Sri Asish Kumar Ghosh , Howrah V. DCIT, Circle - 1(1), Kolkata

ITA 1164/KOL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6312 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 15-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RABIN CHOUDHURY
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Transactions in derivatives; Question of law; Wrong claim; Accommodation entries; Penny stocks; Set aside; Audi alteram partem
• Section: 69C; 143(3); 234B; 260A; 250; 68; 69

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1164 / KOL / 2019 ASSESSMENT YEAR :2014-15 SRI ASISH KUMAR GHOSH 124/9, MAHENDRA BHATTACHARYA ROAD, HOWRAH-711104 [ PAN NO.ADPPG 0795 E ] V/S . DCIT, CIRCLE-1(1), P-7,CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-69 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SOUMITRA CHOUDHURY, ADVOCATE /BY RESPONDENT SHRI RABIN CHOUDHURY, DR /DATE OF HEARING 24-07-2019 /DATE OF PRONOUNCEMENT 02-08-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-6 KOLKATAS OR DER DATED 10.04.2019 PASSED IN CASE NO. CIT(A), KOLKATA-6/10080/2018-19, INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT T HE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. IT EMERGES AT THE OUTSET THAT BOTH THE LOWER AUT HORITIES HAVE ADOPTED IDENTICAL LINE OF REASONING IN TREATING THE ASSESSE ES LTCG AMOUNTING TO 112,12,338/- DERIVED FROM TRANSFER OF SHARES TO BE BOGUS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 2 3. WE FIND THAT THE ASSESSEE HAD DECLARED HIS LTCG OF RS.112,12,338/- DERIVED FROM TRANSFER OF SHARES HELD IN SULABH ENGI NEERING AND SERVICE LTD. LEARNED DEPARTMENTAL REPRESENTATIVE INVITES OUR ATT ENTION TO A VOLUMINOUS EXERCISE UNDERTAKEN BY THE ASSESSING OFFICER INVOLV ING A LONG DRAWN PROCESS OF STOCK MARKET PRICES RIGGING IN COLLUSION WITH VA RIOUS ENTRY OPERATORS. HE TAKES US TO CIT(A)S DETAILED DISCUSSION WHILST TRE ATING THE IMPUGNED LTCG IN THE INSTANT CASE AS UNDER:- 5.3 IN A PENNY STOCK WHICH HAS NO BUSINESS ACTIVI TY OR ANY PLAN OR INITIATIVE OR ANY PROSPECT FOR GROWTH, INVESTOR NORMALLY SELL OFF SUC H STOCK WHENEVER PRICE HAS APPRECIATED TO SOME EXTENT AND THERE IS TOTAL UNCER TAINTY TO HOLD SUCH STOCK FOR FABULOUS APPRECIATION WHEN THE INVESTMENT IS NOT BA CKED BY ANY FUNDAMENTAL OF THE COMPANY, ITS BUSINESS POLICY AND FUTURE PROSPECT. I N ABSENCE OF ANY SUCH FACT THE PERSON WHO KNOWS BEFOREHAND THAT ITS PRICE IS BEING MANIPULATED IN A CONCERTED WAY AND HE IS PART OF SUCH SYSTEM WILL BENEFIT. PRICE M OVEMENT AND VOLUME MOVEMENT OF THIS STOCK INDICATES SUCH FACT. THE SAID TRANSACTIO N DEFIES ALL LOGIC OF HUMAN PROBABILITY. IN THIS CONTEXT THE HON'BLE SUPREME CO URT IN THE CASE OF CIT VS. DURGA PRASAD MORE (82 ITR 540) HAS HELD THAT THE SURROUND ING CIRCUMSTANCES MUSS BE SEEN TO FIND OUT THE REALITY OF THE RECITALS MADE I N THE DOCUMENTS. THIS PRINCIPLE WAS REAFFIRMED BY THE HON'BLE SUPREME COURT IN 214 ITR 801 WHERE IN IT WAS HELD THAT THE APPARENT CAN BE REJECTED WHERE THERE ARE REASONS T O BELIEVE THAT THE APPARENT IS NOT THE REAL FACT. 5.4 I FIND ALL THE JUDGEMENTS RELIED UPON BY THE AP PELLANT FALL FLAT IN THE FACE OF THE FACTS OF THE CASE AND PREPONDERANCE OF PROBABILITY AGAINST THE ASSESSEE. IN FACT, THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF SANJAY BIMALCHAND JAIN VS. PR. CIT (2018) 89 TAXMANN.COM 196 (BORN) IS QUI TE RELEVANT FOR DECIDING THE ISSUE. IT WAS HELD THAT WHERE THE ASSESSEE HAD PURC HASED SHARES OF PENNY STOCKS COMPANIES AT LESSER AMOUNT AND WITHIN A YEAR SOLD S UCH SHARES AT MUCH HIGHER AMOUNT AND ASSESSEE HAD NOT TENDERED COGENT EVIDENC E TO EXPLAIN AS TO HOW SHARES IN AN UNKNOWN COMPANY HAD JUMPED TO SUCH HIGHER AMO UNT IN NO TIME AND ALSO FAILED TO PROVIDE DETAILS OF PERSON WHO PURCHASED S AID SHARES, SAID TRANSACTIONS WERE ATTEMPT TO HEDGE UNDISCLOSED INCOME AS LONG TERM CA PITAL GAIN. APPLYING. THE AFORESAID RATIO, I CONCLUDE THAT THE APPELLANT HAD INDULGED IN A DUBIOUS SHARE TRANSACTION MEANT TO ACCOUNT FOR THE UNDISCLOSED IN COME IN THE GARB OF LONG TERM CAPITAL GAIN SINCE SHE HAS NOT TENDERED ANY COGENT EVIDENCE TO EXPLAIN HOW THE PRICE OF SHARES OF AN UNKNOWN COMPANY HAS JUMPED IN NO TI ME. IN SUPPORT OF THIS FINDING, I ALSO GARNER SUPPORT FROM THE FOLLOWING JUDGEMENTS W HICH ARE AS UNDER: - 1. CHANDAN GUPTA VS. CIT (2015) 229 TAXMAN 173 (P & H) WHERE THE ASSESSEE COULD NOT EXPLAIN RECEIPT OF ALL EGED SHARE TRANSACTION PROFITS CREDITED IN HIS BANK ACCOUNTS, THEN SALE PR OCEEDS HAD TO BE ADDED AS INCOME UNDER SECTION 68. 2. BALBIR CHAND MAINI VS. CIT (2012) 340 ITR 161 (P & H) SECTION 69 OF THE INCOME-TAX ACT,. 1961 - UNEXPLAIN ED INVESTMENTS - ASSESSMENT YEAR 1998-99 - DURING ASSESSMENT PROCEED INGS, ASSESSING OFFICER FOUND THAT ASSESSEE HAD PURCHASED CERTAIN S HARES OF A COMPANY AT ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 3 RATE BETWEEN RS. 2,50 AND RS. 3.40 PER SHARE IN MON TH OF APRIL, 7997 AND PART OF THOSE SHARES WERE SOLD THROUGH A BROKER AT RS 5 5 PER SHARE - HE CAME TO OPINION THAT VALUE OF SAID SHARES COULD NOT BE AS H IGH AS RS.55 PER SHARE. HE RECORDED STATEMENT OF BROKER WHO ADMITTED TO HAVE P URCHASED SHARES IN QUESTION BUT FAILED TO PRODUCE BOOKS OF ACCOUNT AND OTHER RELEVANT DOCUMENTS. HE ALSO FOUND THAT ALLEGED SALE OF SHARE S HAD NOT TAKEN PLACE THROUGH ANY STOCK EXCHANGE - ON SCRUTINY OF BOOKS O F ACCOUNT OF BROKER, IT WAS FOUND THAT THERE WERE CASH DEPOSITS IN ITS HANK ACCOUNT PRECEDING ISSUE OF CHEQUES IN NAME OF ASSESSEE FOR PURCHASE OF SHAR ES CLAIMED TO BE SALE PROCEEDS. OF SAME SHARES RECEIVED IN ADVANCE - BROK ER COULD NOT GIVE DETAILS OF PURCHASER OF SHARES - MOREOVER, SHARES CLAIMED T O HAVE BEEN SOLD THROUGH BROKER HAD NOT BEEN TRANSFERRED EVEN AT TIME OF MAK ING ENQUIRY BY ASSESSING OFFICER AND SAME CONTINUED TO BE REGISTERED IN NAME OF ASSESSEE - IN THOSE CIRCUMSTANCES, ASSESSING OFFICER HELD THAT TRANSACT ION OF SALE OF SHARES WAS AN INGENUINE TRANSACTION AND MADE ADDITION OF ALLEG ED SALE CONSIDERATION TO ASSESSEE'S INCOME AS INCOME FROM UNDISCLOSED SOURCE S - WHETHER ON FACTS, ADDITION MADE BY ASSESSING OFFICER WAS JUSTIFIED - HELD, YES 3. USHA CHANDRESB SHAH VS. ITO (2014-TIOL-1459-IT AT-MUM) WHERE THE ASSESSEE COULD NOT PRODUCE THE COPIES OF SHARE CERTIFICATES AND COPIES OF SHARE TRANSFER FORMS. THE TRANSACTION OF PURCHASE OF SHARES COULD NOT BE CROSS VERIFIED. THE SHARES OF COMPANY WAS DE CLARED AS ' PENNY STOCK ' BY SEBI AND THE BROKER SANJU KABRA, THROUGH WHOM TH E SHARES WERE SOLD BY THE ASSESSEE WAS INDICTED FOR MANIPULATING THE PRIC ES OF PENNY STOCK SHARES. THE TAX AUTHORITIES HAVE RIGHTLY APPLIED THE TEST O F HUMAN PROBABILITIES TO EXAMINE THE CLAIM OF PURCHASE AND SALE OF SHARES MA DE BY THE ASSESSEE. THE CIT(A) WAS JUSTIFIED IN CONFIRMING THE ORDER OF THE AO BY APPLYING THE TEST OF HUMAN PROBABILITIES. 4. RATNAKAR M PUJARI VS.,ITO (2016-TIOL-1746-ITAT-M UMJ WHERE A TRANSACTION OF ' OFF MARKET PURCHASE OF SHARE ' FOR WHICH PAYMENTS WERE MADE IN CASH AND THE BROKERS HAD ISSUED PRE DA TED CONTRACT NOTES, IS LIABLE TO BE TREATED AS BOGUS TRANSACTION, AND HENC E SUCH CASH RECEIPTS ARE LIABLE TO BE TREATED AS ' UNEXPLAINED CASH RECEIPTS . ' 5. M.K. RAJESHWARI VS. ITO (2018) 99 TAXMANN.COM 339 (BANG) WHERE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 10(3 8) IN RESPECT OF CAPITAL GAIN ARISING FROM SALE OF SHARES, IN VIEW OF FACT T HAT FINANCIAL WORTH OF SAID COMPANY WAS MEAGER AND, MOREOVER, THERE WAS ABNORMA L RISE IN PRICE OF SHARES, IT COULD BE CONCLUDED THAT ASSESSEE INTRODU CED HER OWN UNACCOUNTED MONEY IN GRAB OF LONG TERM CAPITAL GAIN AND, THUS C LAIM RAISED BY HER WAS TO BE REJECTED. 6. ITAT, SMC -C BENCH, BANGALORE ITA NO. 1723/BENG/ 2018, A. Y. 2015-16 IN SMT. M.K. RAJESHWARI VS. ITO DATED 12.10.2018 HA S HELD AT PARA 8 & 9. '8, THE AO HAS ALSO EXAMINED THE SEBIS FINDINGS AB OUT THE ACCOMMODATION ENTRY PROVIDERS OBTAINED ON THE BASIS OF VARIOUS IN VESTIGATIONS AND HAS BROUGHT OUT SUFFICIENT MATERIAL ON RECORD TO DEMONS TRATE THAT THE TRANSACTIONS ARE NOT GENUINE ARID HE ACCORDINGLY CONCLUDED THAT THE LONG-TERM CAPITAL GAIN BOOKED BY THE ASSESSEE IN THE BOOKS WERE PREARRANGE D METHOD TO EVADE TAXES AND LAUNDERED MONEY. THE FINDINGS AND OBSERVA TIONS OF THE AO WERE NOT CONTROVERTED BY ASSESSEE BY PLACING ANY EVIDENC E. HE PLACED RELIANCE UPON THE VARIOUS JUDICIAL PRONOUNCEMENTS IN SUPPORT OF HIS CONTENTION THAT ONCE THE ASSESSEE HAS PLACED THE EVIDENCES WITH REG ARD TO PAYMENTS AND THE IDENTITY OF THE PERSONS AND THE CREDITWORTHINESS OF THE CREDITORS, NO ADDITION ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 4 UNDER SECTION 68 IS CALLED FOR. SINCE THE ASSESSEE HAS PLACED THE CONTRACT NOTE, PAYMENT THROUGH CHEQUES IDENTIFYING THE COMPA NY WHOSE SHARES WERE TRANSACTED, THE GENUINENESS OF CLAIM OF LONG- TERM CAPITAL GAIN SHOULD NOT HAVE BEEN DOUBTED. WE DO NOT FIND MERIT IN THESE CO NTENTIONS OF THE ASSESSEE IN THE LIGHT OF THE FACTS THAT THERE IS PR EVALENT PRACTICE IN THE COUNTRY THROUGH WHICH UNACCOUNTED MONEY IS CONVERTED INTO L ONG-TERM CAPITAL GAIN BY CIRCUITOUS MEANS. WHILE DEALING WITH THE ISSUE OF L ONG-TERM CAPITAL GAIN ACCRUED TO THE ASSESSEE IN SHORT SPAN, ONE HAS TO E XAMINE THE FINANCIALS OF THE COMPANY WHOSE SHARES WERE INFLATED WITHIN A SHO RT PERIOD AND AFTER THE SHARP RISE IN THE PRICE OF SHARES IT AGAIN COMES DO WN. IN THE INSTANT CASE, FINANCIALS WERE EXAMINED BY US AND WE FIND THAT THE FINANCIAL WORTH OF THE COMPANY IS MEAGRE AND NOT AT ALL WORTH TO BE INVEST ED THEREIN. WITH SUCH FINANCIALS, WE ARE UNABLE TO UNDERSTAND HOW THERE C AN BE MANIFOLD INCREASE IN THE SHARES. IN THE LIGHT OF THE DURATION OF TRAN SACTIONS AND THE FINANCIALS ()J THE COMPANY WHOSE SHARES WERE TRANSACTED, WE FIND T HAT THE REVENUE HAS BROUGHT SUFFICIENT MATERIAL ON RECORD TO DEMONSTRAT E THAT UNACCOUNTED MONEY WAS INTRODUCED IN THE BOOKS OF ACCOUNT THROUGH LONG -TERM CAPITAL GAIN BY ADOPTING SUCH METHOD. WHATEVER JUDICIAL PRONOUNCEME NTS ARE RELIED ON, THESE ARE M THOSE CASES WHERE THE TRANSACTIONS ARE GENUINE. UNDER THESE CIRCUMSTANCES. WE ARE OF THE VIEW THAT REVENUE AUTH ORITIES HAVE RIGHTLY ADJUDICATED THE ISSUE AND NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). 9. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS D ISMISSED.' 7. ITAT, CHENNAI A-BENCH, ITA NO. 1413/CHNY/2018, A .Y.2014-1S IN M/S. PANKAJ AGARWAL & SONS (HUF) VS. ITO, WARD-10(3) CHE NNAI, DATED 06.12.2018 HAS HELD AT PARA 7 & 8. '7. BEFORE US THE LD.AR SUBMITTED THAT THE ASSESSEE S WERE NOT PROVIDED WITH AN OPPORTUNITY TO CROSS-EXAMINE THE WITNESS WHO WER E RELIED BY THE REVENUE AND FURTHER FAILED TO FURNISH THE INVESTIGATION REP ORT OF THE INTELLIGENCE WING OF THE REVENUE BEFORE CONCLUDING THE ASSESSMENT. THE L D.AR FURTHER ARGUED THAT THE ASSESSEES WERE NOT PROVIDED WITH PROPER OP PORTUNITY OF BEING HEARD. IT WAS THEREFORE PLEADED THAT THE MATTER MAY BE REM ITTED BACK TO THE FILE OF LD.AO FOR FRESH CONSIDERATION. THE LD. DR STRONGLY OPPOSED TO THE SUBMISSION OF THE LD.AR AND REQUESTED FOR CONFIRMIN G THE ORDERS OF THE LD. REVENUE AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. AT THE OUTSET WE MUST SAY THAT THE LD.AR COULD NOT JUSTIFY BEFORE US ANY OF THEIR CLAIMS MADE BEFORE THE LD. REVENUE AUTHORITIES THAT THE TRANSACTION WAS GENUINE. FURTHER THE LD. AR COULD N OT SUCCESSFULLY CONTROVERT TO ANY OF THE FINDINGS OF THE LD. REVENUE AUTHORITI ES BEFORE US WHICH ARE AGAINST THE ASSESSEES. INSTEAD THE LD. AR HAS ONLY COME OUT WITH THE PLEA THAT THE ASSESSEES WERE NOT PROVIDED WITH OPPORTUNI TY OF CROSS-EXAMINING THE WITNESS, THE INVESTIGATION REPORT WAS NOT FURNISHED AND PROPER OPPORTUNITY WAS NOT PROVIDED OF BEING HEARD. HOWEVER WE FIND TH AT ALL THESE ARGUMENTS RAISE BY THE LD. AR BEFORE US WAS NEVER ALLEGED BEF ORE THE LD. REVENUE AUTHORITIES WHEN THE MATTER WAS BEFORE THEM. IN THI S SITUATION WE DO NOT HAVE ANY OTHER OPTION BUT TO CONFIRM THE ORDERS OF THE L D. REVENUE AUTHORITIES IN THE CASE OF ALL THE ASSESSEES BECAUSE THE LD. AO AS WELL AS THE LD. CIT(A) HAVE ARRIVED AT THEIR RESPECTIVE DECISIONS AFTER CO NSIDERING THE ISSUES IN THE APPEAL IN DETAIL AND THERE IS NOTHING BEFORE US TO DISTURB THEIR FINDINGS. ACCORDINGLY WE HEREBY CONFIRM THE ORDER OF THE LD. REVENUE AUTHORITIES ON THIS ISSUE. THUS THE FIRST GROUND RAISED BY THE ASS ESSEES HEREIN ABOVE IN ALL THE APPEALS ARE HELD AGAINST THE ASSESSEES. ' ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 5 8. THE ORDER DATED 04.01.2019 PASSED BY THE ITAT PU NE 'B' BENCH; PUNE, ITA NO. 1648 & 1649/PUN/15, A.Y. 2005-06 & 2006-07 IN RAJKUMAR B AGARWAL VS. DCIT, CENTRAL CIRCLE 1(2), PUNE DATED 0 4.01.2019 HAS HELD AT PARA 15 & 17 15. IT IS FURTHER PERTINENT TO NOTE THAT IT WAS NOT ONLY THE ASSESSEE WHO BOOKED SHORT TERM CAPITAL GAIN ON THE SALE OF SHARES OF PI L TO THE ABOVE EXTENT, BUT HIS FAMILY MEMBERS WERE ALSO NOT LEFT BEHIND. THEY ALSO INDULGED IN THE SIMILAR PAPER TRANSACTIONS BY ALLEGEDLY PURCHASING AND SELLING SHARES OF PIL FROM THE SAME BROKERS AND SHOWING HUGE AMOUNTS OF S HORT TERM. CAPITAL GAINS, FOR WHICH ADDITION OF RS.18,71,906/ - HAS BE EN MADE IN THE HANDS OF HIS SON SH. BHARAT RAJKUMAR AQARUIAL AND RS.20,21,O OL/ - IN THE HANDS OF HIS WIFE AMEETA RAJKUMAR AGARWAL FOR THE SAME ASSESSMEN T YEAR, THE APPEALS OF WHICH ARE BEING DISPOSED OFF THROUGH THIS BATCH OF CASES. 16. IN VIEW OF THE FACTUAL AND LEGAL POSITION DISCU SSED ABOVE, IT IS CRYSTAL CLEAR THAT PIL IS A PENNY STOCK COMPANY AND THE ASSESSEE OBTAINED ONLY ACCOMMODATION ENTRIES IN THE GARB OF SHORT TERM GAI N FROM TRANSFER OF SHARES OF PIL, FOR WHICH AN APPROPRIATE ADDITION HAS RIGHT LY BEEN MADE AND UPHELD BY THE AUTHORITIES BELOW. WE, THEREFORE, COUNTENANCE T HE IMPUGNED ORDER ON THIS SCORE. 17. BEFORE PARTING WITH THIS ISSUE, WE WANT TO RECO RD THAT THE LD. AR HAS RELIED ON CERTAIN DECISIONS IN WHICH THE ADDITIONS MADE ON ACCOUNT OF ACCOMMODATION ENTRIES GOT DELETED. IN THE OPPUGNATI ON, ID. DR HAS ALSO RELIED ON CERTAIN DECISIONS, INCLUDING THOSE REFERR ED TO IN THE IMPUGNED ORDER, IN WHICH THE ADDITION ON ACCOUNT OF ACCOMMODATION E NTRIES GOT CONFIRMED. WE ARE NOT SEPARATELY REFERRING TO THOSE DECISIONS AS THE FACTUAL POSITION PREVAILING IN SUCH CASE VARIES WITH THE FACTS OF TH E INSTANT CASE AS RECORDED ABOVE. EVEN A SINGLE SLIGHTEST VARIATION IN THE FAC TUAL MATRIX OF TWO APPARENTLY SIMILAR CASES CHANGES THE ENTIRE COMPLEXION OF THE DECISION. A THE FACTUAL PANORAMA OBTAINING IN THE EXTANT CASE IS DIFFERENT FROM THOSE RELIED ON BY THE RIVAL PARTIES, WE ARE, THEREFORE, DESISTING FROM DI STINGUISHING SUCH CASES SEPARATELY. THESE GROUNDS ARE THEREFORE DISMISSED. 9. THE ORDER DATED 08.01.2019 PASSED BY THE ITAT DE LHI ' SMC ' BENCH, NEW DELHI, ITA NO. 3810/DEL/2018, A.Y. -2015-16 IN ANJU RASTOGI VS. ITO , WARD 1(1), MEERUT DATED 08.01.2019 HAS HELD AT PARA 7 TO 9. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS ESPECIALLY THE IMPUGNED ORDER. 1 NOTE THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN AMOUNTING TO RS. 22,28,172/ - EARNED DURING THE FY 2014-15 AND EXEMPT U/S. 10(38) OF THE I. T. ACT, 1961. THE ASSESSEE WAS AS KED TO EXPLAIN THE SOURCE OF AFORESAID LONG TERM CAPITAL GAIN DURING THE COUR SE OF SCRUTINY PROCEEDINGS. THE EXPLANATION OFFERED THAT IT IS SAL E PROCEEDS OF SHARES ARE FOUND TO BE UNSATISFACTORY. THE EXPLANATION OF THE ASSESSEE IS GENERAL IN NATURE THAT AS THE TRANSACTION IS THROUGH STOCK EXC HANGE AND THE PAYMENT IS BY CHEQUE, THE TRANSACTIONS SHOULD BE TREATED AS GE NUINE. FURTHER, REGARDING THE STATEMENT OF SH. JAI KISHAN PODDAR THE ASSESSEE HAS ONLY STATED THAT IN THE STATEMENT THERE IS NO SPECIFIC LINK WITH THE CL AIM OF EXEMPTION IN RESPECT OF LONG TERM CAPITAL GAIN OF RS.22,78,172/- U/S.10(38) BY HIM. HE HAS NOT STATED A THING WITH RESPECT TO THE STATEMENT OF SH. JAI KISHARI PODDAR IN WHICH HE HAS ACCEPTED THAT FACILITATION OF ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN / LONG TERM CAPITAL LOSS THROUGH HIS SHARE BAN KING FIRM HAS BEEN DONE TO FEW BENEFICIARIES WITH THE HELP OF DIFFERENT ACCOMM ODATION ENTRY OPERATORS} PROMOTERS OF THE SCRIPTS OF VARIOUS PENNY STOCKS OT HER BROKERS ETC. SH. JAI ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 6 KISHARI PODDAR ALSO GAVE DETAILS OF DIFFERENT BOGUS SCRIPTS/ PENNY STOCKS WHICH HAVE BEEN USED FOR PROVIDING THE ACCOMMODATIO N. ENTRIES OF LTCG AND LTCL TO DIFFERENT BENEFICIARIES USING HIS BROKERAGE COMPANY CONSORTIUM CAPITAL PVT. LTD. AND THE NAME OF CCL INTERNATIONAL LIMITED HAVING SCRIP NAME CCL INTER APPEARS IN THE LIST WHOSE SHARES WER E SOLD BY THE ASSESSEE AND EXEMPTION ON LTCG AMOUNTING TO RS. 22,28,172/- CLAIMED U/ S. 10(38) OF THE ACT. AFTER PERUSING THE RECORDS, I FIND THAT IN THE INSTANT CASE THE INVESTMENT IN SHARES MADE BY THE ASSESSEE REVEALS T HAT HE HAS NOT BEEN DEALING IN SHARES ON A REGULAR BASIS AND THE ENTRIE S OF LTCG HAVE ALSO BEEN TAKEN BY OTHER MEMBERS OF THE ASSESSEE COMPANY AND THE PURCHASE OF THESE SHARES WERE CLAIMED TO BE THROUGH OFF MARKET DEALS AND NOT THROUGH STOCK EXCHANGE. THE FINANCIALS OF PENNY STOCK COMPANY M/S CCL INTERNATIONAL LTD. AND MOVEMENT OF ITS PRICE ARE ABRUPT, UNREALISTIC A ND BASED UPON ANY REALISTIC PARAMETERS. FROM, THE PERUSAL OF FINANCIAL STATEMEN TS OF THE AFORESAID COMPANY M/S CCL INTERNATIONAL LTD. FROM, THE MINIST RY OF CORPORATE AFFAIRS, WEBSITE (MCA) EXAMINING THE INFORMATION AVAILABLE I N THE PUBLIC DOMAIN FROM WHERE IT WAS OBSERVED THAT THERE IS NO EXTRAORDINAR Y INCREASE IN THE PROFITS OF THE COMPANY TO JUSTIFY THE INCREASE IN VALUE OF THE SHARES. I FURTHER NOTE THAT INVESTIGATION WING HAD RECORDED THE STATEMENT OF SH . JAZ KISHAN PODDAR WHO IS ONE OF THE DIRECTOR OF M/S CONSORTIUM CAPITAL PU T: LTD. WHICH IS ONE OF THE ENTITIES UTILISED FOR PROVIDING ENTRY OF BOGUS LONG TERM CAPITAL GAIN OF M/ S CCL INTERNATIONAL LTD. WHO HAD ADMITTED THAT HE WAS INV OLVED IN SCAM OF PROVIDING BOGUS LONG TERM CAPITAL GAINS THROUGH SHARES OF M/S CCL INTERNATIONAL LTD. HAD ALSO ADMITTED THAT THEY WERE ALSO INVOLVED IN T RADING OF THESE JARNAKHARCHI COMPANIES THROUGH WHICH MANIPULATIVE T RANSACTIONS IN SECURITIES TO EITHER ARTIFICIALLY RAISE OR LOWER TH E MARKET RATE OF THE SHARES ARE BEING DONE. I ALSO NOTE THAT THE INDEPENDENT FINDIN GS OF THE AD, WHICH ARE CORROBORATED BY THE INFORMATION GIVEN BY THE INVEST IGATION WING) THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE GENUINENESS OF ALLEGED SHARE TRANSACTIONS IN RESPECT OF LONG TERM CAPITAL GAIN U / S. 10(38) OF THE ACT. IN VIEW OF ABOVE DISCUSSIONS, THE LANDMARK DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF MCDOWELL AND COMPANY LIMITED, 154 ITR 1 48 ARE SQUARELY APPLICABLE IN THIS CASE WHEREIN IT HAS BEEN HELD TH AT TAX PLANNING MAY BE LEGITIMATE PROVIDED IT IS WITHIN THE FRAMEWORK OF T HE LAW AND ANY COLOURABLE DEVICES CANNOT BE PART OF TAX PLANNING AND IT IS WR ONG TO ENCOURAGE OR ENTERTAIN THE BELIEF THAT IT IS HONOURABLE TO AVOID THE PAYMENT OF TAX BY DUBIOUS METHODS. HOWEVER, THE CASE LAWS CITED BY TH E LD. COUNSEL FOR THE ASSESSEE ARE ON DISTINGUISHED FACTS, HENCE, NOT APP LICABLE IN THE INSTANT CASE. THE ASSESSEE HAS NOT ARGUED ANY OTHER GROUND MENTIO NED IN THE GROUNDS OF APPEAL, BUT ONLY ARGUED ON MERIT FOR WHICH ASSESSEE HAS FAILED TO SUBSTANTIATE HIS CLAIM BEFORE THE LOWER REVENUE AUTHORITIES AS W ELL AS BEFORE THIS BENCH. IN VIEW OF ABOVE DISCUSSIONS, I AM OF THE CONSIDERED O PINION THAT LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION IN DISPUTE, WHICH DO ES NOT NEED ANY INTERFERENCE ON MY PART) THEREFORE, I UPHOLD THE AC TION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUNDS RAISED BY T HE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. 8. SINCE IN OTHER APPEAL I.E. IN THE CASE OF ANJU R ASTOGI, ITA NO. 38101 DELL 20 18 (A Y 2015-16), SIMILAR FACTS ARE PERMEATING A ND SAME FINDING HAS BEEN GIVEN, THEREFORE) MY FINDING GIVEN ABOVE WILL APPLY MUTATIS MUTANDIS IN THIS APPEAL ALSO, BECAUSE THE NATURE OF TRANSACTIONS, EV IDENCES AND DOCUMENTS ARE EXACTLY THE SAME. THUS, BOTH THE APPEALS ARE TR EATED AS DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS OF THE DIFFER ENT ASSESSEES ARE DISMISSED. ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 7 10. THE LATEST ORDER DATED 08-03-209 PASSED BY THE DELHI HIGH COURT, NEW DELHI, ITA NO.220/2019 & CM NO. 10774/2019, IN UDIT KARLA VS. ITO, WARD 50(1), DATED 08-03-2019. THE ASSESSEE IS AGGRIEVED BY THE CONCURRENT FINDING S OF THE TAX AUTHORITIES - INCLUDING THE LOWER APPELLATE AUTHORITIES REJECTING ITS CLAIM FOR A LONG TERM CAPITAL GAIN REPORTED BY IT, TO THE TUNE OF RS.13,3 3,956/- AND RS.14,34,501/- IN RESPECT OF 4,000 SHARES OF M/S KAPPAC PHARMA LTD. T HE ASSESSEE HELD THOSE SHARES FOR APPROXIMATELY 19 MONTHS; THE ACQUISITIO N PRICE WAS RS.12/ - PER SHARE WHEREAS THE MARKET PRICE OF THE SHARES AT THE TIME OF THEIR SALE, WAS RS.720/-. IT IS CONTENDED THAT THE ASSESSEE WAS NOT GRANTED FAIR OPPORTUNITY. MR. RAJESH MAHNA, LEARNED COUNSEL APPEARING FOR THE ASSESSEE RELIED UPON THE ORDERS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL , IN RESPECT OF THE SAME COMPANY I.E. M/S KAPPAC PHARMA LTD., AND POINTED OU T THAT THE TAX AUTHORITY'S APPROACH IN THIS CASE WAS ENTIRELY ERRONEOUS AND IN CONSISTENT. THE MAIN THRUST OF THE ASSESSEE'S ARGUMENT IS THAT HE WAS DE NIED THE RIGHT TO CROSS- EXAMINATION OF THE TWO INDIVIDUALS WHOSE STATEMENTS LED TO THE INQUIRY AND ULTIMATE DISALLOWANCE OF THE LONG TERM CAPITAL GAIN CLAIM IN THE RETURNS WHICH ARE THE SUBJECT MATTER OF THE PRESENT APPEAL. THIS COURT HAS -CONSIDERED THE SUBMISSIONS OF THE P ARTIES. ASIDE FROM THE FACT THAT THE FINDINGS IN THIS CASE ARE ENTIRELY CONCURR ENT - A.O., CIT(A) AND THE IT AT HAVE ALL CONSISTENTLY RENDERED ADVERSE FINDINGS - WHAT IS INTRIGUING IS THAT THE COMPANY (M/S KAPPAC PHARMA LTD.) HAD MEAGRE RES OURCES AND IN FACT REPORTED CONSISTENT LOSSES. IN THESE CIRCUMSTANCES , THE ASTRONOMICAL GROWTH OF THE VALUE' OF COMPANY'S SHARES NATURALLY EXCITED THE SUSPICIONS OF THE REVENUE. THE COMPANY WAS EVEN DIRECTED TO BE DELIST ED FROM THE STOCK EXCHANGE. HAVING REGARD TO THESE CIRCUMSTANCES AND PRINCIPALLY ON THE GROUND THAT THE FINDINGS ARE ENTIRELY OF FACT, THIS COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT A PPEAL. THIS APPEAL IS ACCORDINGLY DISMISSED. ' 5.5 RESPECTFULLY FOLLOWING THE ABOVE JUDICIAL PRONO UNCEMENTS THE ORDER OF THE AO IS CONFIRMED. ACCORDINGLY, THE ADDITION OF BOGUS LONG TERM CAPITAL GAIN OF RS.88,39,868/- U/S. 68 OF THE INCOME TAX ACT,1961 I S CONFIRMED. ACCORDINGLY, PURCHASE VALUE RS.23,72,470/- & RS.56,062/- [0.5% O F TOTAL SALE CONSIDERATION RS.112, 12,338/-] AGGREGATING AT RS.24,28,532/ - IS CONFIRMED. THESE GROUNDS 2 TO 4 ARE THEREFORE, ARE REJECTED AND STANDS DISMISSED. 6. THE CHARGING OF INTEREST U/S. 234B HAS BEEN RAIS ED IN GROUND NO. 6. I FIND THIS ISSUE IS A CONSEQUENTIAL MATTER. THE A.O. IS DIRECT ED TO RECALCULATE THE AMOUNT OF INTEREST ON FINALLY ASSESSED TAX AS PER THE PROVISI ONS OF THE ACT AFTER GIVING EFFECT TO THE APPELLATE ORDER IN THE APPEAL IS ' DISMISSED ' 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. THERE IS NO DISPUTE ABOVE ASSESSEES HAVING DERIVED THE IM PUGNED LTCG ON TRANSFER OF SHARES HELD IN SULABH ENGINEERING AND S ERVICES LTD. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE THAT V ERY ISSUE STANDS ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 8 ADJUDICATED IN ASSESSEES FAVOUR IN CO-ORDINATE BEN CHS DECISION IN ITA NO.354KOL/2018 IN SANJEEV GOEL (HUF) VS. ITO DECIDED DATED 24.08. 2018 AS FOLLOWS:- 4. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONS IDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS :- 5. IN IDENTICAL CASES, THE SUBMISSION OF THE ASSESS EE, FINDINGS OF THE ASSESSING OFFICER, FINDINGS OF THE LD. CIT(A) AND THE CONCLUS ION OF THE TRIBUNAL HAVE BEEN BROUGHT OUT AS UNDER:- 6. THE ADDITION WAS MADE BY THE ASSESSING OFFICER B Y OBSERVING AS UNDER:- I. THE INITIAL ALLOTMENT OF SHARES TO BENEFICIARIES IS GENERALLY DONE THROUGH PREFERENTIAL ALLOTMENT. II. THE MARKET PRICE OF SHARES OF THESE COMPANIES R ISE TO VERY HIGH LEVEL WITHIN A SPAN OF ONE YEAR. III. THE TRADING VOLUME OF SHARES DURING THE PERIOD , IN WHICH MANIPULATIONS ARE DONE TO RAISE THE MARKET PRICE, IS EXTREMELY THIN. IV. MOST OF THE PURPORTED INVESTORS ARE RETURNED TH EIR INITIAL INVESTMENT AMOUNT IN CASH. ONLY SMALL AMOUNT IS RETAINED BY THE OPERA TOR AS SECURITY. THUS, AN ENQUIRY WOULD REVEAL THAT MOST OF THE CAPITAL RECEI PTS THROUGH PREFERENTIAL ALLOTMENT OR OTHER MEANS WOULD HAVE FOUND THEIR WAY OUT OF SYSTEM AS CASH. V. MOST OF THESE COMPANIES HAVE NO BUSINESS AT ALL. FEW OF THE COMPANIES WHICH HAVE SOME BUSINESS DO NOT HAVE THE CREDENTIAL S TO JUSTIFY THE SHARP RISE IN MARKET PRICE OF THEIR SHARES. VI. THE SHARP RISE IN MARKET PRICE OF THE SHARES OF THESE ENTITIES IS NOT SUPPORTED BY FUNDAMENTALS OF THE COMPANY OR ANY OTH ER GENUINE FACTORS. VII. AN ANALYSIS IN RESPECT OF PERSONS INVOLVED IN TRANSACTIONS APPARENTLY CARRIED OUT IN ORDER TO JACK UP THE SHARE PRICES HA S BEEN DONE IN RESPECT OF 84 COMPANIES. IT HAS BEEN NOTED THAT MANY COMMON PERSO NS/ENTITIES WERE INVOLVED IN TRADING IN MORE THAN 1 LTCG COMPANIES D URING THE PERIOD WHEN THE SHARES WERE MADE TO RISE WHICH IMPLIES THAT THE Y HAD CONTRIBUTED TO SUCH PRICE RISE. VIII. NAMES OF MOST OF THE LTCG COMPANIES ARE CHANG ED DURING THE PERIOD OF THE SCAM. IX. MOST OF THE COMPANIES SPLIT THE FACE VALUE OF S HARES [THIS IS PROBABLY DONE TO AVOID THE EYES OF MARKET ANALYSTS]. X. THE VOLUME OF TRADE JUMPS MANIFOLD IMMEDIATELY W HEN THE MARKET PRICES OF SHARES REACH AT OPTIMUM LEVEL SO AS TO RESULT IN LT CG ASSURED TO THE BENEFICIARIES. THIS MAXIMUM IS REACHED AROUND THE T IME WHEN THE INITIAL ALLOTTEES HAVE HELD THE SHARES FOR ONE YEAR OR LITT LE MORE AND THUS, THEIR GAIN ON SALE OF SUCH SHARES WOULD BE ELIGIBLE FOR EXEMPT ION FROM INCOME TAX. XI. AN ANALYSIS OF SHARE BUYERS OF SOME OF LTCG COM PANIES WAS DONE TO SEE IF THERE WERE COMMON PERSONS/ENTITIES INVOLVED IN B UYING THE BOGUS INFLATED SHARES. IT WAS NOTED THAT THERE WERE MANY COMMON BU YERS [WHICH WERE PAPER COMPANIES]. XII. THE PRICES OF THE SHARES FALL VERY SHARPLY AFT ER THE SHARES OF LTCG BENEFICIARIES HAVE BEEN OFF LOADED THROUGH THE PRE- ARRANGED TRANSACTIONS ON THE STOCK EXCHANGE FLOOR/PORTAL TO THE SHORT TERM L OSS SEEKERS OR DUMMY PAPER ENTITIES. XIII. THE SHARES OF THESE COMPANIES ARE NOT AVAILAB LE FOR BUY/SELL TO ANY PERSON OUTSIDE THE SYNDICATE. THIS IS GENERALLY ENS URED BY WAY OF ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 9 SYNCHRONIZED TRADING BY THE OPERATORS AMONGST THEMS ELVES AND/OR BY UTILIZING THE MECHANISM OF UPPER/LOWER CIRCUIT OF THE EXCHANG E. 7. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APP EAL. 8. THE FIRST APPELLATE AUTHORITY UPHELD THE ORDER O F THE ASSESSING OFFICER BY GIVING HIS FINDINGS AS FOLLOWS:- A) THE AO HAD PLACED ON RECORD THE ENTIRE GAMUT OF FINDING AND THERE IS NO FURTHER REQUIREMENT FOR ELABORATION. B) THERE IS DIRECT EVIDENCE TO CLEARLY INDICATE THA T THE ENTIRE TRANSACTION UNDERTAKEN BY THE ASSESSEE WAS MERELY AN ACCOMMODAT ION TAKEN FOR THE PURPOSE OF BOGUS LONG TERM CAPITAL GAINS TO CLAIM E XEMPT INCOME. THE AUTHORITIES SUCH AS SEBI HAVE AFTER INVESTIGATING S UCH ABNORMAL PRICE INCREASE OF CERTAIN STOCKS, SUSPENDED CERTAIN SCRIP S. C) THE SUBMISSIONS OF THE ASSESSEE POINTED OUT TOWA RDS ELABORATE DOCUMENTATION SUCH AS : I) APPLICATION OF SHARES. II) ALLOTMENT OF SHARES. III) SHARE CERTIFICATES IV) PAYMENT BY CHEQUES V) FILINGS BEFORE REGISTRAR OF COMPANIES. VI) PROOF OF AMALAGAMATION OF COMPANIES. VII) COPIES OF BANK STATEMENT, VIII) BANK CONTRACT NOTES. IX) DELIVERY INSTRUCTION TO THE BROKER ETC. D) THE ELABORATE PAPER BOOK IS FILED TO STRENGTHEN THE MATTER RELEVANT TO BOGUS CLAIM OF LTCG, AND THIS IS CLEARLY BEEN SCHEM ED AND PRE-PLANNED WITH MALA FIDE INTENTION. THEREFORE, ALL THESE DOCU MENTS ARE NOT EVIDENCE. E) THE TRANSACTIONS ARE UNNATURAL AND HIGHLY SUSPIC IOUS. THERE ARE GRAVE DOUBTS IN THE STORY PROPOUNDED BY THE ASSESSEE BEFO RE THE AUTHORITIES BELOW. BANKING DOCUMENTS ARE MERE SELF-SERVING RECI TALS. 9. THEREAFTER HE REFERRED TO A NUMBER OF JUDGMENTS RELATING TO HUMAN BEHAVIOR AND PREPONDERANCE OF HUMAN PROBABILITIES AND UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER BY RELYING ON WHAT HE CALLS RULES OF SUSPICIOUS TRANSACTIONS. 10. THE ASSESSEE IN THIS CASE HAS FILED THE FOLLOWI NG EVIDENCE BEFORE THE ASSESSING OFFICER IN SUPPORT OF HIS CONTENTIONS:- A) COPIES OF BILLS, EVIDENCING PURCHASE OF SHARES B) COPIES OF CONTRACT NOTES OF SALE OF SHARES C) BANK STATEMENT COPIES D) COPY OF LEDGER A/C OF BROKER E) DEMAT STATEMENT ETC. THE ASSESSING OFFICER HAS JUST RELIED ON GENERAL OB SERVATIONS. NO EVIDENCE WAS CONTROVERTED BY THE ASSESSING OFFICER. 11. THE KOLKATA BENCH OF THE ITAT IN A NUMBER OF DE CISIONS HAVE, ON SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. WE LIST SOME OF THESE DECISIONS:- SHRI GAUTAM KUMAR PINCHA VS. ITO, ITA NO. 569/KOL/2 017, DT. 15/11/2017 ITO VS. SHRI SHALEEN KHEMANI, ITA NO. 1945/KOL/201 4, DT. 18/10/2017 MAHENDRA KUMAR BAID VS. ACIT, CIRCLE-35; ITA NO. 12 37/KOL/2017; ORDER DT. 18/08/2017 KIRAN KOTHARI HUF VS. ITO, ITA NO. 443/KOL/2017, OR DER DT. 15/11/2017 ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 10 THE HONBLE JURISDICTIONAL HIGH COURT ON SIMILAR FA CTS, HAD IN THE FOLLOWING CASES, UPHELD THE CLAIM OF THE ASSESSEE:- CIT VS. SHREYASHI GANGULI (ITA NO. 196 OF 2012) (CA L HC) 2012 (9) TMI 1113 CIT VS. RUNGTA PROPERTIES PRIVATE LIMITED (ITA NO. 105 OF 2016) (CAL HC)DT. 08/05/2017 CIT VS. BHAGWATI PRASAD AGARWAL (2009 TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.04.2009 11. RECENTLY, THE KOLKATA C BENCH OF THE TRIBUNAL IN THE CASE OF NAVNEET AGARWAL,- VS- ITO, WARD-35(3), KOLKATA; I.T.A. NO. 2281/KO L/2017; ASSESSMENT YEAR: 2014- 15, WHILE DEALING WITH IDENTICAL ISSUE OF SALE OF SHARE S OF M/S. CRESSENDA SOLUTIONS PVT. LTD., DECIDED THE ISSUE IN FAVOUR OF THE ASSES SEE BY RELYING UPON A PLETHORA OF JUDGMENTS OF VARIOUS COURTS. IT HELD AS FOLLOWS:- 12. THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A ) HAVE REJECTED THESE EVIDENCES FILED BY THE ASSESSEE BY REFERRING TO MO DUS OPERANDI OF PERSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH H IS EXEMPT FROM INCOME TAX. ALL THESE OBSERVATIONS ARE GENERAL IN NATURE AND ARE APPLIED ACROSS THE BOARD TO ALL THE 60,000 OR MORE ASSESSEES WHO FALL IN THIS CATEGORY. SPECIFIC EVIDENCES PRODUCED BY THE A SSESSEE ARE NOT CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVIDENC E COLLECTED FROM THIRD PARTIES IS CONFRONTED TO THE ASSESSEES. NO OP PORTUNITY OF CROSS- EXAMINATION OF PERSONS, ON WHOSE STATEMENTS THE REV ENUE RELIES TO MAKE THE ADDITION, IS PROVIDED TO THE ASSESSEE. THE ADDITION IS MADE BASED ON A REPORT FROM THE INVESTIGATION WING. 13. THE ISSUE FOR CONSIDERATION BEFORE US IS WHETHE R, IN SUCH CASES, THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUID E OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STA TEMENTS, PROBABILITIES, HUMAN BEHAVIOR AND DISCOVERY OF THE MODUS OPERANDI ADOPTED IN EARNING ALLEGED BOGUS LTCG AND STCG, THA T HAVE SURFACED DURING INVESTIGATIONS, SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCLUSION AS TO WHETHER THE CLAIM IN GENUINE OR NO T. AN ALLEGED SCAM MIGHT HAVE TAKEN PLACE ON LTCG ETC. BUT IT HAS TO B E ESTABLISHED IN EACH CASE, BY THE PARTY ALLEGING SO, THAT THIS ASSE SSEE IN QUESTION WAS PART OF THIS SCAM. THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESEES ACTION GIVING HER INVOLVEMENT IN THE SCAM SHOULD BE ESTABLISHED. THE ALLEGATION IMPLY THAT CASH WAS PAID BY THE ASSESSEE AND IN RETURN THE ASSESSEE RECEIVED LTCG, WHICH IS INCOME EXEMPT FROM INCOME TAX, BY WAY OF CHEQUE THROUGH BANKING CHANNELS. THIS ALLEGA TION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY T HE REVENUE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIGATIONS O FFICE BY WAY OF STATEMENTS RECORDED ETC. HAS TO ALSO BE BROUGHT ON RECORD IN EACH CASE, WHEN SUCH A STATEMENT, EVIDENCE ETC. IS RELIED UPON BY THE REVENUE TO MAKE ANY ADDITIONS. OPPORTUNITY OF CROSS EXAMINATIO N HAS TO BE PROVIDED TO THE ASSESSEE, IF THE AO RELIES ON ANY S TATEMENTS OR THIRD PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATER IAL OR EVIDENCE IS SOUGHT TO BE RELIED UPON BY THE AO, HE HAS TO CONFR ONT THE ASSESSEE WITH SUCH MATERIAL. THE CLAIM OF THE ASSESSEE CANNO T BE REJECTED BASED ON MERE CONJECTURES UNVERIFIED BY EVIDENCE UNDER TH E PRETENTIOUS GARB OF PREPONDERANCE OF HUMAN PROBABILITIES AND THEORY OF HUMAN BEHAVIOR BY THE DEPARTMENT. 14. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PU T BEFORE HIM AND HE ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 11 IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CASE, THE AO RELIES ONLY ON A REPORT AS THE BASIS FOR THE ADDITI ON. THE EVIDENCE BASED ON WHICH THE DDIT REPORT IS PREPARED IS NOT BROUGHT ON RECORD BY THE AO NOR IS IT PUT BEFORE THE ASSESSEE. THE SUBMISSION O F THE ASSESSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RECEIVED SOME TI PS AND SHE CHOSE TO INVEST BASED ON THESE MARKET TIPS AND HAD TAKEN A C ALCULATED RISK AND HAD GAINED IN THE PROCESS AND THAT SHE IS NOT PARTY TO THE SCAM ETC., HAS TO BE CONTROVERTED BY THE REVENUE WITH EVIDENCE. WH EN A PERSON CLAIMS THAT SHE HAS DONE THESE TRANSACTIONS IN A BONA FIDE AND GENUINE MANNER AND WAS BENEFITTED, ONE CANNOT REJECT THIS SUBMISSI ON BASED ON SURMISES AND CONJECTURES. AS THE REPORT OF INVESTIG ATION WING SUGGESTS, THERE ARE MORE THAN 60,000 BENEFICIARIES OF LTCG. E ACH CASE HAS TO BE ASSESSED BASED ON LEGAL PRINCIPLES OF LEGAL IMPORT LAID DOWN BY THE COURTS OF LAW. 15. IN OUR VIEW MODUS OPERANDI, GENERALISATION, PRE PONDERANCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR RE JECTING THE CLAIM OF THE ASSESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT O N RECORD TO CONTROVERT THE VALIDITY AND CORRECTNESS OF THE DOCU MENTARY EVIDENCES PRODUCED, THE SAME CANNOT BE REJECTED BY THE ASSESS EE. THE HON'BLE SUPREME COURT IN THE CASE OF OMAR SALAV MOHAMED SAI T REPORTED IN (1959) 37 ITR 151 (S C) HAD HELD THAT NO ADDITION C AN BE MADE ON THE BASIS OF SURMISES, SUSPICION AND CONJECTURES. IN TH E CASE OF CIT(CENTRAL), KOLKATA VS. DAULAT RAM RAWATMULL REPO RTED IN 87 ITR 349, THE HON'BLE SUPREME COURT HELD THAT, THE ONUS TO PR OVE THAT THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIM S IT TO BE SO. THE BURDEN OF PROVING A TRANSACTION TO BE BOGUS HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCES, WHICH WOULD DIRECTLY P ROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNERRINGLY AND REASONABLY RAISING AN INTERFERENCE TO THAT EFFECT. THE HON'BLE SUPREME COURT IN THE CASE OF UMACHARAN SHAH & BROS. VS. CIT 37 ITR 271 HELD THAT SUSPICION HOWEVER STRONG, CANNOT TAKE THE PLACE OF EVIDENCE. 16. WE FIND THAT THE ASSESSING OFFICER AS WELL AS T HE LD. CIT(A) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREP ARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER WE DO NOT FIND THAT, THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A), HAVE B ROUGHT OUT ANY PART OF THE INVESTIGATION WING REPORT IN WHICH THE ASSESSEE HAS BEEN INVESTIGATED AND/OR FOUND TO BE A PART OF ANY ARRAN GEMENT FOR THE PURPOSE OF GENERATING BOGUS LONG TERM CAPITAL GAINS . NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PERSONS INVESTIG ATED, INCLUDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASS ESSEE WAS IN COLLUSION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LINK THEIR WRONG DOINGS WITH THE ASSESSEE. IN FACT THE I NVESTIGATION WING IS A SEPARATE DEPARTMENT WHICH HAS NOT BEEN ASSIGNED ASS ESSMENT WORK AND HAS BEEN DELEGATED THE WORK OF ONLY MAKING INVE STIGATION. THE ACT HAS VESTED WIDEST POWERS ON THIS WING. IT IS THE DU TY OF THE INVESTIGATION WING TO CONDUCT PROPER AND DETAILED INQUIRY IN ANY MATTER WHERE THERE IS ALLEGATION OF TAX EVASION AND AFTER MAKING PROPER I NQUIRY AND COLLECTING PROPER EVIDENCES THE MATTER SHOULD BE SENT TO THE A SSESSMENT WING TO ASSESS THE INCOME AS PER LAW. WE FIND NO SUCH ACTIO N EXECUTED BY INVESTIGATION WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALLY AGAINST THE ASSESSEE IN THE INVESTIGAT ION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUILTY OR LINKED TO T HE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CASE, IN OUR VIEW, TH E ASSESSING OFFICER AT ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 12 BEST COULD HAVE CONSIDERED THE INVESTIGATION REPORT AS A STARTING POINT OF INVESTIGATION. THE REPORT ONLY INFORMED THE ASSESSI NG OFFICER THAT SOME PERSONS MAY HAVE MISUSED THE SCRIPT FOR THE PURPOSE OF COLLUSIVE TRANSACTION. THE ASSESSING OFFICER WAS DUTY BOUND T O MAKE INQUIRY FROM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION A ND THEN TO COLLECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. WE, HOWEVER, FIND THAT THE A SSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT TH E TRANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHERWISE SUPPORT ED BY PROPER THIRD PARTY DOCUMENTS ARE COLLUSIVE TRANSACTIONS. 17. THE HONBLE SUPREME COURT WAY BACK IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT [1959] 37 ITR 288 (SC) HELD THAT ASSESSMENT COULD NOT BE BASED ON BACKGROUND OF SUSPICION AND IN ABSENCE OF ANY EVIDENCE TO SUPPORT THE SAME. THE HONBLE COURT HELD: ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGH ED WITH THE INCOME-TAX OFFICER WE MAY OBSERVE THAT THE NOTORIET Y FOR SMUGGLING FOOD GRAINS AND OTHER COMMODITIES TO BENG AL BY COUNTRY BOATS ACQUIRED BY SAHIBGUNJ AND THE NOTORIE TY ACHIEVED BY DHULIAN AS A GREAT RECEIVING CENTRE FOR SUCH COM MODITIES WERE MERELY A BACKGROUND OF SUSPICION AND THE APPEL LANT COULD NOT BE TARRED WITH THE SAME BRUSH AS EVERY ARHATDAR AND GRAIN MERCHANT WHO MIGHT HAVE BEEN INDULGING IN SMUGGLING OPERATIONS, WITHOUT AN IOTA OF EVIDENCE IN THAT BEH ALF. THE CANCELLATION OF THE FOOD GRAIN LICENCE AT NAWGACHIA AND THE PROSECUTION OF THE APPELLANT UNDER THE DEFENCE OF I NDIA RULES WAS ALSO OF NO CONSEQUENCE INASMUCH AS THE APPELLAN T WAS ACQUITTED OF THE OFFENCE WITH WHICH IT HAD BEEN CHA RGED AND ITS LICENCE ALSO WAS RESTORED. THE MERE POSSIBILITY OF THE APPELLANT EARNING CONSIDERABLE AMOUNTS IN THE YEAR UNDER CONS IDERATION WAS A PURE CONJECTURE ON THE PART OF THE INCOME-TAX OFFICER AND THE FACT THAT THE APPELLANT INDULGED IN SPECULATION (IN KALAI ACCOUNT) COULD NOT LEGITIMATELY LEAD TO THE INFEREN CE THAT THE PROFIT IN A SINGLE TRANSACTION OR IN A CHAIN OF TRA NSACTIONS COULD EXCEED THE AMOUNTS, INVOLVED IN THE HIGH DENOMINATI ON NOTES,-- -THIS ALSO WAS A PURE CONJECTURE OR SURMISE ON THE PART OF THE INCOME-TAX OFFICER. AS REGARDS THE DISCLOSED VOLUME OF BUSINESS IN THE YEAR UNDER CONSIDERATION IN THE HEA D OFFICE AND IN BRANCHES THE INCOME-TAX OFFICER INDULGED IN SPEC ULATION WHEN HE TALKED OF THE POSSIBILITY OF THE APPELLANT EARNING A CONSIDERABLE SUM AS AGAINST WHICH IT SHOWED A NET L OSS OF ABOUT RS.45,000. THE INCOME-TAX OFFICER INDICATED T HE PROBABLE SOURCE OR SOURCES FROM WHICH THE APPELLANT COULD HA VE EARNED A LARGE AMOUNT IN THE SUM OF RS.2,91,000 BUT THE CO NCLUSION WHICH HE ARRIVED AT IN REGARD TO THE APPELLANT HAVI NG EARNED THIS LARGE AMOUNT DURING THE YEAR AND WHICH ACCORDING TO HIM REPRESENTED THE SECRETED PROFITS OF THE APPELLANT I N ITS BUSINESS WAS THE RESULT OF PURE CONJECTURES AND SURMISES ON HIS PART AND HAD NO FOUNDATION IN FACT AND WAS NOT PROVED AGAINS T THE APPELLANT ON THE RECORD OF THE PROCEEDINGS. IF THE CONCLUSION OF THE INCOME-TAX OFFICER WAS THUS EITHER PERVERSE OR VITIATED BY SUSPICIONS, CONJECTURES OR SURMISES, THE FINDING OF THE TRIBUNAL WAS EQUALLY PERVERSE OR VITIATED IF THE TRIBUNAL TO OK COUNT OF ALL THESE PROBABILITIES AND WITHOUT ANY RHYME OR REASON AND MERELY ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 13 BY A RULE OF THUMB, AS IT WERE, CAME TO THE CONCLUS ION THAT THE POSSESSION OF 150 HIGH DENOMINATION NOTES OF RS.1,0 00 EACH WAS SATISFACTORILY EXPLAINED BY THE APPELLANT BUT N OT THAT OF THE BALANCE OF 141 HIGH DENOMINATION NOTES OF RS.1,000 EACH. THE OBSERVATIONS OF THE HONBLE APEX COURT ARE EQUA LLY APPLICABLE TO THE CASE OF THE ASSESSEE. IN OUR VIEW THE ASSESSING OFFICER HAVING FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THA T THE TRANSACTION OF THE ASSESSEE WAS A COLLUSIVE TRANSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN FACT IN THI S CASE NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIR ECT EVIDENCES OR MATERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BE ING INVESTIGATED BY VARIOUS WINGS OF THE INCOME TAX DEPARTMENT HENCE IN OUR VIEW UNDER THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAIN ST THE ASSESSEE. 18. WE NOW CONSIDER THE VARIOUS PROPOSITIONS OF LAW LAID DOWN BY THE COURTS OF LAW. THAT CROSS-EXAMINATION IS ONE PART O F THE PRINCIPLES OF NATURAL JUSTICE HAS BEEN LAID DOWN IN THE FOLLOWING JUDGMENTS: A) AYAAUBKHAN NOORKHAN PATHAN VS. THE STATE OF MAHA RASHTRA AND ORS. 23. A CONSTITUTION BENCH OF THIS COURT IN STATE OF M.P. V. CHINTAMAN SADASHIVA VAISHAMPAYAN AIR 1961 SC 1623, HELD THAT THE RULES OF NATURAL JUSTICE, REQUIRE THAT A PARTY MUST BE GIVEN THE OPPORTUNITY TO ADDUCE ALL RELEVANT EVIDENCE UPON WH ICH HE RELIES, AND FURTHER THAT, THE EVIDENCE OF THE OPPOSITE PART Y SHOULD BE TAKEN IN HIS PRESENCE, AND THAT HE SHOULD BE GIVEN THE OP PORTUNITY OF CROSS-EXAMINING THE WITNESSES EXAMINED BY THAT PART Y. NOT PROVIDING THE SAID OPPORTUNITY TO CROSS-EXAMINE WIT NESSES, WOULD VIOLATE THE PRINCIPLES OF NATURAL JUSTICE. (SEE ALS O: UNION OF INDIA V. T.R. VARMA, AIR 1957 SC 882; MEENGLAS TEA ESTATE V. WORKMEN, AIR 1963 SC 1719; M/S. KESORAM COTTON MILLS LTD. V. GANGADHAR AND ORS. ,AIR 1964 SC 708; NEW INDIA ASSURANCE CO. LTD. V. NUSLI NEVILLE WADIA AND ANR. AIR 2008 SC 876; RACHPAL SIN GH AND ORS. V. GURMIT SINGH AND ORS. AIR 2009 SC 2448; BIECCO L AWRIE AND ANR. V. STATE OF WEST BENGAL AND ANR. AIR 2010 SC 1 42; AND STATE OF UTTAR PRADESH V. SAROJ KUMAR SINHA AIR 2010 SC 3 131). 24. IN LAKSHMAN EXPORTS LTD. V. COLLECTOR OF CENTRA L EXCISE (2005) 10 SCC 634, THIS COURT, WHILE DEALING WITH A CASE U NDER THE CENTRAL EXCISE ACT, 1944, CONSIDERED A SIMILAR ISSUE I.E. P ERMISSION WITH RESPECT TO THE CROSS-EXAMINATION OF A WITNESS. IN T HE SAID CASE, THE ASSESSEE HAD SPECIFICALLY ASKED TO BE ALLOWED TO CR OSS-EXAMINE THE REPRESENTATIVES OF THE FIRMS CONCERN, TO ESTABLISH THAT THE GOODS IN QUESTION HAD BEEN ACCOUNTED FOR IN THEIR BOOKS OF A CCOUNTS, AND THAT EXCISE DUTY HAD BEEN PAID. THE COURT HELD THAT SUCH A REQUEST COULD NOT BE TURNED DOWN, AS THE DENIAL OF THE RIGH T TO CROSS- EXAMINE, WOULD AMOUNT TO A DENIAL OF THE RIGHT TO B E HEARD I.E. AUDI ALTERAM PARTEM. 28. THE MEANING OF PROVIDING A REASONABLE OPPORTUNI TY TO SHOW CAUSE AGAINST AN ACTION PROPOSED TO BE TAKEN BY THE GOVERNMENT, IS THAT THE GOVERNMENT SERVANT IS AFFORDED A REASONABL E OPPORTUNITY TO DEFEND HIMSELF AGAINST THE CHARGES, ON THE BASIS OF WHICH AN INQUIRY IS HELD. THE GOVERNMENT SERVANT SHOULD BE GIVEN AN OPPORTUNITY TO ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 14 DENY HIS GUILT AND ESTABLISH HIS INNOCENCE. HE CAN DO SO ONLY WHEN HE IS TOLD WHAT THE CHARGES AGAINST HIM ARE. HE CAN THEREFORE, DO SO BY CROSS-EXAMINING THE WITNESSES PRODUCED AGAINST H IM. THE OBJECT OF SUPPLYING STATEMENTS IS THAT, THE GOVERNMENT SER VANT WILL BE ABLE TO REFER TO THE PREVIOUS STATEMENTS OF THE WITNESSE S PROPOSED TO BE EXAMINED AGAINST HIM. UNLESS THE SAID STATEMENTS AR E PROVIDED TO THE GOVERNMENT SERVANT, HE WILL NOT BE ABLE TO COND UCT AN EFFECTIVE AND USEFUL CROSS-EXAMINATION. 29. IN RAJIV ARORA V. UNION OF INDIA AND ORS. AIR 2 009 SC 1100, THIS COURT HELD: EFFECTIVE CROSS-EXAMINATION COULD HAVE BEEN DONE AS REGARDS THE CORRECTNESS OR OTHERWISE OF THE REPORT, IF THE CONTENTS OF THEM WERE PROVED. THE PRINCIPLES ANALOGOUS TO THE P ROVISIONS OF THE INDIAN EVIDENCE ACT AS ALSO THE PRINCIPLES OF NATUR AL JUSTICE DEMAND THAT THE MAKER OF THE REPORT SHOULD BE EXAMINED SAV E AND EXCEPT IN CASES WHERE THE FACTS ARE ADMITTED OR THE WITNESSES ARE NOT AVAILABLE FOR CROSS-EXAMINATION OR SIMILAR SITUATIO N. THE HIGH COURT IN ITS IMPUGNED JUDGMENT PROCEEDED TO CONSIDER THE ISSUE ON A TECHNICAL PLEA, NAMELY, NO PREJUDICE HAS BEEN CAUSE D TO THE APPELLANT BY SUCH NON-EXAMINATION. IF THE BASIC PRI NCIPLES OF LAW HAVE NOT BEEN COMPLIED WITH OR THERE HAS BEEN A GRO SS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE HIGH COURT S HOULD HAVE EXERCISED ITS JURISDICTION OF JUDICIAL REVIEW. 30. THE AFORESAID DISCUSSION MAKES IT EVIDENT THAT, NOT ONLY SHOULD THE OPPORTUNITY OF CROSS-EXAMINATION BE MADE AVAILA BLE, BUT IT SHOULD BE ONE OF EFFECTIVE CROSS-EXAMINATION, SO AS TO MEET THE REQUIREMENT OF THE PRINCIPLES OF NATURAL JUSTICE. I N THE ABSENCE OF SUCH AN OPPORTUNITY, IT CANNOT BE HELD THAT THE MAT TER HAS BEEN DECIDED IN ACCORDANCE WITH LAW, AS CROSS-EXAMINATIO N IS AN INTEGRAL PART AND PARCEL OF THE PRINCIPLES OF NATURAL JUSTIC E. B) ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF C . EX., KOLKATA-II WHEREIN IT WAS HELD THAT: 4. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR C OUNSEL APPEARING FOR THE ASSESSEE, AND MR. K. RADHAKRISHNA N, LEARNED SENIOR COUNSEL WHO APPEARED FOR THE REVENUE . 5. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE 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 BECAU SE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEM ENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSES SEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CRO SS-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 SPECIFI CALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE . HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS T OTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATI ON OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHI CH WOULD NOT BE ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 15 IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAI N AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WA NTED TO CROSS- EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPEL LANT WANTED FROM THEM. 6. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESS ES AND WANTED TO DISCREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANT ED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE A DJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAIN TAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF E XCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID D EALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST I TSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COU LD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE TH E REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN E ARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APP EAL NO. 2216 OF 2000, ORDER DATED 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. 7. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MA TERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY I TS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ON LY BASIS OF ISSUING THE SHOW CAUSE NOTICE. 19. ON SIMILAR FACTS WHERE THE REVENUE HAS ALLEGED THAT THE ASSESSEE HAS DECLARED BOGUS LTCG, IT WAS HELD AS FOLLOWS: A) THE CALCUTTA HIGH COURT IN THE CASE OF BLB CABL ES & CONDUCTORS [ ITA NO. 78 OF 2017 ] DATED 19.06.2018. THE HIGH COURT HELD VIDE PARA 4.1: WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY RECORDED IN THE BOOKS OF THE ASSES SEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUN TS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSAC TION AS BOGUS, THERE HAS TO BE SOME CONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. HERE IN THE CASE THE TRANSACTIONS OF THE COMMODITY EXCHANGED HAVE NOT ONLY BEEN EXPLAINED BU T ALSO SUBSTANTIATED FROM THE CONFIRMATION OF THE PAR TY. BOTH THE PARTIES ARE CONFIRMING THE TRANSACTIONS WHICH H AVE BEEN DULY SUPPORTED WITH THE BOOKS OF ACCOUNTS AND BANK TRANSACTIONS. THE LD. AR HAS ALSO SUBMITTED THE BOA RD RESOLUTION FOR THE TRADING OF COMMODITY TRANSACTION . THE BROKER WAS EXPELLED FROM THE COMMODITY EXCHANGE CAN NOT BE THE CRITERIA TO HOLD THE TRANSACTION AS BOGUS. I N VIEW OF ABOVE, WE REVERSE THE ORDER OF THE LOWER AUTHORITIE S AND ALLOW THE COMMON GROUNDS OF ASSESSEES APPEAL. [ QUOTED VERBATIM ] ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 16 THIS IS ESSENTIALLY A FINDING OF THE TRIBUNAL ON FA CT. NO MATERIAL HAS BEEN SHOWN TO US WHO WOULD NEGATE THE TRIBUNALS FINDING THAT OFF MARKET TRANSACTIONS ARE NOT PROHIBITED. AS REGARDS VERACITY OF THE TRANSACTIONS , THE TRIBUNAL HAS COME TO ITS CONCLUSION ON ANALYSIS OF RELEVANT MATERIALS. THAT BEING THE POSITION, TRIBUNAL HAVING ANALYZED THE SET OF FACTS IN COMING TO ITS FINDING, WE DO NOT THINK THERE IS ANY SCOPE OF INTERFERENCE WITH THE O RDER OF THE TRIBUNAL IN EXERCISE OF OUR JURISDICTION UNDER SECTION 260A OF THE INCOME TAX ACT, 1961. NO SUBSTANTIAL QU ESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL AND T HE STAY PETITION, ACCORDINGLY, SHALL STAND DISMISSED. B) THE JAIPUR ITAT IN THE CASE OF VIVEK AGARWAL [ ITA NO. 292/JP/2017] ORDER DATED 06.04.2018 HELD AS UNDER VIDE PAGE 9 PARA 3: WE HOLD THAT THE ADDITION MADE BY THE AO IS MERELY BASED ON SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO CONTROVERT THE EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF TH E CLAIM. FURTHER, THE AO HAS ALSO FAILED TO ESTABLISH THAT THE ASSESS EE HAS BROUGHT BACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TE RM CAPITAL GAIN. HENCE WE DELETE THE ADDITION MADE BY THE AO O N THIS ACCOUNT. C) THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PREM PAL GANDHI [ITA-95-2017 (O&M)] DATED 18.01.2018 AT VIDE PAGE 3 PARA 4 HELD AS UNDER: .. THE ASSESSING OFFICER IN BOTH THE CASES ADDED THE APPRECIATION TO THE ASSESSEES INCOME ON THE SUSPI CION THAT THESE WERE FICTITIOUS TRANSACTIONS AND THAT THE APPRECIAT ION ACTUALLY REPRESENTED THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. IN ITA-18-2017 ALSO THE CIT (APPEALS) AND THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT PRODUCED ANY EVIDENCE WHA TSOEVER IN SUPPORT OF THE SUSPICION. ON THE OTHER HAND, ALTHOU GH THE APPRECIATION IS VERY HIGH, THE SHARES WERE TRADED O N THE NATIONAL STOCK EXCHANGE AND THE PAYMENTS AND RECEIPTS WERE R OUTED THROUGH THE BANK. THERE WAS NO EVIDENCE TO INDICATE FOR INSTANCE THAT THIS WAS A CLOSELY HELD COMPANY AND THAT THE T RADING ON THE NATIONAL STOCK EXCHANGE WAS MANIPULATED IN ANY MANN ER. THE COURT ALSO HELD THE FOLLOWING VIDE PAGE 3 PARA 5 THE FOLLOWING: QUESTION (IV) HAS BEEN DEALT WITH IN DETAIL BY THE CIT (APPEALS) AND THE TRIBUNAL. FIRSTLY, THE DOCUMENTS ON WHICH THE ASSESSING OFFICER RELIED UPON IN THE APPE AL WERE NOT PUT TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE CIT (APPEALS) NEVERTHELESS CONSIDE RED THEM IN DETAIL AND FOUND THAT THERE WAS NO CO-RELAT ION BETWEEN THE AMOUNTS SOUGHT TO BE ADDED AND THE ENTR IES IN THOSE DOCUMENTS. THIS WAS ON AN APPRECIATION OF FACTS. THERE IS NOTHING TO INDICATE THAT THE SAME WAS PERV ERSE OR IRRATIONAL. ACCORDINGLY, NO QUESTION OF LAW ARISES. D) THE BENCH D OF KOLKATA ITAT IN THE CASE OF G AUTAM PINCHA [ITA NO.569/KOL/2017] ORDER DATED 15.11.2017 HELD AS UNDER VIDE PAGE 12 PARA 8.1: ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 17 IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I TO XI V) IN PARA 6(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIA L TO IMPLICATE THE ASSESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNW ARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAND AND THEREFO RE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT T HE FACTS SUPPORTED WITH MATERIAL EVIDENCES WHICH ARE ON RECO RD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE T HAT IN THE ABSENCE OF MATERIAL/EVIDENCE THE ALLEGATIONS THAT T HE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANI PULATION OF SHARES MUST THEREFORE ALSO FAIL. AT THE COST OF REP ETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDEN CE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. THESE EVIDENCES WERE NEITHER FOUND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACT S OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUP PORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESS EE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE THAT INCOME FROM LTCG IS EXEM PTED U/S 10(38) OF THE ACT. FURTHER IN PAGE 15 PARA 8.5 OF THE JUDGMENT, IT HEL D: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED BY US TO ARRIVE AT OUR CO NCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFOR ESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEED S OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITION. E) THE BENCH D OF KOLKATA ITAT IN THE CASE OF KI RAN KOTHARI HUF [ ITA NO. 443/KOL/2017 ] ORDER DATED 15.11.2017 HELD VIDE PARA 9.3 HELD AS UNDER: .. WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE M ATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LE GS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD . DR COULD NOT CONTROVERT THE FACTS WHICH ARE SUPPORTED WITH MATER IAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND C OULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT THE AL LEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/ MANIPULATION OF SHARES MUST THEREFORE CONSEQUENTLY FAIL. AT THE COS T OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVAN T EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTION S RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG T ERM CAPITAL GAIN. NEITHER THESE EVIDENCES WERE FOUND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACT S OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUP PORT THE CLAIM ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 18 OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESS EE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE EXEMPTED U/S 10(38) OF THE AC T ON THE BASIS OF SUSPICION, SURMISES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRONG, CANNOT PARTAKE THE CH ARACTER OF LEGAL EVIDENCE. IT FURTHER HELD AS FOLLOWS: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSI ON. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPP ORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFOR ESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEED S OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. F) THE BENCH A OF KOLKATA ITAT IN THE CASE OF SH ALEEN KHEMANI [ITA NO. 1945/KOL/2014] ORDER DATED 18.10.2 017 HELD AS UNDER VIDE PAGE 24 PARA 9.3: WE THEREFORE HOLD THAT THERE IS ABSOLUTELY NO ADVE RSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWAR RANTED ALLEGATIONS LEVELED BY THE LD AO AGAINST THE ASSESS EE, WHICH IN OUR CONSIDERED OPINION, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE ARG UMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND M ERELY RELIED ON THE ORDERS OF THE LD AO. WE FIND THAT THE ALLEGA TION THAT THE ASSESSEE AND / OR BROKERS GETTING INVOLVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECORD T HAT THE ASSESSEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTR ACT NOTES, DEMAT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUI NENESS OF THE TRANSACTIONS RELATING TO PURCHASE AND SALE OF S HARES 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 THE 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 I N REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. G) THE BENCH H OF MUMBAI ITAT IN THE CASE OF ARV IND KUMAR JAIN HUF [ITA NO.4682/MUM/2014] ORDER DATED 18.09.2 017 HELD AS UNDER VIDE PAGE 6 PARA 8: WE FOUND THAT AS FAR AS INITIATION OF INVESTIGAT ION OF BROKER IS CONCERNED, THE ASSESSEE IS NO WAY CONCERNED WITH TH E ACTIVITY OF THE BROKER. DETAILED FINDING HAS BEEN RECORDED BY C IT (A) TO THE EFFECT THAT ASSESSEE HAS MADE INVESTMENT IN SHARES WHICH WAS PURCHASED ON THE FLOOR OF STOCK EXCHANGE AND NOT FR OM M/S BASANT PERIWAL AND CO. AGAINST PURCHASES PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE, DELIVERY OF SHARES WERE TAKEN , CONTRACT OF SALE WAS ALSO COMPLETE AS PER THE CONTRACT ACT, THE REFORE, THE ASSESSEE IS NOT CONCERNED WITH ANY WAY OF THE BROKE R. NOWHERE THE AO HAS ALLEGED THAT THE TRANSACTION BY THE ASSE SSEE WITH ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 19 THESE PARTICULAR BROKER OR SHARE WAS BOGUS, MERELY BECAUSE THE INVESTIGATION WAS DONE BY SEBI AGAINST BROKER OR HI S ACTIVITY, ASSESSEE CANNOT BE SAID TO HAVE ENTERED INTO INGENU INE TRANSACTION, INSOFAR AS ASSESSEE IS NOT CONCERNED W ITH THE ACTIVITY OF THE BROKER AND HAVE NO CONTROL OVER THE SAME. WE FOUND THAT M/S BASANT PERIWAL AND CO. NEVER STATED ANY OF THE AUTHORITY THAT TRANSACTIONS IN M/S RAMKRISHNA FINCAP PVT. LTD. ON THE FLOOR OF THE STOCK EXCHANGE ARE INGENUINE OR MERE ACCOMMODATION ENTRIES. THE CIT (A) AFTER RELYING ON THE VARIOUS DECISION O F THE COORDINATE BENCH, WHEREIN ON SIMILAR FACTS AND CIRCUMSTANCES, ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, CAME TO THE CONC LUSION THAT TRANSACTION ENTERED BY THE ASSESSEE WAS GENUINE. DE TAILED FINDING RECORDED BY CIT (A) AT PARA 3 TO 5 HAS NOT BEEN CON TROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF CIT (A). H) THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VIVEK MEHTA [ITA NO. 894 OF 2010] ORDER DATED 14.11.2011 VIDE PAGE 2 PARA 3 HELD AS UNDER: ON THE BASIS OF THE DOCUMENTS PRODUCED BY THE ASSES SEE IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEAL) REC ORDED A FINDING OF FACT THAT THERE WAS A GENUINE TRANSACTIO N OF PURCHASE OF SHARES BY THE ASSESSEE ON 16.3.2001 AND SALE THEREO F ON 21.3.2002. THE TRANSACTIONS OF SALE AND PURCHASE WE RE AS PER THE VALUATION PREVALENT IN THE STOCKS EXCHANGE. SUCH FI NDING OF FACT HAS BEEN RECORDED ON THE BASIS OF EVIDENCE PRODUCED ON RECORD. THE TRIBUNAL HAS AFFIRMED SUCH FINDING. SUCH FINDIN G OF FACT IS SOUGHT TO BE DISPUTED IN THE PRESENT APPEAL. WE DO NOT FIND THAT THE FINDING OF FACT RECORDED BY THE COMMISSIONER OF INCOME TAX IN APPEAL, GIVES GIVE RISE TO ANY QUESTION(S) OF LAW A S SOUGHT TO BE RAISED IN THE PRESENT APPEAL. HENCE, THE PRESENT AP PEAL IS DISMISSED. I) THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT I N THE CASE OF CIT VS. BHAGWATI PRASAD AGARWAL IN I.T.A. NO. 22/KOL/2009 D ATED 29.04.2009 AT PARA 2 HELD AS FOLLOWS: THE TRIBUNAL FOUND THAT THE CHAIN OF TRANSACTION EN TERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUM ENTED AND SUPPORTED BY EVIDENCE. THE ASSESSEE PRODUCED BEFORE THE COMMISSIONER OF INCOME TAX(APPEAL) THE CONTRACT NOT ES, DETAILS OF HIS DEMAT ACCOUNT AND, ALSO, PRODUCED DOCUMENTS SHOWING THAT ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE TH ROUGH BANK. J) THE HONBLE SUPREME COURT IN THE CASE OF PCIT VS . TEJU ROHITKUMAR KAPADIA ORDER DATED 04.05.2018 UPHELD THE FOLLOWING PROPOSITION OF LAW LAID DOWN BY THE HONBLE GUJARAT HIGH COURT AS UNDE R: IT CAN THUS BE SEEN THAT THE APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL CAME TO CONCURRENT CONCLUSION THAT THE PUR CHASES ALREADY MADE BY THE ASSESSEE FROM RAJ IMPEX WERE DU LY SUPPORTED BY BILLS AND PAYMENTS WERE MADE BY ACCOUN T PAYEE CHEQUE. RAJ IMPACTS ALSO CONFIRMED THE TRANSACTIONS . THERE WAS NO EVIDENCE TO SHOW THAT THE AMOUNT WAS RECYCLED BA CK TO THE ASSESSEE. PARTICULARLY, WHEN IT WAS FOUND THAT THE ASSESSEE THE TRADER HAD ALSO SHOWN SALES OUT OF PURCHASES MADE F ROM RAJ ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 20 IMPEX WHICH WERE ALSO ACCEPTED BY THE REVENUE, NO Q UESTION OF LAW ARISES. 20. APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE ABOVE JUDGMENTS TO THE FACTS OF THIS CASE WE ARE BOUND TO CONSIDER AND REL Y ON THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM AN D BASE OUR DECISION ON SUCH EVIDENCE AND NOT ON SUSPICION OR PREPONDERANCE OF PROBABILITIES. NO MATERIAL WAS BROUGHT ON RECORD BY THE AO TO CONTROV ERT THE EVIDENCE FURNISHED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCE S, WE ACCEPT THE EVIDENCE FILED BY THE ASSESSEE AND ALLOW THE CLAIM THAT THE INCOME IN QUESTION IS LONG TERM CAPITAL GAIN FROM SALE OF SHA RES AND HENCE EXEMPT FROM INCOME TAX. 12. CONSISTENT WITH THE VIEW TAKEN THEREIN, AS THE FACTS AND CIRCUMSTANCES OF THIS CASE ARE SAME AS THE FACTS AND CIRCUMSTANCES OF THE CASES OF NAVNEET AGARWAL (SUPRA), WE DELETE THE ADDITION MADE U/S 68 OF THE ACT, ON ACCOUNT OF SALE OF SHARES IN THE CASE OF BOTH THE ASSESSEES. THE CONSEQUENTIA L ADDITION U/S 69C IS ALSO DELETED. ACCORDINGLY BOTH THE APPEALS OF THE ASSESS EE ARE ALLOWED. 5. THIS TRIBUNALS YET ANOTHER RECENT DIRECTION IN MAHAVIR JHANWAR VS. ALSO SUMMARIES LATEST LEGAL DEVELOPMENTS. MORE PART ICULARLY HONBLE BOMBAY HIGH COURTS DECISION IN REVENUES FAVOUR AS FOLLOW S:- 2. THE SOLE ISSUE THAT ARISES FOR MY ADJUDICATION I S WHETHER THE ASSESSING OFFICER WAS RIGHT IN REJECTING THE CLAIM OF THE ASSESSEE TH AT HE HAD EARNED LONG TERM CAPITAL GAINS ON PURCHASE AND SALE OF THE SHARES OF M/S UNNO INDUSTRIES. THE AO BASED ON A GENERAL REPORT AND MODUS OPERANDI ADOPTE D GENERALLY AND ON GENERAL OBSERVATIONS HAS CONCLUDED THAT THE ASSESSEE HAS CL AIMED BOGUS LONG TERM CAPITAL GAIN. HE MADE AN ADDITION OF THE ENTIRE SALE PROCEE DS OF THE SHARES AS INCOME AND REJECTED THE CLAIM OF EXEMPTION MADE U/S 10(38) OF THE ACT. THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF THE GENUINENESS OF TH E TRANSACTION WAS REJECTED. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL AND TH E LD. CIT(A), KOLKATA, HAD UPHELD THE ADDITION. THE LD. CIT(A) HAS IN HIS ORDER RELIE D UPON CIRCUMSTANTIAL EVIDENCE AND HUMAN PROBABILITIES TO UPHOLD THE FINDINGS OF THE AO. HE ALSO RELIED ON THE SO CALLED RULES OF SUSPICIOUS TRANSACTION. NO DIRECT MATERI AL WAS FOUND TO CONTROVERT THE EVIDENCE FILED BY THE ASSESSEE, IN SUPPORT OF THE G ENUINENESS OF THE TRANSACTIONS. IN OTHER WORDS, THE OVERWHELMING EVIDENCE FILED BY THE ASSESSEE REMAINS UNCHALLENGED AND UNCONTROVERTED. THE ENTIRE CONCLUSIONS DRAWN BY THE REVENUE AUTHORITIES, ARE BASED ON A COMMON REPORT OF THE DIRECTOR OF INVESTI GATION, KOLKATA, WHICH WAS GENERAL IN NATURE AND NOT SPECIFIC TO ANY ASSESSEE. THE ASSESSEE WAS NOT CONFRONTED WITH ANY STATEMENT OR MATERIAL ALLEGED TO BE THE BA SIS OF THE REPORT OF THE INVESTIGATION WING OF THE DEPARTMENT AND WHICH WERE THE BASIS ON WHICH CONCLUSION WERE DRAWN AGAINST THE ASSESSEE. COPY OF THE REPORT WAS ALSO NOT GIVEN. 4. THE LD. D/R, SUBMITTED THAT THE TRANSACTION WAS NOT GENUINE. HE ARGUED THAT THE ENTIRE CAPITAL GAIN WAS STAGE MANAGED BY A FEW OPER ATORS AND INVESTORS. HE RELIED ON THE ORDER OF LD. ASSESSING OFFICER AND ARGUED THAT THE SAME BE UPHELD. HE RELIED ON THE ORDER OF THE CHENNAI A BENCH OF THE TRIBUNAL IN THE CASE OF M/S. PANKAJ AGARWAL & SONS (HUF) VS. ITO IN ITA NO. 1413 TO 1420/CHNY/2 018; ORDER DT. 06/12/2018, FOR THE PROPOSITION THAT SUCH CAPITAL GAINS HAVE TO BE BROUGHT TO TAX. HE ALSO RELIED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF SANJAY BIMALCHAND JAIN VS. PRINCIPAL COMMISSIONER OF INCOME-TAX-1, NA GPUR; [2018] 89 TAXMANN.COM ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 21 196 (BOMBAY) AND THE DECISION OF THE SMT. M.K. RAJE SHWARI VS. ITO; ITA NO.1723/BNG/2018; ASSESSMENT YEAR 2015-16, ORDER DT . 12/10/2018. 5. AFTER HEARING BOTH SIDES, I FIND THAT IN A NUMBE R OF CASES THIS BENCH OF THE TRIBUNAL AND JURISDICTIONAL CALCUTTA HIGH COURT HAS CONSISTE NTLY HELD THAT, DECISION IN ALL SUCH CASES SHOULD BE BASED ON EVIDENCE AND NOT ON GENERA LISATION, HUMAN PROBABILITIES, SUSPICION, CONJECTURES AND SURMISES. IN ALL CASES A DDITIONS WERE DELETED. SOME OF THE CASES WERE, DETAILED FINDING HAVE BEEN GIVEN ON THIS ISSUE, ARE LISTED BELOW:- SL.NO ITA NOS. NAME OF THE ASSESSEE DATE OF ORDER /JUD GMENT 1. ITA NO.714 TO 718/KOL/2011 ITAT, KOLKATA DICT VS. SUNITA KHEMKA 28.10.2015 2. 214 ITR 244 CALCUTTA HIGH COURT CIT VS. CARBO INDUSTRIAL HOLDINGS LTD. - 3. 250 ITR 539 CIT VS. EMERALD COMMERCIAL LTD. 23.03.2001 4. ITA NO.1236-1237/KOL/2017 MANISH KUMAR BAID VS. ACIT 18.08.2017 5. ITA NO.569/KOL/2017 GAUTAM PINCHA 15.11.2017 6. ITA NO.443/KOL/2017 KIRAN KOTHARI HUF 15.11.2017 7. ITA NO.2281/KOL/2017 NAVNEET AGARWAL VS. ITO 20.07.2018 8. ITA NO.456 OF 2007 BOMBAY HIGH COURT CIT VS. SHRI MUKESH RATILAL MAROLIA 07.09.2011 9. ITA NO.95 OF 2017 (O&M) PCIT VS. PREM PAL GANDHI 18.01.2018 10. ITA NO.1089/KOL/2018 SANJAY MEHTA 28.09.2018 6. REGARDING THE CASE LAWS RELIED UPON BY THE LD. D EPARTMENTAL REPRESENTATIVE, I FIND THAT, IN THE CASE OF M/S. PANKAJ AGARWAL & SONS (HU F)(SUPRA), THE ISSUE WAS DECIDED AGAINST THE ASSESSEE FOR THE REASON THAT, THE ASSES SEE COULD NOT JUSTIFY HIS CLAIM AS GENUINE BY PRODUCING EVIDENCE AND WAS ONLY ARGUING FOR THE MATTER TO BE SET ASIDE TO THE LOWER AUTHORITIES ON THE GROUND OF NATURAL JUST ICE. AS SIMILAR ARGUMENTS WERE NOT RAISED BEFORE THE LOWER AUTHORITIES BY THE ASSESSEE , THE ITAT REJECTED THESE ARGUMENTS. IN THE CASE ON HAND, ALL EVIDENCES WERE PRODUCED BY THE ASSESSEE. IN THE CASE OF SANJAY BIMALCHAND JAIN, LEGAL HEIR OF S ANTI DEVI BIMALCHAND JAIN, THE HONBLE HIGH COURT UPHELD THE STAND OF THE REVENUE THAT THE TRANSACTION IN QUESTION IS AN ADVENTURE IN NATURE OF TRADE AND THE PROFIT O F THE TRANSACTIONS IS ASSESSABLE UNDER THE HEAD OF BUSINESS INCOME. IN THE CASE ON HAND, THE LD. ASSESSING OFFICER HAS NOT ASSESSED THIS AMOUNT AS BUSINESS INCOME. IN ANY EVENT, I AM BOUND TO FOLLOW THE JUDGMENT OF THE JURISDICTIONAL HIGH COUR T IN THIS MATTER. I FIND THAT THE ASSESSEE HAS FILED ALL NECESSARY EVIDENCES IN SUPPO RT OF THE TRANSACTIONS. SOME OF THESE EVIDENCES ARE (A) EVIDENCE OF PURCHASE OF SHA RES, (B) EVIDENCE OF PAYMENT FOR PURCHASE OF SHARES MADE BY WAY OF ACCOUNT PAYEE CHE QUE, COPY OF BANK STATEMENTS, (C) COPY OF BALANCE SHEET DISCLOSING IN VESTMENTS, (D) COPY OF DEMAT STATEMENT REFLECTING PURCHASE, (E) COPY OF MERGER O RDER PASSED BY THE HIGH COURT , (F) COPY OF ALLOTMENT OF SHARES ON MERGER, (G) EVID ENCE OF SALE OF SHARES THROUGH THE STOCK EXCHANGE, (H) COPY OF DEMAT STATEMENT SHOWING THE SALE OF SHARES, (I) COPY OF BANK STATEMENT REFLECTING SALE RECEIPTS, (J) COPY O F BROKERS LEDGER, (K) COPY OF CONTRACT NOTES ETC. 7. THE PROPOSITION OF LAW LAID DOWN IN THESE CASE L AWS BY THE JURISDICTIONAL HIGH COURT AS WELL AS BY THE ITAT KOLKATA ON THESE ISSUE S ARE IN FAVOUR OF THE ASSESSEE. THESE ARE SQUARELY APPLICABLE TO THE FACTS OF THE C ASE. THE LD. DEPARTMENTAL REPRESENTATIVE, THOUGH NOT LEAVING HIS GROUND, COUL D NOT CONTROVERT THE CLAIM OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IN QUES TION IS COVERED BY THE ABOVE CITED ITA NO.1164/KOL/2019 A.Y. 2014-15 SRI ASISH KR. GHOSH VS. DCIT CIR-1(1), KOL. PAGE 22 DECISIONS OF THE HONBLE JURISDICTIONAL CALCUTTA HI GH COURT AND THE ITAT. I AM BOUND TO FOLLOW THE SAME. 8. IN VIEW OF THE ABOVE DISCUSSION I DELETE THE ADD ITION MADE U/S 68 OF THE ACT, ON ACCOUNT OF LONG TERM CAPITAL GAINS. COUPLED WITH THIS, HON'BLE JURISDICTIONAL HIGH COUR TS OTHER DECISIONS IN CIT VS. RUNGTA PROPERTIES PVT. LTD. ITA NO.105 OF 2016, CIT VS. SHREYAHI GANGULY ITA NO. 196 OF 2012, M/S CLASSIC GROWERS LTD VS. CI T ITA NO. 129 OF 2012 ALSO HOLD SUCH TRANSACTIONS IN SCRIPS SUPPORTED BY THE CORRESPONDING RELEVANT EVIDENCE TO BE GENUINE. WE ADOPT THE ABOVE EXTRACTE D LEARNED CO-ORDINATE BENCHES DETAILED REASONING TAKING INTO CONSIDERATI ON OF VARIOUS DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT (SUPRA) TO CONCLU DE THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN TREATING ASSESSEES LT CG IN ISSUE AS UNEXPLAINED CASH CREDITS. THE IMPUGNED ADDITION IS DELETED THER EFORE. COMMISSION DISALLOWANCE / ADDITION ALSO FOLLOWS SUIT. 6. THIS ASSESSEES APPEAL IS ALLOWED IN FORGOING TERMS. ORDER PRONOUNCED IN THE OPEN COURT 02 /08/2019 SD/- SD/- ( %) (' %) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP (- 02 / 08 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SRI ASISH KR. GHOSH 124/9, MAHENDRA BHAT TACHARYA ROAD, HOWRAH-711104 2. /RESPONDENT-DCIT, CIR-1(1), P-7 CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOL-69 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ 3,