Mukesh Bhoormal Jain Vs ITO (ITAT Mumbai)
Assessing Officer observed that the scrip in which assessee traded was proved to be insignificant, bogus, without business fundamentals and required the assessee to prove the genuineness of the same. In reply assessee vide letter dated 11.12.2017 submitted that the long term capital gain generated was genuine stating the details of section 10(38) of the Act. Not convinced with the submissions of the assessee, the Assessing Officer added the sale proceeds of ₹.5,49,04,773/- u/s 68 of the Act, to the taxable income of the assessee. Assessment u/s 143(3) of the Act was completed on 28.12.2017 determining income at ₹.5,65,51,920/- by making addition of ₹.5,49,04,773/- u/s. 68 of the Act and ₹.16,47,143/-u/s. 69 of the Act towards the commission paid to entry provider.
Respectfully following identical facts in the case of Shri Amit Mafatlal Shah ACIT in ITA.No.5793/Mum/2019 dated 20.01.2020, we direct the Assessing Officer to delete the addition made u/s.68 and u/s. 69 of the Act.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals)–30, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 18.07.2019 for the A.Y.2015-16.
2. Brief facts of the case are that, the assessee is an individual filed his return of income on 24.09.2015 for the A.Y. 2015-16 declaring total income of ₹. Nil/-. The return was processed u/s 143(1) of the Income-tax Act, 1961 (in short “Act”). The case was selected for scrutiny under CASS and notice u/s. 143(2) and 142(1) of the Act. Assessing Officer observed that assessee purchased 20000 Equity Shares of each of Premiere Capital Services Ltd in an off market transaction through preferential allotment (@ 75 % per share) with one-year lock in period on 04.09.2012 and lock in release on 04.09.2013 and split from ₹.10.00 to ₹.1.00 paid up on 21.03.2014 for a consideration of ₹.15,00,000/-. The payment for the purchase was made by cheque. Quantity of shares increased from 20000 shares to 2,00,000 shares on 21.03.2014 due to stock split. Demat of the said purchase was credited for 80,800 shares on 23.07.2014. The price per share was ₹75/ inclusive of premium of ₹.65/-The assessee sold 2,00,000 Equity shares of Premiere Capital Services Ltd from 23.05.2014 to 25.11.2014 for a gross consideration of ₹.5,49,04,773/- (@ ₹.211.00 to 273.60 per share) on BSE and consideration was received by cheque.
3. Assessing Officer observed that the scrip in which assessee traded was proved to be insignificant, bogus, without business fundamentals and required the assessee to prove the genuineness of the same. In reply assessee vide letter dated 11.12.2017 submitted that the long term capital gain generated was genuine stating the details of section 10(38) of the Act. Not convinced with the submissions of the assessee, the Assessing Officer added the sale proceeds of ₹.5,49,04,773/- u/s 68 of the Act, to the taxable income of the assessee. Assessment u/s 143(3) of the Act was completed on 28.12.2017 determining income at ₹.5,65,51,920/- by making addition of ₹.5,49,04,773/- u/s. 68 of the Act and ₹.16,47,143/-u/s. 69 of the Act towards the commission paid to entry provider. Aggrieved assessee preferred appeal before the Ld.CIT(A) and Ld.CIT(A) sustained the addition made by the Assessing Officer. Aggrieved assessee preferred appeal before us raising following grounds in its appeal: –
“(1) The learned Commissioner of Income (Appeal) erred in treating addition under section 68 of Rs 5,49,04,773/- on sale of Quoted shares of Premiere Capital Services Limited by relying on various third party documents and statement of third parties.
(2) The learned Commissioner of Income (Appeal) Tax erred in notional addition under section 69C of Rs.16,47,143/- being purported cash commission paid by assesse for taking accommodation entry under the garb of LTCG on sale of shares of Premiere Capital Services Limited.”.
4. At the time of hearing, Ld. AR of the assessee submitted that facts in this case are exactly identical to the case of Shri Amit Mafatlal Shah in ITA.No. 5793/Mum/2019 dated 20.04.2020 who is the cousin of the assessee. In the case of Shri Amit Mafatlal Shah the ITAT has passed favorable order and Ld. AR filed the copy of the order and also he filed a comparative chart on facts of the both cases and filed the list of case laws in support of the assessee’s case which is reproduced below for the sake of clarity: –
