TMI Blog2022 (8) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... fied by the Directorate of Income Tax (Investigation), Kolkata in which large scale rigging was done to allow benefit of bogus LTCG entities to several beneficiaries. Therefore, respectfully following the decision in the case of Smt. Aparna Misra [ 2019 (7) TMI 179 - ITAT KOLKATA] and Smt. Rachna Agarwal [ 2022 (5) TMI 1000 - ITAT KOLKATA] which have been rendered on similar set of facts, we are of the considered view that Ld. CIT(A) has erred in facts and in law in in allowing the assessee s appeal. - ITA No. 1668/Ahd/2019 - - - Dated:- 29-7-2022 - Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Smt. Astha Maniar, A.R. For the Revenue : Shri R.R. Makwana, Sr. D.R. ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-5, Ahmedabad in Appeal no. CIT(A)-5/ITO. Wd. 4(3)-Guwahati/10655/2018-19 vide order dated 20/09/2019 passed for the assessment year 2010-11. 2. The assessee has raised the following ground of appeal:- The learned CIT (Appeal)-S and Assessing Officer has erred on law and fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that a prudent investor will always consider the financial performance of a company before investing in the company. The P L account of GCM Securities Ltd. for immediately five preceding financial years shows that the profitability, distribution of dividend are not at all encouraging for any prudent investor to invest in such company. Accordingly, the Ld. Assessing Officer observed that it is apparent that the alleged company GCM Securities Ltd. did not make any profit in consecutive five financial years nor distributed any dividend. Thus, it is clear from the facts, that assessee in collusion with the entry operators, purchased shares of GCM Securities Ltd. through an intermediary skipping the normal trading through her regular DP/Broker for particular scrip. Again, the sale trail shows that all the shares were purchased by only those Kolkata based companies managed by a single person. This is possible only when the trade time and price is predetermined between groups of brokers/entry operators. In the instant facts, the onus was therefore on the assessee to prove that either there was no such scheme and even if there was one, the benefit to the asseseee was as a result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture u/s 69 of the Act, the appellant has not brought on record of the undersigned any evidences in support of her contention. As such, the addition made by the AO is hereby upheld. The relevant ground of appeal is confirmed. 5. Before us, the counsel for the assessee submitted that it will be noted that in the entire assessment order, there is no specific reference to the assessee s name which has been pointed out by the alleged entry operators. Further, from the assessment order, it is evident that no evidence has been brought on record to show that the assessee s own unaccounted money has travelled back to him, which has been used by him to earn bogus capital gains. Further, in the instant facts, all transactions were carried out to account payee cheques/DMAT account, which has not been disputed by the Revenue Authorities. The counsel for the assessee then drew our attention to page 26 of the paper-book to show that the assessee has also earned the capital gains from the sale of other scrips as well and it is not the case that he has dealth with only one share i.e. GCM Securities Ltd. The counsel for the assessee placed reliance on the ITAT decisions in the case of Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le proceed of scares, has been deposited is found placed in the paper book Pages 18 to 23. We also note that the assessee, has sold the share after one year of time from the time of its purchase. Clause 38 [w.e.f. 01.10.2004] has been inserted in section 10 of the Act, which envisages that income arising out of transfer of Long Term Capital Asset being an equity share in a company on which STT is paid is exempt from tax. Since the equity shares of the .company [GCM Securities Ltd] has been held by the assessee for more than a year and later sold on recognized stock exchange on which STT has been paid, the income becomes exempt u/s. 10(38) of the Act. 11. We therefore note that since the purchase and sale transactions are supported and evidenced by confirmations, Contract Notes, Demat statements and bank statements etc.,, the same could, not be treated as bogus simply on the basis of some report of the Investigation Wing and/or the orders of SEBI in case of entirely different scrip. Moreover it was submitted before us by ld AR.th the Ld. CIT(A) was not justified in taking an adverse view against the assessee on the ground of abnormal price rise of the shares. The Id AR referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of Rs.240,000 has been duly reflected in the assessee's Axis Bank Account no. 9120100639. A copy of bank account for the period from 01.04.2012 to 31.03.2013 is found placed at page 5 to 11 of paper book. The shares are duly credited to the de-mat account of the assessee with Ashika Stock Broking Ltd and the copy of the demat statement is found placed at page 41 of the paper book. The said shares were subsequently split from face-value of Rs.10/- per share to Rs.l/- per share and hence the number of shares increased by 10 times and the shares available with the assessee after the split was 1,20,000 shares, this is apparent from the demat statement and the copy of the demat statement is found placed at page 45 of the paper book. We therefore note that the shares in question were acquired by the assessee by way of subscription made for equity shares, which were offered for subscription to the public at large by issue of prospectus. It was thus not a case where the shares were acquired through private purchase / off market where there could be an allegation for manipulation.] The A/R of the assessee that the assessee is just an investor and as she received some suggestion f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing against the assessee and no inquiry whatsoever has been done by the AO or the Let CIT (A). In such circumstances the assessee having discharged her onus and nothing adverse being found against her, the addition cannot be sustained. 25 . For the reasons set out in the foregoing therefore we hold that both the lower authorities were not justified in not allowing the appellant's claim for exemption u/s 10(3.8) amounting to 77,78,476 in respect of the profit derived by the appellant on sale of 120,000 shares of M/s GCM Securities Limited. We accordingly set aside the order of Ld. CIT(A) and direct the AO not to treat long term capital gain as bogus and delete the consequential addition and the AO is directed to allow the exemption u/s. 10(38) of the Act as claimed by the assessee. 26. In the result, the appeal of the assessee is allowed. 6.2 We note that the facts of the assessee and the above cases are similar. The assessee has sold the shares of GCM securities Ltd, which were the shares of the same company in respect of which the above decisions have been rendered in favour of the assessee on similar set of facts. No specific allegation has been made by any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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