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Tax Publishers 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.

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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.