TMI Blog2024 (2) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... nd sale of shares were not disproved. The transaction of purchase and sale of shares is through banking channel. Further as discussed in the above paragraphs the Hon ble Tribunal in Shi Jatinder Kumar Jain Vs ITO [ 2022 (8) TMI 21 - ITAT CHANDIGARH] dealt on the same scrip of share and for the same assessment and has granted relief to the assessee. Accordingly, we set aside the order of the CIT(A) and direct the assessing officer to delete the additions and allow the grounds of appeal in favour of the assessee. - SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER For the Appellant : Shri Mani Jain ShriPrateekJain.AR For the Respondent : Shri. G.J. Ninawe. Sr. DR ORDER PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi / CIT(A) passed u/sec 143(3) r.w.s 147 and u/sec 250 of the Ac. The assessee has raised the following grounds of appeal: 1. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the action of ld. AO in reopening the impugned assessment proceedings by issue of notice u/s 148 which is without jurisdiction and bad in law. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from time to time, furnished the details and the case was discussed. On perusal of the financial statements, the Assessing Officer found that the assessee has disclosed the income from salary, income from house property, business income, short term capital gains and income from other sources. Further the assessee has disclosed and claimed the exemption u/sec10(38) of the Act being long term capital gains on sale of shares of Rs. 12,54,207/- and called for the information. The AO on verification of the financial statements found that found that the assessee has earned long term capital gains on sale of shares of M/s Access Global Ltd and the assessee was asked to produce the details of purchase of shares, mode of payment and relevant supporting evidences. Whereas the assessee has purchased 300 shares of Rs. 10/- paid up each of M/s Sea view Suppliers Ltd at Rs. 484/- per share from M/s. Kalimata Tradecom Pvt Ltd through cheque on 24-08-2011 for Rs. 1,45,200/- as per the purchase invoice bill. Subsequently the M/s Sea view Suppliers Ltd shares were amalgamated with M/s Access Global Ltd as per the decision of the Hon ble High Cour of Calcutta order dated 15.11.2011. Since the M/s Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cutta. The Ld. AR mentioned that the AO has only relied on the investigation report and no independent enquiry conducted. The Ld.AR substantiated the submissions with the synopsis, factual paper book and the judicial decisions and prayed for allowing the appeal. Contra, the Ld.DR mentioned that the transactions are not genuine and relied on the order of the CIT(A). 6. Heard the rival submissions and perused the material on record. The sole matrix of the disputed issue is that the CIT(A) has sustained the additions u/sec 68 in respect of sale of shares and u/sec 69 in respect of estimated commission expenditure overlooking the material information and evidences filed in the course of the assessment proceedings and appellate proceedings. The Ld. AR submitted that the assessee has furnished the information with evidences of purchase price, financial statements and summary of shares sold in F.Y 2012-13, ledger account copy, copies of bank account statement, copy of the contract note and sale of the shares, demat account statement and copy of physical share certificate. The Ld. AR contentions are that the assessee has purchased 300 shares of Rs. 10/- paid up each of M/s Sea view Supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have also perused the material on record. We have also gone through the assessment order as well as the order passed by the Ld. CIT (A) and the various judgments which have been relied upon by both the parties in support of their contentions. 6.1 At the very outset, we would like to observe that when the AO raised a query requiring the assssee to establish the genuineness of the impugned Long Term Capital Gains, the assessee had furnished documentary evidences which included copies of Contract Notes, Demat Account, details of share transactions with Shri Ashok Kumar Kayan, Contract Notes giving details like Trade number, Trade time, Contract Note number, Settlement number, details of Service Tax payment, STT paid and the brokerage paid to the broker. It was also demonstrated by the assessee that the purchase of shares for an amount of Rs. 8,22,800/- had been made through cheque in June, 2011. The assessee had also demonstrated that, subsequently, the sale proceeds from the shares of M/s. Access Global Limited were received again through banking channels. Apart from this, the assessee had also filed the judgment of the Hon ble High Court of Kolkata ordering amalgamation of thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same did not have any evidentiary value in the face of the assessee denying any dealings with Shri Harshvardhan Kayan and also in the face of assessee providing voluminous evidences in support of the assessee s claim of having earned Long Term Capital Gains. 6.3 It is also to be noted that the AO had recorded the statement of the assessee during the course of assessment proceedings (this statement has also been reproduced by the AO in the assessment order) and in the said statement, the assessee has sought to explain in detail the sale and purchase of the shares, the same has been rejected only on the basis of statement of Shri Harshvardhan Kayan. Thus, in effect, although the assessee has furnished documentary evidences in support of his contention of having earned Long Term Capital Gains and has also in the statement recorded during the course of assessment proceedings, explained in detail, how the Long Term Capital Gains came to be earned by the assessee, first the AO and later the Ld. CIT (A) completely discarded the submissions of the assessee merely on the basis of preponderance of probability as well as on the basis of the statement of Shri Harshvardhan Kayan with w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on/merger by the judgment of Hon ble High Court of Kolkata and, therefore, mere reliance on the report of Investigation Wing and statement of Shri Harshvardhan Kayan which do not even mention the name of the assessee, in our considered opinion cannot be upheld. 6.6 It is also our observation that when the AO had received the report of the Investigation Wing, he ought to have conducted independent enquiry to examine and verify the involvement of the assessee in the allegedly bogus Long Term Capital Gain claim rather than simply and blindly following the report of the Investigation Wing and the statement of Shri Harshvardhan Kayan to make a case against the assessee. A perusal of the assessment order would show that no independent enquiry had been conducted by the 12 AO and he has not even negated the evidences furnished by the assessee by producing counter evidence but has simply dismissed the assessee s explanation simply on the basis of the said investigation report and the statement of Shri Harshvardhan Kayan. 6.7 The Hon ble High Court of Delhi in the case of CIT vs. Finvest Limited reported in 357 ITR 146 (Delhi) has held that when the assessee had filed documents i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng false. 6.8 The Hon ble Jurisdictional High Court i.e. High Court of Punjab and Haryana in the case of Daulat Ram Rawatmull (supra) had held that documentary evidences cannot be brushed aside merely on suspicion. This judgment of the Hon ble Punjab and Haryana High Court was further upheld by the Hon ble Apex Court. 6.9 The Department has relied on numerous decisions of the Coordinate Bench as well as of the Hon ble Delhi High Court in the case of Udit Kalra in ITA No. 220/2019. However, we note that in the case Udit Kalra (supra) the glaring fact was that this company was directed to be delisted from the Stock Exchange whereas in the case of M/s. Access Global Limited no such finding of fact has been recorded. As per record, this company was not even issued any warning by the SEBI and as per record the transactions in shares of M/s. Access Global Limited were also not suspended by SEBI. Therefore, the reliance by the Department on the case of Udit Kalra (supra) will not be of much assistance to the Department. Further, the reliance on the case of Sumati Dayal reported in 214 ITR 801 (SC) and Durga Prasad More, 82 ITR 540 (SC) would also not help as both these judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961 Cash credit (Bogus LTCG on sale of shares) - Assessment years 2014-15 and 2015-16 Assessee had sold shares of a company held by it and claimed exemption under section 10(38) on account of long-term capital gain (LTCG) arose on such sale of shares - Assessing Officer noted that there was astounding 4849.2 per cent jump in share prices of said company within a span of two years and financials of said company did not show any reason for such extraordinary performance of its stock - Thus, he concluded that assessee had adopted a colourable device of LTCG to avoid tax and, accordingly, made addition under section 68 treating such LTCG arose on sale of such shares as bogus It was noted that there was no dispute that shares of said company were purchased by assessee online and payments were made through banking channel - Shares were dematerialized and sales were routed from demat account and consideration was received through banking channels Assessing Officer simply proceeded on basis of financials of company to come to conclusion that transactions were bogus Assessing Officer had not made its conclusion on basis of any cogent material Finding of Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels. The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. 14. In this view of the matter, no question of law, much less a substantial question of law arises for our consideration. 9. Similarly the Jurisdictional High Court of Bombay in the case of CIT Vs. Shyam R. Pawar, 54 taxmann.com 108 has observed as under: Section 68 of the Income-tax Act, 1961 Cash credit (Share dealings) - Assessment years 2003-04 to 2006-07 Assessee declared capital gain on sale of shares of two companies. Assessing Officer, observing that transaction was done through brokers at Calcutta and performance of concerned companies was not such as would justify increase in share prices. held said transaction as bogus and having been done to convert unaccounted money of assessee to accounted income and, therefore, made addition under section 68 - On appeal, Tribunal deleted addition observing that DMAT account and contract note showed credit/details of share transactions; and that revenue had stopped inquiry at particular point and did not carry forward it to discharge basic onus Whether on facts, transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd 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 the Tribunal's order are not vitiated by any error of law apparent on the face of the record either. [Para 6] 10. Hon ble Supreme Court in the case of Pr. CIT Vs. Parasben Kasturchand Kochar, 130 taxmann.com 177 (SC) has observed as under: Section 10(38) of the Income-tax Act, 1961 Capital gains Income arising from transfer of long-term securities (Shares) Assessment year 2014-15 Assessee-individual engaged in business of trading in shares claimed long term capital gains arising out of sale of shares as exemption under section 10(38) - Assessing officer denied claim and made certain additions into assessee's income on grounds that said gains were earned through bogus penny stock transactions and companies to whom sold shares belonged were bogus in nature Tribunal observing that assessee by submitting records of purchase bills, sale bills, demat statement, etc., had discharged his onus of establishing said transactions to be fair and transparent, same not being earned from bogus companies was eligible for exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be deleted. (Para 4) Assessee had sold shares through MTL shares and Stock Brokers Limited as is noted by Assessing Officer in reply to question No.24 which is a SEBI registered Stock Broker. Furthermore the payment for sale of shares was received through Banking channels. All these documentary evidences in favour of the assessee were rejected by Assessing Officer merely on the basis of some casual replies given by assessee to the Assessing Officer. However, the fact remains that all the documentary evidences are in favour of assessee and learned CIT(A) has passed a very reasoned and speaking order and we do not find any infirmity in the same. 12. The Hon ble High Court of Bombay in the case of CIT Vs. Smt. Jamnadevi Agrawal, 328 ITR 656 (Bom) has observed as under: Income-Cash credit-Genuineness of share transactions- Assessees offered long- term capital gains arising from sale of shares-On the basis of material seized during the search in the case of various assessees who belong to H group, AO did not accept the capital gains and treated the entire sale proceeds of the shares as income from undisclosed sources under s. 68-Not justified-Fact that the assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to the effect that the shares sold by the assessees were in consonance with the market price. On perusal of those documentary evidence, the Tribunal has arrived at a finding of fact that the transactions were genuine. Nothing is brought on record to show that the findings recorded by the Tribunal are contrary to the documentary evidence on record. The Tribunal has further recorded a finding of fact that the cash credits in the bank accounts of some of the buyers of shares cannot be linked to the assessees. Moreover, in the light of the documentary evidence adduced to show that the shares purchased and sold by the assessees were in conformity with the market price, the Tribunal recorded a finding of fact that the cash credits in the buyers' bank accounts cannot be attributed to the assessees. No fault can be found with the above finding recorded by the Tribunal. Therefore, the decision of the Tribunal is based on finding of facts. No substantial question of law arises from the order of the Tribunal.-Asstt. CIT vs. Kamal Kumar S. Agrawal (Indl.) Ors. (2010) 41 DTR (Nag) (Trib) 105: (2010) 133 TT) (Nag) 818 affirmed; Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124: (1995) 80 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal is devoid of merits and it is dismissed with no order as to costs. 14. The Hon ble Supreme Court in the case of Principal Commissioner of Income Tax Vs. Smt. Renu Aggarwal (2023) 456 ITR 249 (SC) dated 3-07- 2023 has observed as under CASH CREDITS-TRANSACTIONS IN PENNY STOCKS- FINDING THAT THERE WAS NO ADVERSE COMMENT FROM STOCK EXCHANGE OR COMPANY WHOSE SHARES INVOLVED-ASSESSING OFFICER QUOTING FACTS PERTAIN- ING TO COMPLETELY UNRELATED PERSONS NAME OF ASSESSEE NEITHER QUOTED BY ANY SUCH PERSONS NOR MATERIAL RELATING TO ASSESSEE FOUND IN INVESTIGATION-TRIBUNAL AFFIRMING AND HIGH COURT DIS- MISSING DEPARTMENT'S APPEAL- SUPREME COURT-SPECIAL LEAVE PETI- TION DISMISSED-INCOME-TAX ACT, 1961, ss. 68, 260A. Where the High Court dismissed the Department's appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) has specifically held that there is no adverse comment in the form of general and specific statement by the principal officer of the stock exchange or by the company whose shares were involved in these transactions and he held that the Assessing Officer only quoted the facts pertaining to various completely unrelated persons whose statements were recorded and on the basis of unfounded presumptions. He further held that the name of the appellants were neither quoted by any of such persons nor any material relating to the assessee was found at any place where investigation was done by the Investigation Wing. The learned Commissioner (Appeals) relying on various orders of the Lucknow Benches and other Benches has allowed relief to the asses- see by placing reliance on the evidence filed by the assessee before the Assessing Officer. I do not find any adversity in the order of the learned Commissioner (Appeals) specifically keeping in view the fact that the Lucknow Benches in a number of cases after relying on the judgment of the hon'ble Delhi High Court in the case of Krishna Devi had allowed relief to various assessees. The concurrent findings of fact have been recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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