TMI Blog2023 (3) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee are allowed. - ITA No.1605/Mum/2021 And ITA No.1612/Mum/2021 And ITA No.1606/Mum/2021 And ITA No.1608/Mum/2021 And ITA No.1607/Mum/2021 And ITA No.1610/Mum/2021 And ITA No.1609/Mum/2021 And ITA No.1611/Mum/2021 - - - Dated:- 3-2-2023 - Shri M.Balaganesh, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Assessee : Shri Nilkanth Khandelwal For the Revenue : Ms. Madhu Malti Ghosh ORDER PER BENCH: ITA No.1605/Mum/2021 (A.Y.2014-15) ITA No.1612/Mum/2021 (AY: 2015-16) These appeals in ITA Nos. 1605/Mum/2021 1612/Mum/2021 for A.Y.2014-15 2015-16 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-51, Mumbai in appeal Nos.CIT(A)-51, Mumbai/10643/2017-18 CIT(A)-51, Mumbai/10648/2017-18 respectively dated 17/08/2021 26/08/2021 (ld. CIT(A) in short) against the order of assessment passed u/s.153 r.w.s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 29/12/2017 by the ld. Dy. Commissioner of Income Tax, Central Circle-3(4), Mumbai (hereinafter referred to as ld. AO). ITA No.1606/Mum/2021 (A.Y.2013-14) ITA No.1608/Mum/2021 (AY: 2014-15) These appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision rendered thereon would apply with equal force for the assessee for Asst Year 2015-16 and also for all the other assessees listed along with him , in view of identical facts, except with variance in figures. 3.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 Blazon Marbles Ltd and Radford Global Ltd, in the facts and circumstances of the case. The inter connected issue involved therein to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding the addition made on account of estimated commission expenditure as unexplained u/s 69C of the Act in the facts and circumstances of the case. 4. The brief facts of this issue are that the assessee is an individual and working as director/partner in certain company/partnership firms and also engaged in trading of shares. The return of income was e-filed for the A.Y. 2014-15 u/s.139(1) of the Act on 30/09/2014 showing total income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, the shares having face value of Rs.10/- were split into 5 shares having face value of Rs.2/- per share. Post split, the total shares credited into demat account were 1000000 shares. During the year under consideration, the assessee has sold these 1000000 shares in the market. Similarly the assessee has also purchased 50,000 equity shares of Blazon Marble Ltd having face value of Rs.10/- per share on 26/05/2011 in off-market for Rs 62,500/-. Subsequently, the shares having face value of Rs.10/- were split into 5 shares having face value of Rs.2/- per share. Post split, the total shares credited into demat account were 250000 shares. During the current financial year 2013-2014, the assessee sold 97000 shares and the balance 153000 shares remain unsold as on 31/03/2022. For both the shares, the payments for purchase of shares were made by the assessee by account payee cheques out of sources duly disclosed in the books of accounts. 4.2. The assessee furnished the following documents in support of his contentions before the lower authorities :- a) Complete details of bank accounts held by the assessee together with the bank statements evidencing the payments made for purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exchange is full of many such companies where inspite of weak financial results, the shares hold good prices. e. None of the people examined by the Investigation Wing have stated the name of the assessee in their depositions or that the investigation has revealed the name of the assessee to be the beneficiary of accommodation entries provided by the operator. f. The claim of the assessee is well backed by cheque payment reflected in the bank statement, delivery of shares reflected in the Demat Statement and the transaction reflected in the Balance Sheet for the year ended 31.03.2012 31.03.2013. The shares were held by the assessee for more than a year before sale transaction was executed. g. The department was not averse to the purchase transaction as no adverse inference was drawn with respect to the purchases in A.Y. 2012-2013. The return of income the A.Y. 2012- 2013 has attained finality and now the department cannot blow hot and cold where at one end drawing no adverse inference in A.Y. 2012-2013 but during A.Y. 2014-2015 doubting the genuineness of this Long Term Capital Gains and indirectly doubting the genuineness of the purchases itself. The finding of the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rential basis were not genuine. The assessee s name being preferential allottee, was also included in the said order vide serial number 57. Accordingly, the said company i.e Radford Global Ltd and the assessee together with various other parties were restrained from accessing the securities market and buying, selling or dealing in securities, either directly or indirectly, in any manner by SEBI, till their final investigation was completed. However, on completion of final investigation, the SEBI has passed a final order dated 20/09/2017 where it has been held that investigations did not find any adverse evidence/findings in respect of violation of provisions of SEBI (Prohibition of Fraudulent and unfair Practices relating to Securities Market) Regulations, 2003 in respect of 82 persons including the assessee herein and the company Radford Global Ltd. This final order of SEBI dated 20/09/2017 was also placed on record by the assessee before the ld. AO vide letter dated 23/09/2017 making a request not to take any adverse view on the issue of LTCG. 4.3.1. With regard to Blazon Marbles Ltd, SEBI vide its order dated 13.10.2017 had passed an order u/s 15I of SEBI Act read with Rule 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to conversion of unaccounted income into bogus LTCG/STCG through accommodation entries by various beneficiaries including the assessee group. 15.2 Reliance is placed on the recent judgement of the Nagpur Bench of the Hon ble Bombay High Court in the case of Sanjay Bimalchand Jain L/H Shantidevi Bimalchand Jain v. Pr. Commissioner of Income Tax-1, Nagpur Another where the Hon ble Bombay High Court vide its order dated 10.04.2017 in Income Tax Appeal No. 18 / 2017 observed that the assessee has not tendered cogent evidence to explain how the shares in an unknown company worth Rs.5 had jumped to Rs.485 in no time and the fantastic sale price was not at all possible as there was no economic or financial basis to justify the price rise. The Hon ble Bombay High Court held that the assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain and that the gain has accordingly to be assessed as undisclosed credit u/s 68. Reliance is also paid on the decision of the Mumbai D Bench of the ITAT dated 22.03.2017 in ITA No. 6398 / Mum / 2012 in the case of Disha N. Lalwani, Mumbai v. ITO, Ward-23 (2)(2), Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssees. e. Arranged transactions: The transactions entered by the assessee involve the series of preconceived steps, the performance of each of which is depending on the others being carried out. The true nature of such share transactions lacked commercial contents, being artificially structured transactions, entered into with the sole intent, to evade taxes. 15.4 Thus, it is beyond the possibilities of genuine transactions that the shares of Blazon Marbles Ltd. Radford Global Ltd. were purchased by the assessee as a genuine investment decision. The price rigging was achieved by the bogus entry operators through manipulation. 15.5 Commission payment for accommodation entry of bogus LTCG 15.5.1 As it has been discussed in detail in this assessment order as to how the assessee invested in nondescript listed companies having such meager financials by preferential allotment and made huge capital gains in complete disregard of market movement, it is clear that the assessee brought back his own unaccounted income into his books of account in the form of bogus capital gains. Moreover, the statements of various accommodation entry providers recorded by the Investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from undisclosed sources of the assessee for the previous year relevant to the assessment year 2014-2015. Penalty proceedings u/s 271(1)(c ) are initiated as the assessee has furnished inaccurate particulars of his income. 15.6.2 There is a cost attached to getting undisclosed income converted into disclosed income without attracting penalty prosecution and a much higher cost to convert undisclosed income into disclosed tax exempt income. As per the prevailing rate of conversion, it is held that the assesseee has incurred an commission expenditure of 6% of the amount purported to have been received on sale of shares of Blazon Marble Ltd. Radford Global Ltd. to get the accommodation entries of bogus long term capital gains. This commission payment has been made out of his undisclosed income and, hence, an amount of Rs. 50,46,247/- (6% of Rs. 8,41,04,109/-) is taxed as unexplained expenditure u/s 69C of the Income Tax Act, 1961. Alternatively, this amount also represents the undisclosed income or income from undisclosed sources of the assessee for the previous year relevant to the assessment year 2014-2015. 4.5. The ld. CIT(A) confirmed the addition of unexplained cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providers in the form of tax-exempt long-term capital gains. It is natural that such entries are provided for a commission. The AO has estimated a rate of 6% which does not appear to be excessive or unreasonable. As such, I find no reason to interfere with the addition made by the AO on this issue. Ground no. 4 raised by the assessee stands dismissed. 5. We have heard the rival submissions and perused the materials available on record. We find that the ld. AO had relied on the findings of the investigation wing of Kolkata and an interim order dated 19/12/2014 passed by SEBI wherein assessee and the company Radford Global Ltd were prevented from accessing the securities market either directly or indirectly in any manner whatsoever, till the completion of final investigation by SEBI. Similarly an order dated 13/10/2017 u/s 15I of SEBI Act, 1992 was passed by SEBI levying penalties on certain persons for procedural violations and for non-appearance to the summons issued by SEBI. We find that assessee is not reflected in the said list of persons on whom penalties were levied. The main grievance of the ld. AO is that rise in share price of Radford Global Ltd and Blazon Marbles Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly involved in price manipulation of the shares dealt by him in connivance with the brokers and entry operators. 5.4. It is not in dispute that the assessee had made purchase of shares in off-market either through preferential allotment of shares by the concerned company or from purchasing from an existing shareholder, as the case may be. Now the next issue that arises for our consideration is as to whether an off market purchase of shares could be taken as a ground to declare the entire transaction as sham. In our considered opinion, the transactions could not be treated as sham merely because they are done in off-market, if the assessee had discharged his onus of proving the fact that shares purchased by him were dematerialized in the Demat account and held by the assessee till the same were sold from the Demat account of the assessee. The transaction of holding the shares are reflected in Demat account and sale of shares are through Demat account. More so , when there is no dispute regarding the purchase price and sale price of shares. Our view is further fortified by the decision of Hon ble Jurisdictional High Court in the case of CIT vs Jamnadevi Agarwal reported in 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am of the considered view that the directions issued against them vide interim orders dated December 19, 2014 and November 9, 2015 which were confirmed vide Orders dated October 12, 2015 , March 18, 2016 and August 26, 2016 are liable to be revoked. 11. In view of the foregoing, I, in exercise of the powers conferred upon me 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. 12. The revocation of the directions issued vide the abovementioned orders (at paragraph 11) is only in respect of the entities mentioned at paragraph 9 of this order in the matter of Radford Global Limited. As regards remaining entities in the scrip of Radford, violations under SEBI Act, SCRA, PFUTP Regulations, etc., were observed and SEBI shall continue its proceedings against them. Hence, the directions issued vide Orders dated October 12, 2015, March 18, 2016 and August 26, 2016 against the remaining 24 entities shall continue. This revocation order is witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made by the assessee is in Radford Global Ltd and Blazon Marble Ltd. This is factually incorrect as assessee has been regular in making investments in various scrips which is evident from the demat statement furnished on record by the assessee. Infact the assessee had duly furnished the demat statement for the period 01/04/2012 to 31/03/2014 and also the holding statement as on 31/03/2022 before us. From the perusal of the same, we find that the assessee had been making investments in various scrips on long term basis. Hence the observation made by the ld. CIT(A) in this regard is dismissed as factually incorrect. Moreover, the assessee in his statement recorded u/s 132(4) of the Act had stated that he has been investing in share market since financial year 2004-05 in IPOs and also on preferential allotment of shares of particular companies based on his independent market study. Infact the assessee also gave details of investments made by him through IPOs and through preferential allotment in various companies in the statement u/s 132(4) of the Act itself. The assessee also explained the complete basis of he deciding to make investment in Radford Global Ltd in his statement u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that SEBI vide its final order dated 20/09/2017 acquitting certain persons including the assessee herein together with the company Radford Global Ltd was duly brought to the notice of the ld. AO which had been ignored by the ld. AO while framing the assessment. This aspect was subject matter of adjudication by the Co-ordinate Bench of this Tribunal in the case of Sunita Chaudhry vs ITO in ITA No. 143/Mum/2022 for A.Y. 2013-14 dated 13/10/2022 wherein it held as under:- 12. We find that despite the aforesaid interim order dated 06/09/2017 passed by SEBI being specifically mentioned by the assessee in her objections before the AO as well as in her submission before the learned CIT(A), the impugned addition was sustained. Since, the very transaction of the assessee in the scrips of First Financial Services Ltd, which resulted in long term capital gains to the assessee, has been found to be not violative of provisions of relevant Act and Rules by the SEBI upon necessary investigation and even the initial restraint order was revoked vide interim order dated 06/09/2017 , therefore, we find no basis in sustaining the impugned addition made by the AO by treating the said trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and had sold shares and ultimately purchased a flat utilizing the sale proceeds of those shares and therefore, the co-ordinate bench chose to delete the impugned additions. We find that this tribunal decision was approved by the Hon ble Jurisdictional High Court in ITA No. 456 of 2007 dated 07/09/2011. It is pertinent to note that the Special Leave Petition preferred by the Revenue against this decision before the Hon ble Supreme Court has been dismissed vide SLP No. 20146 of 2012 dated 27/01/2014. 5.11. Further we find that the Hon ble Jurisdictional High Court in the case of CIT vs Shyam S Pawar reported in 54 taxmann.com 108 (Bom), it was held that where Demat account and contract note showed details of share transaction and the ld.AO had not proved the said transaction as bogus, the long term capital gain earned on said transaction could not be treated as unaccounted income u/s 68 of the Act. The relevant operative portion of the said judgement is reproduced below:- 5. We have perused the concurrent findings and on which heavy reliance is placed by Mr.Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, is not enough to prove that the transactions in the impugned shares were bogus/sham. The details received from Stock Exchange have been relied upon and for the purposes of faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us also herein. The relevant operative portion of the decision of Hon ble Delhi High Court in the case of Smt Krishna Devi is reproduced hereunder:- 10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same for the reasons stated hereinafter. 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in makes it inapplicable to the facts of the case before us. Moreover, we find that the Hon ble Jurisdictional High Court in the recent case of PCIT vs Ziauddin A Siddique in Income Tax Appeal No. 2012 of 2017 dated 04/03/2022 had held as under:- 2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramakrishna Fincap Ltd ( RFL ) is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ( STT ) has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commissioner of Income Tax (Central)- 1 vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that Construction that is favourable to the assessee should be adopted. Hence by following this principle, the decision of Hon ble Calcutta High Court and other decisions that are rendered against the assessee, need not be followed by this Court in the peculiar facts and circumstances of the instant case. 5.15. In any case, we find that the assessee had duly proved the nature and source of credit representing sale proceeds of shares of Radford Global Ltd and Blazon Marbles Ltd within the meaning of section 68 of the Act. The sale proceeds have been received by the assessee from the stock exchange through the SEBI registered share broker by account payee cheques through regular banking channels. Hence the three ingredients of section 68 of the Act are duly fulfilled by the assessee in the instant case. Hence there is no question of making any addition as unexplained cash credit u/s 68 of the Act in the instant case. 5.16. Considering the totality of the facts and circumstances of the instant case and respectfully following the judicial precedents relied upon hereinabove, we are not inclined to accept to the stand of the ld. CIT(A) in sustaining the impugned additions on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income furnished u/s.139(1) of the Act. In the said return of income, the assessee has shown Long term capital gains (LTCG) of Rs 5,21,88,356/- on sale of shares of Greencrest Financial Services Ltd. ( Greencrest ) and Crescent Digital Technologies Pvt. Ltd. (now known as PS IT Infrastructure Services Ltd.)( PS IT ) which have been claimed to be exempt u/s.10(38) of the Act. Details of such LTCG are as under:- Sr. No. (1) Name of the Company (2) No. of Shares purchased (3) Date of Purchase (4) Purchase Amount (In. Rs) (5) 1 Greencrest 765000 06.02.2013 9,18,000/- 2 PS IT 10000 28.06.2012 1,00,000/- Total :- 10,18,000/- Sr. No. (1) Name of the Company (2) No of Shares sold (6) Date of Sale (7) Sale Amount (In Rs) (8) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Greencrest Financial Services Ltd and PS IT Infrastructure Services Ltd, wherein certain parties were debarred for a period of 3 years from accessing the securities market and were further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner. In the said list of persons who were debarred, the name of the assessee or its registered share broker was not reflected. Accordingly, it was pleaded before the ld. CIT(A) that even as per SEBI investigation and its order dated 05/06/2020, the assessee cannot be stated to be involved in artificial price rigging of shares. 10.4. The ld. CIT(A) however did not heed to the contentions of the assessee and proceeded to confirm the order of the ld. AO in the same manner as was done by him in A.Y. 2014-15 in the case of the assessee herein. 11. We have heard the rival submissions and perused the materials available on record. The findings given by us hereinabove for the A.Y. 2014-15 in the case of the assessee shall apply mutatis mutandis to A.Y. 2015-16 also , save that during the A.Y. 2015-16, there was no interim order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount (Rs) 1) Marigold Glass Industries Ltd. (Greencrest Financial Service Ltd.) Sale consideration 5,40,000 share sold on various dates 3,38,76,636 Less: Indexed Cost of acquisition: (Purchased on 06.02.2013) Purchase cost * C.I.I. of F.Y.2014-15 C.I.I. of F.Y.2012-13 Rs.6,48,000 * 1024/852 7,78,817 Long Term Capital Gains 3,30,97,819 Less: Exempt u/s.10(38) of the I.T. Act, 1961 3,30,97,819 Taxable Long Term Capital Gains NIL 15.2. The assessee was allotted 200000 shares of Greencrest Financial Services Ltd (formerly known as Marigo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso. Accordingly, the Ground Nos. 1 2 raised by the assessee are allowed. 17. The Ground No. 3 raised by the assessee is challenging the levy of interest u/s 234B and 234C of the Act, which would be consequential in nature and does not require any specific adjudication. 18. The Ground No. 4 raised by the assessee is challenging the initiation of penalty proceedings u/s 271(1) (c ) of the Act, which would be premature for adjudication at this stage. Hence dismissed. 19. In the result , the appeal of the assessee Smt Nisha Yogesh Thakkar in ITA No. 1607/Mum/2021 for A.Y. 2015-16 is partly allowed . Smt Harsha Nitin Thakkar ITA No. 1606/Mum/2021 Asst Year 2013-14 - Assessee Appeal 20. The Ground No. 1 challenging the validity of reassessment proceedings was stated to be not pressed by the ld. AR at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly the Ground No.1 raised by the assessee is hereby dismissed as not pressed. 21. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance share holding remains unsold as on 31/03/2013. The payment for purchase of shares was made by the assessee by account payee cheques out of sources duly disclosed in the books of accounts. 21.3. The ld. AO in the assessment framed u/s 143(3) r.w.s 147 of the Act in the same manner by making the same observations as was done in A.Y. 2015-16 in the case of Shri Yogesh Thakkar hereinabove by treating the sale proceeds of shares of Rs 3,49,88,324/- as unexplained cash credit u/s 68 of the Act and an estimated commission expenditure of Rs 20,99,300/- (34988324 *6%) as unexplained u/s 69C of the Act at the rate of 6% of sale proceeds of shares. 21.4. When the appeal was pending before the ld. CIT(A) , SEBI had passed an order u/s 11(1), 11(4) and 11B(1) of SEBI Act, 1992 dated 31/12/2018 in the case of Confidance Finance and Trading Ltd, wherein certain parties were debarred from accessing the securities market and were further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner. In the said order, SEBI had disposed of the show cause notices issued to the following persons with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 Confidance Finance and Trading Ltd in the facts and circumstances of the case. The inter connected issue involved therein to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding the addition made on account of estimated commission expenditure as unexplained u/s 69C of the Act in the facts and circumstances of the case. 27.1. The brief facts of this issue are that the assessee is an individual and working as director in Thakkar Popatlal Velji Sales Ltd. The return of income for the A.Y. 2014-15 was originally e-filed on 31/07/2014 showing total income of Rs 1,02,15,260/-. The assessment was originally completed u/s.143(1) on 04/03/2016 determining total income of Rs 1,02,15,260/-. Subsequently, the assessment was sought to be reopened vide issuance of notice u/s 148 of the Act on 22/12/2016. In response to the said notice u/s.148 of the Act, the assessee e-filed her return of income on 05/01/2017 showing total income of Rs 1,02,15,260/- which was same as asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of 6% of sale proceeds of shares. 27.4. When the appeal was pending before the ld. CIT(A) , SEBI had passed an order u/s 11(1), 11(4) and 11B(1) of SEBI Act, 1992 dated 31/12/2018 in the case of Confidance Finance and Trading Ltd, wherein certain parties were debarred from accessing the securities market and were further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner. In the said order, SEBI had disposed of the show cause notices issued to the following persons without any directions :- Noticee No. Name of the Noticee 1 Confidance Finance and Trading Ltd 2 Mr Manoj Kumar Naginlal Jain 3 Mr Amruth Jaochim Coutinho 4 Mr Lalitkumar Roshanlal Maroo 5 Ms.Swati Panchal 27.4.1. In the said list of persons who were debarred, the name of the assessee or its registered share broker was not reflected. Accordingly, it was pleaded before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividual and working as director / partner in certain company / firms. The return of income for the A.Y. 2013-14 was originally e-filed u/s.139(1) of the Act on 28/07/2013 showing total income of Rs 1,25,18,500/-. The assessment was originally completed u/s.143(1) of the Act on 13/12/2013 determining total income of Rs 1,25,18,500/-. Subsequently, the assessment was sought to be reopened by issuing notice u/s. 148 of the Act on 22/12/2016. In response to the notice u/s.148 of the Act , the assessee e-filed his return of income on 05/01/2017 showing total income of Rs 1,25,18,500/- which was same as assessed u/s.143(1) of the Act. In the said return of income, the assessee has shown Long term capital gains (i.e. LTCG) of Rs 4,85,01,939/- on sale of certain shares which have been claimed to be exempt u/s.10(38) of the Act. Such LTCG has been earned on sale of shares of Confidance Finance and Trading Ltd. (i.e. Confidance ), brief details of which are as under:- No. of shares Sale of shares Cost of shares LTCG (` ) Date Sale price Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) that even as per SEBI investigation and its order dated 31/12/2018, the assessee cannot be stated to be involved in artificial price rigging of shares. 33.5. The ld. CIT(A) however did not heed to the contentions of the assessee and proceeded to confirm the order of the ld. AO in the same manner as was done by him in A.Y. 2015-16 in the case of Shri Yogesh Thakkar hereinabove. 34. We have heard the rival submissions and perused the materials available on record. The findings given by us hereinabove for the A.Y. 2015-16 in the case of Shri Yogesh Thakkar shall apply mutatis mutandis to assessee herein for A.Y. 2013-14 also. Accordingly, the Ground Nos. 2 3 raised by the assessee are allowed. 35. The Ground No. 4 raised by the assessee is challenging the levy of interest u/s 234B and 234C of the Act, which would be consequential in nature and does not require any specific adjudication. 36. The Ground No. 5 raised by the assessee is challenging the initiation of penalty proceedings u/s 271(1) (c ) of the Act, which would be premature for adjudication at this stage. Hence dismissed. 37. In the result , the appeal of the assessee Shri Nitin Popatlal Thakkar in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.7,00,000 Rs.1,80,13,488 38.2. The assessee was allotted 200000 shares of M/s Confidence Finance and Trading Ltd. on preferential basis on 27/09/2011, having a face value of Rs.10/- and premium of Rs.5/- per share and consideration paid thereon was Rs 30,00,000/-. All these shares were duly dematted in the demat account of the assessee. Out of this, 160000 shares were sold by the assessee in A.Y. 2013-14 and balance 40000 shares were sold in April 2013 for a consideration of Rs 1,27,01,915/-. Similarly, the assessee purchased 10000 shares of Crescent Digital Technologies Pvt Ltd. of face value of Rs. 10 for a consideration of Rs.1,00,000/- on 28/06/2012 in off-market. Crescent Digital Technologies Pvt Ltd subsequently amalgamated with Parag Shilpa Investment Ltd in accordance with a scheme of amalgamation and the Parag Shilpa was subsequently renamed PS IT Infrastructure Services Ltd. or PS IT in short. These shares were duly dematted in the demat account of the assessee. These shares were sold by the assessee on 11/03/2014 for Rs 53,11,573/- after holding for a period of 21 months. The payments for purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was pleaded before the ld. CIT(A) that even as per SEBI investigation and its order dated 31/12/2018 for Confidance and order dated 05/06/2020 for PS IT , the assessee cannot be stated to be involved in artificial price rigging of shares. 38.5. The ld. CIT(A) however did not heed to the contentions of the assessee and proceeded to confirm the order of the ld. AO in the same manner as was done by him in A.Y. 2015-16 in the case of Shri Yogesh Thakkar hereinabove. 39. We have heard the rival submissions and perused the materials available on record. The findings given by us hereinabove for the A.Y. 2015-16 in the case of Shri Yogesh Thakkar shall apply mutatis mutandis to assessee herein for A.Y. 2014-15 also. Accordingly, the Ground Nos. 1 3 raised by the assessee are allowed. 40. The Ground No. 4 raised by the assessee is challenging the levy of interest u/s 234B and 234C of the Act, which would be consequential in nature and does not require any specific adjudication. 41. The Ground No. 5 raised by the assessee is challenging the initiation of penalty proceedings u/s 271(1) (c ) of the Act, which would be premature for adjudication at this stage. Hence dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Bombay High Court vide order dated 03/05/2013. Subsequently, the name of Parag Shilpa was changed to PS IT Infrastructure Services Ltd . Thus the assessee was holding 50000 shares of face value of Rs 10/- of PS IT after amalgamation of Crescent with Parag Shilpa . The assessee first sold 45,000 shares of face value of Rs 10/- of PS IT in July 2014. Subsequently, there was stock split from face value of Rs 10/- per share of PS IT to face value of Re 1/- per share in the month of September 2014 and thereby remaining 5000 shares of PS IT of face value of Rs 10/- became 50000 shares of PS IT of face value of Re 1/- per share. These 50000 shares were sold by the assessee for a consideration of Rs 34,26,551/-. The payment for purchase of shares was made by the assessee by account payee cheque out of sources duly disclosed in the books of accounts. The fact of original purchase of shares , partial sale thereon , fact of stock split and subsequent sale thereon were duly reflected in the demat account of the assessee. 43.3. The ld. AO in the assessment framed u/s 143(3) of the Act in the same manner by making the same observations as was done in A.Y. 2015-16 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
