IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "SMC" : DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
ITA.No.5882/Del./2018
Assessment Year 2015-2016
Shri Amar Nath Goenka,
New Delhi 110 070. The ACIT,
PAN AAPPG9369R
C/o.Shri Kapil Goel, Circle-20(1),
Advocate, F-26/124, vs.
Sector-7, Rohini, New Delhi.
Delhi 110085.
(Appellant) (Respondent)
ITA.No.5883/Del./2018
Assessment Year 2015-2016
Shri Arvind Goenka,
New Delhi 110 070. The ACIT,
PAN ACTPG1708Q
C/o.Shri Kapil Goel, Circle-20(2),
Advocate, F-26/124, vs.
Sector-7, Rohini, New Delhi.
Delhi 110085.
(Appellant) (Respondent)
ITA.No.6457/Del./2018
Assessment Year 2014-2015
Smt. Preeti Yadav,
New Delhi 110 070. The Income Tax Officer,
PAN AALPY3249A
C/o.Shri Kapil Goel, Ward-33(5),
Advocate, F-26/124, vs.
Sector-7, Rohini, New Delhi.
Delhi 110085.
(Appellant) (Respondent)
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ITA.No.6458/Del./2018
Assessment Year 2014-2015
Smt. Sneha Yadav,
New Delhi 110 070. The Income Tax Officer,
PAN ACVPY0483A
C/o.Shri Kapil Goel, Advocate, Ward-33(5),
F-26/124, vs.
Sector-7, Rohini, New Delhi.
Delhi 110085.
(Appellant) (Respondent)
ITA.No.6459/Del./2018
Assessment Year 2014-2015
Smt. Pooja Yadav,
New Delhi 110 070. The Income Tax Officer,
PAN AHXPY2139G
C/o.Shri Kapil Goel, Advocate, Ward-33(5),
F-26/124, vs.
Sector-7, Rohini, New Delhi.
Delhi 110085.
(Appellant) (Respondent)
For Assessees : Shri Kapil Goel, Advocate
For Revenue : Shri S.L. Anuragi, Sr. D.R.
Date of Hearing : 08.12.2018
Date of Pronouncement : 12.12.2018
ORDER
This Order shall dispose-of all the above five
appeals filed by different Assessees on an identical question
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with regard to addition under section 68 of the I.T. Act, 1961,
on account of claim of long term capital gains.
2. I have heard the Learned Representatives of both
the parties and perused the findings of the authorities below
and considered the material available on record. Learned
Representatives of both the parties mainly argued in ITA.No.
5882/Del./2018 and have submitted that the issue is same in
the remaining appeals, therefore, Order in this case may be
followed in other four appeals. In this view of the matter, I
proceed to decide ITA.No.5882/Del./2018 as under.
ITA.No.5882/Del./2018 - Shri Amar Nath Goenka, New Delhi :
3. This appeal by Assessee has been directed against
the Order of the Ld. CIT(A)-7, New Delhi, Dated 08.08.2018,
for the A.Y. 2015-2016, challenging the addition of
Rs.14,61,585/- under section 68 of the I.T. Act, 1961, on
account of long term capital gains.
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4. Briefly, the facts of the case are that the assessee
filed its original return of income declaring income of
Rs.25.35.010/-. The assessee is an individual and declared
income from Salary, House Property and Income from other
sources. The assessee is Employee-Director of M/s. Premier
Polyfilm Ltd. The assessee filed necessary details which have
been examined by the A.O. The A.O. found that the assessee
claimed Rs.23.44.613/- as long term capital gain (LTCG) on
sale of listed shares. Part of the Long Term Capital Gain
(LTCG) has been claimed to have been earned is through sale
of shares of M/s.Esteem Bio Organic Food Processing Ltd.,
(Scrip Code - EBFL Security Id-534927) listed on Bombay
Stock Exchange (BSE). The summary of the share transaction
is as under :
Sale consideration of 1200 shares Rs.14,61,585/-
Less: Cost of acquisition Rs. 60,000/-
LTCG : Rs.14,01,585/-
4.1. The assessee claimed LTCG from sale of Esteem Bio
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Shares as exempt from taxation under section 10(38) of
Income-Tax Act, 1961. The assessee at assessment proceedings
furnished details of mode of acquisition of these shares, bank
A/c statements where sale proceeds are credited, depository
participant statements and stock broker notes to support claim
of exempt LTCG. The A.O. observed from the submissions of
the assessee together with facts and circumstances of case in
general and those surrounding the share transactions of M/s
Esteem Bio Organic Food Processing Ltd ("EBFL") in particular
and noted that the events are not as simple as described in
assessee's submissions. There are several important
circumstantial as well as direct evidences that lead to the
conclusion that the exempt Long-Term Capital Gain claimed by
assessee on sale of shares of EBFL is not genuine but is pre-
arranged collusive transaction in form of accommodation entry
without real substance. The A.O. noted that the assessee has
earned windfall gain within a short span of time that too with
the investment in a relatively unknown company. The financial
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figures of the above company are noted in the Order to show
that net profit on turnover have declined. There is
unreasonable and inexplicable rise in the share prices of the
Company within a short span. The transactions are carried-out
with predetermined understanding, plan. Increase of share
price of the Company did not commensurate with its financial
results and fundamentals. There is unrealistic returns on the
investment. The DIT (Investigation), Kolkata carried-out
countrywide investigation to un-earth organized racket/
syndicate for generating bogus entries of long term capital
gains which is exempt from tax. Statement of several entry
operators were recorded which include statement of Shri
Sanjay Vohra who has admitted in his statement that M/s.
Esteem Bio Organic Food Processing Ltd., is a penny stock
company whose shares have been artificially manipulated to
provide long term capital gains. The assessee was given show
cause notice as to why the same should not be treated as non-
genuine transactions. The assessee explained before A.O. that
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all evidences related to sale and purchase of shares have been
provided and there is no material to hold that transactions are
bogus. All the purchases have been made through banking
channels and sold through stock market platform. Reason of
suspicion is insufficient. The allegation that price is rigged is
baseless and without any evidence. No opportunity to cross-
examine have been given of the statements which are used
against the assessee. The A.O. however, did not accept the
contention of the assessee and by applying the test of human
probability held that long term capital gains claimed by
assessee is not genuine and falls within the ambit of Section 68
of the I.T. Act. Therefore, Section 115BBE of the I.T. Act is
applicable and the same is taxable @ 30%. The A.O.
accordingly made the addition of Rs.14,61,585/-.
5. The assessee challenged the addition before Ld.
CIT(A). The written submissions of the assessee and grounds
of appeals are reproduced in the appellate order in which the
assessee briefly explained that cost of the acquisition of
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Rs.60,000/- have not been reduced. The addition is perverse
and invalid and based on irrelevant reason. The statement of
Shri Sanjay Vohra was not confronted to the assessee and no
right of cross-examination have been given to rebut his
statement. Therefore, such statement cannot be read in
evidence against the assessee. No copy of the Investigation
report of SEBI have been provided to assessee. The transaction
is done on online through recognized Stock Exchange through
Demat account and Security Transaction Tax ("STT") as per
the contract note duly paid. The assessee produced all the
documentary evidences like bank statement, contract notes,
transaction statement of Demat account, copy of share
certificates, financial ledger of the assessee with broker etc., to
prove the transaction as genuine. No specific material have
been brought against the assessee on record to disprove the
claim of assessee. The amount is paid and received through
banking channel. No information of any inquiry made from the
broker have been provided. Oral evidence cannot prevail over
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documentary evidence. M/s. Esteem Bio Organic Food
Processing Ltd., has been very much a going concern
company, an acting Company on MCA website allowed till
recently to trade on recognized stock exchange by the SEBI.
No copy of report of Investigation Wing have been provided.
Assessee has no control over activity of the company in
question whether its price rig etc., The SEBI after detailed
investigation pronounced its order dated 06.09.2017 that
there is no irregularity found in the case of M/s. Esteem Bio
Organic Food Processing Ltd., Therefore, interim order was
revoked. This company still listed with BSE and shares of the
company are being traded regularly. The assessee purchased
6000 shares through public issue and payment for this is
made through banking channel, out of which, part shares
have been sold and remaining are still with the assessee. The
shares were directly transferred to Demat account, copy of
which is also filed. The assessee held shares for more than the
period specified by the Act to claim long term capital gains.
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The assessee has sold the shares through recognized stock
exchange as governed by the SEBI on which STT has been
paid. The contract note issued by the stock exchange/broker
cannot be doubted. The assessee relied upon several decisions
in support of the contention that assessee entered into
genuine transaction. The assessee relied upon Judgment of
Hon'ble Delhi High Court in the case of Pr. CIT-5 vs. Jatin
Investment Pvt. Ltd., in ITA.No.43 & 44 of 2016, Dated
18.01.2017 approving the Order of ITAT, Delhi Bench in the
case of ITO, Ward-4(2), New Delhi vs. Jatin Investment Pvt.
Ltd., New Delhi in ITA.No.4325 & 4326/Del./2009. The Ld.
CIT(A), however, did not accept the contention of assessee and
dismissed the appeal of assessee. The Ld. CIT(A), more or less
on the same reasoning as given by the A.O. noted that there is
strong circumstantial evidence against the assessee and that
transaction is an accommodation entry, therefore, following
the rule of preponderance of probability decided the issue
against the assessee. It is also observed that A.O. is not under
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obligation to allow cross-examination of any person. The
appeal of assessee was accordingly dismissed by the Ld.
CIT(A).
6. Before the Tribunal, the Learned Counsel for the
Assessee reiterated the submissions made before the
authorities below and submitted that that all documentary
evidences were filed before A.O, of which were filed in the
paper book. The documents are, copy of the application for
allotment of shares along with copy of the cheque. Allotment of
shares, copy of the bank pass book, copy of the Demat
account of Oriental Bank of Commerce showing accrued 6000
shares of the aforesaid company, copy of the contract note of
share broker for sale of the shares, copy of the financial ledger
of the share broker showing sale of the shares, copy of the
credit payment with bank statement. Learned Counsel for the
Assessee filed copies of several Orders of the ITAT, Delhi
Bench, Kolkata Bench and Mumbai Bench to show that in
similar circumstances additions have been deleted. Learned
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Counsel for the Assessee also relied upon the Order of ITAT,
Delhi SMC Bench, in the case of Arun Kumar, Delhi & Others
vs. ACIT, Circle-1, Noida in ITA.No.457, 2825 & 2826/ Del./
2018, Dated 05.11.2018 in which the Tribunal followed
several decisions of various Benches of the Tribunal including
the Order of ITAT, Delhi Bench in the case of ITO vs. Jatin
Investment Pvt. Ltd., in ITA.Nos.4325 & 4326/Del./2009,
Dated 27.05.2015 in which similar addition has been deleted,
in which it was held that "on sale of investment, provisions of
Section 68 will not be applicable". He has submitted that the
said decision has been confirmed by the Hon'ble Delhi High
Court in the case of Pr. CIT-5 vs. Jatin Investment Pvt. Ltd.,
2017-TMI-342-Del-HC. He has submitted that the Tribunal
following this decision decided the issue in favour of the
assessee. Learned Counsel for the Assessee also relied upon
the Order of the ITAT, Delhi Bench in the case of Smt. Shikha
Dhawan, Gurgaon vs. ITO, Ward-4(2), Gurgaon in
ITA.No.3035/Del./2018, Dated 27.06.2018 in which the
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Tribunal following its earlier decisions as well as decision of
Hon'ble Punjab & Haryana High Court in the case of PCIT
(Central), Ludhiana vs. Prem Pal Gandhi in ITA.No.95 of 2017,
Dated 18.01.2018, decided similar issue in favour of the
assessee. Copies of the Orders are placed on record. Learned
Counsel for the Assessee, therefore, submitted that the issue
is covered by the aforesaid decisions of the Tribunal.
7. On the other hand, Ld. D.R. relied upon the Orders
of the authorities below.
8. I have considered the rival submissions and
perused the material on record. The ITAT, Delhi Bench in the
case of Smt. Shikha Dhawan, Gurgaon vs. ITO, Ward-4(2),
Gurgaon (supra) in paras 6 to 10 noted the submissions of
both the parties and decided the issue in favour of the
assessee. The findings are reproduced as under :
6. Ld. Counsel for the assessee reiterated the
submissions made before the authorities below and
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submitted that an inquiry conducted in the cases of other
assessees and statements referred to by the AO in the
assessment order have not been confronted to the
assessee. The assessee has not been named by any of
these persons for indulging in taking accommodation
entries. He has, therefore, submitted that such evidence
cannot be read in evidence against the assessee and
relied upon the decision of the Hon'ble Supreme Court in
the case of Kishan Chand Chela Ram 125 ITR 713 (SC).
He has submitted that for claiming exemption u/s 10(38)
of the Act, the assessee shall have to prove twin conditions
i.e. the income arise from the transfer of long term capital
asset and being equity share in a company where the
transfer of sale of such equity share is entered into on or
after the date of which Chapter-VII of the Finance Act,
2004 comes into force and such transaction is chargeable
to security transaction tax under that Chapter. In the case
of the assessee, both twin conditions are satisfied. He has
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filed copy of the shares certificate with transfer form, copy
of debit note issued by Shreeji Broking (P) Ltd., copy of
cash receipt of Shreeji Broking (P) Ltd., copy of ledger
account of Indus Portfolio (P) Ltd., Page | 18 ITA
No.3035/Del/2018 copy of form for evidence for payment
of securities transaction tax on transaction entered in a
recognized stock exchange and copy of the bank statement
of the assessee in the Paper Book. He has further
submitted that on identical facts, ITAT SMC Bench, Delhi
in the case of Meenu Goel vs ITO in ITA
No.6235/Del/2017 for AY 2014-15 vide order dated
19.03.2018 relying upon the decision of Hon'ble Punjab &
Haryana High Court in the case of Pr.CIT vs Prem Pal
Gandhi in ITA No.95-2017 vide order dated 18.01.2018,
allowed the claim of the assessee. The findings of the
Tribunal in para 6 to 8 are reproduced as under:-
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"6. I have heard both the parties and perused the
relevant records available with me, especially the
orders of the revenue authorities and the case law
cited by both the parties. I note that assessee has
earned Long Term Capital Gain amounting to
Rs.18,46,600/- during the financial year 2013-14 and
the same has been claimed exempt under Section
10(38) of Income Tax Act, 1961. The assessee had
purchased of 45,000/- shares of Unisys Software
Holding Industries Ltd amounting Rs. 9,38,600/- at a
premium of Rs. 20.85 per share in physical form. Out
of the aforesaid 45000/- Shares assessee sold of 8000
Shares only i.e. 17.77%. Thus, the major part of the
Shares i.e. 82.33% are still in the hand of the assessee.
In my view the assessee just wanted to enter into the
transaction to earn exempted capital gain, but the
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assessee did not sell all the share 45000 shares instead
of sale of a part i.e. 8000 shares only when that time
was the best price ever. All the transaction were made
through account payee cheque/banking channel and
assessee had purchased share in financial year 2009-
10 and sold the same in the financial year 2013-14
resulting in Long Term Capital Gain. The assessee has
submitted various documentary evidences to prove
the genuineness of the transaction of sale and
purchase of shares which includes a copy of purchase
bill dated 22.02.2010; a copy of share transfer form in
the favour of the assessee; Copy of bank statement
highlighting the payment made against the share
purchased; Transaction statement of the stock broker
i.e. Pace Stock Broking Services (P) Ltd., account; copy
of bank statement in which sale proceed from the sale
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of shares received; copy of calculation of long term
capital gain, which was not faulted by the AO.
However, the lower authorities have not considered
the aforesaid documents and rejected all the claims
made by the assessee by relying on the report of the
Investigation Wing and thereby made the addition,
which is not sustainable in the eyes of law. I further
find that the AO has given detailed explanation in the
order regarding the modus operandi of bogus LTCG
scheme but failed to substantiate how the assessee fell
in the purview of the same without bringing any
material on record and proving that the assesssee was
directly involved in the so called bogus transaction. I
further note that the addition in dispute made by the
AO and upheld by the Ld. CIT(A) u/s 68 as
unexplained credit instead of long term capital gain
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as claimed by the assessee, however, the source
identity and genuineness of the transaction having
been established by documentary evidences and there
is no case for making addition u/s 68 of the Act,
hence, the same deserve to be deleted. I note that in
most of the case laws of the Hon'ble High Courts
referred by the Ld. DR the reason on the basis of
addition was confirmed was that the assessee had not
tendered cogent evidence with regard to share
transaction, however, in the present the case assessee
has submitted all the documents / evidences,
therefore, the case laws relied by the Ld. DR are based
on distinguished facts and circumstances, hence, the
said case laws are not applicable in the present case.
However, in my considered opinion, the issue in
dispute is squarely covered by the various decisions
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of the ITAT and the Hon'ble High Courts including
the recent decision dated 18.1.2018 of the Hon'ble
High Court i.e. Hon'ble High Court of Punjab &
Haryana in the case of PCIT (Central), Ludhiana vs.
Prem Pal Gandhi passed in ITA No. 95 of 2017.
Decision dated 18.1.2018 of the Hon'ble High
Court of Punjab & Haryana in the case of
PCIT (Central), Ludhiana vs. Prem Pal Gandhi
passed in ITA No. 95 of 2017 wherein it has
been held as under:-
"2. The following questions of law have been
raised:-
(i) Whether on the facts and in the
circumstances of the case, the Hon'ble
Income Tax Appellate Tribunal has erred in
upholding the order of the CIT(A) deleting
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the addition of Rs. 4,11,77,474/- made by
the AO on account of sham share
transactions ignoring an important aspect
that the transaction of shares showing their
purchase price at Rs. 11,00,000/- and sale
consideration at Rs. 4,23,45,295/- within a
period of less than two years / purchases of
shares made in cash not cheque that too
before shares got dematerialized / worth of
the company at the time of purchase / sale of
shares not proved- All suggest non-
genuineness of the said transaction?
(ii) Whether on the facts and in the
circumstances of the case, the Hon'ble
Income Tax Appellate Tribunal has erred in
law in upholding the order of the CIT(A)
deleting the addition of Rs. 4,11,77,474/-
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made by the AO on account of sham share
transactions, whereas the CIT(A) himself had
held that the assessee had not been able to
substantiate the source of investment of
Rs.11,00,000/- in the said shares purchased
during the financial year 2005-06 and the AO
was directed to reopen the case of the
assessee for the assessment year 2006-07
on this issue?
iii) Whether the Hon'ble ITAT has erred in
ignoring and important aspect that in such
cases of sham transactions of shares showing
abnormal hike in their value, where the facts
themselves speak loud and clear, the AO is
justified to even draw an inference from the
attendant circumstances ?
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(iv) Whether on the facts and in the
circumstances of the case, the Hon'ble
Income Tax Appellate Tribunal has erred in
law in upholding the order of the CIT(A)
deleting the addition of Rs.12,59,000/- made
by the AO on the basis of seized document
on the grounds that the AO has not pointed
out as to how the figures of Rs. 12.59 lacs
has been worked out ignoring the fact that
the assessee himself in his reply to the AO
had tried to explain the source of the receipts
of Rs. 12,59,000/- instead of challenging the
working out of the said figure by the A.O. ?
3. The first three questions of law raised in
this appeal are covered against the appellant by an
order and judgment of a Division Bench of this Court
dated 16.02.2017 in ITA-18-2017 titled as The Pr.
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Commissioner of Income Tax (Central), Ludhiana vs.
Sh. Hitesh Gandhi, Bhatti Colony, Chandigarh Road,
Nawanshahar.
4. The issue in short is this : The assessee
purchased shares of a company during the
assessment year 2006-07 at Rs. 11/- and sold the same
in the assessment year 2008-09 at Rs. 400/- per share.
In the above case, namely, ITA 18- 2017 also the
assessee had purchased and sold the shares in the
same assessment years. The AO in both the cases
added the appreciation to the assessees' income on
the suspicion that these were fictitious transactions
and that the appreciation actually represented the
assessee's income from undisclosed sources. In ITA-
18-2017 also the CIT(Appeals) and the Tribunal held
that the AO had not produced any evidence
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whatsoever in support of the suspicion. On the other
hand, although the appreciation is very high, the
shares were traded on the National Stock Exchange
and the payments and receipts were routed through
the bank. There was no evidence to indicate for
instance that this was a closely held company and
that the trading on the National Stock Exchange was
manipulated in any manner.
5. In these circumstances, following the judgment
in ITA- 18-2017, it must be held that there is no
substantial question of law in the present appeal.
6. Question (iv) has been dealt with in detail by the
CIT(A) and the Tribunal. Firstly, the documents on
which the AO relied upon the appeal were not put to
the Assessee during the assessment proceedings. The
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CIT(A) nevertheless considered them in detail and
found that there was no co- relation between the
amounts sought to be added and the entries in those
documents. This was on an appreciation of facts.
There is nothing to indicate that the same was
perverse or irrational. Accordingly, no question of
law arises.
7. In the circumstances, the appeal is dismissed."
7. Keeping in view of the facts and circumstances of the
case as explained above and respectfully following the
precedent, as aforesaid, the addition amounting
Rs.18,46,600/- made by the AO and confirmed by the Ld.
CIT(A) is hereby deleted and ground raised by the assessee
is allowed.
8. In the result, the appeal of the assessee is allowed."
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6.1. He has, therefore, submitted that the issue is covered
in favour of the assessee by above decision. The assessee
entered into genuine transaction, therefore, no addition
u/s 68 of the Act be made against the assessee.
7. On the other hand, Ld. Sr. DR relied upon the orders
of the authorities below.
8. I have heard the rival submissions and perused the
material available on record. The assessee placed
sufficient documentary evidences before the AO which are
copy of the shares certificates with transfer form, copy of
debit note issued by Shreeji Broking (P) Ltd., copy of cash
receipt of Shreeji Broking (P) Ltd., copy of the account
statement of the assessee in the books of the broker, copy
of ledger account of Indus Portfolio (P) Ltd., copy of
evidence for payment of securities transaction tax and
copy of the bank statement of the assessee to show that
the assessee had entered into genuine transaction of
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purchase of share which were later on sold through the
broker on recognized stock exchange after payment of STT.
The claim of the assessee for sale of shares has been
supported by the documentary evidences which have not
been rebutted by the authorities below. Whatever inquiry
was conducted in the cases of other parties and statement
recorded of several persons namely Sh. Anil Khemka, Sh.
Sanjay Vohra and Sh. Bidyoot Sarkar as referred in the
assessment order and the report of the Investigation Wing
were not confronted to the assessee and above statements
were also not subject to cross-examination on behalf of the
assessee. Therefore, such evidences cannot be read in
evidence against the assessee. The order of the SEBI was
also not confronted to the assessee. AO did not mention
any such fact in assessment order. More so in those
reports and statements, the name of the assessee has not
been referred to. Ld. Counsel for the assessee, therefore,
rightly contended that the twin conditions of section 10(38)
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Shri Amar Nath Goenka, Delhi & Others.
.
of the Act have been satisfied in the case of the assessee.
The assessee has been able to prove that she has entered
into the genuine transaction of purchase and sale of
shares and the sale consideration is received from broker
through banking channel. The brokers have not denied the
transaction with the assessee. The assessee rooted the
transaction of sale of shares through recognized stock
exchange after making payment of STT. In similar
circumstances, ITAT SMC Bench, Delhi in the case of
Meenu Goel vs ITO (supra) following the decision of
Jurisdictional Hon'ble P&H High Court in the case of Pr.CIT
vs Prem Pal Gandhi (supra) deleted the similar addition.
Therefore, the issue is covered in favour of the assessee by
the order of ITAT, Delhi Bench in the case of Meenu Goel
vs ITO (supra) followed by judgment of Jurisdictional P&H
High Court which is binding. There is no other material
available on record to rebut the claim of the assessee of
exemption claimed u/s 10(38) of the Act.
30
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
9. Keeping in view of the above discussion and the
material on record, in the light of the order of the Tribunal
in the case of Meenu Goel vs ITO (supra), I set aside the
orders of the authorities below and delete the addition of
Rs.19,51,357/-. The appeal of the assessee is,
accordingly, allowed.
10. In the result, the appeal of the assessee is allowed."
8.1. The ITAT, Delhi SMC Bench, in the case of Arun
Kumar, Delhi vs. ACIT, Circle-1, Noida (supra) following
several decisions of various Benches of the Tribunal and
following the decision of ITAT, Delhi Bench in the case of ITO,
Ward-4(2), New Delhi vs. Jatin Investment Pvt. Ltd., New Delhi
and Judgment of Hon'ble Delhi High Court in the same case
(supra) allowed the appeal of assessee on identical facts. The
Hon'ble Bombay High Court in the case of CIT-13 vs. Shyam
R. Pawar (2015) 229 Taxman 256 (Bom.) held as under :
31
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
"Where DMAT account and contract note showed details
of share transaction, and Assessing Officer had not
proved said transaction as bogus, capital gain earned on
said transaction could not be treated as unaccounted
income under section 68."
8.2. ITAT, Hyderabad Bench in the case of ITO, Ward-2,
Nizamabd vs. Smt. Aarati Mittal (2014) 149 ITD 728 (Hyd.)
(Trib.) held as under :
"Where assessee having purchased shares in physical
form, converted them in D-Mat form and thereupon sale
of those shares was carried out through recognized
stock exchange after paying securities transaction tax,
said transactions were to be regarded as genuine in
nature and, therefore, assessee's claim for exemption
under section 10(38) was to be allowed."
8.3. ITAT, Delhi Bench in the case of ITO, Ward-4(2),
New Delhi vs. Jatin Investment Pvt. Ltd., New Delhi in
32
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
ITA.No.4325 & 4326/Del./2009 vide Order Dated 27.05.2015
in paras 12 to 14 held as under :
"12. We have considered the submissions of both
the parties and gone through the material available on the
record. In the present case, it is noticed that the assessee
purchased the shares in earlier years which were shown
as investment in the books of accounts and reflected in the
"Asset Side" of the "Balance Sheet", out of those
investments (copy which is placed at page no. 23 and 24
of the assessee's paper book), the assessee sold certain
investments and accounted for the profit / loss and offered
the same for taxation. In the present case, the amount in
question was neither a loan or the deposit , it was also not
on account of share application money, the said amount
was on account of sale of investment therefore the
provisions of Section 68 of the Act were not applicable and
the AO was not justified in making the addition. In our
33
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
opinion, the Ld. CIT(A) rightly deleted the addition made
by the AO.
13. On a similar issue the Hon'ble Jurisdictional
High Court in the case of CIT vs. Vishal Holding and
Capital Pvt. Ltd. vide order dated 9th August, 2010 upheld
the order dated 30.7.2009 of the ITAT in ITA no.
1788/Del/2007 for the assessment year 2000-2001
wherein the order of the Ld. CIT(A) making the similar
deletion was upheld by observing in para 6 as under :-
"We are of the view that the assessee had
produced copies of accounts, bills and contract
notes issued by M/s. MKM Finsec Pvt. Ltd., and
had been maintaining books of account as per
Companies Act. The assessee had also
demonstrated the purchase and sale of shares
over a period of time as seen from the balance
sheet's. In our opinion, the Assessing Officer has
34
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
simply acted on the information received from
the Investigation Wing without verifying the
details furnished by the assessee. The assessee
has also produced best possible evidence to
support its claim. Consequently the addition
made by the Assessing Officer cannot be
sustained."
14. We, therefore, considering the totality of the
facts do not see any valid ground to interfere with the
findings of the Ld. CIT(A). Accordingly, we do not see any
merit in this appeal of the department. In ITA no.
4326/Del./2009 of the assessment year 2004- 05
identical issue having similar facts is involved, the only
difference is in the amount of addition which was deleted
by the Ld. CIT(A). Therefore, our findings given in former
part of this order, in respect of assessment year 2003-04,
35
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
shall apply mutatis mutandis for assessment year 2004-
05.
In the result, appeals of the department are
dismissed."
8.4. The Order is confirmed by the Hon'ble Delhi High
Court by dismissing the Departmental Appeal in case of PCIT
vs. Jatin Investment Pvt. Ltd., in ITA.No.43 & 44 of 2016
Dated 18.01.2017 and decided the similar issue in favour of
the assessee.
8.5. Considering the material on record in the light of
above decisions it is clear that assessee placed sufficient
documentary evidences before A.O. to prove genuineness of
the transaction. The assessee purchased shares through
banking channel and actually got the shares transferred in his
name. Purchase was made through cheque which is supported
by bank statement. The transactions of sale have been made
through Demat account. The contract note along with other
36
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
details were produced to show that purchase and sale of the
shares have been made through banking channel through
recognized Stock Exchange through Demat account on which
Security Transaction Tax have also been paid. The A.O. did
not make any enquiry on the documentary evidences filed by
the assessee. No material have been brought on record against
the assessee to disprove the claim of assessee. It is not the
case of the Revenue that amount received on sale of shares is
more than what is declared by the assessee. The assessee
pleaded that the Interim Order of the SEBI have been diluted
by passing final order in which no adverse view have been
taken against the aforesaid company. Thus, the claim of
assessee of purchase and sale of shares have been supported
by documentary evidences. The statement of Shri Sanjay
Vohra was recorded by the Investigation Wing, Kolkata, but,
the same was not confronted to the assessee and his
statement was also not subjected to cross-examination on
behalf of the assessee. Therefore, his statement cannot be read
37
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
in evidence against the assessee. I rely on the decision of
Hon'ble Supreme Court in the case of Kishan Chand Chela
Ram 125 ITR 713 (SC). The A.O. did not mention any fact as to
how the claim of assessee was sham or bogus. The assessee
thus, satisfied the conditions of Section 10(38) of the I.T. Act.
The broker through whom transactions have been carried out
have not denied the transaction conducted on behalf of the
assessee. It, therefore, appears that the addition is merely
made on presumption and assumptions of certain facts which
are not part of the record. The issue is, therefore, covered in
favour of the assessee by several Orders of the Tribunal
including the case of Smt. Shikha Dhawan, Gurgaon vs. ITO,
Ward-4(2), Gurgaon (supra). There is no other material
available on record to rebut the claim of assessee of exemption
claimed under section 10(38) of the I.T. Act. Keeping in view of
the above discussion and material on record in the light of
above decisions of the Tribunal and Hon'ble Delhi High Court,
I set aside the Orders of the authorities below and delete the
38
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
addition of Rs.14,61,585/-. The appeal of Assessee is
accordingly allowed.
9. In the result, ITA.No.5882/Del./2018 of the
Assessee is allowed.
ITA.No.5883/Del./2018 Shri Amarnath Goenka, Delhi :
10. This appeal by Assessee has been directed against
the Order of the Ld. CIT(A)-7, New Delhi, Dated 08.08.2018,
for the A.Y. 2015-2016 challenging the addition of
Rs.7,00,793/- under section 68 of the I.T. Act on account of
long term capital gains. The facts in this care are similar as
have been considered in the case of Shri Amar Nath Goenka in
ITA.No.5882/Del./2018 hereinabove.
ITA.No.6457/Del./2018 Smt. Preeti Yadav, New Delhi :
ITA.No.6458/Del./2018 Smt. Sneh Yadav, New Delhi. :
ITA.No.6459/Del./2018 Smt. Pooja Yadav, New Delhi :
11. These appeals by the above Assessees are directed
against the different Orders of the Ld. CIT(A)-11, New Delhi,
39
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
Dated 10.08.2018, for the A.Y. 2014-2015 challenging the
additions of Rs.33,79,407/-, Rs.34,70,815/- and
Rs.34,10,399/- respectively, under section 68 of the I.T. Act,
1961, on account of long term capital gains.
12. Learned Representatives of both the parties
submitted that the issue is same as have been considered in
the case of Shri Amar Nath Goenka, Delhi in ITA.No.5882/
Del./2018 (supra) except that in these cases the sale is
shares of M/s. KAPPAC Pharma Limited, through broker.
Learned Representatives of both the parties submitted that the
issue being the sale, therefore, Order in the case of Shri Amar
Nath Goenka, Delhi (supra) may be followed.
13. We find that the issue in the remaining four appeals
is same as has been considered in the case of Shri Amar Nath
Goenka, Delhi (supra). Therefore, following the reasons for
decision in the case of Shri Amar Nath Goenka, Delhi (supra),
we set aside the Orders of the authorities below and delete the
40
ITA.No.5882, 5883, 6457 to 6459/Del./2018
Shri Amar Nath Goenka, Delhi & Others.
.
entire additions. Accordingly, appeals of the Assessees are
allowed.
14. In the result, ITA.No.5883, 6457, 6458 and
6459/Del./2018 of the Assessees are allowed.
15. To sum-up, all the appeals of the Assessees are
allowed.
Order pronounced in the open Court.
Sd/-
(BHAVNESH SAINI)
Delhi, Dated 12th December, 2018 JUDICIAL MEMBER
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT `SMC' Bench, Delhi
6. Guard File.
// By Order //
Assistant Registrar : ITAT Delhi Benches :
Delhi.
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