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TMI Blog2024 (1) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... f treating the long term capital earned by assessee as unexplained cash credit u/s 68. 3. The CIT(A) has erred in not considering the orders passed by the jurisdictional ITAT and Hon'ble Rajasthan High Court on the same facts as of the assessee and has also erred in not appreciating the various documentary evidences submitted. 4. The CIT(A) has erred in not considering the objections raised by the assessee before the ld. AO during the assessment proceedings. 5. The appellant crave liberty to add, amend, alter or modify any of the ground or appeal on or before its hearing before your honour." 3. Since, there are common issues challenged on similar facts in both the appeals by the appellants and therefore, both these appeals were heard together and adjudicated simultaneously for convenience and brevity. There are two main issues pertaining to validity of reopening of assessment proceedings u/s 147 of the Act and claim of exemption u/s 10(38) of the Act. 4. Briefly the facts of the case as per record are taken and discussed from Abhay Kumar Daga HUF, in ITA No.176/Jodh/2022 as there are similar facts in both the appeals. The appellant objected to the initiation of proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid basis for initiation of reopening proceedings u/s 147 of the Act. Accordingly, the ground regarding validity u/s 147 is dismissed. 5. The next issue is regarding exemption u/s 10(38) of the Act. 5.1 During scrutiny assessment proceeding, the AO holds the sale value of shares of M/s ACI Infocom of Rs. 14,68,750/- as manipulated transactions which was claimed to be exempt u/s 10(38) after deduction of the purchase price in respect of the Assessment Year 2013-14 and treated the exempted long term capital gains of the assessee as unexplained cash credit u/s 68 of the I.T. Act, 1961. 6. In appeal, the action of AO in rejection of exemption u/s 10(38) and thereby addition so made by the AO, has been confirmed by the Ld. CIT(A) by observing that the business of ACI Infocom had been declining over the years and almost reduced to Nil which is evident from its financial statements and under such circumstances the price high recorded in the shares is extraordinary and beyond the dynamics and normal behaviors of the stock market. This is possible only when the shares prices are rigged and manipulated. Later on the shares prices has fallen down sharply and substantially. The ld. CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of any purchase or sale of shares in stock market is well tested transaction and can be verified at any time. The transaction is verifiable from the broker note of transaction issued which gives complete details of transactions effected. This gives details of shares, quantity of shares, value, time on which transaction was made at the stock exchange. Copy of broker/contract note was submitted during the assessment proceedings and copies were also submitted in the paper book. The share broker through whom these shares were sold, are duly registered with recognized stock exchange and with SEBI. Receipt of the shares sale realization is verifiable from the bank statements. That these shares were duly transferred in Demat accounts of the assessee. The fact of Demat of shares is also verifiable from the documentary evidence. In support, he referred to following judgments: 1. ITAT, Jodhpur Bench in the case of ITO V/s Smt. Kusumlata. 105 TTJ (Jd) 265 in which under similar facts the long term capital gains declared were accepted and the following findings were given therein. "For making addition under section 69 of the Act, the department is required to prove to the hilt that impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... boats acquired by Sahibgunj and the notoriety achieved by Dhulian as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as every arhatdar and grain merchant who might have been indulging in smuggling operations, without an iota of evidence in that behalf. The cancellation of the food grain licence at Nawgachia and the prosecution of the appellant under the Defence of India Rules was also of no consequence inasmuch as the appellant was acquitted of the offence with which it had been charged and its license also was restored. The mere possibility of the appellant earning considerable amounts in the year under consideration was a pure conjecture on the part of the Income Tax Officer and the fact that the appellant indulged in speculation (in Kalai account) could not legitimately lead to the inference that the profit in a single transaction or in a chain of transactions could exceed the amounts, involved in the high denomination notes, this also was a pure conjecture or surmise on the part of the Income Tax Officer. As regards the disclosed volume of business in the year under consideration in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the approval was also granted by a common order. The appellant has referred to other assessment made in relation to the similar proceeding where the department accepted the long term capital gains arising on the same shares (Script). The appellant in the paper book had submitted the order passed by National Faceless Assessment Centre, Delhi in the case of another assessee Shri Mohd. Sharif, Pali (Rajasthan) and Abhay Kumar Kuldeep Kumar HUF. In these cases, on similar facts and circumstances, department has reopened assessment u/s 148 for the same reasons as of the assessee but assessments were closed by allowing exemption u/s 10(38) on sale of shares of M/s ACI Infocom Ltd. Therefore, he contended that not allowing exemption u/s 10(38) to the assessee for the same facts and circumstances is bad in law and against the principles of natural justice. Copy of assessment orders in the case of such assessee were furnished in the paper book as submitted before the authorities below. 8. We heard the rival submission, perused the material on record, impugned orders and case laws cited before us. Admittedly, the share transactions were made through the registered broker and a transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains-Vis-a-vis income from undisclosed sources-Genuineness of share transactions-Tribunal has found that though at the time of survey the assessee in her statement denied having made any transactions in shares, subsequently facts came on record that the assessee had transacted not only in the shares which are disputed but shares of various other companies-Various details like copy of contract note regarding purchase and sale of shares and assessee's account with share broker PK were filed-Copy of depository account or demat account was also filed which shows that the transactions were made through demat account-Payments and receipts were through account payee cheques and the transactions were routed through Kolkata Stock Exchange- There is no evidence that the cash has gone back in assessee's account-Prima facie the transactions which are supported by documents appear to be genuine transactions-AO has failed to prove through any independent inquiry or relying on some material that the transactions made by the assessee through share broker PK were non-genuine or there was any adverse mention about the transaction in question in the statement of P-In view of Tribunal's findings, ..... 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