Jinesh Kumar Jain, HUF, Kolkata V. ITO, Ward - 35(2), Kolkata , Kolkata

ITA 1605/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7006 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 26-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PASS KOLKATA
• Keywords: Unexplained cash credit; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Transactions in derivatives; Question of law; Wrong claim; Accommodation entries; Audi alteram partem
• Section: 69C; 143(3); 260A; 68

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1605 / KOL / 20 18 ASSESSMENT YEAR :2014-15 JINESH KR. JAIN HUF C/O SUBASH AGARWAL & ASSOCIATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE-213, 2 ND FLOOR, KOLKATA-700069 [ PAN NO.AABHJ 3911 J ] V/S . INCOME TAX OFFICER, WARD-35(2), 110, SHANTI PALLY, E.M.BYPASS, KOLKATA-107 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SUBASH AGARWAL, ADVOCATE /BY RESPONDENT SHRI SHANKAR HALDER, JCIT-SR-DR /DATE OF HEARING 16-04-2019 /DATE OF PRONOUNCEMENT 26-04-2019 / 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)-10, KOLKATAS ORDER DATED 01.06.2018 PASSED IN CASE NO.413/CIT(A)-10/WD-35(2)/14-15/2016 -17 / KOL, INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD THE LEARNED REPRESENTATIVE AS WELL AS THE REV ENUE REITERATING THEIR RESPECTIVE STANDS AGAINST AND IN SUPPORT OF T HE IMPUGNED BOGUS LTCG ADDITION FOLLOWED BY DISALLOWANCES OF UNEXPLAI NED COMMISSION EXPENDITURE. CASE FILE PERUSED. ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 2 2. IT EMERGES AT THE OUTSET THAT BOTH THE LOWER AUT HORITIES HAVE ADOPTED IDENTICAL LINE OF REASONING IN TREATING THE ASSESSE ES LTCG/LOSSES DERIVED FROM TRANSFER OF SHARES IN VARIOUS ENTITIES TO BE BOGUS THEREBY TREATING THE SAME AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. 3. WE FIND THAT THE ASSESSEE HAD DECLARED HIS LTCG OF 10,08,900/- DERIVED FROM TRANSFER OF SHARES LEARNED DEPARTMENTA L REPRESENTATIVE INVITES OUR ATTENTION TO A VOLUMINOUS EXERCISE UNDERTAKEN B Y THE ASSESSING OFFICER INVOLVING A LONG DRAWN PROCESS OF STOCK MARKET PRIC ES RIGGING IN COLLUSION WITH IN THE VARIOUS ENTRY OPERATORS. HE TAKES US TO ASSE SSMENT ORDER INDICATING THE ASSESSEE TO HAVE ALLEGEDLY INVESTED HIS MONEY IN CR ESSANDA SOLUTIONS LTD. NOT HAVING ANY SOUND FINANCIAL POSITION OR BUSINESS ACTIVITY SO AS TO JUSTIFY THE LTCG IN ISSUE. CASE LAW SUMATI DAYAL VS. CIT 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE (1971) 82 ITR (SC) IS QUOTED IN SUPPORT TO PLEAD T HAT BOTH THE LOWER AUTHORITIES HAVE MADE IT CLEAR IN THEIR R ESPECTIVE ORDER(S) ABOUT THE ASSESSEE HAVING ACTED IN COLLUSION WITH VARIOUS ENT ITY OPERATORS FOR THE PURPOSE OF BOGUS LTCG IN ISSUE. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. THERE IS NO DISPUTE THAT ASSESSEE HAVING CLAIMED TO HAVE IN ISSUE DERIVED LTCG ON TRANSFER OF SHARES HELD IN CRESANDA SOLUTIONS LTD. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE THAT VERY ISSUE STA NDS ADJUDICATED IN ASSESSEES FAVOUR IN CO-ORDINATE BENCHS DECISION I N 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. ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 3 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 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 ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 4 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 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 ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 5 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 ASSESSES. NO OPP ORTUNITY 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 GUI DE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON ST ATEMENTS, 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 QUESITON 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 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 ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 6 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 ARRA NGEMENT 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 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 ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 7 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 THE PROBABLE SOURCE OR SOURCES FROM WHICH THE APPELLANT COULD HAVE EARNED A LARGE AMOUNT IN THE SUM OF RS. 2,91,0 00 BUT THE CONCLUSION WHICH HE ARRIVED AT IN REGARD TO THE APP ELLANT HAVING EARNED THIS LARGE AMOUNT DURING THE YEAR AND WHICH ACCORDING TO HIM REPRESENTED THE SECRETED PROFITS OF THE APPE LLANT IN ITS BUSINESS WAS THE RESULT OF PURE CONJECTURES AND SUR MISES ON HIS PART AND HAD NO FOUNDATION IN FACT AND WAS NOT PROVED AGAINST THE APPELLANT ON THE RECORD OF THE PROCEEDI NGS. IF THE CONCLUSION OF THE INCOME-TAX OFFICER WAS THUS EITHE R PERVERSE OR VITIATED BY SUSPICIONS, CONJECTURES OR SURMISES, THE FINDING OF THE TRIBUNAL WAS EQUALLY PERVERSE OR VITIATED IF TH E TRIBUNAL TOOK COUNT OF ALL THESE PROBABILITIES AND WITHOUT ANY RH YME OR REASON AND MERELY BY A RULE OF THUMB, AS IT WERE, CAME TO THE CONCLUSION THAT THE POSSESSION OF 150 HIGH DENOMINA TION NOTES OF RS. 1,000 EACH WAS SATISFACTORILY EXPLAINED BY T HE APPELLANT BUT NOT THAT OF THE BALANCE OF 141 HIGH DENOMINATIO N 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. ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 8 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 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, SA VE AND EXCEPT IN CASES WHERE THE FACTS ARE ADMITTED OR THE WITNES SES ARE NOT AVAILABLE FOR CROSS-EXAMINATION OR SIMILAR SITUATIO N. THE HIGH COURT ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 9 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 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 ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 10 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 ] 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: ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 11 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: 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 THAT 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 FACTS O F THE CASE AND THE ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 12 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 REJE CTING 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 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 AFO RESAID 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 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. ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 13 F) THE BENCH A OF KOLKATA ITAT IN THE CASE OF SH ALEEN KHEMANI [ITA NO. 1945/KOL/2014] ORDER DATED 18.10. 2017 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 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). ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 14 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 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 RELY ON THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM A ND 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 CIRCUMSTANC ES, 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 ITA NO.1605/KOL/2018 A .Y. 2014-15 JINESH KR. JAIN HUF VS. ITO WD-35(2), KOL. PAGE 15 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. THE REVENUE FAILS TO INDICATE ANY SPECIFIC EVIDE NCE AGAINST THE ASSESSEE IN ABOVE TERMS QUA THE IMPUGNED LTCG DERIVED FROM TRANSFER OF SHARE IN M/S CRESSANDA SOLUTIONS LTD. WE THEREFORE ADOPT THE ABOVE EXTRACTED REASONING AS PER HON'BLE JURISDICTIONAL H IGH COURTS JUDGMENT (SUPRA) MUTATIS MUTANDIS TO DELETE THE IMPUGNED BOGUS LTCG ADDITION OF 10,08,900/-. 6. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 26/ 04/2019 SD/- SD/- ( %) (' %) (DR.A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 26 / 04 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-JINESH KR. JAIN HUF C/O SUBASH AGARWAL & ASSOCIATES SIDDHA GIBSON, 1, GIBSON LANE, SUITE-213, 2 ND FLOOR, KOLKATA-700069 2. /RESPONDENT-ITO WD-35(2), 110, SHANTI PALLY, E.M.BY PASS, KOLKATA-107 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,