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TMI Blog2023 (7) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... account of transfer of shares and further erred in calculating the short-term capital gain on the sale of shares at Rs. 2,60,17,820/-only. 3. The necessary facts arising from the order of the authorities below are that the assessee in the present case is an individual and promoter/director of various companies belonging to Amarpali Group. There were certain people who were holding the shares in the company namely M/s Amrapali Fincap Pvt. Ltd. since the financial years 2008-09 and 2009-10. The details of such shareholders are extracted below: Sr.No. Name of theRegistered owner No. of shares Face Value/Rate at the time of allotment Total Investment i.e cost of acquisition 1. Surnisha Orgenizer Pvt. Ltd. 50,000 10/- 5,00,000/- 2. Omrim Securities Ltd. 10,68,058 10/- 1,06,80,580/- 3. Saharshi Securiites Pvt. Ltd 50,000 10/- 5,00,000/- 4. Rakesh B. Patel 42,809 10/- 42,8090/- 5. Nexus Software Ltd. 13,00,867 1,30,08,670/- Total 13,00,867 1,30,08,670/- 3.1 However, the assessee claimed to be the beneficial owner of the shares held by the entities/ persons as discussed above. It was submitted by the assessee that the above shares w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, the AO has disallowed the loss of Rs.5,73,13,610/- and made the addition of short-term capital gain of Rs.2,60,17,820/- by observing as under: 8.2 This is a classic case of defrauding the revenue which can be summarized as below The assessee claims to have bought shares of a company of his own group (Amrapali). The shares are actually registered in the name of other persons, who admittedly are accommodation entry providers. No statutory obligations regarding registered / beneficial ownership has been met in prescribed time. The shares are sold to his son, who is also a director of the company of which the shares belong Though there is a gain of Rs. 2,60,17,820/-, the assessee has fraudulently claimed indexation and claimed Long Term Capital Loss of Rs. 5,73,13,610/-, which has been carried forward to next years. 8.3 In view of the facts and circumstance, it is held that the assessee has not brought on record any evidence to show that the shares of Amrapali Fincap Ltd. where held for more than 36 months which would allow the assessee the benefit of indexation on the cost shares for computing long term capital gain. The assessee contention that he was a ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rking out the capital gain has taken the cost of acquisition of the shares at the value at which the registered shareholders acquired the shares of the company. As such, the year in which the registered shareholders have acquired the shares of the company should be taken as the basis year for calculating the income under the head capital gain. The term used in defining short-term capital assets is that the assets should be 1st held by an assessee and not purchased or acquired by it. 8. However, the ld. CIT(A) rejected the contentions of the assessee and confirmed the order of the AO by observing as under: The appellant claimed to have purchased the shares in the year 2009-10 and on inquiry, it was stated that these shares were in the name of Rakesh B. Patel & Omnim Securities Ltd and the appellant was beneficial owner of these shares. The AO issued notice u/s 133(6) of the Act to Shri Rakesh B Patel and Omrim Securities Ltd. In response to the same, Shri Rakesh B. Patel stated that he provided accommodation entries in the form of investment in shares of Amrapali Fincap P Ltd out of the funds provided by the promoters of Amrapali Fincap P Ltd. These facts clearly show that these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 287 and contended that the assessee is the beneficial owner of the shares, and this fact was not doubted by the authorities below. Moreover, the registered shareholders have also confirmed that the assessee was the beneficial owner of the shares. Similarly, the necessary documents filed with the ROC i.e. Form RGT-4 RGT-5 and RGT-6 also establish the fact that the assessee is the beneficial owner of the shares. Moreover, the revenue has not disputed the cost shown by the registered shareholders for the shares in dispute. Thus, it was contended by the learned AR that the shares held by the registered shareholders represent the long-term asset and therefore the assessee should be allowed the benefit of indexation cost. 11. On the contrary, the learned DR before us vehemently supported the order of the authorities below. 12. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that it is the admitted position that the assessee was the beneficial owners of the shares held by the registered shareholders elaborated in the order of the authorities below. It is also not in doubt that the shares we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the company submitted exactly similar reply as in his individual capacity 12.3 Moreover, the assessee has also paid the taxes on the investment made by him in the name of registered shareholders out of his undisclosed income and therefore it will be inappropriate to allege that the transaction shown by the assessee represents the use of colorable device. Furthermore, the revenue while calculating the capital gain in the hands of the assessee has adopted the cost of acquisition shown in the name of the registered shareholders for the investment made in the shares in the years 2008-09 and 2009-10. Thus, a conjoint reading of the of all the above stated facts establishes that the period of holding while calculating the income under the head capital gain exceeds 36 months and therefore the assessee must be given the benefit of indexation cost. Hence, the ground of appeal of the assessee is hereby allowed. 12.3 In the result the appeal filed by the assessee is allowed. Now coming to the Revenue's appeal bearing ITA No.2220/Ahd/2018 for A.Y. 2015-16. 13. The Revenue has raised the following grounds of appeal: 1. On the facts and circumstances of the case and in law, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h payment of Rs. 11,32,00,650/- which is nothing but represents unexplained expenses. All these cash transactions were carried out by the assessee with the Venus group. Based on the above, the AO has made the addition of Rs. 5,10,37,810/- and 11,32,00,650/- under section 69A/69C of the Act. 16. Aggrieved, assessee preferred an appeal to the learned CIT(A) who deleted the addition made by the AO by observing as under: 6.2 The facts mentioned in the assessment order and the submissions of the appellant has been carefully considered. The AO stated in para 9.7 of the assessment order that the appellant made payment of Rs 11.32,00,650/- in cash to Venus Group which remains as unexplained expenses and same has been added u/s 69C of the Act The AO further stated that the appellant received Rs.5,10,37,810/- in cash from the Venus group and the same has been considered as unexplained money and added u/s.69A of the Act. Before going to the other contentions of the appellant, it is clear from the findings of the AO that during the year, the appellant has paid Rs 11,32,00,650/- and received Rs.5.10.37,810/-. The AO made additions of total of these two amounts Le Rs.16,42,38,460/- which is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and he only admitted that these papers are written in his handwriting as per directions of Shri Ashok Vaswani but there is no mention of the appellant in the whole statement of Shri Deepak Gajjar. These facts clearly prove that during the course of search, post search and assessment proceeding, there is no statement of anyone which has any reference of the assessee in any manner which can be attributed against the appellant. When the persons from whose premises the documents were found, does not state anything against the appellant, additions made in the hands of the appellant are not found justified. Regarding exchange of SMS between Shri Ashok Vaswani and the appellant as reproduced on page 22 of the assessment order. these sms contains the details of bank accounts of Ashrita Construction P Ltd and Amrapali Capital and Finance Service Ltd, but nowhere name of the appellant or mention of any bank account of the appellant is written in these sms. Regarding the 2nd sms showing bank account details of Amrapali Capital and Finance Service Ltd, the appellant submitted that it is on 12/12/2014 and amount of Rs.779558/- is shown in the regular books of accounts of Amrapali Capital and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome as income from undisclosed sources Tribunal, o scrutiny of said statements, having found that evidence tendered suffered from serious infirmities held that mere entries in accounts regarding payments to assessee were not sufficient to prove tha assessee had received money in black' for which she did not issue a receipt - Tribunal delete additions accordingly - Whether entries in day-book or ledger would be a corroborative piece evidence and once direct evidence of persons having made payments in 'black' was disbelieved, I value could be attached to those entries Held, yes - Whether therefore, Tribunal was justified deleting additions - Held, yes. b) Jawaharbhal Atmaram Hathiwala vs ITO, (2010) 128 TTJ 36 (Ahd) Section 69 of the Income-tax Act, 1961- Unexplained investments - Assessment year 1999-2000- Where assessee was alleged to have paid a sum as 'on money for purchase of flat but no evidence could be brought on record by Revenue to show that in fact assessee had paid 'on-money to developers, and no document containing signature of assessee or handwriting of assessee to corroborate above making of payment by assessee was found during course of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make a pure guess, however, required to make an assessment without reference to any evidence. There must be something more than bare suspicion. In the present appeal a fundamental question is that whether there was sufficient clinching evidence unearthed by the Revenue Department consequent upon the search to make a firm belief that in fact there was the existence of unaccounted Investment in the purchase of land. Side by side a second question therefore arises that whether the impugned addition was in the nature of suspicion only. We have carefully examined both these questions and on critical analysis of the evidences and under the totality of the circumstances, we hereby hold that those were not even the incriminating material but simply e) Devaram C Bhavani vs ITO in ITA No. 4675/Mum/2016 dated 29/12/2017 At Para 6 of the said order, the Hon'ble Bench that in the case the nothing could be safely gathered from a perusal of the dumb notings in the impugned impounded document. We thus in the backdrop of our aforesaid observations that there is no basis for relating the notings in the Impounded document, viz. Annexure A-2-Page 37 & Page 105 with the purchase of Flat No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cash book, containing various financial transactions. Based on these documents, the addition was made by the AO in the hands of the assessee for the different amounts which have been elaborated in the preceding paragraph. Before we deal with the specific issue arising from the order of the authorities below, we note that there is a presumption under section 132(4A) of the Act, providing that the documents found during search shall be presumed belonging to the search party. There is no ambiguity to the fact that the documents were found from the 3rd party which have been used for the purpose of the addition in the hands of the assessee. In other words, the documents found from the premises of 3rd party have been used against the assessee. However, on perusal of the assessment order, we note that nothing had been mentioned by the AO with reasons of using such documents against the assessee which is against the spirit of the provisions of section 132(4A) of the Act. Admittedly, the presumption provided under section 132(4A) of the Act is rebuttable presumption i.e. the search party by bringing the evidence on record can rebut such presumption. However, on perusal of the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the expenditure itself. No evidence of any unexplained expenditure has been brought on record either by search party or by the AO. None of the seized material or document indicates that the appellant has incurred any unexplained expenditure out of books. Section 69C is a deeming provision. Therefore, it has to be interpreted strictly. Onus was on the AO to prove that the appellant had incurred expenses out of books of account. The AO has not brought on record any material to show that the appellant incurred expenses out of books of account"
21.3 In view of the above, and after considering the facts in totality, we do not find any reason to interfere in the order of the learned CIT(A). At the time of hearing, the learned DR has also not brought anything on record contrary to the finding of the learned CIT(A). Thus, we uphold the order of the learned CIT(A). Hence the ground of appeal of the revenue is hereby dismissed.
21.4 In the result, the appeal of the Revenue is dismissed.
21. In the combined result, the appeal filed by the assessee is allowed whereas the appeal filed by the revenue is dismissed.
Order pronounced in the Court on 12/06/2023 at Ahmedabad X X X X Extracts X X X X X X X X Extracts X X X X
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