O R D E R

This appeal is filed by the assessee against order dated 08.02.2018, passed by the CIT(A), Ahmedabad-5, for the Assessment Year 2014-15.

2. The assessee has raised the following grounds of appeal :-

“a) That no opportunity to cross examination has been given by the AO b) Shares have been purchased, demated and sold for which necessary bills have been issued.

c) Shares have been sold through demat account and against the sale payment has been received by account payee cheque etc.

d) STT shares have been sold on recognized stock exchange on which STT have been paid.”

3. The assessee filed return of income for Assessment Year 2014-15 on 31.12.2014 declaring total income at Rs.2,57,910/-. The return of income was processed under Section 143(1) of the Income Tax Act, 1961. Notice under Section 143(2) of the Act dated 28.09.2015 was issued and served to the assessee. Notice under Section 142(1) read with Section 129 of the Act dated 05.09.2016 alongwith questionnaire was issued and served upon the assessee. In response to the above notices, the Ld. AR/CA of the assessee attended the assessment proceedings and filed written submissions as well as details. The Assessing Officer observed that in the present case reason for scrutiny selection is “Suspicious Long Term Capital Gains on shares” (inputs from Investigation Wing) and, therefore, submissions and evidences were called for from the assessee. The Assessing Officer issued show cause notice dated 16.12.2016 which includes entire report of the Directorate of Investigation, Kolkata. The main gist of the show cause notice was in respect of assessee’s entry of bogus LTCG of Rs.51,34,778/- claimed under Section 10(38) of the Act. The Assessing Officer pointed out from the Investigation Wing report that shares of Surabhi Chemicals & Investment Limited is reflected in the list at Sl. No.16 and, therefore, the said share was utilised with the sole objective of entering unaccounted cash of beneficiaries into regular books of account. The Assessing Officer also pointed out the brokers who are earning commission and providing bogus LTCG to the beneficiaries namely SMC Global Securities Limited, Anand Rathi Share & Stock Broker Limited , Religare Securities Limited, Destiny Securities Limited, Madhya Pradesh Stock Exchange Limited, Nakamichi Securities Limited & Intellect Stock Broking Limited. The Assessing Officer further observed that the assessee purchased 2000 shares of Surbhi Chemical & Investment Limited which was purchased off market on 02.03.2012 from M/s Akriti Advisor Services Pvt. Ltd. for a cost of Rs.2,50,000/-. The assessee received bonus share of Rs.18,000/- which made it to Rs.20,000/- (fair value at Rs.10/-) shares which was further split into Rs.2,00,000/- shares each of Rs.1/-, out of which the assessee sold 1,00,000 shares between 24.09.2016 to 31.12.2013 and received Rs.52,59,778/- which resulted into LTCG of Rs.51,34,778/- and claimed as exemption under Section 10(38) of the Act. The assessee submitted contract note of Arihant Marketingb Limited money receipt of Akriti Advisor Services Pvt. Ltd., copy of bank statement for Oriental Bank of Commerce and Gujarat Ambuja Co. Op. Bank. The Assessing Officer further observed that the assessee failed to submit the following relevant evidences regarding purchase and sale of 2000 shares of Surbhi Chemicals & Investment Limited which was purchased off market from M/s Akriti Advisor Marketing Limited and thereafter received 18,000 bonus shares.

“1. The copy of original certificate of 2000 shares held by Akriti Advisor Pvt. Ltd. which was purchased off market.

2. The audit report showing the financial status of Surabhi Chemicals &

Investment Pvt. Ltd. to issue 18000 bonus shares.

3. The application form for converting the said shares into Demat form.

4. The procedure followed to convert the share into penny stock.

5. The Suda Chitthi regarding purchase and sale of the said shares.”

4. Thus, the Assessing Officer made addition of Rs.52