JIGNESH H SHAH,MUMBAI vs. DCIT, CIRCLE 41(2)(1), MUMBAI

We first take up Ground Nos. 3 to 5, as these grounds are interrelated and interconnected and relates to challenging the additions made by the Assessing Officer (“AO”) and upheld by the learned CIT(A) under Section 68 of the Income-tax Act, 1961 (“the Act”) for Assessment Year 2014-15. Therefore, we have decided to adjudicate these grounds by way of the present consolidated order.

At the very outset, the learned AR submitted that the issue under consideration is covered by the decisions of various coordinate Benches of the Tribunal.

We have heard the learned counsels for both the parties, perused the material placed on record, the judgments cited before us, and the orders passed by the Revenue Authorities. From the records, we notice that the assessee had purchased 5,000 shares of Sunrise Asia Limited through broker M/s Santoshima Leasing Finance and Investment (India) Limited for a consideration of Rs. 1,00,000/- at the rate of Rs. 20/- per share by way of an account-payee cheque. These shares were purchased in dematerialised form and credited to the assessee’s demat account.

The assessee had also purchased 11,000 shares of M/s Santoshima Leasing Finance and Investment (India) Limited on 24.05.2011 and 27.05.2011 through the broking firm M/s Mihir Consultancy and Trading Private Limited. These shares were initially purchased in physical form and were subsequently dematerialised in the name of the assessee and credited to his demat account.

Subsequently, M/s Santoshima Leasing Finance and Investment (India) Limited was amalgamated with Sunrise Asia Limited. Consequently, the assessee received 10,960 shares of Sunrise Asia Limited in exchange for the shares held by him in the amalgamated company.

Thereafter, the assessee sold 1,900 shares of Sunrise Asia Limited in March 2013 for a consideration of Rs. 8,50,158/- during Assessment Year 2013-14. The assessee further sold 14,060 shares of Sunrise Asia Limited during April, June and November 2013 for a consideration of Rs. 68,41,479/- during the year under consideration, i.e., Assessment Year 2014- 15.

In order to substantiate the genuineness of the transactions in the said scrip, the assessee submitted the following documentary evidences:

However, while completing the assessment, the AO made the impugned addition by holding that the scrip in which the assessee had traded was a penny stock.

In this regard, it was specifically submitted by the learned AR that the assessee had discharged the initial onus cast upon him by placing on record all the relevant documentary evidences. It was further submitted that the AO could not point out any specific defect in the documents furnished by the assessee and had merely relied upon a third-party report without bringing any independent material on record to disprove the genuineness of the transactions.

Furthermore, the learned AR submitted that the issue under consideration is squarely covered by the decisions of various coordinate Benches of the ITAT and by the Hon’ble Supreme Court, wherein the very same scrip was involved. It was submitted that, after considering the entire factual position and the financial position of the said scrip, various coordinate Benches of the ITAT and the Hon’ble High Court had deleted the additions made in similar cases.

In support of his submissions, the learned AR relied upon, inter alia, the following judicial precedents:

In all the aforesaid cases, the additions made by the respective Assessing Officers were deleted after considering the relevant facts and circumstances of the cases.

Considering the totality of the facts and circumstances of the case, as discussed above, and respectfully following the aforesaid judicial precedents, as well as the doctrine of judicial consistency and binding precedent, we set aside the order passed by the learned CIT(A) and direct the AO to delete the impugned additions.

Since we have deleted the impugned additions, the remaining grounds become academic in nature and, therefore, do not require any separate adjudication.

In the result, appeal filed by the Assessee stands allowed.