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TMI Blog2025 (1) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... atement made from the bar and accordingly Ground No. 1 is dismissed as not pressed. 3. The Ground No. 4 raised by the assessee is challenging the initiation of penalty proceedings by the learned AO which would be premature for adjudication at this stage and hence dismissed. 4. The Ground Nos. 2, 3 and 5 raised by the assessee are challenging the validity of reassessment under section 147 of the Act and challenging the addition of Rs 76,21,459 made by the learned AO and confirmed by the learned CITA in the facts and circumstances of the instant case. 5. We have heard the rival submissions and perused the materials available on record. The assessee is an individual and had filed his original return of income under section 139(1) of the Act for the assessment year 2016-17 on 21-07-2016 declaring total income of Rs 47,08,260/-. The same was processed under section 143(1) of the Act. Further as per the information received through CRIU module of insight portal, following inputs pertaining to the assessee were made available:- a) A search and seizure action was conducted under section 132 of the Act by the investigation wing, New Delhi on 16-05-2018 in the case of M/s Dutta and Tyag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany Limited to be bogus and added a sum of Rs 73,99,475/- thereon by denying the exemption under section 10(38) of the Act. Since the LTCG of Rs 73,99,475/- was treated as unexplained cash credit arising through accommodation entries, estimated commission expenditure at the rate of 3% of the value there on was also added as unexplained expenditure under section 69C of the Act in the sum of Rs 2,21,984/-. This action of the Learned AO was upheld by the Learned CIT A. 7. The assessee made investment in buying shares of M/s Anax Com Trade Ltd. Payment was made vide cheque number 564481 dated 25-09- 2012 of Rs 2 lakhs and share certificates allotting shares of Rs 2 lakhs was issued on 25-03-2013. The assessee had enclosed the bank statement from which the payment of Rs 2 lakhs was made by him for purchase of 2 lakh shares of Anax Com Trade Ltd. These shares stood dematerialized on 15- 04-2014. 8. M/s Anax Com Trade Ltd. of Mumbai and M/s Fidelo Power and Infrastructure Ltd of Delhi as transferor companies and Yamini Investment Company Ltd of Mumbai as transferee company filed scheme of arrangement under section 394 of the Companies Act, 1956 vide Company Petition No. 563/2013 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2014. The evidence in this regard is enclosed in page 60 of the Paper Book. Later, M/s Anax Trade Com Limited merged with Mrs. Yamini Investments Company Limited vide order of Hon'ble High Court with effect from 01-04-2013. Pursuant to the said amalgamation, assessee was issued 1,60,000 shares of Yamini Investment Company Limited as against 2 lakh shares held by him in Anax Com Trade Limited. These 1,60,000 shares were sold in three tranches by the assessee seeing that the share price was going down drastically from Rs 450 to Rs 30. Hence, in three different phases, the assessee had sold the shares in the open market through a registered stockbroker after duly suffering Securities Transaction Tax (STT). The total sale consideration received by the assessee on sale of shares of Yamini Investment Company Limited was Rs 75,99,961/- and after reducing the purchase cost of Rs 2 lakhs, he earned Long Term Capital Gains of Rs 73,99,975/- and claimed the same as exempt under section 10(38) of the Act as the sale transaction had duly suffered STT and had been made through a registered stockbroker in the recognized stock exchange. The assessee had furnished the following documents in suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities to doubt the transaction carried out by the assessee. 11. The Learned CITA relied on the order passed by Securities and Exchange Board of India (SEBI) dated 4-9-2023 in the case of Yamini Investment Company Limited restraining certain parties from accessing the securities market. The said order clearly specified the list of persons involved in the manipulation of the scrip and artificial rigging of share prices and who were the actual beneficiaries by obtaining ill -gotten gains through the scrip of Yamini Investment Company Limited. On perusal of the said order, neither the assessee's name nor the share broker through which assessee traded are reflected and hence no adverse inference could be drawn on the assessee herein. We also find that SEBI order had also taken cognizance of the fact that stock split benefit of 1:10 was obtained by some of the persons in this scrip, whereas the assessee had bought the shares earlier to the date of stock split itself. Further the period of SEBI enquiry was from Sept 2013 to Jan 2014, whereas the assessee sold shares in June 2015 and Feb 2016. Nowhere the assessee's conduct fall under any of the adverse effects reflected in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in the artificial rigging in the share price. Further, even in the Mumbai Tribunal relied upon by the ld DR vehemently, there is an observation that people who had approached the tainted parties in order to get accommodation entries in the form the exempt long term capital gains. There is absolutely no evidence brought on record by the revenue in the instant case before us that assessee had either approached the alleged tainted parties/ entry operators who were involved in artificial rigging of share price of Yamini Investment Company ltd in order to receive accommodation entries in the form of exempt long term capital gains. It is pertinent to note that assessee has been holding the share from September 2012 onwards and the price of the very same scrip in the open market in October 2014 was ranging from Rs. 452 to 496 per share. Considering the drastic fall in the said scrip, the assessee had chosen to sell it in three tranches at the price 61.70 per share; Rs 58.15 per share and Rs. 30.85 per share. This is classic case of assessee falling in the category of gullible investor who had been hit by the declining market prices due to alleged manipulation and artificial rigging of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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