Pulkit Gupta vs Income Tax Officer

Per Raj Kumar Chauhan, Judicial Member:

The appeal is directed against the order dated 24.02.2025 of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [ hereinafter referred to as the “C IT (A)/NFAC”] passed u/s 250 o f the Income T ax Act, 1961 [hereinafter referred to as “the Act”] wherein the appeal of the assesse was dismissed and the assessme nt order dated 29.03.2022 was upheld and the addition made u/s 68 r.w.s. 115BBE of the Act w as confirmed.

The facts in brief as culled out from the order of the authorities below are that the assessee is an individual, has filed return o f income for AY 2013-14 on 24^{t h} July, 2013 declaring a taxable income of Rs. 8 ,93,500/-. The Income Tax Office is in receipt of information/report from the Investigation Wing came to know all the beneficiaries of bogus Lo ng Term Capital Gain thro ugh the scrip of M/ s Access Global Ltd which is allegedly controlled by a Syndicate of Brokers, Dummy Directors, Operators and Entry Providers Managers; the list of all beneficiaries contained the name of the assesse. The assessee has allegedly purchased shares of M/s Seaview Suppliers Pvt. Ltd., a private limited company based at Ko lkata throug h M/s Kalimata Tradecom Pvt. Ltd.; the assesse is allowed to purchase 9 months’ credit as the payment for the purchase was finally debited from the bank account o f the assessee on 26.04 .2011. M/s Seav iew Suppliers Pvt. Ltd. w as got merged with M/s Access Global Ltd by the order of Hon’ble Kolkata Hig h Court. The assessee had purchased 600 shares of Seaview Suppliers Pvt. Ltd at Rs. 484 each off market on 10 .0 7.2010. However, the payment was not made on the same day. The payment for the purchase of shares o f Seaview Suppliers Pvt. Ltd was made o n 26 .04.2011 after availing 9 Months long credit period. Seaview Suppliers Pvt. Ltd got amalgamated with Access Global Limited Vide order dated 15.11.2011 of the Hon'ble High C ourt of Calcutta. 28,200 shares of Access Global Limited got credited into the demat account of the asse sse оn 03.03.2012. The assessee so ld 282 00 shares of Access Global Limited through M/s. Prakash Nahata & Co. on 30.11.2012, 03.12.2012, 05.12 .2012.

In view of the report of the department regarding claim of bogus long term capital gain through the scr ip of M/s Access Global Ltd., a notice u/s 144 of the Act was issued to the assesse and assesse has filed a re turn on 3 0.05.2021 declar ing an income of Rs. 8,93 ,500/-; notice u/s 143 (2) was issued on 04.10.2021 and subsequently, also issued on different dates wherein the requisite details were called for from the assesse online. In reply the assesse state d that he has allegedly purchased and sold the share s in normal cour se, submitted purchase bills, payment proof of banking channel, certificate of transfer issued by the Registrar of the Companie s, letter of amalgamation received by registered post, Share Certificate and contract note for the sale o n which STT is duly paid and bank statement to prove the genuineness of the transactio n. However, the ld. AO was not convinced by the evidence submitted by the assesse and had proceeded to make an addition o f Rs. 70,62,901/-, on account o f bogus lo ng term capital gain/claimed exemptio n u/s 10(38) and addition was made u/s 68 of the Act.

Aggrieved by the impugned order, the assessee filed an appeal before the ld. CIT(A) w here in vario us cases were referred pertaining to same scrip w here the transactions in the shares of Access Global Ltd. was he ld to b e genuine . The ld. CIT(A) has observed that during the course of enquiry by the Investigation Wing and by the AO, it was found that the company M/s Access Global Ltd. has got no business, no cash flow statement and no fixed or tangible assets. It was further observed that the AO after doing detailed investigation has made the additio n because the appellant has clearly received bogus LTCG from a p aper company. It was further observe d that the genuineness of the company M/s Access Global Ltd. w as no t est ablished before the ld. C IT(A) as the assesse co uld not prove that the said company was doing some real business because the appellant has no t enclosed the P&L Account and balance sheet of the company to prove any real business done by the company. While relying upon the judgment of ITAT Mumbai in the case of ITO v. S.M. Bharwani in the case of Penny Stock and Hon’ble Kolkata High Court in the case of PCIT v. Swati Bajaj, the ld. CIT(A) has confirmed the additio n and d ismissed the appeal of the asse sse.

Aggrieved by the imp ugned order the assessee is in appeal has raised the following grounds o f appeal:

We have heard the rival submissions and o n the basis of grounds raised in the appeal, it is noticed that the ground no. 5 only pertains to the merit of the matter as other ground s are either general in nature or legal in nature. On the basis of grounds so r aised the following issues for consideration ar ises as under:

In order to prove the nature of the investment to be genuine and re al and no t be a bogus LTCG, the preliminary onus is on the assesse to prove the genuine ness of the transactio ns. The ld. AR for the assesse would submit in that regard that the assesse purchased and sold all shares in normal course, submitted purchase bill, payment proof fr om banking channel, share transfer form issued by Registrar of Companie s, le tter of amalgamation r eceived by registered post, demat account, contract no te for the sale on w hich STT is duly p aid and bank statement to prove the genuineness of the transaction but the Ld. AO failed to rely on the facts and evidences tendered by the assessee and made addition of Rs. 70,62,901/- on account of bogus long term capital gain and denied exemption u/s 10(38) and addition was made u/s 68 of the Act. In support of above submissions, the ld. AR has submitted the d etails of the docume nts submitted before the AO in a chronological manner as under:

In support of his argument, the ld. AR has furthe r relied upon the var ious judgment in which the same scr ip has been considered and transactions has b een found genuine, the details of the judgme nts is extracted belo w as under:

We now proceed to d iscuss the cases re lied by the assesse in brief as under:

The ld. AR has submitted that the assesse has successfully discharged the onus of proving the genuineness of the transactions and has established that he w as a genuine investor and the LTCG claimed by the assesse was perfectly legal, justified and genuine and therefore the assesse w as entitled to exemption u/s 10(38) of the Act.

The ld. DR on the o ther hand has r elied upon the judgment of the lower authorities stating that the ld. AO has done the investigation/enquir ies himself and has no t simply relied upon the Investigation W ing. The ld. DR further submitte d that the ld. AO has examined the materials and the submissions and the details and has rightly denied the claim of LTCG made by the assesse and as such he prayed for dismissed of the appeal.

We have co nsidered the submissions made at bar. In view of the argument raised by the assesse wherein he has referred to various documents relied by the assesse and the genuine ness of those documents has neither been disputed by the revenue nor any material has been provided before us to be lieve that the said documents relied by the assesse were no t genuine with respect to the sale and purchase of the shares of the scrip involved. T he legal precedent relied by the assesse are also supporting the case o f the assesse to the effe ct that the assesse is a genuine investor and there is no material to conclude that he was involved in rigging the price of the scrip of Access G lobal Ltd. company in any manner. We have noticed that the Assessing Officer has proceeded more on presumptions and assumptio ns and he has even questioned the amalgamation of M/s Seaview Supplier s Pvt. Ltd. into M/s Acce ss Global Ltd. w hich has been approved by the Hon’ble Kolkata High Court.

Once the assesse has discharged the onus successfully to establish the genuineness of the transactions having been done by him while purchasing the share of M/s Access Global Pvt. Ltd., the onus is thus shifted to the revenue to estab lish that the transactions made by the assesse was not genuine and was a result o f bogus claim of LTCG thro ugh rigging the price of share of the scr ip involved. We have also noticed that the assesse has purchased the shares of M/s Seaview Suppliers Ltd. which was lawfully amalgamated bythe order of Hon’ble High Court into M/s Access Global Pvt. Ltd. along with three other co mpanies. On amalgamation of M/s Seav iew Supplier s Pvt. Ltd. into M/s Access Global Pvt. Ltd., the assessee was allo tted 47 share for one share of Seaview Suppliers Pvt. Ltd. The Assessing Officer has raised doubt about the said transactio ns on the ground that M/s Seaview Supplie rs Pvt. Ltd. had no cash flow statement, no business, no income and no fixe d or tangible assets. However, no material in that regard has been brought to our knowledge either in the order of the lower authorities or by way of submissions of the ld . DR. We have further noticed that the observations of the ld . Asse ssing Officer in para 4.3.1 and 4.3.2 of the Assessment Order with re gard to the d ubious nature of stock broker M/s Prakash Nahata & Co. thro ugh whom the assessee claimed to have sold the shares o f M/s Access G lobal Ltd., in the absence of any material brought to o ur no tice are not correct to say that the assessee was acting in convince with M/s Access Global Ltd. so as to raise the bogus LTCG claim for seeking exemptions u/s 10(38) of the Act. Nothing has been brought to our notice that the assessee has ever been investigated by the Investigation Wing of the Inco me Tax Department or any question has ever been raised regarding rigging the price of shares of scrip in question by the assessee. The revenue has thus failed to discharge the onus shifted upon to prove transactions carr ied out by the assessee was not genuine and thus we are of the considered view that the lower authorities has rejected LTCG claim of the assessee for exemptions u/s 10(38) without any legal and factual basis. In view of the above discussion, the question framed by us in the beginning of the order is decided in favour o f the assesse and against the revenue by hold ing that the assessee , in the g iven facts and circumstances, has successfully e stablished that he was a genuine investor and genuinely purchased the shares of Seaview Suppliers Pvt. Ltd and subseq uently on account of amalgamation of it into M/s Acce ss Global Pvt. Ltd. has acquired 28,200/- share by way of transfer to his demat account. He has further succeeded and d ischarged onus that he has genuinely and successfully so ld the shares of M/s Access Global Pvt. Ltd . on 06.12.2022 and 0 7.12.2012 through demat account and payme nt has been received through banking channel.

In view o f the above discussion and the legal precedents relied by the assessee, the ground no. 5 raised b y the assesee in appeal with respect to the merits of the case is decided in favour of the assessee and against the revenue.

In vie w of the our decision on the ground no. 5, the decision on remaining grounds which are either general or legal in nature is rendered academic and we hav e le ft the same open and has not adjudicated them. For the above reasons the impugned order is set aside. T he AO is directed to delete the addition of Rs. 70,62,901/- accordingly.

The appeal o f the assessee is acco rdingly allowed.