Vasudha Jain , Kolkata V. ITO, Ward - 36(4), Kolkata , Kolkata

ITA 1018/KOL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4772 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 16-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATYAJIT MONDAL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Share purchase agreement; Transactions in derivatives; Earning of tax free income; Question of law; Accommodation entries; Sham transactions; Penny stocks; Set aside; Capital Gains; Bogus
• Section: 68; 205; 201; 72; 13; 22; 20

Judgement Text

1 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 , A (SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL A(SMC) BENCH : KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 1018/KOL/2018 ASSESSMENT YEAR: 2015-16 VASUDHA JAIN (PAN: AFTPA5188H) VS. INCOME-TAX OFFICER, WD-36(4), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 18.12.2018 DATE OF PRONOUNCEMENT 15.02.2019 FOR THE APPELLANT SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT SHRI SATYAJIT MONDAL, ADDL. CIT ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-10, KOLKATA DATED 02.04.2018 FOR AY 2015-16. 2. THE SOLE ISSUE OF ASSESSEES APPEAL IS AGAINST THE ACTION OF LD. CIT(A) IN UPHOLDING THE ADDITION MADE BY THE AO U/S. 68 OF THE INCOME-T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) IN RESPECT OF SALE PROCEEDS OF SHARES OF M/S. SULABH ENGINEERS & SERVICES LTD. (IN SHORT M/S. SESL) REJECTING THE ASSESSEES CLA IM OF LONG TERM CAPITAL GAINS (LTCG) ON SALE OF THOSE SHARES. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A N INDIVIDUAL WHO FILED HER RETURN OF INCOME ON 27.07.2015 DECLARING TOTAL INCOME AT RS.3 ,51,280/-. ACCORDING TO AO, VARIOUS DETAILS/DOCUMENTS FURNISHED ON RECORD INCLUDED DETA ILS OF PURCHASES AND SALE OF SHARE SCRIPS OF M/S. SESL WHICH RESULTED IN LTCG OF RS.9,31,615/ - WHICH WAS CLAIMED AS EXEMPT U/S. 10(38) OF THE ACT. THE AO WAS OF THE OPINION THAT HUGE RISE IN THE SHARES OF M/S. SESL WAS 2 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 NOT REAL AND IT IS A STAGE MANAGED, PRE-ARRANGED TR ANSACTION WHEREIN THE ASSESSEES OWN MONEY HAS BEEN CONVERTED/LAUNDERED THROUGH THE USE OF A SYNDICATE/RACKET WHICH SELLS THE SCRIPS OF M/S. SESL FOR A VERY LOW PRICE AND AFTER TWELVE MONTHS RIGS/ARTIFICIALLY INFLATED THE PRICE WHEREIN PRE-ARRANGED COMPANIES WITH WHOM ASSE SSEES CASH IS DELIVERED, PURCHASES THE SHARES OF M/S. SESL OF A VERY HIGH PRICE, THUS THE ASSESSEE EARNS HUGE LTCG WHICH THE ASSESSEE LATER CLAIMS TO BE EXEMPT INCOME. ACCORDI NG TO AO, THE MODUS OPERANDI AS SUGGESTED ABOVE HAS BEEN REVEALED AFTER IN DEPTH ST UDY BY THE INVESTIGATION WING OF THE DEPARTMENT AS WELL AS BY OTHER AGENCIES LIKE SEBI E TC. HOWEVER, IN PARA 11.3 OF THE ASSESSMENT ORDER, THE AO CLARIFIES AFTER REFERRING TO THE CASH TRAIL WHICH HAPPENED IN SUCH MODUS OPERANDI IN EARLIER PARAS AND AO ACKNOWLEDGES THAT THE SAID DISPLAYED CASH TRAIL DOES NOT PERTAIN THIS PARTICULAR CASE AND HE ALSO STATES THAT IT IS NOT AN EASY TASK TO FORM THE TRAIL OF THE CASH MOVEMENT IN EACH AND EVERY CA SE . THEREAFTER, EVEN THOUGH THE ASSESSEE FILED VARIOUS DETAILS/DOCUMENTS/PAPERS BEFORE THE A O TO SHOW THAT PURCHASE AND SALE OF SHARE SCRIPS OF M/S. SESL WHICH RESULTED IN LTCG OF RS.9,31,615/- AND WHICH WAS NOT ACCEPTED BY THE AO. ACCORDING TO ASSESSEE, THE SHAR ES PURCHASED AND SOLD WERE THROUGH RECOGNIZED SHARE BROKER VIZ. M/S. EUREKA STOCK & SH ARE BROKING SERVICES LTD. AND THROUGH ONLINE TRADING MECHANISM ON WHICH STT WAS ALSO PAID . IT WAS BROUGHT TO NOTICE OF AO THAT THE SHARES WERE QUOTED WITH BOMBAY STOCK EXCHANGE ( BSE). HOWEVER, THE AO DID NOT AGREE WITH THE CLAIM OF THE ASSESSEE AND ADDED THE ENTIRE SALE CONSIDERATION OF RS.12,37,500/-. AGGRIEVED, ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED CONFIRM THE ACTION OF AO. AGGRIEVED, ASSES SEE IS BEFORE US. 4. THE LD. AR ASSAILING THE ACTION OF THE LD. CIT(A ) CONTENDED THAT THE LD. CIT(A) ARBITRARILY BRUSHED ASIDE ALL THE DOCUMENTS PRODUCE D BY THE ASSESSEE TO SUBSTANTIATE THE CLAIM AND HAS GONE BY THE TEST OF HUMAN PROBABILITY TO NIX THE CLAIM OF ASSESSEE, WHICH IS NOT LEGALLY SUSTAINABLE, SO HE WANTS US TO ALLOW TH E CLAIM OF THE ASSESSEE IN THIS REGARD. FURTHER THE LD. AR SUBMITS THAT THE ASSESSEE HAS DI SCHARGED THE ONUS ON HIM TO SHOW THAT THE TRANSACTION IS IN THE RECOGNIZED STOCK EXCHANGE THROUGH RECOGNIZED STOCK BROKER AND ON ONLINE PLATFORM AND THE SHARES WERE HELD IN DE MAT ACCOUNT AND SOLD THROUGH THE BANKING 3 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 CHANNEL. ACCORDING TO LD. AR, THERE IS NO EVIDENCE /MATERIAL TO SUGGEST THAT ASSESSEE HAD INDULGED IN ANY ACTIVITY AS SUGGESTED BY THE AO TO CAUSE A DOUBT ON THE CLAIM MADE BY THE ASSESSEE. ACCORDING TO LD. AR, IN THE INVESTIGATIO N REPORT OF THE DEPARTMENT IS A GENERAL REPORT AND HAS NOWHERE INDICTED THE ASSESSEE/BROKER /SCRIPS OR ANY REPORT OF SEBI TO SUGGEST THAT THE ASSESSEE HAD INDULGED IN ANY NEFARIOUS ACT IVITY. SO WITHOUT ANY EVIDENCE ASSESSEES CLAIM CANNOT BE DISALLOWED. PER CONTRA, THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A) AND AO AND DOES NOT WANT US TO INTERFERE IN THE ORD ER OF LD. CIT(A) AND CITED THE ORDER OF HONBLE BOMBAY HIGH COURT IN BIMAL CHAND JAIN IN T AX APPEAL NO. 18/2017, THE LD. DR VEHEMENTLY OPPOSING THE ARGUMENTS OF THE LD. AR COMPLETELY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES AND STATED THAT THE ASSESSEE S OWN MONEY HAS BEEN LAUNDERED THROUGH THIS MAZE OF COMPANIES WHICH ARE PRE-ARRANGED, STAG E MANAGED AND, THEREFORE, NEEDS TO BE DEALT WITH HEAVY HANDS. 5. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. I NOTE THAT THE ASSESSEE HAS PURCHASED 5000 SHARES OF M/S. SESL @ RS.59.75 PER SHARE ON 21.03.2013 THROUGH HER BROKER M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. ALL THESE 5000 SHARES WERE SOLD BY THE ASSESSEE ON TWO DIFFERENT DATES AT LOTS OF 2500 EACH ON 27.05.2014 @ RS.249/- PER SHARE AND ON 29.05.2014 @ 246/- PER SHARE WITH GROSS COST OF RS.12,37,500/-. IN ORDER TO JUSTIFY THE CLAIM THE L D. AR DREW MY ATTENTION TO THE CONTRACT NOTE NO. 101690 AND SETTLEMENT NO.R-1213248 DATED 2 1.03.2013 WHICH IS PLACED AT PAGE 2 OF THE PAPER BOOK FROM WHERE I NOTE THAT THE ASSESS EE HAD PURCHASED 5000 SHARES @ RS.59.75 FOR A TOTAL CONSIDERATION OF RS.2,98,750.0 0 THROUGH M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. THEREAFTER, I NOTE THAT THE A MOUNT HAS BEEN PAID THROUGH BANK WHICH IS REVEALED ON A PERUSAL OF THE BANK STATEMENT PLAC ED AT PAGE 3 OF THE PAPER BOOK. I ALSO NOTE FROM PAGES 4 TO 5 OF THE PAPER BOOK THE DE MAT STATEMENT SHOWING 5000 SHARES OF M/S. SESL TRANSFERRED TO THE NATIONAL SECURITY DEPOSITOR Y LTD. PAGE 6 OF THE PAPER BOOK REVEALS THE DE MAT HOLDING STATEMENT OF 5000 SHARES IN M/S . SESL. PAGE 7 OF THE PAPER BOOK IS BROKERS LEDGER SHOWING RECEIPT OF THE ABOVE TRANSA CTION. COMING TO THE SALES, I NOTE THAT FROM PERUSAL OF PAGES 8 AND 9 OF THE PAPER BOOK THE CONTRACT NOTE FOR SALE OF 5000 SHARES OF 4 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 M/S. SESL DATED 27.03.2014, 2500 SHARES AT GROSS RA TE OF RS.249/- RECEIVED CONSIDERATION OF RS.6,22,500/- AND ON 29.03.2014 2500 SHARES WERE SO LD AT RS. 246/- GENERATING SALE CONSIDERATION OF RS.6,15,000/- THUS TOTAL AMOUNT OF RS.12,37,500/-. PAGE NOS. 10 TO 11 REFLECTS THE SALE CONSIDERATION HAS BEEN PASSED THR OUGH THE BANKING CHANNELS AND PAGE NOS. 12 TO 14 REVEALS THE DE MAT HOLDING STATEMENT SHOWI NG THE SALE OF 5000 SHARES OF M/S. SESL. PAGE 15 REFLECTS THE BROKERS LEDGER SHOWING THE PAYMENTS MADE. PAGES 16 TO 19 OF THE PAPER BOOK REVEALS THE BALANCE SHEET, P&L ACCOU NT AND COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THE AFORES AID BACK DROP, THE LD. AR SUBMITS THAT THE ASSESSEE HAS DISCHARGED THE ONUS ON HER TO SHOW THAT THE TRANSACTION HAPPENED IN THE RECOGNIZED STOCK EXCHANGE THROUGH RECOGNIZED STOCK BROKER AND ON ONLINE PLATFORM AND THE SHARES WERE HELD IN DE MAT ACCOUNT AND SOLD THROUGH THE BANKING CHANNEL. AND, IT WAS POINTED OUT BY THE LD. AR, THERE IS NO EVIDENCE/MAT ERIAL TO SUGGEST THAT ASSESSEE HAD INDULGED IN ANY ACTIVITY AS SUGGESTED BY THE AO TO CAST A DOUBT ON THE CLAIM MADE BY THE ASSESSEE. 6. AS EARLIER NOTED BY ME THAT THE ASSESSEE HAS FIL ED CONTRACT NOTE DATED 21.03.2013, BANK STATEMENT FOR PAYMENT, DEMAT STATEMENT, DEMAT HOLDING STATEMENT, BROKERS LEDGER SHOWING RECEIPT ETC. TO SUPPORT HER CLAIM. THE AO HAS HEAVILY RELIED ON THE MODUS OPERANDI WHICH HAS BEEN BROUGHT OUT BY THE INVESTIGATION WIN G OF THE DEPARTMENT. HOWEVER, THE AO ACKNOWLEDGES THAT THE CASH TRAILS ETC. WHICH THE AO HAD DRAWN/DEPICTED AS EXAMPLE IN HIS ASSESSMENT ORDER HAVE NOTHING TO DO WITH THE AS SESSEE. I FIND THAT THERE IS NO EVIDENCE/MATERIAL TO SUGGEST THAT THE AFORESAID DOC UMENTS FILED BY THE ASSESSEE ARE FALSE OR FABRICATED. ALL THE TRANSACTIONS OF PURCHASE AND S ALE HAVE HAPPENED THROUGH STOCK EXCHANGE THROUGH ONLINE PLATFORM AND THROUGH BANKING CHANNEL . THE SHARES WERE HELD IN DEMAT ACCOUNT FOR MORE THAN A YEAR, THEREFORE, WITHOUT AN Y MATERIAL TO SUGGEST THAT THE ASSESSEE/BROKER HAD INDULGED IN ANY ACTIVITY LIKE S TAGE MANAGED AND/OR PRE-ARRANGED AS SUGGESTED BY THE AO IT CANNOT BE HELD THAT THE ASSE SSEES LTCG CLAIM IS BOGUS. THEREFORE, WE OVERTURN THE DECISION OF THE AUTHORITIES BELOW A ND DIRECT THE AO TO ALLOW THE CLAIM OF LTCG OF THE ASSESSEE. 5 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 7. FOR TAKING SUCH A COURSE OF ACTION WE TAKE NOTE OF CERTAIN JUDICIAL DECISIONS ON SIMILAR FACTS:- 8. THE CASE OF THE ASSESSEES IS SIMILAR TO THE DEC ISION OF HONBLE BOMBAY HIGH COURT, NAGPUR BENCH IN CIT VS. SMT. JAMNADEVI AGRAWAL & OR S. DATED 23RD SEPTEMBER, 2010 REPORTED IN (2010) 328 ITR 656 WHEREIN IT WAS HELD THAT: 'THE FACT THAT THE ASSESSEES IN THE GROUP HAVE PURC HASED AND SOLD SHARES OF SIMILAR COMPANIES THROUGH THE SAME BROKER CANNOT BE A GROUN D TO HOLD THAT THE TRANSACTIONS ARE SHAM AND BOGUS, ESPECIALLY WHEN DOCUMENTARY ITA NOS. 93 TO 99/RPR/2014 & C.O. NOS. 12 TO 18/RPR/2014 . A.Y. 2004-05 10 PRODUCED TO ESTABLISH THE GENUINENESS OF THE CLAIM. FROM THE DOCUMENTS PRODUCED, IT IS SEEN THAT THE SHARES IN Q UESTION WERE IN FACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY H AS CONFIRMED TO HAVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEES. SIMILARLY, THE S ALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRODUCING DOCUMENTARY EVIDENCE. IT IS TRUE THAT SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS. HOWEVER, THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET RA TES PREVAILING ON THE RESPECTIVE DATES AS IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEES. THEREFORE, THE FACT THAT SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHAM TRANSACTIONS. THE STATEMENT OF THE BROKER P TH AT THE TRANSACTIONS WITH THE H GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCIN G DOCUMENTARY EVIDENCE TO THE EFFECT THAT THE SHARES SOLD BY THE ASSESSEES WERE IN CONSO NANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EVIDENCE, THE TRIBUNAL HAS ARRIVE D AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT ON RECORD TO SHOW THAT THE FINDINGS RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE DOCUMENTARY EVIDENCE ON RECORD. THE TRIBUNAL HAS FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE,BANK A CCOUNTS OF SOME OF THE BUYERS OF SHARES CANNOT BE LINKED TO THE ASSESSEES. MOREOVER, YN THE LIGHT OF THE DOCUMENTARY EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE A SSESSEES WERE IN CONFORMITY WITH THE MARKET PRICE, THE TRIBUNAL RECORDED A FINDING OF FA CT THAT THE CASH CREDITS IN THE BUYERS' BANK ACCOUNTS CANNOT BE ATTRIBUTED TO THE ASSESSEES. NO FAULT CAN BE FOUND WITH THE ABOVE FINDING RECORDED BY THE TRIBUNAL. THEREFORE, THE DECISION O F THE TRIBUNAL IS BASED ON FINDING OF FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDE R OF THE TRIBUNAL.ASSTT. CIT VS. KAMAL KUMAR S. AGRAWAL (INDL.) & ORS. (2010) 41 DTR (NAG) (TRIB) 105: (2010) 133 TTJ (NAG) 818 AFFIRMED; SUMATI DAYAL VS. CIT (1995) 125 CTR (SC) 124: (1995) 80 TAXMAN 89 (SC) DISTINGUISHED. 12. THE HON'BLE HIGH COURT OF RAJASTHAN IN CIT VS. SMT. PUSHPA MALPANI - REPORTED IN (2011) 242 CTR (RAJ.) 559; (2011) 49 DTR 312 DISMIS SED THE APPEAL OF DEPARTMENT OBSERVING 'WHETHER OR NOT THERE WAS SALE OF SHARES AND RECEIP T OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSENTIALLY A QUESTION OF FACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT AT THE TIME O F TRANSACTIONS, THE BROKER IN QUESTION WAS NOT BANNED BY SEBI AND THAT ASSESSEE HAD PRODUCED COPIE S OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICATE, APPLICATION FOR TRANSFER OF SHAR E CERTIFICATE TO DEMAT ACCOUNT ALONG WITH COPIES OF HOLDING STATEMENT IN DEMAT ACCOUNT, BALAN CE SHEET AS ON 31ST MARCH, 2003, SALE BILL, BANK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS, OF CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. ON 23RD JULY, 2003. THEREFORE, 'TH E PRESE/ITDPPEAL DOES NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. 6 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 9. THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF ANUPAM KAPOOR 299 ITR 0179 HAS HELD AS UNDER:- THE TRIBUNAL ON THE BASIS OF THE MATERIAL ON RECOR D, HELD THAT PURCHASE CONTRACT NOTE, CONTRACT NOTE FOR SATES, DISTINCTIVE NUMBERS OF SHA RES PURCHASED AND SOLD, COPY OF SHARE CERTIFICATES AND THE QUOTATION OF SHARES ON THE DAT E OF PURCHASE AND SALE WERE SUFFICIENT MATERIAL TO SHOW THAT THE TRANSACTION WAS NOT BOGUS BUT A GENUINE TRANSACTION. THE PURCHASE OF SHARES WAS MADE ON 28TH APRIL, 1993 I.E.. ASST. YR. 1993-94 AND THAT ASSESSMENT WAS ACCEPTED BY THE DEPARTMENT AND THERE WAS NO CHALLEN GE TO THE PURCHASE OF SHARES IN THAT YEAR. IT WAS ALSO PLACED BEFORE THE RELEVANT AO AS WELL A S BEFORE THE TRIBUNAL THAT THE SALE PROCEEDS HAVE BEEN ACCOUNTED FOR IN THE ACCOUNTS OF THE ASSE SSEE AND WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE TRIBUNAL WAS RIGHT IN REJECTING T HE APPEAL OF THE REVENUE BY HOLDING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPAN Y. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CO NTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTE D AND THE TRANSACTION TOOK PLACE THROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHICH COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITIER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUCH PRESUMP TION COULD BE DRAWN BY THE AO MERELY ON SURMISES AND CONJECTURES. IN THE ABSENCE OF ANY COG ENT MATERIAL IN THIS REGARD, HAVING BEEN PLACED ON RECORD, THE AO COULD NOT HAVE REOPENED TH E ASSESSMENT. THE ASSESSEE HAD MADE AN INVESTMENT IN A COMPANY, EVIDENCE WHEREOF WAS WITH THE AO. --THEREFORE, THE AO COULD NOT HAVE ADDED INCOME, WHICH WAS RIGHTLY DELETED BY THE CIT(A) AS WELL AS THE TRIBUNAL. IT IS SETTLED LAW THAT SUSPICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. CONSEQUENTLY, NO QUESTION OF LAW, MUCH LESS A SUBST ANTIAL QUESTION OF LAW, ARISES FOR ADJUDICATION. C. VASANTLAL & CO. VS. CIT (1962) 45 ITR 206 (SC), M.O. THOMAKUTTY VS. CIT (.1958) 34 ITR 501 (KER)) AND MUKAND SINGH VS. SALE S TAX TRIBUNAL (1998) 107 STC 300 (PUNJAB) RELIED ON; UMACHARAN SHAW &BROS. VS. CIT ( 1959) 37 ITR 271 (SC) APPLIED; JASPAL SINGH VS. CIT (2006) 205 CTR (P & H) 624 DISTINGUIS HED 10. THE CO-ORDINATE BENCH OF AHMEDABAD IN ITA NOS. 501 & 502/AHD/2016 HAD THE OCCASION TO CONSIDER A SIMILAR ISSUE WHICH WAS WHER EIN THE ASSESSMENT WAS FRAMED ON THE STRENGTH OF THE STATEMENT OF A BROKER. THE RELEVANT PART READS AS UNDER:- 14. THE ENTIRE ASSESSMENT IS BASED UPON THE STATEMENT O F SHRI MUKESH CHOKSI. IT IS AN UNDISPUTED FACT THAT NEITHER A COPY OF THE STATEMEN T WAS SUPPLIED TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN BY THE A SSESSING OFFICER/CIT(A). THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES IN CIVIL APPEAL NO. 4228 OF 2006 WAS SEIZED WITH THE FOLLOWING ACTION OF THE TRIBUNA L :- 6. THE PLEA OF NO CROSS EXAMINATION GRANTED TO THE VARIOUS DEALERS WOULD NOT HELP THE APPELLANT CASE SINCE THE EXAMINATION OF THE DEA LERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE POSSESSION OF TH E APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PRICES REMAIN STATIC. SI NCE WE ARE NOT UPHOLDING AND APPLYING THE EX FACTORY PRICES, AS WE FIND THEM CON TRAVENED AND NOT NORMAL PRICE AS ENVISAGED UNDER SECTION 4(1), WE FIND NO REASON TO DISTURB THE COMMISSIONERS ORDERS. 7 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 15. THE HONBLE APEX COURT HELD AS UNDER :- ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND T HAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAI D TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AF ORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE T RIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EXFACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL T O HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOS E DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR T ESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS EXAMINATIO N. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAIN TAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETH ER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS ME NTIONED IN THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFO RE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUB JECT MATTER OF THE CROSS- EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE . WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REM ITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL O N MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF TH E TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTM ENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESA ID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE. WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. 16. ON THE STRENGTH OF THE AFOREMENTIONED DECISIO N OF THE HONBLE SUPREME COURT, THE ASSESSMENT ORDER HAS TO BE QUASHED . 17. EVEN ON FACTS OF THE CASE, THE ORDERS OF THE AU THORITIES BELOW CANNOT BE ACCEPTED. THERE IS NO DENYING THAT CONSIDERATION WAS PAID WHEN THE SHA RES WERE PURCHASED. THE SHARES WERE 8 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 THEREAFTER SENT TO THE COMPANY FOR THE TRANSFER OF NAME. THE COMPANY TRANSFERRED THE SHARES IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECOR D WHICH COULD SUGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THER E IS ALSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE NEVER WITH THE ASSESSEE. ON THE CON TRARY, THE SHARES WERE THEREAFTER TRANSFERRED TO DEMAT ACCOUNT. THE DEMAT ACCOUNT WAS IN THE NAME OF THE ASSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF TH E SHARES WERE OF SOME FICTITIOUS COMPANY WHICH WAS NOT LISTED IN THE BOMBAY STOCK EXCHANGE/N ATIONAL STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFERRED TO DEMAT ACCOUNT. SHRI MUKESH CHOKSI MAY HAVE BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT THE TRANSACTIONS WERE GENUINE AND THER EFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN. 18. IN THE LIGHT OF THE DECISIONS OF THE HONBLE S UPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND CONSIDERING THE FACTS IN TOT ALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PRESUMPTION AND SURMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT EVIDENCES ON RECORD RELATING TO THE SALE/PUR CHASE TRANSACTIONS IN SHARES SUPPORTED BY BROKERS CONTRACT NOTES, CONFIRMATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE DEMAT ACCOUNT. 19. ACCORDINGLY, WE DIRECT THE A.O. TO TREAT THE GA INS ARISING OUT OF THE SALE OF SHARES UNDER THE HEAD CAPITAL GAINS- SHORT TERM OR LONG TERM AS THE CASE MAY BE. THE OTHER GRIEVANCE OF THE ASSESSEE BECOMES INFRUCTUOUS. 11. THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SU PPORT OF THE CLAIM OF THE ASSESSEE THAT IT EARNED LTCG ON TRANSACTIONS OF HIS INVESTMENT IN SH ARES. THE PURCHASE OF SHARES HAD BEEN ACCEPTED BY THE AO IN THE YEAR OF ITS ACQUISITION AND THEREAFTER UNTIL THE SAME WERE SOLD. THE OFF MARKET TRANSACTION FOR PURCHASE OF SHARES I S NOT ILLEGAL AS WAS HELD BY THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF D OLARRAI HEMANI VS. ITO IN ITA NO. 19/KOL/2014 DATED 2.12.2016 AND THE DECISION BY HONBLE CALCUTTA HIGH COURT IN PCIT VS. BLB CABLES & CONDUCTORS PVT. LTD. IN ITAT NO. 78 OF 2017 DATED 19.06.2018 WHEREIN ALL THE TRANSACTIONS TOOK PLACE OFF MARKET AND THE LOSS ON COMMODITY EXCHANGE WAS ALLOWED IN FAVOUR OF ASSESSEE. THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE CHEQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE OF SHARES AN D THE SALE OF SHARES WERE ALSO REFLECTED IN DEMAT ACCOUNT STATEMENTS. THE SALE OF SHARES SUFFER ED STT, BROKERAGE ETC. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE HELD THAT T HE TRANSACTIONS WERE BOGUS. THE FOLLOWING JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT :- 9 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 (I) THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME VS M/S. BLB CABLES AND CONDUCTORS ; ITAT NO.78 OF 2017, GA NO.747 OF 2017; DT. 19 JUNE, 2018, HAD UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS FOLLOWS:- '4. WE HAVE HEARD BOTH THE SIDE AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE LD. AR SUBMITTED TWO PAPERS BOOKS. FIRST BOOK IS RUNNING I N PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US THE LD. AR S UBMITTED THAT THE ORDER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH THE BROKER WAS EXPELLED. THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF BOTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBMITTE D THE IT RETURN, LEDGER COPY, LETTER TO AO LAND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM W HICH IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTRACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REGISTERS WERE ALSO SUBMITTED IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. THE BOARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIONS IN COMMODITY WA S PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER HAND THE LD. DR RELIED IN THE ORDER OF THE LOWER AUTHORITIES. 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD SUCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME LOSS WAS ALSO CONFIRMED B Y THE LD. CIT(A). HOWEVER WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY R ECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS A ND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME C ONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. II) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDENCES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINI ON OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGH T HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY FAILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAI LING PRICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTI ATED. 10 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 III)CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITE D [2013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RE CORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE O F PROOF. IT WAS FURTHER HELD THAT IN ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANSACTIONS OF BUYING OR SELLING OF SHARES WERE CO LOURABLE TRANSACTIONS OR WERE RESORTED TO WITH ULTERIOR MOTIVE. IV) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CA L HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BR OKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMIS SED. V) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE DECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHE RE THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN A LLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOC K ON THE BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT TH E AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUN AL HELD THAT THE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. TH E APPEAL FILED BY THE REVENUE WAS DISMISSED. VI) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM ED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. 11 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 VII) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE AO, BASED ON THE I NFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUM ENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTR ACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIV ED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARIL Y DISMISSED BY HIGH COURT. 12. WE NOTE THAT SINCE THE PURCHASE AND SALE TRA NSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND BANK ST ATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTED BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BASIS OF SOME REPORT S OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTI ES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAI D JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLOWING CASES:- (I) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (II) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (IV) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (V) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VI) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (VII) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) 12 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 (IX) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (X) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XI) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XII) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XIII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XIV) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XVI) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XVII) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XVIII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XIX) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 13. THE LD AR ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRAN SACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADE SH [1977] 1 SCC 816 (SC) . IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNE R ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARG ED BY ADDUCING EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BE NAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WH ICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT H AS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAI MED BY THE ASSESSEE ON LTCG ON ALLEGED PENNY SOCKS. 13 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 14. MOREOVER IT WAS SUBMITTED BEFORE US BY LD AR TH AT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SUBMITTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFFECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HIS BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN CSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SU PPORT OF THIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO W AS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSE SS THE SALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. AMITA AGARWAL & OTHERS - ITA NOS. 247/(KO L)/ OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 15. WE NOTE THAT THE LD. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMALCHAND JAIN IN TAX APPEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIN D THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PUR CHASES WERE MADE BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WA S INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOW N AS CAPITAL GAINS WHICH WAS NOT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTU RE IN NATURE OF TRADE. THUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UPON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARNED ON SALE OF SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT . 14 ITA NO.1018/KOL/2018 VASUDHA JAIN, AY :2015-16 16. IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF T HE CASE OF THE ASSESSEE ARE SIMILAR WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BENCH O F THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG ON SUCH SALE OF SHARES TH EREFORE, RESPECTFULLY FOLLOWING THE SAME RATIO, I AM INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND ORDER TO ALLOW T HE CLAIM OF LTCG ON SALE OF SHARE OF M/S. SESL AND DELETE THE CONSEQUENTIAL ADDITION. 17. GROUND NO. 2 IS GENERAL IN NATURE, THEREFORE, T HE SAME IS DISMISSED. 18. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15TH FEBRU ARY, 2019. SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED : 15TH FEBRUARY, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SMT. VASUDHA JAIN, 15B, CLIVE ROW, K OLKATA-700 001. 2 RESPONDENT ITO, WARD-36(4), KOLKATA. 3. 4. CIT(A)-10, KOLKATA(SENT THROUGH E-MAIL) CIT, . KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR