SHRI UTTUNG HITENDRA THAKUR,MUMBAI vs. INCOME TAX OFFICER, WARD-4(5), THANE

Per Rajesh Kumar, Accountant Member:

2 M/s. Uttung Hitendra Thakur 3. The facts in brief are that the assessee filed the return of income electronically on 28.11.2014 declaring an income of Rs.18,24,000/-. The case of the assessee was selected under scrutiny in CASS to examine the suspicious long term capital gain on shares. The AO observed that the assessee is beneficiary of long term capital gain of Rs.98,93,959/- during A.Y. 2014-15 by purchasing and selling the scrips of M/s. Jolly Plastic Industries Ltd. the details of transaction of purchase and sale by the assessee in this share are given as under: Scrip Purchased Jolly Plastic Industries Ltd. No. of shares purchased 43,000 Date of purchase 08.05.2012 Amount paid 6,96,600 Broker through whom South Asia Portfolios Private purchased Limited, Delhi No. of shares sold 43,000 Amount received 10627540

3 M/s. Uttung Hitendra Thakur beneficiaries seeking long term capital gain and losses to evade the taxes. The AO also noted that the SEBI found evidences of share price rigging to create non genuine long term capital gain to benefit various beneficiaries and consequently passed order under section 11(1), 11(4) and 11(e) of SEBI Act, 1992. The AO also relied on the statements recorded of the chairmen and main directors of the Companies involving in rigging of prices. Finally, the AO came to the conclusion that it was an organized way of doing price rigging, securing gains to beneficiaries by paying STT on the sale and purchase of shares done on the recognised stock exchange and finally treated the said long term capital gain as unexplained cash credit under section 68 of the Act and thus made an addition of Rs.98,93,959/- and further added Rs.66,948/- towards commission paid for securing such capital gain by framing assessment under section 143(3) of the Act dated 30.12.2016.

4 M/s. Uttung Hitendra Thakur Jolly Plastic Industry Ltd. was accepted by the co-ordinate bench of the Tribunal by holding that shares were purchased through brokers who have undertaken the transactions of shares lying with the assessee purchased in earlier years and same were sold after paying due taxes in the form of STT. The Ld. A.R. submitted that the co-ordinate bench of the Tribunal held that the scrips were fully explained and had it been a case of routine own unaccounted money then material has to be brought on record and link has to be established. The Ld. A.R. relying on the said decision of the co-ordinate bench of the Tribunal prayed before the Bench that the issue may kindly be decided in favour of the assessee based on the ratio laid down in the said decision.

11. From the perusal of the entire assessment and appellate order nowhere there is any discussion or whisper that there is any material or information with the Department that assessee’s name has appeared as a beneficiary of accommodation entry in any kind of inquiry or investigation conducted by the Department or assessee has routed his unaccounted money in the garb of Long Term Capital Gain. The entire emphasis is on the fact that there is an astronomical rise in the price of the shares in BSE. From the perusal of the historic price of shares of M/s. Jolly Plastic Industries Ltd., it is seen that the price of the said shares had been steadily growing since December, 2012 and had reached to its zenith around October, 2013 and trading in such shares was continuing uptill January, 2015. It was only in January 2015, the SEBI has suspended its trading which was much after the assessee had sold the shares. Apart from that, the copy of balance sheet of M/s. Jolly Plastic Industries Ltd. as filed by the learned counsel available in the public domain, it cannot be held that the said company did not had any operations or sales as the figures of sale as on 31st March, 2013 and as on 31st 6 M/s. Uttung Hitendra Thakur March, 2014 has already been incorporated above. If what is apparent is not real, then Department has to bring some cogent material on record to prove that assessee’s contention/explanation are incorrect or are not substantiated. Here, in this case, addition has been sought to be made u/s.68 which postulates that assessee has to prove the nature and source of credit appearing in his books of account. Here, from the perusal of the nature of credit, it is seen that the same has come through sales of shares which fact has also not been doubted by the Department. The source of money is through broker who has undertaken the transaction of the shares lying with the assessee purchased in the earlier years and same has been sold after paying due taxes in the form of STT. Thus, nature of the credit stands fully explained. If it is to be held that assessee has routed his own unaccounted money, then there has to be some material to provide live link nexus to show that the unaccounted money has been routed under the garb perusal of the historic price of shares of M/s. Jolly Plastic Industries Ltd., it is seen that the price of the said shares had been steadily growing since December, 2012 and had reached to its zenith around October, 2013 and trading in such shares was continuing uptill January, 2015. It was only in January 2015, the SEBI has suspended its trading which was much after the assessee had sold the shares. Apart from that, the copy of balance sheet of M/s. Jolly Plastic Industries Ltd. as filed by the learned counsel available in the public domain, it cannot be held that the said company did not had any operations or sales as the figures of sale as on 31st March, 2013 and as on 31st March, 2014 has already been incorporated above. If what is apparent is not real, then Department has to bring some cogent material on record to prove that assessee’s contention/explanation are incorrect or are not substantiated. Here, in this case, addition has been sought to be made u/s.68 which postulates that assessee has to prove the nature and source of credit appearing in his books of account. Here, from the perusal of the nature of credit, it is seen that the same has come through sales of shares which fact has also not been doubted by the Department. The source of money is through broker who has undertaken the transaction of the shares lying with the assessee purchased in the earlier years and same has been sold after paying due taxes in the form of STT. Thus, nature of the credit stands fully explained. If it is to be held that assessee has routed his own unaccounted money, then there has to be some material to provide live link nexus to show that the unaccounted money has been routed under the garb of transaction of purchase and sale of shares. If the availability of shares is not in doubt then the sale of the same also cannot be doubted in wake of the evidences as discussed above. Even for the sake of repetition, it is reiterated that it is not a case here that any such information or material was found or discovered that the assessee beneficiary of any accommodation entry nor there is any such statement or material either from the broker or from the stock exchange or from elsewhere. Thus, in the facts and circumstances of the case, we do not find any reason to sustain the addition made u/s.68 by the Assessing Officer and ld. CIT (A) and accordingly same is directed to be deleted.

7 M/s. Uttung Hitendra Thakur therefore, respectfully following the decision of the co-ordinate bench of the Tribunal direct the AO to delete the addition made under section 68 of the Act by setting aside the order of Ld. CIT(A).