IN THE INCOME TAX APPELLATE TRIBUNAL
\nDELHI BENCH \u201cSMC\u201d NEW DELHI
\nBEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
\nI.T.A. No.2766\/DEL\/2018
\nAssessment Year: 2014-15
\nMukta Gupta,
\nAkhilesh Kumar, Adv.,
\nChamber No.206-207,
\nAnsal \u2018Satyam\u2019, RDC Raj
\nNagar,
\nGhaziabad.
\nv. ITO, Ward-1(4),
\nGhaziabad.
\nTAN\/PAN: AHGPG 4685R
\n(Appellant) (Respondent)
\nI.T.A. No.2767\/DEL\/2018
\nAssessment Year: 2014-15
\nMohan Lal Agarwal (HUF),
\nAkhilesh Kumar, Adv.,
\nChamber No.206-207,
\nAnsal \u2018Satyam\u2019, RDC Raj
\nNagar,
\nGhaziabad.
\nv. ITO, Ward-1(4),
\nGhaziabad.
\nTAN\/PAN: AAJHM 8433Q
\n(Appellant) (Respondent)
\nAppellant by: S\/Shri Akhilesh Kumar, Adv. &
\nPushkar Pandey, Adv, .
\nRespondent by: Shri S.L. Anuragi, Sr.D.R.
\nDate of hearing: 12 11 2018
\nDate of pronouncement: 26 11 2018
\nO R D E R
\nPER AMIT SHUKLA, J.M.:
\nThe aforesaid appeals have been filed by the assessee
\nagainst separate impugned orders of even date, 16.01.2018,
\npassed by ld. CIT (Appeals), Ghaziabad for the quantum of
\nassessment passed u\/s. 143(3) for the Assessment Year
\nI.T.A. No.2767\/DEL\/2016 2
\n2014-15. Since facts involved in assessee\u2019s appeals are
\ncommon, therefore, same were heard together and are being
\ndisposed of by way of this consolidated order. In the grounds
\nof appeal, the assessee has challenged the disallowance of
\nexemption claimed u\/s.10(38) for Rs.24,60,241\/- being Long
\nTerm Capital Gain on sale of listed equity shares in the name
\nof Mohan Lal Agarwal (HUF) and similar disallowance of
\nRs.19,31,075\/- in the case of Mukta Gupta.
\n2. We will first take up the appeal in the case of Mohan Lal
\nAgarwal (HUF), wherein the brief facts are that the assessee is
\na HUF which carried out business of trading in iron and steel.
\nThe assessee has claimed exemption u\/s.10(38) of
\nRs.24,60,241\/- on Long Term Capital Gain resulting on sale
\nof shares of M\/s. CCL International Ltd. which was
\npurchased for Rs.97,800 on 11.05.2009 and was sold on
\n12.12.2013 for Rs.26,06,548\/- in the assessment year 2014-
\n15. Learned AO observed that assessee had purchased
\n10,000 shares of M\/s. CCL International Ltd. on 11.05.2009
\n@ Rs.16.30 per share though face value of the shares were
\nRs.10 each and these were locked for a period of one year ten
\nmonths as per SEBI Regulation and trading of the shares
\nstarted from 28.11.2011. Thereafter he has quoted the price
\nof the said scrip in the Bombay Stock Exchange from
\n06.02.2010 to 19.12.2016. The moment of the share price for
\neach day starting from 6th February, 2010 to 19th December,
\n2016 has been incorporated in the impugned order and from
\nthe trend of share price moment, he held that the price of
\nthese shares had risen manifolds and thereby inferred that
\nI.T.A. No.2767\/DEL\/2016 3
\nthe reason for astronomical rise was not related to any
\nfundamentals of market. Without any material or information
\non record that the assessee had done any bogus transaction
\nor has received any accommodation entry or assessee\u2019s name
\nhas been cropped as a beneficiary of accommodation entry in
\nany of the investigation, has held that there are various
\ninstances whereby entry providers arrange accommodation
\nentry for bogus Long Term Capital Gain. Pages after pages AO
\nhas referred to modus operandi as to how the accommodation
\nentry is provided by the entry operators. A statement on oath
\nof the Karta of the HUF was also recorded by him on
\n19.12.2016 which has been incorporated in the impugned
\norder and on the basis of the statement he has deduced
\nfollowing points.
\n\u201c1. That the karta of the HUF only started dealing in share transaction
\nat the time when he purchased these shares and got a D-mat account
\nonly in the year 2010.
\n2. The company whose shares the assessee dealt in split the shares
\nin F.Y. 2011-12 and the total number of shares held by the assessee
\nincreased to 50000 shares from 10000 shares of which the assessee
\nsold 30000 shares in F.Y. 2013-14 for Rs. 87\/- per share.
\n3. The assessee only dealt in these shares of M\/s CCL International
\nLtd. and has neither purchased nor sold any other share which again
\nleads to suspicion.
\n4. The shares of the company were purchased on the advice of his
\naccountant.
\n5. The assessee didn’t watch the price of the shares purchased\/sold
\nand only used to enquire about it once in a while.
\n6. The aforesaid facts clearly indicate that the transaction is a sham.\u201d
\nI.T.A. No.2767\/DEL\/2016 4
\n3. After referring to various judgments and general
\ndiscussion about how this minus of bogus accommodation
\nentry prevailing in the country, he held that the entire sale
\nconsideration received from sale of scrip is to be added
\nu\/s.69A and thereby made addition of Rs.26,05,548\/-
\n4. Ld. CIT (A) too has confirmed the said addition and
\nmade observations that no evidence in support of
\ngenuineness of purchase of shares and justification of
\npurchase price of the share has been submitted by the
\nassessee. Further, M\/s. CCL International Ltd. has been
\nfound to be penny stock by DIT (Investigation) Kolkata. After
\ndiscussing various case laws, he has confirmed the addition
\nafter concluding as under:
\n\u201c5.1.14 Considering that the purchase of shares has not been made
\nonline on stock exchange. There are no proper bills supporting the
\npurchase price. The details submitted by the appellant failed to
\nsubstantiate the genuineness of transactions in so far as purchase of
\nshares is concerned. The shares transferred by the appellant reflect
\nsuch a huge price rise in the shares of a defunct company without
\ncorresponding fundamentals, corroborated by information received
\nfrom Investigation Wing of Department that the shares have been
\ntraded violating the SEBI’s guidelines. In view of these facts it cannot
\nbe said that appellant has discharged the primary onus of proving the
\ngenuineness of transactions. However, it is noted that AO has added
\nthe entire sale consideration u\/s 69A however, actual money
\nintroduced by the appellant in books of accounts during the year is
\nlong term capital gain i.e. Rs. 26,05,548\/- (-) Rs. 1,63,000\/- i.e. Rs.
\n24,42,548\/- is the addition confirmed u\/s 69A r.w.s 115BBE. Hence,
\nthese grounds of appeal are partly allowed while confirming action of
\nI.T.A. No.2767\/DEL\/2016 5
\nAO of making an addition on account of bogus long term capital gain
\nclaimed u\/s 10(38).\u201d
\n5. Before us, ld. counsel for the assessee submitted that
\nAssessee had purchased 10,000 shares on 11.05.2009 @
\n16.30 per share for a total amount of Rs.1,63,000\/- out of
\nwhich Rs. 20,000\/- was paid in cash and balance
\nRs.1,43,000\/- through cheque. Later on, said shares were
\nsub divided into 50,000\/- shares in August, 2011. Said
\nshares were purchased from the direct allottee, Mr. Himanshu
\nPokhariyal and as such shares were transferred directly from
\nthe d-mat a\/c of Himanshu to the Demat of assessee with
\nAllied Services Private Limited through e-transfer. Out of
\n50,000 shares 20,000 shares were sold in previous year and
\nbalance 30,000\/- sold on 12.12.2013 i.e. in the relevant year.
\nSaid sale is duly declared in return. Sale under question is
\nsupported with following evidences\/details:-
\na) Contract note giving date, time settlement details etc
\nb) STT is paid on transaction
\nc) Transaction is through Trustline Securities
\nd) Sale is made on online market of Bombay Stock
\nExchange
\ne) Consideration is received electronically in bank
\nthrough RTGS
\nf) Shares are transferred from Demat Account.
\n6 Shares were purchased on 11.05.2009 and were sold
\non 12.12.2013, and therefore, holding period of shares was
\nmore than 4 years and 7 months. Even after entering in
\nI.T.A. No.2767\/DEL\/2016 6
\nDemat of assessee holding period was 3 years and 8 months.
\nHe further submitted that rate of the said scrip at BSE on
\n06.02.2010 to 09.06.2016 was as per the trading norms and
\ncap permitted by SEBI and the said scrip was regularly traded
\nfor six years. During the period, the highest rate was over
\nRs.600\/-, however when the assessee sold it was Rs.87\/- per
\nshare on 12.12.2013. The Assessing Officer has not found
\nany material\/ information against the assessee nor against
\nthe company, M\/s. CCL International Ltd. Besides, there is no
\nallegation\/statement of any party that the said transaction or
\neven dealing in shares of the company was for bogus capital
\ngain. Neither the said company has been blacklisted by SEBI
\nnor has it been named in the list of Shell Company uploaded
\nby SEBI on net. In the statement recorded by the Assessing
\nOfficer, assessee has given all the details as asked and no
\nadverse inference can be drawn from the said statement. He
\nalso pointed out that the Income Tax Department itself has
\naccepted the transaction of Long Term Capital Gain\/Short
\nTerm Capital Gain in the case of M\/s. CCL International Ltd.
\nnot only in the current year but also in the previous years in
\nseveral cases in scrutiny proceedings. Thus, without any
\nmaterial on record, simply by general observation and
\nconjectures, no adverse inference could have been drawn. He
\nalso filed various judgments of this Tribunal and also
\nassessment records and the assessment order in the case of
\nother assessees, wherein similar scrip has been accepted qua
\nthe same assessment year or subsequent assessment year.
\nI.T.A. No.2767\/DEL\/2016 7
\n7. On the other hand, learned Department Representative
\nhas strongly relied upon the order of the Assessing Officer
\nand ld. CIT (A) and submitted that such a huge rise in the
\nprice itself shows that everything was not right and in some of
\nthe case, Investigation Wing Kolkata has found that scrip of
\nM\/s. CCL International Ltd. were used for providing
\naccommodation entries by the brokers. Thus, the order of the
\nAssessing Officer and ld. CIT (A) needs to be confirmed.
\n8. We have heard the rival submissions and also perused
\nthe relevant findings given in the impugned orders as well as
\nmater referred to before us. As discussed above, assessee has
\npurchased 10,000 shares on 11.05.2009 @ 16.30 per share
\nfor total amount of Rs.1,63,000\/- out of which Rs.20,000\/-
\nwas paid in cash and balance amount of Rs.1,43,000\/-
\nthrough cheque which was duly reflected in the statement of
\naffairs in the return of income filed for Assessment Year
\n2010-11. Later on, the said shares were sub-divided into
\n50,000 shares in August, 2011. These shares were stated to
\nbe purchased from the direct allottee, Mr. Himanshu
\nPokhariyal and such shares were transferred directly from
\nDemat account of the said person to the Demat account of the
\nassessee through e-transfer with Allied Services Pvt. Ltd. Out
\nof 50,000 shares, 20,000 shares were sold in previous year
\nand balance amount of 30,000 shares have been sold in the
\nrelevant Assessment Year. It has not been brought on record
\nI.T.A. No.2767\/DEL\/2016 8
\nthat the sale of similar shares in the earlier Assessment Year
\nhas been doubted or not. It is not in dispute that, in so far as
\npurchase of shares through cheque is concerned the same
\nwere duly reflected in the bank account of the assessee and
\nshown in the earlier years and the sale consideration is also
\nsupported by following evidences:-
\na) Contract note giving date, time settlement details etc
\nb) STT is paid on transaction
\nc) Transaction is through Trustline Securities
\nd) Sale is made on online market of Bombay Stock
\nExchange
\ne) Consideration is received electronically in bank
\nthrough RTGS
\nf) Shares are transferred from Demat Account.
\n9. Apart from that, it is not in dispute rather both
\nAssessing Officer and ld. CIT (A) in their exhaustive order
\nhave incorporated the price movement of the said scrip right
\nfrom 06.02.2010 to 09.12.2016 and on perusal of the same it
\nis seen that there has been increase and decrease in the
\nshares prices like a normal scrip and it is also not in dispute
\nthat the said shares were traded in all the years under the
\nstock exchange. Before us, learned counsel has also placed
\nthe assessment orders for the Assessment Year 2013-14 and
\n2014-15 in the case of M\/s. CCL International Ltd. passed
\nu\/s.143(3) to show that this company is genuine and
\nregularly assessed to tax by the Department. From the
\nperusal of the entire assessment order and ld. CIT (A) order, it
\nI.T.A. No.2767\/DEL\/2016 9
\nis seen that, nowhere there is any reference to any material or
\ninformation so as to suggest that;
\n\u2022 Firstly, assessee has been found to be beneficiary of any
\nbogus or accommodation entry in any of the
\ninvestigation\/searches carried out anywhere;
\n\u2022 Secondly, there is no material that any action has been
\ntaken by the SEBI against this company and such an
\naction of black-listing this company had attained finality
\nand;
\n\u2022 Lastly, it is also matter of record that the Department in
\nother cases under scrutiny proceedings has accepted
\nsimilar transaction of sale of shares of M\/s. CCL
\nInternational Ltd.
\n10. Nowhere the evidences filed by the assessee has been
\nrebutted or any inquiry whatsoever has been conducted by
\nthe Assessing Officer or by the ld. CIT(A) to prove that
\nassessee was involved in any clandestine manner for routing
\nits own unaccounted money. If the assessee has filed the
\nentire evidences relating to purchase which is mostly through
\ncheque shown in the earlier years and also filed all the details
\nof sale transactions and the shares which have been routed
\nthrough Demat account and sold through stock exchange on
\na quoted price on that date, then onus shifts upon the
\nDepartment to prove that all these evidences are only make
\nbelieve documents and certain minimal inquiry is required to
\nrebut all these evidences. As stated above, nowhere it has
\nbeen found that assessee was in any manner found to be
\nI.T.A. No.2767\/DEL\/2016 10
\nbeneficiary of any accommodation entry under any inquiry or
\ninvestigation. Once all these transactions are duly proved by
\ntrading from stock exchange, then to hold the sale of shares
\nas unexplained credit or as unexplained money cannot be
\nupheld. Accordingly, we hold that the money credited in the
\naccount of the assessee is from the sale of shares and
\naccordingly benefit of Long Term Capital Gain on sale of such
\nlisted equity shares have to be given.
\n11. In the result, the appeal of the assessee is allowed.
\n12. In the case of Mukta Gupta similar facts are
\npermeating in this year also for the sale of similar shares.
\nThere is another additional factor that in this case a direction
\nwas issued by the learned Joint Commissioner of Income Tax,
\nRange-2, Ghaziabad to accept the said transaction. The
\nlearned JCIT vide his direction dated 29.02.2016 has sought
\nthe Assessing Officer\u2019s report and has given following finding:-
\n\u201c2. The application of the assessee has been examined and the A.O.
\nvide this office letter dated 23 12.2016 was required to furnish his
\ncomment and the report submitted by the AO as under :
\nDuring proceeding of the case, it has been found that the assessee has
\npurchased the shares of Rs. 24,000\/- by Account payee cheque No.
\n077429 dated 04.03.2013(Punjab National Bank] from the broker M\/s
\nKarvy Stock Broking Limited, C-7, Lohia Nagar, Ghaziabad. The shares
\nhave been sold after holding the shares for one year through SEBI
\nRegistered broker. The payment of Rs. 9,84,516\/- has been received by
\nRTGS after payment of STT. The assessee has claimed Exemption u\/s
\nI.T.A. No.2767\/DEL\/2016 11
\n10(38] for the above transaction made also refer the various judgments
\npronounced by the courts’.
\n3. Assessee has filed his D-MAT statement from where it is
\nobserved that assessee is a regular investor & holds shares in many
\ncompanies. The sale & purchase is through account payee cheque and
\nimmediately on purchase of shares in March, 2013, the same were
\nreflected in his D-MAT account as on 31.03.2013 with M\/s Karvy Stock
\nBrokings.
\n4. All the details as per AO’s questionnaire dated 02.12.2015 has
\nbeen filed by the assessee. All documents filed appears to be genuine.
\nThe assessee has shares of many other companies as on 31.03.2013,
\nthe estimated market value as per D-MAT statement is 11.15 lacs.
\n5. The assessee has also filed price chart of the share company
\nnamely Effingo Textiles based on 30th Annual Report and price range
\nof this company as reported is Rs. 56 to 102 between April, 2014 to
\nJan,2015. The SEBI has as a matter of surveillance stopped the trading
\nof shares of this company w.e.f. 07.01.2015 but no adverse order has
\nbeen passed by SEBI on this company for this manipulation.
\n6. In any case, even the AO has reported no adverse report in this case,
\ntherefore, AO is directed to treat the gain earned by him as genuine
\nand allow exemption u\/s 10(38) of the I.T. Act for which the
\ntransactions are carried out on which STT has been paid as per law.\u201d
\n13. The aforesaid direction of the JCIT to the Assessing
\nOfficer clearly clinches the issue in favour of the assessee in
\nboth the cases. Thus, the addition made by the Assessing
\nOfficer by disallowing the Long Term Capital Gain and
\ntreating as unexplained money is deleted.
\nI.T.A. No.2767\/DEL\/2016 12
\n14. In the result, the appeals of both the assessees are
\nallowed.
\nOrder pronounced in the open Court on 26th November, 2018.
\nSd\/-
\n[AMIT SHUKLA]
\nJUDICIAL MEMBER
\nDATED: 26th November, 2018
\nPKK:<\/p>\n","protected":false},"excerpt":{"rendered":"
Nowhere it has been found that assessee was in any manner found to be beneficiary of any accommodation entry under any inquiry or investigation. Once all these transactions are duly proved by trading from stock exchange, then to hold the sale of shares as unexplained credit or as unexplained money cannot be upheld<\/p>\n