Shri Udit Goyal , Kolkata V. ITO, Ward - 36(4), Kolkata , Kolkata

ITA 1637/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0284 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 31-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANKAR HALDER; SHRIRADHEYSHYAM
• Keywords: Income from undisclosed sources; Principle of natural justice; Opportunity of cross examination; Transactions in derivatives; Earning of tax free income; Question of law; Scheme of amalgamation; Assessment record; Penny stocks; Set aside; Capital Gains; Bogus
• Section: 68; 143(3); 142(1); 143(1); 201; 143(2); 72; 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.1637/KOL/2018 ( / ASSESSMENT YEAR: 2015-16) SHRI UDIT GOYAL ROOM NO. 8JA, 8 TH FLOOR, SARVAMANGALA HOUSE, DR.RAJENDRA PRASAD SARANI (CLIVE ROW), DALHOUSIE, KOLKATA-700001 VS. ITO, WARD-36(4), KOLKATA ./ ./PAN/GIR NO. : AJEPG 2636 D (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI SUBASH AGARWAL, ADVOCATE RESPONDENT BY :SHRIRADHEYSHYAM, CI T DR AND SHRI SHANKAR HALDER, JCIT, SR. DR / DATE OF HEARING : 18/04/2019 /DATE OF PRONOUNCEMENT : /06/2019 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAIN ING TO ASSESSMENT YEAR 2015-16, IS DIRECTED AGAINST AN ORDER PASSED BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLKATA (IN SHORT THE LD. CIT(A)], WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT), DATED 2 0.12.2017. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. FOR THAT THE ORDER PASSED BY THE LD. CIT(A) IS I N VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND, AS SUCH, IS NOT SUSTAINABLE IN LAW. SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 2 22 2 2. FOR THAT ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 42, 06,250/- MADE BY THE A.O. U/S 68, ON ACCOUNT OF ALLEGED LONG TERM CAPITA L GAIN CLAIMED AS EXEMPT INCOME U/S 10(38) IN THE RELEVANT YEAR BY WR ONGLY TREATING THE SAME AS BOGUS AND SUSPICIOUS NATURE OF TRANSACTION. 3. THE APPELLANT CRAVES LEAVE TO ADD FURTHER GROUND S OF APPEAL OR ALTER THE GROUNDS AT THE TIME OF HEARING. 3. THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSES SEE HAS FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2015-16 ON 15.10.2015 DECLARING TOTAL INCOME TO THE TUNE OF RS. 7,50,830/-. THE ASSESSEES RETURN WAS PROCESSE D U/S 143(1) OF THE ACT. LATER ON, THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY U /S 143(2) OF THE ACT ON ACCOUNT OF SUSPICION SALE TRANSACTION IN SHARES AND EXEMPT LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER, DURING THE SCRUTINY ASSESSMENT, NOTICED THAT ASSESSEE EARNED LONG TERM CAPITAL GAINFROM SALE OF SHARES OF M/S KAILASH AUTO FINANCE LTD. THIS LONG TERM CAPITAL GAIN WAS CLAIMED EXEMPT FROM INCOME TA X, AS PER SECTION 10(38) OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS TH E ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF SUCH SHARES TRANSACTION. IN RESPONSE, THE ASSESSEE SUBMITTED THAT HE WAS NOT INVOLVED IN THE REGULAR ACTIVITIES OF THE TRANSACTION IN SHARES, EXPECT FRO M THE EXEMPT LONG TERM CAPITAL GAIN EARNED FROM THE SALE OF SHARES OF M/S KAILASH AUTO FINANCE LTD. THE ASSESSEE FURTHER SUBMITTED THAT HIS TRANSACTION OF SALE OF S HARES OF M/S KAILASH AUTO FINANCE LTD, IS GENUINE THEREFORE NO ANY DISALLOWAN CE SHOULD BE MADE. HOWEVER, THE ASSESSING OFFICER REJECTED THE CONTENTION OF TH E ASSESSEE AND RELYING UPON THE FINDINGS OF THE INVESTIGATION WING CAME TO CONCLUSI ON THAT THE EXPLANATION SO OFFERED BY THE ASSESSEE WAS NOT FOUND TO BE SATISFA CTORY THEREFORE THE ASSESSING OFFICER MADE THE ADDITION OF THE GROSS TRADE VALUE OF SALE OF 25,000 SHARES OF M/S KAILASH AUTO FINANCE LTD. WHICH CAME TO THE TUNE OF RS. 42,06,250/-. THIS WAY, THE ASSESSING OFFICER MADE ADDITION U/S 68 OF THE A CT ON ACCOUNT OF LONG TERM CAPITAL GAIN TO THE TUNE OF RS. 42,06,250/-. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS JUST REITER ATED THE FINDINGS OF THE SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 3 33 3 ASSESSING OFFICER AND CONFIRMED THE ADDITION MADE B Y THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESS EE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL HAS REITERATED THE SUBMISSION MA DE BEFORE THE LOWER AUTHORITIES. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS PRIMA RILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTE D IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE FACTS OF THE CASE IS THAT THE ASSESSEE MADE PUR CHASES AND SALES OF THE SHARES NAMELY M/S KAILASH AUTO FINANCE LTD, THROUGH SEBI R EGISTERED SHARES BROKERS BEING MEMBERS OF THE RECOGNIZED STOCK EXCHANGES AND THE PURCHASE AND SALE ARE DULY SUPPORTED BY THE DOCUMENTARY EVIDENCES. THE SH ARES ARE DULY REFLECTED IN THE TRANSACTIONS OF DEMAT STATEMENT OF THE ASSESSEE AND PAYMENTS AND RECEIPTS OF THE CONSIDERATION OF THE SHARE VALUES ARE REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE. THE LD. ASSESSING OFFICER FAILED TO POINT OUT ANY D ISCREPANCIES IN THE DOCUMENTS PRODUCED BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE ACQUIRED THE SHARES IN EARLIER ASSESSMENT YEARS A ND THE FACT IS CORROBORATIVE FROM THE STATEMENT OF ACCOUNTS SUBMITTED BY THE ASSESSEE , DURING THE ASSESSMENT PROCEEDING COMPLETED U/S 143(3) OF THE INCOME TAX A CT, 1961. THE ASSESSEE HAS PROVED BEYOND THE DOUBT DURING THE ASSESSMENT PROCE EDING BY EXAMINING THE BROKER NAMELY VEDIKA SECURITIES PVT. LTD, AND THE ALLEGED BROKER DULY CONFIRMED THE TRANSACTIONS WITH COLLABORATIVE EVIDENCE BEFORE THE LD. ASSESSING OFFICER. THE LD. ASSESSING OFFICER ADDED THE LTCG AMOUNT OF RS. 42,06,250/- TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 WITHOUT RECOGNIZING T HE ABOVE FACT THAT THE TRANSACTIONS WERE MADE THROUGH BANK ON THE PLATFORM OF A RECOGNIZED STOCK EXCHANGE AND TRANSACTIONS ARE DULY SUPPORTED BY A V ALID CONTRACT NOTES. WE NOTE THAT THE LD. ASSESSING OFFICER HAD ADDED BACK RS. 4 2,06,250/- TO THE TOTAL INCOME OF THE ASSESSEE, JUST BY FORMING THE GENERALIZED VI EW AND NOT CONSIDERING THE SUBMISSION MADE BY THE ASSESSEE. SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 4 44 4 7. WE NOTE THAT BEFORE US THE ASSESSEE SUBMITTED IN COME TAX RETURN ACKNOWLEDGE COPY FOR ASSESSMENT YEAR 2015-16 (VIDE PB-1). THE A SSESSEE SUBMITTED COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2013-14 A ND ASSESSMENT YEAR 2015-16 (VIDE PB- 4A TO 7A). THE ASSESSEE SUBMITTED THE BA LANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR ASSESSMENT YEAR 2013-14 AND FOR ASSESSM ENT YEAR 2015-16 (VIDE PB-3 TO 4). THE ASSESSEE SUBMITTED DETAILS OF SHARE TRA NSACTION (PB-8).COPY OF PURCHASE BILLS ALSO PLACED IN THE PAPER BOOK (VIDE PB-9). TH E ASSESSEE SUBMITTED THE COPY OF THE BANK STATEMENT SHOWING TRANSACTION IN RESPECT O F PURCHASE OF SHARES OF KAILASH AUTO FINANCE LTD. (VIDE PB-10TO11). THE COPY OF AMA LGAMATION LETTER IS ALSO PLACED IN THE PAPER BOOK (VIDE PB-12). THE ASSESSEE SUBMITTED THE COPIES OF THE CONTRACT NOTE OF SALE OF SHARES (VIDE PB-13 TO 18) .THE ASSESSEE SUBMITTED THE COPY OF THE BANK STATEMENT SHOWING TRANSACTION IN RESPEC T OF SALE OF SHARES (VIDE PB-19 TO 20). THE COPY OF LEDGER ACCOUNT OF ASSESSEE IN T HE BOOKS OF THE BROKER IS ALSO FURNISHED BEFORE US (PAPER BOOK 21 TO 23). THE ASSE SSEE ALSO SUBMITTED THE COPY OF THE DEMAT STATEMENT (VIDE PB-25).IN ADDITION TO THI S, THE ASSESSEE ALSO SUBMITTED THAT THE TRANSACTION HAS BEEN DONE THROUGH THE RECO GNIZED STOCK EXCHANGE. THE SAID TRANSACTION MAY BE VERIFIED FROM THE CONCERNED STOCK EXCHANGE. BASED ON THESE PLETHORA DOCUMENTS SUBMITTED BY THE ASSESSEE, THE LD. COUNSEL CLAIMED THAT THE ASSESSEE HAS PROVED THE GENUINENES S OF THE LONG TERM CAPITAL GAIN EARNED BY HIM HENCE THE LONG TERM CAPITAL GAIN EARN ED BY THE ASSESSEE IS NOT BOGUS. 8. WE NOTE THAT IN THE ASSESSEES CASE UNDER CONSID ERATION, THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN TO THE TUNE OF RS. 42,06,250 /- ON SALE OF M/S KAILASH AUTO FINANCE LTD. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEARNE D COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 08.05.2019 , PASSED BY THE DIVISION BENCH OF THIS TRIBUNAL IN THE CASE OF SANJIB KUMAR PATW ARI (HUF) I.T.A. NO.205/KOL/2018, FOR ASSESSMENT YEAR 2014-15, DATED 08.05.2019.THE SCRIP/ SHARES OF M/S KAILASH AUTO FINANCE LTD. HAS BEEN DI SCUSSED AND ADJUDICATED BY THE COORDINATE BENCH, IN FAVOUR OF ASSESSEE. LEARNE D COUNSEL FOR THE ASSESSEE SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 5 55 5 SUBMITTED THAT THE PRESENT APPEAL IS SQUARELY COVER ED BY THE AFORESAID ORDER OF THE TRIBUNAL, A COPY OF WHICH WAS ALSO PLACED BEFORE TH E BENCH. 9. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 10. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF TH E MATTER THAN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN THE CAS E OF SANJIB KUMAR PATWARI (HUF) IN I.T.A. NO.205/KOL/2018, FOR ASSESSMENT YEA R 2014-15, ORDER DATED 08.05.2019. IN THIS ORDER, THE TRIBUNAL HAS INTER ALIA OBSERVED AS FOLLOWS: 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE IS A REGULAR INVESTOR IN SHA RES AND HAS BEEN INVESTING IN SHARES SINCE PAST SEVERAL YEARS. THE SAID FACT IS EVIDENT FROM THE DETAILS GIVEN BELOW: THUS, FROM THE ABOVE TABLE, IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE IS A REGULAR INVESTOR IN SHARES AND IS HAVING A SUBSTANTIAL AMOUNT OF INV ESTMENTS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD THE IMPUGNED T HREE SCRIPS AND EARNED CAPITAL GAINS ON THE SAME WHICH IS CLAIMED YEAR AFTER YEAR CONSIS TENTLY. THE DETAILS OF LONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE IS GIVEN BELOW: WE NOTE THAT THE ASSESSEE CLAIMED EXEMPTION OF LTCG OF RS.7,12,89,467/- U/S 10(38) OF THE ACT, SINCE THE SHARES PURCHASED AND SOLD WERE L ISTED SHARES AND WERE PURCHASED AND SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 6 66 6 SOLD THROUGH STOCK BROKER IN STOCK EXCHANGE AND STT WAS DEDUCTED AT THE TIME OF SALE. THE DETAILS OF PURCHASE AND SALES TRANSACTION MADE BY THE ASSESSEE IS GIVEN BELOW: THEREFORE, THE DETAILS OF LTCG OF RS. 7,12,89,467/- EARNED DURING THE FINANCIAL YEAR ON ACCOUNT OF SALE OF SHARES THROUGH A REGISTERED STOC K BROKER IN A RECOGNIZED STOCK EXCHANGE AND CLAIMED AS EXEMPT U/S 10(38) OF THE AC T IS AS UNDER: SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 7 77 7 SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 8 88 8 WE NOTE THAT THE AO IN HIS ORDER HAS DISCUSSED ABOU T THE INTERIM ORDER OF SEBI, WHERE SEBI HAS RESTRAINED SOME PERSONS INCLUDING ASSESEE FROM ACCESSING THE SECURITIES MARKET. HOWEVER, SEBI IN ITS FINAL ORDER DID NOT GI VE ADVERSE COMMENT.THE SAME WAS REVOKED BY SEB1, VIDE ITS FINAL ORDER, SEB1/WTM/MPB /EFD-DRA- 1/31/2017 DATED 21.09.2017, (PAGE NOS. 69-84). ASSESSEE'S NAME IS A T S.N. 154 (AT PAGE NO. 80) READ WITH PARA 7 OF PAGE NO. 83. THE AO HAS MADE SOME OTHER G ENERAL ALLEGATIONS INCLUDING THE STATEMENT OF AN ALLEGED ENTRY OPERATOR SRI SUNIL DO KANIA AT PAGE NO. 22 OF THE ASSESSMENT ORDER. HOWEVER, NO COPY OF SUCH STATEMENT WAS GIVEN TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS EXAMINATION OF THE PARTY WAS ALLOWED TO TH E ASSESSEE. FURTHER, THE AO DID NOT BROUGHT ANY CORROBORATIVE EVIDENCE ON RECORD TO SUB STANTIATE THE CONTENTS OF THE STATEMENT RELIED ON.WE NOTE THAT NOT ALLOWING THE A SSESSEE TO CROSS EXAMINE THE WITNESS BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESS WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY. WE NOTE THAT SAME VIEW EXPRESSED BY THE HON`BLE CALCUTTA HIGH COURT I N THE CASE OF EASTERN COMMERCIAL ENTERPRISES 210 ITR 103 (CAL), WHEREIN IT WAS HELD THAT IT IS A TRITE LAW THAT CROSS EXAMINATION IS THE SINE QUA NON OF DUE PROCESS OF T AKING EVIDENCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE PARTY UNLESS THE PARTY IS PUT ON NOTICE OF THE CASE MADE OUT AGAINST HIM. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER BASED ON THESTATEMENT OF AN ALLEGED ENTRY OPERATOR SRI SUNIL DOKANIAIS NOT SUSTAINABLE IN LAW, AS THE ASSESSING OFFICER DID NOT PROVIDE AN OPPORTUNIT Y TO THE ASSESSEE TO CROSS EXAMINE THE STATEMENT OF SRI SUNIL DOKANIA. 13. NOW, COMING TO THE MERITS OF THE ASSESSEE`S CAS E, WE NOTE THAT LD COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US PAPER BOOK WHICH CONTA IN THE DOCUMENTS AND EVIDENCES IN SUPPORT OF THE PURCHASE AND SALE OF SHARES ON WHICH THE LONG TERM CAPITAL GAIN(LTCG) AROSE TO THE ASSESSEE. THESE ALL DOCUMENTS AND EVID ENCES WERE AVAILABLE BEFORE THE LD CIT(A) AS WELL AS BEFORE THE LD AO. THE ASSESSEE SU BMITTED BEFORE US FOLLOWING DOCUMENTS AND EVIDENCES IN RESPECT OF KAILASH AUTO FINANCE LTD. (1) KAILASH AUTO FINANCE LTD. I) COPY OF PURCHASE BILL DATED 12.02.2012, REFLECTI NG THE PURCHASE OF 3,20,000 SHARES OF CAREFUL PROJECTS ADVISORY LTD. FROM TRUMP TRADERS P VT. LTD. (PAPER BOOK PAGE NO. 4) II) COPY OF PURCHASE BILL DATED 09.10.2012 REFLECTI NG THE PURCHASE OF 9,00,000 SHARES OF CAREFUL PROJECTS ADVISORY LTD. FROM TRUMP TRADERS P VT. LTD. (PAPER BOOK PAGE NO. 5) SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 9 99 9 III) COPY OF BANK STATEMENT REFLECTING THE DEBIT TR ANSACTION OF THE AMOUNT OF RS. 3,20,000/- PAID FOR THE PURCHASE OF SHARES BY CHEQU E NO. 729958 ON 10.02.2012 (PAPER BOOK PAGE NO. 9) IV) COPY OF BANK STATEMENT REFLECTING THE DEBIT TRA NSACTION OF THE AMOUNT OF RS. 9,00,000/- PAID FOR THE PURCHASE OF SHARES BY CHEQU E NO. 037633 ON 09.10.2012 (PAPER BOOK PAGE NO. 8) V) COPY OF STATEMENT OF DEMAT ACCOUNT EVIDENCING TH E DEBIT OF SHARES OF KAILASH AUTO FINANCE LTD. ON 07.04.2014, 09.04.2014, 10,04,2014, 11.04.2014, 15.04.2014, 16.04.2014 AND SO ON; (PAPER BOOK PAGE NO. 64- 65) VI) COPY OF ORDER APPROVING THE SCHEME OF AMALGAMAT ION PASSED BY THE HON'BLE HIGH COURT IN RELATION TO MERGER OF KAILASH AUTO FINANCE LTD. AND CAREFUL PROJECTS ADVISORY LTD. AND PANCHSHUL MARKETING LTD. (PAPER BOOK PAGE NO. 85-115). VII) COPY OF CONTRACT NOTES EVIDENCING THE SALE OF SHARES OF KAILASH AUTO FINANCE LTD. VIII) COPY OF BANK STATEMENT REFLECTING THE TRANSAC TIONS OF SALE OF SHARES OF KAILASH AUTO FINANCE LTD. (PAPER BOOK PAGE NO. 59-61) IX) SEB1 BY ITS INTERIM ORDER DATED 29.03.2016 REST RAINED 246 ENTITIES FROM ACCESSING THE SECURITIES MARKET AND FROM DEALING AND BUYING & SEL LING IN SECURITIES, DIRECTLY OR INDIRECTLY IN ANY MANNER WHATSOEVER TILL ANY FURTHE R DIRECTIONS (PAGE NO. 69) AND INCLUDED KAILASH AUTO FINANCE LTD. AND ASSESSEE AT SERIAL NO. 1 AND SERIAL NO. 156 (PAGE NOS. 70 & 74 RESPECTIVELY) . X) THE SAME WAS REVOKED BY SEB1 VIDE ITS ORDER SEB1 /WTM/MPB/EFD-DRA- 1/31/2017 DATED 21.09.2017 (PAGE NOS. 69-84). ASSESSEE'S NAME IS AT S.N. 154 (AT PAGE NO. 80) READ WITH PARA 7 OF PAGE NO. 83. (2) LIFELINE DRUG & PHARMA LTD. I) COPY OF ALLOTMENT ADVICE DATED 05.10.2012 REFLEC TING THE PURCHASE OF 20,000 SHARES OF LIFELINE DRUGS & PHARMA LTD. (PAPER BOOK PAGE NO. 6 ) (LATER, 20,000 SHARES OF RS. 10 EACH WERE SPLIT TO 2,00,000 SHARES OF RS. 1 EACH) II) COPY OF BANK STATEMENT REFLECTING THE DEBIT TRA NSACTION OF THE AMOUNT OF RS. 12,00,000/- PAID FOR THE PURCHASE OF SHARES,BY CHEQ UE NO. 037632 ON 01.10.2012 (PAPER BOOK PAGE NO. 8) III) COPY OF STATEMENT OF DEMAT ACCOUNT EVIDENCING THE DEBIT OF SHARES OF LIFELINE DRUGS & PHARMA LTD. ON 01.07.2014, 08.07.2014, 11.07.2014 , 15.07.2014, 21.07.2014 AND SO ON; (PAPER BOOK PAGE NO. 66-67) IV) COPY OF CONTRACT NOTES EVIDENCING THE SALE OF S HARES OF LIFELINE DRUGS & PHARMA LTD.; V) COPY OF BANK STATEMENT REFLECTING THE TRANSACTIO NS OF SALE OF SHARES OF LIFELINE DRUGS & PHARMA LTD. (PAPER BOOK PAGE NO. 59-61) (3) EINS EDUTCEHLTD. (NOW APLAYA CREATIONS LTD.) SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 I)COPY OF PURCHASE BILL DATED 10.08.2013, REFLECTIN G THE PURCHASE OF 50,000 SHARES OF EINS EDUTECH LTD. FROM NEPTUNE FINANCIAL ADVISORY P VT. LTD. (PAPER BOOK PAGE NO.7); II) COPY OF BANK STATEMENT REFLECTING THE DEBIT TRA NSACTION OF THE AMOUNT OF RS. 8,00,000/- PAID FOR THE PURCHASE OF SHARES BY CHEQUE NO. 37644 ON 01.08.2013 (PAPER BOOK PAGE NO. 10) III) COPY OF STATEMENT OF DEMAT ACCOUNT EVIDENCING THE DEBIT OF SHARES OF EINS EDUTECH LTD. ON 01.12.2014, 02.12.2014, 06.12.2014, 11.12.2 014 AND SO ON; (PAPER BOOK PAGE NO. 63) IV) COPY OF CONTRACT NOTES EVIDENCING THE SALE OF S HARES OF E1NS EDUTECH LTD.; V).COPY OF BANK STATEMENT REFLECTING THE TRANSACTIO NS OF SALE OF SHARES OF EINS EDUTECH LTD. (PAPER BOOK PAGE NO. 59-61) . THEREFORE, BY SUBMITTING THESE PLETHORA DOCUMENTS A ND EVIDENCES, THE LD COUNSEL FOR THE ASSESSEE CLAIMED THAT LONG TERM CAPITAL GAIN (LTCG) EARNED IN RESPECT OF THE SCRIPS, NAMELY: KAILASH AUTO FINANCE LTD., LIFELINE DRUG & PHARMA L TD, AND EINSEDUTCEH LTD. (NOW APLAYA CREATIONS LTD.) ARE GENUINE. WE ALSO NOTE TH AT THE SECURITIES EXCHANGE BOARD OF INDIA (SEBI) ALSO DECLARED THESE SCRIPS AND SHARES AS GEN UINE AND THE INTERIM ORDER PASSED BY THE SEBI WAS REVOKED BY SEB1 ITSELF, VIDE ITS ORDER SEB1/WTM/MPB /EFD-DRA- 1/31/2017 DATED 21.09.2017 (PAGE NOS. 69-84). ASSESSEE'S NAME IS AT S.N. 154 (AT PAGE NO. 80) READ WITH PARA 7 OF PAGE NO. 83. HENCE, WE NOTE THAT SINCE TH ESE SHARES/SCRIPS WERE TRADED ON THE PLATFORM OF RECOGNIZED STOCK EXCHANGE AND THE SECURITIES EXCHANGE BOARD OF INDIA (SEBI) DID NOT GIVE ANY ADVERSE REPORT THEREFORE, LONG TERM CAPITAL GAIN ARISE OR EARNED B Y THE ASSESSEE SHOULD BE GENUINE AND IT SHOULD NOT BE BOGUS BY ANY STRETCH OF IMAGINATION. MOREOVER, THE ASSESSING OFFICER DID NOT DOUBT ON THE DOCUMENT S AND EVIDENCES AS NOTED BY US ABOVE. THE ASSESSING OFFICER MAINLY MADE ADDITION BASED ON SUSPICION, AND PROBABILITY. AS WE HAVE NOTED THAT IN THE COURSE OF ASSESSMENT PROCEED INGS, ALL THE RELEVANT DETAILS AND DOCUMENTS REQUISITIONED BY THE LD. ASSESSING OFFICE R IN NOTICE U/S 142(1) WAS FILED BEFORE HIM. THE ASSESSEE HAS SUBMITTED THE DETAILS OF LTC G, COPY OF CONTRACT NOTES, BANK STATEMENTS, ALLOTMENT ADVISE, COPY OF BILLS, DEMAT ACCOUNT AND OTHER NECESSARY DETAILS BEFORE AO AND THE AO FAILED TO BRING ANY COGENT EVI DENCE ON RECORD TO SHOW THAT THESE DOCUMENTS AND EVIDENCES WERE FALSE AND UNTRUE. 14. WE WOULD LIKE TO MENTION SOME IMPORTANT SALIENT FEATURES OF THE LTCG TRANSACTION ENTERED INTO BY THE ASSESSEE, WHICH IS GIVEN BELOW: (I) THE ASSESSEE IS A REGULAR INVESTOR IN SHARES AN D SECURITIES AS EVIDENT FROM PAST ASSESSMENT RECORDS. (II) THE SHARES WERE PURCHASED AND SOLD THROUGH A R EGISTERED BROKER NAMED ' EUREKA STOCK & SHARE BROKING SERVICES LTD .' IN THE STOCK EXCHANGE. (III) THE SHARES WERE PURCHASED AND SOLD BASED ON T HE PREVAILING MARKET CONDITION. (IV) THE PURCHASE AND SALE OF SHARES ARE SUPPORTED BY CONTRACT NOTES. THE PAYMENTS WERE RECEIVED THROUGH PROPER BANKING CHANNEL. (V) THE PURCHASE AND SALE TRANSACTIONS WERE SUBJECT ED TO SECURITY TRANSACTION TAX, SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. (VI) THE SHARE PURCHASE AND SALE TRANSACTIONS ARE R EFLECTED IN THE D-MAT ACCOUNT. SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 (VII) THE PURCHASE OF SHARES (INVESTMENTS) WAS NOT DISPUTED IN EARLIER YEAR, WHERE ASSESSMENT IS COMPLETED U/S. 143(3) OF THE INCOME T AX ACT. (VIII) THESE FACTS ARE VERIFIABLE FROM THE REGULAR BOOKS OF ACCOUNTS. (IX) THE TRANSACTIONS CAN ALSO BE VERIFIED FROM THE STOCK EXCHANGE. (X) THE SEBI HAS CLEARED THESE SHARES AND SCRIPS FR OM THE ALLEGATION OF MARKET RIGGING. HENCE, THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. 15. NOW COMING TO THE ALLEGATIONS MADE BY THE ASSES SING OFFICER FOR MAKING THE ADDITION. THE ASSESSING OFFICER ALLEGED IN THE ASSESSMENT OR DER THAT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING, KOLKATA, THE CLAIM OF LTCGU/S 10(38) BY THE ASSESSEE IS BOGUS. IN THE ASSESSMENT ORDER, THE LD. ASSESSING OFFICER HAS MENTIONED THE STORY THAT THE LIST OF 84 SCRIPS IDENTIFIED BY THE INVESTIGATION WING WHERE PRICE RIGGING HAVE BEEN FOUND WHICH INCLUDES THE NAME OF THE SCRI PS IN WHICH THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER ALLEG ED THAT THE TRANSACTIONS WERE PRE- ARRANGED TO BOOK SUCH GAIN IN THE HANDS OF THE PRE- FIXED BENEFICIARIES. THE ABOVE ALLEGATIONS ARE GENERALIZED AND NOT SPECIFIC TO THE CASE OF THE ASSESSEE. THE ASSESSEE WAS ASKED TO SHOW CAUSE, VIDE LETTER DATED 14.12.2017, AS TO WHY THE LONG TERM CAPITAL GAIN BOOKED BY WAY OF TRANSACTION IN THE AFORESAID SCRIP S WOULD NOT BE CONSIDERED BOGUS, AND CONSEQUENTLY, BE ADDED TO HIS TOTAL INCOME. THE ASS ESSEE DULY REPLIED TO THE SHOW CAUSE NOTICE VIDE HIS LETTER DATED 22.12.2017 THEREBY GIV ING ALL THE DETAILS AND REASONS AS REQUIRED BY THE AO TO PROVE THAT THE LTCG INCURRED BY THE ASSESSEE ON SALE OF ABOVE MENTIONED SHARES ARE GENUINE AND CANNOT BE CONSIDER ED AS BOGUS. HOWEVER, THE LD. AO DID NOT CONSIDER THE SUBMISSION OF THE ASSESSEE AND MADE THE ADDITION OF LTCG IN THE HANDS OF THE ASSESSEE TREATING THE SAME TO BE UNEXP LAINED. WE NOTE THAT IT APPEARS FROM THE SHOW CAUSE NOTICE THAT THE LD. AO HAS RELIED ON THE FOLLOWING INFORMATION FOR ARRIVING AT SUCH CONCLUSION: (A) INFORMATION RECEIVED FROM THE OFFICE OF DIT(INV ), KOL REGARDING ENTRY OF BOGUS LTCG. (B) STATEMENT GIVEN BY SRI SUNIL DOKANIA, AN ALLEGE D ENTRY OPERATOR WHO WAS INVOLVED IN PRICE RIGGING AND PROVIDING BOGUS LTCG THROUGH PENN Y STOCKS. SO FAR FIRST ALLEGATION OF AO IS CONCERNED, WE NOTE THAT THE ASSESSEE HAS PURCHASED THE SHARES FROM THE RECOGNIZED STOCK EXCHANGE THROUGH H IS BROKER I.E. EUREKA STOCK & SHARE BROKING SERVICES LTD. ON VARIOUS DATES. THE ASSESSE E SUBMITTED CONTRACT NOTES. THIS TRANSACTION IS NOT THROUGH ANY PREFERENTIAL ALLOTME NT OR OFFLINE SALE. ALL THE TRANSACTIONS ARE MADE THROUGH PROPER BANKING CHANNELS. THE SHAR ES WERE SOLD THROUGH REGISTERED SHARE BROKER, M/S EUREKA STOCK & SHARE BROKING SERV ICES LTD. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED ALL THE DETAILS AND DOCUMENTS THAT WERE NECESSARY FOR ALLOWING THE CLAIM OF THE ASSESS EE. IN THE ASSESSMENT ORDER U/S. 143(3), LD. AO HAS STATED THAT THERE WAS INFLOW OF SOME INFORMATION FROM THE INVESTIGATION WING ALLEGING THAT THE ASSESSEE WAS I NVOLVED IN SELLING OF SO CALLED ' PENNY STOCK '. IN THIS REGARD IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS FOLLOWS: I) THE ASSESSEE IS A REGULAR INVESTOR IN SHARES AND SECURITIES AS EVIDENT FROM PAST ASSESSMENT RECORDS. SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 12 22 2 II) THE SHARES WERE PURCHASED AND SOLD THROUGH A RE GISTERED BROKER NAMED 'EUREKA STOCK & SHARE BROKING SERVICES LTD.' IN THE STOCK E XCHANGE. III) THE SHARES WERE PURCHASED AND SOLD BASED ON TH E PREVAILING MARKET CONDITION. IV) THE PURCHASE AND SALE OF SHARES ARE SUPPORTED B Y CONTRACT NOTES. THE PAYMENTS WERE RECEIVED THROUGH PROPER BANKING CHANNEL. V) THE PURCHASE AND SALE TRANSACTIONS WERE SUBJECTE D TO SECURITY TRANSACTION TAX, SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. VI) THE SHARE PURCHASE AND SALE TRANSACTIONS ARE RE FLECTED IN THE D-MAT ACCOUNT. VII) THE PURCHASE OF SHARES (INVESTMENTS) WAS NOT D ISPUTED IN EARLIER YEAR, WHERE ASSESSMENT IS COMPLETED U/S. 143(3) OF THE INCOME T AX ACT. VIII) THESE FACTS ARE VERIFIABLE FROM THE REGULAR B OOKS OF ACCOUNTS. IX) THE TRANSACTIONS CAN ALSO BE VERIFIED FROM THE STOCK EXCHANGE. X) THE INTERIM ORDER OF SEBI ABOUT WHICH THE AO HAS DISCUSSED IN HIS ORDER, HAS BEEN REVERSED BY THE FINAL ORDER OF SEBI DATED 21.09.201 7,WHERE THE SEBI HAS CLEARED THE ASSESSEE FROM THE ALLEGATION OF MARKET RIGGING. THEREFORE, SO FAR FIRST ALLEGATION OF THE ASSESSING OFFICER IS CONCERNED, THE ASSESSEE HAS PROVED BEYOND ANY DOUBT THAT ASSESSEE IS A REGULAR INVESTOR IN SHARES AND SECURITIES. THE SHARES WERE PURCHASED AND SOLD THROUGH A REGISTERED BROKER NAMED 'EUREKA STOCK & SHARE BROKING SERVICES LTD.' IN THE STOCK EXCHANGE. THE SHARES WERE PURCHASED AND SOLD BASED ON THE PREVAILING MARKET CONDITION. THE PAYME NTS WERE RECEIVED THROUGH PROPER BANKING CHANNEL. THE PURCHASE AND SALE TRANSACTIONS WERE SUBJECTED TO SECURITY TRANSACTION TAX, SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. THE SHARE PURCHASE AND SALE TRANSACTIONS ARE REFLECTED IN THE D-MAT AC COUNT. THE PURCHASE OF SHARES (INVESTMENTS) WAS NOT DISPUTED IN EARLIER YEAR, WHE RE ASSESSMENT IS COMPLETED U/S. 143(3) OF THE INCOME TAX ACT. THESE FACTS ARE VERIFIABLE FROM THE REGULAR BOOKS OF ACCOUNTS. THE TRANSACTIONS CAN ALSO BE VERIFIED FROM THE STOC K EXCHANGE. THEREFORE, WE DO NOT AGREE WITH THE ASSESSING OFFICER AND HENCE THE ADDI TION MADE BY ASSESSING OFFICER NEEDS TO BE DELETED. SO FAR SECOND ALLEGATION OF THE ASSESSING OFFICER I S CONCERNED, WE NOTE THATASSESSING OFFICER HAS RELIED ON THE STATEMENT GIVEN BY SRI SU NIL DOKANIA, AN ALLEGED ENTRY OPERATOR. WE NOTE THAT THE AO HAS MADE GENERAL ALLEGATIONS AB OUT THE ALLEGED ENTRY OPERATOR, SRI SUNIL DOKANIA, VIDE PAGE NO. 22 OF THE ASSESSMENT ORDER. WE NOTE THAT NO COPY OF SUCH STATEMENT WAS GIVEN TO THE ASSESSEE NOR ANY OPPORTU NITY OF CROSS EXAMINATION OF THE PARTY WAS ALLOWED TO THE ASSESSEE. FURTHER, THE AO DID NO T BROUGHT ANY CORROBORATIVE EVIDENCE ON RECORD TO SUBSTANTIATE THE CONTENTS OF THE STATE MENT RELIED ON. WE NOTE THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESS BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESS WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY. WE NOTE THAT SA ME VIEW EXPRESSED BY THE HON`BLE CALCUTTA HIGH COURT IN THE CASE OF EASTERN COMMERCI AL ENTERPRISES 210 ITR 103 (CAL), WHEREIN IT WAS HELD THAT IT IS A TRITE LAW THAT CRO SS EXAMINATION IS THE SINE QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE PARTY UNLESS THE PARTY IS PUT ON NOTICE OF THE CASE MADE OUT AGAINST HIM. SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 13 33 3 WE NOTE THAT THE FACT THAT NEITHER THE STATEMENT RE LIED ON BYTHE AUTHORITIES BELOW WERE PROVIDED TO THE ASSESSEE NOR ANY CROSS EXAMINATION WAS ALLOWED TO PROVE THE VERACITY OF THE STATEMENT. WE NOTE THAT THE FACT THAT IN THE ST ATEMENT OF THIRD PARTY, THE NAME OF THE ASSESSEE WAS NOT IMPLICATED. EVEN OTHERWISE, ACCORD ING TO LEARNED COUNSEL, NO ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE ON TH E BASIS OF UNTESTED STATEMENTS WITHOUT ALLOWING OPPORTUNITY OF CROSS-EXAMINATION. FOR THAT WE RELY ON THE FOLLOWING JUDGEMENTS IN SUPPORT OF THE AFORESAID VIEW:- (I) ANDMAN TIMBER INDUSTRIES VS. CCE [2015] 62 TA XMANN.COM 3 (SC) (II) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2 009 (AGRA ITAT) (III) ACIT VS. AMITA AGARWAL & OTHERS ITA NO. 247 /(KOL) OF 2011 (KOL ITAT) (IV) ITO VS. BIJAYA GANGULY- ITA NOS. 624 & 625/KO L/2011 (KOL ITAT) (V) GANESHMULLBIJAY SINGH BAID HUF VS. DCIT ITA N OS. 544/KOL/2013 (KOLKATA ITAT) (VI) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22 -26/KOL/2P11 (KOL-ITAT) (VII) MALTI GHANSHYAMBHAI PATADIA VS. ITO - ITA NO .3400/AHD/2015AHMEDABAD ITAT) (VIII) PRATIK SURYAKANT SHAH VS. ITO [2017] 77 TA XMANN.COM 260 (AHMEDABAD ITAT) THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFIC ER BASED ON THE STATEMENT OF AN ALLEGED ENTRY OPERATOR SRI SUNIL DOKANIA IS NOT SUS TAINABLE IN LAW, AS THE ASSESSING OFFICER DID NOT PROVIDE AN OPPORTUNITY TO THE ASSES SEE TO CROSS EXAMINE THE STATEMENT OF SRI SUNIL DOKANIA. COUPLED WITH THIS, THE CBDTS CI RCULAR DATED 10.03.2003 ITSELF MADE IT CLEAR THAT SUCH ADMISSIONS OR STATEMENTS WITHOUT ANY TANGIBLE EVIDENCE FOUND DURING SEARCH CARRY NO SIGNIFICANCE. 16. WE NOTE THAT SECURITIES EXCHANGE BOARD OF INDIA (SEBI) IS AN AUTHORITY WHICH REGULATES THE LISTED COMPANIES. THE SEBI CONTROLS L ISTED COMPANIES AND MAKES RULES AND REGULATIONS AND THE LISTED COMPANIES ARE SUPPOSED T O FOLLOW THE RULES, REGULATIONS AND DIRECTIONS GIVEN BY SEBI. WE NOTE THAT SEB1 BY ITS INTERIM ORDER DATED 29.03.2016 RESTRAINED 246 ENTITIES FROM ACCESSING THE SECURITI ES MARKET AND FROM DEALING AND BUYING & SELLING IN SECURITIES, DIRECTLY OR INDIRECTLY IN ANY MANNER WHATSOEVER TILL ANY FURTHER DIRECTIONS (PAGE NO. 69) AND INCLUDED KAILASH AUTO FINANCE LTD. AND ASSESSEE AT SERIAL NO. 1 AND SERIAL NO. 156 (PAGE NOS. 70 & 74 RESPECT IVELY) . HOWEVER, THE SAME WAS REVOKED BY SEB1 VIDE ITS ORDE R SEB1/WTM/MPB/EFD-DRA- 1/31/2017 DATED 21.09.2017 (PAGE NOS. 69-84). ASSES SEE'S NAME IS AT S.N. 154 (AT PAGE NO. 80) READ WITH PARA 7 OF PAGE NO. 83. WE NOTE TH AT THE SEBI BY ITS ORDER BEARING REFERENCE NO. SEBI/WTM/MPB/EFD- DRA-I/31/2017, DATE D 21.03.2017, HAS HELD AS UNDER: 6.CONSIDERING THE FACT THAT THERE ARE NO ADVERSE F INDINGS AGAINST THE AFOREMENTIONED 244 ENTITIES WITH RESPECT TO THEIR ROLE IN THE MANIPULA TION OF THE SCRIP OF KAILASH AUTO, I AM OF THE CONSIDERED VIEW THAT THE DIRECTIONS ISSUED AGAINST THEM VIDE INTERIM ORDER DATED MARCH 29, 2016 AND CONFIRMATORY ORDERS DATED JUNE 15, 2016, SEPTEM BER 30, 2016, OCTOBER 21, 2016, OCTOBER 27, 2016 AND JULY 13, 2017 ARE LIABLE TO BE REVOKED . IN VIEW OF THE FOREGOING, IN EXERCISE OF THE POWER S CONFERRED UPON US UNDER SECTION 19 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 RE AD WITH SECTIONS 11, 11(4) AND 11B OF THE SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 14 44 4 SEBI ACT, HEREBY REVOKE THE INTERIM ORDER DATED MAR CH 29, 2016 AND CONFIRMATORY ORDERS DATED JUNE 15, 2016, SEPTEMBER 30,2016, OCTOBER 21,2016, OCTOBER 27,2016 AND JULY 13, 2017 QUA AFORESAID 244 ENTITIES (PARAGRAPH 5 ABOVE) WITH IMM EDIATE EFFECT. THE REVOCATION OF THE DIRECTIONS ISSUED VIDE THE A BOVE MENTIONED ORDERS (AT PARAGRAPH 7) IS ONLY IN RESPECT OF THE ENTITIES MENTIONED AT PARAGRAPH 5 OF THIS ORDER IN THE MATTER OF KAILASH AUTO. AS REGARDS REMAINING ENTITIES IN THE SCRIP OF KAILASH AUTO, VIOLATIONS UNDER SEBI ACT, PFUTP REGULATIONS, ETC., WERE OBSERVED AND SEBI SHALL CON TINUE ITS PROCEEDINGS AGAINST THEM. HENCE, THE DIRECTIONS ISSUED VIDE CONFIRMATORY ORDER DATED JUNE 15, 2016 AGAINST THE REMAINING 2 ENTITIES SHALL CONTINUE. THIS REVOCATION ORDER IS W ITHOUT PREJUDICE TO ANY OTHER ACTION SEBI MAY INITIATE AS PER LAW.' WE NOTE THAT IN THE ABOVE ORDER OF THE SEBI, THE NA ME OF THE ASSESSEE IS ALSO MENTIONED IN THE SERIAL NO. 154. THEREFORE, THE SEBI ITSELF HAS FREED THE ASSESSEE FROM MARKET RIGGING ALLEGATION AND THUS THE ASSESSEE IS PROVED TO BE A BONA-FIDE INVESTOR NOT INVOLVED IN ANY MALICIOUS ACTIVITIES. HENCE, CONSIDERING THE ABOVE, IT IS ABUNDANTLY CLEAR THAT NO DOUBT CAN BE ARISEN ABOUT THE SHARES BEING PENNY STOCK. 17. WE NOTE THAT THE ASSESSEE HAD NEVER ENTERED INT O ANY TRANSACTION WITH SRI SUNIL DOKANIA AGAINST WHOM INVESTIGATION WING HAD ALLEGED LY MADE INQUIRY. WE ALSO NOTE THAT IN THE EXTRACTS OF THE STATEMENT OF SRI SUNIL DOKAN IA GIVEN IN THE SHOW CAUSE NOTICE, IT IS NOWHERE MENTIONED THAT THE ALLEGED PERSON HAS PROVI DED ANY ENTRY TO THE ASSESSEE DIRECTLY. THE STATEMENT TALKS ABOUT THE ENTRIES PRO VIDED BY HIM TO PREFERENTIAL ALLOTTEES AND THE MODUS OPERANDI ADOPTED BY HIM FOR PROVIDING THE BOGUS LTCG. THE ASSESSEE BEING A GENUINE INVESTOR WAS UNAWARE OF THE FACT TH AT ANY SUCH ACTIVITY WAS UNDERTAKEN IN THE SCRIPS PURCHASED BY HIM. HE WAS NOWHERE, ASSOCI ATED WITH THE PERSON ALLEGED TO PROVIDE THE ENTRIES AS ALLEGED BY THE AO. WE ALSO N OTE THAT SEBI HAS GIVEN A CLEAN CHIT TO THE COMPANY AND HAS FREED IT FROM THE ALLEGATION OF MARKET RIGGING. THEREFORE, THE ALLEGATION OF THE AO ITSELF BECOMES INFRUCTUOUS. FU RTHER, THE ASSESSEE HAD ALSO REQUESTED FOR AN OPPORTUNITY TO CROSS EXAMINE SRI SUNIL DOKAN IA, WHOSE STATEMENT HAS BEEN RELIED ON BY THE AO FOR MAKING THE ADDITION. HOWEVER, THE LD. AO DID NOT PROVIDE ANY OPPORTUNITY FOR CROSS EXAMINE THE SO-CALLED OPERATO RS. IT IS WELL ESTABLISHED LAW THAT NO ADVERSE VIEW CAN BE TAKEN AGAINST AN ASSESSEE ON TH E BASIS OF STATEMENT RECORDED BY DEPARTMENT OF ANY PERSON WITHOUT PROVIDING COPY OF THE STATEMENT TO THE ASSESSEE AND ALSO WITHOUT PROVIDING OPPORTUNITY FOR CROSS EXAMIN ATION OF THE SAID PERSON. 18. WE NOTE THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. LA VANYA LAND PVT. LTD. [2017] 83TAXMANN.COM 161 (BOM) HELD THAT THERE WAS NO EVIDENCE WHATSOEVER TO ALLEGE THAT MONEY CHANGED HANDS BETWEEN THE ASSESSE E AND THE BROKER OR ANY OTHER PERSON INCLUDING THE ALLEGED EXIT PROVIDER WHATSOEV ER TO CONVERT UNACCOUNTED MONEY FOR GETTING BENEFIT OF LTCG AS ALLEGED. IN THE SAID CAS E, THE HONBLE HIGH COURT AT PARA 21 HELD THAT IN ABSENCE OF ANY MATERIAL TO SHOW THAT H UGE CASH WAS TRANSFERRED FROM ONE SIDE TO ANOTHER, ADDITION CANNOT BE SUSTAINED. 19. WE NOTE THAT ALL THE OBSERVATIONS, CONCLUSIONS AND FINDINGS OF THE LOWER AUTHORITIES ARE BASED ON SUSPICION, SURMISES AND RUMOR. IT IS T RITE LAW THAT THE SUSPICION HOWSOEVER STRONG CANNOT PARTAKE THE CHARACTER OF LEGAL EVIDEN CE. REFERENCE WAS MADE TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF L ALCHAND BHAGAT AMBICA RAM VS. CIT (1959) 37ITR 288 (SC, UMACHARAN SHAW 37 ITR 27 1 AND OMAR SALAY MOHAMED SAIT 37ITR 151. WE NOTE THAT THE ENTIRE CASE OF THE REVENUE IS BASED UPON THE PRESUMPTION THAT THE ASSESSEE HAS PLOUGHED BACK HIS OWN UNACCOUNTED MONEY IN THE FORM OF BOGUS LTCG. HOWEVER, THIS PRESUMPTION OR SUSPICI ON HOWSOEVER STRONG IT MAY APPEAR SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 15 55 5 TO BE, BUT NEEDS TO BE CORROBORATED BY SOME EVIDENC E TO ESTABLISH A LINK THAT THE ASSESSEE HAD BROUGHT BACK HIS UNACCOUNTED INCOME IN THE FORM OF LTCG. 20. WE NOTE THAT SINCE THE PURCHASE AND SALE TRA NSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENT S AND BANK STATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTE D BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BA SIS OF SOME REPORTS OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD COUNSE L, IN ADDITION TO THE AFORESAID JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLO WING CASES:- (I) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (II) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (IV) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (V) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VI) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (VII) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (IX) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (X) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XI) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XII) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XIII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XIV) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XVI) GANESHMULLBIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XVII) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XVIII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XIX) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 21. THE LD COUNSEL ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRAN SACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HON BLE SUPREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRAD ESH [1977] 1 SCC 816 (SC). IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL O WNER ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRI CTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING INF ERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CI RCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BA SIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTE D THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RE LATING TO EXEMPTION CLAIMED BY THE ASSESSEE ON LTCG ON ALLEGED PENNY SOCKS. (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITA NO. 32/AGR/2007 (A GRA ITAT) SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 16 66 6 22. MOREOVER IT WAS SUBMITTED BEFORE US BY LD COUNS EL THAT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SUBMITTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFFECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HIS BROKER WAS A PART Y TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN BSE/CSE. THE LD AR REFERRED TO THE FOLL OWING JUDGMENTS IN SUPPORT OF THIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SE CTION 10(38) OF THE ACT AND TO ASSESS THE SALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME OF TH E ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS.AMITA AGARWAL & OTHERS - ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 23. WE NOTE THAT THE LD. D.R. FOR THE REVENUE HAD H EAVILY RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMALC HAND JAIN IN TAX APPEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIND THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRST LY, IN THAT CASE, THE PURCHASES WERE MADE BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES O F COMPANIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DONE THROUGH THE BROKER AND TH E ADDRESS OF THE BROKER WAS INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOWN AS CAPITAL GAINS WHICH WAS NOT ACCEPTED BY THE A.O. AN D THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTURE IN NATURE OF TRADE. THUS, IT CAN BE SEEN THAT IN THE D ECISION RELIED UPON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARNED ON SALE OF SH ARES WAS CAPITAL GAINS OR BUSINESS PROFIT. 24. WE NOTE THAT W HEN THE TRANSACTIONS WERE AS PER NORMS PRESCRIBED BY SEBI AND CONCERNED STOCK EXCHANGE AND SUFFERED STT, BROKERAG E, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE R EFLECTED IN DEMAT ACCOUNT. AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY ASSESSEE. THE LD AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIV ED BY THE ASSESSEE THROUGH BANKS. IN THESE CIRCUMSTANCES, THE LONG TERM CAPITAL GAIN (LTCG) EARNED BY THE ASSESSEE SHOULD NOT BE TREATED AS BOGUS, AS HELD BY THE JURISDICTIO NAL HON`BLE CALCUTTA HIGH COURT IN VARIOUS CASES, AS MENTIONED BELOW: (I) . CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CA L- HC) INTHIS CASE THE HONBLE CALCUTTA HIGH COURT HELD TH AT THE ASSESSING OFFICERDOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBISACTION. HOWEVER, THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BR OKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THETRANSACTIONS AS IT W ERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THEREVENUE WAS DISMISSED. (II) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 105 OF 2016] (CAL- HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIR MED THE DECISION OF THIS TRIBUNAL, WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASS ESSEE WHERE THE LD AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEEIN RESPECT OF HIS TR ANSACTIONS IN ALLEGED PENNY STOCKS. THE SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 17 77 7 TRIBUNAL FOUNDTHAT THE LD AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON THE BASIS OFSOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE LD AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT THE LD AOS CONCLUSIONS ARE MERELY BASED ON THE INF ORMATION RECEIVED BY HIM. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. (III) CIT V. ANDAMAN TIMBERS INDUSTRIES LTD [ITA NO . 721OF 2008] (CAL-HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM EDTHE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEEWASALLOWED SINCE THE LD AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHA RES BY THE ASSESSEE WERE NOT GENUINE. (IV) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34 738 (CAL- HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE LD AO, BASED ON THE INFORMATION RECEIV ED BY HIM FROM CALCUTTA STOCKEXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURIS DICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CLAIM OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DO CUMENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CO NTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RE CEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WA S SUMMARILY DISMISSED BY HIGH COURT. (V).THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF ALPINE INVESTMENTS ITA 620 OF 2008, DATED 26 TH AUGUST 2008, HELD AS FOLLOWS: IT APPEARS THAT THE SHARE LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZE D STOCKBROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE PAYMENTS MADE TO THE STOCKBROK ER AND ALL THE PAYMENTS RECEIVED FROM STOCKBROKER THROUGH ACCOUNT PAYEE INSTRUMENTS, WHICH WERE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME THE TRIBUNAL CAME TO THE CONCLUSION AND AL LOWED THE APPEAL FILED BY THE ASSESSEE. IN DOING SO, THE TRIBUNAL HELD THAT THE T RANSACTION FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCES COULD NOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER, IT WAS HELD THAT THE TRANSACTIONS OF SHARE ARE GENU INE. THEREFORE, WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS ANY SUBST ANTIAL QUESTION OF LAW INVOLVED IN THIS MATTER. HENCE, THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. (VI) THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME VS M/S. BLB CABLES AND CONDUCTORS ; ITAT NO.78 OF 2017, GA NO.747 OF 2017; DT. 19 JUNE, 2018, HAD UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS FOLLOWS:- '4. WE HAVE HEARD BOTH THE SIDE AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE LD. AR SUBMITTED TWO PAPERS BOOKS. FIRST BOOK IS RUNNIN G IN PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US THE LD. AR SUBMITTED THAT THE ORDER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH THE BROKER WAS EXPELLED. THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF BOTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBM ITTED THE IT RETURN, LEDGER COPY, LETTER TO AO AND PAN OF THE BROKER IN SUPPORT OF HI S CLAIM WHICH IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCH ASE & SALE CONTRACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PUR CHASE AND SALES REGISTERS WERE ALSO SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 18 88 8 SUBMITTED IN THE FORM OF THE PAPER BOOK WHICH IS PL ACED AT PAGES 76 TO 87. THE BOARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIO NS IN COMMODITY WAS PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER HAND, THE LD. DR RELIED IN THE ORDER OF THE LOWER AUTHORITIES. 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD S UCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME LOSS WAS ALSO CONF IRMED BY THE LD. CIT(A). HOWEVER, WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER W ERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE H AS TO BE SOME CONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTI VE EVIDENCE. (VII).M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 2012] (CAL- HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDEN CES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINI ON OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRAN GED TRANSACTIONS SO AS TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN TH E VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY FAILED TO SUBSTANTIATE THAT. THE HIGH COU RT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING PRICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. (VIII)CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMI TED [2013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RECORD ANY F INDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER HELD THAT IN ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIB LE, TO HOLD THAT THE TRANSACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS O R WERE RESORTED TO WITH ULTERIOR MOTIVE. WE NOTE THAT ABOVE MENTIONED JUDGMENTS OF HON`BLE C ALCUTTA HIGH COURT, BY AND LARGE HELD THAT WHERE THE WHOLE TRANSACTIONS WERE SUPPORT ED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCKBROKER OF STOCK EXCHANGE AND ALL THE PAYMENTS MADE TO THE STOCKBROKER AND ALL THE PAYMENTS RECEIV ED FROM STOCKBROKER THROUGH ACCOUNT PAYEE CHEQUES, THEN IN THESE FACTS AND CIRCUMSTANCE S ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF BOGUS LONG TERM CAPITAL GAIN SHOULD B E DELETED. WE NOTE THAT UNLESS AND UNTIL THE ORDER OF JURISDICTIONAL HON`BLE HIGH COUR T IS REVERSED BY HON`BLE SUPREME COURT, THE SAME HAS TO BE GIVEN DUE EFFECT. JUDICIA L DISCIPLINE DEMANDS THAT ONCE AN ORDER HAS BEEN PASSED IN THE ASSESSEES OWN CASE, B Y THE JURISDICTIONAL HIGH COURT, THE TRIBUNAL IS DUTY BOUND TO ACT IN ACCORDANCE WITH TH E SAME. WE NOTE THAT IN THE CASE OF UNION OF INDIA V. RAGHUBIR SINGH (1989) 178 ITR 548 (SC), THE SUPREME COURT HELD THAT THE DOCTRINE OF BINDING PRECEDENT HAS MER IT OF PROMOTING CERTAINTY AND CONSISTENCY IN JUDICIAL DECISIONS. AS PER THE DOCTRINE OF PRECEDENT, ALL LOWER COURTS, TRIBUNALS AND AUTHORITIES EXERCISING JUDICI AL OR QUASI-JUDICIAL FUNCTIONS ARE BOUND BY THE DECISIONS OF THE HIGH COURT WITHIN WHO SE TERRITORIAL JURISDICTION THESE COURTS, TRIBUNALS &AUTHORITIES FUNCTIONS. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE JURISDICTIONAL, HON`BLE HIGH COURT OF CALCUTTA, ON SIMILAR AND IDENTICAL FACTS, THE AD DITION MADE BY ASSESSING OFFICER SHOULD BE DELETED. 25. WE NOTE THAT W HEN THE TRANSACTIONS WERE AS PER NORMS PRESCRIBED BY SEBI AND CONCERNED STOCK EXCHANGE AND SUFFERED STT, BROKERAG E, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE R EFLECTED IN DEMAT ACCOUNT. AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY ASSESSEE. THE LD AO FAILED TO BRING SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 19 99 9 ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIV ED BY THE ASSESSEE THROUGH BANKS. IN THESE CIRCUMSTANCES, THE LONG TERM CAPITAL GAIN (LTCG) EARNED BY THE ASSESSEE SHOULD NOT BE TREATED AS BOGUS, AS HELD BY THE COORDINATE BENCHES OF ITAT KOLKATA, IN THE FOLLOWING CASES: (I). MR. SANJIV SHROFF,I.T.A. NO. 1197/KOL/2018, AS SESSMENT YEAR: 2014-15, ORDER DATED, 02.01.2019 28. WE NOTE THAT SINCE THE PURCHASE AND SALE TR ANSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND BANK ST ATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTED BY THE LD AO IN EA RLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BASIS OF SOME REPORTS OF THE IN VESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAID JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLOWING CASES:- (XX) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (XXI) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (XXII) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (XXIII) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (XXIV) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (XXV) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (XXVI) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (XXVII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (XXVIII) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (XXIX) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XXX) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XXXI) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XXXII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XXXIII) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XXXIV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XXXV) GANESHMULLBIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XXXVI) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XXXVII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XXXVIII) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 29. THE LD AR ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COU RT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADESH [1977] 1 SCC 816 (S C). IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR T RANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNER ALWAYS RESTS ON THE PER SON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRC UMSTANCES UNERRINGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX CO URT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BEC AUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING J UDGMENTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAIMED BY THE ASSESSEE ON LTCG ON ALL EGED PENNY SOCKS. (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 2 22 20 00 0 (IV) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 30. MOREOVER, IT WAS SUBMITTED BEFORE US BY LD AR T HAT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SUBMITTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFFECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HIS BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN CSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SU PPORT OF THIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO W AS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSE SS THE SALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (V) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 (AGRA ITAT) (VI) ACIT VS.AMITA AGARWAL & OTHERS - ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (VII) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (VIII) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 31. WE NOTE THAT THE LD. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMALCHAND JAIN IN TAX AP PEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIND THAT THE F ACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MADE BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES O F THE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WAS INCIDENTAL LY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOWN AS CAPITAL GAINS W HICH WAS NOT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE AS SESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTURE IN NATURE OF TRADE. T HUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UPON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARNED ON SALE OF SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT. 32.IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG ON SALE OF SHARES OF M/S KAFL. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, AND SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND DELETE THE CONSEQUEN TIAL ADDITION. (II) JAGMOHAN AGARWAL VS. ACIT, ITA NO.604/KOL/2018 , ORDER DATED 05.09.2018. 35.IN THE LIGHT OF THE DOCUMENTS STATED IN PARA 30 AT PAGE14(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICAT E THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAN D AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE 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 T HE ALLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANI PULATION OF SHARES MUST THEREFORE CONSEQUENTLY FAIL. AT THE COST OF REPETIT ION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILL S, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TR ANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. NEITHER THESE EVIDENCES WERE FOUND BY THE AO NOR BY THE LD. CIT(A ) TO BE FALSE OR FICTITIOUS OR BOGUS NOR THE AO HAD ISSUED ANY NOTICE TO THE BROKE RS FOR CONFIRMATION. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENC E 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 T HE ASSESSEE EXEMPTED U/S 10(38) OF THE ACT ON THE BASIS OF SUSPICION, SURMISES AND CON JECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRONG, CANNOT PARTAKE T HE CHARACTER OF LEGAL EVIDENCE. IN THE AFORESAID FACTS AND CIRCUMSTANCE, FOR ALLOWI NG THE APPEAL WE RELY ON THE SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 2 22 21 11 1 DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INVESTMENTS IN ITA NO.620 OF 2008 DATED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOWS : IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZE D STOCK BROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECEIVED FROM THE S HARE BROKER THROUGH ACCOUNT PAYEE WHICH ARE ALSO FILED IN ACCORDANCE WITH THE ASSESSM ENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESS EE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANSACTIONS CANNOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER IT WAS HELD THAT THE TRANSACT IONS OF THE SHARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON T O HOLD THAT THERE IS NO SUBSTANTIAL QUESTION OF LAW HELD IN THIS MATTER. HENCE THE APPE AL BEING ITA NO.620 OF 2008 IS DISMISSED. 36. WE NOTE THAT THE LD. AR CITED PLETHORA OF THE C ASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALR EADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DUL Y CONSIDERED TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTIC E ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFOR ESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JU STIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOM E OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDIT ION. (III).NAVNEET AGARWAL, ITA NO.2281/KOL/ 2017, ORDER DATED 05.09.2018 THE ASSESSEE IN THIS CASE HAD STATED THAT THE ASSE SSEE WAS ALLOTTED OF 50000 EQUITY SHARES OF SCITIL. THE PAYMENT FOR THE ALLOTMENT OF SHARES WAS MADE THROUGH AN ACCOUNT PAYEE CHEQUE (COPY OF THE BANK STATEMENT EVIDENCING THE SOURCE OF MONEY). ANNUAL RETURN NO. 20B WAS FILED WITH REGISTRAR OF COMPANIES BY SC ITIL SHOWING THE ASSESSEE'S NAME AS SHAREHOLDER. THE ASSESSEE LODGED THE SAID SHARES WI TH THE DEPOSITORY ESSBSL WITH A DEMAT REQUEST. THE SAID SHARES WERE DEMATERIALIZED AND COPY OF DEMAT REQUEST SLIP ALONG WITH THE TRANSACTION STATEMENT IS PLACED ON R ECORD. LATER ON, THE HIGH COURT APPROVED THE SCHEME OF AMALGAMATION OF SCITIL WITH CSL. IN ACCORDANCE WITH THE SAID SCHEME OF AMALGAMATION, THE ASSESSEE WAS ALLOTTED 5 0000 EQUITY SHARES OF CSL. THE DEMAT SHARES ARE REFLECTED IN THE TRANSACTION STATE MENT OF THE PERIOD FROM 1-11-2011 TO 31-12-2013. THE ASSESSEE SOLD 50000 SHARES THROUGH HER BROKER SKP WHICH WAS A SEBI REGISTERED BROKER AND EARNED A LONG TERM CAPITAL GA IN. COPY OF FORM NO. 10DB ISSUED BY THE BROKER, IN SUPPORT OF CHARGING OF S.T.T. IN RESPECT OF THE TRANSACTIONS APPEARING IN THE LEDGER IS PLACED ON RECORD. THE HOLDING PERIOD OF THE SAID SCRIP IS MORE THAN ONE YEAR (ABOVE 500 DAYS) THROUGH IN ORDER TO GET THE BENEFI T OF CLAIM OF LONG TERM CAPITAL GAIN THE HOLDING PERIOD IS REQUIRED TO BE 365 DAYS THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER ( APPEALS) HAVE REJECTED THESE EVIDENCES FILED BY THE ASSESSEE BY REFERRING TO 'MO DUS OPERANDI' OF PERSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH IS EXEMPT FROM INCOME TAX. ALL THESE OBSERVATIONS OF INVESTIGATION WING WERE GENERAL IN NATURE AND WERE APPLIED ACROSS THE BOARD TO ALL THE 60,000 OR MORE ASSESSEES WHO FALL IN THIS CATEGORY. SPECIFIC EVIDENCES PRODUCED BY THE ASSESSEE WERE NOT CONTROVERTED BY THE REVENUE AUTHO RITIES. NO EVIDENCE COLLECTED FROM THIRD PARTIES WAS CONFRONTED TO THE ASSESSEES. NO O PPORTUNITY OF CROSS-EXAMINATION OF PERSONS, ON WHOSE STATEMENTS THE REVENUE RELIED TO MAKE THE ADDITION, WAS PROVIDED TO THE ASSESSEE. THE ADDITION IS MADE BASED ON A REPOR T FROM THE INVESTIGATION WING. THE ISSUE FOR CONSIDERATION IS WHETHER, IN SUCH CAS ES, THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUIDE DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILITIES, HUMAN BEHAVIOUR AND DISC OVERY OF THE MODUS OPERANDI ADOPTED SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 2 22 22 22 2 IN EARNING ALLEGED BOGUS LTCG AND STCG, THAT HAVE S URFACED DURING INVESTIGATIONS, SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCL USION AS TO WHETHER THE CLAIM IS GENUINE OR NOT. AN ALLEGED SCAM MIGHT HAVE TAKEN PLACE ON L TCG ETC. BUT IT HAS TO BE ESTABLISHED IN EACH CASE, BY THE PARTY ALLEGING SO, THAT THIS A SSESSEE IN QUESTION WAS PART OF THIS SCAM. THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESS EE'S ACTION GIVING HER INVOLVEMENT IN THE SCAM SHOULD BE ESTABLISHED. THE ALLEGATION IMPLY TH AT CASH WAS PAID BY THE ASSESSEE AND IN RETURN THE ASSESSEE RECEIVED LTCG, WHICH IS INCO ME EXEMPT FROM INCOME TAX, BY WAY OF CHEQUE THROUGH BANKING CHANNELS. THIS ALLEGATION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVENUE. EVIDENCE G ATHERED BY THE DIRECTOR INVESTIGATION'S OFFICE BY WAY OF STATEMENTS RECORDE D 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 EXAMINATION HAS TO BE PROVIDED TO THE ASSESSEE, IF THE ASSESSING OFFICER RELIES ON ANY STATEMENTS OR THIRD PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATERIAL OR EVIDENCE WAS SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER, HE HAS TO CONFRONT THE ASSESSEE WITH SUCH MATERIAL. THE CL AIM OF THE ASSESSEE CANNOT BE REJECTED BASED ON MERE CONJECTURES UNVERIFIED BY EVIDENCE UN DER THE PRETENTIOUS GARB OF PREPONDERANCE OF HUMAN PROBABILITIES AND THEORY OF HUMAN BEHAVIOUR BY THE DEPARTMENT. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THI RD PARTIES CANNOT BE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PUT BEFORE HIM AND HE IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CASE, THE ASSESSIN G OFFICER RELIED ONLY ON A REPORT AS THE BASIS FOR THE ADDITION. THE EVIDENCE BASED ON WHICH THE DDIT REPORT WAS PREPARED IS NOT BROUGHT ON RECORD BY THE ASSESSING OFFICER NOR IS I T PUT BEFORE THE ASSESSEE. THE SUBMISSION OF THE ASSESSEE THAT SHE IS JUST AN INVE STOR AND AS SHE RECEIVED SOME TIPS 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 PARTY TO THE SCAM ETC., HAS TO BE CONTROVERTED BY THE REVENUE WITH EVIDENCE. WHEN A PERSON CLAIMS THA T 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 CA SE HAS TO BE ASSESSED BASED ON LEGAL PRINCIPLES OF LEGAL IMPORT LAID DOWN BY THE C OURTS OF LAW JUST THE MODUS OPERANDI, GENERALISATION, PREPONDERA NCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTING THE CLAIM OF THE AS SESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CONTROVERT THE VALIDITY AND CO RRECTNESS OF THE DOCUMENTARY EVIDENCES PRODUCED, THE SAME CANNOT BE REJECTED BY THE ASSESSEE. THE BURDEN OF PROVING A TRANSACTION TO BE BOGUS HAS TO BE STRICTLY DISCHA RGED BY ADDUCING LEGAL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNERRINGLY AND REASONABLY RAISING AN INTERFERENCE TO THAT EFFE CT. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER ( APPEALS) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESP ECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER, THE ASSESSING OFFICER AS WEL L AS THE COMMISSIONER (APPEALS), HAVE BROUGHT 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 BRO UGHT ON RECORD TO SHOW THAT THE PERSONS INVESTIGATED, INCLUDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASSESSEE 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 INVESTIGATION WING IS A SEPARATE DEPARTMENT WHICH HAS NOT BEEN ASSIGNED ASSESSMENT W ORK AND HAS BEEN DELEGATED THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VEST ED WIDEST POWERS ON THIS WING. IT IS THE DUTY OF THE INVESTIGATION WING TO CONDUCT PROPE R AND DETAILED INQUIRY IN ANY MATTER WHERE THERE IS ALLEGATION OF TAX EVASION AND AFTER MAKING PROPER INQUIRY AND COLLECTING PROPER EVIDENCES THE MATTER SHOULD BE SENT TO THE A SSESSMENT WING TO ASSESS THE INCOME AS PER LAW. NO SUCH ACTION EXECUTED BY INVESTIGATIO N WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALLY AGAINST THE ASS ESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUILTY OR LINKED TO THE WRONG ACTS OF THE PERSONS SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 2 22 23 33 3 INVESTIGATED. IN THIS CASE, THE ASSESSING OFFICER A T BEST COULD HAVE CONSIDERED THE INVESTIGATION REPORT AS A STARTING POINT OF INVESTI GATION. THE REPORT ONLY INFORMED THE ASSESSING OFFICER THAT SOME PERSONS MAY HAVE MISUSE D THE SCRIPT FOR THE PURPOSE OF COLLUSIVE TRANSACTION. THE ASSESSING OFFICER WAS DU TY BOUND TO MAKE INQUIRY FROM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION AND T HEN TO COLLECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. HOWEVER, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVI DENCE TO PROVE THAT THE TRANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHERWISE SUPPORT ED BY PROPER THIRD PARTY DOCUMENTS ARE COLLUSIVE TRANSACTIONS. THE ASSESSING OFFICER HAVING FAILED TO BRING ON REC ORD ANY MATERIAL TO PROVE THAT THE TRANSACTION OF THE ASSESSEE WAS A COLLUSIVE TRANSAC TION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN FACT, IN TH IS CASE NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT EVIDENCES OR MA TERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BEING INVESTIGATED BY VARIOUS WINGS OF THE I NCOME TAX DEPARTMENT HENCE UNDER THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAIN ST THE ASSESSEE ONE IS BOUND TO CONSIDER AND RELY ON THE EVIDENCE P RODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM AND BASE DECISION ON SUCH EVIDENCE AND NO T ON SUSPICION OR PREPONDERANCE OF PROBABILITIES NO MATERIAL WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO CONTROVERT THE EVIDENCE FURNISHED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, THE EVIDENCE FILED BY THE ASSESSEE IS ACCEPTED AND THE CLAIM THAT THE INC OME IN QUESTION IS A BONA FIDE LONG TERM CAPITAL GAIN ARISING FROM THE SALE OF SHARES I S ALLOWED AND HENCE EXEMPT FROM INCOME TAX. [PARA 20] 26. TO CONCLUDE,WE NOTETHAT SEBI HAS GIVEN A CLEAN CHIT TO THE COMPANY AND HAS FREED IT FROM THE ALLEGATION OF MARKET RIGGING. THEREFORE, T HE ALLEGATION OF THE AO ITSELF BECOMES INFRUCTUOUS. FURTHER, THE ASSESSEE HAD ALSO REQUEST ED FOR AN OPPORTUNITY TO CROSS EXAMINE SRI SUNIL DOKANIA, WHOSE STATEMENT HAS BEEN RELIED ON BY THE AO FOR MAKING THE ADDITION. HOWEVER, THE LD. AO DID NOT PROVIDE ANY OPPORTUNITY FOR CROSS EXAMINE, THE SO-CALLED OPERATORS. IT IS WELL ESTABLISHED LAW THAT NO ADVE RSE VIEW CAN BE TAKEN AGAINST AN ASSESSEE, ON THE BASIS OF STATEMENT RECORDED BY DEP ARTMENT OF ANY PERSON WITHOUT PROVIDING COPY OF THE STATEMENT TO THE ASSESSEE AND ALSO WITHOUT PROVIDING OPPORTUNITY FOR CROSS EXAMINATION OF THE SAID PERSON.WE NOTE TH AT THE ASSESSEE HAD NEVER ENTERED INTO ANY TRANSACTION WITH SRI SUNIL DOKANIA, AGAINST WHO M INVESTIGATION WING HAD ALLEGEDLY MADE INQUIRY. WE ALSO NOTE THAT IN THE EXTRACTS OF THE STATEMENT OF SRI SUNIL DOKANIA GIVEN IN THE SHOW CAUSE NOTICE, IT IS NOWHERE MENTI ONED THAT THE ALLEGED PERSON HAS PROVIDED ANY ENTRY TO THE ASSESSEE DIRECTLY. WE NOTE THAT THE LD COUNSEL HAS PROVEDTHATASSESSEE IS A REGULAR INVESTOR IN SHARES AND SECURITIES. THE SHARES WERE PURCHASED AND SOLD THRO UGH A REGISTERED BROKER NAMED 'EUREKA STOCK & SHARE BROKING SERVICES LTD.' IN THE STOCK EXCHANGE. THE SHARES WERE PURCHASED AND SOLD BASED ON THE PREVAILING MARKET C ONDITION. THE PAYMENTS WERE RECEIVED THROUGH PROPER BANKING CHANNEL. THE PURCHA SE AND SALE TRANSACTIONS WERE SUBJECTED TO SECURITY TRANSACTION TAX (STT), SERVIC E TAX, BROKERAGE CHARGES AND STAMP DUTY. THE SHARE PURCHASE AND SALE TRANSACTIONS ARE REFLECTED IN THE DMAT ACCOUNT. THE PURCHASE OF SHARES (INVESTMENTS) WAS NOT DISPUTED I N EARLIER YEAR, WHERE ASSESSMENT IS COMPLETED U/S. 143(3) OF THE INCOME TAX ACT. THESE FACTS ARE VERIFIABLE FROM THE REGULAR BOOKS OF ACCOUNTS. THE TRANSACTIONS CAN ALSO BE VE RIFIED FROM THE STOCK EXCHANGE.IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BENCHES OF TH IS TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG. THE ASSESSEE`S CASE IS ALSO COVERED BY THE VARIOUS JUDGMENTS OF JURISDICTIONAL HIGH COURT OF CALCUTTA, AS NOTED (SUPRA). WE, THEREFORE, SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 2 22 24 44 4 RESPECTFULLY FOLLOWING THE SAME, SET ASIDE THE ORDE R OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERMCAPITAL AS BOGUS AND HENCE WE DELETE THE ADDITION OF RS.7,12,89,467/-. 27. THE NEXT ISSUE IN ITA NO.205/KOL/2018, FOR A.Y. 2014-15 IS IN RELATION TO CONFIRMING THE ADDITION OF RS.57,02,785/- AS UNEXPLAINED EXPEN DITURE TOWARDS COMMISSION CHARGES OF SALE OF SUCH SHARES BY THE OPERATOR. WE HAVE AL READY HELD THAT THE TRANSACTIONS RELATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODA TION ENTRIES AS ALLEGED BY THE AO. CONSEQUENTLY, THE ADDITION OF RS.57,02,785/- IS HER EBY DIRECTED TO BE DELETED. WE ACCORDINGLY HOLD THAT THE ISSUE IS ALLOWED IN FAVOU R OF THE ASSESSEE. 28. SAME ABOVE DETAILED REASONING TO BE FOLLOWED IN ALL REMAINING APPEALS, BEING, ITA NO. 2268 & 2269/KOL/2018, CASE OF FORMER ASSESS EE AND IN CASE OF LATTER ASSESSEES IN ITA NO.205/KOL/2018, FOR A.Y. 2014-15, AS IT TRA NSPIRES THAT THERE ARE COMMON AND IDENTICAL ISSUES ARE INVOLVED IN THESE TWO ASSESSEE S RELATING TO THE SAME GROUP. WE FURTHER NOTE THAT THE RELEVANT SCRIPS IN ISSUE WERE KAILASH AUTO FINANCE LTD, LIFELINE DRUGS & PHARMA LTD, AND ENIS EDUTECH, IN ITA 2270/K OL/2018, SAME AS IS THE LEAD CASE.WE NOTE THAT IN SANJIB KUMAR PATWARI (HUF), IN ITA 205/KOL/2018, THE RELEVANT SCRIPS WERE,KAILASH AUTO FINANCE LTD, LIFELINE DRUG S & PHARMA LTD, WHICH ARE EXACTLY IDENTICAL& COMMON AND SCRIPS OF M/S NCL RESEARCH & FINANCIAL SERVICES AND ESSAR INDIA LIMITED WERE ALSO COVERED BY THE IDENTICAL FA CTS AND ISSUES BY OUR THIS ORDER AND OTHER ORDERS OF THE COORDINATE BENCHES. WE ADOPT TH E PRECEDING DETAILED REASONING MUTATIS MUTANDIS TO DELETE ALL THE CORRESPONDING LO NG TERM CAPITAL GAIN(LTCG) ADDITION HEREINABOVE. 12. THEREFORE RESPECTFULLY FOLLOWING THE JUDGMENT O F THE CO-ORDINATE BENCH (SUPRA) WHERE THE CO-ORDINATE BENCH HAS CONSIDERED THE ISSUE RELATING TO LTCG IN THE SCRIP / SHARE OF M/S KAILASH AUTO FINANCE LTD. AND ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE THEREFORE WE DELETE THE ADDI TION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LONG TERM CAPITAL GAIN TO THE TUNE OF RS. 42,06,250/-. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 .06.2019. SD/- (S.S.GODARA) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER DATED 28/06/2019 SB, SR. PS SHRI UDIT GOYAL ITA NO.1637/KOL/2018 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 2 22 25 55 5 COPY OF THE ORDER FORWARDED TO: 1. SHRI UDIT GOYAL 2. ITO, WARD-36(4), KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES