TMI Blog2022 (5) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... - Decided in favour of assessee. - ITA NO. 779/MUM/2020 - - - Dated:- 12-4-2022 - SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, HON'BLE JUDICIAL MEMBER Assessee by : Shri Chintan Patel Department by : Shri Dilipkumar Shah ORDER PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against order of the Learned Commissioner of Income Tax (Appeals)-4, Mumbai [hereinafter in short Ld.CIT(A) ] dated 05.11.2019 for the A.Y. 2013-14. 2. Brief facts of the case are, assessee filed return of income for the A.Y. 2013-14 on 30.09.2013 declaring total income of Rs.87,152/-. The return was processed u/s. 143(1) of the Income-tax Act, 1961 (in short Act ). Based on the information received from the Directorate of Investigation, Kolkata the case of the assessee was reopened and notice u/s. 148 of the Act were issued and served on the assessee. Based on the information that assessee is the beneficiary, who has taken bogus entries of long term capital gain. Considering the informations and statements recorded by the investigation wing of Kolkata the reassessment was initiated. During the re-assessment Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings indicating bogus LTCG/STCL entries claimed by a large number of beneficiaries. Contentions and arguments of the assessee 5. Sir first and foremost, we wish to state that the assessee is an investor in shares since many years and the same is self evident from the returns of income filed for last many years wherein capital gains have been regularly offered as income. Further, as per demat statement of Standard chartered, the assessee was holding shares of 10 companies as on that date. Please refer to Page 1-8 attached herewith reflecting detailed transaction carried on by the assesse. 6. As regards the information received from Kolkata - Investigation Directorates, we politely wish to state that the assessee is not provided with any adverse statements/ documents/ information and therefore the same cannot be used against the assessee. 7. AS regards your good selfs contention that assessee is one of the beneficiary of some dubious scheme wherein the assessee's own unaccounted money has come back in the form of exempt LTCG, we wish to state that this is merely a presumption and surmise on your part. The direct evidences furnished by the assessee support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the order U/s 143(3) r.w.s 147 dated 31.12.2017 in gross contravention of provisions of law as the Ld AO failed to provide necessary statements so relied upon for reopening of assessment and an opportunity to cross-examine the person(s) who had given adverse statements and thus reopening of assessment is bad in law and is in contravention of principal of natural justice. 2. The Ld. A.O. erred in making additions amounting to Rs.2,12,47,086/- u/s 68 of the Income Tax Act, 1961 by holding that the Long Term Capital Gains earned by the appellant were bogus in nature and were merely accommodation entries without appreciating the fact that a) the appellant had earned capital gains on shares by purchasing and selling shares on the floor of Bombay Stock Exchange (Recognized Stock Exchange) by paying the STT and receiving the sale consideration through its bank accounts and transacting through demat accounts; b) the company s shares listed on the recognized stock exchanges Viz BSE, were complying with various regulatory compliances of SEBI and MCA are open for investors to invests based on individual risks and thus could not be generally stated that all transaction in rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased through recognised stock exchange through registered broker and were credited in the D-mat account of the assessee. Similarly the bonus shares were also credited in the said D-mat account held by the assessee. All these purchase of shares were supported by the contract notes issued by the authorised brokers of the stock exchange and the payments were made through banking channels. Thereafter, the assessee sold these shares during the period commencing on 23.08.2012 to 08.02.2013 for a total consideration of Rs.41,48,39,241/- and was received through banking channel thereby making a long term capital gain of Rs.35,44,38,501/- which was claimed as exempt under section 10(38) of the Act as long term capital gain on sale of shares. We notice that all these transactions were carried out on a recognised stock exchange by the assessee through registered brokers duly evidenced by the contract notes and entries in the D-mat account and the sale and purchase consideration reached through banking channels. The AO has also only relied on the investigation carried out by the Investigation wing, Kolkata and Mumbai that assessee is a beneficiary of these bogus long term capital gain ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt. Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, al! that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme. 6. It is in that regard that we find that Mr.Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on records by the assessee were false, fabricated or fictitious , then the transactions of purchase and sale of shares can not be treated as non genuine. We have also perused other decisions of the coordinate Mumbai benches wherein under similar facts the issue has been decided in favour of the assessee. 12. We do not find merit in the argument of the Ld. D.R. as the decisions relied by the Ld. D.R. clearly are distinguishable on facts. In view of the above facts and the ratio laid down as discussed above, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition made under section 68 of the Act of Rs.41,48,39,241/-. 13. Since we have deleted the addition as made by the AO under section 68 of the Act by setting aside the order of Ld. CIT(A), the other addition of Rs.2,07,41,962/- as made by the AO towards commission paid on the accommodation entry is a consequential one and is also deleted. 9. Respectfully following the above said decision and the facts in the present appeal are exactly similar, we are inclined to allow the grounds raised by the assessee. 10. In the result, appeal filed by the assessee is allowed. Orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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