ANIP RASTOGI ,MEERUT vs. ITO, WARD- 1(1), MEERUT

These appeals by the different assessees are preferred against

the respective orders of the Ld. Commissioner of Income Tax

[Appeals]-Meerut pertaining to assessment year 2015-16. Since the

issues involved in these appeals are common and identical, hence,

the appeals were heard together and are being disposed of by this

common order for the sake of convenience. The grounds raised in

ITA No. 3809/Del/2018 read as under:-

the facts of the case by confirming the addition of

Rs.22,28,172/-, of the amount of LTCG earned by the

appellant on STT paid sales of listed equity shares of M/s

CCL International Ltd., ignoring the evidences,

documents and case laws relied upon by the appellant,

for various reasons including the followings:-

a) That the conclusions drawn by the authorities

below for making/confirming the aforesaid addition are

unjust, unlawful and based upon incorrect appreciations

of the facts on record and the submissions of the

appellant have not been considered in right perspective.

b) That nothing has been brought on record to show

any linking between the alleged entry operators whose

statements have been relied upon and the appellant. The

evidences and arguments used by the authorities below

are generic in nature and can in no sense be related to

the appellant.

c) That the authorities below have made & confirmed

the impugned addition without any basis and without

brining on record any corroborative material found during

the course of assessment proceedings and also by

completely ignoring the well established law that no

addition can be made solely on the basis of statements

recorded on oath during the course of survey conducted

by the Investigation Wing of Income Tax, Kolkata and

departmentally communicated to the A.O., without

making his own independent enquiry and efforts. Thus

the additions made solely on the basis of the statements

recorded behind the back of the appellant deserve to be

deleted.

d) That the statement of Sh. Jai Kishan Poddar, as

relied upon the Id. A.O. cannot be taken cognizance with,

as the same has been recorded at the back of the

appellant and no opportunity of cross examination was

provided. Further, the statement was only general

statement and no where did the name of the appellant

appear therein.

alter, omit or substitute any or all of the above grounds

of appeal.

the facts of the case by confirming the addition of

Rs.14,36,364/-, of the amount of LTCG earned by

the appellant on STT paid sales of listed equity

shares of M/s CCL International Ltd., ignoring the

evidences, documents and case laws relied upon by

the appellant, for various reasons including the

followings:-

a) That the conclusions drawn by the authorities

below for making/confirming the aforesaid

addition are unjust, unlawful and based upon

incorrect appreciations of the facts on record

and the submissions of the appellant have not

been considered in right perspective.

b) That nothing has been brought on record to

show any linking between the alleged entry

operators whose statements have been relied

upon and the appellant. The evidences and

arguments used by the authorities below are

generic in nature and can in no sense be

related to the appellant.

c) That the authorities below have made &

confirmed the impugned addition without any

basis and without brining on record any

corroborative material found during the course

of assessment proceedings and also by

completely ignoring the well established law

that no addition can be made solely on the

basis of statements recorded on oath during

the course of survey conducted by the

Investigation Wing of Income Tax, Kolkata

and departmentally communicated to the

A.O., without making his own independent

enquiry and efforts. Thus the additions made

solely on the basis of the statements recorded

behind the back of the appellant deserve to be

deleted.

d) That the statement of Sh. Jai Kishan

Poddar, as relied upon the Id. A.O. cannot be

taken cognizance with, as the same has been

recorded at the back of the appellant and no

opportunity of cross examination was

provided. Further, the statement was only

general statement and no where did the name

of the appellant appear therein.

to add, alter, omit or substitute any or all of

the above grounds of appeal.

being ITA No. 3809/Del/2018 (AY 2015-16) and my finding given therein will apply mutatis mutandis in other appeal, since similar

facts and findings are permeating in other appeal also. The

assessee is aggrieved by addition of Rs. 22,28,172/- made u/s. 68

of the I.T. Act, 1961 on account of credits of sale of penny stock.

earning rental income, income from medical profession and interest

on deposits with banks, during the relevant year. The assessee filed

his ITR for the relevant year on 22.9.2015, declaring a total income

of Rs. 9,39,250/-. The return filed him was selected for scrutiny

assessment which were completed vide order dated 18.12.2017,

passed u/s. 143(3) of the Income Tax Act, 1961 (in short “Act”),

making an addition of Rs. 22,28,172/-, holding that the exempt long

term capital gain earned by the assessee on sale of shares of M/s

CCL International Ltd., was not genuine and the same was bogus.

Against the assessment order, the Assessee appealed before the Ld.

CIT(A) who vide his impugned order dated 20.4.2018 has

dismissed the appeal of the assessee. Aggrieved with the order of

the Ld. CIT(A), assessee appealed before the Tribunal.

that the addition in dispute was made and confirmed purely on

presumptions, conjecture and surmises and therefore, deserve to be

deleted. He further submitted that the authorities below have failed

in disallowing deduction claimed by the assessee u/s. 10(38) of the

Act for Rs. 22,28,172/-. It was further submitted that lower

authorities failed to appreciate that the amount of LTCG earned by

the assessee on STT paid sales of listed equity shares of M/s CCL

International Ltd., ignoring the evidences, documents and case laws

relied upon by the assessee. It was further submitted that the

nothing has been brought on record to show any linking between

the alleged entry operators whose statements have been relied

upon and the assessee. The evidences and arguments used by the

authorities below are generic in nature and can in no sense be

related to the assessee. He further submitted that the addition

made was without any basis and without brining on record any

corroborative material found during the course of assessment

proceedings and also by completely ignoring the well established

law that no addition can be made solely on the basis of statements

recorded on oath during the course of survey conducted by the

Investigation Wing of Income Tax, Kolkata and departmentally

communicated to the A.O., without making his own independent

enquiry and efforts. Hence, he requested to cancel the orders of the

authorities below and allow the appeal of the assessee. In support

of his contention, he filed a Paper Book containing pages 1 to 55 in

which he has attached the copy of written submissions dated

20.4.2018 as filed before the Ld. CIT(A), Meerut; photocopy of sale

note and confirmation from M/s Sai Securities for purchase of

shares of M/s CCL International Ltd. as filed before the Ld. CIT(A),

Meerut; photocopy of the relevant bank statement of the assessee

showing payment for purchase of shares as filed before the CIT(A);

photocopy of statement of D-MAT account of the assessee, as

maintained by him with Mansukh Securities and Finance Ltd. as filed

before the CIT(A), Meerut; photocopy of the sale note of the shares

sold as filed before the CIT(A), Meerut; Photocopy of the stock

trading details as downloaded from website of BSE India as filed

before the CIT(A); Financial details of M/s CCL International Ltd. for

FY’s 2012-13 to 16017 as downloaded from the website of money

control.com as filed before the Ld. CIT(A); photocopy of

submissions dated 4.10.2017 & 28.11.2017 as filed before the AO

during the assessment proceedings; copy of judgment of Hon’ble

Delhi High Court in the case of PCIT & Ors. vs. Best Infrastructure

India Pvt. Ltd. (2017) 397 ITR 0082; copy of Hon’ble Delhi High

Court in the case of CIT vs. Ashwini Gupta (2010) 322 ITR 0396;

judgment of Hon’ble High Court of Madhya Pradesh in the case of

Prakash Chand Nahata vs. CIT (2008) 301 ITR 134 and copy of

judgment of Hon’ble High Court of Bombay in the case of CIT vs.

M/s Ashish International (2011) ITA no. 4299 of 2009; ITAT, Delhi

‘SMC’ Bench decision dated 25.9.2018 in ITA Nos. 20121/Del/2018

to 2028/Del/2018 in the case of Shoubit Goel (HUF) & Ors. vs. ITO;

ITAT, Delhi SMC decision dated 24.10.2018 in the acse of Amit

Rastogi (HUF) & Ors. vs. ITO in ITA No. 2128, 2129, 2131 &

2132/Del/2018 (AY 2015-16) and SMC, ITAT, Delhi Decision dated

5.11.2018 in the case of Arun Kumar & Ors. vs. ACIT in ITA No.

457, 2825 & 2826/Del/2018).

authorities below. He further stated that assessee has not

substantiated his claim before the revenue authorities. He stated

that assessee hasd generated bogus entries of long term capital

gains on sale of penny stocks and claimed the same to be exempted

under section 10(38) of the Act. In this case the Investigation Wing

at Kolkata had carried out country wise investigation to unearth the

organized racket of generating bogus entries of long term capital

gains which is exempt from tax. It was further submitted that the

assessee had purchased 5000 equity shares of M/s CCL

International Ltd. for Rs. 2,00,000/- on 15.4.2013 in off market

transaction @ Rs. 40.00 per share from Sai Securities. These

shares were sold by the assessee through stock broker M/s Mansukh

Securities and Finance Ltd. ranging from Rs. 492.50 to 481.20 per

share. He further submitted that the payment for purchase of

shares has been debited from assessee account through cheque for

a sum of Rs. 2,00,000/- was debited whereas the sale note was

dated 15.4.2013, which proves that the transaction was an

afterthought and the buyer has back dated the transaction. The

shares were purchased through off market deals of unknown

company. In view of the above assessee failed to prove the

genuineness of the alleged long term capital gain claimed to have

been earned by the assessee. He further stated that the case laws

relied upon by the AO as well as Ld. CIT(A) may be read as his

arguments including the decision of the Hon’ble Supreme Court of

India in the case of Sumati Dayal vs. CIT and in the case of Mc

Dowell and Company Limited, 154 ITR 148.

especially the impugned order. I note that the assessee has shown

Long Term Capital Gain amounting to Rs. 22,28,172/- earned during

the FY 2014-15 and exempt u/s. 10(38) of the I.T. Act, 1961. The

assessee was asked to explain the source of aforesaid Long Term

Capital Gain during the course of scrutiny proceedings. The

explanation offered that it is sale proceeds of shares are found to be

unsatisfactory. The explanation of the assessee is general in nature

that as the transaction is through Stock Exchange and the payment

is by cheque, the transactions should be treated as genuine.

Further, regarding the statement of Sh. Jai Kishan Poddar the

assessee has only stated that in the statement there is no specific

link with the claim of exemption in respect of Long Term Capital

Gain of Rs. 22,78,172/- u/s. 10(38) by him. He has not stated a

thing with respect to the statement of Sh. Jai Kishan Poddar in

which he has accepted that facilitation of accommodation entries of

long term capital gain / long term capital loss through his share

banking firm has been done to few beneficiaries with the help of

different accommodation entry operators, promoters of the scripts

of various penny stocks other brokers etc. Sh. Jai Kishan Poddar

also gave details of different bogus scripts/ penny stocks which have

been used for providing the accommodation entries of LTCG and

LTCL to different beneficiaries using his brokerage company

Consortium Capital Pvt. Ltd. and the name of CCL International

Limited having scrip name CCL Inter appears in the list whose

shares were sold by the assessee and exemption on LTCG

amounting to Rs. 22,28,172/- claimed u/s. 10(38) of the Act. After

perusing the records, I find that in the instant case the investment

in shares made by the assessee reveals that he has not been

dealing in shares on a regular basis and the entries of LTCG have

also been taken by other members of the assessee company and

the purchase of these shares were claimed to be through off market

deals and not through Stock Exchange. The financials of penny

stock company M/s CCL International Ltd. and movement of its price

are abrupt, unrealistic and based upon any realistic parameters.

From the perusal of financial statements of the aforesaid company

M/s CCL International Ltd. from the Ministry of Corporate Affairs

website (MCA) examining the information available in the public

domain from where it was observed that there is no extraordinary

increase in the profits of the company to justify the increase in

value of the shares. I further note that Investigation Wing had

recorded the statement of Sh. Jai Kishan Poddar who is one of the

Director of M/s Consortium Capital Pvt. Ltd. whcih is one of the

entities utilised for providing entry of bogus long term capital gain of

M/s CCL International Ltd. who had admitted that he was involved

in scam of providing bogus long term capital gains through shares of

M/s CCL International Ltd. had also admitted that they were also

involved in trading of these Jamakharchi Companies through which

manipulative transactions in securities to either artificially raise or

lower the market rate of the shares are being done. I also note

that the independent findings of the AO, which are corroborated by

the information given by the Investigation Wing, the assessee has

failed to substantiate the genuineness of alleged share transactions

in respect of long term capital gain u/s. 10(38) of the Act. In view

of above discussions, the landmark decision of the Hon’ble Supreme

Court in the case of McDowell and Company Limited, 154 ITR 148

are squarely applicable in this case wherein it has been held that

tax planning may be legitimate provided it is within the framework

of the law and any colourable devices cannot be part of tax planning

and it is wrong to encourage or entertain the belief that it is

honourable to avoid the payment of tax by dubious methods.

However, the case laws cited by the Ld. counsel for the assessee

are on distinguished facts, hence, not applicable in the instant case.

The assessee has not argued any other ground mentioned in the

grounds of appeal, but only argued on merit for which assessee has

failed to substantiate his claim before the lower revenue authorities

as well as before this Bench. In view of above discussions, I am of

the considered opinion that Ld. CIT(A) has rightly confirmed the

addition in dispute, which does not need any interference on my

part, therefore, I uphold the action of the Ld. CIT(A) on the issue in

dispute and reject the grounds raised by the Assessee. In the

result, the appeal of the assessee is dismissed.

3810/Del/2018 (AY 2015-16), similar facts are permeating and

same finding has been given, therefore, my finding given above will apply mutatis mutandis in this appeal also, because the nature

of transactions, evidences and documents are exactly the same.

Thus, both the appeals are treated as dismissed.

dismissed.

The order pronounced on 08.01.2019. Sd/- [H.S. SIDHU] JUDICIAL MEMBER

Dated: 08-01-2019

SR BHATNAGAR