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TMI Blog2023 (12) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 (the Act) concerning Assessment Year 2015-16. 2. As per the grounds of appeal, the assessee has challenged denial of exemption of Long Term Capital Gain (LTCG) claimed under section 10(38) of the Act and additions of Rs. 51,41,219/- on account of LTCG under section 69A of the Act. The assessee has also challenged addition of Rs. 1,02,824/- on account of unexplained transaction expense under section 69C of the Act. 3. Briefly stated, the assessee, an individual, filed her return of income declaring total income at Rs. 10,64,770/- for the A.Y. 2015-16 in question. The return filed by the assessee was subjected to scrutiny assessment. In the course of scrutiny assessment. 3.1 The Assessing Officer inter alia observed that assessee has dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Directorate of Investigation, Kolkata explaining the modus operandi for rigging the prices of penny stocks abnormally high by involvement of multiple intermediaries and take advantage of tax provision to claim exempt income by significant jump in the share prices through such rigging. The Assessing Officer also made enquiries with Sai Securities by issuance of notice under section 133(6) of the Act. The enquiries however, could not be conducted due to non-service of notice on the ground of incomplete address. The Assessing Officer also observed that the assessee has not indulged in any other share purchase and sale transactions and unrealistic returns received of solitary investments is highly improbable based on the investigation repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discernible from the financial statement placed on record. The learned Counsel further pointed out that the fixed asset based have also increased from 1.30 crore to Rs. 23.91 crore in A.Y. 2010-11. CCL has cloaked a turnover of Rs. 72.96 cr and profit after tax 91 lakhs. The shares of CCL International Ltd. have neither been delisted nor suspended for trading on BSE till date nor the company has been under SEBI surveillance. The chart of monthly movements of share prices were also referred to submit that no adverse interference should be drawn in the facts of the case. The learned Counsel thereafter referred to the assessment order for A.Y. 2015-16 in the case of another assessee namely 'Parth Yadav' passed under section 147 r.w.s 144B of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the wake of demateriliasation of shares in the demat account and thereafter, transfer thereof on sale of shares. Both purchase and sale transactions have occurred through banking channel. The documentary evidences have been furnished in support of purchase and sale of shares and transfer of shares in demat form. Thus, the onus to prove that the apparent is not real is on the AO and wrongly shifted to the assessee. The AO has proceeded on conjecture and surmises merely because astronomical increase has happened in the share prices of CCL Ltd. which is not uncommon phenomena in capital market. A reference was made to the judgement rendered by the Hon'ble Delhi High Court in the case of PCIT vs. Krishna Devi to submit that startling spike i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered in the case of Swati Bajaj case. 8. We have carefully considered the rival submissions and perused the material available on record. The case law cited have also been taken into account. As pointed out on behalf of the assessee, the transaction of existence of purchase and sale of CCL Ltd. giving rise to LTCG claimed to be exempt under section 10(38) of the Act is fully corroborated by the documentary evidences. The shares have been credited in the demat account and transferred out of demat account at the time of sale. Both purchase and sale transactions are carried out through banking channel and by transfer of shares. The prima facie bonafides of existence of transaction executed cannot thus be doubted. It is not the case of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rception that apparent is not real. 8.6 In the light of factual matrix and case laws available on record, we see potency in the plea of the assessee that such capital gains arising on sale of shares cannot be regarded as sham profit and consequently, additions under s. 69A of the Act is not justified. The Assessing Officer has not provided anything on record to justify additions under section 69C of the Act either. The modus operandi spelt by itself is not a adequate ground to impeach the transactions. The judgment in Udit Kalra relied upon by revenue was rendered in the facts of that case and is quite distinguishable. In that case, the financial resources of the company [Kappac Pharma Ltd.] was quite meager and incurring consistent losses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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