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TMI Blog2021 (2) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of alleged commission expenses @ 4% against these transactions was also made which is also disputed under the appeal. 3. We have carefully heard the rival submissions and perused relevant material on record including written submissions and documents as placed in the paper book. The judicial precedents as relied upon during the course of hearing have duly been deliberated upon. Our adjudication to the subject matter would be as given in succeeding paragraphs. The Ld. AR, at the outset, relied on the recent favorable decision of this Tribunal in the case of Dipesh Ramesh Vardhan V/s DCIT (ITA Nos.7648/Mum/2019 & ors. Order dated 11/08/2020) to submit that the facts as well as issues are identical in all respect. It has been submitted that this case law deals with gains arising out of sale of shares of an entity namely M/s Sunrise Asia Limited (SAL) which is similar to the issue in the present appeal. The Ld. DR relied on the orders of lower authorities but failed to bring on record any contrary decision to rebut the submissions made by the Ld. AR. No distinction in facts could be pointed out. Proceedings before Ld. AO 4.1 To reiterate, an assessment was framed in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of shares of premeditated scrips on recognized stock exchanges. After making preferential allotment, the price of the shares would be rigged up and jacked up through circular trading by cartel of brokers acting in concert. This would be managed by the operator of the scrip which would manage overall affairs of the scheme. During the investigation, statements of various operators, entry providers and stock brokers were recorded wherein the said facts of their engagement in providing accommodation entries in the form of Long-Term Capital Gains (LTCG) / Short-Term Capital Losses (STCL) were admitted. 4.4 During search & seizure action u/s 132 in the case of Shri Anil Agarwal, director of M/s Comfort Securities Ltd. (a registered stock broker) and his group entities, his statement was recorded on 12/04/2015 u/s 132(4). In the said statement he admitted to be helping various persons in obtaining accommodation entries. He also admitted that he provided such entries with regard to the shares of M/s Sunrise Asia Limited (SAL) besides various other concerns. In the statement, he explained the modus operandi adopted by him with a view to provide bogus LTCG / STCL. Similar statements w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee resorted to pre-conceived scheme to procure LTCG by way of price difference in share transactions which was not supported by market factors. The commutative event in transactions would reveal that the same were devoid of any commercial nature and fell in realm of not being bona-fide and the LTCG so earned was not allowable. The assessee failed to discharge the onus of proving the unusual rise and fall of shares prices to be natural and based on the market forces. The stated transactions were alleged to be closed circuit transactions & structured one. Though the net-worth of M/s SAL was negligible but the share prices were artificially rigged to unusual high levels. 4.8 Ultimately, the sale proceeds as received by the assessee was held to be received against payment of equivalent cash paid by the assessee and therefore, the same was added to assessee's income as unexplained cash credit. The commission against these transactions was estimated @4% which led to another addition u/s 69C for Rs. 8.97 Lacs. Proceedings before Ld. CIT(A) 5.1 Before Ld CIT(A), the assessee maintained that the findings of investigation wing and the observations of Ld. AO were general observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat M/s SAL was a penny stock and its prices were rigged to provide bogus LTCG to various beneficiaries. Finally relying upon the findings of Ld.AO, the impugned additions u/s 68 as well as u/s 69C was confirmed. Aggrieved as aforesaid, the assessee is in further appeal before us. Our findings and Adjudication 6. We have carefully considered the factual matrix as enumerated in the preceding paragraphs. The material on record would reveal that the assessee acquired certain shares of an entity namely M/s Santoshima Lease Finance & Investment (India) Ltd. during September, 2011 at aggregate consideration of Rs. 9 Lacs. The name of this entity was subsequently changed to M/s Santoshima Tradelinks Limited vide fresh certificate of incorporation dated 16/09/2011 issued by The Registrar of Companies, Maharashtra. The purchase consideration admittedly was paid through banking channels which is evidenced by assessee's bank statement as placed on record. The investment so made by the assessee was duly reflected in her Balance Sheet As on 31/03/2012. The purchase of shares is evidenced by Allotment Advice dated 11/11/2011 which establish that the assessee has been allotted 45000 shares. M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO in the same. Upon perusal of all these documents, it is quite discernible that the assessee had furnished all the requisite documentary evidences to substantiate the transactions and therefore, the onus had shifted on revenue to substantiate the allegation that the impugned gains were unaccounted money of the assessee and the same was routed through dummy entities in the garb of LTCG. The assessee all along denied having entered into any bogus transactions or paid any cash while undertaking these transactions. 7. We find that the whole basis of disregarding these transactions is the findings rendered by investigation wing, Kolkata merely on the basis of statement of various operators, entry providers and stock brokers including the statement of Shri Anil Aggarwal. It is noteworthy that that the assessee has not been named in any of the statement made by any of these persons rather the basis of additions is the general statement that the shares of M/s SAL were used to provided bogus LTCG / STCL. More so, all these statements are not backed up any cogent corroborative material on record to establish the assessee's involvement in price rigging of shares of M/s SAL. Similar is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han mere suspicion to support the assessment as per the decision of Hon'ble Apex Court in Dhakeshwari Cotton Mills Ltd. V/s CIT (26 ITR 775). The assessment should not be based merely on suspicion or guess work but on legitimate material from which reasonable inference of income could have been drawn. 8. Another aspect of the matter is that the additions have been made u/s 68 which was not applicable in view of the fact that sale transactions took place through recognized stock exchange and the money was received in settlement through banking channels. The assessee had delivered the shares from her demat account to the broker, who, in turn, paid sale consideration to the assessee. Therefore, the source of credit received in the bank account could not be held to be unexplained unless it was established that assessee's own money was routed in her bank account in the garb of LTCG. 9. We find that on identical set of facts, similar addition made by revenue was deleted by coordinate bench of this Tribunal in the case of Dipesh Ramesh Vardhan & ors. V/s DCIT (ITA Nos.7648/Mum/2019 & ors. dated 11/08/2020; authored by one of us) by observing as under:- 6. We have carefully heard the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he range of Rs. 360/- to Rs. 600/- per share. The price range was stated to be in the same range for 15 months after the period of sale of shares by the assessee, which has not been disputed by the revenue. On the basis of all these facts, it could be gathered that the assessee had duly discharged the onus casted upon him to prove the genuineness of the stated transactions and the onus had shifted on revenue to rebut the same. 7. As against the assessee's position, the primary material to make additions in the hands of assessee is the statement of Shri Vipul Bhat and the outcome of search proceedings on his associated entities including M/s SAL. However, there is nothing on record to establish vital link between the assessee group and Shri Vipul Bhat or any of his group entities. The assessee, all along, denied having known Shri Vipul Bhat or any of his group entities. However, nothing has been brought on record to controvert the same and establish the link between Shri Vipul Bhat and the assessee. The opportunity to cross-examine Shri Vipul Bhat was never provided to the assessee which is contrary to the decision of Hon'ble Supreme Court in M/s Andaman Timber Industries V/s CCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e do not find any independent investigations by Ld. AO to bring on record any tangible material to corroborate the same. There are no evident or even allegation of any cash exchange between the assessee and group entities of Shri Vipul Bhat. This is further evidenced by the fact that no substantial incriminating material / wealth of that magnitude has been found during the course of search operations on assessee which would corroborate such presumption and prove that the transactions were sham transactions, in any manner. 9. The fact that the assessee could not produce the concerned person of M/s SAL was rightly controverted by submitting that the aforesaid entity was not under the control of the assessee and the assessee was under no obligation to do so. The existence of M/s SAL is beyond doubt since it was a listed corporate entity and secondly, it was subject matter of scheme of amalgamation u/s 391 to 394. The scheme of amalgamation was duly been approved by Hon'ble Bombay High Court. Therefore, the existence of the said entity could not be doubted, in any manner. 10. The above conclusion is further fortified by the fact that in share sale transactions through online mode, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p i.e. M/s Sunrise Asian Ltd. 13. Therefore, considering the entirety of facts and circumstances, we are not inclined to accept the stand of Ld.CIT(A) in sustaining the impugned additions in the hands of the assessee. Resultantly, the addition on account of alleged Long-Term Capital Gains as well as estimated commission against the same, stands deleted. The grounds of appeal, to that extent, stand allowed. The facts as well as issues are pari-materia the same in the present appeal. No distinguishing feature could be pointed out by the revenue. In view of the forgoing, it could very well be said that onus casted upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The whole basis of making additions is third party statement and no opportunity of cross-examination has been provided to the assessee to confront the said parties. As against this, the assessee's position that that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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