Yogesh Kumar Dalmia, Kolkata V. ACIT, Circle - 36, Kolkata , Kolkata

ITA 113/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5539 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 23-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Assessee Lawyers: M D SHAH
• Keywords: Unexplained cash credit; Unexplained expenditure; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Transactions in derivatives; Earning of tax free income; Question of law; Wrong claim; Accommodation entries; Scheme of amalgamation; Sham transactions; Penny stocks; TDS; Set aside
• Section: 205; 131; 68

Judgement Text

1 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 113/KOL/2018 ASSESSMENT YEAR: 2014-15 YOGESH KUMAR DALMIA (PAN: ACXPD6692C) VS. ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-36, KOLKATA. APPELLANT RESPONDENT FOR THE APPELLANT SHRI M. D. SHAH, AR FOR THE RESPONDENT SHRI ROBIN CHOUDHURY, ADDL. CIT , SR. DR DATE OF HEARING 26.03.2019 DATE OF PRONOUNCEMENT 03.06.2019 ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A) 10, KOLKATA DATED 03.10.2017 FOR AY 2014-15. 2. GROUND NO. 1 OF ASSESSEES APPEAL IS AS TO WHETH ER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN UPHOLD ING THE ADDITION MADE BY THE AO U/S 68 OF THE ACT IN RESPECT OF SALE PROCEEDS OF SHARES OF M/S KAILASH AUTO FINANCE LIMITED (KAFL) AND M/S. ESSAR INDIA LTD. (EIL) TREATING THE SAME AS INCOME FROM UNDISCLOSED SOURCES AFTER REJECTING THE ASSESSEES CLAIM OF LON G TERM CAPITAL GAINS (LTCG) ON SALE OF THOSE SHARES U/S. 10(38) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. THE BRIEF FACTS AS HAS BEEN RECORDED BY THE AO I N THE ASSESSMENT ORDER ARE THAT THE ASSESSEE CLAIMED LONG TERM CAPITAL GAINS FROM S ALE OF SHARES OF M/S. KAFL AND M/S. EIL. THE AO NOTED THAT THE ASSESSEE HAD PURCHASED 2 ,00,000 SHARES OF M/S. CAREFUL 2 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 PROJECTS ADVISORY LIMITED (CPAL) AT A FACE VALUE OF RS.1 EACH FOR A TOTAL CONSIDERATION OF RS.2,00,000/- WHICH COMPANY (CPAL) LATER GOT AM ALGAMATED WITH M/S. KAFL BY VIRTUE OF AN ORDER OF HONBLE ALLAHABAD HIGH COURT AND IN PURSUANCE TO SUCH AMALGAMATION, THE ASSESSEE WAS ALLOTTED 2,00,000 S HARES OF KAFL OF THE FACE VALUE OF RS.1 EACH. THE SAID SHARES WERE LATER SOLD ON BOMBA Y STOCK EXCHANGE [BSE] THROUGH A BROKER NAMED M/S. SYKES & RAY EQUITIES (I) LTD. ON DIFFERENT DATES FALLING WITHIN THE PREVIOUS YEAR 2013-14 CORRESPONDING TO THE ASST YEA R 2014-15 AT A PRICE OF RS.74,65,600/-., WHICH ACCORDING TO ASSESSEE, RESUL TED IN LONG TERM CAPITAL GAINS AND SO THE ASSESSEE CLAIMED EXEMPTION U/S 10(38) OF THE ACT OF RS.72,65,600/-. LIKEWISE, THE ASSESSEE HAD PURCHASED 1,00,000 SHARES OF M/S. EIL AT A FACE VALUE OF RS.11/- EACH FOR A TOTAL CONSIDERATION OF RS.11,00,000/- THROUGH THE SELLER DELIGHT DEALMARK PVT. LTD. THE SAID SHARES WERE LATER SOLD ON BOMBAY STOCK EXC HANGE [BSE] ON DIFFERENT DATES THROUGH THE SAME BROKER NAMED M/S. SYKES & RAY EQUI TIES (I) LTD. FALLING WITHIN THE PREVIOUS YEAR 2013-14 CORRESPONDING TO THE ASST YEA R 2014-15 AT A PRICE OF RS.45,14,430/-., WHICH ACCORDING TO ASSESSEE, RESUL TED IN LONG TERM CAPITAL GAINS AND SO THE ASSESSEE CLAIMED EXEMPTION U/S 10(38) OF THE ACT OF RS.34,14,430/-. 4. HOWEVER, THE AO DID NOT AGREE WITH THE ASSESSEE S CLAIM OF LTCG AND EXEMPTION THEREOF CLAIMED BY THE ASSESSEE. ACCORDI NG TO AO, IT IS UNBELIEVABLE THAT THE ASSESSEE CAN MAKE A FANTASTIC GAIN IN A SPAN OF 17 TO 21 MONTHS OF THESE SCRIPS. ACCORDING TO AO, THE PRICE MOVEMENT OF THE SCRIP IN THE SPAN OF 17 TO 21 MONTHS RAISED DOUBTS IN HIS MIND AND THAT PROFIT EARNED BY THE AS SESSEE WERE BEYOND HUMAN PROBABILITIES. THE AO NOTICED THAT THE COMPANY, M/S . CPAL, WAS INCORPORATED ON 18.09.2010 WITH AUTHORIZED AND PAID UP SHARE CAPITA L OF RS.1 LAKH. THE COMPANY INCREASED ITS AUTHORIZED SHARE CAPITAL TO RS.34.50 LAKHS AND THEREAFTER ISSUED 330155 SHARES OF THE FACE VALUE OF RS.10 EACH AT THE PREMI UM OF RS.590 TO DIFFERENT ENTITIES. THE AO ALSO OBSERVED THAT DURING THE FY 2011-12, M/ S. CPAL INCREASED ITS AUTHORIZED SHARE CAPITAL TO RS.29 CRORES AND THEN THE SHARES O F RS.10 EACH WERE SPLIT INTO 1:10 I.E. EACH SHARES OF RS.10 INTO SHARES OF RE.1 EACH. THE SAID COMPANY CPAL THEREAFTER ISSUED BONUS SHARES TO THE EXISTING EQUITY SHAREHOL DERS IN THE RATIO OF 1:55. THE AO 3 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 SUSPECTED THE ISSUE OF BONUS SHARES IN THE UNREALIS TIC RATIO OF 1:55. HE WAS OF THE OPINION THAT THE PROBABLE REASONS WERE WITH A VIEW TO PROVIDE LARGE AMOUNT OF LTCG IN THE HANDS OF BENEFICIARIES AFTER AMALGAMATING THE S AID COMPANY WITH KAFL. THE AO CONCLUDED THAT CPAL WAS INCORPORATED WITH A DUBIOUS PLAN AND PREMEDITATED ARRANGEMENT AND ARTIFICE TO INCREASE NUMBER OF SHAR ES THEREIN THROUGH SHAM AND NON GENUINE TRANSACTIONS OF ITS SHARES WHICH RESULTED I N FETCHING EXORBITANT AND UNREALISTIC CONSIDERATIONS IN THE SCHEME OF AMALGAMATION. THE A O REFERRED TO THE STATEMENT OF SHRI SUNIL DOKANIA RECORDED U/S 131 OF THE ACT BY THE IN VESTIGATION WING ON 12.06.2015, WHEREIN, SHRI DOKANIA HAS EXPLAINED THE MODUS OPERA NDI OF PROVIDING OF LTCG IN THE SCRIP OF KAFL. HE STATED THAT BY WAY OF AMALGAMATIO N OF CPAL WITH KAFL, THE BENEFICIARIES OF LTCG GOT HIGHER NUMBER OF SHARES O F KAFL AS AGAINST SHARES OF CPAL. MR. DOKANIA, IN THE AFORESAID STATEMENT, STAT ED BEFORE THE INVESTIGATION WING THAT HE HAD GOT EQUAL AMOUNT OF CASH FROM THE BENEFICIAR IES, DEPOSITED THE SAME TO VARIOUS UNDISCLOSED PROPRIETORSHIP CONCERNS, AND FINALLY TR ANSFERRED THE SAME TO BOGUS/SHELL COMPANIES, BY LAYERING THROUGH VARIOUS ACCOUNTS, WH ICH HAD ULTIMATELY PURCHASED THE SHARES SOLD BY THE BENEFICIARIES. THE AO HAS ALSO RELIED UPON STATEMENT OF SHRI SUNIL DOKANIA RECORDED U/S 131 BY THE INVESTIGATION WING, IN THE CASE OF RASHMI GROUP OF KOLKATA ; STATEMENT OF SHRI DIPAN JESINGBHAI PATEL RECORDED ON 20.5.2015; STATEMENT OF SOME BENEFICIARIES WHO HAD CORROBORATED THE MOD US OPERANDI AS REVEALED BY SHRI DOKANIA. THE AFORESAID STATEMENTS WERE REFERRED TO IN THE ASSESSMENT ORDER TO COME TO A CONCLUSION THAT THE ASSESSEE WAS ONE OF THE BENEF ICIARIES OF THE TRANSACTIONS IN SHARES OF KAFL WHICH RESULTED IN BOGUS CLAIM OF EXEMPT LTC G. 5. THE AO, ON THE BASIS OF MOVEMENT OF PRICE OF KAF L QUOTED IN BOMBAY STOCK EXCHANGE DURING THE PERIOD OF SEPTEMBER, 2013 TO JA NUARY, 2014 (THE PERIOD OF SALE OF SHARES OF KAFL BY THE ASSESSEE), FOUND THAT THE PRI CE OF SHARES HAD INCREASED BY 267%. THE AO CONCLUDED THAT WHILE SENSEX SHOWED ALMOST N O PROGRESS, PRICE OF SHARES OF KAFL MOVED PHENOMENALLY. THE AO ALSO REFERRED TO T HE FINANCIALS OF KAFL DURING THE FINANCIAL YEARS 2011-12 TO 2015-16 AND CONCLUDE D THAT EARNINGS PER SHARE (EPS) DURING THAT PERIOD WAS EITHER NIL OR NEGATIVE BUT T HE VALUE OF SHARES WAS HIGHLY INFLATED. 4 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 THE AO OBSERVED THAT THE PRICES OF SHARES OF KAFL W ERE RIGGED BY THE ENTITIES CONNECTED TO KAFL. 6. THE AO REFERRED TO THREE SEPARATE ORDERS PASSED BY SEBI DATED 29 TH MARCH, 2016, 15 TH JUNE, 2016 AND 31 ST OCTOBER, 2016 IN SUPPORT OF HIS ADVERSE CONCLUSION S DRAWN AGAINST THE ASSESSEE THAT SEVERAL ENTITIES RELATED/ CONNECTED TO KAFL RIGGED THE PRICES BY 230% DURING THE PERIOD OF JANUARY, 2013 TO JUNE, 20 13 (PATCH-1), CREATED ARTIFICIAL DEMAND AND THEREAFTER PROVIDED EXIT TO THE BENEFICI ARIES DURING THE PERIOD OF JULY 2013 TO NOVEMBER, 2014 (PATCH-2). THE SAID ORDERS PASSED BY SEBI CONTAINED LIST OF RELATED/CONNECTED PARTIES OF KAFL AND ALSO THE LIST OF BENEFICIARIES. SOME OF THESE WERE RESTRAINED FROM ACCESSING THE SECURITIES MARKET AND BUYING, SELLING OR DEALING IN SECURITIES. THE AO CONCLUDED THAT THE IN DEPTH ANAL YSIS DONE BY SEBI IN THE THREE ORDERS IS DIRECT EVIDENCE AGAINST THE ASSESSEE TO HOLD THAT THE PRICES OF KAFL WERE MANIPULATED AND ARTIFICIALLY HIKED TO CREATE NON-GENUINE LTCG I N THE TRANSACTIONS OF KAFL. THE AO FURTHER CONCLUDED THAT CONFESSIONS GIVEN ON OATH BY THE PROMOTERS/BROKERS/OPERATORS ARE THE CIRCUMSTANTIAL EVIDENCE AGAINST THE ASSESSE E THAT THE LTCG WAS ARRANGED ONE. THE AO WAS OF THE OPINION THAT THE SEBI REPORTS AND STATEMENTS, STRENGTHENS THE SUSPICIONS OVER THE GENUINENESS OF THE BUYERS OF SH ARES AND FURTHER SUSPECTED THAT THE UNACCOUNTED CASH OF THE ASSESSEE WAS LAYERED INTO T HE BANK ACCOUNT OF THE EXIT PROVIDERS. 7. THE AO RELYING ON THE VARIOUS DECISIONS VIZ. HER SH WIN CHADDHA V. DCIT [ITA NOS.3088 TO 3098 & 3104/DEL/2005], SUMATI DAYAL V. CIT 214 ITR 801 (SC), DURGA PRASAD MORE V. CIT, MCDOWELL & CO. V. CTO, CIT V. P . MOHANKALA] OBSERVED THAT TAX LIABILITIES CAN BE ASSESSED BY REVENUE AUTHORITIES ON CONSIDERATION OF MATERIAL AVAILABLE ON RECORD, SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT , PREPONDERANCE OF PROBABILITIES AND NATURE OF INCRIMINATING INFORMATION/EVIDENCE AV AILABLE ON RECORD. THE AO ULTIMATELY CONCLUDED THAT IN SUCH CLANDESTINE OPERA TIONS AND TRANSACTIONS, IT IS IMPOSSIBLE TO HAVE DIRECT EVIDENCE OR DEMONSTRATIVE PROOF OF EVERY MOVE. 5 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 8. THE AO CONCLUDED THAT THE ASSESSEES TRANSACTION S RESULTING IN LTCG ON SALE OF SHARES OF KAFL WERE BOGUS AND THAT THE ASSESSEE PLO UGHED BACK HIS UNACCOUNTED MONEY IN THE BOOKS OF ACCOUNTS WHICH IS ASSESSABLE UNDER SECTION 68 OF THE ACT. 9. LIKEWISE, IN THE CASE OF M/S. EIL THE AO HAS AN ALYZED THIS SCRIP FROM PAGE 23 OF THE ASSESSMENT ORDER (PARA 3.14.1). ACCORDING T O AO, THE COMPANY MERELY FORWARDED THE SHARE CAPITAL RECEIVED THROUGH PREFER ENTIAL PLACEMENT OF SHARES (THE OFF MARKET ROUTE) IN FY 2010-11 AND LATER ON IN 2012-13 TOWARDS LOANS AND ADVANCES. AND DURING THESE PERIODS ASTRONOMICAL RISE OF SHARE PRI CES OF THE SCRIP HAPPENED AND THERE WAS NO CORPORATE ANNOUNCEMENT OF ANY BIG ORDER OR A NY SUCH NEWS WHICH COULD HAVE RESULTED IN SUCH FRENZY IN THE SCRIP PRICE SHOOTING UP. THEREFORE, ACCORDING TO HIM, AN ASTRONOMICAL RISE IN PRICE WAS NOT RELATED TO THE F UNDAMENTALS OF THE MARKET. AFTER TAKING NOTE OF FEW PURCHASES WHICH DEPICTED THE PRI CE RISING OF M/S. EIL, THE AO CONCLUDES THAT THE PRICES WERE RIGGED TO INCREASE T HE SCRIP PRICE SIGNIFICANTLY. THEREAFTER, THE AO TOOK NOTE OF THE MODUS OPERANDI FOLLOWED BY UNSCRUPULOUS PERSONS IN CONVERTING THEIR UNACCOUNTED MONEY BY PURCHASING PENNY STOCKS FOR A VERY NOMINAL PRICE AND SELLING THEM FOR ASTRONOMICAL HIGH PRICES AND CLAIMED LTCG AS EXEMPT INCOME. AND ALSO THE PERSON BUYING THIS SCRIP AT VERY HIGH VALUE, LATER ON WILL SELL IT FOR VERY NOMINAL RATE WHICH WOULD RESULT IN SOME OT HER BENEFICIARIES TO CLAIM HUGE LOSSES. THEREAFTER, THE AO DISCUSSES ABOUT THE SEB I REPORT IN RESPECT OF M/S. KAFL AS WELL AS THE OBSERVATIONS OF THE SPECIAL INVESTIGATI ON TEAM OF THE HONBLE SUPREME COURT AND THEREAFTER TOOK AN ADVERSE VIEW AGAINST T HE LTCG CLAIM OF THE ASSESSEE ON BOTH THE SCRIPS OF M/S. KAFL AND M/S. EIL. 10. ON FIRST APPEAL, THE LD. CIT(A) DISMISSED THE G ROUNDS RAISED BY THE ASSESSEE AGAINST HIS CLAIM OF EXEMPTION U/S 10(38) OF THE AC T AND HE ALSO CONFIRMED THE ADDITIONS MADE BY THE AO UNDER SECTION 68 OF THE ACT. AGGRIEV ED, THE ASSESSEE IS IN APPEAL BEFORE US. 11. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR THAT THIS 6 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 TRIBUNAL IN THE FOLLOWING CASES HAVE DECIDED THAT T HE SCRIPS OF M/S KAFL ARE NOT BOGUS AND HELD THAT THE LTCG CLAIM OF THE ASSESSEE NEED TO BE ALLOWED: I) MANISH KUMAR BAID VS. ACIT, ITA NOS. 1236& 1237/ KOL/2017 DATED 18.08.2017 II) RUKMINI DEVI MANPRIA VS. DCIT, ITA NO.1724/KOL/ 2017 DATED 24.10.2018 III) JAGMOHAN AGARWAL VS. ACIT, ITA NO.604/KOL/2018 DATED 05.09.2018. 12. PER CONTRA THE LD. DR FOR THE REVENUE VEHEMEN TLY OPPOSED THE CONTENTIONS OF THE ASSESSEE AND TOOK US THROUGH THE AOS ORDER AND LD. CIT(A) ORDER AND SUBMITTED THAT SCRIPS OF M/S. KAFL WAS ARTIFICIALLY RIGGED TO PROVIDE LTCG TO THE ASSESSEE WHICH CANNOT BE ALLOWED AND SUPPORTED THE IMPUGNED ORDER AND RELIED ON THE ORDER OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BINOD CHAND JAIN I N TAX APPEAL NO.18 OF 2017 AND SO HE DOES NOT WANT US TO INTERFERE WITH THE IMPUGN ED ORDER . LD. DR FURTHER SUBMITTED THAT IN THIS CASE NO DOCUMENT APPARENTLY BEING FURN ISHED TO AO TO SHOW THE DATE OF TRANSFER OF SUCH SHARE CERTIFICATE IN THE NAME OF T HE ASSESSEE. THIS COMPANY HAS BEEN MERGED WITH THE LISTED COMPANY M/S. KAFL AND ASSESS EE STARTED SELLING OF SUCH SHARES FROM 24.07.2013. WITHOUT PROVING THE DATE OF TRANS FER OF SHARE AT THE POINT OF PURCHASE ASSESSEE CANNOT CLAIM HOLDING SUCH SHARE FOR MORE T HAN 12 MONTHS TO CLAIM SUCH GAIN AS LONG TERM CAPITAL GAIN. HE ALSO ARGUED THAT THIS QU ESTION NEEDS TO BE DECIDED WHETHER PURCHASE OF SHARES OF AN OBSCURE COMPANY M/S. CAREF UL PROJECT OFF-MARKET FROM AN UNKNOWN ENTITY WAS AN INVESTMENT DECISION AT ALL OR NOT. HE ALSO STATED THAT IT IS RELEVANT TO MENTION THAT, ONE OF THE PROMOTER AND ENTRY OPER ATOR OF KAILASH AUTO AND CAREFUL PROJECTS , SRI SUNIL DUKANIA, A CA, IN HIS STATEMEN T GIVEN BEFORE THE DDIT (INV.) OF INCOME TAX U/S 131(1) OF THE ACT ON 12.06.2015 ADMI TTED THAT THESE ARE PAPER COMPANIES HAVING NO REAL BUSINESS AND BOTH ARE CONTROLLED BY ENTRY OPERATORS. DIRECTORS ARE ONLY DUMMY PERSONS THERE. IN VIEW OF SUCH FACT IT IS VER Y CLEAR THAT THE SUBMISSION OF THE ASSESSES REGARDING THE REASON FOR PURCHASE OF SHARE OF THAT WAS NOT AN INVESTMENT DECISION BUT A MOVE TO GET AN ENTRY FOR LTCG INCOME . THE LD. DR ALSO SUBMITTED THAT THERE IS REPORT OF SEBI CONFIRMING THAT KAILASH AUT O STOCK WAS GROSSLY MANIPULATED ON THE STOCK EXCHANGE PLATFORM TO GENERATE BOGUS CAPIT AL GAIN INCOME FOR BENEFICIARIES TO 7 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 EVADE PAYMENT OF TAX. THUS, ACCORDING TO LD. DR, IT IS EVIDENT THAT ASSESSEE'S PURCHASE OF THAT SOCK WAS NOT AN INVESTMENT DECISION BUT ONL Y AN ENTRY POINT TO COME TO THE LISTED COMPANY KAILAS AUTO IN ORDER TO GENERATE BOGUS LTCG INCOME , AND THUS, ASSESSEE WAS A PART OF SUCH SCHEME OF THINGS AS ITS BENEFICIARY. HE ALSO STATED THAT ON THE ISSUE OF DEMANDING CROSS-EXAMINATION OF THE DIRECTOR THE COM PANY AND OTHER PERSON WHO ADMITTED THE ISSUE OF PROVIDING ENTRY, IT IS TO SUB MIT THAT THOSE STATEMENT / ADMISSION ARE SUBORDINATE MATERIAL USED ONLY TO SUPPORT THE MAIN ISSUE AND NO WAY A DIRECT EVIDENCE. IN THE INSTANT CASE THE ADMISSION OF THE THIRD PART Y BEFORE THE INVESTIGATION WING CAN ONLY BE CONSIDERED AS CIRCUMSTANTIAL EVIDENCE AND N OT A DIRECT EVIDENCE. IN SUPPORT OF HIS SUBMISSION HE REFERRED TO THE FOLLOWING CASE LA WS: I) GTC INDUSTRIES LTD. VS. ACIT (1998) 65 ITD 380 (BOM ), II) SANJAY BIMALCHAND JAIN VS. CIT-1, NAGPUR (THREE ME MBERS NAGPUR BENCH DECISION), III) SMT. M. K. RAJESHWARI VS. ITO, WARD-3, RAICHUR, ITA T SMC-C BENCH, BANGALORE, IV) USHA CHANDRESH SHAH VS. ITO (ITA NO. 6858/MUM/2011) , V) ITA NOS. 1413 TO 1420/CHNY/2018 DATED 06.12.2018, VI) MC. DOWELL & CO. LTD. VS. CTO (1983) 154 ITR 148, VII)HARSH WIN CHADDHA VS. DCIT (ITA NO. 3088 TO 303 8 & 3107/DEL/2005, VIII)SUMATI DAYAL VS. CIT 214 ITR 801, IX) M/S. DURGA PRASAD MORE 82 ITR 540 13. HE ALSO SUBMITTED THE ALTERNATE GROUND FOR ADDI TION THAT PURCHASE OF THIS STOCK WAS NOT AN INVESTMENT DECISION BUT AN ADVENTURE IN THE NATURE OF TRADE. HE LASTLY SUBMITTED BEFORE THE BENCH THAT ASSESSEES DEALING WITH THIS STOCK MAY BE CONSIDERED AS AN ADVENTURE IN THE NATURE OF TRADE AND SO, PROFIT DERIVES FROM SUCH ACTIVITY MAY KINDLY BE CONSIDERED AS INCOME FROM BUSINESS OR OTHER SOUR CES. 14. WE NOTE THAT SIMILAR ISSUE AROSE IN MANISH KUMA R BAID, (SUPRA) WHEREIN, THE TRIBUNAL ALLOWED THE CLAIM OF ASSESSEE IN RESPECT O F LTCG FROM SALE OF SCRIPS OF M/S. KAFL HAS HELD AS UNDER: 6. WE HAVE HEARD BOTH THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND LOT OF FORCE IN THE ARGUMENTS OF TH E LD AR THAT THE LD AO WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT, AND PREPONDERANCE OF PROBABILITY WITHOUT BRINGING ON 8 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 RECORD ANY LEGAL EVIDENCE AGAINST THE ASSESSEE. WE RELY ON THE JUDGEMENT OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF GTC INDUSTR IES LTD. (SUPRA) FOR THIS PROPOSITION. THE VARIOUS FACETS OF THE ARGUMENTS O F THE LD AR SUPRA, WITH REGARD TO IMPLEADING THE ASSESSEE FOR DRAWING ADVERSE INFEREN CES WHICH REMAIN UNPROVED BASED ON THE EVIDENCES AVAILABLE ON RECORD, ARE NOT REITE RATED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOUS CASE LAWS RELIED UP ON BY THE LD AR ARE ALSO NOT REITERATED FOR THE SAKE OF BREVITY. WE FIND THAT T HE AMALGAMATION OF CPAL WITH KAFL HAS BEEN APPROVED BY THE ORDER OF HONBLE HIGH COUR T. THE LD AO OUGHT NOT TO HAVE QUESTIONED THE VALIDITY OF THE AMALGAMATION SCHEME APPROVED BY THE HONBLE HIGH COURT IN MAY 2013 MERELY BASED ON A STATEMENT GIVE N BY A THIRD PARTY WHICH HAS NOT BEEN SUBJECT TO CROSS EXAMINATION. MOROEVER, IT I S ALSO PERTINENT TO NOTE THAT THE ASSESSEE AND / OR THE STOCK BROKER ASHITA STOCK BRO KING LTD NAME IS NEITHER MENTIONED IN THE SAID STATEMENT AS A PERSON WHO HAD ALLEGEDLY DEALT WITH SUSPICIOUS TRANSACTIONS NOR THEY HAD BEEN THE BENEFICIARIES OF THE TRANSACT IONS OF SHARES OF KAFL. HENCE WE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL T O IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGATIONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION, HAS NO LEGS TO STAND IN TH E EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE AR GUMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON T HE ORDERS OF THE LOWER AUTHORITIES APART FROM PLACING THE COPY OF SEBIS INTERIM ORDER SUPRA. WE FIND THAT THE SEBIS ORDERS RELIED ON BY THE LD AO AND REFERRED TO HIM A S DIRECT EVIDENCE AGAINST THE ASSESSEE DID NOT CONTAIN THE NAME OF THE ASSESSEE A ND/OR THE NAME OF ASHIKA STOCK BROKING LTD. THROUGH WHOM THE ASSESSEE SOLD THE SHA RES OF KAFL AS A BENEFICIARY TO THE ALLEGED ACCOMMODATION ENTRIES PROVIDED BY THE RELAT ED ENTITIES / PROMOTERS / BROKERS / ENTRY OPERATORS. IN THE INSTANT CASE, THE SHARES OF CPAL WERE PURCHASED BY THE ASSESSEE WAY BACK ON 20.12.2011 AND PURSUANT TO MER GER OF CPAL WITH KAFL, THE ASSESSEE WAS ALLOTTED EQUAL NUMBER OF SHARES IN KAF L, WHICH WAS SOLD BY THE ASSESSEE BY EXITING AT THE MOST OPPORTUNE MOMENT BY MAKING G OOD PROFITS IN RODER TO HAVE A GOOD RETURN ON HIS INVESTMENT. WE FIND THAT THE A SSESSEE AND / OR THE BROKER ASHITA STOCK BROKING LTD WAS NOT THE PRIMARY ALLOTTEES OF SHARES EITHER IN CPAL OR IN KAFL AS COULD BE EVIDENT FROM THE SEBIS ORDER. WE FIND T HAT THE SEBI ORDER DID MENTION THE LIST OF 246 BENEFICIARIES OF PERSONS TRADING IN SHA RES OF KAFL, WHEREIN, THE ASSESSEE AND / OR ASHITA STOCK BROKING LTDS NAME IS NOT REF LECTED AT ALL. HENCE THE ALLEGATION THAT THE ASSESSEE AND / OR ASHITA STOCK BROKING LTD GETTING INVOLVED IN PRICE RIGGING OF KAFL SHARES FAILS. WE ALSO FIND THAT EVEN THE SEBI S ORDER HEAVILY RELIED UPON BY THE LD AO CLEARLY STATES THAT THE COMPANY KAFL HAD PERF ORMED VERY WELL DURING THE YEAR UNDER APPEAL AND THE P/E RATIO HAD INCREASED SUBSTA NTIALLY. THUS WE HOLD THAT THE SAID ORDERS OF SEBI IS NO EVIDENCE AGAINST THE ASSESSEE, MUCH LESS TO SPEAK OF DIRECT EVIDENCE. THE ENQUIRY BY THE INVESTIGATION WING AND /OR THE STATEMENTS OF SEVERAL PERSONS RECORDED BY THE INVESTIGATION WING IN CONN ECTION WITH THE ALLEGED BOGUS TRANSACTIONS IN THE SHARES OF KAFL ALSO DID NOT IMP LICATE THE ASSESSEE AND/OR HIS BROKER. IT IS ALSO A MATTER OF RECORD THAT THE ASSE SSEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO PURCHAS E AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEITHER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF T HE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THEREFORE THE LD AO WAS NOT JUSTIFIED IN REJECT ING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. WE ALSO FIND THAT THE VARIOUS CASE LAWS OF HONBLE JURISDICTIONAL HIGH COURT RELIED UPON BY THE LD AR AND FINDINGS GIVEN THEREON WOULD APPLY TO THE FACTS OF THE INSTANT CASE. THE LD DR WAS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFECT. HENCE WE HOLD THAT THE LD A O WAS NOT JUSTIFIED IN ASSESSING THE SALE 9 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 PROCEEDS OF SHARES OF KAFL AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE ACCORDINGLY HOLD THAT THE REFRAMED QUESTION NO. 1 R AISED HEREINABOVE IS DECIDED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. 15. COMING BACK TO THE FACTS OF THE INSTANT CASE BE FORE US, WE NOTE THAT THE ASSESSEE HAD PURCHASED 2,00,000 EQUITY SHARES OF M/S. CAREFU L PROJECTS ADVISORY LIMITED ON 13.02.2012 WHICH SHARES WERE CREDITED TO ITS DE MAT ACCOUNT [PAGE 8 PB] THE ASSESSEE HAD MADE PAYMENT FOR PURCHASE OF ABOVE SHARES THROU GH RTGS DATED 10.02.2012 DRAWN ON HDFC BANK, ACCOUNT NO.12041378531.[PAGE 6PB] TH E SHARES WERE PURCHASED FROM M/S. SANSKRITI VINCOM PRIVATE LIMITED, OFF MARKET. LATER M/S. CAREFUL PROJECTS ADVISORY LIMITED WAS AMALGAMATED WITH M/S. KAILASH AUTO FINANCE LIMITED BY AN ORDER DATED 21.05.2013 U/S. 391, 394 OF THE COMPANI ES ACT, 1956 OF HONBLE ALLAHABAD HIGH COURT. BY VIRTUE OF THIS AMALGAMATION, THE AS SESSEE WAS ALLOTTED 2,00,000 EQUITY SHARES OF M/S. KAILASH AUTO FINANCE LIMITED IN LIEU OF 2,00,000 EQUITY SHARES OF M/S. CAREFUL PROJECTS ADVISORY LIMITED, AS PER ORDER OF THE HONBLE HIGH COURT. IN VIEW OF THIS ORDER, SHARES OF M/S. CAREFUL PROJECTS ADVISOR Y LIMITED GOT EXTINGUISHED AND SHARES OF M/S. KAILASH AUTO FINANCE LIMITED WERE ALLOTTED AND WERE CREDITED TO ASSESSEES DE MAT ACCOUNT. COPY OF THEIR SHARE BILL DATED 13.02. 2012 IS SEEN PLACED IN THE PAPER BOOK PAGE 3. WE NOTE THAT COPY OF DE MAT ACCOUNT FROM 01 .04.2011 TO 29.03.2012 WAS ALSO PRODUCED BEFORE THE AUTHORITIES BELOW AND ALSO PLAC ED IN THE PAPER BOOK PAGES 7 TO 16. WE NOTE THAT SHARES OF M/S. KAILASH AUTO FINANCE WE RE LISTED AT BSE. COPY OF DE MAT STATEMENT CLEARLY REFLECTING DEBIT OF SUCH SHARES F ROM THE ACCOUNT IS FOUND ATTACHED FROM PAGE78 TO 83 OF PB. COPY OF BANK STATEMENT OF HDFC BANK ACCOUNT HIGHLIGHTING THE CREDIT RECEIPTS RECEIVED FROM THE SALE CONSIDERATIO N IS SEEN PLACED IN THE PAPER BOOK. 16. WE NOTE THAT THE ASSESSEE HAD FILED THE FOLLOWI NG DOCUMENTS TO SUPPORT HIS CLAIM OF LT CG ON SALE OF SHARES OF M/S. KAFL. 1. COPY OF PURCHASE BILL DATED 13 FEBRUARY 2012 REF LECTING THE PURCHASE OF SHARES OF CAREFUL PROJECTS ADVISORY LTD. FROM SANSKRITI VINCOM PVT. LTD. (PAPER BOOK PAGE 3). 2. COPY OF BANK STATEMENT REFLECTING THE DEBIT TRANSAC TION OF THE AMOUNT OF RS.2,00,000/- PAID TO SANKRITI VINCOM FOR THE PURCHASE OF SHARES VIA RTGS ON 10 FEBRUARY 2012. (PAPER BOOK PAGE 6). 10 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 3. COPY OF PROOF OF DEMAT ACCOUNT HELD WITH SYKES & RA Y EQUITIES (INDIA) LTD. BEARING CLIENT ID: 00056004 AND DP ID: 12018600. (PAPER BOOK PAG E 7). 4 COPY OF STATEMENT OF DEMAT ACCOUNT EVIDENCING T HE CREDIT OF SHARES OF CAREFUL PROJECTS ADVISORY LTD. ON 17 FEBRUARY 2012. (PAPER BOOK PAGE 8), 5 COPY OF STATEMENT OF DEMAT ACCOUNT EVIDENCING T HE DEBIT OF SHARES OF KAILASH AUTO FINANCE LTD. ON 25 JULY. 2013, 25 JULY 2013, 7 AUGUST 2013 AND 13 AUGUST 2013. (PAPER BOOK PAGE 78 TO 83). 7.COPY OF THE ORDER APPROVING THE SCHEME OF AMALGAM ATION PASSED BY THE HONBLE ALLAHABAD HIGH COURT IN RELATION TO THE MERGER OF KAILASH AUT O FINANCE LTD. AND CAREFUL PROJECTS ADVISORY LTD. (PAPER BOOK PAGE 21-51). 8. COPY OF CONTRACT NOTES EVIDENCING THE SALE OF SH ARES KAILASH AUTO FINANCE LTD. (PAPER BOOK PAGE 56-60). 9. COPY OF BROKERS LEDGER AND FINANCIAL STATEMENTS ( PAPER BOOK PAGE 64-73). 10. COPY OF THE BANK STATEMENT REFLECTING THE TRANS ACTIONS OF SALE OF SHARES OF KAILASH AUTO FINANCE LTD. (PAPER BOOK PAGE 61-63). 17. WE NOTE THAT THE ASSESSEE HAD PURCHASED 100000 SHARES OF M/S. EIL ON 23.03.2013 WHICH IS EVIDENT FROM PAPER BOOK PAGE 4. WE ALSO NOTE THAT AFTER THE PURCHASE OF SHARES IT WAS DEMATED WHICH IS EVIDENT FROM THE DEMAT HOLDING STATEMENT REFLECTING THE SAME AT PAPER BOOK PAGE 7 TO 16. AF TER HOLDING THE SHARES OF M/S. EIL FOR MORE THAN 12 MONTHS THE ASSESSEE HAD SOLD THE 24000 SHARES OF M/S. EIL ON 12.11.2013 ON BSE THROUGH BROKER SYKES & RAY EQUITIES (I) LTD. WHICH IS EVIDENT FROM PAPER BOOK PAGE 52 AND THEREAFTER, 25,000 SHARES OF M/S. EIL S OLD ON 27.11.2013 ON BSE THROUGH BROKER SYKES & RAY EQUITIES (I) LTD. WHICH IS EVIDE NT FROM PAPER BOOK PAGE 53. THEREAFTER, THE ASSESSEE HAD SOLD 20,000 SHARES OF M/S. EIL ON 05.12.2013 ON BSE THROUGH BROKER SYKES & RAY EQUITIES (I) LTD. WHICH IS EVIDENT FROM PAPER BOOK PAGE 54 AND 31,000 SHARES OF M/S. EIL SOLD ON 12.12.2013 ON BSE THROUGH BROKER SYKES & RAY EQUITIES (I) LTD. WHICH IS EVIDENT FROM PAPER BOOK PAGE 55. WE ALSO NOTE THAT THE ASSESSEE HAD PURCHASED THE SHARES THROUGH BANKING C HANNEL AND SALE CONSIDERATION WAS RECEIVED BY A/C PAYEE CHEQUE, WHICH FACTS ARE DULY REFLECTED IN BANK STATEMENT WHICH IS PLACED AT PAPER BOOK PAGE 5 6. OUR ATTENTION WAS ALSO DRAWN TO THE CONTRACT NOTES OF SEBI REGD. BROKER (SYKES & RAY EQUITIES (I) LTD.) FOR SALE OF EQUITY SHARES OF M/S. EIL WHICH IS FOUND PLACED AT PAPER BOOK PAGES 52-55. T HUS, WE NOTE THAT THE ASSESSEE HAD 11 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 PURCHASED THE SHARES OF M/S. EIL DEMATERIALIZED THE SAME AND AFTER HOLDING IT FOR MORE THAN 12 MONTHS HAD SOLD IT THROUGH DIFFERENT TRANSA CTIONS IN THE SEBI RECOGNIZED BOMBAY STOCK EXCHANGE AND THE PURCHASE AND SALE CON SIDERATION WERE THROUGH BANK ACCOUNTS. 18. WE FURTHER NOTE THAT THE ASSESSEE HAD FILED THE FOLLOWING DOCUMENTS TO SUPPORT HIS CLAIM OF LT CG ON SALE OF SHARES OF M/S. EIL. I) 100000 SHARES PURCHASE DOCUMENTS OF M/S. EIL ON 23. 03.2013 (PAPER BOOK PAGE 4), II) DEMAT HOLDING STATEMENT REFLECTING PURCHASE (PAPER BOOK PAGE 7 TO 16), III) 24000 SHARES OF M/S. EIL SOLD ON 12.11.2013 ON BSE THROUGH BROKER SYKES & RAY EQUITIES (I) LTD. (PAPER BOOK PAGE 52), IV) 25,000 SHARES OF M/S. EIL SOLD ON 27.11.2013 ON BSE THROUGH BROKER SYKES & RAY EQUITIES (I) LTD. (PAPER BOOK PAGE 53), V) 20,000 SHARES OF M/S. EIL SOLD ON 05.12.2013 ON BSE THROUGH BROKER SYKES & RAY EQUITIES (I) LTD. (PAPER BOOK PAGE 54), VI) 31,000 SHARES OF M/S. EIL SOLD ON 12.12.2013 ON BSE THROUGH BROKER SYKES & RAY EQUITIES (I) LTD. (PAPER BOOK PAGE 55), VII)PAYMENT OF PURCHASE CONSIDERATION BY A/C PAYEE CHEQUE AND DUE REFLECTION OF THE SAME IN BANK STATEMENT (PAPER BOOK PAGE 5 6), VIII)CONTRACT NOTES OF SEBI REGD. BROKER FOR SALE O F EQUITY SHARES OF M/S. EIL (PAPER BOOK PAGE52-55), IX) RECEIPT OF SALE CONSIDERATION BY A/C PAYEE CHEQ UE AND DUE REFLECTION OF THE SAME IN BANK STATEMENT (PAPER BOOK PAGE 61-63) 19. WE NOTE THAT SHARES OF M/S. KAFL & M/S EIL WERE SOLD BY ASSESSEE THROUGH RECOGNIZED BROKER IN A RECOGNIZED BOMBAY STOCK EXCH ANGE. THE DETAILS OF SUCH SALE AND CONTRACT NOTE HAVE BEEN SUBMITTED BEFORE AO/LD. CIT(A). WE TAKE NOTE THAT WHEN THE TRANSACTIONS HAPPENED IN THE STOCK EXCHANGE, T HE SELLER WHO SELLS HIS SHARES ON THE STOCK EXCHANGE DOES NOT KNOW WHO PURCHASES SHARES. ACCORDING TO OUR KNOWLEDGE, THE SHARES ARE SOLD AND BOUGHT IN AN ELECTRONIC MODE ON THE COMPUTERS BY THE BROKERS AND THERE IS ALSO NO DIRECT CONTACT AT ANY LEVEL EVEN B ETWEEN THE BROKERS. WE NOTE THAT AS AND WHEN ANY SHARES ARE OFFERED FOR SALE IN THE STO CK EXCHANGE PLATFORM, ANY ONE OF THE THOUSANDS OF BROKERS REGISTERED WITH THE STOCK EXCH ANGE IS AT LIBERTY TO PURCHASE IT. AS FAR AS OUR UNDERSTANDING, THE SELLING BROKER DOES N OT EVEN KNOW WHO THE PURCHASING 12 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 BROKER IS. THIS IS HOW THE SEBI KEEPS A STRICT CONT ROL OVER THE TRANSACTIONS TAKING PLACE IN RECOGNIZED STOCK EXCHANGES. UNLESS THERE IS A EV IDENCE TO SHOW THAT THERE IS A BREACH IN THE AFORESAID PROCESS WHICH FACT HAS BEEN UNEART HED BY METICULOUS INVESTIGATION, WE ARE OF THE OPINION THAT THE UNSCRUPULOUS ACTIONS OF FEW PLAYERS EXPLOITING THE LOOPHOLES OF THE STOCK EXCHANGE CANNOT BE THE BASIS TO PAINT THE ENTIRE SALE/PURCHASE OF A SCRIP LIKE THAT OF M/S. KAFL & M/S EIL AS BOGUS WITHOUT B RINGING OUT ADVERSE MATERIAL SPECIFICALLY AGAINST THE ASSESSEE. 20. THE FACT OF HOLDING THE SHARES OF M/S. KAFL & M /S EIL IN THE D-MAT ACCOUNT CANNOT BE DISPUTED. FURTHER, THE ASSESSING OFFICER HAS NOT EVEN DISPUTED THE EXISTENCE OF THE D-MAT ACCOUNT AND SHARES CREDITED IN THE D-M AT ACCOUNT OF THE ASSESSEE. THEREFORE, ONCE, THE HOLDING OF SHARES IS D-MAT ACC OUNT CANNOT BE DISPUTED THEN THE TRANSACTION CANNOT BE HELD AS BOGUS. THE AO HAS NOT DISPUTED THE SALE OF SHARES FROM THE D-MAT ACCOUNT OF THE ASSESSEE AND THE SALE CONS IDERATION WAS DIRECTLY CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE, THEREFORE, ONCE THE A SSESSEE PRODUCED ALL RELEVANT EVIDENCE TO SUBSTANTIATE THE TRANSACTION OF PURCHAS E, DEMATERIALIZATION AND SALE OF SHARES THEN, IN THE ABSENCE OF ANY CONTRARY MATERIAL BROUG HT ON RECORD THE SAME CANNOT BE HELD AS BOGUS TRANSACTION MERELY ON THE BASIS OF STATEME NT OF SHRI SUNIL DOKANI, AND FEW OTHERS RECORDED BY THE INVESTIGATION WING, KOLKATA WHEREIN THERE IS A GENERAL STATEMENT OF PROVIDING BOGUS LONG TERM CAPITAL GAIN TRANSACTI ON TO THE CLIENTS WITHOUT STATING ANYTHING ABOUT THE TRANSACTION OF ALLOTMENT OF SHAR ES BY THE COMPANY TO THE ASSESSEE. 21. THE ASSESSEE HAS REQUESTED THE CROSS EXAMINATI ON OF SHRI SUNIL DOKANI, WHICH WAS NOT PROVIDED TO THE ASSESSEE BY THE AO. THUS, I N VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CCE VS. ANDAMANTIMBER INDUSTRIES 127 DTR 241(SC) THE ASSESSMENT BASED ON STATEMENT WITHOUT G IVING AN OPPORTUNITY TO ASSESSEE TO CROSS EXAMINE THE MAKER OF THE ADVERSE STATEMENTS R ELIED ON BY THE AO, IS NOT SUSTAINABLE IN LAW. WE FIND THAT THE STATEMENT CANN OT BE USED BY THE AO WITHOUT GIVING AN OPPORTUNITY TO CROSS EXAMINATION OF SHRI SUNIL D OKANI, AND OTHERS. THEREFORE, THE STATEMENT OF THIRD PARTY CANNOT BE SOLE BASIS OF TH E ASSESSMENT WITHOUT GIVEN AN OPPORTUNITY OF CROSS EXAMINATION AND CONSEQUENTLY I T IS A SERIOUS FLAW WHICH RENDERS THE 13 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 ORDER A NULLITY. THE MUMBAI SPECIAL OF THE TRIBUNAL IN CASE OF GTC INDUSTRIES VS. ACIT (SUPRA) HAD THE OCCASION TO CONSIDER THE ADDITION M ADE BY THE AO ON THE BASIS OF SUSPICION AND SURMISES AND OBSERVED IN PAR 46 AS UN DER:- 46. IN SITUATIONS LIKE THIS CASE, ONE MAY FALL INT O REALM OF 'PREPONDERANCE OF PROBABILITY' WHERE THERE ARE MANY PROBABLE FACTORS, SOME IN FAVO UR OF THE ASSESSEE AND SOME MAY GO AGAINST THE ASSESSEE. BUT THE PROBABLE FACTORS HAVE TO BE WEIGHED ON MATERIAL FACTS SO COLLECTED. HERE IN THIS CASE THE MATERIAL FACTS STR ONGLY INDICATE A PROBABILITY THAT THE WHOLESALE BUYERS HAD COLLECTED THE PREMIUM MONEY FO R SPENDING IT ON ADVERTISEMENT AND OTHER EXPENSES AND IT WAS THEIR LIABILITY AS PER TH EIR MUTUAL UNDERSTANDING WITH THE ASEESSEE. ANOTHER VERY STRONG PROBABLE FACTOR IS TH AT THE ENTIRE SCHEME OF 'TWIN BRANDING' AND COLLECTION OF PREMIUM WAS SO DESIGNED THAT ASSE SSEE COMPANY NEED NOT INCUR ADVERTISEMENT EXPENSES AND THE RESPONSIBILITY FOR S ALES PROMOTION AND ADVERTISEMENT LIES WHOLLY UPON WHOLESALE BUYERS WHO WILL BORNE OUT THE SE EXPENSES FROM ALLEGED COLLECTION OF PREMIUM. THE PROBABLE FACTORS COULD HAVE GONE AG AINST THE ASSESSEE ONLY IF THERE WOULD HAVE BEEN SOME EVIDENCE FOUND FROM SEVERAL SE ARCHES EITHER CONDUCTED BY DRI OR BY THE DEPARTMENT THAT ASSESSEE-COMPANY WAS BENEFIC IARY OF ANY SUCH ACCOUNTS. AT LEAST SOMETHING WOULD HAVE BEEN UNEARTHED FROM SUCH GLOBA L LEVEL INVESTIGATION BY TWO CENTRAL GOVERNMENT AUTHORITIES. IN CASE OF CERTAIN DONATIONS GIVEN TO A CHURCH, ORIGINATING THROUGH THESE BENAMI BANK ACCOUNTS ON T HE BEHEST OF ONE OF THE EMPLOYEES OF THE ASSESSEE COMPANY, DOES NOT IMPLICATE THAT GTC A S A CORPORATE ENTITY WAS HAVING THE CONTROL OF THESE BANK ACCOUNTS COMPLETELY. WITHOUT GOING INTO THE AUTHENTICITY AND VERACITY OF THE STATEMENTS OF THE WITNESSES SMT. NI RMALA SUNDARAM, WE ARE OF THE OPINION THAT THIS ONE INCIDENT OF DONATION THROUGH BANK ACC OUNTS AT THE DIRECTION OF ONE OF THE EMPLOYEE OF THE COMPANY DOES NOT IMPLICATE THAT THE ENTIRE PREMIUM COLLECTED ALL THROUGHOUT THE COUNTRY AND DEPOSITED IN BENAMI BANK ACCOUNTS ACTUALLY BELONGS TO THE ASSESSEE-COMPANY OR THE ASSESSEE-COMPANY HAD DIRECT CONTROL ON THESE BANK ACCOUNTS. ULTIMATELY, THE ENTIRE CASE OF THE REVENUE HINGES U PON THE PRESUMPTION THAT ASSESSEE IS BOUND TO HAVE SOME LARGE SHARE IN SO-CALLED SECRET MONEY IN THE FORM OF PREMIUM AND ITS CIRCULATION. HOWEVER, THIS PRESUMPTION OR SUSPICION HOW STRONG IT MAY APPEAR TO BE TRUE, BUT NEEDS TO BE CORROBORATED BY SOME EVIDENCE TO ES TABLISH A LINK THAT GTC ACTUALLY HAD SOME KIND OF A SHARE IN SUCH SECRET MONEY. IT IS QU ITE A TRITE LAW THAT SUSPICION HOWSOEVER STRONG MAY BE BUT CANNOT BE THE BASIS OF ADDITION E XCEPT FOR SOME MATERIAL EVIDENCE ON RECORD. THE THEORY OF 'PREPONDERANCE OF PROBABILITY ' IS APPLIED TO WEIGH THE EVIDENCES OF EITHER SIDE AND DRAW A CONCLUSION IN FAVOUR OF A PA RTY WHICH HAS MORE FAVOURABLE FACTORS IN HIS SIDE. THE CONCLUSIONS HAVE TO BE DRAWN ON TH E BASIS OF CERTAIN ADMITTED FACTS AND MATERIALS AND NOT ON THE BASIS OF PRESUMPTION OF FA CTS THAT MIGHT GO AGAINST ASSESSEE. ONCE NOTHING HAS BEEN PROVED AGAINST THE ASSESSEE W ITH AID OF ANY DIRECT MATERIAL ESPECIALLY WHEN VARIOUS ROUNDS OF INVESTIGATION HAV E BEEN CARRIED OUT, THEN NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE.' 22. SINCE, WHEN THE ASSESSING OFFICER HAS NOT BROU GHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PAID OVER AND ABOVE THE PURCHASE CONSIDERATION AS CLAIMED AND EVIDENT FROM THE BANK ACCOUNT THEN, IN THE ABSE NCE OF ANY EVIDENCE IT CANNOT BE HELD THAT THE ASSESSEE HAS INTRODUCED HIS OWN UNACC OUNTED MONEY BY WAY OF BOGUS LONG TERM CAPITAL GAIN. THE HON'BLE RAJASTHAN HIGH COURT DATED 11-09-2017IN CASE OF CIT 14 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 VS. SMT. POOJA AGRAWAL [ ITA NO 385/2011 ] HAS UPHELD THE FINDING OF THE TRIBUNAL ON THIS ISSUE IN PARA 12 AS UNDER:- '12. HOWEVER, COUNSEL FOR THE RESPONDENT HAS TAKEN US TO THE ORDER OF CIT(A) AND ALSO TO THE ORDER OF TRIBUNAL AND CONTENDED THAT IN VIEW OF THE FINDING REACHED, WHICH WAS DONE THROUGH STOCK EXCHANGE AND TAKING INTO CONSIDERATIO N THE REVENUE TRANSACTIONS, THE ADDITION MADE WAS DELETED BY THE TRIBUNAL OBSERVING AS UNDER :- 'CONTENTION OF THE AR IS CONSIDERED. ONE OF THE MAI N REASONS FOR NOT ACCEPTING THE GENUINENESS OF THE TRANSACTIONS DECLARED BY THE APPELLANT THAT AT THE TIME OF SURVEY THE APPELLANT IN HIS STATEMENT DENIED HAVING MADE ANY TRANSACTIONS IN SHARES. HOWEVER, SUBSEQUENTLY THE FACTS CAME ON REC ORD THAT THE APPELLANT HAD TRANSACTED NOT ONLY IN THE SHARES WHICH ARE DISPUTE D BUT SHARES OF VARIOUS OTHER COMPANIES LIKE SATYAM COMPUTERS, HCL, IPC L, BPCL AND TATA TEA ETC. REGARDING THE TRANSACTIONS IN QUESTION VARIOUS DETA ILS LIKE COPY OF CONTRACT NOTE REGARDING PURCHASE AND SALE OF SHARES OF LIMTEX AND KONARK COMMERCE & IND. LTD., ASSESSEE'S ACCOUNT WITH P.K. AGARWAL & CO. SH ARE BROKER, COMPANY'S MASTER DETAILS FROM REGISTRAR OF COMPANIES, KOLKATA WERE F ILED. COPY OF DEPOSITORY A/C OR DEMAT ACCOUNT WITH ALANKR IT ASSIGNMENT LTD., A SUBSIDIARY OF NSDL WAS ALSO FILED WHICH SHOWS THAT THE TRANSACTIONS WERE MADE THROUGH DEMAT A/C. WHEN THE RELEVANT DOCUMENTS ARE AVAILABLE THE FACT OF TRANSACTIONS ENTERED INTO CANNOT BE DENIED SIMPLY O N THE GROUND THAT IN HIS STATEMENT THE APPELLANT DENIED HAVING MADE ANY TRAN SACTIONS IN SHARES. THE PAYMENTS AND RECEIPTS ARE MADE THROUGH A/C PAYEE CH EQUES AND THE TRANSACTIONS ARE ROUTED THROUGH KOLKATA STOCK EXCHANGE. THERE IS NO EVIDENCE THAT THE CASH HAS GONE BACK IN APPELLANTS'S ACCOUNT. PRIMA FACIE THE TRANSACTION WHICH ARE SUPPORTED BY DOCUMENTS APPEAR TO BE GENUINE TRANSAC TIONS. THE AO HAS DISCUSSED MODUS OPERANDI IN SOME SHAM TRANSACTIONS WHICH WERE DETECTED IN THE SEARCH CASE OF B.C. PUROHIT GROUP. THE AO HAS ALSO STATED IN THE ASSESSMENT ORDER ITSELF WHILE DISCUSSING THE MODUS OPERANDI TH AT ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN WERE PURCHASED AS LONG TERM CAPITAL GAIN EITHER WAS EXEMPTED FROM TAX OR WAS TAXABLE AT A LOWER RATE. A S THE APPELLANT'S CASE IS OF SHORT TERM CAPITAL GAIN, IT DOES NOT EXACTLY FALL U NDER THAT CATEGORY OF ACCOMMODATION TRANSACTIONS. FURTHER AS PER THE REPO RT OF DCIT, CENTRAL CIRCLE- 3 SH. P.K. AGARWAL WAS FOUND TO BE AN ENTRY PROVIDE R AS STATED BY SH. PAWAN PUROHIT OF B.C. PURIHIT AND CO. GROUP. THE AR MADE SUBMISSION BEFORE THE AO THAT THE FACT WAS NOT CORRECT AS IN THE STATEMENT O F SH. PAWAN PUROHIT THERE IS NO MENTION OF SH. P. K. AGARWAL. IT WAS ALSO SUBMITTED THAT THERE WAS NO MENTION OF SH. P. K. AGARWAL IN THE ORDER OF SETTLEMENT COMMIS SION IN THE CASE OF SH. SUSHIL KUMAR PUROHIT. COPY OF THE ORDER OF SETTLEMENT COMM ISSION WAS SUBMITTED. THE AO HAS FAILED TO COUNTER THE OBJECTIONS RAISED BY T HE APPELLANT DURING THE ASSESSMENT PROCEEDINGS. SIMPLY MENTIONING THAT THES E FINDINGS ARE IN THE APPRAISAL REPORT AND APPRAISAL REPORT IS MADE BY TH E INVESTING WING AFTER CONSIDERING ALL THE MATERIAL FACTS AVAILABLE ON REC ORD DOES NOT HELP MUCH. THE AO HAS FAILED TO PROVE THROUGH ANY INDEPENDENT INQU IRY OR RELYING ON SOME MATERIAL THAT THE TRANSACTIONS MADE BY THE APPELLAN T THROUGH SHARE BROKER P.K. AGARWAL WERE NON-GENUINE OR THERE WAS ANY ADVERSE M ENTION ABOUT THE TRANSACTION IN QUESTION IN STATEMENT OF SH. PAWAN P UROHIT. SIMPLY BECAUSE IN THE SHAM TRANSACTIONS BANK A/C WERE OPENED WITH HDFC BA NK AND THE APPELLANT HAS ALSO RECEIVED SHORT TERM CAPITAL GAIN IN HIS ACCOUN T WITH HDFC BANK DOES NOT ESTABLISH THAT THE TRANSACTION MADE BY THE APPELLAN T WERE NON GENUINE. 15 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 CONSIDERING ALL THESE FACTS THE SHARE TRANSACTIONS MADE THROUGH SHRI P.K. AGARWAL CANNOT BE HELD AS NON-GENUINE. CONSEQUENTLY DENYING THE CLAIM OF SHORT TERM CAPITAL GAIN (6 OF 6) [ ITA-385/2011] MADE BY THE APPELLANT BEFORE THE AO IS NOT APPROVED. THE AO IS THEREFORE, DIRECTED TO A CCEPT CLAIM OF SHORT TERM CAPITAL GAIN AS SHOWN BY THE APPELLANT.' IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AO IS BASED ON MERE SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO SHOW TH AT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TE RM CAPITAL GAIN. ON THE OTHER HAND, THE ASSESSEE HAS BROUGHT ALL THE RELEVANT MAT ERIAL TO SUBSTANTIATE ITS CLAIM THAT TRANSACTIONS OF THE PURCHASE AND SALE OF SHARE S ARE GENUINE. EVEN OTHERWISE THE HOLDING OF THE SHARES BY THE ASSESSEE AT THE TI ME OF ALLOTMENT SUBSEQUENT TO THE AMALGAMATION/MERGER IS NOT IN DOUBT, THEREFORE, THE TRANSACTION CANNOT BE HELD AS BOGUS. ACCORDINGLY WE DELETE THE ADDITION M ADE BY THE AO ON THIS ACCOUNT.' 23. WE NOTE THAT THE SALE OF SHARES OF M/S. KAFL & M/S EIL WHICH WAS DEMATERLIZED IN DEMAT ACCOUNT HAS TAKEN PLACE THROU GH RECOGNIZED STOCK EXCHANGE AND ASSESSEE RECEIVED MONEY THROUGH BANKING CHANNEL. SO , ASSESSEE HAS EXPLAINED THE NATURE AND SOURCE OF THE MONEY WITH SUPPORTING DOCU MENTS AND THUS HAS DISCHARGED THE ONUS CASTED UPON HIM BY PRODUCING THE RELEVANT DOCU MENTS MENTIONED IN PARA 15 (SUPRA), ACCORDINGLY, THE QUESTION OF TREATING THE SAID GAIN AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT CANNOT ARISE UNLESS THE AO IS ABLE TO FIND FAULT/INFIRMITY WITH THE SAME. WE NOTE THAT THE SOURCE OF THE RECEI PT OF THE AMOUNT HAS BEEN EXPLAINED AND THE TRANSACTION IN RESPECT OF WHICH THE SAID AM OUNT HAS BEEN RECEIVED BY ASSESSEE HAS NOT BEEN CANCELLED BY THE STOCK EXCHANGE/SEBI. SO, IT IS DIFFICULT TO COUNTENANCE THE ACTION OF AO/LD. CIT(A) IN THE AFORESAID FACTS AND CIRCUMSTANCES EXPLAINED ABOVE. 24. EVEN ASSUMING THAT THE BROKERS MAY HAVE DONE SO ME MANIPULATION THEN ALSO THE ASSESSEE CANNOT BE HELD LIABLE FOR THE ILLEGAL ACTI ON OF THE BROKERS WHEN THE ENTIRE TRANSACTIONS HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS DULY RECORDED IN THE DEMAT ACCOUNTS WITH A GOVERNMENT DEPOSITORY AND TRADED ON THE STOCK EXCHANGE UNLESS SPECIFIC EVIDENCE EMERGES THAT THE ASSESSEE WAS IN HAND IN GLOVES WITH THE BROKER FOR COMMITTING THE UNSCRUPULOUS ACTIVITY TO LAUNDER HIS OWN MONEY IN THE GUISE OF LTCG IS BROUGHT ON RECORD BY THE AO. 16 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 25. THERE IS ALSO NOTHING ON RECORD WHICH COULD SUG GEST THAT THE ASSESSEE GAVE HIS OWN CASH AND GOT CHEQUE FROM THE ALLEGED BROKERS/B UYERS. THE ASSESSMENT IS BASED UPON SOME THIRD PARTIES STATEMENTS RECORDED BEHIND THE BACK OF THE ASSESSEE AND THE ASSESSEE HAS NOT BEEN ALLOWED TO CROSS EXAMINE THO SE PERSONS, SO THE STATEMENTS EVEN IF ADVERSE AGAINST THE ASSESSEE CANNOT BE RELIED UPON BY THE AO TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE IN THE LIGHT OF THE DOCUMENTS TO SUBSTANTIATE THE CLAIM OF LTCG, WHICH HAS NOT BEEN FOUND FAULT WITH BY THE AO. 26. LET US LOOK AT CERTAIN JUDICIAL DECISIONS ON SI MILAR FACTS:- 27. THE CASE OF THE ASSESSEES IS SIMILAR TO THE DE CISION OF HONBLE BOMBAY HIGH COURT, NAGPUR BENCH IN CIT VS. SMT. JAMNADEVI AGRAW AL & ORS. 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 EST ABLISH THE GENUINENESS OF THE CLAIM. FROM THE DOCUMENTS PRODUCED, IT IS SEEN THAT THE SH ARES IN QUESTION WERE IN FACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY HAS CONFIRMED TO HAVE HANDED OVER THE SHARES PURCHASED BY THE ASSESS EES. SIMILARLY, THE SALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRO DUCING DOCUMENTARY EVIDENCE. IT IS TRUE THAT SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANS ACTIONS. HOWEVER, THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET RATES PREVAILING ON THE RESPECTIVE DATES AS IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEES. THEREFORE, THE FACT THAT SOME OF THE TRA NSACTIONS WERE OFF-MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHA M TRANSACTIONS. THE STATEMENT OF THE BROKER P THAT THE TRANSACTIONS WITH THE H GROUP WER E BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCING DOCUMENTARY EVIDENCE TO THE EFFE CT THAT THE SHARES SOLD BY THE ASSESSEES WERE IN CONSONANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EVIDENCE, THE TRIBUNAL HAS ARRIVED AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT ON RECORD TO SHOW THAT THE FINDI NGS 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 ASSESSEES WERE IN CONFORMITY WITH THE MARKET PRICE, THE TRIBUNAL RECORDED A FIND ING OF FACT THAT THE CASH CREDITS IN THE BUYERS' BANK ACCOUNTS CANNOT BE ATTRIBUTED TO THE A SSESSEES. NO FAULT CAN BE FOUND WITH THE ABOVE FINDING RECORDED BY THE TRIBUNAL. THEREFO RE, THE DECISION OF THE TRIBUNAL IS BASED ON FINDING OF FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL.ASSTT. CIT VS. KAMAL KUMAR S. AGRAWAL (IN DL.) & ORS. (2010) 41 DTR (NAG) (TRIB) 105: (2010) 133 TTJ (NAG) 818 AFFIRMED; SUMA TI DAYAL VS. CIT (1995) 125 CTR (SC) 124: (1995) 80 TAXMAN 89 (SC) DISTINGUISHED. 17 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 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 RECEIPT OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSENTIALLY A QUESTION OF F ACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT AT THE TIME OF TRANSACTIONS, THE BROKER IN QUESTION WAS NOT BANNED BY SEBI AND T HAT ASSESSEE HAD PRODUCED COPIES OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICATE, APPLICATION FOR TRANSFER OF SHARE CERTIFICATE TO DEMAT ACCOUNT ALONG WITH COPIES OF H OLDING STATEMENT IN DEMAT ACCOUNT, BALANCE SHEET AS ON 31ST MARCH, 2003, SALE BILL, BA NK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS, OF CALCUTTA STOCK EXCHANGE A SSOCIATION LTD. ON 23RD JULY, 2003. THEREFORE, 'THE PRESE/ITDPPEAL DOES NOT RAISE ANY Q UESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. 28. 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 CHALLENGE TO THE PURCHASE OF SHARES IN THAT YEAR. IT WAS ALSO PLACED BEFORE T HE RELEVANT AO AS WELL AS BEFORE THE TRIBUNAL THAT THE SALE PROCEEDS HAVE BEEN ACCOUNTED FOR IN THE ACCOUNTS OF THE ASSESSEE AND WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE TRIBUNAL WAS RIGHT IN REJECTING THE APPEAL OF THE REVENUE BY HOLDING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPANY. HE HAD MADE INVESTMENT IN A COMPANY IN WHI CH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CONTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTED AND THE TRANSACTION TOOK PLACE T HROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHIC H COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITIER A DEVICE TO C AMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUCH PRESUMPTION COULD BE DRAWN BY THE AO MERELY ON SURMISES AND CONJECTURES. IN THE ABSENCE OF ANY COGENT MATERIAL IN THIS REGARD, HAVING BEEN PLACED ON RECORD, THE AO COULD NOT HAVE REOPENED THE ASSESSME NT. 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. SALES TAX TRIBUNAL (1998) 107 STC 300 (PUNJAB) RELIED ON; UMACHARAN SHAW &BROS. VS. C IT (1959) 37 ITR 271 (SC) APPLIED; JASPAL SINGH VS. CIT (2006) 205 CTR (P & H ) 624 DISTINGUISHED 29. 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 RELE VANT 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 18 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN BY THE A SSESSING OFFICER/CIT(A). THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES IN CIVIL APPEAL NO. 4228 OF 2006 WAS SEIZED WITH THE FOLLOWING ACTION O F THE TRIBUNAL :- 6. THE PLEA OF NO CROSS EXAMINATION GRANTED TO THE VARIOUS DEALERS WOULD NOT HELP THE APPELLANT CASE SINCE THE EXAMINATION OF TH E DEALERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE POSSESSION O F THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PRICES REMAIN ST ATIC. SINCE WE ARE NOT UPHOLDING AND APPLYING THE EX FACTORY PRICES, AS WE FIND THEM CONTRAVENED AND NOT NORMAL PRICE AS ENVISAGED UNDER SECTION 4(1), W E FIND NO REASON TO DISTURB THE COMMISSIONERS ORDERS. 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 JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS G IVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORR ECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS S PECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOW EVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEAL T WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATE D THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIA L WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN A S TO WHY THEIR EXFACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO 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 DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPO N THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/W ITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUB JECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORIT Y TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATIO N AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN E ARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2 216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO TH E TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S 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 WIT H THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEM ENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE. 19 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 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 WHE N THE SHARES WERE PURCHASED. THE SHARES WERE 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 RECORD WHICH COULD SUGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN T HE NAME OF THE ASSESSEE. THERE IS ALSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE N EVER WITH THE ASSESSEE. ON THE CONTRARY, 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 THE SHARES WERE OF SOME FICTITIOUS COMPAN Y WHICH WAS NOT LISTED IN THE BOMBAY STOCK EXCHANGE/NATIONAL 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 C ASE IN HAND SUGGEST THAT THE TRANSACTIONS WERE GENUINE AND THEREFORE, NO ADVERSE INFERENCE SH OULD 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 TOTALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PRESUMPTION AND SU RMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT EVIDENCES ON RECORD RELATIN G TO THE SALE/PURCHASE TRANSACTIONS IN SHARES SUPPORTED BY BROKERS CONTRACT NOTES, CONFIR MATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE DEMAT ACCO UNT. 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. 30. THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SU PPORT OF THE CLAIM OF THE ASSESSEE THAT IT EARNED LTCG ON TRANSACTIONS OF HIS INVESTME NT IN SHARES. THE PURCHASE OF SHARES HAD BEEN ACCEPTED BY THE AO IN THE YEAR OF ITS ACQ UISITION AND THEREAFTER UNTIL THE SAME WERE SOLD. THE OFF MARKET TRANSACTION FOR PURCHASE OF SHARES IS 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 ASSESSE E. THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE CHEQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE OF SHARES AND THE SALE OF SHARES WERE ALSO REFLECTED I N DEMAT ACCOUNT STATEMENTS. THE SALE 20 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 OF SHARES SUFFERED STT, BROKERAGE ETC. IN THE FACT S AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE HELD THAT THE TRANSACTIONS WERE BOGUS. TH E FOLLOWING JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT:- (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 TH E 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 RUNNIN G IN PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US T HE LD. AR SUBMITTED THAT THE ORDER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH THE BROK ER 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 ACCOU NTS OF BOTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBMITTED THE IT RETURN, LEDGER COPY, LETTER TO AO LAND PAN OF THE BROKER IN SUPPOR T OF HIS CLAIM WHICH IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUC ED THE PURCHASE & SALE CONTRACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAP ER BOOK. THE PURCHASE AND SALES REGISTERS WERE ALSO SUBMITTED IN THE FORM OF THE PA PER BOOK WHICH IS PLACED AT PAGES 76 TO 87. THE BOARD RESOLUTION PASSED BY THE COMPANY F OR THE TRANSACTIONS IN COMMODITY WAS PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTH ER 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 S UCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME LOSS WAS ALSO CONF IRMED BY THE LD. CIT(A). HOWEVER WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER W ERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE H AS TO BE SOME CONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SU PPORTIVE 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 PROD UCED 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 THA T THE OPINION OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LO SS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERA BLY FAILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WER E AT THE PREVAILING PRICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. 21 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 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 RECORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF 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 COLOURABLE TRANSACTIONS OR WERE RESORTED TO WITH UL TERIOR 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 , BROKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRA NSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE W AS DISMISSED. V) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM ED THE DECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASS ESSEE WHERE THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS T RANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON T RADING OF PENNY STOCK ON THE BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS A LSO FOUND THAT THE AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT THE AOS CONCLUSIONS ARE MERELY BASED ON THE I NFORMATION RECEIVED BY HIM. THE 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 AFFIR MED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOWED SINCE THE AO FAILED TO 22 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SA LE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. 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, BASE D ON THE INFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRA NSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREI N IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO FOUND THAT T HE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUM ENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FA CTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED BY HIGH COURT. 31. WE NOTE THAT SINCE THE PURCHASE AND SALE TRA NSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENT S AND BANK STATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE AC CEPTED BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON TH E BASIS OF SOME REPORTS OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAID 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) 23 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (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 ) 32. 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 PR ADESH [1977] 1 SCC 816 (SC) . IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURD EN OF SHOWING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NO T THE REAL OWNER ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECT LY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND REASONABLY R AISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT IS NOT ENOU GH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DEC IDE ON THE BASIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. TH E LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DEC IDING THE ISSUE RELATING TO EXEMPTION CLAIMED BY THE ASSESSEE ON LTCG ON ALLEGE D PENNY SOCKS. (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) 24 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 33. 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 PART Y TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN CSE. THE LD AR REFERRED TO THE FOLLOWIN G JUDGMENTS IN SUPPORT OF THIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SE CTION 10(38) OF THE ACT AND TO ASSESS THE SALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME OF TH E 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) 34. 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, W E FIND THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CAS E, THE PURCHASES WERE MADE BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPA NIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRE SS OF THE BROKER WAS INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY TH E ASSESSEE WAS SHOWN AS CAPITAL GAINS WHICH WAS NOT ACCEPTED BY THE A.O. AND THE GA INS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTURE 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. 35. IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF T HE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINAT E BENCH OF THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG ON SALE OF S HARES OF M/S KAFL & M/S EIL. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, AND SET ASIDE THE ORDER OF LD. CIT(A) 25 ITA NO. 113/KOL/2018 , YOGESH KUMAR DALMIA, AYS 2014-15 AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPIT AL AS BOGUS AND DELETE THE CONSEQUENTIAL ADDITION. 36. THE NEXT ISSUE IN CONFIRMING THE ADDITION OF RS .5,99,001/- AS UNEXPLAINED EXPENDITURE TOWARDS COMMISSION CHARGES OF SALE OF S UCH SHARES BY THE OPERATOR. WE HAVE ALREADY HELD THAT THE TRANSACTIONS RELATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODATION ENTRIES AS ALLEGED BY THE AO. CONSEQU ENTLY THE ADDITION OF RS.5,99,001/- IS HEREBY DIRECTED TO BE DELETED. WE ACCORDINGLY HOLD THAT THE ISSUE IS ALLOWED IN FAVOUR OF THE ASSESSEE. 37. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 03/06/20 19. SD/- SD/- (M. BALAGNESH) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3RD JUNE , 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT SHRI YOGESH KUMAR DALMIA, C/O RUSTAGI & CO., 19, R. N. MUKHERJEE ROAD, 1 ST FLOOR, EASTERN BUILDING, KOLKATA-700 001. . 2 RESPONDENT ACIT, CIRCLE-36, KOLKATA., 3 4 5 CIT(A)-10, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR