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This appeal filed by assessee is against the order of Ld. CIT(A) - 6, Kolkata dated 16.10.2018 for AY 2015-16.
2. In this case the assessee has raised as many as seven grounds of appeal but the sole issue involved in this appeal of assessee relates to confirmation of the addition/disallowance by Ld. CIT(A) on account of Long Term Capital Gain of Rs.21,96,793/- claimed by the assessee as exempt /s. 10(38) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) from gross sale consideration of 5000 shares of M/s. CCL International Ltd..
3. Briefly stated facts as observed by the AO are that the assessee filed his return of income on 23.09.2015 for AY 2015-16 electronically declaring total income of Rs.9,90,050/-. The case was selected for scrutiny under CASS. Accordingly, notice u/s. 143(2) of the Act dated 29.07.2006 and subsequently notice u/s. 142(1) of the Act along with questionnaire dated 11.01.2017 were issued and served upon the assessee fixing the date of hearing on 18.01.017. In response the said notices, assessee himself appeared from time to time and necessary documents and explanations were filed. On perusal of the said submissions of the assessee, the AO found that the assessee had purchased scrip of M/s. CCL International Ltd. of 5000 shares. These shares were sold during the FY 2014-15 relevant to AY 2015-16 and assessee claimed exemption on account of LTCG u/s. 10(38) of the Act in his return for AY 2015-16 having capital gain of Rs. 21.96,793/-. It was brought to the notice of AO that the assessee had purchased 5,000 shares of CCL International Ltd. in June, 2013 from M/s. Goodshine Commerce Pvt. Ltd. for a consideration of Rs. 2,60,000/-. The consideration amount of Rs.2,60,000/- was paid by assessee to the seller of the said shares by account payee cheque No. 547147 drawn on Indusind Bank Account no. 200004739924. The aforesaid 5,000 shares of CCL International Ltd. were received in Dernaterialized form to the assessee's DEMAT account (Client ID 10017878) maintained by assessee with Vedika Securities Ltd, a Depository Participant registered with NSDL (DPID No IN301493). The assessee sold all those 5,000 shares of M/s. CCL International Ltd. during the previous year 2014-15 through M/s. Vardhaman Capital Pvt. Ltd., a Registered Share & Stock Broker. The assessee earned LTCG of Rs. 21,96,793/- on sale of aforesaid shares being the aggregate value of gross sale consideration Rs. 24,56,793/- minus Rs. 2,60,000/- being cost of acquisition of such hares. The said amount of LTCG was claimed as exemption under section 10(38) of th Act. During the course of assessment proceedings the assessee produced and furnished the evidences relating to purchase of 5,000 shares of M/s. CCL International Ltd. for Rs.2,60,000. The relevant extract of Bank Account Statement was submitted to show that the said amount was paid by account payee cheque.
The assessee also produced and filed the copy of the Demat account to show that the said 5,000 shares of M/s. CCL International Ltd. were credited in assessee's Demat account. The said 5,000 shares were sold through Vardhaman Capital Pvt Ltd, a registered share and stock broker. The assessee also produced and filed the copies of contract note in support of sale of 5,000 shares as aforesaid and also submitted relevant extract of his bank account statement to show that the sale consideration was credited to his bank account. It was also shown that the sales of those shares are reflected in the Demat statement of the assessee. The period of holding of such shares being more than 12 months was also brought to the notice of AO by the assessee from the aforesaid documentary evidences.
4. On perusal of the submission of the assessee, the AO found that the assessee had purchased scrip of M/s . CCL International Ltd. of 5,000 units. These were sold during the F.Y. 2014-15 having capital gain of Rs.21,96,793/-. The assessee has taken this amount as exempt long term capital gain in his return for the A.Y. 2015-16 u/s. 10(38) of the Act. According to AO, regarding this kind of huge capital gain and claiming exemption u/s.10(38) of the Act an investigation was conducted on a number of penny stock companies by the Directorate of Investigation Wing, Kolkata. And as per the report submitted by the wing it was discovered that total 84 penny stock companies were identified to be indulged in giving beneficiaries LTCG etc. so number of search & surveys were conducted in the office premises of more than 32 share broking entities which inturn accepted that they were actively involved in the bogus LTCG/STCL scam. Surveys were also conducted in the office premises of many accommodation entry provide s and their statements recorded. All have accepted their role in the scam. Beneficiaries of more than Rs.38000 crores have been identified and segregated DGIT(Investigation) wise. Total number of more than 60,000 PANs of the beneficiaries have been identified which have been reported to the assessment wing through the DGITs. Out of 84 penny stock companies which have been used for generating bogus LTCG , the above nam d penny stock, i.e. M/s. CCL International Limited is included. According to AO, the basic trade pattern of all the 84 scrips are same. A close view of all such data sugg sted that there is a common pattern in the trading of such scrips and the pattern is that they represent a bell shape in their trading. It means first, their prices start from low range then it rises rapidly, stays there for a while and then it decreases more rapidly. Thus trade pattern makes a bell shape. In support of the aforesaid common feature, the share pricing chart of M/s. CCL International Limited from Jan, 2013 to July, 2017 available at website of money control are reproduced at page 2 of the assessment order. According to AO, apart from that from the balance sheet of the penny stocks it can be seen that they have no credentials to support their share movement pattern. Further it was observed by the AO that all the companies have no fixed asset, no turnover, no profitability and they did not pay taxes. So according to AO, it shows that these are made especially for the purpose of providing bogus Long Term Capital Gain or Short Term Capital Loss to willing beneficiaries. So, according to AO, the above the long term capital gain claimed to