Smt. Radhika Garg Vs ITO (ITAT Delhi)
Conclusion: Where the documentary evidences furnished by assessee clearly supported the claim of exemption under section 10(38) on account of sale of securities that assessee entered into genuine transaction of sale of shares through recognized exchange upon which STT had also been paid and there was no other evidence available on record against assessee so as to make the impugned addition under section 68, accordingly, addition was to be deleted.
Held: During the year, assessee had claimed exemption under section 10(38) on account of sale of securities. The case was selected for scrutiny assessment on the basis of information uploaded by Investigation Wing that “Suspicious Transaction relating to Long Term Capital Gain on sale of shares.” Assessee was found one of the beneficiary who had taken accommodation entry. AO recorded statement of assessee under section 131, in which also she had confirmed purchase and sale of the shares in question to earn capital gain. The statement of the broker S was confronted to assessee. However, in her statement she denied having any knowledge about the same. AO did not accept the contention of assessee and held that it was a ‘sham transaction’ which was aimed only to bring unaccounted money in the guise of exempted long term capital gains accordingly, made the addition under section 69. It was held assessee filed copy of the computation, bank statements and details of long term capital gains. The documentary evidences furnished by assessee clearly supported the claim of assessee that assessee entered into genuine transaction of sale of shares through recognized exchange upon which STT had also been paid. AO relied upon statement of Broker to prove that he had provided accommodation entries of M/s. L, in question. However, his statement was not subjected to cross-examination on behalf of assessee. Therefore, such statement could not be read in evidence against the assessee. There was no other evidence available on record against assessee so as to make the impugned addition. Accordingly, addition was to be deleted.
FULL TEXT OF THE ITAT JUDGEMENT
ITA.No.4738/Del./2018 of the Assessee has been directed against the Order of the Ld. CIT(A), Faridabad, Dated 28.05.2018, for the A.Y. 2015-2016, challenging the addition of Rs.26,40,725/- under section 69 of the I.T. Act, on account of alleged bogus sale of shares.
2. No.2429/Del./2018 of the Assessee has been directed against the Order of the Ld. CIT(A)- 1, Gurgaon, Dated 22.01.2018, for the A.Y. 2014-2015, challenging the addition of Rs.28, 14,180/- under section 68 of the I.T. Act, in not allowing exemption under section 10(38) of the I.T. Act, 1961.
3. This Order shall dispose-of the above appeals filed by different Assessees on an identical question with regard to addition under sections 68/69 of the I.T. Act, 1961 on account of claim of long term capital gains. Since, common issue is involved in these appeals, the appeals are heard on same issue and are being disposed of by this single consolidated order. First, I will take up the appeal in No.4837/Del./2018.
4. Briefly, the facts of the case are that assessee filed return of income of Rs.6,66, 100/-. During the year assessee’s source of income is salary from M/s. Prayas Tracon Ltd., and M/s. Satymaya Trading Company. During the year, the assessee has claimed exemption of Rs.26,40,725/- under section 10(38) of the Income Tax Act, 1961, on account of sale of securities. The case was selected for scrutiny assessment on the basis of information uploaded by the Investigation Wing that “Suspicious Transaction relating to Long Term Capital Gain on sale of shares.” The A.O. discussed about the term ‘Penny Stock’ which transactions are of those shares which are purchased or sold in abysmally low quantity in stock exchange. It was noted that DIT, Investigation, Kolkata carried-out countrywide Investigation to un-earth the organized racket of generating bogus entries of long term capital gains which is exempt from tax. Certain statements have also been recorded. The assessee was found one of the beneficiary who has taken entry of Rs.26,40,725/- in assessment year under appeal. The assessee submitted written submissions along with copy of computation, bank statements and furnished details of long term capital gains before A.O. The assessee has purchased and sold shares of M/s. Lifeline Durgs and Pharma Ltd. The assessee purchased 10000 shares on 19.11.2013 for Rs. 10,000/- which were purchased directly off-line. All the shares were sold through National Stock Exchange on 09.12.2014 and 17.12.2014 through broker M/s. SMC Global Securities Ltd. The A.O. referred to statement of Shri Sanjay Vora, Kolkata who has confirmed in his statement on oath that he had provided accommodation entries of long term capital gains including M/s. Lifeline Drug and Pharma Ltd. Explanation of assessee was called for as to why the addition of the same amount may not be made on account of income from undisclosed sources. It is noted in the show cause notice that even SEBI has directed to BSE to suspend trading in securities of the aforesaid company. The assessee’s reply is reproduced in the assessment order in which the assessee explained that she has purchased shares of the aforesaid company from her source which were sold through broker M/s. SMC Global Services Ltd. Sale consideration has received in the bank account of assessee on which brokerage and STT have been paid. The shares have been sold electronically on recognized Stock Exchange i.e., Bombay Stock Exchange in accordance with SEBI guidelines. All the details were submitted and shares were sold as per Rules on which tax have been paid. The amount of sale consideration have been received through banking channel which was received in the account of assessee. The A.O. recorded statement of assessee under section 131 of the I.T. Act, in which also she has confirmed purchase and sale of the shares in question to earn capital gain. The statement of the broker Shri Sanjay Vora was confronted to assessee. However, in her statement she denied having any knowledge about the same. The A.O. did not accept the contention of assessee and referred to the rule of preponderance of probabilities and noted the financials of the aforesaid company in the assessment order and held that it was a ‘sham transaction’ which was aimed only to bring unaccounted money in the guise of exempted long term capital gains. The A.O. accordingly made the addition of the aforesaid amount under section 69 of the I.T. Act.
5. The assessee challenged the addition before the CIT(A) and reiterated the submissions made before the A.O. The Ld. CIT(A) however confirmed the addition and dismissed the appeal of assessee.
6. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that the statement of Shri Sanjay Vora, Broker, was not subjected to cross-examination on behalf of the assessee, therefore, it cannot be read in evidence against the assessee. He has filed two letters from website of BSE scrip Code 506113 of the company in question to show it is still continuing and doing the transactions on the Stock He has relied upon the following Orders of the Tribunal and submitted that the issue is covered in favour of the assessee by these decisions.
1. Order of ITAT, Delhi SMC-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.
2. Order of ITAT, Delhi SMC-Bench in the case of Arun Kumar, Delhi vs. ACIT, Circle-1, Noida & Others in ITA.No.457/Del./2018 etc., dated 05.11.2018.
3. Anubhav Jain vs. ITO (2018) 54 CCH 273 (Del.) (Tribu.)
7. On the other hand, Ld. D.R. relied upon the Orders of the authorities below and relied upon the following decisions :
