TMI Blog2024 (1) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... , the same were sold by the assessee and therefore, reliance was placed on the decision of this Court in the case of Jagat Pravinbhai Sarabhai [ 2023 (1) TMI 44 - GUJARAT HIGH COURT] . - Decided against revenue. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA and HONOURABLE MR. JUSTICE NIRAL R. MEHTA Appearance: For the Appellant(s) No. 1 : Mr Karan Sanghani Advocate With Mrs Kalpana K Raval(1046) For the Opponent(s) No. 1 : None ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) [1] Being aggrieved and dissatisfied with the order dated 27th July 2023 passed by the Income Tax Appellate Tribunal, Surat Bench, Surat (for short, the Tribunal ) in ITA No. 73/SRT/2023 for Assessment Year 2014-15, the appellant - Revenue has preferred this Tax Appeal under Section 260A of the Income Tax Act, 1961 (for short, the Act ) with the following proposed substantial questions of law: i) Whether on the facts and in the circumstances of the case and in law, the Hon ble ITAT was justified in deleting the addition of sale proceeds of the share of Rs.4 9,01,840/- on account of unexplained income u/s 68 of the Act made by the Assessing Officer arisin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs.4,22,502/-. The case of the assessee was selected for scrutiny through CASS and notice under Section 143(2) of the Act was issued on 18th September 2015 followed by notice under Section 142(1) of the Act dated 13th June 2016. The assessee furnished the details sought for by the Assessing Officer. The assessee has also shown Long Term Capital Gains of Rs.45,01,840/- in her return of income which was claimed as exempt under Section 10(38) of the Act. It was noted by the Assessing Officer that the Long Term Capital Gains claimed by the assessee included sale transactions effected during the year on the script named Sunrise Asian Ltd . [3] The Assessing Officer, thereafter, on the basis of details available on record, ascertained that the assessee sold 10,000 shares of the said company during the year under consideration on total sale prices of Rs.49,01,840/-, which has resulted in Long Term capital gains of Rs.45,01,840/-. [4] During the course of assessment proceedings, information under Section 133(6) of the Act was called for from the Bombay Stock Exchange and the details of Sunrise Asian Ltd were received by the Assessing Officer. The details of the sale of script du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not proved the genuineness of transaction and therefore, the addition made by the Assessing Officer should be sustained. [9] The Tribunal, after considering the findings of the Assessing Officer, CIT(A) as well as the material placed on record, has come to the conclusion and arrived at a finding of fact that the assessee has proved the genuineness of transaction of sale of 10,000 shares of Sunrise Asian Ltd. The Tribunal also relied upon the decision of this Court in the case of Jagat Pravinbhai Sarabhai reported in [2022] 142 taxmann.com, wherein it is held that the Assessing Officer has failed to substantiate that addition under Section 68 of the Act could be sustained in absence of genuineness of investment in shares of the assessee by producing copy of the transaction statement and shares were retained for a long time and sold after some time and the investment could not be held to be bogus. It was, therefore, held by the Tribunal that in the facts of the case also, when the assessee has held the shares from 2011-2014 for almost two and half years, the same cannot be said to be bogus. The Tribunal, after considering the various submissions, has held as under: 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olor of genuine transactions. However, we note that there is no evidence before the Assessing Officer to the effect that the assessee has received the cash back against such transaction. 22. We note that during the assessment stage, the assessee has provided complete detail of the company. It was submitted that the company's share were listed on BSE and NSE stock exchange. The assessee has also submitted past history and business of the company, market cap and other financial data of the company. The shareholding pattern of the company and management particular, directors administrators and auditors, were also proved. A price moment chart between April, 2012 to March, 2015 was also supplied. It was submitted that during given period, high price of Sunrise Asian Ltd. (in brief SAL ) was Rs. 605.50 and low price was Rs. 548.50 per share. Further, a list of the company who has given handsome return in the span of one year or less is also supplied to the Assessing Officer. These companies are in existence but not much popular due to its fundamentals, financial and corporate news. The assessee has argued that share market activities are risky business and many persons are l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of her decision so make the investment. All time high share price was Rs. 605.50 an on 31.03.2015 and from the month of Jan 2013 to July 2015. The price range stated by the Assessing Officer at pars 4 of his order is between Rs. 486 to 492 during the period February-2014 to June-2014. The assessee has sold shares of SAL at average rate of Rs. 487.40 during the month of February March 2014, which itself is an evidence of genuineness of transaction. Therefore, the allegations of rigging of manipulation of shares were refined by the assessee. 26. We note that Assessing Officer heavily relied upon the findings of Investigation Wing without carrying out any independent investigation of his own. Nothing was brought on record which would establish that the assessee was beneficiary of alleged accommodation entries provided by the so called Shri Anuj Agrawal. No corroborative evidences to support the finding of Assessing Officer were brought on record. No nexus was established. Further, no contrary and conclusive evidences furnished by the assessee. The enquiries were conducted by the DCIT at Kolkata and the statements were recorded at the back of the assessee. The assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The Assessing Officer does not have any evidence to show that cash payment of Rs. 49,01,840/- made by the assessee to any broker or any entry provider. In absence of such evidence, genuine transactions recorded in on BSE as well as SBI hank account of the assessee cannot be held as accommodation entry. We note that the SEBI suspended only trading of 26 scrip out of the said 58 scrip and only 11 scrip prices were found rigged. The Sunrise Asian Ltd (Scrip Code 506615) was not included in these scrips whose shares assessee had purchased on 21.08.2011. We also note that in this case, the assessee, being an investor, has held shares for 2 and 1/2 years after holding shares for long period, the assessee sold the said shares. The assessee submitted Shares holding pattern of 'SAL which is as under: Category No. of shares %age Promoters 8,447,558 18.50% General Public 16,385,687 35.88% Others 16,685,906 34.35% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that addition under section 18 of the Act made merely on the basis of suspicion presumptions and probability of preponderance without any direct evidence to prove the transactions as non genuine or sham or demonstrating assessee's involvement in any kind of manipulation, cannot be made. Thus, the sessee has explained and submitted evidences to prove identity, nature of source of the cash credit on account of sale proceeds credited received in the bank account of the assessee and also furnished all evidences comprising contract notes, broker, banking details in support of the genuineness of the transactions. The shares are sold by the assessee's broker on BSE platform hence source in BSE's clearing system. The transactions on the BSE platform and settlement system who are responsible for the transactions of the demat account and prevailing price on public domain prove the genuineness of the transactions. Therefore, respectfully, following the judgment of Hon'ble Jurisdictional High Court (supra) and Coordinate Bench of ITAT (supra), we deleted the addition Rs. 49,01,840/-. 35. Since we have deleted the mam addition of Rs 49,01,840/-, therefore Ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-genuine transaction by the assessee. It was, therefore, rightly held by the Tribunal that the claim of the assessee for exemption of Long Term Capital Gains under Section 10(38) of the Act cannot be held to be bogus on the basis of presumption in absence of any evidence brought on record by the assessee with regard to shares of Sunrise Asian Ltd, which is not even found to be rigged by the SEBI also. The Tribunal has also considered that the assessee held the shares for two and half years and after holding the shares for a long period, the same were sold by the assessee and therefore, reliance was placed on the decision of this Court in the case of Jagat Pravinbhai Sarabhai (supra), wherein this Court has held as under: 5. The genuineness of investment in the shares by the assessee was substantiated by him by producing copy of transaction statement for the period from 1.6.2001 to 1.10.2010. The investment was made in the year 2000-01. The shares were retained for more than ten years and were sold after such long time. These circumstances suggested that the investment was not bogus or investment made in penny stock. The shares were purchased in order to invest and not for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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