disclosed in her sworn statement as well as other material on the record, an inference could reasonably be drawn that the winning tickets were purchased by the appellant after the event. The majority opinion after considering surrounding circumstances and applying the test of human probabilities had rightly concluded that the appellant's claim about the amount being her winning from races, was not genuine. It could not be said that the explanation offered by the appellant in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about the tax liability by the AO are to be answered by the assessee by furnishing reasonable and plausible explanations. If assessee is not forthcoming with proper or complete facts or his statement or explanation is contradictory, drawing of suitable inferences and estimation of facts is inevitable. Courts generally will not interfere with such estimate of facts, unless the inferences or estimates are perverse or capricious. 6.15. The Assessee's technical contentions about admissibility and reliance on material available on the AO's record are in the nature of contentions challenging criminal or civil liabilities in a court of law. We are dealing with a process of adjudication of assessees tax liability i.e. assessment under Income Tax Act rather than conducting criminal or civil court proceedings. As held by the Hon'ble Supreme Court in the case of S.S. Gadgil (supra) no 'lis" is involved in adjudication of tax liability. The Assessee's contention that there was no new material before the AO after the CIT(A)'s setting aside order cannot be accepted. New information and material did indeed come on record. In our view, in a sensitive matter like this, even a single clue or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the postal authorities with the remark "unknown". In this regard the assessee had replied that the name of the company was wrongly mentioned by the AO as M/s Brightsuns (P)Ltd and hence the notice got returned. But there is not comment about the address, meaning thereby, the AO had issued notice to the correct address only and hence the slight variation in the name of the company would not normally make any difference. Hence the fact that the notice was returned back only shows that the seller of the shares could not be identified. All these discussions would show that the purchase transaction could not be cross verified by the assessing officer. 10. One more point to be noted here is that the speculation transactions can be entered only payment of margin money. But the details of said payment are not available. With regard to the query raised by the AO relation to Margin money, the broker M/s D,K. KhandeJwal & Co has replied In the context of purchase of shares of M/s Prime Capital Markets Ltd and not in the context of speculation transactions. Thus, It is seen that the question of keeping margin money for speculation transactions remains unanswered both by the assessee as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the order of Tribunal on the reasoning that no fault can be found with the findings recorded by the Tribunal. A perusal of the above said order would Show that the revenue in the above said* case had contended that the assessees in the group have purchased and sold shares of similar compat1ieS through the same broker. Further the purchase prices and sale prices were supported by producing the evidence to show that the said transactions were undertaken at the rates prevailing on the respective dates. Under these set of facts, the High Court held that the findings given by the Tribunal cannot be found fault with the further held that the decision rendered by Hon'ble Supreme Court in the case of Sumati Dayal (supra) was not applicable. In the case of Shri Mukesh Ratilal Marolia (supra), the Hon'ble Bombay high court has observed that the assessee has furnished copies of share certificates to show that the shares were in fact transferred to the name of the assessee before it. Further there was no allegation that the prices of shares purchased by the assessee in the case before High court were manipulated. 14. However, in the instant case, the assessee could not produce th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of human probabilities, transactions have to be held to be non genuine. 3. The relevant facts briefly stated are that during the course of assessment proceedings, the AO observed that assessee had incurred a long term capital loss on account of sale of gold jewellery declared under the VDIS, 1997, amounting to Rs. 19,87,705 and also there was a short-term capital gain near to this amount of long-term capital loss amounting to Rs. 20,36,700 resulting into net capital gain of Rs. 48,995. The AO on perusal of record further observed that in the case of a family member of the same assessee Shri D.C. Maini, in the same assessment year, similar exercise has been done by the assessee wherein a long-term capital loss of Rs. 11,59,066 had been incurred on account of sale of gold jewellery declared under the VDIS and short-term capital gain of Rsw.11,75,100 resulting into a net gain of Rs. 16,034. On going through the nature of transactions, the AO doubted the genuineness of the short-term capital gain in the case of the assessee and he made further inquiry that during the year assessee had purchased 45,000 shares of M/s Ankur International Ltd. At varying rates from Rs. 2,06 to Rs. 3.1 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative also pointed out that shares have been sold to M/s S.K. Sharma & Co. On 9th Feb., 1998 and 23rd March, 1998, whereas from the statement of account of M/s S.K. Sharma & Co. Payments have been received by the assessee from 31st March, 1988 to 27th July, 1998, meaning thereby that had the transactions been genuine, payment could have been received in one go by S./K. Sharma & Co. The learned Departmental Representative pointed out that any such type of transactions relating to these types of company operating on stock exchanges payments are received in piecemeal whereas in normal market share transactions, contract notes are issued by the broker and payments are received in one go. The learned Departmental Representative also argued that as per the statement of S.K. Sharma & Co. Recorded at the time of inquiry, he did not produce any books of account and identity of persons to whom the shares have been sold. Ordinarily, when brokers are enquired about share transactions, they keep proper books of account form, whom shares have been purchased and sold. However, in this case, S.K. Sharma & Co. failed to provide the names of purchases of the shares and identity of the purchasers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... story is found to be unbelievable as the Tribunal has found and in our opinion, rightly that the decisions remains that the consideration for the sale proceeded from the assessee and therefore, it must be assumed to be his money. It is surprising that the High Court has found fault with the ITO for not examining the wife and the father-in-law of the assessee for proving the Department's case. All that we can say is that the High Court has ignored the facts of life. It is unfortunate that, the High Court has taken a superficial view of the onus that lay on the Department. 7. The learned CIT(A) only got swayed by the issuance of notice by the AO under Section 131 to both the brokers from whom shares were purchased and sold and came to the conclusion that share transactions were genuine overlooking the material gathered by the AO from the statements recorded of broker M/s S.K. Sharma & Co. and the other facts and circumstances that volume of transactions of Jaipur Stock Exchange is only 600 shares and 1000 shares. Payments have been received from the brokers only in installments over a period of 6-7 months. It is true that when transactions are through cheques, it looks like re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 14,118;- as made by the Ld. AO. Therefore these grounds of appeal numbering 1 to 6 stands dismissed." 4. I have given my thoughtful consideration to rival contentions. Learned departmental representative vehemently supports both the lower authorities' identical action holding the assessee's STCL as bogus since derived from rigging of the scrip prices in issue and involving accommodation entry in collusion with the concerned entry operators. Hon'ble apex court's decisions in Sumati Dayal vs. CIT (1995) 80 Taxmann.89/214 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) are quoted before me during the course of hearing at the Revenue's behest. It strongly argues that the department has disallowed/added the impugned STCL based on circumstantial evidence unearthed after a series of search actions / investigations undertaken by the DDIT(Inv). I find no merit in Revenue's instant arguments. The fact remains that the assessee has duly placed on record the relevant contract notes, share certificate(s), detailed corroborative documentary evidence indicating purchase / sale of shares through registered brokers by banking channel, demat statements etc., The Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on were drawn against the assessee. Copy of the report was also not given. 4. The ld. D/R, submitted that the transaction was not genuine. He argued that the entire capital gain was stage managed by a few operators and investors. He relied on the order of ld. Assessing Officer and argued that the same be upheld. He relied on the order of the Chennai 'A' Bench of the Tribunal in the case of M/s. Pankaj Agarwal & Sons (HUF) vs. ITO in ITA No. 1413 to 1420/CHNY/2018; order dt. 06/12/2018, for the proposition that such capital gains have to be brought to tax. He also relied on the judgment of the Hon'ble Bombay High Court in the case of Sanjay Bimalchand Jain vs. Principal Commissioner of Income-tax-1, Nagpur; [2018] 89 taxmann.com 196 (Bombay) and the decision of the Smt. M.K. Rajeshwari vs. ITO; ITA No.1723/Bng/2018; Assessment Year 2015-16, order dt. 12/10/2018. 5. After hearing both sides, I find that in a number of cases this bench of the Tribunal and Jurisdictional Calcutta High Court has consistently held that, decision in all such cases should be based on evidence and not on generalisation, human probabilities, suspicion, conjectures and surmises. In all cases additions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stock exchange, (h) copy of demat statement showing the sale of shares, (i) copy of bank statement reflecting sale receipts, (j) copy of brokers ledger, (k) copy of Contract Notes etc. 7. The proposition of law laid down in these case laws by the Jurisdictional High Court as well as by the ITAT Kolkata on these issues are in favour of the assessee. These are squarely applicable to the facts of the case. The ld. Departmental Representative, though not leaving his ground, could not controvert the claim of the ld. Counsel for the assessee that the issue in question is covered by the above cited decisions of the Hon'ble Jurisdictional Calcutta High Court and the ITAT. I am bound to follow the same. 8. In view of the above discussion I delete the addition made u/s 68 of the Act, on account of Long Term Capital Gains." 5. Coupled with this, hon'ble jurisdictional high court's other decisions in CIT vs. Rungta Properties Pvt. Ltd. ITA No.105 of 2016, CIT vs. Shreyahi Ganguly ITA No. 196 of 2012, M/s Classic Growers Ltd vs. CIT ITA No. 129 of 2012 also hold such transactions in scrips supported by the corresponding relevant evidence to be genuinene. I adopt the above extrac ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
