AJIT MALIK ,FARIDABAD vs. ITO, WARD- 1(1), FARIDABAD

That on the facts and the circumstances of the case the Ld Commissioner of Income Tax Appeals, Faridabad was not justified in placing reliance on the statement of Mr. Sanjay Vora of M/s Anand Rathi Shares and Stock Brokers Limited recorded in an unrelated matter . Neither Mr. Sanajay Vora nor Anand Rathi Shares and Stock brokers Limited have any transactions with the assessee and thus have no locus standi in the case of the assessee .The statement of Mr. Vora was recorded on the back of the assessee and the assessee was never given an option to cross examine the said person. Page 1 of 6 ITA No.- 4549/Del/2018 Ajit Malik, Faridabad.

That on the facts and the circumstances of the case the Ld Commissioner of Income Tax, Appeals Faridabad has erred in holding (in para 8 of his order) that Mr. Sanjay Vora of Anand Rathi Shares and Stock Brokers Limited a. admitted that M/s Alps Motor Finance Limited was engaged in providing accommodation entries- Mr. Sanjay Vora’s statement nowhere stated or confirmed this. He only confirmed transacting in the said script as a Broker and said that he earned only brokerage from the same. The Investigation Kolkatta has gathered that certain person had b. been involved in price manipulation of some companies listed in Bombay Stock Exchange and Alps Motor Finance Limited was one of them - No such order has been made by SEBI, the concerned regulator for such issues against the said company or any person in relation to the said company. The assessee has failed to give any concrete evidence of his c. bonafide claim during the assessment as well as appellate proceedings - The assessee has given a complete trail of how the shares were acquired, paid for and sold through a registered broker on a recongnised exchange through a valid stock exchange transaction. Neither the Assessing Officer no the CIT Appeals has found anything wrong or bogus about any stage of the above stated trail of the shares purchased and sold The assessee has not given any cogent reason for investing in an d. unfamiliar company when there existed so many reputed companies- The information of all listed companies is in the public domain and people regularly trade in all big and small companies listed on the exchange . Merely because the company is not famous and as reputed as some of the other listed companies cannot be a ground for disregarding the investment in such companies. That the assessee has failed to counter observations and facts cited e. by the A.O. in para 10 and 11 of the assessment order - All the contentions made by the Assessing Officer in para 10 of his order are untrue and unsubstantiated by any sort of evidence thus making them completely bald statements as can be seen hereunder Para 10 Some unscrupulous operators in the capital markets were running a i. scheme of providing entries of LTCG-No evidence of any sort has been brought on record by the assessee to prove such a contention specific to the case of the assessee. The financial result of the penny Stock used clearly indicate that its ii. quoted price at peak was a result of rigging - SEBI is the only regulator who is empowered to make an order against a company or a person for “Price Rigging”.No such order has been made by SEBI either against the assessee, the broker through whom the assessee dealt with or the company in whose shares the assessee dealt with. The Assessing officer has not brought on record any person who is alleged to have rigged the price for the transaction in which the assessee sold his shares Price rigging has been confirmed by SEBI - The AO has not brought iii. on record any such order of the SEBI That such scheme is prevalent for converting black money into white iv. is common knowledge , independently confirmed by SEBI - Again no so called Scheme or the persons running such scheme who have been associated with the assessee have brought on record by the assessing officer Page 2 of 6 ITA No.- 4549/Del/2018 Ajit Malik, Faridabad. Many such individuals availed the benefit of the scheme and took v. entries of LTCG- First the assessing officer has not brought on record any scheme or the so called persons who have been the beneficiaries of this so called scheme and Second he has not brought on record as to how any such person/ s have a bearing on the case of the assessee. Many such individuals have voluntarily without any enquiry have vi. withdrawn their claim and filed revised returns- this has not bearing on the case of the assessee. The assessee is a beneficiary who has taken entry of LTCG - No vii. evidence of any scheme, operators of the scheme or the fact that the assessee has taken an “entry of LTCG” has been brought on record by AO Exactly similar entries have been taken by other family members of viii. the assesee - factually incorrect as no family member of the assessee has dealt in the stock of Alps Motor Finance Co ltd. Neither the assessee not his family members have dealt in shares ix. before or after this transaction - this is untrue and evidence for the purchase of shares of Pfizer limited and Sun Phamaceuticals Ltd purchased by the assessee were placed on record in assessment proceedings. As the trading in these shares are at a predetermined time between x. predetermined brokers at a predetermined price , there is virtually no scope of any genuine trader to buy or sell these shares - No evidence put on record by the A.O of the so called predetermined persons who transacted at a predetermined time at a predetermined price . That who so ever benefited from the transaction in these shares xi. have transacted in accordance with the scheme and has admittedly converted his unaccounted cash equal to the sale proceeds of the shares into white money in the guise of the exemption u/s 10(38) . - An absolutely bald statement with no shred of evidence of any sort brought on record to substantiate this allegation. Merely because a person makes a gain in a stock it cannot be said that he converted his black money into white. With so much evidence against the assessee , the onus is on the xii. assessee to prove that his transactions were genuine and that he had not availed the benefit of the aforementioned scheme-It is strange to note that even without a single piece of evidence against the assessee or the transaction made the assessee and without being able to point out even a singly mistake or error in the trail of transactions put on record by the assessee the assessing officer says that there is “So much evidence against the assessee” Similarly the contentions in para 11 of the Assessment order relied upon by the Ld Commissioner of Income Tax Appeals also contains allegations which in no way make the transaction of the assessee bogus or sham ie a. The relevant column in the purchase bills ie order No, Trade No. Trade time are left blank - The shares were purchased in preferential allotment in an off market transaction which is fully permitted form of allotment of shares as per the Companies Act-1956 and cannot be faulted with. Thus there is no order number, Trade No., trade Time etc b. Purchase of shares is an Off Market transaction- Purchase of shares in off market transaction cannot be faulted with as the same was a preferential allotment which will always be off market” . It cannot be a reason for holding that the transaction was bogus when the buyer Page 3 of 6 ITA No.- 4549/Del/2018 Ajit Malik, Faridabad. and the seller and the script are identified and the same are on record. c. The assessee is not a regular investor in shares - this cannot be a ground for disallowing a claim . The assessee has invested in shares of Pfizer and Sun Pharmceuticals Ltd also .That the assessee earned a huge profit also cannot be faulted unless the transaction entered into by the assessee is found to be bogus which is not the case here. d. The department has identified the shares of Alps Motor Finance Limited as Penny Stock- this can only be a ground for starting an investigation but cannot be ground for making a disallowance . e. There is specific information that the assessee is indulged in non genuine and bogus capital gain obtained from the transaction of purchase and sale of shares of M/s Alps Motor Finance Limited. - this is factually incorrect as there is no specific information against the assessee which has been brought on record by the assessing officer.

That on the facts and the circumstances of the case the Ld Commissioner of Income Tax Appeals Faridabad has not found any submission made by the assessee’s counsel in the appellate proceedings to be incorrect and has yet proceeded to decide the grounds against the assessee without citing any cogent reasons for rejecting the submissions of the assessee.

That without prejudice to the above grounds the Ld Commissioner of Income Tax Appeals , Faridabad , erred in upholding the addition under section 69 which speaks of Unexplained Investments “in the present case under review there are no unexplained investments which are under investigation. Even if for academic purposes the amounts received from M/s Bharat Bhushan Equity traders Limited are regarded as investments in the Bank Account , the same are duly explained are corresponding contract notes and ledger accounts of the said company as being for the sale proceeds of shares sold by it on behalf of the assessee in a recognisesd stock exchange vide a genuine transaction which can be traced and tracked in the stock exchange. Thus, no addition could have been made under section 69 of the Income Tax Act, 1961.”