Ritu Mittal , Kolkata V. ITO, Ward - 36(1), Kolkata , Kolkata

ITA 1307/KOL/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9839 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 14-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained expenditure; Gift; 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; Accommodation entries; Scheme of amalgamation; Onus to prove; Penny stocks
• Section: 69C; 143(3); 260A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENC HES : SMC: KOLKATA [BEFORE SHRI S.S.GODARA, JM] ITA NO.1263/KOL/2018 ASSESSMENT YEAR:2014 - 15 SHRI JIGNESH DESAI 71, CANNING STREET, AL-6, BAGREE MARKET, KOLKATA-700001. REP. BY SHRI MIRAJ D.SHAH, AR DATE OF HEARING : 17.09.2018. PAN : AFEPD 5066 Q VS. I.T.O., WARD-35(2) 110, SHANTIPALLY, 7 TH FLOOR. PURBA, E.M.BYPASS, KOLKATA-700107. REP. BY SHRI KAPIL MONDAL, JCIT ITA NO.1270/KOL/2018 ASSES SMENT YEAR:2014 - 15 SHRI GOPAL KALANAURIA, 135, CANNING STREET, GR. FLOOR, KOLKATA-700001. REP. BY SHRI HEMANT KEJRIWAL, ACA DATE OF HEARING : 13.09.2018. PAN : AGFPK 9235 L VS. I.T.O., WARD-34(4), 110, SHANTIPALLY, 7 TH FLOOR. PURBA, E.M.BYPASS, KOLKATA-700107. REP. BY MD. GHYAS UDDIN, ADDL. CIT ITA NO.1267//KOL/2018 ASSESSMENT YEAR:2014-15 SHRI RAJ KUMAR GOENKA, MARSHAL HOUSE, 25, STRAND ROAD, 3 RD FLOOR, KOLKATA-1. REP. BY SHRI MIRAJ D.SHAH, AR DATE OF HEARING : 12.09.2018. PAN : ADZPG 3205 D VS. I.T.O., WARD-36(1), 110, SHANTIPALLY, 7 TH FLOOR. PURBA, E.M.BYPASS, KOLKATA-700107. REP. BY SHRI ROBIN CHOUDHURY, ADDL. CIT ITA NO.844//KOL/2018 ASSESSMENT YEAR:2014-15 SMT. NEELAM AGARWAL, C/O SUBASH AGARWAL, & ASSOCIATES, SIDDHA GIBSON, GIBSON LANE, SUITE- 213, 2 ND FLOOR, KOLKATA-700069. REP. BY SHRI SIDDHARTH AGARWAL, ADVOCATE DATE OF HEARING : 18.09.2018. PAN : ACQPA 7648 Q VS. I.T.O., WARD-2 (4),SILIGURI, CENTRAL REVENUE BUILDING, MATIGARA, DIST. DARJEELING. REP. BY SHRI KAPIL MONDAL, JCIT 2 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 2 ITA NO.519//KOL/2018 ASSESSMENT YEAR:2014 - 15 SHRI AMIT SHAH, C/O M/S SHAH AND SHAH; 70 CANNING STREET, KOLKATA-700001. REP. BY SHRI SUBASH AGARWAL, ADVOCATE DATE OF HEARING : 10.09.2018. PAN : AMBPS 0013 L VS. I.T.O., WARD-34(2), AAYKAR BHAWAN, 110, SHANTIPALLY, 7 TH FLOOR. PURBA, E.M.BYPASS, KOLKATA- 700107. REP. BY SHRI SANJOY MUKHERJEE, ADDL. CIT ITA NO.1266//KOL/2018 ASSESSMENT YEAR: 2013 - 14 SHRI KISHORE KUMAR JAIN, C/O N.K.SETHI & CO., CHARTERED ACCOUNTANT, 5 CLIVE ROW, 6 TH FLOOR, NO.-6A, DALHOUSIE, KOLKATA-700001. REP. BY SHRI MIRAJ D.SHAH, AR DATE OF HEARING : 17.09.2018. PAN : ACKPJ 1801 E VS. I.T.O., WARD-22(4), 110, SHANTIPALLY, 9 TH FLOOR. PURBA, E.M.BYPASS, KOLKATA-700107. REP. BY SHRI KAPIL MONDAL, JCIT ITA NO.1307//KOL/2018 ASSESSMENT YEAR:2014-15 SMT. RITU MITTAL, 204, AJC BOSE ROD, 5 TH FLOOR, KOLKATA-700017. REP. BY SHRI MIRAJ D.SHAH, AR DATE OF HEARING : 17.09.2018. PAN : AKEPM 1804 E VS. I.T.O., WARD-36(1), 110, SHANTIPALLY, 8 TH FLOOR. PURBA, E.M.BYPASS, KOLKATA-700107. REP. BY SHRI KAPIL MONDAL, JCIT ITA NO.518//KOL/2018 ASSESSMENT YEAR:2014-15 SHRI NIKHIL AGARWAL, 7C, KIRAN SHANKAR ROY ROAD, KOLKATA-700001. REP. BY SHRI MIRAJ D.SHAH, AR DATE OF HEARING : 10.09.2018. PAN : ADGPA 6050 M VS. I.T.O., WARD-35 (2), 110, SHANTIPALLY, 7 TH FLOOR. PURBA, E.M.BYPASS, KOLKATA-700107. REP. BY SHRI SANJOY MUKHERJEE, ADDL. CIT ITA NO.1051//KOL/2018 ASSESSMENT YEAR: 2015 - 16 SHRI VIKASH JHAWAR, 14/2, OLD CHINA BAZAR STREET, VS. I.T.O., WARD-36(4), 110, SHANTIPALLY, 7 TH FLOOR. PURBA, 3 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 3 KOLKATA-700001. REP. BY SHRI SUNIL SURANA, CA DATE OF HEARING : 19.09.2018. PAN : AEWPJ 9016 R E.M.BYPASS, KOLKATA-700107. REP. BY SHRI DILIP KUMAR MITRA, ADDL. CIT (APPELLANTS) (RESPO NDENTS) DATE OF PRONOUNCEMENT : 26/09/2018 ORDER PER S.S.GODARA, JM THE INSTANT NINE ASSESSEES HAVE FILED THEIR IMPUGNE D APPEALS AGAINST CIT(A)S SEPARATE ORDERS PASSED UPHOLDING THE ASSESSING OFFI CERS IDENTICAL ACTION TREATING THEIR LONG TERM CAPITAL GAIN CLAIMED U/S 10(38) OF THE IN COME TAX ACT, 1961 (ACT) TO BE BOGUS, INVOLVING PROCEEDINGS U/S 143(3) OF THE ACT. RELEVANT DETAILS (APPEAL-WISE) ARE AS FOLLOWS :- CIT(A) APPEAL NO. DATE OF ORDER CIT(A)-10, KOLKATA 523/CIT(A)/10/W-35(2)/2014-15/20 16-17 26.03.2018 CIT(A)-10, KOLKATA 561/CIT(A)-10/W-34(4)/2014-15/20 16-17/KOL 28.03.2018 CIT(A)-10,KOLKATA 572/CIT(A)-10/W-36(1)/2014-15/201 6-17/KOL 01.03.2018 CIT(A)-SILIGURI 51/CIT(A)/SLG/2016-17 22.03.2018 CIT(A)-10,KOLKATA 132/CIT(A)-10/W-34(2)/2014-15/201 6-17/KOL 12.01.2018 CIT(A)-6, KOLKATA CIT(A), KOLKTA-6/10287/2016-17 08.03.2018 CIT(A)-10, KOLKATA 469/CIT(A)-10/W-36(1)/2014-15/20 16-17/KOL 20.04.2018 CIT(A)-10, KOLKATA 568/CIT(A)-10/W-35(2)/2014-15/20 16-17/KOL 29.12.2018 CIT(A)-10, KOLKATA 855/CIT(A)-10/WD-36(4)/15-16/201 7-18/KOL 12.04.2018 RELEVANT ASSESSMENT YEAR INVOLVED IN ALL CASES IS 2 014-15 EXCEPT ITA NO.1266/KOL/2018 RELATING TO A.Y.2013-14. 4 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 4 2. I HAVE HEARD ALL LEARNED COUNSEL(S) REPRESENTING THESE ASSESSEES AS WELL AS THE REVENUE REITERATING THEIR RESPECTIVE STANDS AGAINST AND IN SUPPORT OF THE LOWER AUTHORITIES IMPUGNED ACTION TREATING THEIR RESPECT IVE CAPITAL GAINS AMOUNTS TO BE BOGUS. I ALSO CONDONE 17 DAYS DELAY IN ITA NO.1266/KOL/201 8 AS THE REVENUE IS FAIR ENOUGH IN NOT DISPUTING THE SOLE ISSUE AVERMENTS CITING REASO NS THEREOF. I TAKE UP ITA NO.1263/KOL/2018 IN CASE OF SHRI JIGNESH DESAI TO B E THE LEAD CASE AS IT HAS COME ON RECORD THAT THE ISSUE INVOLVED IS SAME IN ALL THESE CASES. 3. I NOW ADVERT TO THE RELEVANT FACT IN THE ABOVE L EAD CASE. THERE IS NO DISPUTE THAT THE ASSESSEE CLAIMED TO HAVE DERIVED LONG TERM CAPI TAL GAIN UNDER ISSUE OF RS.23,92,464/- FROM SALE OF SHRI SHALEEN TEXTILES A ND GRANDMA TRADING AGENCIES LTD INVOLVING PURCHASE PRICE(S) OF RS.20,400/-AND RS.94 ,500, SOLD FOR RS.12,77,746/- AND RS.12,29,618/- RESULTING IN LONG TERM CAPITAL GAIN OF RS.12,57,346/- AND RS.11,35,118; RESPECTIVELY TOTALLING TO RS.23,92,464/-. 4. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFI CER THAT THESE SCRIPS HAD BEEN PURCHASED THROUGH OFF MARKET ON 24.04.2012 AND 18 .01.2013. THE ASSESSING OFFICER DID NOT AGREE TO ASSESSEES ABOVE NARRATED DETAILS. HE WAS OF THE VIEW THAT THE ABOVE ALLEGED ABNORMALITY IN ASSESSEEE DERIVING PROFITS @ 6163% AND 1201% DEFIED THE STOCK MARKETS ESTABLISHED CONVENTIONS AS PER HUMAN PROB ABILITIES. HE OBSERVED IN ASSESSMENT ORDER DATED 27.12.2016 THAT ALL THIS SUG GESTED A VERY WELL PLANNED PRICE RIGGING OF THESE TWO SCRIPS. 5. CASE FILE SUGGESTS THAT THE ASSESSING OFFICER EX AMINED BOTH THE ABOVE TWO SCRIPS PAST HISTORY, FACE VALUE OF SHARES, ALLEGED DUBIOUS NATURE OF OTHER BUSINESS, BALANCE SHEET AND FINANCIALS INCLUDING EQUITIES AND LIABILI TIES, DIVIDENDS DECLARED IN THE INTERVENING PERIOD ETC TO OPINE THAT THEIR ASTRONOM ICAL RISE IN SHARES HAD REASONS ATTRIBUTABLE TO SOMETHING SUSPICIOUS RATHER THAN FL OWING FROM NORMAL MARKET TRENDS. HE 5 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 5 ANALYSED SHARE PRICE MENTIONED OF THE TWO SCRIPS FR OM APRIL 2012 TO THE DATE OF RISING THEIR MAXIMUM VALUE IN THE HOLDING PERIOD. HE WAS OF THE OPINION THAT THE SAID SHARE PRICE MOVEMENT WITNESSED A PRE-ARRANGED TRADING PAT TERN REVEALING AN ARTIFICIAL PRICE RIGGING IN THESE TWO SCRIPS AS PER RELEVANT DETAILS RIGHT FROM THE DATE OF ACQUISITION TO 31 ST MARCH, 2015. HE THEREFORE TREATED ASSESSEES TO HAV E ENGAGED IN BOGUS LONG TERM CAPITAL GAIN ARRANGEMENTS AS PER THE RELEVANT CASE RECORDS IN COLLUSION WITH ENTRY OPERATORS IN THESE FACTS AND CIRCUMSTANCES. HE ALSO REFERRED TO D.I.T.S INVESTIGATION REPORT TO THIS EFFECT ALLEGING SUCH LONG TERM CAPIT AL GAINS TO BE AN ARRANGEMENT BETWEEN ASSESSEES AND THEIR ENTRY OPERATORS INVOLVING WIDER SCHEME OF THINGS. ALL THESE MADE HIM TO ADD THE ASSESSEES LONG TERM CAPITAL GAIN OF RS.25,21,600/- AS UNEXPLAINED CASH CREDITS AND COMMISSION DISALLOWANCE/ADDITION @2.5% AMOUNTING TO RS.60,041/- AS UNEXPLAINED EXPENDITURE. 6. THE CIT(A) UPHOLDS THE ASSESSING OFFICERS ACTIO N WITH THE FOLLOWING DETAIL DISCUSSION : 1. I HAVE CAREFULLY CONSIDERED THE ACTION OF THE L D. AO IN MAKING AN ADDITION OF RS.25,21,600/- AS UNEXPLAINED CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. AFTER AN EXHAUSTIVE DISCUSSION AND ELABORATING THE FACTUAL A ND LEGAL MATRIX, I FIND THAT THE LD. AO HAS HELD THAT THE CLAIM OF LONG TERM CAPITAL GAIN U/S 10(38) WAS TO BE DENIED TO THE ASSESSEE-INDIVIDUAL, AND WAS TO BE AS SESSED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I T ACT. THE LD. AO HAS PLACED ON RECORD THE ENTIRE GAMUT OF FINDINGS, AND THERE IS, IN MY CONSIDERED VIEW NO FU RTHER REQUIREMENT FOR ELABORATION FROM THIS FORUM. IN MY VIEW OF THE FACT S THERE ARE ELABORATE AND DIRECT EVIDENCE TO CLEARLY INDICATE THAT THAT THE ENTIRE T RANSACTIONS UNDERTAKEN BY THE APPELLANT WERE MERELY ACCOMMODATION ENTRIES TAKEN F OR THE PURPOSE OF SUCH BOGUS LONG TERM CAPITAL GAIN MADE BY THE ASSESSEE DURING THE PREVIOUS YEAR .. IT IS APPARENT THAT, IN THE GRAB OF ALLEGED LTCG, THE ASS ESSEE 'EARNED' EXEMPT INCOME OF RS.25,21,600/- AND HUGE AMOUNT BROUGHT INTO THE BOOKS WITHOUT PAYING A SINGLE RUPEE OF TAX. THE LD. AO HAS VERY CAREFULLY ANALYZE D THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, AND HAS RECORDED THE N OTEWORTHY FEATURES OF THE COMPANY WHOSE SHARES WERE PURCHASED / SOLD BY THE A SSESSEE-INDIVIDUAL. THE ECONOMIC PARAMETERS OF THE SAID COMPANY OVER THE IM PUGNED PERIOD HAS ALSO BEEN BROUGHT ON RECORD, IN THE ANALYSIS. THE RISE AND FA LL OF THE PRICES AS RECORDED HAD BEEN BROUGHT OUT BY THE LD. AO TO BE ARTIFICIAL AND NOT COMMENSURATE WITH THE NORMAL MARKET, AS THE COMPANY HAD NO BUSINESS AT AL L. THE LD. AO HAS ALSO BROUGHT FORTH INFORMATION THAT THE REGULATORY AUTHO RITY SEBI HAS ALSO AFTER 6 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 6 INVESTIGATING SUCH ABNORMAL PRICE INCREASES OF CERT AIN STOCKS INVESTIGATED THE MATTER AND SUSPENDED TRADING IN CERTAIN SCRIPTS. IT IS VERY CLEAR THAT THE PRICES OF THESE SCRIPTS FELL SHARPLY AFTER THE OFF LOADING OF THESE SCRIPTS BY PRE-ARRANGED AND MANIPULATED TRANSACTIONS. THE ENTIRE TRANSACTIONS W ERE CARRIED OUT ON THE STOCK EXCHANGE TO GIVE IT A COLOR OF REAL TRANSACTIONS. 2. I ALSO FIND THAT ALL THE SUBMISSIONS MADE BY THE APPELLANT DURING THE COURSE OF THE APPEAL POINT TOWARDS THE ELABORATE DOCUMENTATION, M EANING THEREBY THAT THE APPELLANT HAS PRODUCED PAPERS RELATING TO APPLICATI ON FOR THE SHARES, THE ALLOTMENT OF THE SHARES, THE SHARE CERTIFICATES, PAYMENTS BY CHEQUE AND THE NECESSARY PAPERS FILED BEFORE THE REGISTRAR OF COMPANIES, WHERE THE NAME OF THE ASSESSEE HAS BEEN REFLECTED AS A SHAREHOLDER. THE APPELLANT HAS ALSO FILED PROOF OF AMALGAMATION OF THE COMPANIES WHEREIN THE SHAREHOLDING HAS CHANGED HANDS. IT IS ALSO THE CONTENTION OF THE APPELLANT THAT IT HAS PROVIDED CO PIES OF THE BANK STATEMENT, BANK CONTRACT NOTES AND DELIVERY INSTRUCTIONS TO THE BRO KER BY WAY OF PROOF THAT ALL THESE TRANSACTIONS WERE GENUINE. HOWEVER, IN MY CONSIDERE D VIEW OF THE MATTER, IT IS PRECISELY THIS ELABORATE PAPERWORK THAT STRENGTHENS THE MATTER RELATING TO THE BOGUS BENEFIT OF THE LTCG, WHICH CLEARLY HAS BEEN SCHEMED , PREPLANNED AND EXECUTED WITH MALAFIDE INTELLIGENCE AND PRECISION. THEREFORE ALL THESE PAPERS ARE MERE DOCUMENTS AND NOT ANY EVIDENCE. THE WHOLE GAMUT OF TRANSACTIONS ARE UNNATURAL AND HIGHLY SUSPICIOUS, AND THEREFORE THE RULES OF S USPICIOUS TRANSACTIONS OUGHT TO APPLY IN THE INSTANT CASE. THERE ARE GRAVE DOUBTS IN THE STORY PROPOUNDED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. NONE OF THE MATERIAL PRODUCED BEFORE THE LD. AO BY THE ASSESSEE-APPELLANT ARE ENOUGH TO JUSTIFY THE HUMONGOUS GAINS ACCRUING TO THE ASSESSEE BY WAY OF CAPITAL GAINS. I N MY CONSIDERED VIEW THE BANKING DOCUMENTS ARE MERE SELF SERVING RECITALS. T HE LAW IN THE MATTER OF SELF- SERVING RECITALS HAS BEEN LONG ESTABLISHED BY THE H ON'BLE APEX COURT. IN THE CASE OF CIT VS P.MOHANKALA 291 ITR 278, THE HON'BLE SUPREME COURT HELD THAT' THE MONEY CAME BY WAY OF BANK CHEQUE AND WAS PAID THROU GH THE PROCESS OF BANKING TRANSACTIONS WAS NOT BY ITSELF OF ANY CONSEQUENCES. ' THE BURDEN OF PROOF IS ON THE ASSESSEE IN THE MATTER OF JUSTIFICATION OF RECEIPTS WHICH ARE OF SUSPICIOUS AND DUBIOUS NATURE. IN THE CASE OF CIT VS. DURGA PRASAD MORE (1971)82 ITR 540 (SC), THEIR LORDSHIPS LAYING DOWN THE SIGNIFICANCE OF HUM AN PROBABILITIES HELD AS UNDER: 'IN A CASE WHERE A PARTY RELIED ON SELF SERVING REC ITALS IN DOCUMENTS, IT WAS FOR THAT PARTY TO ESTABLISH THE TRUTH OF THOSE RECITALS: THE TAXING AUTHORITIES WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF SUCH RECITALS.' SIMILARLY IN THE CASE OF SUMATI DAYAL VS. CIT (1995 ) 214 ITR 801 (SC), THEIR LORDSHIPS HELD AS UNDER: 'IN VIEW OF SECTION 68 OF THE ACT, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVI OUS YEAR, THE SAME MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSES OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATUR E AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACTORY. IN SUCH A CASE, THERE IS PRIMA 7 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 7 FACIE, EVIDENCE AGAINST THE ASSESSEE VIZ. THE RECEI PT OF MONEY, AND IF HE FAILS -TO REBUT, THE SAID EVIDENCE BEING UN-REBUTTED, CAN BE USED AGAINST HIM BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME NATURE. ' IN THE CASE OF SAJJAN DAS & SONS VS. CIT (2003) 264 ITR 435 (DELHI), THEIR LORDSHIPS OF THE HIGH COURT OF DELHI, WHILE CONSIDERING A CASE IN WHICH GIFTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKING CHANNELS LAID IMPORTANCE ON THE CAPACITY OF THE DON OR FOR MAKING THE GIFT AND HIS IDENTITY AS WELL AS IMPORTANCE OF RELATIONSHIP BETW EEN THE DONOR AND DONEE IN DETERMINATION OF GENUINENESS OF GIFT HELD AS UNDER: 'THAT A MERE IDENTIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOU NT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT. SINCE THE CLAIM OF THE GIFT WAS MADE BY THE ASSESSEE, THE ONUS LAY ON HIM NOT O NLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING THE GIFT BUT A/SO HIS CAPACITY TO MAKE A GIFT AND THAT IT HAD ACTUALLY BEEN RECEIVED AS A GIFT FROM THE DONOR. 'I N MY CONSIDERED VIEW WHEREVER DOCUMENTS ARE RELIED UPON THEY SHOULD PASS THE TEST OF NORMAL BEHAVIOR OF THE ASSESSEE IN THE COURSE OF BUSINESS VIZ., HUMAN COND UCT, PREPONDERANCE OF PROBABILITY AND SURROUNDING CIRCUMSTANCES. IN MY CO NSIDERED VIEW, EVEN IF DOCUMENTARY EVIDENCE IS PRODUCED, THE SAME MUST PAS S THE TEST OF HUMAN PROBABILITIES AND SURROUNDING CIRCUMSTANCES IF THEY DO NOT, THEN ADDITION JUSTIFIED. RELIANCE ON SUCH MATTERS IS PLACED ON THE CASE OF S MT PHOOLWATI DEVI 314 ITR (AT) 1 (DEL.) 3. IT MUST ALSO BE STATED HERE THAT IN COMMISSIONER OF INCOME TAX VS NR PORTFOLIO PVT LTD ON 22 NOVEMBER, 2013, THE HON'BLE DELHI HIG H COURT HAS HELD ..... 'THE ASSESSING OFFICER IS BOTH AN INVESTIGATOR AND AN ADJUDICATOR. WHEN A FACT IS ALLEGED AND STATED BEFORE THE ASSESSING OFFICER BY AN ASSESSEE, HE MUST AND SHOULD EXAMINE AND VERIFY, WHEN IN DOUBT OR WHEN THE ASSER TION IS DEBATABLE. NORMALLY A FACTUAL ASSERTION MADE SHOULD BE ACCEPTED BY THE AS SESSING OFFICER UNLESS FOR JUSTIFICATION AND REASONS THE ASSESSING OFFICER FEE LS THAT HE NEEDS/REQUIRES A DEEPER AND DETAILED VERIFICATION OF THE FACTS ALLEGED. THE ASSESSEE IN SUCH CIRCUMSTANCES SHOULD COOPERATE AND FURNISH PAPERS, DETAILS AND PA RTICULARS. THIS MAY ENTAIL ISSUE OF NOTICES TO THIRD PARTIES TO FURNISH AND SUPPLY I NFORMATION OR CONFIRM FACTS OR EVEN ATTEND AS WITNESSES. THE ASSESSING OFFICER CAN ALSO REFER TO INCRIMINATING MATERIAL OR EVIDENCE AVAILABLE WITH HIM AND CALL UP ON THE ASSESSEE TO FILE THEIR RESPONSE. WE CANNOT LAY DOWN OR STATE A GENERAL OR UNIVERSAL PROCEDURE OR METHOD WHICH SHOULD BE ADOPTED BY THE ASSESSING OFFICER WH EN VERIFICATION OF FACTS IS REQUIRED. THE MANNER AND MODE OF CONDUCTING ASSESSM ENT PROCEEDINGS HAS TO BE LEFT TO THE DISCRETION OF THE ASSESSING OFFICER, AN D THE SAME SHOULD BE JUST, FAIR AND SHOULD NOT CAUSE ANY HARASSMENT TO THE ASSESSEE OR THIRD PERSONS FORM WHOM CONFIRMATION OR VERIFICATION IS REQUIRED. THE VERIF ICATION AND INVESTIGATION SHOULD BE ONE WITH THE LEAST AMOUNT OF INTRUSION, INCONVEN IENCE OR HARASSMENT ESPECIALLY TO THIRD PARTIES, WHO MAY HAVE ENTERED INTO TRANSAC TIONS WITH THE ASSESSEE. THE 8 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 8 ULTIMATE FINDING OF THE ASSESSING OFFICER SHOULD RE FLECT DUE APPLICATION OR MIND ON THE RELEVANT FACTS AND THE DECISION SHOULD TAKE INT O CONSIDERATION THE ENTIRE MATERIAL, WHICH IS GERMANE AND WHICH SHOULD NOT BE IGNORED AND EXCLUDE THAT WHICH IS IRRELEVANT. CERTAIN FACTS OR ASPECTS MAY B E NEUTRAL AND SHOULD BE NOTED. THESE SHOULD NOT BE IGNORED BUT THEY CANNOT BECOME THE BEDROCK OR SUBSTRATUM OF THE CONCLUSION. THE PROVISIONS OF EVIDENCE ACT ARE NOT APPLICABLE, BUT THE ASSESSING OFFICER BEING A QUASI JUDICIAL AUTHORITY, MUST TAKE CARE AND CAUTION. TO ENSURE THAT THE DECISION IS REASONABLE AND SATISFIE S THE CANONS OF EQUITY, FAIRNESS AND JUSTICE. THE EVIDENCE SHOULD BE IMPARTIALLY AND OBJECTIVELY ANALYZED TO ENSURE THAT THE ADVERSE FINDINGS AGAINST THE ASSESSEE WHEN RECORDED ARE ADEQUATELY AND DULY SUPPORTED BY MATERIAL AND EVIDENCE AND CAN WIT HSTAND THE CHALLENGE IN APPELLATE PROCEEDINGS. PRINCIPLE OF PREPONDERANCE O F PROBABILITIES APPLIES. WHAT IS STATED AND THE SAID STANDARD, EQUALLY APPLY TO THE TRIBUNAL AND INDEED THIS COURT. THE REASONING AND THE GROUNDS GIVEN IN ANY DECISION OR PRONOUNCEMENT WHILE DEALING WITH THE CONTENTIONS AND ISSUES SHOULD REFL ECT APPLICATION OF MIND ON THE RELEVANT ASPECTS. WHEN AN ASSESSEE DOES NOT PRODUCE EVIDENCE OR TRIES TO AVOID APPEARANCE BEFORE THE ASSESSING OFFICER, IT NECESSA RILY CREATES DIFFICULTIES AND PREVENTS ASCERTAINMENT OF TRUE AND CORRECT FACTS AS THE ASSESSING OFFICER IS DENIED ADVANTAGE OF THE CONTENTION OR FACTUAL ASSERTION BY THE ASSESSEE BEFORE HIM. IN CASE AN ASSESSEE DELIBERATELY AND INTENTIONALLY FALLS TO PRODUCE EVIDENCE BEFORE THE ASSESSING OFFICER WITH THE DESIRE TO PREVENT INQUIR Y OR INVESTIGATION, AN ADVERSE VIEW SHOULD BE TAKEN'. 4. IN THIS CONNECTION, I WOULD ALSO WISH TO REFER T O THE DECISION OF THE HON'BLE ITAT BOMBAY BENCH B' (ITA NO.614/BOM/87 A.V. 1983-84) I N THE CASE OF M/S. MONT BLANE PROPERTIES AND INDUSTRIES PVT. LTD., WHICH WA S UPHELD BY THE HON'BLE SUPREME COURT. THE HON'BLE TRIBUNAL HELD THAT THE W ORD 'EVIDENCE' AS USED IN SEC. 143(3) COVERED CIRCUMSTANTIAL EVIDENCE ALSO. THE WO RD 'EVIDENCE' AS USED IN SEC.143 (3) OBVIOUSLY COULD NOT BE CONFINED TO DIRE CT EVIDENCE. THE WORD 'EVIDENCE' WAS COMPREHENSIVE ENOUGH TO COVER THE CIRCUMSTANTIA L EVIDENCE ALSO. UNDER THE TAX JURISPRUDENCE, THE WORD 'EVIDENCE' HAD MUCH WID ER CONNOTATIONS. WHILE THE WORD 'EVIDENCE' MIGHT RECALL, THE ORAL AND DOCUMENT ARY EVIDENCE AS MAY BE ADMISSIBLE UNDER THE INDIAN EVIDENCE ACT THE USE OF WORD 'MATERIAL' IN SEC.143(3) SHOWED THAT THE ASSESSING OFFICER, NOT BEING A COUR T COULD RELY UPON MATERIAL, WHICH MIGHT NOT STRICTLY BE EVIDENCE ADMISSIBLE UNDER THE INDIAN EVIDENCE ACT FOR THE PURPOSE OF MAKING AN ORDER OF ASSESSMENT. COURT OFT EN TOOK JUDICIAL . PRINCIPAL FACT. IT IS EVIDENCE OF VARIOUS FACTS, OT HER THAN THE FACT IN ISSUE WHICH ARE SO ASSOCIATED WITH THE FACT IN ISSUE, THAT TAKEN TO GETHER, THEY FORM A CHAIN OF CIRCUMSTANCES LEADING TO AN INFERENCE OR PRESUMPTIO N OF THE EXISTENCE OF THE PRINCIPAL FACT. IN THE APPRECIATION OF CIRCUMSTANTI AL EVIDENCE, THE RELEVANT ASPECTS, AS LAID DOWN FROM TIME TO TIME ARE - 9 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 9 (1.) THE CIRCUMSTANCES ALLEGED MUST BE ESTABLISHED BY SUCH EVIDENCE, AS IN THE CASE OF OTHER EVIDENCE (2) THE CIRCUMSTANCES PROVED, MUST BE OF A CONCLUSI VE NATURE AND NOT TOTALLY INCONSISTENT WITH THE CIRCUMSTANCES OR CONTRADICTOR Y TO OTHER EVIDENCE. (3) ALTHOUGH THERE SHOULD BE NO MISSING LINKS IN TH E CASE, YET IT IS NOT ESSENTIAL THAT EVERY ONE OF THE LINKS MUST APPEAR ON THE SURFACE O F THE EVIDENCE ADDUCED ; SOME OF THESE LINKS MAY HAVE TO BE INFERRED FROM THE PRO VED FACTS ; (4) IN DRAWING THOSE INFERENCES OR PRESUMPTIONS, TH E AUTHORITIES MUST HAVE REGARD TO THE COMMON COURSE OF NATURAL EVENTS, TO HUMAN CO NDUCT AND THEIR RELATION TO THE FACTS OF THE PARTICULAR CASE. (5)THE CIRCUMSTANTIAL EVIDENCE CAN, WITH EQUAL FACI LITY, BE RESORTED TO IN PROOF OF A FACT IN ISSUE WHICH ARISES IN PROCEEDINGS FOR THE A SSESSMENT OF TAXES BOTH DIRECT AND INDIRECT, CIRCUMSTANTIAL EVIDENCE CAN BE MADE USE O F IN ORDER TO PROVE OR DISPROVE A FACT ALLEGED OR IN ISSUE. IN FACT, IN WHATEVER PROC EEDINGS OR CONTEXT INFERENCES ARE REQUIRED TO BE DRAWN FROM THE EVIDENCE OR MATERIALS AVAILABLE OR LACKING, CIRCUMSTANTIAL EVIDENCE HAS ITS PLACE TO ASSIST THE PROCESS OF ARRIVING AT THE TRUTH. ' 6.14. IT WILL ALSO BE WORTHWHILE TO CONSIDER THE NA TURE OF BURDEN OF PROOF ON THE AO FOR PROVING A FACT OR CIRCUMSTANCE IN THE INCOME TA X PROCEEDINGS. THE QUESTIONS RAISED ABOUT THE TAX LIABILITY BY THE AO ARE TO BE ANSWERED BY THE ASSESSEE BY FURNISHING REASONABLE AND PLAUSIBLE EXPLANATIONS. I F ASSESSEE IS NOT FORTHCOMING WITH PROPER OR COMPLETE FACTS OR HIS STATEMENT OR E XPLANATION IS CONTRADICTORY, DRAWING OF SUITABLE INFERENCES AND ESTIMATION OF FA CTS IS INEVITABLE. COURTS GENERALLY WILL NOT INTERFERE WITH SUCH ESTIMATE OF FACTS, UNLESS THE INFERENCES OR ESTIMATES ARE PERVERSE OR CAPRICIOUS. 6.15. THE ASSESSEE S TECHNICAL CONTENTIONS ABOUT AD MISSIBILITY AND RELIANCE ON MATERIAL AVAILABLE ON THE AOS RECORD ARE IN THE N ATURE OF CONTENTIONS CHALLENGING CRIMINAL OR CIVIL LIABILITIES IN A COURT OF LAW. WE ARE DEALING WITH A PROCESS OF ADJUDICATION OF ASSESSES TAX LIABILITY I.E. ASSESSM ENT UNDER INCOME TAX ACT RATHER THAN CONDUCTING CRIMINAL OR CIVIL COURT PROCEEDINGS . AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF S.S. GADGIL (SUPRA) NO 'LIS' IS INVOLVED IN ADJUDICATION OF TAX LIABILITY. THE ASSESSEE'S CONTENTION THAT TH ERE WAS NO NEW MATERIAL BEFORE THE AO AFTER THE CIT(A)'S SETTING ASIDE ORDER CANNOT BE ACCEPTED. NEW INFORMATION AND MATERIAL DID INDEED COME ON RECORD. IN OUR VIEW, IN A SENSITIVE MATTER LIKE THIS, EVEN A SINGLE CLUE OR REVELATION CAN BE OF GREAT IM PORTANCE. TO REVERSE THE ORDER OF THE AO ON THIS TECHNICAL PLEA WILL AMOUNT TO TAKING A LOPSIDED VIEW OF THE PROCEEDINGS. BESIDES, THE JPC HAS UNDERLINED THE IM PORTANCE OF REPORTS OF INVESTIGATION AGENCIES LIKE CBI, DRI, ED WHOSE WERE IN THE OFFING, AS THE RELEVANT INVESTIGATIONS WERE IN PROCESS. IN VIEW OF THESE OB SERVATIONS, WE DO NOT ACCEDE TO THE ASSESSEE'S PLEAS IN THIS BEHALF. THE ASSESSEE'S CONTENTIONS AND OBJECTIONS IN THIS BEHALF THAT THE MATERIAL AVAILABLE ON RECORD WAS NO T ADMISSIBLE AS EVIDENCE AND THAT 10 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 10 IT CANNOT BE RELIED ON BY THE AO, ARE DEVOID OF ANY MERIT AND ARE REJECTED OUTRIGHT. ' 8. WHEN THE IMPOSSIBLE IS PROJECTED AS POSSIBLE THR OUGH A PLETHORA OF WELL ARRANGED DOCUMENTS, IT WOULD BE VERY REASONABLE TO REJECT TH E DOCUMENTS OUTRIGHT AS MAKE BELIEVE AND SELF SERVING. IN THE CASE OF US HA CHAN DRESH SHAH VS ITO, WARD- 19(1)(2), MUMBAI, THE HONBLE ITAT F BENCH MUM BAI BY THEIR ORDER FOR A.Y.2006-07 26 TH SEPTEMBER, 2014 HAVE, IN THE OPERATIONAL PORTION A DJUDICATED AS UNDER : [QUOTE] 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE PERTINENT POINTS ARE THAT THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED THE IMPUGNED SHARES THROUGH OFF MARKET TRANSACTION. THE PURCHASE PRICE WAS NOT PAID BY CHEQUE, BUT IT WAS CLAIMED TO HAVE BEEN ADJUSTED AGAINST THE SPECULATI ON PROFIT CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE. THE SMALL DIFFERENCE OF RS.32 4/- WAS CLAIMED TO HAVE BEEN PAID BY WAY OF CASH. IT IS ALSO PERTINENT TO NOTE T HAT THE ALLEGED SPECULATION TRANSACTION CARRIED OUT EARLIER TO THE PURCHASE OF SHARES OF PRIME CAPITAL MARKETS LTD WAS ALSO CLAIMED TO HAVE BEEN CARRIED IN OFF MA RKET TRANSACTION. ANOTHER IMPORTANT POINT IS THAT THE ASSESSEE DID NOT POSSES S COPIES OF SHARE CERTIFICATES OR COPIES OF SHARE TRANSFER FORMS. THE BROKER M/S KHAN DELWAL & CO., HAS EXPRESSED ITS INABILITY TO FURNISH COPIES OF CONTRACT NOTES A VAILABLE WITH IT AND ALSO FAILED TO FURNISH ITS BOOKS OF ACCOUNT TO SUBSTANTIATE THE TR ANSACTIONS OF PURCHASE OF SHARES BY THE ASSESSEE. SINCE THE IMPUGNED TRANSACTION WAS AN OFF MARKET TRANSACTION, THE PURCHASE TRANSACTION COULD NOT BE CONFIRMED BY THE KOLKATA STOCK EXCHANGE. THE SAID SHARES WERE EARLIER HELD BY M/S BRIGHTSUN MERC HANTS (P) LTD AND THE ASSESSEE HAD PURCHASED THE SHARES FROM THEM. THE NOTICE ISSU ED TO M/S BRIGHTSUN MERCHANTS (P) LTD WAS RETURNED UNSERVED BY THE POST AL AUTHORITIES WITH, THE REMARK 'UNKNOWN'. IN THIS REGARD, THE ASSESSEE HAD REPLIED THAT THE NAME OF THE COMPANY WAS WRONGLY MENTIONED BY THE AO AS M/S BRIG HTSUNS (P) LTD AND HENCE THE NOTICE GOT RETURNED. BUT THERE IS NOT COMMENT A BOUT THE ADDRESS, MEANING THEREBY, THE AO HAD ISSUED NOTICE TO THE CORRECT AD DRESS ONLY AND HENCE THE SLIGHT VARIATION IN THE NAME OF THE COMPANY WOULD NOT NORM ALLY MAKE ANY DIFFERENCE. HENCE THE FACT THAT THE NOTICE WAS RETURNED BACK ON LY SHOWS THAT THE SELLER OF THE SHARES COULD NOT BE IDENTIFIED. ALL THESE DISCUSSIO NS WOULD SHOW THAT THE PURCHASE TRANSACTION COULD NOT BE CROSS VERIFIED BY THE ASSE SSING OFFICER. 10. ONE MORE POINT TO BE NOTED HERE IS THAT THE SPE CULATION TRANSACTIONS CAN BE ENTERED ONLY ON PAYMENT OF MARGIN MONEY. BUT THE DE TAILS OF SAID PAYMENT ARE NOT AVAILABLE. WITH REGARD TO THE QUERY RAISED BY THE A O RELATING TO MARGIN MONEY, THE BROKER M/S D.K. KHANDELWAL & CO HAS REPLIED IN THE CONTEXT OF PURCHASE OF SHARES 11 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 11 OF M/S PRIME CAPITAL MARKETS LTD AND NOT IN THE CON TEXT OF SPECULATION TRANSACTIONS. THUS, IT IS SEEN THAT THE QUESTION OF KEEPING MARGIN MONEY FOR SPECULATION TRANSACTIONS REMAINS UNANSWERED BOTH BY THE ASSESSEE AS WELL AS BY THE SHARE BROKER CITED ABOVE. FURTHER THE SPECULATI ON TRANSACTION IS ALSO CLAIMED TO BE AN OFF MARKET TRANSACTION, WHICH FURTHER CAST S SHADOW OF DOUBT OVER THE CLAIM PUT FORTH BY THE ASSESSEE. 11. THOUGH THE ASSESSEE HAS CLAIMED TO HAVE PURCHAS ED THE SHARES IN PHYSICAL FORMAT IN MAY, 2004, SHE CHOSE TO D-MAT THE SAME ON LY IN JUNE 2005, JUST TWO MONTHS PRIOR TO ITS SALE. THE SHARES WERE SOLD THRO UGH A SHARE BROKER NAMED SANJU KABRA, WHO IS INDICTED BY SEBI FOR RIGGING THE PRIC ES OF PENNY STOCK SHARES. IT IS PERTINENT TO NOTE THAT THE SHARE PRICES OF MIS PRIM E CAPITAL MARKETS LTD WENT FROM RS.5.17 (MAY, 2004) TO RS.279.50 (SEP., 2005). THE ASSESSEE COULD NOT FURNISH ANY REASONS OR AT-LEAST STOCK MARKET NEWS TO SUPPORT TH E ABNORMAL INCREASE IN THE PRICES OF THE ABOVE SAID SHARES. THE FINANCIAL STAT EMENTS OF THE ABOVE SAID COMPANY WERE ALSO NOT PRODUCED. THOUGH M/S PRIME CA PITAL MARKETS LTD HAS CONFIRMED THE ENTRIES IN ITS BOOKS OF ACCOUNT WITH REGARD TO THE PURCHASES MADE BY THE ASSESSEE, IT COULD NOT IDENTIFY THE NAME OF PUR CHASER TO WHOM THE SHARES WERE SOLD BY THE ASSESSEE. 12. WE HAVE ALREADY SEEN THAT THE TAX AUTHORITIES H AVE APPLIED THE TEST OF HUMAN PROBABILITIES EXPLAINED BY THE HON'BLE SUPREME COUR T IN THE CASES OF SUMATI DAYAL AND DURGA PRASAD MORE (SUPRA) TO DISBELIEVE THE CLA IM OF LONG TERM CAPITAL GAINS PUT FORTH BY THE ASSESSEE. WE NOTICE THAT THE TEST OF HUMAN PROBABILITIES WAS NOT APPLIED BY THE CO-ORDINATE BENCHES OF-TRIBUNAL IN T HE CASE OF SHRL AVLNASH KANTILAL JAIN (SUPRA) AND MR. SHYAM R PAWAR (SUPRA). HENCE, IN OUR VIEW,' THE ASSESSEE CANNOT TAKE SUPPORT FROM THE ABOVE SAID DECISIONS. WE FURTHER NOTICE THAT THE ID CIT(A) HAS PLACED RELIANCE ON THE DECISION DATED 04 .1.2011 RENDERED BY ITAT DELHI IN THE CASE OF HARESH WIN CHADDHA VS. DDIT, W HEREIN THE TRIBUNAL HAS EXPRESSED THE VIEW THAT THERE IS NO PRESUMPTION IN LAW THAT THE AO IS SUPPOSED TO DISCHARGE AN IMPOSSIBLE BURDEN TO ASSESS THE TAX LI ABILITY BY DIRECT EVIDENCE ONLY AND TO ESTABLISH THE EVASION BEYOND DOUBT AS IN CRI MINAL PROCEEDINGS. FURTHER IT WAS HELD THAT THE AO CAN ASSESS ON CONSIDERATION OF MATERIAL AVAILABLE ON RECORD, SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT, PREPONDER ANCE OF PROBABILITIES AND NATURE OF INCRIMINATING INFORMATION /EVIDENCE AVAIL ABLE ON RECORD. 13. IN THE CASE OF SMT. JAMNADEVI AGRAWAL (SUPRA), THE HON'BLE BOMBAY HIGH COURT HAS UPHELD THE ORDER OF TRIBUNAL ON THE REASO NING THAT NO FAULT CAN BE FOUND WITH THE FINDINGS RECORDED BY THE TRIBUNAL. A PERUS AL OF THE ABOVE SAID ORDER WOULD SHOW THAT THE REVENUE IN THE ABOVE SAID CASE HAD CONTENDED THAT THE ASSESSEES IN THE GROUP HAVE' PURCHASED- AND SOLD SH ARES OF SIMILAR COMPANIES THROUGH THE SAME BROKER. FURTHER THE PURCHASE PRICE S AND SALE PRICES WERE 12 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 12 SUPPORTED BY PRODUCING THE EVIDENCES TO SHOW THAT T HE SAID TRANSACTIONS WERE UNDERTAKEN AT THE RATES PREVAILING ON THE RESPECTIV E DATES. UNDER THESE SET OF FACTS, THE HIGH COURT HELD THAT THE FINDINGS GIVEN BY THE TRIBUNAL CANNOT BE FOUND FAULT WITH AND FURTHER HELD THAT THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL (SUPRA) WAS NOT APPLICABLE. IN THE CASE OF SHRL MUKESH RATILAL MAROLLA (SUPRA), THE HON'BLE BOMBAY HIGH CO URT HAS OBSERVED THAT THE ASSESSEE HAS FURNISHED COPIES OF SHARE CERTIFICATES TO SHOW THAT THE SHARES WERE IN FACT TRANSFERRED TO THE NAME OF THE ASSESSEE BEFORE IT. FURTHER THERE WAS NO ALLEGATION THAT THE PRICES OF SHARES PURCHASED BY T HE ASSESSEE IN THE CASE BEFORE HIGH COURT WERE MANIPULATED. 14. HOWEVER, IN THE INSTANT CASE, THE ASSESSEE COUL D NOT PRODUCE THE COPIES OF SHARE CERTIFICATES AND COPIES OF SHARE TRANSFER FOR MS. THE TRANSACTION OF PURCHASE OF SHARES COULD NOT BE CROSS VERIFIED. THE SHARES O F M/S PRIME CAPITAL MARKETS LTD WAS DECLARED AS 'PENNY STOCK' BY SEBI AND THE BROKE R SANJU KABRA, THROUGH WHOM THE SHARES WERE SOLD BY THE ASSESSEE WAS INDIC TED FOR MANIPULATING THE PRICES OF PENNY STOCK SHARES. HENCE, IN OUR VIEW, T HE TAX AUTHORITIES HAVE RIGHTLY APPLIED THE TEST OF HUMAN PROBABILITIES TO EXAMINE THE CLAIM OF PURCHASE AND SALE OF SHARES MADE BY THE ASSESSEE. 15. WE NOTICE THAT THE MUMBAI D BENCH HAS CONSIDERE D AN IDENTICAL ISSUE IN THE CASE OF SHRL RAMESH KUMAR D JAIN IN ITA NO.3192/MUM /2010 RELATING TO ASSESSMENT YEAR 2006-07. THE TRIBUNAL, VIDE ITS ORD ER DATED 15-06-2011, REJECTED THE CLAIM OF MAKING SPECULATION GAINS ON THE REASON ING THAT SPECULATION TRANSACTIONS COULD NOT HAVE BEEN ENTERED INTO BY TH E ASSESSEE THEREIN WITHOUT PAYING MARGIN MONEY TO THE BROKER. ACCORDINGLY, THE CLAIM OF PURCHASE OF SHARES WAS REJECTED BY THE TRIBUNAL AND CONSEQUENTLY THE C LAIM OF SALE OF SHARES WAS ALSO REJECTED. IT IS PERTINENT TO NOTE THAT, IN THE DECI SIONS RELIED UPON BY THE ASSESSEE, THE CLAIM OF SPECULATION PROFITS WAS NOT CONSIDERED BY THE TRIBUNAL. IN YET ANOTHER CASE OF SHRL ARAVING M KARIYA CONSIDERED BY A BE NCH OF MUMBAI ITAT, THE TEST OF HUMAN PROBABILITIES WAS APPLIED TO REJECT THE AI M OF PROFIT REALIZED ON' SALE OF PENNY STOCKS. THERE SHOULD NOT BE ANY DISPUTE THAT THE ONUS TO PRODUCE NECESSARY EVIDENCES TO CONVINCINGLY SHOW THAT THE SHARES WERE PURCHASED AND SOLD AT THE PRICES CLAIMED ALWAYS LIES UPON THE ASSESSEE. OUR V IEW FINDS SUPPORT FROM THE DECISION RENDERED BY HON 'BLE GUWAHATL HIGH COURT I N THE CASE OF CIT VS. SMT. JASVINDER KAUR (357 ITR 638). 16. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE DECISIONS RELIED UPON BY THE ASSESSEE CANNOT BE TAKEN SUPPORT OF BY THE ASSESSEE FOR THE REASONS DISCUSSED SUPRA. ACCORDINGLY, WE ARE OF THE VIEW TH AT THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER BY APPLYING THE TEST OF HUMAN PROBABILITIES. 13 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 13 1 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. [ UNQUOTE] 9. RELIANCE IS ALSO PLACED IN THE CASE OF SOMNATH M AINI VS ITO (226) 100 TT] 917 WHEREIN THE HON'BLE CHANDIGARH BENCH OF ITAT HELD T HAT IF FACTS AND CIRCUMSTANCES SO WARRANT THAT IT DOES NOT ACCORD WI TH THE TEST OF HUMAN PROBABILITIES, TRANSACTIONS HAVE TO BE HELD TO BE N ON-GENUINE. [ QUOTE] 3. THE RELEVANT FACTS BRIEFLY STATED ARE THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT ASSESSEE HAD INCU RRED A LONG-TERM CAPITAL LOSS ON ACCOUNT OF SALE OF GOLD JEWELLERY DECLARED UNDER THE VDIS, 1997, AMOUNTING TO RS. 19,87,705 AND ALSO THERE WAS A SHORT-TERM CAPIT AL GAIN NEAR TO THIS AMOUNT OF LONG-TERM CAPITAL LOSS AMOUNTING TO RS. 20,36,700 R ESULTING INTO NET CAPITAL GAIN OF RS. 48,995. THE AO ON PERUSAL OF RECORD FURTHER OBS ERVED THAT IN THE CASE OF A FAMILY MEMBER OF THE SAME ASSESSEE SHRI D.C. MAINI, IN THE SAME ASSESSMENT YEAR, SIMILAR EXERCISE HAS BEEN DONE BY THE ASSESSEE WHER EIN A LONG-TERM CAPITAL LOSS OF RS. 11,59,066 HAD BEEN INCURRED ON ACCOUNT OF SALE OF GOLD JEWELLERY DECLARED UNDER THE VDIS AND SHORT-TERM CAPITAL GAIN OF RS. 1 1,75,100 RESULTING INTO A NET GAIN OF RS. 16,034. ON GOING THROUGH THE NATURE OF TRANSACTIONS, THE AO DOUBTED THE GENUINENESS OF THE SHORT-TERM CAPITAL GAIN IN T HE CASE OF THE ASSESSEE AND HE MADE FURTHER INQUIRY THAT DURING THE YEAR ASSESSEE HAD PURCHASED 45,000 SHARES OF W ANKUR INTERNATIONAL LTD. AT VARYING RATES FROM R S. 2.06 TO RS. 3.1 PER SHARE AND SOLD THEM WITHIN A SHORT SPAN OF SIX-SEVEN MONTHS A T THE RATE VARYING FROM RS. 47.75 TO RS. 55. THESE SHARES WERE PURCHASED THROUG H A BROKER MUNISH ARORA & CO. AND SOLD THROUGH ANOTHER BROKER M/S S.K. SHARMA & CO. THE AO TOOK BY SURPRISE THE ASTRONOMICAL RISE IN SHARE PRICE OF A COMPANY FROM RS. 3 TO RS. 55 AND STARTED FURTHER INQUIRY. THE AO ISSUED NOTICE UNDER SECTION 131 TO BOTH THE BROKERS FROM WHOM SHARES WERE PURCHASED AND SOLD AND STATEM ENTS WERE RECORDED. THE AO ALSO ANALYZED THE BALANCE SHEET OF- M/S ANKUR . INT ERNATIONAL LTD. TO JUSTIFY AS TO HOW THE SHARE PRICE OF A COMPANY CAN GO UP FROM A . MERE RS. 3 TO RS. 55 IN A SHORT SPAN OF SIX TO SEVEN MONTHS' TIME. THE. AO MADE DET AILED AND EXTRANEOUS EXERCISE OF FINDING THE FUNDAMENTAL OF THE SHARE OF THE COMP ANY BY DIFFERENT METHODS AND CONCLUDED THAT THESE SHARES WERE NOT GENUINE AND TR ANSACTIONS WERE SO ARRANGED SO AS TO COVER UP THE LOSS INCURRED ON ACCOUNT OF SALE OF JEWELLERY ONLY. THE AO ALSO RECORDED THE FINDING THAT TRANSACTIONS WERE MADE AT LUDHIANA WHERE ALSO THE SHARE PRICE OF THE COMPANY IS QUOTED BUT MAXIMUM VALUE OF THE SHARE ARE QUOTED WAS RS. 17 BUT THAT WAS ONLY IN JULY, 1997, .I.E. LONG BEFO RE THE SHARES WERE SOLD BY THE ASSESSEE TO M/S S.K. SHARMA & CO. IN THE OF MONTHS OF FEBRUARY AND MARCH, 1998. THE AO ALSO RECORDED THE FINDING THAT ALTHOUGH THE SHARES WERE TRANSFERRED IN THE NAME OF THE ASSESSEE, THEY WERE STILL LYING IN THE NAME OF ASSESSEE MUCH AFTER THE 14 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 14 SALE TO M/S S.K. SHARMA & CO. THE LEARNED CIT(A) DE LETED THE ADDITION ON THE GROUND THAT BOTH THE BROKERS FROM WHOM THE SHARES H AVE BEEN PURCHASED AND SOLD WERE CALLED UNDER SECTION 131 BY THE AO. BOTH HAVE CONFIRMED THE SALE AND PURCHASE OF SAID SHARES. OTHER ASPECT OF THE FACTS AND CIRCUMSTANCES RAISED BY THE AO WAS NOT DISCUSSED BY THE CIT(A) IN HIS ORDER. 4. IN APPEAL BEFORE US, THE LEARNED DEPARTMENTAL RE PRESENTATIVE CONTENDED THAT IT IS HIGHLY IMPROBABLE THAT SHARES OF A' COMPANY GO UP S O HIGH IN FEW MONTHS' TIME. THE LEARNED DEPARTMENTAL REPRESENTATIVE TOOK US THR OUGH VARIOUS PAGES OF THE ASSESSMENT ORDER AND THE PAPER BOOK WHEREIN SALE BI LL OF THE SHARES WITH THE SAID M/S S.K. SHARMA &' CO. WERE ALSO FILED. THE LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT SHARES HAVE BEEN SOLD AT LUDHIANA WHEN ACTUALLY STOCK EXCHANGE WAS NOT FUNCTIONAL - A FACT WHICH IS ALSO RECORDED BY THE AO. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO POINTED OUT THAT S HARES HAVE BEEN SOLD TO M/S S.K. SHARMA & CO. ON 9TH FEB., 1998 AND 23'D MARCH, 1998, WHEREAS FROM THE STATEMENT OF ACCOUNT OF M/S S.K. SHARMA & CO., PAYM ENTS HAVE BEEN RECEIVED BY THE ASSESSEE FROM 31 ST MARCH, 1998 TO 27TH JULY, 1998, MEANING THEREBY T HAT HAD THE TRANSACTIONS BEEN GENUINE, PAYMENT COULD HAVE B EEN RECEIVED IN ONE GO BY S.K. SHARMA & CO. THE LEARNED DEPARTMENTAL REPRESENTATIV E POINTED OUT THAT ANY SUCH TYPE OF TRANSACTIONS RELATING TO THESE TYPES OF COM PANY OPERATING ON STOCK EXCHANGES PAYMENTS ARE RECEIVED IN PIECEMEAL WHEREA S IN NORMAL MARKET SHARE TRANSACTIONS, CONTRACT NOTES ARE ISSUED BY THE BROK ER AND PAYMENTS ARE RECEIVED IN ONE GO. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALS O ARGUED THAT AS PER THE STATEMENT OF S.K. SHARMA & CO. RECORDED AT THE TIME OF INQUIRY, HE DID NOT PRODUCE ANY BOOKS OF ACCOUNT AND IDENTITY OF PERSONS TO WHO M THE SHARES HAVE BEEN SOLD. ORDINARILY, WHEN BROKERS ARE ENQUIRED ABOUT SHARE T RANSACTIONS, THEY KEEP PROPER BOOKS OF ACCOUNT FROM WHOM SHARES HAVE BEEN PURCHAS ED AND SOLD. HOWEVER, IN THIS CASE, S.K. SHARMA & CO. FAILED TO PROVIDE THE NAMES OF PURCHASERS OF THE SHARES AND IDENTITY OF THE PURCHASERS. 5. ON THE OTHER HAND, THE LEARNED AUTHORISED REPRES ENTATIVE CONTENDED THAT IN THE SHARE MARKET, SHARE PRICE DOES NOT MOVE ACCORDING T O THE FUNDAMENTALS OF A COMPANY. THEY GO UP AND DOWN AS PER SENTIMENTS PREV AILING AT THAT TIME. TO CONTROVERT, THE ARGUMENT OF THE LEARNED DEPARTMENTA L REPRESENTATIVE, HE ARGUED THAT SHARE PRICES ARE QUOTED AT JAIPUR STOCK EXCHAN GE AND WERE QUOTED ON THE RELEVANT DATE OF SALE AT THE SAME PRICE ON WHICH SH ARES WERE SOLD TO M/S S.K. SHARMA & CO. HOWEVER, THE LEARNED DEPARTMENTAL REPR ESENTATIVE CONTROVERTED HIS ARGUMENT BY SAYING THAT VOLUME OF TRANSACTIONS ON T HE RELEVANT DATES IS ONLY 600 SHARES ON 9TH FEB., 1998 AND 1000 SHARES ON 23RD MA RCH, 1998 WHEREAS NUMBER OF SHARES INVOLVED IN THE TRANSACTIONS WITH S.K, SHARM A & CO. ARE 45000 SHARES. 15 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 15 6. AFTER HEARING THE RIVAL SUBMISSIONS, GOING THROU GH THE ORDERS OF AUTHORITIES BELOW AND PAPER BOOK, WE FIND THAT M/S ANKUR INTERN ATIONAL LTD., ALTHOUGH IT IS A QUOTED COMPANY, ITS SHARES WERE NOT BEING TRANSACTE D AT LUDHIANA STOCK EXCHANGE AT, THE RELEVANT TIME. SHARES HAVE BEEN PURCHASED A ND SOLD THROUGH THE BROKERS AND PAYMENTS HAVE BEEN RECEIVED CHEQUE ON DIFFERENT DAT ES AS PER THE STATEMENT OF ACCOUNT OF M/S S.K. SHARMA & CO, FACTUAL MATRIX OF THE CASE FROM START OF THE PURCHASE OF SHARES AT THE RATE OF RS. 3 TO THE SALE OF SHARES AT RS. 55 IN A SHORT SPAN OF TIME AND SHARES BEING NOT, QUOTED AT LUDHIANA ST OCK EXCHANGE AND THE WAY IN WHICH DIFFERENT, INSTALMENT PAYMENTS HAVE BEEN RECE IVED FROM THE BROKERS AND NON-AVAILABILITY OF THE RECORDS OF THE BROKERS AND THE SHARES REMAINING IN THE NAME OF ASSESSEE EVEN LONG AFTER THE SALE OF THE SHARES DOES NOT STAND THE TEST OF PROBABILITIES. AS RIGHTLY POINTED OUT BY THE LEARNE D DEPARTMENTAL REPRESENTATIVE, THESE TYPES OF COMPANIES FUNCTION IN THE CAPITAL MA RKET WHOSE SALE PRICE IS MANIPULATED TO ASTRONOMICAL HEIGHT ONLY TO CREATE T HE ARTIFICIAL TRANSACTION IN THE FORM OF CAPITAL GAIN. SURROUNDING CIRCUMSTANCES DIF FER FROM THE NORMAL SHARE MARKET TRANSACTIONS IN WHICH THEY ARE ORDINARILY CA RRIED OUT. TAKING ALL THE STEPS TOGETHER, FINAL CONCLUSION DOES NOT ACCORD WITH THE HUMAN PROBABILITIES. THE HON'BLE SUPREME COURT IN THE CASE OF CUT V. DURGA P RASAD MORE HELD AS UNDER: IT IS A STORY THAT DOES NOT ACCORD WITH HUMAN PROBA BILITIES. IT IS STRANGE THAT HIGH COURT FOUND FAULT WITH THE TRIBUNAL FOR N OT SWALLOWING THAT STORY. IF THAT STORY IS FOUND TO BE UNBELIEVABLE AS THE TRIBUNAL HAS FOUND AND IN OUR OPINION, RIGHTLY THAT THE DECISIONS REMA INS THAT THE CONSIDERATION FOR THE SALE PROCEEDED FROM THE ASSES SEE AND THEREFORE, IT MUST BE ASSUMED TO BE HIS MONEY. IT IS SURPRISING THAT THE HIGH COURT HAS FOUND FAUL T WITH THE ITO FOR NOT EXAMINING THE WIFE AND THE FATHER-IN-LAW OF THE ASS ESSEE FOR PROVING THE DEPARTMENT'S CASE, 'ALL THAT WE CAN SAY IS THAT THE HIGH COURT HAS IGNORED THE FACTS OF LIFE. IT IS UNFORTUNATE THAT, THE HIGH COURT HAS TAKEN A SUPERFICIAL VIEW OF THE ONUS THAT LAY ON THE DEPART MENT. 7. THE LEARNED CIT(A) ONLY GOT SWAYED BY THE ISSUAN CE OF NOTICE BY THE AO UNDER SECTION 131 TO BOTH THE BROKERS FROM WHOM SHARES WE RE PURCHASED AND SOLD AND CAME TO THE CONCLUSION THAT SHARE TRANSACTIONS WERE GENUINE OVERLOOKING THE MATERIAL GATHERED BY THE AO FROM THE STATEMENTS REC ORDED OF BROKER M/S S.K. SHARMA & CO. AND THE OTHER FACTS AND CIRCUMSTANCES THAT VOLUME OF TRANSACTIONS OF JAIPUR STOCK EXCHANGE IS ONLY 600 SHARES AND 1000 S HARES. PAYMENTS HAVE BEEN RECEIVED FROM THE BROKERS ONLY IN INSTALMENTS OVER A PERIOD OF 6-7 MONTHS. IT IS TRUE THAT WHEN TRANSACTIONS ARE THROUGH CHEQUES, IT LOOKS LIKE REAL TRANSACTION BUT AUTHORITIES ARE PERMITTED TO LOOK BEHIND THE TRANSA CTIONS AND FIND -OUT THE MOTIVE BEHIND TRANSACTIONS. GENERALLY, IT IS EXPECTED THAT APPARENT IS REAL BUT IT IS NOT 16 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 16 SACROSANCT. IF FACTS AND CIRCUMSTANCES SO WARRANT T HAT IT DOES NOT ACCORD WITH THE TEST OF HUMAN PROBABILITIES, TRANSACTIONS HAVE BEEN HELD TO BE NON-GENUINE, IT IS HIGHLY IMPROBABLE THAT SHARE PRICE OF A WORTHLESS C OMPANY CAN GO FROM RS. 3 TO RS. 55 IN A SHORT SPAN OF TIME. MERE PAYMENT BY CHEQUE AND RECEIPT BY CHEQUE DOES NOT. RENDER A TRANSACTION GENUINE. CAPITAL GAIN TAX WAS CREATED TO OPERATE IN A REAL WORLD AND NOT THAT OF MAKE BELIEF. FACTS OF THE CAS E ONLY LEAD TO THE INFERENCE THAT THESE TRANSACTIONS ARE NOT GENUINE AND MAKE BELIEVE ONLY TO OFFSET THE LOSS INCURRED ON THE SALE OF JEWELLERY DECLARED UNDER VDIS. IN TH E TOTALITY OF FACTS AND CIRCUMSTANCES OF THIS CASE AND MATERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE I MPUGNED ADDITION. WE, ACCORDINGLY SET ASIDE THE ORDER OF THE CITCA) AND R ESTORE THAT OF THE AO. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED. MOREOVER ON THE JUDGMENTS RELIED UPON BY THE APPELL ANT FALL FLAT IN THE FACE OF THE FACTS OF THE CASE AND THE PREPONDERANCE OF PROBABIL ITY AGAINST THE ASSESSEE. IN A DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF SANJAY BIMALCHAND JAIN VS PR.CIT BY THE ORDER DATED 10TH APRIL, 2017 HAVE UPHELD THE ORDERS OF THE .HON'BLE ITAT, NAGPUR BENCH DATED 18.07.2016 IN ITA NO. 61/NAG/2013 IN SANJAY BIMALCHAND LAIN VS ITO, WARD-4(2), NAGPUR, W HEREIN IT WAS HELD THAT ON THE FACTS EMERGENT IN THE CASE, AND THE PREPONDERAN CE OF PROBABILITIES, ENTIRE CAPITAL GAINS CLAIMS WERE TO BE TREATED AS FICTITIO US AND BOGUS. BOGUS L TCG FROM PENNY STOCKS: THE ASSESSEE HAS NOT TENDERED COGENT EVIDENCE TO EXPLAIN HOW THE SHARES IN AN UNK NOWN COMPANY WORTH RS.5 HAD JUMPED TO RS.485 IN NO TIME. THE FAN TASTIC SALE PRICE WAS NOT AT ALL POSSIBLE AS THERE WAS NO ECONOMIC OR FINANCIAL BASIS TO JUSTIFY THE PRICE RISE. THE ASSESSEE HAD INDULGED I N A DUBIOUS SHARE TRANSACTION MEANT TO ACCOUNT FOR THE UNDISCLOSED IN COME IN THE GARB OF LONG TERM CAPITAL GAIN. THE GAIN HAS ACCORDINGLY TO BE ASSESSED AS UNDISCLOSED CREDIT U/S 68. IN VIEW OF THE ABOVE DISCUSSION, I FIND NO INFIRMIT Y IN THE ORDERS OF THE LD. AO, AND I CONFIRM THE SAME, HOLDING THE CLAIM OF LTCG OF RS .25,21,600/- TO BE BOGUS. AS A NATURAL COROLLARY, I ALSO HOLD THAT THE LD. AO WAS ALSO CORRECT IN ADDING BACK AN AMOUNT OF RS.60,041/- UNDER SEC 69C OF THE INCOME T AX ACT. THE SAME ALSO STANDS CONFIRMED. THEREFORE THESE GROUNDS ARE DISMISSED. 17 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 17 7. I HAVE GIVEN MY THOUGHTFUL CONSIDERATION TO RIVA L CONTENTIONS. LEARNED DEPARTMENTAL REPRESENTATIVES SOLE CONTENTION AS PE R THE RELEVANT FACTS AND CIRCUMSTANCES NARRATED IN THE PRECEDING PARAGRAPHS IS THAT THE ASSESSEE HAS DERIVED HIS LONG TERM CAPITAL GAIN UNDER ISSUE FROM A DUBIOUS R OUTE OF RIGGING IN VALUE OF HIS SHARES IN THE TWO SCRIPS. HE REFERS TO THE RELEVANT PAPER BOOK AS WELL AS TO THIS EFFECT FILED ON RECORD AT ASSESSEES BEHEST SHOWING COMPUTATION OF INCOME, FINANCIAL STATEMENT DISCLOSING LONG TERM CAPITAL GAINS, INVESTMENT DET AILS, PURCHASE OF SHARES, DETAILS OF CONSIDERATION RECEIPT ON GROSS AND NET BASIS, PURCH ASE BILLS, PROOF OF PAYMENT, DEMAT STATEMENTS, CONTRACT NOTE(S), TRANSACTIONS AND BALA NCE CONFIRMATION, SHARE PROGRESS LEDGER ACCOUNT ETC. HE VEHEMENTLY CONTENDS THEREFOR E THAT ALL THIS ARRANGEMENT HAS BEEN TAKEN RECOURSE BY THE ASSESSEE IN ORDER TO DEFRAUD THE REVENUE. IT IS EMPHASIZED THAT BOTH THE LOWER AUTHORITIES HAVE RIGHTLY INVOKED SEC TION 68 IN THE GIVEN FACTS AND CIRCUMSTANCES OF THIS CASE TO TREAT THE IMPUGNED LO NG TERM CAPITAL GAIN AS ASSESSEES UNEXPLAINED CASH CREDITS. MY ATTENTION IS INVITED T IME AND AGAIN TO THE FACT THAT DIT(INVESTIGATION) HAS FOUND SOME ENTRY OPERATORS S PREAD THROUGHOUT THE COUNTRY TO BE INDULGED IN SUCH KIND OF BUSINESS BY RIGGING SCRIPS PRICES. I FIND NO MERIT IN ALL THESE CONTENTIONS RAISED AT THE REVENUES BEHEST. THE FA CT REMAINS THAT THERE IS NOT EVEN A SINGLE EVIDENCE OR MATERIAL AGAINST THE ASSESSEE AP ART FROM MERE ASSUMPTIONS AND PRESUMPTIONS HEREINABOVE. THIS TRIBUNAL COORDINATE BENCHS DECISION IN CASE OF NAVNEET AGARWAL VS ITO ITA NO.2281/KOL/2017 DATED 20.07.201 8 HAS DECIDED THE VERY ISSUE IN ASSESSEES FAVOUR WITH THE FOLLOWING ELABORATE DISC USSION :- 10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMI SSIONS, PERUSAL OF THE PAPERS ON RECORD AND ORDER OF THE LOWERS AUTHORITIE S BELOW, AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS. 11. THE ASSESSEE IN THIS CASE HAS STATED THE FOLLOW ING FACTS AND PRODUCED THE FOLLOWING DOCUMENTS AS EVIDENCES: 1. THE ASSESSEE HAD MADE AN APPLICATION FOR ALLOTMENT OF 50000 EQUITY SHARES OF SMART CHAMPS IT AND INFRA LTD. AND SHE WAS ALLOTT ED THE SHARE ON 3 RD DECEMBER 18 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 18 2011 (COPY OF APPLICATION FORM, INTIMATION OF ALLOT MENT AND SHARE CERTIFICATE PAPER BOOK AT PAGE 8 TO 10). 2. THE PAYMENT FOR THE ALLOTMENT OF SHARES WAS MADE TH ROUGH AN ACCOUNT PAYEE CHEQUE (COPY OF THE BANK STATEMENT EVIDENCING THE S OURCE OF MONEY AND PAYMENT MADE TO SMART CHAMPS IT & INFRA LTD. FOR SUCH SHA RES ALLOTTED IS PLACED IN THE PAPER BOOK AT PAGE NO. 11). 3. ANNUAL RETURN NO. 20B WAS FILED WITH REGISTRAR OF C OMPANIES BY SMART CHAMPS IT & INFRA LTD SHOWING THE ASSESSEES NAME AS SHAREHO LDER (COPY OF ANNUAL RETURN NO. 20B FILED WITH REGISTRAR OF COMPANIES BY SMART CHAMPS IT & INFRA LTD. IS PLACED IN THE PAPER BOOK AT PAGE NO. 12 TO 18.) 4. THE ASSESSEE LODGED THE SAID SHARES WITH THE DEPOSI TORY M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. WITH A DEMAT REQUEST ON 11 TH FEBRUARY, 2012. THE SAID SHARES WERE DEMATERIALIZED ON 31 ST MARCH, 2012 (COPY OF DEMAT REQUEST SLIP ALONG WITH THE TRANSACTION STATEMENT IS PLACED IN T HE PAPER BOOK AT PAGE NO. 19 TO 21). 5. ON 24.01.2013, THE HONBLE BOMBAY HIGH COURT APPROV ED THE SCHEME OF AMALGAMATION OF SMART CHAMPS IT AND INFRA LTD. WI TH CRESSANDA SOLUTIONS LTD. IN ACCORDANCE WITH THE SAID SCHEME OF AMALGAM ATION, THE ASSESSEE WAS ALLOTTED 50000 EQUITY SHARES OF M/S. CRESSANDA SOL UTIONS LTD. THE DEMAT SHARES ARE REFLECTED IN THE TRANSACTION STATEMENT OF THE P ERIOD FROM 1 ST NOVEMBER 2011 TO 31 ST DECEMBER, 2013 (A COPY OF THE SCHEME OF AMALGAMATI ON ALONGWITH COPY OF ORDER OF THE HONBLE BOMBAY HIGH COURT AND A COPY O F THE LETTER TO THIS EFFECT SUBMITTED BY CRESSANDA SOLUTIONS LTD. TO BOMBAY S TOCK EXCHANGE IS PLACED IN THE PAPER BOOK AT PAGE NO 22 TO 43.) 6. THE ASSESSEE SOLD 50000 SHARES COSTING RS. 500000/- THROUGH HER BROKER SKP STOCK BROKING PVT. LTD WHICH WAS A SEBI REGISTERED BROKER AND EARNED A LONG TERM CAPITAL GAIN OF RS. 2,18,13,072/-. (COPY OF TH E BANK STATEMENT, BROKERS CONTRACT NOTE TOGETHER WITH THE DELIVERY INSTRUCTIO NS GIVEN TO THE DP AND BROKERS CONFIRMATION IS ALSO PLACED IN THE PAPER BOOK AT PA GE NO 44 TO 65). 7. COPY OF FORM NO. 10DB ISSUED BY THE BROKER, IN SUPP ORT OF CHARGING OF S.T.T. IN RESPECT OF THE TRANSACTIONS APPEARING IN THE LEDGER IS PLACED IN THE PAPER BOOK AT PAGE NO. 66. 8. THE HOLDING PERIOD OF THE SAID SCRIP IS MORE THAN O NE YEAR (ABOVE 500 DAYS) THROUGH IN ORDER TO GET THE BENEFIT OF CLAIM OF LON G TERM CAPITAL GAIN THE HOLDING PERIOD IS REQUIRED TO BE 365 DAYS. 19 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 19 12.THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAVE REJECTED THESE EVIDENCES FILED BY THE ASSESSEE BY REFERRING TO MODUS OPERAN DI OF PERSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH HIS EXEMPT FROM INCOM E TAX. ALL THESE OBSERVATIONS ARE GENERAL IN NATURE AND ARE APPLIED ACROSS THE BO ARD TO ALL THE 60,000 OR MORE ASSESSEES WHO FALL IN THIS CATEGORY. SPECIFIC EVIDE NCES PRODUCED BY THE ASSESSEE ARE NOT CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVI DENCE COLLECTED FROM THIRD PARTIES IS CONFRONTED TO THE ASSESSES. NO OPPORTUNI TY OF CROSS-EXAMINATION OF PERSONS, ON WHOSE STATEMENTS THE REVENUE RELIES TO MAKE THE ADDITION, IS PROVIDED TO THE ASSESSEE. THE ADDITION IS MADE BASED ON A RE PORT 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 GUIDE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILI TIES, HUMAN BEHAVIOR AND DISCOVERY OF THE MODUS OPERANDI ADOPTED IN EARNING ALLEGED BOGUS LTCG AND STCG, THAT HAVE SURFACED DURING INVESTIGATIONS, SHO ULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCLUSION AS TO WHETHER THE CLAIM IN GENUINE OR NOT. 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 ASSESSEE IN QUESTI ON 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 IMPL Y 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 CHANNE LS. THIS ALLEGATION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVENUE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIGATIONS OFFICE BY WAY OF STATEMENTS RECORDED ETC. HAS TO ALSO BE BROUGHT ON RECORDIN EACH CASE, WHEN SUCH A STATEMENT, EVIDENCE ETC. IS RELIED UPON BY THE REVENUE TO MAKE ANY ADDITIONS . OPPORTUNITY OF CROSS EXAMINATION HAS TO BE PROVIDED TO THE ASSESEE, IF T HE AO RELIES ON ANY STATEMENTS OR THIRD PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATERIAL 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 CANNOT BE REJEC TED BASED ON MERE CONJECTURES UNVERIFIED BY EVIDENCE UNDER THE PRETENTIOUS GARB O F PREPONDERANCE OF HUMAN PROBABILITIES AND THEORY OF HUMAN BEHAVIOR BY THE D EPARTMENT. 14. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PUT BEF ORE HIM AND HE IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CAS E, THE AO RELIES ONLY ON A REPORT AS THE BASIS FOR THE ADDITION. THE EVIDENCE BASED O N WHICH THE DDIT REPORT IS PREPARED IS NOT BROUGHT ON RECORD BY THE AO NOR IS IT PUT BEFORE THE ASSESSEE. THE SUBMISSION OF THE ASSESSEE THAT SHE IS JUST AN INVE STOR AND AS SHE RECEIVED SOME TIPS 20 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 20 AND SHE CHOSE TO INVEST BASED ON THESE MARKET TIPS AND HAD TAKEN A CALCULATED RISK AND HAD GAINED IN THE PROCESS AND THAT SHE IS NOT P ARTY TO THE SCAM ETC., HAS TO BE CONTROVERTED BY THE REVENUE WITH EVIDENCE. WHEN A P ERSON CLAIMS THAT SHE HAS DONE THESE TRANSACTIONS IN A BONA FIDE AND GENUINE MANNER AND WAS BENEFITTED, ONE CANNOT REJECT THIS SUBMISSION BASED ON SURMISES AND CONJECTURES. AS THE REPORT OF INVESTIGATION WING SUGGESTS, THERE ARE MORE THAN 60 ,000 BENEFICIARIES OF LTCG. EACH CASE HAS TO BE ASSESSED BASED ON LEGAL PRINCIP LES OF LEGAL IMPORT LAID DOWN BY THE COURTS OF LAW. 15.IN OUR VIEW, JUST THE MODUS OPERANDI, GENERALISA TION, PREPONDERANCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTIN G THE CLAIM OF THE ASSESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CO NTROVERT THE VALIDITY AND CORRECTNESS OF THE DOCUMENTARY EVIDENCES PRODUCED,T HE SAME CANNOT BE REJECTED BY THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF OMAR SALAV MOHAMED SAIT REPORTED IN (1959) 37 ITR 151 (S C) HAD HELD THAT N O ADDITION CAN BE MADE ON THE BASIS OF SURMISES, SUSPICION AND CONJECTURES. IN TH E CASE OF CIT(CENTRAL), KOLKATA VS. DAULAT RAM RAWATMULL REPORTED IN 87 ITR 349, TH E HON'BLE SUPREME COURT HELD THAT, THE ONUS TO PROVE THAT THE APPARENT IS N OT THE REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO. THE BURDEN OF PROVING A TRANSAC TION TO BE BOGUS HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCES, WH ICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNERRIN GLY AND REASONABLY RAISING AN INTERFERENCE TO THAT EFFECT. THE HON'BLE SUPREME CO URT IN THE CASE OF UMACHARAN SHAH & BROS. VS. CIT 37 ITR 271 HELD THAT SUSPICION HOWEVER STRONG, CANNOT TAKE THE PLACE OF EVIDENCE . IN THIS CONNECTION WE REFER TO THE GENERAL VIEW O N THE TOPIC OF CONVEYANCE OF IMMOVABLE PROPERTIES. THE R ATES/SALE PRICE ARE AT VARIANCE WITH THE CIRCLE RATES FIXED BY THE REGISTR ATION AUTHORITIES OF THE GOVERNMENT IN MOST CASES AND THE GENERAL IMPRESSION IS THAT CASH WOULD HAVE CHANGED HANDS. THE COURTS HAVE LAID DOWN THAT JUDICIAL NOTICE OF SUCH NOTORIOUS FACTS CANNOT BE TAKEN BASED ON GENERALISA TIONS. COURTS OF LAW ARE BOUND TO GO BY EVIDENCE. 16 . WE FIND THAT THE ASSESSING OFFICER AS WELL AS THE L D. CIT(A) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER, WE DO NOT FIND THAT THE ASSE SSING OFFICER AS WELL AS THE LD. CIT(A), HAVE BROUGHT OUT ANY PART OF THE INVESTIGAT ION WING REPORT IN WHICH THE ASSESSEE HAS BEEN INVESTIGATED AND /OR FOUND TO BE A PART OF ANY ARRANGEMENT FOR THE PURPOSE OF GENERATING BOGUS LONG TERM CAPITAL G AINS. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PERSONS INVESTIGATED, IN CLUDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASSESSEE WAS IN COLLUS ION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LINK THEIR WRONG DOINGS WITH THE ASSESSEE. IN FACT, THE INVESTIGATION WING IS A SEPARATE DEPARTMENT WHI CH HAS NOT BEEN ASSIGNED 21 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 21 ASSESSMENT WORK AND HAS BEEN DELEGATED THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VESTED WIDEST POWERS ON THIS WING. IT I S THE DUTY 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 ASSESSME NT WING TO ASSESS THE INCOME AS PER LAW. WE FIND NO SUCH ACTION EXECUTED BY INVESTI GATION WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALLY AG AINST THE ASSESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE H ELD TO BE GUILTY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CAS E, IN OUR VIEW, THE ASSESSING OFFICER AT BEST COULD HAVE CONSIDERED THE INVESTIGA TION 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 COLL USIVE TRANSACTION. THE ASSESSING OFFICER WAS DUTY BOUND TO MAKE INQUIRY FROM ALL CON CERNED PARTIES RELATING TO THE TRANSACTION AND THEN TO COLLECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. WE, HOWE VER, FIND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO P ROVE THAT THE 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 ASSESS MENT COULD NOT BE BASED ON BACKGROUND OF SUSPICION AND IN ABSENCE OF ANY EVIDE NCE 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 NOTORIETY FOR SMUGGLING FOOD GRAIN S AND OTHER COMMODITIES TO BENGAL BY COUNTRY BOATS ACQUIRED BY SAHIBGUNJ AND THE NOTORIE TY ACHIEVED BY DHULIAN AS A GREAT RECEIVING CENTRE FOR SUCH COMMODITIES WERE MERELY A BACKGROUN D OF SUSPICION AND THE APPELLANT 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 BEHALF. THE CANCELLATION OF THE FOOD GRAIN LICENCE AT NAWGACHIA AND THE PROS ECUTION OF THE APPELLANT UNDER THE DEFENCE OF INDIA RULES WAS ALSO OF NO CONSEQUENCE INASMUCH AS THE APPELLANT WAS ACQUITTED OF THE OFFENCE WITH WHICH IT HAD BEEN CHARGED AND ITS LICE NCE ALSO WAS RESTORED. THE MERE POSSIBILITY OF THE APPELLANT EARNING CONSIDERABLE AMOUNTS IN THE Y EAR UNDER CONSIDERATION WAS A PURE CONJECTURE ON THE PART OF THE INCOME-TAX OFFICER AN D THE FACT THAT THE APPELLANT INDULGED IN SPECULATION (IN KALAI ACCOUNT) COULD NOT LEGITIMATE LY LEAD TO THE INFERENCE THAT THE PROFIT IN A SINGLE TRANSACTION OR IN A CHAIN OF TRANSACTIONS CO ULD EXCEED THE AMOUNTS, INVOLVED IN THE HIGH DENOMINATION NOTES,---THIS ALSO WAS A PURE CONJECTU RE OR SURMISE ON THE PART OF THE INCOME-TAX OFFICER. AS REGARDS THE DISCLOSED VOLUME OF BUSINES S IN THE YEAR UNDER CONSIDERATION IN THE HEAD OFFICE AND IN BRANCHES THE INCOME-TAX OFFICER INDUL GED IN SPECULATION WHEN HE TALKED OF THE POSSIBILITY OF THE APPELLANT EARNING A CONSIDERABLE SUM AS AGAINST WHICH IT SHOWED A NET LOSS OF 22 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 22 ABOUT RS. 45,000. THE INCOME-TAX OFFICER INDICATED THE PROBABLE SOURCE OR SOURCES FROM WHICH THE APPELLANT COULD HAVE EARNED A LARGE AMOUNT IN T HE SUM OF RS. 2,91,000 BUT THE CONCLUSION 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 IN ITS BUSINESS WAS THE RESULT OF PURE CONJECTURES AND SURMISES ON HIS PART AND HAD NO FOUNDATION IN FACT AND WAS NOT PROVED AGAINST THE APPELLANT ON THE RECORD OF T HE PROCEEDINGS. IF THE CONCLUSION OF THE INCOME-TAX OFFICER WAS THUS EITHER PERVERSE OR VITI ATED BY SUSPICIONS, CONJECTURES OR SURMISES, THE FINDING OF THE TRIBUNAL WAS EQUALLY PERVERSE OR VITIATED IF THE TRIBUNAL TOOK COUNT OF ALL THESE PROBABILITIES AND WITHOUT ANY RHYME OR REASON AND M ERELY BY A RULE OF THUMB, AS IT WERE, CAME TO THE CONCLUSION THAT THE POSSESSION OF 150 HIGH D ENOMINATION NOTES OF RS. 1,000 EACH WAS SATISFACTORILY EXPLAINED BY THE APPELLANT BUT NOT T HAT 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 HA VING FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE TRANSACTION OF THE ASSES SEE WAS A COLLUSIVE TRANSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN FACT, IN THIS CASE NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE WI TH AID OF ANY DIRECT EVIDENCES OR MATERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BEING INVESTIGATED BY VARIOUS WINGS OF THE INCOME TAX DEPARTMENT HENCE IN OUR VIE W UNDER THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE. 18. WE NOW CONSIDER THE VARIOUS PROPOSITIONS OF LAW LAID DOWN BY THE COURTS OF LAW.THAT CROSS-EXAMINATION IS ONE PART OF THE PRINC IPLES OFNATURAL JUSTICE HAS BEEN LAID DOWN IN THE FOLLOWING JUDGMENTS: A) AYAAUBKHANNOORKHAN PATHAN VS. THE STATE OF MAHAR ASHTRA AND ORS. 23. A CONSTITUTION BENCH OF THIS COURT IN STATE OF M.P .V. CHINTAMAN SADASHIVA VAISHAMPAYAN AIR 1961 SC1623, HELD THAT THE RULES O F NATURAL JUSTICE, REQUIRE THAT A PARTY MUST BE GIVEN THE OPPORTUNITY TO ADDUCE ALL R ELEVANT EVIDENCE UPON WHICH HE RELIES, AND FURTHER THAT, THE EVIDENCE OF THE OPPOS ITE PARTY SHOULD BE TAKEN IN HIS PRESENCE, AND THAT HE SHOULD BE GIVEN THE OPPORTUNI TY OF CROSS-EXAMINING THE WITNESSES EXAMINED BY THAT PARTY. NOT PROVIDING THE SAID OPPO RTUNITY TO CROSS-EXAMINE WITNESSES, WOULD VIOLATE THE PRINCIPLES OF NATURAL JUSTICE. (S EE ALSO: UNION OF INDIA V. T.R. VARMA, AIR 1957 SC 882; MEENGLAS TEA ESTATE V. WORKMEN, AI R 1963 SC 1719; M/S. KESORAM COTTON MILLS LTD. V. GANGADHAR AND ORS. ,AIR 1964 S C708; NEW INDIA ASSURANCE CO. LTD. V. NUSLI NEVILLE WADIA AND ANR. AIR 2008 SC 87 6; RACHPAL SINGH AND ORS. V. GURMIT SINGH AND ORS. AIR 2009 SC 2448;BIECCO LAWRI E AND ANR. V. STATE OF WEST BENGAL AND ANR. AIR 2010 SC 142; AND STATE OF UTTAR PRADESH V.SAROJ KUMAR SINHA AIR 2010 SC 3131). 23 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 23 24. IN LAKSHMAN EXPORTS LTD. V. COLLECTOR OF CENTRA L EXCISE (2005) 10 SCC 634, THIS COURT, WHILE DEALING WITH A CASE UNDER THE CENTRAL EXCISE ACT, 1944,CONSIDERED A SIMILAR ISSUE I.E. PERMISSION WITH RESPECT TO THE C ROSS-EXAMINATION OF A WITNESS. IN THE SAID CASE, THE ASSESSEE HAD SPECIFICALLY ASKED TO B E ALLOWED TO CROSS-EXAMINE THE REPRESENTATIVES OF THE FIRMS CONCERN, TO ESTABLISH THAT THE GOODS IN QUESTION HAD BEEN ACCOUNTED FOR IN THEIR BOOKS OF ACCOUNTS, AND THAT EXCISE DUTY HAD BEEN PAID. THE COURT HELD THAT SUCH A REQUEST COULD NOT BE TURNED DOWN, AS THE DENIAL OF THE RIGHT TO CROSS- EXAMINE, WOULD AMOUNT TO A DENIAL OF THE RIGHT TO B E HEARD I.E. AUDI ALTERAMPARTEM. 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 REASONABLE OPPORTUNITY TO DEFEND HIMSELF AGAINST TH E CHARGES, ON THE BASIS OF WHICH AN INQUIRY IS HELD. THE GOVERNMENT SERVANT SHOULD BE G IVEN AN OPPORTUNITY TO 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 HIM. THE OBJECT OF SUPPLYING STATEMENTS IS THAT, TH E GOVERNMENT SERVANT WILL BE ABLE TO REFER TO THE PREVIOUS STATEMENTS OF THE WITNESSES P ROPOSED TO BE EXAMINED AGAINST HIM. UNLESS THE SAID STATEMENTS ARE PROVIDED TO THE GOVE RNMENT SERVANT, HE WILL NOT BE ABLE TO CONDUCT AN EFFECTIVE AND USEFUL CROSS-EXAMINATIO N. 29. IN RAJIV ARORA V. UNION OF INDIA AND ORS. AIR 2 009SC 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 WE RE PROVED. THE PRINCIPLES ANALOGOUS TO THE PROVISIONS OF THE INDIAN EVIDENCE ACT AS ALSO T HE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT THE MAKER OF THE REPORT SHOULD BE EXAMI NED, SAVE AND EXCEPT IN CASES WHERE THE FACTS ARE ADMITTED OR THE WITNESSES ARE N OT AVAILABLE FOR CROSS-EXAMINATION OR SIMILAR SITUATION. THE HIGH COURT IN ITS IMPUGNED J UDGMENT PROCEEDED TO CONSIDER THE ISSUE ON A TECHNICAL PLEA, NAMELY, NO PREJUDICE HAS BEEN CAUSED TO THE APPELLANT BY SUCH NON-EXAMINATION. IF THE BASIC PRINCIPLES OF LA W HAVE NOT BEEN COMPLIED WITH OR THERE HAS BEEN A GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE HIGH COURT SHOULD HAVE EXERCISED ITS JURISDICTION OF JUDICIAL REVIEW. 30. THE AFORESAID DISCUSSION MAKES IT EVIDENT THAT, NOTONLY SHOULD THE OPPORTUNITY OF CROSS-EXAMINATION BE MADE AVAILABLE, BUT IT SHOULD BE ONE OF EFFECTIVE CROSS- EXAMINATION, SO AS TO MEET THE REQUIREMENT OF THE P RINCIPLES OF NATURAL JUSTICE. IN THE ABSENCE OF SUCH AN OPPORTUNITY, IT CANNOT BE HELD T HAT THE MATTER HAS BEEN DECIDED IN ACCORDANCE WITH LAW, AS CROSS-EXAMINATIONS AN INTEG RAL PART AND PARCEL OF THE PRINCIPLES OF NATURAL JUSTICE. 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 COUNSEL APPEARING FOR THE ASSESSEE, AND MR. K.RADHAKRISHNAN, LEARNED SENIOR C OUNSEL 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 THO SE WITNESSES WERE MADE THE BASIS OF 24 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 24 THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES TH E ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TW O WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AF ORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUN AL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL T O HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOS E DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. 6. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR T ESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOO DS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED I N THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUB JECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALS O POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL 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 MATERIAL WITH THE DEPA RTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORE S AID TWO WITNESSES WAS THE ONLY 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 CALCUTTAHIGH COURT IN THE CASE OF BLBCABLES &CONDUCTORS[ITA NO. 78 OF2017] DATED19.06.2018. 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 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 HAS TO BE SOME CONCRETE 25 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 25 EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WI TH THE SUPPORTIVE EVIDENCE. HERE IN THE CASE THE TRANSACTIONS OF THE COMMODITY EXCHANGE D HAVE NOT ONLY BEEN EXPLAINED BUT ALSO SUBSTANTIATED FROM THE CONFIRMATION OF THE PAR TY. BOTH THE PARTIES ARE CONFIRMING THE TRANSACTIONS WHICH HAVE BEEN DULY SUPPORTED WIT H 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 CANNOT BE THE CRITERIA TO HOLD THE TRANSACTION AS BOGUS. I N VIEW OF ABOVE, WE REVERSE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE COMMON GROUN DS OF ASSESSEES APPEAL. [QUOTED VERBATIM] 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 M ARKET 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 ORDER OF THE TRIBUNAL IN EXER CISE 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 THE STAY PETITION, ACCORDING LY, SHALL STAND DISMISSED. B) THE JAIPURITAT IN THE CASE OF VIVEKAGARWAL[ITA N O.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 EVIDE NCE FILED BY THE ASSESSEE IN SUPPORT OF THE CLAIM. FURTHER, THE AO HAS ALSO FAILED TO ES TABLISH THAT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TE RM CAPITAL GAIN. HENCE WE DELETE THE ADDITION MADE BY THE AO ON THIS ACCOUNT. C)THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PREMPAL GANDHI[ITA-95-2017(O&M)] DATED18.01.2018 AT VIDE PA GE 3 PARA 4 HELD AS UNDER: .. THE ASSESSING OFFICER IN BOTH THE CASES ADDED THE APPRECIATION TO THE ASSESSEES INCOME ON THE SUSPICION THAT THESE WERE FICTITIOUS TRANSACTIONS AND THAT THE APPRECIATION ACTUALLY REPRESENTED THE ASSESSEES INCOME FROM UN DISCLOSED SOURCES. IN ITA-18-2017 ALSO THE CIT (APPEALS) AND THE TRIBUNAL HELD THAT T HE ASSESSING OFFICER HAD NOT PRODUCED ANY EVIDENCE WHATSOEVER IN SUPPORT OF THE SUSPICION. ON THE OTHER HAND, ALTHOUGH THE APPRECIATION IS VERY HIGH, THE SHARES WERE TRADED ON THE NATIONAL STOCK EXCHANGE AND THE PAYMENTS AND RECEIPTS WERE ROUTED THROUGH THE BANK. THERE WAS NO EVIDENCE TO INDICATE FOR INSTANCE THAT THIS WAS A C LOSELY HELD COMPANY AND THAT THE TRADING ON THE NATIONAL STOCK EXCHANGE WAS MANIPULA TED IN ANY MANNER. THE COURT ALSO HELD THE FOLLOWING VIDE PAGE 3 PARA 5 THE FOLLOWING: 26 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 26 QUESTION (IV) HAS BEEN DEALT WITH IN DETAIL BY THE CIT (APPEALS) AND THE TRIBUNAL. FIRSTLY, THE DOCUMENTS ON WHICH THE ASSESSING OFFIC ER RELIED UPON IN THE APPEAL WERE NOT PUT TO THE ASSESSEE DURING THE ASSESSMENT PROCE EDINGS. THE CIT (APPEALS) NEVERTHELESS CONSIDERED THEM IN DETAIL AND FOUND TH AT THERE WAS NO CO-RELATION BETWEEN THE AMOUNTS SOUGHT TO BE ADDED AND THE ENTRIES IN T HOSE DOCUMENTS. THIS WAS ON AN APPRECIATION OF FACTS. THERE IS NOTHING TO INDICATE THAT THE SAME WAS PERVERSE OR IRRATIONAL. ACCORDINGLY, NO QUESTION OF LAW ARISES. D) THE BENCH DOF KOLKATAITAT IN THE CASE OF GAUTA MPINCHA[ITA NO.569/KOL/2017]ORDER DATED 15.11.2017 HELD AS UNDE R VIDE PAGE 12 PARA 8.1: 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 MATERIAL TO IMPLICATE THE ASS ESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAND AND THE REFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS SUPPORTED WITH MATERIAL EVIDENCES WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT (A). WE NOTE THAT IN THE ABSENCE OF MATERIAL/EVIDENCE THE ALLEGATIONS THAT T HE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE ALSO FAIL. AT THE COST 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 THEGENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF S HARES 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 FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE THAT INCOME FROM LTCG IS EXEMPTED 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 CONCLUSION. 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 AFORESAID FACTS AND CIRC UMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS 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: 27 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 27 .. WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE M ATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIO NS 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 T HE FACTS WHICH ARE SUPPORTED WITH MATERIAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT THE AL LEGATIONS THAT THE ASSESSE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARE S MUST THEREFORE CONSEQUENTLY FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSE E HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PUR CHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. NEITHER THESE EVIDENCES WER E 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 SUPPORT THE CLAIM O F THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE 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 SUSP ICION HOW SO EVER STRONG, CANNOT PARTAKE THE CHARACTER 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 CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO S UPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTA NCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE AC T. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. F) THE BENCH AOF KOLKATAITAT IN THE CASE OF SHAL EENKHEMANI[ITA NO.1945/KOL/2014]ORDER DATED 18.10.2017 HELD AS UND ER 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 UNWARRANTED ALLEGAT IONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION, HAS NO L EGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE ARGUME NTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON T HE ORDERS OF THE LD AO. WE FIND THAT THE ALLEGATION THAT THE ASSESSEE AND / OR BROKERS G ETTING INVOLVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO AMATTER OF RECORD TH AT THE ASSESSEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEME NTS 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 28 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 28 AND THEREFORE THE LD AO WAS NOT JUSTIFIED IN REJECT ING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. G) THE BENCH HOF MUMBAIITAT IN THE CASE OF ARVIN DKUMAR JAINHUF[ITA NO.4682/MUM/2014]ORDER DATED 18.09.2017 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 THE ACTIVITY OF T HE BROKER. DETAILED FINDING HAS BEEN RECORDED BY CIT (A) TO THE EFFECT THAT ASSESSEE HAS MADE INVESTMENT IN SHARES WHICH WAS PURCHASED ON THE FLOOR OF STOCK EXCHANGE AND NO T FROM 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 P ER THE CONTRACT ACT, THEREFORE, THE ASSESSEE IS NOT CONCERNED WITH ANY WAY OF THE BROKE R. NOWHERE THE AO HAS ALLEGED THAT THE TRANSACTION BY THE ASSESSEE WITH THESE PARTICUL AR BROKER OR SHARE WAS BOGUS, MERELY BECAUSE THE INVESTIGATION WAS DONE BY SEBI AGAINST BROKER OR HIS ACTIVITY, ASSESSEE CANNOT BE SAID TO HAVE ENTERED INTO INGENUINE TRANS ACTION, INSOFAR AS ASSESSEE IS NOT CONCERNED WITH 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 RELYI NG ON THE VARIOUS DECISION OF THE COORDINATE BENCH, WHEREIN ON SIMILAR FACTS AND CIRC UMSTANCES, ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, CAME TO THE CONCLUSION THAT TRANSACTION ENTERED BY THE ASSESSEE WAS GENUINE. DETAILED FINDING RECORDED BY CIT (A) A T PARA 3 TO 5 HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSI TIVE 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 OF2010] ORDER DATED 14.11.2011 VI DE PAGE 2 PARA 3 HELD AS UNDER: ON THE BASIS OF THE DOCUMENTS PRODUCED BY THE ASSE SSEE IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEAL) RECORDED A FINDING OF FACT T HAT THERE WAS A GENUINE TRANSACTION OF PURCHASE OF SHARES BY THE ASSESSEE ON 16.3.2001 AND SALE THEREOF ON 21.3.2002. THE TRANSACTIONS OF SALE AND PURCHASE WERE AS PER THE V ALUATION PREVALENT IN THE STOCKS EXCHANGE. SUCH FINDING OF FACT HAS BEEN RECORDED ON THE BASIS OF EVIDENCE PRODUCED ON RECORD. THE TRIBUNAL HAS AFFIRMED SUCH FINDING. SUC H FINDING 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 RI SE TO ANY QUESTION(S) OF LAW AS SOUGHT TO BE RAISED IN THE PRESENT APPEAL. HENCE, T HE PRESENT APPEAL IS DISMISSED. 29 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 29 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 DATED 29.0 4.2009 AT PARA 2 HELD AS FOLLOWS: THE TRIBUNAL FOUND THAT THE CHAIN OF TRANSACTION E NTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUP PORTED BY EVIDENCE. THE ASSESSEE PRODUCED BEFORE THE COMMISSIONER OF INCOME TAX(APPEAL) THE CONTRACT NOTES, DETAILS OF HIS DEMAT ACCOUNT AND, A LSO, PRODUCED DOCUMENTS SHOWING THAT ALL PAYMENTS WERE RECEIVED BY THE ASS ESSEE THROUGH BANK. J) THE HONBLE SUPREME COURT IN THE CASE OF PCIT VS . TEJU ROHIT KUMAR KAPADIA ORDER DATED 04.05.2018 UPHELD THE FOLLOWING PROPOSI TION OF LAW LAID DOWN BY THE HONBLE GUJRAT HIGH COURT AS UNDER: IT CAN THUS BE SEEN THAT THE APPELLATE AUTHORITY A S WELL AS THE TRIBUNAL CAME TO CONCURRENT CONCLUSION THAT THE PURCHASES ALREADY MA DE BY THE ASSESSEE FROM RAJ IMPEX WERE DULY SUPPORTED BY BILLS AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE. RAJ IMPACTS ALSO CONFIRMED THE TRANSACTIONS. THERE WAS NO EVIDENCE TO SHOW THAT THE AMOUNT WAS RECYCLED BACK TO THE ASSESSEE. PARTICULA RLY, WHEN IT WAS FOUND THAT THE ASSESSEE THE TRADER HAD ALSO SHOWN SALES OUT OF PUR CHASES MADE FROM RAJ IMPEX WHICH WERE ALSO ACCEPTED BY THE REVENUE, NO QUESTION OF L AW ARISES. 20. APPLYING THE PROPOSITION OF LAW AS LAID DOWN IN THE ABOVE-MENTIONED JUDGMENTS TO THE FACTS OF THIS CASE WE ARE BOUND T O CONSIDER AND RELY ON THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF IT S CLAIM AND BASE OUR DECISION ON SUCH EVIDENCE AND NOT ON SUSPICION OR PREPONDERANCE OF PROBABILITIES. NO MATERIAL WAS BROUGHT ON RECORD BY THE AO TO CONTROVERT THE E VIDENCE FURNISHED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, WE ACCEPT THE EVIDENCE FILED BY THE ASSESSEE AND ALLOW THE CLAIM THAT THE INCOME IN QUESTION IS A BONA FIDE LONG TERM CAPITAL GAIN ARISING FROM THE SALE OF SHARES AND HENCE EXEM PT FROM INCOME TAX. 21.UNDER THE CIRCUMSTANCES AND IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE CONTENTIONS OF THE ASSESSEE AND DELETE THE ADDITION IN QUESTION. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. I ADOPT THE ABOVE EXTRACTED DETAILED REASONING M UTATIS MUTANDIS IN THE GIVEN FACTS AND CIRCUMSTANCE TO ACCEPT THE ASSESSEES PLEAS RA ISED IN THE INSTANT APPEAL ITA 30 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 30 NO.1263/KOL/2018. THE IMPUGNED BOGUS LONG TERM CAPI TAL GAIN ADDITION OF RS.25,21,600/- AS WELL AS UNEXPLAINED COMMISSION OF RS.60,041/- STANDS DELETED. 9. SAME ORDER TO FOLLOW IN ALL THE REMAINING APPEAL S ITA NOS.1270/KOL/2018, 1267/KOL/2018, 844/KOL/2018, 519/KOL/2018,1266/KOL/ 2018, 1307/KOL/2018, 518/KOL/2018 AND 1051/KOL/2018 AS IT HAS COME ON RE CORD THAT THE LOWER AUTHORITIES HAVE ADDED THE IMPUGNED LONG TERM CAPITAL GAINS CLA IMED AT THESE ASSESSEES BEHEST. LEARNED DEPARTMENTAL REPRESENTATIVE SOUGHT TO CARVE OUT SOME EXCEPTIONS THEREIN THAT THESE ASSESSEES COULD NOT ESTABLISH ACQUISITION OF THE CORRESPONDING SCRIPS IN SOME INSTANCES. I REITERATE THAT THE RELEVANT EVIDENCE C OMPRISING OF PAYMENTS, INVOLVEMENT OF REGISTERED STOCK BROKERS AS WELL AS ALL SIMILAR DOC UMENTS AS IN THE LEAD CASE SUFFICIENTLY REBUT THESE DOUBTS IN ISSUE RAISED AT REVENUES BEH EST. REMAINING ISSUES REGARDING INTEREST ETC ARE TREATED AS MERE CONSEQUENTIAL IN N ATURE. A COPY OF THIS ORDER BE PLACED IN RESPECTIVE CASE FILES. 10.ALL THESE ASSESSEES APPEALS ARE PARTLY ACCEPTED IN ABOVE TERMS. SD/- [ S.S.GODARA ] JUDICIAL MEMBER DATED : 26.09.2018 [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1. APPELLANTS 2. RESPONDENTS 3. CIT(A)-10, KOLKATA 4. C.I.T.-10, KOLKAT A. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECR ETARY HEAD OF OFFICE/ D.D.O., ITAT KOLKATA BENCHES 31 ITA NO.1263/KOL/2018 JIGNESH DESAI & ORS. A.YR.2014-15 31