Dipesh Ramesh Vardhan v. DCIT [ITA Nos. 7648,
7662, 7651, 7650, 7649/Mum/2019, dt. 11-8-2020] : 2020 TaxPub(DT) 3189
(Mum-Trib)
Exempted long-term capital gains on sale of
shares--Addition under section 68 alleging price rigging arising out of third
party statement
Facts:
Assessee and their family members were part of the Vardhan
group of companies. They had invested shares in a company called STL Ltd. @ Rs.
12.50 per share in 2011. This STL Ltd. was amalgamated with a listed company
called SAL Ltd. whose shares were highly volatile share scrip. Consequential to
the amalgamation assessee came in possession of the shares of SAL Ltd. in lieu
of the shares held in STL Ltd. A search and seizure operations happened in the
meantime with the assessee group where no incriminating documents came forth.
Assessee had returned exempted long-term capital gains under section 10(38) by
way of sale of SAL Ltd. shares thru authorized brokers in the stock exchange
after subjecting payment of STT for a collective sum of Rs. 3235.98 lakhs (all
assessees put together). Arising out of some third party statements the
assessing officer and Commissioner (Appeals) upheld the entire exempted capital
gains as alleged price rigged transactions besides adding 2% for performing the
accommodation of price rigging activity. On higher appeal --
Held in favour of the assessee that the addition was not
sustainable as assessee had produced evidences manifesting the share price
which prevailed in the stock exchange at that time besides producing documentary
evidences in the form of contract notes etc.
The allegations of assessing officer and Commissioner
(Appeals) was based on preponderance of probabilities as held in Sumati
Dayal (1995) 214 ITR 801 (SC) : 1995 TaxPub(DT) 1173 (SC). There was no cross
examination right offered to the assessee on the alleged third party statements
which was a sine qua non as per law to sustain additions as held in Andaman
Timer Industries Ltd. (Civil Appeal No. 4228 of 2006) : 2015 TaxPub(EX) 2155
(SC) and the decision of Kishanchand Chellaram v. CIT (1980) 125
ITR 713 (SC) : 1980 TaxPub(DT) 1130 (SC). In the absence of these the
additions could not be sustained.