SANTOSH BHANSALI HUF,JAIPUR vs. ITO, WARD 6(1), , JAIPUR

1. 1 .That on the facts and in the circumstances of the case and in law the Ld. CIT(A) grossly erred in confirming the action of the AO who has not given any adverse comments on the facts given by the assessee on the sale and purchase of shares and as such accepted the facts given by the assessee regarding purchase and sale of shares b) That accepting the facts given by the assessee, the Ld. CIT(A) grossly erred in confirming the arbitrary addition made by the AO u/s. 68 of the Act of Rs. 82,27,828/- which is the LTCG after deducting the cost of purchases of these equity shares of Rs. 1,52,447/- which is illegal c) That without revoking the purchases and sales of the shares the Ld. CIT(A) grossly erred in confirming the action of the AO in arbitrarily applying the modus operandi narrated by the broker in the statement recorded by the Investigation Wing Kolkata d) That the Ld. CIT grossly erred in not giving the opportunity for cross examination of the brokers on whose statement the AO has made the addition of LTCG u/s 68 of the Act.

That the appellant craves leave to add, alter, amends or withdraws any of the grounds of appeal before or at the time of hearing.”

The issues involved in both the appeals are identical (Except the amounts and the names of the scrip involved), hence for sake of convenience we are taking appeal for Assessment Year 2012-13 first and the ratio of this year will be applied to the appeal of Assessment Year 2014-15 also. The brief facts of case are that the assessee has filed return of income u/s. 139(1) of the Act on 31.07.2012 declaring income of Rs. 2,59,730/-. As per the details available with the Department during the year under consideration the assessee has entered into sale transaction of Rs. 41,70,000/- of shares of M/s. Karma Ispat Ltd. and has booked a Long Term Capital gain to the tune of Rs. 38,04,956/-. On the basis of information available in the case of the abovementioned assessee was reopened u/s. 148 of the Act after taking due permission and notice u/s. 148 of the Act issued on 30/03/2019 calling the assessee to prepare a true and correct return of income in respect of which the assessee is assessable under the Income Tax Act, 1961 during the previous year relevant to assessment year 2012-13. In response to the same the assessee filed his ITR on 26.04.2019. Notice u/s. 143(2) of the Act issued on 02.09.2019. Reasons of reopening were supplied to the assessee on 17.09.2019 along with a notice u/s. 142(1) of the Act dated 17.09.2019 was issued along with a questionnaire fixing the case for hearing on 24.09.2019.

As per the information received from the Pr.DIT (Inv.), Kolkata, vide his office letter M. No. 81/2017-18/4193 dated 20.09.2017 that an organized racket of generating bogus entries of LTCG in penny stock has been unearthed as a result of investigation carried out through-out the country. The Directorate of Investigation has recorded statements u/s. 132(4)/131 of the Act and the Directorate has made available various confidential statements of entities involved in the transactions for generating such bogus claims of LTCG. On the basis of information collected during search/survey operations beneficiaries of such bogus LTCG were also identified. The assessee is also one of such beneficiary. The detail of share transaction in case of assessee from penny script during the year is as under:-

Based on the above considering the submissions of the assessee and after thorough analysis of the scrip involved the case of the assessee was assessed at Rs. 42,92,983/-, i.e. addition of Rs. 38,04,956/- u/s. 68 of the Act and Rs. 2,28,297/- u/s. 69 of the Act. The assessee being aggrieved with this order of the AO preferred an appeal before the Ld. CIT (A), NFAC (Delhi), who in turn confirmed the order of the AO. The assessee being further aggrieved preferred the present before us. The case was fixed for hearing on various dates as per order-sheet but always adjourned on the request of the AR of the assessee. Ultimately, the AR of the assessee filed an application for withdrawal of appeal along with Form 2 under the Direct Tax Vivad Se Vishwas Scheme, 2024. We have considered the request of the assessee in the light of Form No. 2 mentioned supra and allowed the application of the assessee for withdrawal of appeal before us and treated the same as dismissed.

In the result, both the appeals of the assessee are dismissed as withdrawn.