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TMI Blog2024 (9) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... y and properly the submissions made and evidence produced in support of the capital gain. The Id.NFAC has grossly ignored crucial facts relating to the impugned capital gain such as the holding period, manner of purchase and sale etc. 3.1 The Id. NFAC has grievously erred in law and or on facts in upholding that the capital gain on sale of shares of Monotype India Ltd. was not genuine and thereby upholding the addition of Rs. 59,93,278/- as unexplained credit u/s 68 made by AO. 3.2 That the in the facts and circumstances of the Id. NFAC ought not to have upheld that the capital gain on sale of shares of Monotype India Ltd. was not genuine and thereby upholding the addition of Rs. 59,93,278/- as unexplained credit u/s 68 made by A.O." 3. Ground no.3.1 and 3.2 were stated by the Ld.Counsel for the assessee to be the only effective grounds for adjudication before us. Ground no.1.1 and 2.1 were stated to be general in nature and therefore are not being dealt with by us. 4. The solitary issue, it was pointed out during the course of hearing before us and as is evident from the grounds being adjudicated before us, relates to the addition made to the income of the assessee on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,93,278/- by selling scrip dealt in by Shri Naresh Jain and his associates, by the name Monotype India Ltd. The assessee has argued that it had discharged its onus of proving the genuineness of the transaction by pointing out that - i) All documentary evidences of purchase and sale of this particular share were filed; ii) The purchase and sale transactions were shown to be undertaken through banking channels; iii) Purchase was effected in 2011 while the sale was effect in 2016 and 2017 i.e. after a gap of five to six years; iv) Shares were DEMATED immediately on purchase and sales were booked also through DEMAT account; v) The assessee was trader of shares dealing in a number of shares /scrips that too through a renowned broker, M/s.Sharekhan Ltd. and the impugned transaction of sale of shares of Monotype India Ltd. was carried out through this renowned share broker; vi) Shares of Monotype India Ltd. were sold in various lots during the year with the sale prices fluctuating from Rs. 36 to Rs. 17. 9. In this regard our attention was drawn to reply filed by the assessee during the assessment proceedings dated 15.2.2022 which was placed before us at PB Page No.22 to 25, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g out that the impugned scrip of Monotype India Ltd. was not the only scrip which has been dealt by the assessee. * At page no.53 was placed a scrip wise detailed report of Sharekhan Ltd. revealing that the scrip of Monotype India Ltd. was sold by the assessee in different lots from August, 2016 to April, 2017 with price ranging from Rs. 36.20 per share to Rs. 17.25 per share. The shares initially being sold at the higher price and later on decreasing in its value to Rs. 17.25 per share. 12. Referring to the above, it was the contention of the ld.counsel for the assessee before us that it was amply demonstrated to the Revenue authorities that the shares of Monotype India Ltd. were genuinely purchased in 2011 and sold after five to six years in the impugned years through reputed/renowned brokers and shares were sold at varying rates and not at one fixed rate, thus, ruling out any assumption of sale of shares being pre-mediated transactions considering the huge gap of five to six years in the purchase and sale of shares, and also considering the varied rates at which shares were sold. 13. Our attention was also drawn to another reply filed by the assessee to the AO against show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through a recognised and SEBI registered stock broker and corresponding broker bills, contract notes and statement of sale of shares were submitted in our earlier reply dated 15.02.2022. * All the payments towards sale consideration are received through account payee cheques/RTGS and duly reflected in our bank account and copies of corresponding bank statements were submitted in our earlier reply dated 15.02.2022. * STT was duly charged by the share broker which is reflected in the bills received from the broker and copies of the same were submitted in our earlier reply dated 15.02.2022. * As per mechanism and working of stock exchange either seller places bid for sale of shares giving number of shares to be sold and the rate at which the shares are to be sold. Purchasers also places bid for purchase of shares giving number of shares to be purchased and the rate at which he is ready to purchase the shares. When the prices of the seller and the purchaser matches the transaction is confirmed by the system of the stock exchange. Purchaser and seller do not know each other. * After completion of the transaction as stated above purchase price is debited to the share broker of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, there is no lawful basis, whatsoever, to consider the said genuine and authentic Long-Term Capital Gain income of us, as a sham or bogus transaction and the statutory onus, as casted upon us, by numerous binding judicial pronouncements of the Hon'ble ITATs and High Courts, regarding the establishment of authenticity and genuineness of the said share transactions and the resultant long-term capital gain, had been fully and completely reflected in statement of Income. It is respectfully submitted that a mere presumption on the basis of conjectures, surmises and premises that in the guise of long-term capital gain income, assessee's own unaccounted income/on-money, had been routed in its books of account, and without bringing on record any corroborating material or evidence, to substantiate the source and generation of 'on-money' by the assessee, is in contravention of the well settled and established position of Law. The mere presumption that since the assessee had earned long term capital gain, which is exempt as per law, therefore, the assessee must have earned some on-money/unaccounted income, is not at all in conformity with the established legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of evading tax. g) Artificial gains are created to evade taxes. h) It is a preconceived scheme to procure bogus LTCG in share transactions of this scrip which is not supported by market factors. i) Net worth of this company is negligible but its share price is artificially rigged. j) Operator, Brokers and Exit providers made an arrangement of routing cash to obtain bogus LTCG." 16. Referring to the above, the ld.counsel for the assessee contended that the finding of the ld.CIT(A) that the assessee has earned astronomical profit on the sale of said shares which was unusually higher, the net worth of the company to which the shares related being negligible, the share prices were rigged, that it was a pre-mediated adjustment made by the Naresh Jain and Associates to bring unaccounted money in the books of the beneficiary; that the transaction undertaken are devoid of any commercial value or consequences, was all without any basis at all; that there was no fact brought on record by the Revenue authorities to support this finding except for the investigation report of the Department, contents of which were not shared with the assessee. It was also contended that after the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department has failed to make out a case of the transaction being bogus. There is no dispute with regard to the fact that the assessee had submitted all documents pertaining to the purchase and sale of shares of Monotype India Ltd. The ld.DR, in fact, has accepted this fact that the assessee had submitted all purchases and sale bills, contract-notes of the brokers, along with ledger account of the assessee in the books of the broker, the DEMAT account of the assessee, wherein the purchase and sale of these scrips were recorded, as also, the fact of transaction being carried out through banking channels, both of purchase and sales. The fact that the shares of Monotype India Ltd. were purchased in 2011 and sold after a gap of five to six years in 2016 and 2017 is also not disputed. Also, not disputed is the fact that the assessee sold scrips of Monotype India Ltd. not in a single transaction at a single price, but in different lots at varying share prices ranging between Rs. 36 to 17/- per shares from August, 2016 to March, 2017; that it was not a single transaction of sale of shares by the assessee during the year. 20. All the above facts are not disputed by the Revenue. Even, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be any premediated transaction presumed to have taken place in such a long time gap of five to six years, that too at varying prices. It was the duty and onus of the Revenue to prove how the impugned transaction was pre-mediated. Merely stating and reiterating that it was a premediated transaction is not sufficient. The said fact has to be demonstrated with evidences, which the Revenue has miserably failed in the present case, relying only on the investigation report, the contents of which have also not been brought on record. Not to be missed is also the fact, demonstrated by the assessee, that the scrips so dealt with was de-mated and dealt through a prominent broker, Sharekhan Ltd. and was not the only scrip the assessee has traded in, but there were numerous other scrips in which the assessee traded during the year. 22. In the light of the above, we have no hesitation in holding that the assessee has sufficiently discharged its onus of proving genuineness of the transaction of sale of scrip of Monotype India Ltd. and finding of the ld.CIT(A) that the transaction was mere accommodation entry, is not justified and not sustainable. The addition, therefore, made of the enti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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