TMI Blog2024 (1) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... in these shares to accommodate the beneficiaries to claim deduction u/s 10(38) of the Act. Since, the assessee has only dealt with the above transaction after receiving the shares thru will from his mother, he has nothing to offer any explanation. AO has proceeded to make the addition based on the various statements of the operators. At the same time, he has not brought on record how the assessee is involved in the above transaction except trading in the stock exchange. He has not established any relationship with any of the operators. As relying on Shri Abhishek Doshi [ 2023 (6) TMI 87 - ITAT MUMBAI] only difference is the script is different, however, the assessee has no saying on the script traded by him and there is no relationship established with the accommodation entry providers anywhere on the record. Further the assessee himself a regular investor and not linked to any other suspected transactions. Merely because he has dealt with one of the suspected scripts, we cannot take adverse view without actually bring any material on record. Decided in favour of assessee. - SHRI NARENDER KUMAR CHOUDHRY, HON BLE JUDICIAL MEMBER SHRI S. RIFAUR RAHMAN, HON'BLE ACCOU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market. He heavily relied on the statements of Shri Amar Chand Rander, Managing Director of M/s. Rander Corporation Ltd., who has explained clearly the modus operandi and the price of these shares were artificially manipulated and controlled by Shri Natwar Lal Daga in order to provide accommodation entries to various beneficiaries. Based on the various beneficiaries statements, share brokers statements and exit providers statements and further analyzed the individual statements of Shri Raj Kumar Kedia, Shri Natwar Lal Daga and Shri Kishan Khadaria, he came to the conclusion that assessee is one of the beneficiaries who has taken the benefit of manipulation in the share prices of M/s. Rander Corporation Ltd., and issued notices to the assessee. 5. In response assessee has submitted a letter dated 26.12.2016 in which assessee has submitted that all the purchases and sales of the above said shares were through Demat Account and payments were through banking channels and filed documents of broker note. In support of the above contention, it was submitted that all the prescribed conditions laid down under section 10(38) of the Act were complied with. The sales were done through r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... script was used for accommodation entry of bogus LTCG, bogus STCG and bogus STCL/bogus business loss claimed through trading of shares, it was found that the assessee had also obtained such accommodation entries in the form of bogus LTCG of ₹. 1,10,52,724/- and thereby converted undisclosed income into tax free income without paying taxes. 10. Ld.AR of the assessee submitted that Assessing Officer on the basis of irrelevant materials and statement recorded on oath of Mr. Amar Chand Rander Entry Operator of M/s. Rander Corporation Ltd., wherein he has admitted of being a bogus entry provider and has provided bogus entry, the Sale consideration shown by the Assessee from share transactions are treated as bogus and added as concealment of income of ₹. 1,10,52,724/-. He submitted that the shares were transferred/purchased through preferential allotment mode. Assessing Officer observed that the low share price on date of acquisition on 04.10.2016 of 1,50,000 shares of face value ₹. 10 and premium of ₹. 3/- held in name of late Smt. Badambai U. Jain (Mother of the assessee). Thereafter, the Assessee acquired said shares through will dated 25.04.2011 and afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r last several years and is still maintaining Demat Account with same broker M/s Ambient Securities Broking Pvt. Ltd. ii. The Appellant's mother expired on 06.06.2011 and Legal heir Mr. Jitendra Udaylal Jain the Appellant was brought on record. [Copy of death certificate is part of Paper Book Pg. No. 11) iii. The Appellant's mother has made investment in the Shares of M/s. Rander Corporation Ltd., a Profit making company in A.Y 2010-11. During the year, after the death of Assessee's mother under consideration had transferred 75,000 preferential allotment of shares @ of Rs.10/- with premium for Rs.9,75,000/- to the Assessee under the scheme of Rights Equity Shares. (Page No. 15 of Paper Book) As also confronted by WILL in the statement taken Clause 7 the Schedule of property on 20.04.2011 in answer to Q.3, Q. 9, Q. 10, Q. 11, Q. 12, Q. 13, and Q. 14 (Copy of statements enclosed from material documents is the Part of paper book Page No. 11-22) iv. The Appellant's Mother has paid the full consideration by account payee cheque and as such the payment was made through proper banking channel (Page No.16 to 18 of paper Book) v. The shares got credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to be a part of the group indulging into rigging of share prices of the scrips as alleged by the Ld. AO. xiv. During the course of assessment proceedings the appellant submitted following documents to substantiate his claim of Long Term Capital Gain on which the assessee has paid taxes according to the Act:- Copy of Bank statement Copy of Demat account Copy of Contract notes. Copy of WILL by Late Smt Badambai Ujjain Copy of Ledger/Retraction of M/s. Ambient Securities Broking Pvt. Ltd. Xv. However, one point to be noted that the finding of the Ld. AO is wrong and shows that the Ld. AO has received RoC of the Scrips whether evolved knowledge about the share transactions between acquisition. The Ld.AO has relied on mere information by Investigation Directorate wing and added the sale proceeds in lieu of STCG assuming it to be LTCG. xvi. The Appellant's Mother purchased the shares directly from the Company under Private Placement and sold at Bombay Stock Exchange through its share brokers. The shares were received directly from the company and on sale, the demat shares were delivered to the clearing corporation of BSE throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en. The seller of shares never knows who the ultimate buyer is and the buyer does not know who the ultimate seller is of scrip/shares. Further all the fund and shares delivery settlement is done through the stock exchange and its clearing corporation. As such when the Assessee placed his order for sale of shares, he did not know who the buyer was or to whom the shares were being sold. 15. Ld.AR of the assessee submitted that assessment was made on the basis of material supplied by the Investigation Wing in respect of the survey under the Income Tax Act carried out on M/s Rander Corporation Pvt. Ltd and third person one Mr. Natwar Lal Daga and the Confirmatory statements of Other beneficiaries recorded on various occasions in which statement of promoter said to have accepted that Shri. Amar Chand Rander is an entry operator and Mr. Natwar Lal Daga is involved in providing various bogus accommodation entries to the various beneficiaries for commission. Based on the statement of so called Shri. Amar Chand Rander, the Assessing Officer has added the sale consideration of ₹. 1,10,52,724/- as undisclosed income under section 68 of the Act. In the Assessment Order, Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the price of the shares by so called Shri Amar Chand Rander also existed in the Appellants case. iv. No Opportunity was provided to the Appellant to cross examine the so called Shri Amar Chand Rander and Shri. Natwar Lal Daga. v. No tangible document provided to the Appellant. vi. The documentary evidences submitted by the Appellant during the course of assessment proceeding was neither verified nor examined nor anything contrary and conducive evidences were brought on record. vii. The said statement made by M/s. Rander Corporation Pvt Ltd. has been retracted on 04.10.2016 by way of a confirmation of allotment of preferential Shares in name of Assessee's mother Late Smt Badambai U. Jain. (Copy of retraction part of Paper Book Page No 15) viii. The Ld. AO made the addition on mere ground that Mr. Amar Chand Rander had given statement on behalf of the promoter of the M/s. Rander Corporation Pvt. Ltd. that he is providing the bogus share transaction entries. However, the Ld. AO failed to consider that addition cannot be made on mere general Statement of Mr. Natwar Lal Daga (third person) where no opportunity of cross examination was given to the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of shares. Assessee offloaded in the same way. iv) Total scam was of 438 crores v) MD of M/s Rander participated in the scam as he got Rs 7 crores vi) Mr Daga, Kedia, Khandaria coordinated the conspiracy. Share brokers clarified their roles in the process of rigging. vii) Other beneficiaries confirmed the whole modus operendi. viii) All these statements of operators, brokers and entry providers were confronted to assessee and Assessee's statement was recorded u/s 131 to give the opportunity to rebut these evidences 2. Issues in dispute Grounds of appeal- -Whether money received against deliveries reflected in balance sheet can be considered for section 68? -Whether changing character LTCG to income from other sources is bad in law? 3. summary of argument of the Assessee and its rebuttal-Assessee claims to be an investor for several years, -consideration was paid by cheque, -shares were credited offline in DMAT a/c, -script was listed, -sell was through online platform, through a broker, -consideration came in banking channel, -no evidence assessee giving cash to entry operator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fraud and conspiracy. (sub silentio) Evidences of scam ie bank statement, DMAT a/c, contract note, ledger were considered as in favour of assessee when they were the very documents explaining modus operendi of the fraud. (per-incuriam). 3 Rameshchandra kothari v ACIT ITAT 649/bang/2019 Set aside to AO. Issue was about providing statements to the assessee. In the case of Assessee, AO gave all the statements and mentioned in the order. (Distinguish) 4 Arun Tripathi V PCIT 2560/mum/2018 Did not about the bogus LTCG scam but about reopening order u/s 263. Not relevant. 5 CIT v Shyam R Pawar [2015] 54taxmann.com108 Did not considered whole scheme as a fraud and conspiracy. (sub silentio). Documents were considered as separate pieces of evidences. (per-incuriam). Hon'ble bench observed that there is 'No substantial question of law.' 6 Aarti Mittal v ITO [2014] 41 taxmann.com118 Not a case of LTCG scam. (Distinguish) The fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77 ITD 127 (Delhi - Trib.) Anip Rastogi v. ITO [IT Appeal No. 3809 (Delhi) of 2018, dated 8-1-2019] Abhimanyu Soin v. ACIT [IT Appeal No. 951 (CHD) of 2016, dated 18-4-2016] Smt. M.K. Rajeshwari v. ITO [2018] 99 taxmann.com 339 (Bang. - Trib.) Chandan Gupta v. CIT [2015] 54 taxmann.com 10/229 Taxman 173 (Punj. Har.) 5. In view of the above, appeal filed by the assessee may be dismissed. 20. In the rejoinder Ld.AR of the assessee submitted that assessee is a regular investor and he brought to our notice Page No. 10 of the Paper Book wherein assessee has made several investments and he brought to our notice list of investments made by the assessee. With regard to reliance of Ld. DR in the case of Naresh Manakchand Jain v. ACIT (supra) Ld. AR submitted that in the above case assessee is a stock broker and not the investor. Further he submitted that the Hon ble High Court has stayed the above said order. 21. Considered the rival submissions and material placed on record, we observe from the record that the assessee has not made the above disputed investments but his mother who bought the initial shares through preferential allotment and at the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares of M/s Ashika Credit and Capital Ltd, the assessee earned short-term capital gains. On the basis that the aforesaid companies were part of the investigation by the Directorate of Income Tax (Investigation), Kolkata, Mumbai, and Ahmedabad, and certain investors as well as entry operators have earned bogus long-term capital gains from transacting in shares of the aforesaid companies, the AO treated these companies as paper entities and disallowed the claim of exemption under section 10(38) on account of long term capital gains and a lower rate of tax on short-term capital gains earned by the assessee. The AO also referred to the value of the shares at a different point in time including the period during which the assessee was holding the shares. However, from the perusal of the assessment order, it is evident that neither in the findings of the Investigation Wing, referred by the AO from pages 4-6 of the assessment order, nor in the statements of beneficiaries and entry providers recorded during the aforesaid investigation, as mentioned from pages 12-22 and thereafter from 24-31 of the assessment order, there is any mention of the name of the assessee. Further, the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
