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10-07-2019, Gaurav Bagaria, Section 68, 10(38), 131, Tribunal Jaipur

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3 months 2 days ago #10051 by amit
Section - 68, 10(38), 131, 133A, 147, 4(1), 153C
Order Date - 10-07-2019
Favouring - Assessee
Court - Tribunal Jaipur
Appellant - ITO
Respondent - Gaurav Bagaria
Justice - RAMESH C. SHARMA, AM & VIJAY PAL RAO, JM
Citation - 719Taxpundit147
Appeal No. - ITA No. 550/JP/2019
Asstt. Year - 2014-15

Order

PER : VIJAY PAL RAO, JM

This appeal by the revenue is directed against the order dated 3rd January, 2019 of ld. CIT (A), Kota for the assessment year 2014-15. The revenue has raised the following grounds :-

“ 1. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 75,93,444/- made on account of unexplained credit u/s 68 of the Act when the assessee was unable to justify equity trading by nitpicking the shares of specific companies with poor net worth.

2. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 75,93,444/- by holding the transaction as genuine because transaction is through stock exchange and payment is by cheque, completely ignoring the fact that this is the basic guise to provide accommodation entry, only to layer the sham transaction as genuine ?

3. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 1,51,869/- being commission to acquire such accommodation entry ?

4. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the additions made on the basis of corroborative information received from Investigation Wing, Kolkata which is a law enforcement agency under the Ministry of Finance and accordingly the case falls under exception clause 10(e) of Circular 03 of 2018 dated 20.08.2018 ?

5. The appellant craves the right to amend alter or add to any of the grounds of appeal given above.

2. The relevant facts leading to the controversy of treating the long term capital gain on sale of shares as sham/bogus transaction and addition under section 68 of the IT Act which was deleted by the ld. CIT (A) is that the assessee purchased 2,00,000 shares of face value of Re. 1/- each of M/s. Careful Projects Advisory Ltd on 24.11.2011 from M/s Sanskriti Vincom Pvt. Ltd. for a consideration of Rs. 2,00,000/-. The shares were dematerialized and later on the said company M/s. Careful Projects Advisory Ltd. merged with M/s. Kailash Auto Finance Ltd. (KAFL) in pursuant to the amalgamation plan approved by the Hon’ble Allahabad High Court vide Judgment dated 9th May, 2013 with effect from 01.04.2012. Pursuant to such amalgamation, the assessee was allotted 2,00,000 shares of M/s. Kailash Auto Finance Ltd. of the face value of Re. 1/- each and accordingly the same were credited in the demat account of the assessee in lieu of the shares of erstwhile company M/s. Careful Projects Advisory Ltd. The assessee sold these shares between 13.08.2013 to 30.01.2014 in the Stock Exchange for a sale consideration of Rs. 77,93,444/- and earned long term capital gain of Rs. 75,93,444/- on the sale of these shares which was claimed as exempt under section 10(38) of the IT Act. The AO on the basis of the report of the Investigation Wing, Kolkata based on the statement of Shri Sunil Dokania recorded under section 131/133A wherein he admitted to have engaged in providing accommodation entries of Long Term Capital Gain in the shares of various entities including M/s. Kailash Auto Finance Ltd. treated the claim of Long Term Capital Gain as sham and bogus and made the addition of Long Term Capital Gain under section 68 of the IT Act as undisclosed cash credit as well as an addition of Rs. 1,51,869/- being commission paid for acquiring such accommodation entry. The assessee challenged the action of the AO before the ld. CIT (A) and referred to the documentary evidence of purchasing of shares against the payment through banking channel. The shares were duly dematerialized in the demat account of the assessee and thereafter the erstwhile company M/s. Careful Projects Advisory Ltd. was merged with M/s. Kailash Auto Finance Ltd. by virtue of a judgment of Hon’ble Allahabad High Court and consequently the shares of M/s. Kailash Auto Finance Ltd. were allotted to the assessee in lieu of the shares of M/s. Careful Projects Advisory Ltd. On considering all these facts and evidences, the ld. CIT (A) has deleted the addition made by the AO. Aggrieved by the order of ld. CIT (A), the revenue has filed this appeal.

3. Before us, the ld. D/R has submitted that during the survey operations carried out by the Investigation Wing of the Department, Kolkata, Shri Sunil Dokania admitted that he is aware of suspicious transactions done by some companies in the script of M/s. Kailash Auto Finance Ltd. through the broker houses. The ld. D/R has

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