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TMI Blog2022 (5) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax (Appeals) has erred in confirming the action of the Learned Assessing Officer in not holding that the appellant had earned income out of sale of shares of M/s. Kailash Auto Finance Limited as genuine and eligible for exemption U/s. 10(38) of the Act. The action of the Learned Commissioner of Income Tax (Appeals) is contrary to the facts and law and deserves to be deleted. 04. On appreciation of the facts and circumstances of the case and law the Learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Learned Assessing Officer in disallowing Long Term Capital Gain of Rs. 48,59,287/- and commission expenses on the same to the tune of Rs. 24,713/-, being consideration received on sale of shares of M/s. Kailash Auto Finance Limited treating the same as unexplained cash credit U/s.68 of the Act. The addition was made solely based on the statement recorded on oath of the third parties and the appellant without any independent and tangible supporting evidences and deserves to be deleted. 05. On appreciation of the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther informed that vide its order dated 17/03/2015 SEBI has found that the prices were artificially rigged by the directors and other related persons to provide the accommodation entry of bogus long term capital gains and short term capital loss to the beneficiaries. As assessee was one of the beneficiary, who had earned long term capital gains to the tune of Rs. 48,59,287 from the sale of shares of Kailash Auto Finance Limited, the assessee was asked to show cause as to why the said claim and commission paid for the transaction be not treated as undisclosed income and added to total income of the assessee. In reply, the assessee submitted that the shares were purchased through payment by RTGS and sale was made online after paying Securities Transaction Tax, therefore sales transaction were genuine. The Assessing Officer vide order dated 28/12/2016 passed under section 143(3) of the Act, after referring to the investigation carried out by the Investigation Wing, Kolkata, inter-alia, on the activities of Kailash Auto Finance Limited, held that financial transactions undertaken by the assessee as sham and the entire edifice was only a colourable device used to evade tax. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the role of brokers in this entire process. In the process, the statement of promoter of Kailash Auto Finance Limited was recorded under oath under section 131 of the Act. In the statement, the promoter explained the modus operandi and admitted that Kailash Auto Finance Ltd is a penny stock company and has provided bogus long term capital gains to various beneficiaries. Further, as noted above, SEBI also confirmed that Kailash Auto Finance Ltd has been barred suspended/blacklisted from trading at BSE and has also been penalised. It was also informed by the SEBI that Kailash Auto Finance Ltd was indulging in the activities which were in contravention of SEBI Act and Rules. Both the aforesaid findings by two independent authorities corroborated the fact that Kailash Auto Finance Ltd was not a genuine company and was involved in activities to provide bogus long term capital gains to various beneficiaries. 9. Further, the Assessing Officer noted that when the price increase in the shares was compared with the movement in the Sensex, it was observed that there was no correlation. While Sensex had shown almost no progress, the price of the shares moved phenomenally. Further, from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advance of Rs. 28,53,251 received from M/s A.R. International Private Limited. As the assessee was a shareholder of this company having stake of his shares at 25.34% and transaction being covered under the provisions of section 2(22)(e) of the Act, the assessee was asked to furnish the copy of return of M/s A.R. International Private Limited for assessment year 2014 - 15. From the verification of the IT return and balance sheet as on 31/03/2014 of M/s A.R. International Private Limited, it was observed that an amount of Rs. 28,53,251 is shown under the head loans and advances paid to the assessee, as proprietor of A.H. Traders. Accordingly, the assessee was specifically asked to justify why the provisions of deemed dividend should not be attracted as the assessee has received advances from the company wherein he was holding 25.34% of shares. In the absence of any satisfactory explanation along with supporting documents justifying the advance received at Rs. 28,53,251, the Assessing Officer vide order dated 28/12/2016 passed under section 143(3) of the Act treated the said amount received by the assessee as deemed dividend and accordingly taxed the same in the hands of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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