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Income Tax Appellate Tribunal, Mumbai “D” Bench, Mumbai.
Before: Shri B.R. Baskaran (AM) & Shri Narender Kumar Choudhry (JM)
Both the appeals of the revenue are directed against the orders passed by Ld CIT(A), NFAC, Delhi and they relate to the assessment years 2011-12 and 2014-15. The revenue is aggrieved by the decision rendered in both the years by Ld CIT(A) in allowing exemption u/s 10(38) of the Act in respect of long term capital gains earned on sale of shares and also in deleting the additions relating to expenses. Both the appeals were heard together and are being disposed of by this common order, for the sake of convenience.
We shall first take up the appeal filed for AY 2011-12. The facts relevant for this year are that the assessee had purchased 12,500 shares of M/s Sampada Chemicals Ltd on 15th October, 2009 from online portal of Bombay Stock Exchange through her share broker M/s Ikab Securities & Investments Ltd. The payment for above said purchase was made through
2 Renu Prakash Bijlani banking channel to the share broker and the shares were credited to the demat account maintained with the above said broker. After holding above shares for a period of one year, they were sold through the share broker in the Bombay stock exchange in November, 2010 in five installments. The assessee earned long term capital gains of Rs.55.53 lakhs and claimed the same as exempt u/s 10(38) of the Act. The return of income filed by the assessee is processed u/s 143(1) of the Act.
Subsequently, the AO reopened the assessment of AY 2011-12 on the basis of information received from DDI, Investigation, Mumbai based on the search conducted in the case of Vipul Vidur Bhatt and his related entities. The search action revealed that the above said person was providing accommodation entries to generate bogus long term capital gains. It was noticed that the above said group was providing accommodation entries in shares of M/s Sampada Chemicals Ltd also. Accordingly, the AO entertained a belief that the assessee is one of the beneficiaries, who has availed bogus long term capital gains. Accordingly, he reopened the assessment.
Before the AO, the assessee contended that she has purchased shares though stock exchange and sold them through stock exchange only. She also furnished all the documents, demat statement and bank statements to prove the purchase and sale of shares. However, the AO placed his reliance on the report given by the investigation wing and accordingly held that the assessee has declared bogus long term capital gains. Accordingly, the AO assessed the long term capital gains of Rs.55.53 lakhs as taxable income of the assessee u/s 68 of the Act. The AO also held that the assessee would have paid commission for getting bogus long term capital gains. He estimated the commission at Rs.2,22,127/- and assessed the same unexplained expenditure u/s 69C of the Act.
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5. The Ld CIT(A), however, took the view that the assessing officer has not carried out investigation of the facts of the case which are specific to the assessee. He also referred to the decision rendered by the Tribunal in various cases, wherein addition made on identical set of facts were deleted on the ground that the assessing officer could not find the documents furnished by the assessee in support of purchase and sale of shares were not found to be false. Accordingly, the Ld CIT(A) deleted both the additions made by the AO.
6. We heard the parties and perused the record. The undisputed facts are that the assessee has purchased the shares through the stock broker from Bombay stock exchange and also sold the shares in Bombay Stock Exchange only. The shares have been received in the Demat account and exited from that account only. The payments have been made through the bank account of the assessee and the sale proceeds have been received in the bank. All documents relating to purchase and sale of shares, demat account and bank account have been furnished to the AO. It is an undisputed fact that the assessing officer did not find fault with any of the documents furnished by the assessee. On the contrary, the AO has placed reliance on the investigation department’s report with regard to the search conducted in the hands of Vipul Vidur Bhatt.
The question that arises is whether the AO can disbelieve the long term capital gains declared by the assessee when the assessee has furnished all the documents in support of purchase and sale of shares and further, the said transactions have been carried out through stock exchange? This question was answered by Hon’ble jurisdictional Bombay High Court in the case of Pr. CIT vs. Indravadan Jain HUF (ITA No.454 of 2018 dated 12th July, 2023) as under:- “4. The A.O. did not accept respondent’s claim of long term capital gain and added the same in respondent’s income under Section 68 of the Act. While allowing the appeal filed by respondent, the CIT[A] deleted the 4 Renu Prakash Bijlani
addition made under Section 68 of the Act. The CIT[A] has observed that the A.O. himself has stated that SEBI had conducted independent enquiry in the case of the said broker and in the scrip of RFL through whom respondent had made the said transaction and it was conclusively proved that it was the said broker who had inflated the price of the said scrip in RFL. The CIT[A] also did not find anything wrong in respondent doing only one transaction with the said broker in the scrip of RFL. The CIT[A] came to the conclusion that respondent brought 3000 shares of RFL, on the floor of Kolkata Stock Exchange through registered share broker. In pursuance of purchase of shares the said broker had raised invoice and purchase price was paid by cheque and respondent’s bank account has been debited. The shares were also transferred into respondent’s Demat account where it remained for more than one year. After a period of one year the shares were sold by the said broker on various dates in the Kolkata Stock Exchange. Pursuant to sale of shares the said broker had also issued contract notes cum bill for sale and these contract notes and bills were made available during the course of appellate proceedings. On the sale of shares respondent effected delivery of shares by way of Demat instructions slip and also received payment from Kolkata Stock Exchange. The cheque received was deposited in respondent’s bank account. In view thereof, the CIT[A] found there was no reason to add the capital gains as unexplained cash credit under Section 68 of the Act. The tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of Stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of Stock Exchange. The ITAT therefore, in our view, rightly concluded that there was no merit in the appeal.”
We noticed earlier that the assessing officer has not found fault with any of the documents furnished by the assessee in support of purchase and sale of shares. We also notice that there is also no allegation made that the assessee was part of ring which indulged in the alleged price rigging. The allegation of the AO is that the assessee has availed accommodation entries by way of long term capital gains. We notice that an identical case of allegations that the assessee has availed accommodation entries for bogus capital gains was examined by the Hon’ble jurisdictional Bombay High Court in the case of Shyam Power (supra). The decision rendered by Hon’ble Bombay High Court in the above said case is extracted below:-
“3. Mr. Sureshkumar seriously complained that such finding rendered concurrently should not have been interfered with by the Tribunal. In further Appeal, the Tribunal proceeded not by analyzing this material and concluding that findings of fact concurrently rendered by the Assessing
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Officer and the Commissioner are perverse. The Tribunal proceeded on the footing that onus was on the Department to nail the Assessee through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr. Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, therefore, be admitted.
4. Mr. Gopal, learned Counsel appearing on behalf of the Assessee in each of these Appeals, invites our attention to the finding of the Tribunal. He submits that if this was nothing but an accommodation of cash or conversion of unaccounted money into accounted one, then, the evidence should have been complete. Change of circumstances ought to have, after the result of the investigation, connected the Assessee in some way or either with these brokers and the persons floating the two companies. It is only, after the Assessee who is supposed to dealing in shares and producing all the details including the DMAT account, the Exchange at Calcutta confirming the transaction, that the Appeal of the Assessee has been rightly allowed. The Tribunal has not merely interfered with the concurrent orders because another view was possible. It interfered because it was required to interfere with them as the Commissioner and the Assessing Officer failed to note some relevant and germane material. In these circumstances, he submits that the Appeals do not raise any substantial question of law and deserve to be dismissed.
We have perused the concurrent findings and on which heavy reliance is placed by Mr. Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried out in paras 20, 20.1, 20.2 and 21 of his order, what was important and vital for the purpose of the present case was whether the transactions in shares were genuine or sham and bogus. If the purchase and sale of shares are reflected in the Assessee's DMAT account, yet they are termed as arranged transactions and projected to be real, then, such conclusion which has been reached by the Commissioner and the Assessing Officer required a deeper scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock Exchange records showed that the shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt.Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme.
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It is in that regard that we find that Mr. Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs.25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, is not enough to prove that the transactions in the impugned shares were bogus/sham. The details received from Stock Exchange have been relied upon and for the purposes of faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparent on the face of the record either.
7. As a result of the above discussion, we do not find any substance in the contention of Mr. Sureshkumar that the Tribunal misdirected itself and in law. We hold that the Appeals do not raise any substantial question of law. They are accordingly dismissed. There would no order as to costs.
8. Even the additional question cannot be said to be substantial question of law, because it arises in the context of same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted or regular as such. The relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and pertaining to the addition of Rs.25,93,150/-. Barring the figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For the same reasons, even this additional question cannot be termed as substantial question of law.”
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The Hon’ble Jurisdictional High Court has considered an identical issue in yet another case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022) and relevant discussions made by Hon’ble Bombay High Court are extracted below:-
“2. We have considered the impugned order with the assistance of learned counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd (“RFL”) is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax (“STT”) has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL.
3. Therefore we find nothing perverse in the order of the Tribunal.
4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commissioner of Income tax (Central)-1 vs. NRA Iron & Steel (P) Ltd (2019)(103 taxmann.com 48)(SC) but that does not help the revenue in as much as the facts in that case were entirely different.
5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law.”
Following the binding decisions rendered by Hon’ble jurisdictional Bombay High Court, we uphold the decision rendered by Ld CIT(A) in deleting the addition made by the AO u/s 68 and sec.69C of the Act in AY 2011-12.
We shall now take up the appeal filed by the revenue for AY 2014-15. In this year, the assessee earned long term capital gain of Rs.1.47 crores on sale of shares of M/s Kailash Auto Finance Ltd and claimed the same exempt. The AO disallowed the said claim and assessed the sale proceeds of the shares amounting to Rs.1.51 crores as income of the assessee u/s 68 of the Act. The AO also estimated commission income at Rs.4,44,044/- and 8 Renu Prakash Bijlani assessed the same as unexplained expenditure u/s 69C of the Act. In this year, the assessee had shown other income of Rs.32.66 lakhs and claimed expenses to the tune of Rs.11.69 lakhs against the above said income. The AO disallowed a sum of Rs.2,62,420/- for not submitting vouchers to prove the expenses.
12. The Ld CIT(A) deleted all the additions and disallowances and hence the revenue is in appeal.
13. The facts relating to Long term capital gains declared by the assessee are stated in brief. The Ld A.R submitted that the assessee purchased 400000 shares of M/s Panchshul Marketing Ltd in the off market from M/s Overflow Merchandise P Ltd on 04-06-2012. The face value of shares was Rs.1.00 per share and the purchase consideration of Rs.4.00 lakhs was paid to the seller by way of cheque. The shares were credited in the demat account of the assessee maintained with M/s Ikab Securities & Investments Ltd. Subsequently, the assessee transferred the shares to another demat account maintained with M/s BCB Brokerage P Ltd.
In the meantime, M/s Panchshul Marketing Ltd merged with M/s Kailash Auto Finance Ltd and accordingly, the assessee was allotted 400000 shares of M/s Kailash Auto Finance. Thereafter the assessee sold the above said shares in September, 2013 and October, 2013 in stock exchange and declared long term capital gains of Rs.1.47 crores. Before the AO, the assessee furnished all the documents in support of purchase and sale of shares.
The AO did not find fault with any of the documents furnished by the assessee. He primarily placed reliance on the report of the investigation wing that the assessee has only availed accommodation entries for Long term capital gains. Accordingly, he assessed sale proceeds amounting to Rs.1.51
9 Renu Prakash Bijlani crores as unexplained cash credit u/s 68 of the Act. As observed earlier, the AO also assessed estimated commission expenditure. Since the Ld CIT(A) has deleted the above said additions, the revenue has filed this appeal.
The Ld A.R submitted that the assessee has furnished all the documents in support of purchase and sale of shares. He submitted that the AO did not find fault with any of those documents. He further submitted that the assessee has purchased these shares in the course of normal trading in shares. He submitted that assessee has not been named as part of the group which allegedly rigged the prices of the shares. Accordingly he submitted that the long term capital gains declared by the assessee should not have been doubted with, in the absence of any evidence.
The Ld D.R, on the contrary, submitted that the SEBI has made enquiries with regard to trading in shares of M/s Kailash Auto Finance Ltd and passed an interim order on 29-03-2016 suspending the trading in shares of above said company. The SEBI has also passed another order on 30-09- 2019, wherein it has levied penalty on seven persons. The ld D.R submitted that the orders so passed by SEBI proves the fact that there was price rigging in the shares of M/s Kailash Auto Finance Ltd.
In the rejoinder, the Ld A.R submitted that the assessee has not been indicted in any of the orders by SEBI. He submitted that the SEBI has revoked the suspension of trading in Kailash Auto Finance Ltd, vide its final order dated 21-09-2017. He submitted that the order dated 30-09-2019 passed by SEBI levying penalty is a specific case related to seven persons and it will not have any impact on the trading carried on by the assessee. He submitted that an identical issue was examined by co-ordinate bench in the case of Deepak Srichand Bathija vs. NFAC, Delhi in and the Tribunal, vide its order dated 26th July, 2023, has deleted identical additions made by the AO. He further submitted that the assessee was not 10 Renu Prakash Bijlani found to be part of the ring, which allegedly involved in price rigging and hence the transactions of the assessee should not be doubted with as held by Hon’ble Bombay High Court in the case of Shyam Pawar (supra).
We heard rival contentions and perused the record. We noticed earlier that the assessing officer has not found fault with any of the documents furnished by the assessee in support of purchase and sale of shares. There is also no allegation made that the assessee was part of ring which indulged in the alleged price rigging. The allegation of the AO is that the assessee has availed accommodation entries by way of long term capital gains mainly on the basis of report of investigation wing. The ld D.R also placed reliance on the investigation conducted by SEBI.
In the preceding paragraphs, we noticed that the Hon’ble Bombay High Court has held in the case of Shyam R Pawar (supra) that the long term capital gains declared by the assessee cannot be doubted with unless it is shown that the assessee was part of the ring which indulged in price rigging. Similar view was expressed by Hon’ble Bombay High Court in the case of Zaiuddin A Siddique (supra). We further notice that the impact of SEBI investigation with regard to the long term capital gain earned from sale of shares of M/s Kailash Auto Finance Ltd was examined by the co-ordinate bench in the case of Deepak Srichand Bathija (supra). It was held as under:-
“11. having heard the rival submissions and after perusal of the material on record, the undisputed facts are that the assessee has earned a capital gain of Rs. 19,23,000/- on the sale of scrip namely M/s. Kailash Auto Finance Ltd [M/s KAFL]. The facts qua the purchase and sale of shares and necessary evidences were already discussed hereinabove and are not being repeated for the sake of brevity. It is noted that assessee has filed all the relevant evidences comprising summary of sale and purchase of shares, contract notes/broker notes, details of Demat account/transaction statement, copies of purchase bills, evidences of payment through banking channels along with bank statements etc. It is noted that the authorities below have relied merely on the report of investigation wing and interim- report of SEBI by ignoring the relevant facts on record. In this case, it is a matter of record that when called upon by AO, the assessee had furnished
11 Renu Prakash Bijlani all the primary evidences in the form of bills, contract notes, Demat statement and bank accounts statement to prove the genuineness of the transactions relating to purchase and sale of shares resulting in LTCG. These evidences were neither found by the AO nor the Ld. CIT(A) to be false or fabricated. The basis on which the AO has drawn adverse inference against the assessee (in the respect of the claim of LTCG from sale of shares of M/s KAFL) inter-alia was since SEBI interim order dated 29.03.2016 found the actions of various entities dealing with this scrip (M/s KAFL) was in violation of provisions of SEBI Act 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practice (PFUTP Regulation) and had passed the interim order dated 29.03.2016, wherein 246 entities/persons were restrained from accessing the securities market until the investigation is over. And along with the interim order dt 29.03.2016, SEBI had given the list of 246 entities which included the scrip of M/s KAFL and M/s. Panchshul Marketing Ltd and the initial broker from whom the assessee purchased shares of M/s. Panchshul Marketing viz M/s. Overflow Merchandise Pvt. Ltd. However, it has been brought to our notice that by order dated 21.09.2017, the SEBI was pleased to pass the final order u/s 11, 11(4) & 11B of the SEBI Act, 1922 in the case of M/s KAFL wherein baring two (2) entities [out of 246 entities (M/s. Bholebaba Suppliers Pvt. Ltd. and M/s. Overall Vincom Pvt. Ltd.)] all other persons/entities [including the scrip M/s KAFL and M/s Panchsheel Karketing and broker M/s. Overflow Merchandise Pvt. Ltd.] were exonerated because upon completion of investigation by SEBI it did not find any adverse evidence in respect of violation of provisions of PFUTP Regulation and took note of this fact as under:-
“5. Pursuant to the interim order, SEBI conducted a detailed investigation into the role of various entities in price manipulation in the scrip of Kailash Auto so as to ascertain the violation of securities laws. Upon completion of investigation by SEBI, investigation did not find any adverse evidence/adverse findings in respect of violation of provisions of the PFUTP Regulations in respect of the following 244 entities (against whom directions were issued vide the interim order and/or confirmatory orders) warranting continuation of action under section 11B r/w 11(4) of the Act.”
And has given the details of 244 entities exonerated, wherein the scrip of M/s KAFL and M/s. Panchshul Marketing Ltd is given as item no. 1 and 106 respectively and the broker through whom the assessee purchased the scrip of M/s. Panchshul Marketing Ltd i.e. M/s. Overflow Merchandise Pvt. Ltd (item no. 123) is found in this 244 entities names exonerated by SEBI. Further, as asserted by the Ld. AR it is noted that the broker through whom assessee sold the shares was not even in the interim list of SEBI (restricting the transaction vide order dated 29.03.2016). We examined this fact and note from a perusal of the list of entities debarred from securities market vide interim order dated 29th March, 2016, that the name of the broker through whom the assessee had sold the shares of M/s KAFL i.e. M/s. Edelweiss Securities Ltd has not figured even in the initial interim order itself. Thus, it was not debarred from accessing the securities market while the SEBI interim order was in force against 246
12 Renu Prakash Bijlani persons/entities. Thus, we find that the main/foundational basis on which the AO had drawn adverse inference against the LTCG claim on sale of shares of M/s KAFL is not existing as per the final order of the SEBI (supra).
The AO has also relied on the report of the investigation wing and/or the statement of the several third party/persons recorded by the investigation wing in connection with the alleged bogus transaction in the shares of M/s KAFL. It is noted in this context that there is no material even in these statements directly implicating the assessee or the brokers M/s. Overflow Merchandise Pvt. Ltd or M/s. Edelweiss Securities Ltd. in any wrong doing; and it is undisputed that even though the investigation wing report is based on statement of several persons it cannot be relied upon because firstly it has been recorded behind the back of assessee; secondly a copy of the same has not been fully given to assessee; and thirdly assessee has not been given an opportunity to cross-examine the maker of such statement on the basis of which the investigation report has been made. Therefore, such a statement cannot be used as evidence against the assessee to draw adverse view. [refer case of Andaman Timber Industries 127 DTR 241) (SC)] wherein the Hon’ble Supreme Court has held that the assessment based on third party statement without giving an opportunity to the assessee to cross-examine the maker of adverse statement is not sustainable in law. Thus, anyway the investigation report based on third party statement cannot be the basis to draw adverse inference against the assessee, even though undisputedly there is no statement which incriminates assessee or the broker directly or in-directly in any manner. Therefore, the investigation report cannot be the basis for drawing any adverse inference against the assessee as wrongly relied upon by the AO. Therefore, the AO erred in relying on the investigation report of the investigation wing to disallow the claim of LTCG.
Thus, considering the facts of the case and the evidences in support of the LTCG claim clearly support the claim of the assessee that the transactions of the assessee were bonafide and genuine and therefore the AO was not justified in rejecting the assessee’s claim of exemption under section 10(38) of the Act. As discussed (supra), the adverse order against the scrip (M/s KAFL and M/s. Panchshul Marketing Ltd) as well as the initial broker M/s. Overflow Merchandise Pvt. Ltd has been over- ruled by SEBI final order dated 21.09.2017 as discussed (supra). And the investigation report as discussed (supra) cannot be the basis for drawing adverse view against the claim of LTCG. When these two documents are kept aside, then only aspect surviving is the suspicious rise of share price of M/s KAFL, which cannot be the sole basis to discard the evidence given by assessee to substantiate the LTCG claim. True, the suspicious rise/fall of share price of M/s KAFL raises doubt in the mind, but Hon’ble Supreme Court held that suspicion cannot take the place of evidence. And it is noted that when called upon by the AO to prove the claim of LTCG from the transaction of M/s KAFL, the assessee have filed the best evidence to prove the transaction in question viz, bills, contract notes, demat Statement and the bank accounts statements to prove the genuineness of 13 Renu Prakash Bijlani
the transaction relating in the purchase of M/s. Panchshul Marketing Ltd and thereafter sale of shares [after amalgamation] of M/s KAFL which resulted in LTCG claim of Rs.19,23,000/-. Therefore, by applying the test of preponderance of probability, the claim of LTCG cannot be disallowed without AO pointing out any infirmities in the evidences produced by assessee, which unfortunately AO could not point out. So the assessee’s claim of LTCG need to be allowed. And the commission added to the tune of Rs.58,190/- also based on surmises & conjectures does not survive. So it is also ordered to be deleted.”
The facts of the present case being identical, we are of the view that the above said decision rendered by the co-ordinate bench can be followed in the instant case. Before us, the Ld D.R relied on the order of SEBI dated 30th Sep., 2019. We have gone through the same and notice that the said order is, as pointed out by Ld A.R, related to penalty levied on 7 persons. As observed by us earlier, it was not the case of the AO that the assessee was part of the ring, which rigged the prices of shares. Accordingly, we are of the view that the above said order of SEBI will not have any impact upon the assessee.
Accordingly, we hold that the Ld CIT(A) was justified in deleting the additions made u/s 68 towards sale proceeds of shares and u/s 69C towards estimated commission expenses.
The next issue arising in AY 2014-15 relates to disallowance of expenses. As noticed earlier, the assessee claimed expenses aggregating to Rs.11,69,043/- against her other receipt of Rs.32,66,325/-. The AO asked the assessee to produce evidences in support of various expenses. The assessee could produce evidences to the tune of Rs.7.40 lakhs against salary expenses of Rs.7.50 lakhs. In respect of telephone expenses, the assessee produced evidences to the tune of Rs.39,601/- as against the claim of Rs.41,316/-. The assessee could not produce evidences for the expenses claim of Rs.2,51,245/-. Accordingly, the AO disallowed expenses to the tune of Rs.2,62,420/- for want of evidences. The Ld CIT(A) deleted the same.
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We heard the parties on this issue and perused the record. The main contention of Ld A.R is that the other expenses claimed by the assessee is routine expenses like insurance premium on cars, car expenses, electricity expenses, internet connection charges, professional fee payment, account writing charges, staff welfare expenses and conveyance expenses. He further submitted that the assessee has claimed a sum of Rs.11.69 lakhs only against the income receipts of Rs.32.66 lakhs. Accordingly, he submitted that the AO was not justified in making additions for want of evidences.
We heard Ld D.R and perused the record. There should not be any doubt that the burden to prove the expenditure claim is placed upon the assessee. Hence, it is the duty of the assessee to submit evidences in support of the expenditure claim. However, in the facts of the present case, we notice that the assessee has only claimed routine expenses, i.e., there is no abnormal claim. Hence, we are of the view that the AO was not justified in disallowing entire claim of expenses. In our view, assessing officer should have disallowed a part of expenditure claim in order to take care of possible excess claim. We notice that the Ld CIT(A) has not given any particular reason for deleting the disallowance made by the AO. Accordingly, to put this issue at rest, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance at Rs.25,000/- and in our view, the same would take care of revenue leakages, if any. We order accordingly.
In the result, the appeal filed by the revenue for AY 2011-12 is dismissed and the appeal filed for AY 2014-15 is partly allowed.
Order pronounced in on 30.10.2023.