TMI Blog2023 (2) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... see herein and hence whomsoever had dealt in this scrip, would only result in bogus claim of long term capital gain exemption or bogus claim of short term capital loss. Merely because a particular scrip is identified as a penny stock by the income tax department, it does not mean all the transactions carried out in that scrip would be bogus. So many investors enter the capital market just to make it a chance by investing their surplus monies. They also end up with making investment in certain scrips (read penny stocks) based on market information and try to exit at an appropriate time the moment they make their profits. In this process, they also burn their fingers by incurring huge losses without knowing the fact that the particular scrip invested is operated by certain interested parties with an ulterior motive and once their motives are achieved, the price falls like pack of cards and eventually make the gullible investors incur huge losses. We hold that the entire addition has been made based on mere surmise, suspicion and conjecture and by making baseless allegations against the assessee herein. Whether the ld. AO merely on the basis of Kolkata investigation wing re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 28/12/2017 by the ld. Income Tax Officer 22(1)(3), Mumbai (hereinafter referred to as ld. AO). 2. Though the assessee has raised several grounds before us, we find that the effective issue to be issued in this appeal is as to whether the ld. CIT(A) was justified in confirming the action of the ld.AO in denying the exemption claimed u/s 10(38) of the Act in respect of long term capital gain derived from sale of shares of Radford Global Ltd, in the facts and circumstances of the case. The inter connected issue involved therein is whether the ld. CIT(A) NFAC was justified in confirming the addition @ 3% of transaction amount of long term capital gain as unexplained expenditure u/s 69C of the Act in the facts and circumstances of the case. 3. We have heard the rival submissions and perused the materials available on record. The assessee is an individual engaged in investment in shares on long term basis. The assessee had made investments in various scrips including Radford Global Ltd. The evidence in the form of making investments in various scrips is enclosed in 37 of the paper book. He had filed his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted in the demat account maintained by the assessee. The said shares were held by the assessee for 17 months by the assessee and sold for Rs 73.73 ; Rs 77.36 and 79.90 per share on 08/04/2013, 10/04/2013 and 22/04/2013 respectively in Asst Year 2014-15 for an amount of Rs 38,60,875/-. The assessee furnished the following documents in support of his contentions before the lower authorities :- a) Purchase Bill dated 18/11/2011 b) Payment receipt dated 23/11/2011 given by the seller of shares to the assessee c) Advertisement published in newspaper by Seller which enabled assessee to approach the seller for purchase of shares d) Bank statement of assessee disclosing payment of purchase consideration for shares on 24/11/2011 e) Share Certificate dated 30/11/2011 evidencing transfer of shares in assessee s name f) Special resolution passed by Radford Global Ltd at an Extra Ordinary General Meeting of its shareholders for sub-division of shares g) Demat statement of the assessee showing the credit of 50000 shares on purchase and consequential sub-division of shares h) Balance Sheet of the assessee for Asst Years 2012-13 and 2013-14 evidencing the fact of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to add estimated commission @ 3% for arranging the said bogus transaction as unexplained expenditure u/s 69C of the Act. 5. We find that each and every averment of the ld. AO were duly met by the assessee before the ld. CIT(A) in his written submissions filed before the ld. CIT(A). The ld. CIT(A) upheld the action of the ld. AO. 6. At the outset, we find that the documentary evidences submitted by the assessee were found to be genuine and no adverse inferences were drawn by the revenue on the same. The purchase transaction of shares made in off-market in Asst Year 2012-13 and assessee had made payment for the same by account payee cheque. We find that the assessee has made investment in various scrips of various companies including Radford Global Ltd. The entire investments made by the assessee has been duly disclosed in the Balance Sheet of the assessee , which fact is not disputed by the revenue. The sale transactions were carried out by the assessee in the secondary market through a registered share broker at the prevailing market prices. Payments were received by the assessee by account payee cheques from the stock exchange through the registered broker. Amounts received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficiaries. The assessee s name or the broker through whom the assessee bought and sold the shares does not figure in the said list in the order of SEBI. Hence even SEBI does not allege any involvement of the assessee herein with the manipulation of share prices. Infact SEBI had passed an interim order dated 19/12/2014 on Radford Global Ltd wherein it was preliminarily held that the share prices of the said scrip had been artificially rigged by manipulators. Later SEBI had passed a final order dated 20/09/2017 under sections 11,11(4) and 11B of the SEBI Act, 1992 in the matter of Radford Global Ltd, wherein all the 82 entities had been acquitted by SEBI by clearly giving a finding that those entities were not involved in artificial price rigging of shares. 6.5.We find that the assessee had held the shares in the instant case for 17 months and then sold the shares in the open market at prevailing market prices. The assessee bought the shares on 18/11/2011, which was prior to the investigation period carried out by SEBI as admittedly SEBI carried out investigation of this scrip for the period 28/01/2013 to 24/03/2014. We find that the assessee had sold the shares from 08/04/2013 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve Private Limited 13 ATXPD7040B Roshan Dwarkani 14 AAECK3394G Kingfisher Propertis Private Limited 15 BCXPS0818J Suresh Kumar Saini 16 AAAPJ6765F Shailesh Mangilaljain 17 ABAPB8617M Aachalchand Balar 18 AEXPA1230M Shilpa Aggarwal 19 AEFPS6298M Brij Bhushan Singal 20 ACAFS8650G Sushant Investments 21 ANRPS7986B Neeraj Singal 22 AFAPT5888A Tanvi Bhavik Trevadia 23 ABHPS3711M Rity Singal 24 AOQPA9034E Tarun Aggarwal 25 ANRPS7987A Uma Singal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manimudra Vincom Private Limited 51 AHEPG0025A G.M. Prasanna Kumar 52 AADCN6251G Natural Housing Private Limited 53 ADPPK9874N G.S. Anith Kumar 54 AAFCR2818B Radison Properties Private Limited 55 AAJPV4754H Harikishan Suderlal Vermani 56 AAGCR1715E Rangan Vincom Private Limited 57 AABPJ2835R Hitesh Mangilal Jain 58 AAECR9858C Ridhi Vincom Private Limited 59 AABPR9949J Hukamsingh B Rajpurohit 60 AAICS6023N Scope Vyapar Private Limited (Presently known class commercial pvt. Ltd.) 61 ABWPT8000C Jyoti Anil Trevadia 62 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked 11. In view of the foregoing, I, in exercise of the powers conferred upon mne under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11, 11(4) and 11B of the SEBI Act, hereby revoke the Confirmatory Orders dated October 12, 2015, March 18, 2016 and August 26, 2016 qua aforesaid 82 entities (paragraph 9 above) with immediate effect. 6.6. From the above order of SEBI, it is very clear that SEBI, based on its investigations and replies given by various parties, had ordered either to take action against certain parties or had discharged certain parties on the ground that they are not involved in the price manipulation. In any case, the assessee s name or the broker, through whom assessee transacted had not figured in the said list either in the restraint list or in the discharged list. Hence it could be safely concluded that the assessee herein is merely a gullible investor, who had resorted to make investment in the shares of Radford Global Ltd based on market information and had sold the shares in the secondary market in prevailing market prices. 6.7. Hence the entire addition has been made merely by placing reliance on the Kolkata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs is further fortified by the decision of Hon ble Delhi High Court in the case of PCIT vs Laxman Industrial Resources Ltd in ITA No. 169/2017 dated 14/03/2017. It is well settled that the suspicion however strong could not partake the character of legal evidence. Hence the greater onus is casted on the revenue to corroborate the impugned addition by controverting the documentary evidences furnished by the assessee and by bringing on record cogent material to sustain the addition. No evidence has been brought on record to establish any link between the assessee herein and the directors of Radford Global Ltd or any other person named in the assessment order being involved in any price rigging and also the exit provider. This onus is admittedly not discharged by the revenue in the instant case. 6.9. We find that the Co-ordinate Bench of this Tribunal in the case of Mukesh Ratilal Marolia vs Additional CIT reported in 6 SOT 247 (Mum ITAT) dated 15/12/2005 had held that personal knowledge and excitement on events should not lead the ld. AO to a state of affairs where salient evidences are overlooked. When every transaction has been accounted, documented and supported, it would be ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransacted 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 found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs.25,93,150/-. These shares were sold and how they were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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