Income Tax Appellate Tribunal - Kolkata
Sanjay Kumar Agarwal (Huf), Howrah vs Ito, Ward - 48(4) , Kolkata on 7 August, 2019
आयकर अपील य अधीकरण, यायपीठ - "SMC" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH: KOLKATA
(सम ) ी ऐ. ट . वक , यायीक सद य)
[Before Shri A. T. Varkey, JM]
I.T.A. Nos. 2378/Kol/2018
Assessment Years: 2015-16
Sanjay Kumar Agarwal (HUF) Vs. Income-tax Officer
Ritz Court, Flat No. 317, 3rd Floor, Ward-48(4),
Sapuipara(East), Bally, Kolkata
Howrah-711227
(PAN: AASHS5458J)
Appellant Respondent
For the Appellant Shri Sunil Surana, FCA
For the Respondent Shri Sankar Halder, JCIT, Sr. DR
Date of Hearing 02.07.2019
Date of Pronouncement 07.08.2019
ORDER
Per Shri A.T.Varkey, JM
This is an appeal preferred by the assessee against the Order of the CIT(A)-14, Kolkata dated 05.10.2018 for assessment year 2015-16.
2. The main grievance of the assessee is against the action of Ld. CIT(A) in confirming the addition of Rs. 15,95,720/- claimed by the assessee as Long Term Capital Gain (hereinafter 'LTCG') on sale of shares of M/s. Sulabh Engineering and Services Ltd. (hereinafter 'M/s. SESL') under Section 68 of the Income Tax Act, 1961 (hereinafter 'the Act').
3. Brief facts of the case as noted by the AO is that he got information from the Investigation Wing that the assessee had indulged in bogus LTCG from the transaction of purchase and sale of shares of M/s. SESL. So he asked the assessee to furnish the details for which he has asked twenty queries which have been reproduced at page 2 of the assessment Order. The AO acknowledges that the Kartha of the assessee (HUF) appeared before him and filed the documents from which it transpired that the assessee had purchased 800 shares of M/s. SESL at the rate of Rs. 42.67 for a total amount of Rs. 3,41,338/-. This purchase 2 ITA No. 2378/Kol/2018 Sanjay Kumar Agarwal (HUF), AY: 2015-16 was made through M/s. JM Financial Services Pvt. Ltd. (Broker BSE and NSE, SEBI registered no. INB011054831) and sold also the same shares through the same broker which belonged to Kolkata. According to the AO, the assessee had explained to him that the purchase of this share was on the basis of the market information and that though the shares were initially received in paper format, once the company got the certificate for dematerialization of the shares, the shares have been dematerialized. Thereafter the AO notes that assessee purchased the shares on 05.02.2013 at the rate of 42.67 per share for a total payment of Rs. 3,41,340/- in an off market transaction. Later, the assessee sold the shares on 18.06.2014, 4000 shares at Rs. 246.05 per share and received Rs. 4,36,646/- and another lot of 4000 shares on 22.08.2014 at the rate of Rs. 240.48 per share thereby receiving total amount of Rs. 7,91,241/-. Thereafter the AO notes that the assessee having purchased the shares at the rate of 42.67 per share in January, 2013 had sold the same at the rate of 246.05 per share in June, 2014 meaning thereby that the assessee got 203 times of his purchase value within a very short period of time which is unusual and unbelievable. Thereafter, the AO reproduced charts showing the graphic description about the price rise of this share and thereafter, he reproduces the financials of the company and was of the opinion that the astronomical increase in price after January, 2013 is beyond the human probabilities and is a colourable device to convert the unaccounted money into tax exempt income. Thereafter the AO describes the general modus operandi adopted by unscrupulous brokers and certain penny stock companies and thereafter, he finds fault with the assessee purchasing shares in an off market transaction which according to the AO was a transaction carried out in a pre-planned manner to launder the black money and taking note of certain doubts he expressed in respect to the transactions in question was of the opinion that the assessee's claim of LTCG is not real; and he held it as bogus and by applying the test of human probabilities he treated the entire receipt of Rs. 15,95,713/- as a fabricated transaction and the same was treated as bogus and added under Section 68 of the Act.
4. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) without any success. Aggrieved, the assessee is before me. I have heard both the parties and perused the records. It was brought to my notice by the Ld. AR that this Tribunal was faced with a 3 ITA No. 2378/Kol/2018 Sanjay Kumar Agarwal (HUF), AY: 2015-16 same/similar issue wherein an assessee had claimed LTCG on sale of shares of M/s. Sulabh Engineering Services Ltd. and the Tribunal was pleased to allow the claim of the assessee in the case of Smt. Suman Kothari vs. ITO in ITA No. 2467/Kol/2017 for AY 2014-15 dated 10.05.2019. I note that the assessee had purchased 800 shares of M/s. SESL on 04.01.2013 for a total consideration of Rs. 3,41,294/- after permitting STT through M/s. JM Financial Services Pvt. Ltd. which was a member of the BSE and NSE and also a SEBI registered broker. The contract note is found placed at page no. 1 of the Paper Book (hereinafter 'PB'). The bank statement evidencing payment made for purchase of shares is noted from the page no. 2 (back side of PB) wherein it is noted that the payment has happened through banking channel on 10.01.23013. The DEMAT statement showing that the shares of M/s. SESL is found placed at page 3 (PB back side). The DEMAT statement showing supply of shares from 800 to 8000 shares as on 06.02.2013 is also seen placed at page 3 (PB back side). I also note the sale of 4000 of M/s. SESL on 18.06.2014 for a total amount of Rs. 9,84,198.27/- through the same broker and the contract note evidencing the same is found placed at page 5 of the PB. Another lot of 4000 shares were sold on 22.08.2014 for a total amount of Rs. 9,61,910.78/- and the contract note evidencing sale is found placed at page 4 of the PB. I also note from the bank statement placed at page 8 of the PB that both sale consideration has been received through banking channel (on 23.06.2014 an amount or Rs. 9,84,198.27/- and on 01.09.2014 Rs. 9,61,910.78/-). Page 10 of the PB shows DEMAT statement reflecting sales of shares on 18.06.2014, 4000 numbers of shares and on 22.08.2014 the rest of the 4000 shares. I also note that assessee has furnished all the aforesaid documents before the AO vide letter dated 08.09.2017 and answered to all his twenty queries (page no. 12 and 13 of PB). Thus, I note that the assessee has discharged its onus about the veracity of the transaction and the claim made on the sale consideration of shares of M/s. SESL as claimed under Section 10(38) of the Act. However, the AO being influenced by the investigation report of the Investigation Wing of the Department has taken adverse view against the assessee without any direct evidence / material to suggest that the entire claim of assessee was bogus. In such a scenario I note that a similar issue arose in the case of Smt. Suman Kothari vs. ITO (supra) wherein the Tribunal allowed the claim of the assessee of sale of shares of M/s. SESL by holding as under:
4 ITA No. 2378/Kol/2018Sanjay Kumar Agarwal (HUF), AY: 2015-16 "7. We have heard both the parties and perused the material available on record. We note that the assessee has submitted before us the statement showing purchases and sale of long term capital gain on sale of equity shares (PB-1). The assessee submitted allotment advice for 75,000 shares of M/s Sulabh Engineers and Services Ltd. (PB-2). The assessee submitted the bank detail for payment (vide PB-3 to 5). The assessee submitted before us NSDL statement showing preferential allotment of 75000 shares of M/s Sulabh Engineering and Services Ltd. We note that the assessee also submitted extract of resolution passed and screenshot of money control showing splitting of face value from Rs.10 to Rs. 1 of M/s Sulabh Engineering and Services Ltd. (PB-11 to
13). The assessee submitted the NSDL statement showing allotment of 7,50,000 shares of M/s Sulabh Engineers and Services Ltd. at fair value of Rs. 1 (PB-14 to 17). The balance sheet and profit & loss account along with investment schedule showing 7,50,000 shares of M/s Sulabh Engineers and Services Ltd. for assessment year 2013-14 (PB-18 to 23) were also submitted. The assessee also submitted the sale bill along with contract note from broker for sale of 1,25,000 shares of M/s Sulabh Engineers and Services Ltd. (PB-23 to 46). The broker's statement showing payment made for the sale has also been submitted by the assessee,(vide PB-47 to 59). The bank statement reflecting receipt of sale consideration for sale of 1,25,000 shares of M/s Sulabh Engineers and services ltd is placed in paper book vide,(PB-60 to 63). The Profit & loss account and computation of income for assessment year 2014-15 (PB-64 to 69) were also placed in the paper book. With help of these plethora documents and evidences, the ld Counsel claimed that long term capital gain on sale of equity shares of Sulabh Engineering and Services Ltd. of Rs.
1,12,13,010/-during the current financial year, is genuine."
5. Respectfully following the Co-ordinate Bench decision and taking note of the documents filed which was discussed in detail, I am inclined to allow the claim of the assessee and direct deletion of the addition of Rs. 15,95,720/-.
6. In the result, the appeal of assessee is allowed.
Order is pronounced in the open court on 7th August, 2019.
Sd/-
(A. T. Varkey)
Judicial Member
Dated: 7th August, 2019
Bidhan (P.S.)
5
ITA No. 2378/Kol/2018
Sanjay Kumar Agarwal (HUF), AY: 2015-16
Copy of the order forwarded to:
1 Appellant - Sanjay Kumar Agarwal (HUF), Ritz Court, Flat No. 317, 3rd Floor, Sapuipara(East), Bally, Howrah-711227.
2 Respondent -ITO, Ward-48(4), Kolkata.
3 CIT(A)-14, Kolkata. (sent through e-mail)
4 CIT , Kolkata
5 DR, Kolkata Benches, Kolkata (sent through e-mail)
/True Copy, By order,
Assistant Registrar