Rukmini Devi Manpuria, Kolkata V. DCIT(IT), Circle - 2(1), Kolkata, Kolkata

ITA 1724/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4980 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 26-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY A DDL
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Earning of tax free income; Accommodation entries; Scheme of amalgamation; Penny stocks
• Section: 143(3); 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI A T VARKEY, JM, & SHRI M.BAL AGANESH, AM] I.T.A NO. 1724/KOL/20 17 ASSESSMENT YEAR : 2014-1 5 RUKMINI DEVI MANPURIA -VS- DCIT(IT), CIRCLE-2( 1), KOLKATA [PAN: AXAPM 3836 H ] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUBASH AGARWA L, ADVOCATE FOR THE RESPONDENT : SHRI ROBIN CHOWDHURY, AD DL. CIT SR. DR DATE OF HEARING : 09.10.2018 DATE OF PRONOUNCEMENT : 24.10.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-22, KOLKATA [IN SHORT THE LD CI T(A)] IN APPEAL NO. 74/CIT(A)- 22/KOL/14-15/16-17 DATED 17.03.2017 AGAINST THE OR DER PASSED BY THE DCIT(IT), CIRCLE- 2(1), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 28.12.2016 FOR THE ASS ESSMENT YEAR 2014-15. 2. THE ONLY ISSUE TO BE DECIDED IN ALL THESE APPEAL S IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITION MADE TOWARDS LO NG TERM CAPITAL GAINS ON SALE OF SHARES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE FILED HER RETURN OF INCOME FOR THE ASST YEAR 2014-15 ON 18.7.2014 DECLARING TOTAL INCOME OF RS 3,16,250/-. SHE IS A NON- RESIDENT INDIAN SETTLED IN UNITED KINGDOM. SHE DERI VED INCOME IN INDIA FROM COMMODITY TRADING, LONG TERM CAPITAL GAINS ON ACCOU NT OF SALE OF SHARES AND MUTUAL FUND UNITS AND RECEIVED INTEREST INCOME FROM BONDS AND B ANK DEPOSITS. THE ASSESSEE CLAIMED CARRY FORWARD OF LONG TERM CAPITAL LOSS ON MUTUAL F UND TO THE TUNE OF RS 2,07,522/- AND EXEMPT INCOME U/S 10(38) OF THE ACT ON ACCOUNT OF LONG TERM CAPITAL GAINS (LTCG IN SHORT) OF RS 74,86,600/- ON SALE OF LISTED EQUIT Y SHARES OF KAILASH AUTO FINANCE LTD (KAFL) WHICH WAS ALSO SUBJECTED TO SECURITIES TRANS ACTION TAX (STT) AND TRANSACTIONS ROUTED THROUGH RECOGNIZED STOCK EXCHANGE. THE LD A O OBSERVED THAT THE ASSESSEE ACQUIRED 200000 EQUITY SHARES OF FACE VALUE OF RS 1 0/- EACH OF M/S CAREFUL PROJECTS ADVISORY LIMITED (CPAL IN SHORT) AT RE. 1/- EACH TO TALING TO RS 2,00,000/- ON 14.2.2012 THROUGH OFF MARKET PURCHASE FROM M/S SANSKRITI VINC OM PVT LTD (PAN AAPCS2061P) , 4, RAJ SIR RADHA KANTA DEB LANE, SHYA MPUKUR, KOLKATA 700005. THE PAYMENT OF RS 2,00,000/- FOR THE SAME WAS MADE BY ACCOUNT PAYEE CHEQUE BY THE ASSESSEE IN FAVOUR OF M/S SANSKRITI VINCOM P LTD AN D THE CHEQUE GOT CLEARED IN THE BANK ACCOUNT OF THE ASSESSEE ON 16.2.2012. THESE SHARE S WERE CREDITED TO THE DEMAT ACCOUNT OF THE ASSESSEE ON 23.2.2012. LATER THIS COMPANY ( I.E M/S CAREFUL PROJECTS ADVISORY LTD) GOT MERGED WITH M/S KAILASH AUTO FINANCE LTD ( KAFL - A LISTED COMPANY) VIDE ORDER OF MERGER APPROVED BY HONBLE ALLAHABAD HIGH COURT ON 21.5.2013 WITH APPOINTED DATE AS 1.4.2012. PURSUANT TO THIS MERGE R, THE ASSESSEE WAS ALLOTTED 200000 SHARES IN KAFL . THESE SHARES WERE DULY DEMATTED B Y THE ASSESSEE WITH THE DEPOSITORY PARTICIPANT ON 22.7.2013. LATER THESE SHARES WERE SOLD IN THE RECOGNIZED STOCK EXCHANGE ( I.E OPEN MARKET) THROUGH A REGISTERED SHARE BROKE R ON VARIOUS DATES DURING THE PERIOD 8.8.2013 TO 1.11.2013 , RELEVANT TO ASST YEAR 2014- 15 FOR RS 76,86,600/- AFTER HOLDING PERIOD OF MORE THAN 17 MONTHS AND LTCG THEREON WAS WORKED OUT AT RS 74,86,600/-. THE DETAILS OF THE SAME ARE AS UNDER:- 3 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 3 4. THE LD AO OBSERVED THAT SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI IN SHORT) HAD PASSED AN EXPARTE ORDER U/S 11(1), 11(4) AND11B OF THE SEBI ACT, 1992 , IN THE CASE OF M/S KAFL ON 29.3.2016. IN THE SAID ORDER, SEBI HELD THAT, IN ORDER TO PROTECT THE INTEREST OF THE INVESTORS AND SAFEGUARD THE INTEGRI TY OF THE SECURITIES MARKET, KAILASH AUTO FINANCE WAS RESTRAINED FROM ACCESSING THE SECU RITIES MARKET AND BUYING, SELLING OR DEALING IN SECURITIES, EITHER DIRECTLY OR INDIRE CTLY, IN ANY MANNER WHATSOEVER TILL FURTHER DIRECTIONS . THE LD AO SOUGHT TO TREAT THE LTCG REPORTED BY T HE ASSESSEE AS BOGUS AS ACCORDING TO HIM, THE SCRIP DID NOT JUSTIF Y SUCH A HUGE INCREASE IN ITS SALE PRICE AND THAT THE INCREASE IN SHARE PRICE THEREON WAS ON LY ARTIFICIAL AND DUE TO PRICE RIGGING CARRIED OUT BY SOME PERSONS IN THE MARKET. HE OBSE RVED THAT THE FINANCIALS OF THE SAID COMPANY ( I.E KAFL ) DID NOT JUSTIFY SUCH A HUGE IN CREASE IN SHARE PRICES AND THAT PRICES HAVE BEEN ARTIFICIALLY RIGGED UPWARDS BY SOME ENTRY OPERATORS. HE FOUND THAT THE RETURNS OBTAINED BY THE ASSESSEE , THOUGH FROM THE OPEN MARKET, APPEARS TO BE UNREALISTIC AND BEYOND HUMAN PROBABILITIES. ACCORDINGLY HE HEL D THAT THE LTCG CLAIMED AS EXEMPT IN THE SUM OF RS 74,86,600/- AS BOGUS AND AD DED THE SAME AS UNEXPLAINED CASH 4 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 4 CREDIT U/S 68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THIS ACTION WAS UPHELD BY THE LD CITA. AGGRIEVED, THE AS SESSEE IS IN APPEAL BEFORE US. 5. THE LD AR PLACED RELIANCE ON THE PRIMARY DOCUME NTS EVIDENCING THE PURCHASE AND SALE OF EQUITY SHARES OF CPAL (PRE-MERGER) AND KAFL (POST MERGER) . HE ARGUED THAT THE SHARES WERE SOLD BY THE ASSESSEE BASED ON THE P REVAILING MARKET PRICES IN THE STOCK EXCHANGE IN THE OPEN MARKET ON WHICH THE ASSESSEE D OES NOT HAVE ANY CONTROL. HE ARGUED THAT THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE REVENUE TO PROVE THAT THE CONCERNED SCRIP WAS INVOLVED IN ARTIFICIAL PRICE RI GGING AT THE BEHEST AND CONNIVANCE OF ASSESSEE TOGETHER WITH HIS BROKER AND THE STOCK EXC HANGE AND SOME ENTRY OPERATORS. HE ARGUED THAT THE HONBLE PUNJAB & HARYANA HIGH COURT (CHANDIGARH BENCH) IN THE CASE OF PCIT VS SH HITESH GANDHI IN ITA NO. 18 OF 2017 DATED 16.2.2017 ON THE ASPECT OF HUGE INCREASE IN SHARE SALE PRICE HAD OBSERVED IN T HE SIMILAR CIRCUMSTANCES AND DECIDED IN FAVOUR OF THE ASSESSEE. HE PLACED RELIANCE ON THE CO-ORDINATE BENCH DECISION OF MUMBAI TRIBUNAL IN THE CASE OF MUKESH R MAROLIA VS ADDITIONAL CIT REPORTED IN (2006) 6 SOT 247 (MUM.) DATED 15.12.2005 WHEREIN I T WAS HELD AS UNDER:- 10.7 THEREFORE, WE FIND THAT THE EXPLANATIONS OF THE ASS ESSEE SEEMS TO HAVE BEEN REJECTED BY THE ASSESSING AUTHORITY MORE ON THE GRO UND OF PRESUMPTION THAN ON FACTUAL GROUND. THE PRESUMPTION IS SO COMPELLING THAT COMPA RATIVELY A SMALL AMOUNT OF INVESTMENT MADE BY THE ASSESSEE DURING THE PREVIOUS YEAR PERIOD RELEVANT TO THE ASSESSMENT YEARS 1999- 2000 AND 2000-01 HAVE GROWN INTO A VERY SIZABLE AMOUNT ULTIMATELY YIELDING A FABULOUS SUM OF RS. 1,41,08,4 84 WHICH WAS USED BY THE ASSESSEE FOR THE PURCHASE OF THE FLAT AT COLABA. THE SEQUENC E OF THE EVENTS AND ULTIMATE REALIZATION OF MONEY IS QUITE AMAZING. THAT ITSELF IS A PROVOCATION FOR THE ASSESSING OFFICER TO JUMP INTO A CONCLUSION THAT THE TRANSACT IONS WERE BOGUS. BUT, WHATEVER IT MAY BE, AN ASSESSMENT HAS TO BE COMPLETED ON THE BASIS OF RECORDS AND MATERIALS AVAILABLE BEFORE THE ASSESSING AUTHORITY. PERSONAL KNOWLEDGE AND EXCITEMENT ON EVENTS, SHOULD NOT LEAD THE ASSESSING OFFICER TO A STATE OF AFFAIR S WHERE SALIENT EVIDENCES ARE OVER- LOOKED. IN THE PRESENT CASE, HOWSOEVER UNBELIEVABLE IT MIGHT BE, EVERY TRANSACTION OF THE ASSESSEE HAS BEEN ACCOUNTED, DOCUMENTED AND SUPPORT ED. EVEN THE EVIDENCES COLLECTED FROM THE CONCERNED PARTIES HAVE BEEN ULTIMATELY TUR NED IN FAVOUR OF THE ASSESSEE. THEREFORE, IT IS, VERY DIFFICULT TO BRUSH ASIDE THE CONTENTIONS OF THE ASSESSEE THAT HE HAD PURCHASED SHARES AND HE HAD SOLD SHARES AND ULTIMAT ELY HE HAD PURCHASED A FLAT UTILIZING THE SALE PROCEEDS OF THOSE SHARES. 5 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 5 THIS DECISION OF MUMBAI TRIBUNAL WAS APPROVED BY TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS MUKESH R MAROLIA IN ITA NO. 456 OF 2007 DATED 7.9.2011 WHEREIN IT WAS HELD AS UNDER:- 6. SIMILARLY, THE SALE OF THE SAID SHARES FOR RS 1, 41,08,484/- THROUGH TWO BROKERS NAMELY, M/S RICHMOND SECURITIES PVT LTD AND M/S SCO RPIO MANAGEMENT CONSULTANTS PVT LTD CANNOT BE DISPUTED, BECAUSE THE FACT THAT THE ASSESSEE HAS RECEIVED THE SAID AMOUNT IS NOT IN DISPUTE. IT IS NEITHER THE CASE OF THE REVENUE THAT THE SHARES IN QUESTION ARE STILL LYING WITH TH E ASSESSEE NOR IT IS THE CASE OF THE REVENUE THAT THE AMOUNTS RECEIVED BY THE ASSESS EE ON SALE OF THE SHARES IS MORE THAN WHAT IS DECLARED BY THE ASSESSEE. THOUGH THERE IS SOME DISCREPANCY IN THE STATEMENT OF THE DIRECTOR OF M/S RICHMOND SE CURITIES PVT LTD, REGARDING THE SALE TRANSACTION, THE TRIBUNAL RELYING ON THE S TATEMENT OF THE EMPLOYEE OF M/S RICHMOND SECURITIES PVT LTD HELD THAT THE SALE TRAN SACTION WAS GENUINE. 7. IN THESE CIRCUMSTANCES, THE DECISION OF THE ITAT IN HOLDING THAT THE PURCHASE AND SALE OF SHARES ARE GENUINE AND THEREFORE, THE A SSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE AMOUNT OF RS 1,41,08, 484/- REPRESENTED UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE INCOME TAX ACT, 1961 CANNOT BE FAULTED. 8. IN THE RESULT, WE SEE NO MERIT IN THIS APPEAL AN D THE SAME IS DISMISSED WITH NO ORDER AS TO COSTS. THE LD AR ALSO PLACED ON RECORD THE EVIDENCE FOR DI SMISSAL OF SPECIAL LEAVE PETITION (SLP) OF THE REVENUE BY THE HONBLE APEX COURT IN S LP NO. 20146/2012 DATED 27.1.2014 AGAINST THE DECISION OF THE HONBLE BOMB AY HIGH COURT SUPRA. 5.1. THE LD AR FURTHER PLACED RELIANCE ON THE CO-O RDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF MANISH KUMAR BAID & ORS VS ACIT IN I TA NOS. 1236-1237/KOL/2017 DATED 18.8.2017 WHEREIN THE SCRIP OF KAFL HAD BEEN DEALT UNDER SIMILAR CIRCUMSTANCES AND RELIEF GRANTED TO THE ASSESSEE. HE ALSO ARGUED THAT THE SEBI IN ITS FINAL ORDER DATED 21.9.2017 ON THE INVESTIGATION OF KAFL SHARES HAD R EVOKED THE BAN AND RESTRAINT ORDERS ISSUED ON 244 ENTITIES AND PERSONS WHICH FORMED THE VERY BASIS OF THE LD AO FOR FRAMING THE ADDITION AND MAKING VARIOUS ALLEGATIONS AGAINST THE ASSESSEE HEREIN. 6 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 6 6. THE LD DR ON THE OTHER HAND VEHEMENTLY SUPPORTE D THE INTERIM ORDER OF SEBI DATED 29.3.2016 AND SHARE PRICE MOVEMENTS IN GRAPHICAL FO RM OF THE SAID SCRIP. HE ALSO PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY H IGH COURT IN THE CASE OF SANJAY BIMALCHAND JAIN L/H SHANTIDEVI BIMALCHAND JAIN VS P CIT, NAGPUR & ANOTHER IN ITA NO. 18 / 2017 DATED 10.4.2017 WHICH WAS DECIDED IN FAVOUR OF THE REVENUE WITH REGARD TO THE ISSUE OF HUGE INCREASE IN SHARE SALE PRICES. HE ALSO PLACED RELIANCE ON CERTAIN BOOKS AUTHORED BY MR PARAG PARIKH TITLED AS VALUE INVESTING AND BEHAVIORIAL FINANCE ( INSIGHTS INTO INDIAN STOCK MARKET REALITIES) WHERE IN THE VARIOUS HUMAN BEHAVIOUR WITH REGARD TO THE TIME OF PURCHASE OF SCRIP AND EXIT FR OM STOCK MARKETS WERE LISTED OUT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE AS WELL AS THE LD DR. THE ONLY ISSUE TO BE DECIDED IS WHETHER THE LTCG ON SALE OF SHARES OF KA FL EARNED THROUGH SALE IN RECOGNIZED STOCK EXCHANGE AND SUBJECTED TO PAYMENT OF STT THROUGH A REGISTERED SHARE BROKER , COULD BE TREATED AS GENUINE OR NOT. WE FI ND THAT THE ASSESSEE PURCHASED THE SHARES OF M/S CPAL BY MAKING PAYMENT OF RS 2,00,000 /- THROUGH ACCOUNT PAYEE CHEQUE ON 14.2.2012 AND THE CHEQUE GOT CLEARED ON 1 6.2.2012 AS IS EVIDENT FROM HIS BANK STATEMENT ENCLOSED IN THE PAPER BOOK. THIS I NVESTMENT IS DULY REFLECTED IN THE BOOKS OF THE ASSESSEE TOGETHER WITH OTHER INVESTMEN TS AS ON 31.3.2012 AS UNDER : 7.1. WE FIND THAT THE ASSESSEE HAD DEMATTED THE SHA RES OF CPAL ON 23.2.2012 WITH M/S EUREKA STOCK & SHARE BROKING SERVICES LTD (DEPOSITO RY PARTICIPANT DP IN SHORT). 7 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 7 PURSUANT TO THE MERGER OF CPAL WITH KAFL, THE ASSES SEE GOT 200000 SHARES IN KAFL AND THE SAME WERE DEMATTED WITH THE SAME DP ON 22. 7.2013. THE SCHEME OF AMALGAMATION OF CPAL WITH KAFL WAS DULY APPROVED BY THE HONBLE ALLAHABAD HIGH COURT ON 21.5.2013. 7.2. THERE IS NO HARM IN SHARES BEING PURCHASED IN OFF MARKET AND THIS ISSUE HAD BEEN ADDRESSED BY THIS TRIBUNAL IN THE CASE OF DOLARRAI HEMANI VS ITO IN ITA NO. 19/KOL/2014 DATED 2.12.2016. 7.3. WE FIND THAT THE ASSESSEE HAD SOLD THESE 20000 0 SHARES OF KAFL, THROUGH THE SHARE BROKER (M/S EUREKA STOCK & SHARE BROKING SERVICES L TD NSDL) WHO IS REGISTERED WITH SEBI AND MEMBER OF BOMBAY STOCK EXCHANGE, ON VARIOUS DATES IN ASST YEAR 2014-15 AND THE SAID SALE IS EVIDENCED BY THE FOLLO WING DOCUMENTS :- A) CONTRACT NOTES ISSUED BY THE REGISTERED SHARE BR OKER CONTAINING THE NUMBER OF SHARES SOLD, PRICE AT WHICH IT WAS SOLD, STT COLLECTED, BR OKERAGE COLLECTED, SERVICE TAX COLLECTED, TRADE TIME, DATE OF SALE, SETTLEMENT NUM BER, NET AMOUNT PAYABLE TO SELLER THROUGH THE STOCK EXCHANGE ( ENCLOSED IN PAGES 40 T O 49 OF PAPER BOOK) ; B) BANK STATEMENTS OF THE ASSESSEE FOR THE PERIOD 1 .8.2013 TO 28.1.2014 MAINTAINED WITH AXIS BANK WHEREIN THE SALE PROCEEDS OF SALE OF SHAR ES ON DIFFERENT DATES WERE CREDITED (ENCLOSED IN PAGE 50 OF PAPER BOOK) C) DEMAT STATEMENT OF THE ASSESSEE IN RESPECT OF VA RIOUS SCRIPS INCLUDING THE SCRIP OF KAFL CONTAINING THE NUMBER OF SHARES HELD IN EACH S CRIP AFTER EACH SALE (ENCLOSED IN PAGES 51 TO 52 OF PAPER BOOK). 8 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 8 7.4. WITH REGARD TO THE ARGUMENTS OF THE LD DR THAT AT THE TIME OF PURCHASE OF SHARES OF CPAL BY THE ASSESSEE, THE SHARES OF KAFL WERE VERY MUCH AVAILABLE IN THE STOCK MARKET AND THE ASSESSEE COULD HAVE VERY WELL BOUGHT THE SHARES OF KAFL FROM THE OPEN MARKET. HE NEED NOT HAVE RESORTED TO PURCHASING THE SHARES OF CPAL AND LATER ON GET IT MERGED WITH KAFL. IN THIS REGARD, WE FIND FROM THE MATERIALS AVAILABLE ON RECORD, THAT THE ASSESSEE WAS NOT THE DIRECTOR OR PROMOTER OF EI THER M/S CPAL OR KAFL PRIOR AND POST MERGER. ASSESSEE WAS ONLY A SHAREHOLDER IN C PAL AND PURSUANT TO THE MERGER OF THAT COMPANY WITH KAFL, THE ASSESSEE WAS ALLOTTED S HARES IN KAFL, WHICH CANNOT BE FAULTED WITH BY THE REVENUE BY MERE SURMISE AND CON JECTURE AND WITHOUT BRINGING ANY EVIDENCE ON RECORD TO THE CONTRARY. MOREOVER, IT IS FOR THE ASSESSEE TO CHOSE WHETHER TO BUY A PARTICULAR SCRIP AND THE DEPARTMENT CANNOT ST EP INTO THE SHOES OF THE ASSESSEE IN THIS REGARD AND PARTICIPATE IN THE BUSINESS AND INV ESTMENT DECISIONS OF THE ASSESSEE. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION O F HONBLE APEX COURT IN THE CASE OF CIT VS DHANRAJGIRJI RAJA NARASINGIRJI REPORTED IN 9 1 ITR 544 (SC) . THE NEXT ARGUMENT OF THE LD DR THAT THE CONTRACT NOTES AND DEMAT STAT EMENTS ARE ONLY EVIDENCES TO PROVE THAT THE TRANSACTIONS HAPPENED AND GOT RECORDED IN THE STOCK EXCHANGE AND THAT IT DOES NOT GIVE CREDENCE TO THE TRANSACTION PER SE. IN T HIS REGARD, WE FIND THAT THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES HAPPEN IN THE SECOND ARY MARKET BASED ON THE PREVAILING MARKET PRICES THROUGH THE REGISTERED STOCK BROKERS IN THE CONCERNED STOCK EXCHANGE. THIS IS HOW THE TRANSACTIONS HAPPEN ACROSS THE WORL D. FOR THESE EVENTS, THE DOCUMENTS ARE FURNISHED BY THE STOCK BROKERS IN THE FORM OF C ONTRACT NOTES , DELIVERY INSTRUCTIONS SUBMITTED BY THE PARTIES FOR EFFECTING THE SALE THR OUGH THE RECOGNIZED STOCK EXCHANGE AND TRANSACTIONS OF MOVEMENT OF SHARES FROM ONE PER SON TO ANOTHER ARE RECORDED IN THE RESPECTIVE DEMAT STATEMENTS ISSUED BY THE CONCERNED DEPOSITORY PARTICIPANT. THESE DOCUMENTS CANNOT BE DISBELIEVED AS NOT GIVING ANY C REDENCE TO THE SHARE TRANSACTIONS AS THEY HAD HAPPENED IN THE OPEN MARKET. IN ANY CASE, IT IS FOR THE REVENUE TO BRING OUT ANY OTHER EXTRANEOUS MATERIAL TO PROVE THAT THESE DOCUM ENTS ARE FABRICATED WITH THE CONNIVANCE OF ASSESSEE, REGISTERED STOCK BROKER AND RECOGNIZED STOCK EXCHANGE. IT 9 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 9 CANNOT BE BRUSHED ASIDE THAT THESE TRANSACTIONS IN THE OPEN MARKET HAD DULY SUFFERED STT WHICH IS ALSO REFLECTED IN THE CONTRACT NOTES I SSUED BY THE STOCK BROKER AND THE REVENUE HAD ALREADY BEEN ENRICHED BY THE STT COMPON ENT. HENCE IT WOULD NOT BE PROPER FOR THE LD DR TO STATE THAT THESE DOCUMENTS CANNOT BE RELIED UPON. 7.5. WE FIND THAT THE HONBLE PUNJAB & HARYANA HIGH COURT (NON-JURISDICTI ONAL HIGH COURT) IN THE CASE OF PCIT (CENTRAL), LUDHIANA VS P REM PAL GANDHI IN ITA NO. 95 OF 2017 DATED 18.1.2018 HAD IN SIMILAR CIRCUMSTANCES HELD THE ISSUE IN FAV OUR OF THE ASSESSEE. WE FIND THAT THE LD DR ALSO PLACED RELI ANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SANJAY BIMALCHAND JAIN L/H SHANTIDEVI BIMALCHAND JAIN VS PCIT, NAGPUR & ANOTHER IN ITA NO. 18 / 2017 DATED 10.4.2017 WHICH IS ALSO A NON-JURISDICTIONAL HIGH COURT DECISION. IN THESE C IRCUMSTANCES, THE HONBLE APEX COURT IN THE CASE OF VEGETABLE PRODUCTS HAD HELD TH AT WHEN THERE ARE CONFLICTING VIEWS ON AN ISSUE FOR AND AGAINST THE ASSESSEE BY THE DIF FERENT NON-JURISDICTIONAL HIGH COURTS, THE CONSTRUCTION WHICH FAVOURS THE ASSESSEE SHOULD BE FOLLOWED. ACCORDINGLY, THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT SUP RA WOULD HAVE TO BE FOLLOWED IN THE INSTANT CASE BEFORE US. 7.6. WE ALSO FIND THAT THE ENTIRE ISSUE WITH REGARD TO SALE OF SHARES OF KAFL HAD BEEN THE SUBJECT MATTER OF ADJUDICATION BY THIS TRIBUNAL IN THE CASE OF MANISH KUMAR BAID & OTHERS VS ACIT IN ITA NOS. 1236-1237/KOL/2017 DATED 18.8.2017, WHEREIN THE ARGUMENTS OF THE ASSESSEE AND THE DECISION RENDERED BY THIS TRIBUNAL ARE AS UNDER:- 5. THE LD AR ARGUED THAT THE LD CIT(A) ERRED IN CON FIRMING THE ADDITION MADE BY THE LD AO ON THE BASIS OF THE AFORESAID FINDINGS AN D VARIOUS OBSERVATIONS MADE IN THE IMPUGNED ASSESSMENT ORDER. THE LD AR SUBMITTED THAT THE FINDINGS OF THE LD AO ARE BASED ON PRESUMPTIONS AND SUSPICION ALONE AND ARE P ERVERSE. IN THE COURSE OF HEARING OF THE CASE, THE LD AR REFERRED TO VARIOUS DOCUMENT ARY EVIDENCES FURNISHED IN THE PAPER BOOK IN SUPPORT OF THE CLAIM OF THE ASSESSEE TO PRO VE THE GENUINENESS OF THE TRANSACTIONS RELATING TO LTCG ON SALE OF SHARES OF KAFL. THE DOC UMENTARY EVIDENCES INCLUDED THE FOLLOWING: 10 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 10 (I) PURCHASE BILL FOR PURCHASE OF 2,40,000 SHARES O F CPAL FROM M/S BRIJDHARA MERCANTILE PVT. LTD. ON 20.12.2011 FALLIN G IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2012-13. (II) BANK STATEMENT SHOWING PAYMENT OF THE PURCHASE CONSIDERATION OF SHARES OF CPAL TO BRIJDHARA. (III) BALANCE SHEET OF THE ASSESSEE FOR THE FY 2011 -12 TO 2012-13 TO SHOW THAT THE INVESTMENT IN THE SHARES OF CPAL WAS DULY DISCLOSED. (IV) DEMAT STATEMENT WITH UNITED BANK OF INDIA, A D EPOSITORY PARTICIPANT (DP) SHOWING THE AFORESAID SHARES OF CPAL IN THE AC COUNT OF THE ASSESSEE. (V) THE LETTER DATED 8 TH JUNE, 2013 OF KAFL INFORMING THE ASSESSEE THAT THE CPAL WAS MERGED WITH KAFL BY VIRTUE OF COURT ORDER AND THE ASSESSEE WAS ALLOTTED SHARES OF KAFL AS AGAINST THE SHARES OF CP AL IN THE RATIO OF 1:1. (VI) THE DEMAT STATEMENT OF THE ASSESSEE WITH UNITE D BANK OF INDIA SHOWING RECEIPT OF SHARES OF KAFL ON AMALGAMATION AS AFORES AID. (VII) CONTRACT NOTES OF ASHIKA STOCK BROKING LTD., SHARE BROKER THROUGH WHOM THE ASSESSEE SOLD SHARES OF KAFL IN THE FY 201 3-14 RELEVANT TO THE AY 2014-15. (VIII) BANK STATEMENT SHOWING RECEIPT OF SALE CONSI DERATION FROM M/S ASHIKA STOCK BROKING LTD. BY ACCOUNT PAYEE CHEQUES. (IX) DEMAT STATEMENT SHOWING DELIVERY OF SHARES OF KAFL ON SALE OF SHARES. 5.1. THE LD AR SUBMITTED THAT THE PURCHASE OF SHAR ES IN THE FY 2011-12 WAS ACCEPTED BY THE LD AO. IN THE CASE OF SRI MAHENDRA KUMAR BAI D THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2012-13 WAS PASSED UNDER SECTION 14 3(3) ON 30 TH JANUARY, 2015 AND THE PURCHASE OF SHARES OF CPAL WAS ACCEPTED. THE AS SESSMENT IN THE CASE OF MANISH KUMAR BAID WAS PROCESSED UNDER SECTION 143(1) OF TH E ACT ACCEPTING THE PURCHASE OF SHARES. THE LD AR ALSO SUBMITTED THAT EVEN IN THE I MPUGNED ASSESSMENT ORDER THE PURCHASE OF SHARES BY THE ASSESSEE WAS NOT HELD TO BE BOGUS. THE LD AR SUBMITTED THAT THE EVIDENCES AND DOCUMENTS FURNISHED BY THE ASSESS EE WERE NEITHER FOUND TO BE FALSE NOR FABRICATED. THE LD AR SUBMITTED THAT THE LD A O DOUBTED THE GENUINENESS OF THE SALE TRANSACTIONS ON THE BASIS OF VARIOUS ORDERS OF SEBI AND/OR THE INVESTIGATION WING AND THE STATEMENTS OF VARIOUS PERSONS RECORDED BY INVES TIGATION WING IN THE CASES OF PERSONS UNCONNECTED TO THE ASSESSEE. IT WAS SUBMITT ED THAT THE LD AO DISALLOWED THE ASSESSEES CLAIM OF LTCG ON SALE OF SHARES OF KAFL ON SUSPICION AND PRESUMPTIONS ALONE. IT WAS SUBMITTED THAT THE LOWER AUTHORITIES HAVE NOT BROUGHT ANY MATERIAL OR EVIDENCE ON RECORD TO FALSIFY THE CLAIM OF THE ASSE SSEE OR TO HOLD THAT THE SHARE TRANSACTIONS WERE BOGUS. 5.2. THE LD AR HAS SHOWN THAT THE THREE ORDERS OF SEBI AND THE REPORT OF THE INVESTIGATION WING AND/OR THE STATEMENTS OF DIFFERE NT PERSONS RECORDED BY INVESTIGATION WING NOWHERE NAMED THE ASSESSEE AS A BENEFICIARY TO THE TRANSACTIONS RELATING TO KAFL . IT IS SEEN FROM THE INTERIM ORDER DATED 29 TH MARCH, 2016 THAT SEBI HAS LISTED THE NAMES OF VARIOUS ENTITIES/PERSONS WHO WERE THE PROMOTERS AND/OR THE CONNECTED OR RELATED PARTIES PROVIDED BOGUS TRANSACTIONS OF LTCG TO VARIOUS BENEFICIARIES. THE LIST OF THE NAMES OF THE BENEFICIARIES WAS ALSO GIVEN IN THE SAID ORDER. THE LD AR REFERRING TO THE SAID LISTS HAS SHOWN TO US THAT THE NAME OF THE ASSESSEE AND/OR HIS BROKER NAMELY 11 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 11 ASHIKA STOCK BROKING LTD. NOWHERE APPEAR IN THE SA ID LISTS ANNEXED TO SEBIS INTERIM ORDER DATED 29 TH MARCH, 2016. ON A SPECIFIC QUERY TO THE LD DR APPE ARING FOR REVENUE, HE FAIRLY AGREED THAT THE ASSESSEES NAME AND/OR TH E NAME OF ASHIKA STOCK BROKING LTD. DO NOT APPEAR IN THE LIST ANNEXED TO VARIOUS ORDERS OF THE SEBI INCLUDING FINAL ORDER DATED 15 TH JUNE, 2016 REFERRED TO IN THE IMPUGNED ASSESSMENT ORDER. 5.3. THE LD AR ALSO BROUGHT OUR ATTENTION TO THE EN QUIRY REPORT MADE BY PR. DIRECTOR OF INCOME TAX (INVESTIGATION), KOLKATA IN THE MATTE R OF TRANSACTIONS OF KAFL. THE LD AO RELIED ON THE STATEMENTS OF DIFFERENT PERSONS IN CLUDING SRI SUNIL KUMAR DOKANIA RECORDED BY THE INVESTIGATION WING OF KOLKATA WHO E XPLAINED THE MODUS OPERANDI OF PROVIDING ACCOMMODATION ENTRIES OF LTCG AND SHORT T ERM CAPITAL LOSS (STCL). THESE PERSONS ALSO PROVIDED THE LISTS OF BENEFICIARIES TO WHOM THEY PROVIDED ACCOMMODATION ENTRIES. THE LD AR HAS SHOWN THAT THE LIST OF BENEFICIARIES PROVIDED BY THESE PERSONS ALSO DID NOT CONTAIN THE NAME OF THE ASSESSEE AND/ OR THE NAME OF THE SHARE BROKER VIZ. ASHIKA STOCK BROKING LTD. 5.4. THE LD AR, ON THE OTHER HAND, RELIED ON THE AD INTERIM EXPARTE ORDER DATED 29 TH MARCH, 2016 PASSED BY SEBI IN FAVOUR OF ASSESSEE. H E DREW OUR ATTENTION TO PARA 24 OF THE SAID ORDER WHEREIN SEBI FOUND THAT SOME INNOCEN T AND GULLIBLE INVESTORS HAD BEEN LURED INTO THE TRADING OF SHARES OF KAFL AND HAD BE EN ENTRAPPED IN THE PRICE FLUCTUATION OF THE SCRIPT. THIS FINDING OF SEBI SUP PORTS THE CASE OF THE ASSESSEE. IN THIS CASE, THE ASSESSEE WAS LURED TO PURCHASE SHARES OF CPAL, WHEN HE KNEW THAT THE COMPANY ALLOTTED BONUS SHARES IN THE RATIO OF 1:55. THE ASSESSEE SOLD THE SHARES OF KAFL WHEN HE FOUND THAT THE PRICES INCREASED SUBSTA NTIALLY IN THE MARKET. THE LD AR SUBMITTED THAT HE BEING INNOCENT GULLIBLE INVESTOR, HIS NAME DID NOT APPEAR IN THE LIST OF SEBI WHO WERE NAMED AS BENEFICIARY TO THE ALLEGED S CHEME FORMULATED BY SOME PERSONS. 5.5 THE LD AR, IN COURSE OF HEARING BEFORE US, FILE D A COPY OF THE AUDITED FINANCIALS OF KAFL FOR THE FY 2012-13 AND DREW OUR ATTENTION T O THE NOTICE CONVENING THE AGM. HE SUBMITTED THAT IT WAS THE 28 TH AGM OF KAFL WHICH SHOWS THAT THE SAID COMPANY WAS INCORPORATED FOR MORE THAN 28 YEARS AS ON THE END O F THE SAID FINANCIAL YEAR I.E. 2011- 12. HE CONCLUDED THAT IN SUCH CIRCUMSTANCES, THE MERGER OF THE TWO COMPANIES WITH KAFL COULD NOT BE SAID TO BE A PREMEDITATED ARRANGE MENT TO GIVE BENEFIT OF LTCG TO BENEFICIARIES. AT LEAST A GULLIBLE INVESTOR WOULD B E LURED TO MAKE INVESTMENT IN SUCH COMPANIES. 5.6. THE LD AR ALSO BROUGHT TO OUR NOTICE THE FINAN CIALS OF KAFL REPORTED IN SEBIS INTERIM ORDER DATED 29 TH MARCH, 2016 TO SHOW THAT THE PRICE EARNINGS RATIO (IN SHORT P/E RATIO) OF THAT COMPANY INCREASED TO RS.4,065 IN FY 2013-14 FROM RS. NIL IN THE FY 2012-13. THE LD AR STATED THAT THE CONCLUSION DRAWN BY LD AO THAT THE FINANCIALS OF THE COMPANY SHOWS NIL P/E RATIO AND DID NOT GIVE RISE T O STEEP INCREASE OF MARKET PRICE OF THE SHARES OF KAFL, IS CONTRARY TO THE FACTS ON REC ORD. 12 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 12 5.7. THE LD AR ALSO REFERRED TO THE STATEMENT OF SR I SUNIL DOKANIA RELIED ON BY THE LD AO TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE. HE REFERRED TO THE FOLLOWING STATEMENT AGAINST Q. NO. 15 :- Q.15 PLEASE EXPLAIN THE MODUS OPERANDI OF GETTING B OGUS LONG TERM CAPITAL GAIN THROUGH SCRIPS CONTROLLED AND MANAGED BY YOU. ANS. GENERALLY BENEFICIARIES APPROACHED TO THE BROK ER/ENTRY OPERATOR IN SEARCH OF GENERATION OF CAPITAL IN AN EASIER MANNER WITHOUT P AYING ANY TAX ON IT. BROKERS IDENTIFY THE VARIOUS BOGUS SCRIPTS TO PROVIDE LTCG AS THE SA ME IS EXEMPT FROM THE TAX. KAILASH AUTO IS SUCH SCRIPS WHICH IS ENGAGED IN PROVIDING A CCOMMODATION ENTRY IN FORM OF LTCG / STCL TO VARIOUS BENEFICIARIES. BENEFICIARIES ARE ALLOTTED THE SHARES AT NOMINAL PRICE AND THE PRICE OF THE SHARES RISE ARTIFICIALLY BY USING LOOPHOLES OF STOCK EXCHANGE MECHANISM AND THE SHARES WERE SOLD AT DESIRED LEVEL TO VARIOUS BOGUS ENTITIES. THESE BOGUS ENTITIES ARE PAID BY THE UNACCOUNTED MONEY OF THE BENEFICIARIES IN CASH. AS A RESULT UNACCOUNTED INCOME PLOUGHED BACK IN THE FILE OF INDIVIDUALS AND HUFS IN THE FORM OF BOGUS LTCG WITHOUT PAYING INCOME TAX ON IT. IN PROCESS THE BOGUS SHORT TERM CAPITAL LOSS IS ALSO BOOKED BY THE ENTITIES WHO WAN TS TO REDUCE THEIR TAXABILITY. 5.8. THE LD AR SUBMITTED THAT THERE IS NO ALLEGATIO N BY SHRI SUNIL DOKANIA AND/OR THE LD AO THAT THE ASSESSEE EVER APPROACHED SHRI DOKANIA AND/ OR ANY OTHER PERSON WHATSOEVER, TO APPROACH FOR SUCH BOGUS LTCG. THEREFORE THE LD AO H AS WRONGLY DRAWN INFERENCE AGAINST THE ASSESSEE FROM THE STATEMENT OF SHRI DOKANIA. TH E LD. AR ALSO REFERRED TO THE STATEMENTS OF VARIOUS OTHER PERSONS ANNEXED WITH THE ASSESSMEN T ORDER TO SHOW THAT NONE OF THE SAID PERSONS NAMED THE ASSESSEE TO HAVE BEEN BENEFITTED BY THEM IN RESPECT OF LTCG CLAIMED BY THE ASSESSEE. THE LD AR SUBMITTED THAT THE LD AO WAS UNJUSTIFIED IN DRAWING AN ADVERSE INFERENCE AGAINST THE ASSESSEE ON THE BASIS OF HIS ENQUIRY MADE FROM BSE TO FIND OUT THE NAMES OF BUYERS WHO ULTIMATELY BOUGHT THE S HARES SOLD BY THE ASSESSEE. ON THE BASIS OF SUCH ENQUIRY, THE LD AO PREPARED A CASH TRAIL T O ALLEGE THAT CASH DEPOSITED IN 5 TH OR 6 TH LAYER WERE THE UNACCOUNTED INCOME OF THE ASSESSEE. IT WAS HIS SUBMISSION THAT THE ASSESSEE DID NOT KNOW THE NAMES OF THE BUYERS AND HAS NO CON NECTION AND/OR RELATIONS WITH ANY SUCH PERSONS. THE TRANSACTIONS OF SALE OF SHARES WERE ON LINE TRADING SYSTEM THROUGH HIS BROKER FROM WHOM HE RECEIVED THE SALE CONSIDERATION. THE B ROKER ALSO RECEIVES PAYMENTS FOR ALL HIS TRANSACTIONS FROM STOCK EXCHANGE. THE SELLER AN D THE BUYER CANNOT KNOW THE NAMES OF EACH OTHER AS WELL AS THEIR RESPECTIVE BROKERS, WHO WERE INVOLVED IN THE TRADING TRANSACTIONS IN THE SECONDARY PLATFORM. IN SUCH A SITUATION IT CANNOT BE PRESUMED THAT THERE COULD BE ANY TRANSFER OF CASH BETWEEN THE BUYERS AN D SELLERS TO CONVERT THE UNACCOUNTED MONEY OF THE BENEFICIARIES AS ALLEGED BY THE LD AO. THE LD AR REFERRED TO THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. LA VANYA LAND PVT. LTD. [2017] 83 TAXMANN.COM 161 (BOM) TO CONTEND THAT THERE WAS NO EVIDENCE WHATSOEVER TO ALLEGE THAT MONEY CHANGED HANDS BETWEEN THE ASSESSEE AND THE BR OKER OR ANY OTHER PERSON INCLUDING THE ALLEGED EXIT PROVIDER WHATSOEVER TO CONVERT UNA CCOUNTED MONEY FOR GETTING BENEFIT OF LTCG AS ALLEGED. IN THE SAID CASE, THE HONBLE HIG H COURT AT PARA 21 HELD THAT IN ABSENCE OF ANY MATERIAL TO SHOW THAT HUGE CASH WAS TRANSFER RED FROM ONE SIDE TO ANOTHER , ADDITION CANNOT BE SUSTAINED. SIMILAR VIEW WAS TAKEN IN THE FOLLOWING CASES:- (I) BAIJNATH AGARWALLA VS. ACIT [2010] 40 SOT 475 (AGRA THIRD MEMBER) 13 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 13 (II) GANESHMULL BIIJAY SINGH BAID HUF VS. DCIT ITA NO. 544/KOL/13 DATED 4.12.2015 (KOLKATA TRIBUNAL) (III) MALTI GHANSHYAMBHAI PATODIA VS. ITO ITA NO. 3400/ AHD/2015 (AHMEDABAD TRIBUNAL) (IV) PRATIK SURYAKANT SHAH VS. ITO [ 2017] 77 TAXMANN.C OM 260 (AHMEDABAD TRIBUNAL) (V) PADDUCHARI JEEVAN PRASHANT VS. ITO ITA NO. 452/HY D/2015 (HYDERABAD TRIBUNAL) (VI) ANIL NAND KISHORE GOYAL VS.ACIT ITA NOS. 1256/PN/ 2012 (PUNE TRIBUNAL) (VII) CIT VS. JAMNA DEVI AGRAWAL [2012] 20 TAXMANN.COM 529 (BOM HC) 5.9. THE LD AR SUBMITTED THAT ALL THE OBSERVATIONS, CONCLUSIONS AND FINDINGS OF THE LOWER AUTHORITIES ARE BASED ON SUSPICION, SURMISES AND HE ARSAY. IT IS A TRITE LAW THAT THE SUSPICION HOWSOEVER STRONG CANNOT PARTAKE THE CHARACTER OF LE GAL EVIDENCE. REFERENCE WAS MADE TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT (1959) 37 ITR 288 (SC). THE LD AR SUBMITTED THA T THE ENTIRE CASE OF THE REVENUE HINGES UPON THE PRESUMPTION THAT THE ASSESSEE HAS PLOUGHED BACK HIS OWN UNACCOUNTED MONEY IN THE FORM OF BOGUS LTCG. HOWEVER, THIS PRESUMPTION O R SUSPICION HOW STRONG IT MAY APPEAR TO BE TRUE, BUT NEEDS TO BE CORROBORATED BY SOME EV IDENCE TO ESTABLISH A LINK THAT THE ASSESSEE HAD BROUGHT BACK HIS UNACCOUNTED INCOME IN THE FORM OF LTCG. THE LD AR REFERRED TO THE JUDGEMENT OF SPECIAL BENCH OF MUMBA I TRIBUNAL IN THE CASE OF GTC INDUSTRIES LTD. VS. ACIT [2017] 164 ITD 1 (MUMBAI-T RIB.)(SB) THE TRIBUNAL OBSERVED AS UNDER: 46. ......... ULTIMATELY THE ENTIRE CASE OF REVENUE HINGES UPON THE PRESUMPTION THAT ASSESSEE IS BOUND TO HAVE SOME LARGE SHARE IN SO CALLED SECRET MONEY IN THE FORM OF PREMIUM AND ITS CIRCULATION. HOWEVER, THIS PRESUMPTION OR SUSPICION HOW STRONG IT MAY APPEAR TO BE TRUE BUT NEEDS TO BE COR ROBORATED BY SOME EVIDENCE TO ESTABLISH A LINK THAT GTC ACTUALLY HAD SOME KIND OF A SHARE IN SUCH SECRET MONEY. IT IS QUITE A TRITE LAW THAT SUSPICION HOWSOEVER ST RONG MAY BE BUT CANNOT BE THE BASIS OF ADDITION EXCEPT FOR SOME MATERIAL EVIDENCE ON RECORD. THE THEORY OF PREPONDERANCE OF PROBABILITY IS APPLIED TO WEIGH THE EVIDENCES OF EITHER SIDE AND DRAW A CONCLUSION IN FAVOUR OF A PARTY WHICH HA S MORE FAVOURABLE FACTORS IN HIS SIDE. THE CONCLUSIONS HAVE TO BE DRAWN ON THE B ASIS OF CERTAIN ADMITTED FACTS AND MATERIALS AND NOT ON THE BASIS OF PRESUMPTIONS OF FACTS THAT MIGHT GO AGAINST THE ASSESSEE. ONCE NOTHING HAS BEEN PROVED AGAINST THE ASSESSEE WITH AID OF ANY DIRECT MATERIAL ESPECIALLY WHEN VARIOUS ROUNDS OF I NVESTIGATIONS HAVE BEEN CARRIED OUT, THEN NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE . 5.10. THE LD AR SUBMITTED THAT THERE IS NO DIRECT E VIDENCE AGAINST THE ASSESSEE BROUGHT ON RECORD BY LD AO TO HOLD THAT THE ASSESSEE INTROD UCED ITS OWN UNACCOUNTED MONEY BY WAY OF BOGUS LTCG. THE DIRECT EVIDENCE AS ALLEGED B Y THE LD AO TO BE THE SEBIS ORDERS 14 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 14 IS NO EVIDENCE AGAINST THE ASSESSEE FOR THE REASONS STATED EARLIER. THE LD AR SUBMITTED THAT ALTHOUGH VARIOUS INVESTIGATIONS WERE CARRIED O UT BY DIFFERENT AGENCIES, THERE IS NO EVIDENCE AGAINST THE ASSESSEE TO HOLD THAT THE ASSE SSEE WAS A BENEFICIARY TO THE MODUS OPERANDI ADOPTED BY DIFFERENT ENTITIES / BROKERS / ENTRY OPERATORS. THE LD AR SUBMITTED THAT, IN VIEW OF THE AFORESAID JUDGEMENT OF SPECIAL BENCH OF HONBLE MUMBAI TRIBUNAL, VARIOUS JUDGEMENTS RELIED ON BY THE LD AO AGAINST T HE ASSESSEE ARE IRRELEVANT IN AS MUCH AS THE SAID JUDGEMENTS ARE BASED ON CONCLUSIONS DRA WN ON THE BASIS OF CIRCUMSTANTIAL EVIDENCES ONLY WITHOUT ANY MATERIAL EVIDENCE ON REC ORD. 5.11. THE LD AR VEHEMENTLY SUBMITTED THAT THE ASSES SEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE CLAIM OF THE ASSESSEE THAT IT EARNED LTCG ON TRANSACTIONS OF HIS INVESTMENT IN SHARES. THE PURCHASE OF SHARES HAD BE EN ACCEPTED BY THE LD AO IN THE YEAR OF ITS ACQUISITION AND THEREAFTER UNTIL THE SAME WE RE SOLD. THE OFF MARKET TRANSACTION FOR PURCHASE OF SHARES OF CPAL IS NOT ILLEGAL AS WAS HE LD BY THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DOLARRAI HEMA NI VS. ITO IN ITA NO. 19/KOL/2014 DATED 2.12.2016. THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE CHEQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE OF SHARES AN D THE SALE OF SHARES WERE ALSO REFLECTED IN DEMAT ACCOUNT STATEMENTS. THE SALE OF SHARES SUFFERED STT, BROKERAGE ETC. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CAN NOT BE HELD THAT THE TRANSACTIONS WERE BOGUS. THE LD AR REFERRED TO THE FOLLOWING JUDGEMEN TS OF JURISDICTIONAL HIGH COURT:- (I) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDENCES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WER E STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE LD AO THAT THE ASSESSE E GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTU M OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY F AILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING P RICE AND THEREFORE THE SUSPICION OF THE LD AO WAS MISPLACED AND NOT SUBSTANTIATED. (II) CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITED [2 013] 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 H ELD THAT IN ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANSACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTED TO WITH UL TERIOR MOTIVE. (III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BROKERAGE, SERVICE TAX, AND CESS. THE RE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. 15 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 15 (IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE D ECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHERE T HE LD AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLE GED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE LD AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON THE BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE LD AO D ID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL H ELD THAT THE LD AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEA L FILED BY THE REVENUE WAS DISMISSED. (V) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE D ECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOWED SINCE THE LD A O FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WER E NOT GENUINE. (VI) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE LD AO, BASED ON THE INF ORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTI ONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUP PORTED BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS O F DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED BY HIGH COUR T. 5.12. THE LD AR SUBMITTED BEFORE US THAT WHERE T HE PURCHASE AND SALE TRANSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, D EMAT STATEMENTS AND BANK STATEMENTS ETC., 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 BASIS O F SOME REPORTS OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESA ID JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLOWING CASES:- (I) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (II) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (IV) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (V) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VI) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (VII) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) 16 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 16 (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (IX) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (X) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XI) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XII) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XIII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XIV) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XVI) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XVII) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) 5.13. THE LD AR FURTHER SUBMITTED BEFORE US THAT ON CE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRAN SACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADE SH [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 F ACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WH ICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT H AS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGEMENTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAI MED 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 ITYA NO. 32/AGR/2007 ( AGRA ITAT) 5.14. THE LD AR FURTHER SUBMITTED THAT THE LD AO WA S NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND PRICE RIGGING. IT WAS SUBMITTED THAT THERE IS NO ALLEGATI ON IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFFECT THAT THE ASSESSEE AND/OR HIS BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN BS E. THE LD AR REFERRED TO THE FOLLOWING 17 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 17 JUDGEMENTS IN SUPPORT OF THIS CONTENTION WHEREIN UN DER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE LD AO WAS NOT JUSTIFIED IN REFUSING TO ALL OW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSESS THE SALE PROCEEDS OF SHARES AS UN DISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. AMITA AGARWAL & OTHERS - ITA NOS. 247/(KO L)/ OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 5.15. THE LD AR ALSO SUBMITTED THAT THE LD AO WAS N OT JUSTIFIED IN DISALLOWING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT BY CONCLUDING THAT THE TRANSACTIONS OF THE ASSESSEE RESULTING IN LTCG ON SALE OF SHARES OF KAFL WERE BOGUS RELYING ON THE STATEMENTS OF VARIOUS PERSONS RECORDED BY INVESTIGA TION WING WHEREIN THESE PERSONS ACCEPTED TO HAVE PROVIDED ACCOMMODATION ENTRIES OF VARIOUS NATURES INCLUDING LTCG TO DIFFERENT PERSONS. THE LD AR SUBMITTED THAT IN THE STATEMENT OF THIRD PARTIES, THE NAME OF THE ASSESSEE WAS NOT IMPLICATED. EVEN OTHERWISE, NO AD VERSE INFERENCE COULD BE TAKEN AGAINST THE ASSESSEE ON THE BASIS OF UNTESTED STATEMENTS WI THOUT ALLOWING OPPORTUNITY OF CROSS- EXAMINATION. THE LD AR REFERRED TO AND RELIED ON TH E FOLLOWING JUDGEMENTS IN SUPPORT OF THE AFORESAID SUBMISSIONS:- (I) ANDMAN TIMBER INDUSTRIES VS. CCE [2015] 62 TAXMAN N.COM 3 (SC) (II) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 (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/KOL/20 11 (KOL ITAT) (V) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (VI) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VII) MALTI GHANSHYAMBHAI PATADIA VS. ITO - ITA NO.3400/ AHD/2015 (AHMEDABAD ITAT) (VIII) PRATIK SURYAKANT SHAH VS. ITO [2017] 77 TAXMANN.C OM 260 (AHMEDABAD ITAT) (IX) SUNITA JAIN VS. ITO - ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (X) ATUL KUMAR KHANDELWAL VS. DCIT ITA NO. 874/DEL/20 16 (DELHI ITAT) (XI) FARAH MARKER VS. ITO ITA NO. 3801/MUM/2011 (MUMBA I ITAT) 5.16. THE LD AR ALSO SUBMITTED THAT THE LD AO WAS N OT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT TO HOLD THAT THE SALE PROCEED S OF SHARES OF KAFL RECEIVED BY THE ASSESSEE FROM M/S ASHIKA STOCK BROKING LTD. WAS NOT SATISFACTORILY EXPLAINED BY THE 18 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 18 ASSESSEE. THERE IS NO EVIDENCE ON RECORD TO DISBELI EVE THAT THE ASSESSEE SOLD SHARES OF KAFL THROUGH M/S ASHIKA STOCK BROKING LTD., A REGISTERED SHARE AND STOCK BROKER WITH BSE. THE ASSESSEE PRODUCED ALL EVIDENCES TO EXPLAIN THE SOUR CE OF THE AMOUNTS RECEIVED BY THE ASSESSEE FROM M/S ASHIKA STOCK BROKING LTD. THE LD AO WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF KAFL AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 5.17. THE LD AR SUBMITTED THAT ON THE FACTS AND CIR CUMSTANCES OF THE CASE AND ON THE BASIS OF INCONTROVERTIBLE EVIDENCES PRODUCED BY THE ASSES SEE, THE LD AO WAS NOT JUSTIFIED IN CONCLUDING THAT THE ASSESSEES TRANSACTIONS RELATIN G TO LTCG ON SALE OF SHARES OF KAFL WERE BOGUS. THE LD CIT(A) WAS ALSO NOT JUSTIFIED IN DISMISSING THE APPEAL WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE EVIDENCE S PRODUCED BY THE ASSESSEE IN SUPPORT OF HIS CASE. VARIOUS JUDGEMENTS REFERRED TO BY THE ASS ESSEE IN SUPPORT OF ASSESSEES CLAIM OF EXEMPTION OF LTCG ON SALE OF SHARES OF KAFL WAS NOT DISTINGUISHED ON FACTS AND/OR ON LAW BY THE LD CIT(A) . ON THE OTHER HAND, HE AGREED WI TH THE LD AO, WHO RELYING ON SURROUNDING CIRCUMSTANCES HELD THAT THE ASSESSEES TRANSACTIONS OF LTCG WERE BOGUS IGNORING ALL LEGAL EVIDENCES FURNISHED BY THE ASSES SEE IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS RESULTING IN LTCG. THE LD AR PRAYED TH AT THE ORDER OF THE LD CIT(A) BE SET ASIDE AND THE EXEMPTION UNDER SECTION 10(38) OF THE ACT BE ALLOWED TO THE ASSESSEE. 6. WE HAVE HEARD BOTH THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS AVAILABLE ON RECORD. WE FIND LOT OF FORCE IN THE ARGUMENTS OF TH E LD AR THAT THE LD AO WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT, AND PREPONDERANCE OF PROBABILITY WIT HOUT BRINGING ON RECORD ANY LEGAL EVIDENCE AGAINST THE ASSESSEE. WE RELY ON THE JUDGE MENT OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF GTC INDUSTRIES LTD. (SUPRA) FOR THIS PROPOSITION. THE VARIOUS FACETS OF THE ARGUMENTS OF THE LD AR SUPRA, WITH REGARD TO IMPLEADING THE ASSESSEE FOR DRAWING ADVERSE INFERENCES WHICH REMAIN UNPROVED BASED ON T HE EVIDENCES AVAILABLE ON RECORD, ARE NOT REITERATED FOR THE SAKE OF BREVITY. THE PRINCIP LES LAID DOWN IN VARIOUS CASE LAWS RELIED UPON BY THE LD AR ARE ALSO NOT REITERATED FOR THE S AKE OF BREVITY. WE FIND THAT THE AMALGAMATION OF CPAL WITH KAFL HAS BEEN APPROVED B Y THE ORDER OF HONBLE HIGH COURT. THE LD AO OUGHT NOT TO HAVE QUESTIONED THE VALIDITY OF THE AMALGAMATION SCHEME APPROVED BY THE HONBLE HIGH COURT IN MAY 2013 MERELY BASED ON A STATEMENT GIVEN BY A THIRD PARTY WHICH HAS NOT BEEN SUBJECT TO CROSS EXAMINATION. MOROEVER, IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE AND / OR THE STOCK BROKER ASHITA STOCK BROKING LTD NAME IS NEITHER MENTIONED IN THE SAID STATEMENT AS A PERSON WHO HAD ALLEGEDLY DEALT WITH SUSPICIOUS TRANSACTIONS NOR THEY HAD BEEN THE BENEFICIARIES OF THE TRANSACTIONS OF SHARES OF KAFL. HENCE WE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE M ATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGATIONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION, HAS NO LEGS TO STAND IN TH E EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE ARG UMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON T HE ORDERS OF THE LOWER AUTHORITIES APART FROM PLACING THE COPY OF SEBIS INTERIM ORDER SUPRA . WE FIND THAT THE SEBIS ORDERS RELIED ON BY THE LD AO AND REFERRED TO HIM AS DIRECT EVIDE NCE AGAINST THE ASSESSEE DID NOT CONTAIN THE NAME OF THE ASSESSEE AND/OR THE NAME OF ASHIKA STOCK BROKING LTD. THROUGH WHOM THE ASSESSEE SOLD THE SHARES OF KAFL AS A BENEFICIARY T O THE ALLEGED ACCOMMODATION ENTRIES 19 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 19 PROVIDED BY THE RELATED ENTITIES / PROMOTERS / BROK ERS / ENTRY OPERATORS. IN THE INSTANT CASE, THE SHARES OF CPAL WERE PURCHASED BY THE ASSESSEE W AY BACK ON 20.12.2011 AND PURSUANT TO MERGER OF CPAL WITH KAFL, THE ASSESSEE WAS ALLOT TED EQUAL NUMBER OF SHARES IN KAFL, WHICH WAS SOLD BY THE ASSESSEE BY EXITING AT THE MO ST OPPORTUNE MOMENT BY MAKING GOOD PROFITS IN RODER TO HAVE A GOOD RETURN ON HIS INVES TMENT. WE FIND THAT THE ASSESSEE AND / OR THE BROKER ASHITA STOCK BROKING LTD WAS NOT THE PRI MARY ALLOTTEES OF SHARES EITHER IN CPAL OR IN KAFL AS COULD BE EVIDENT FROM THE SEBIS ORDE R. WE FIND THAT THE SEBI ORDER DID MENTION THE LIST OF 246 BENEFICIARIES OF PERSONS TR ADING IN SHARES OF KAFL, WHEREIN, THE ASSESSEE AND / OR ASHITA STOCK BROKING LTDS NAME I S NOT REFLECTED AT ALL. HENCE THE ALLEGATION THAT THE ASSESSEE AND / OR ASHITA STOCK BROKING LTD GETTING INVOLVED IN PRICE RIGGING OF KAFL SHARES FAILS. WE ALSO FIND THAT EV EN THE SEBIS ORDER HEAVILY RELIED UPON BY THE LD AO CLEARLY STATES THAT THE COMPANY KAFL H AD PERFORMED VERY WELL DURING THE YEAR UNDER APPEAL AND THE P/E RATIO HAD INCREASED SUBSTA NTIALLY. THUS WE HOLD THAT THE SAID ORDERS OF SEBI IS NO EVIDENCE AGAINST THE ASSESSEE, MUCH LESS TO SPEAK OF DIRECT EVIDENCE. THE ENQUIRY BY THE INVESTIGATION WING AND/OR THE ST ATEMENTS OF SEVERAL PERSONS RECORDED BY THE INVESTIGATION WING IN CONNECTION WITH THE AL LEGED BOGUS TRANSACTIONS IN THE SHARES OF KAFL ALSO DID NOT IMPLICATE THE ASSESSEE AND/OR HIS BROKER. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE FURNISHED ALL EVIDENCES IN THE FO RM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUI NENESS OF THE TRANSACTIONS RELATING TO PURCHASE AND SALE OF SHARES RESULTING IN LTCG. THES E EVIDENCES WERE NEITHER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE C ASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE AS SESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THEREFORE TH E LD AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10( 38) OF THE ACT. WE ALSO FIND THAT THE VARIOUS CASE LAWS OF HONBLE JURISDICTIONAL HIGH CO URT RELIED UPON BY THE LD AR AND FINDINGS GIVEN THEREON WOULD APPLY TO THE FACTS OF THE INSTANT CASE. THE LD DR WAS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFECT. HEN CE WE HOLD THAT THE LD AO WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF KAFL AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE ACCORDINGLY HOLD THAT THE REFRAME D QUESTION NO. 1 RAISED HEREINABOVE IS DECIDED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESS EE. 7.7. MOREOVER, WE ALSO FIND FROM PAGES 114 TO 129 O F THE PAPER BOOK THAT SEBI VIDE ITS ORDER DATED 21.9.2017 HAD REVOKED THE RESTRAINT ORD ER BANNING 244 ENTITIES AND PERSONS FROM TRADING AND DEALING IN SECURITIES BY GIVING A CATEGORICAL FINDING THAT THEY HAD NO ROLE IN THE MANIPULATION OF THE SCRIP OF KAILASH AU TO FINANCE LTD. WE FIND THAT THE LD AO HAD GROSSLY RELIED ON THE INTERIM ORDER PASSED B Y SEBI ON 29.3.2016 TO ADDRESS THE ISSUE BEFORE US. IN THE SAID INTERIM ORDER OF SEB I, RESTRAINT ORDERS WERE ISSUED. NOW IN THE FINAL ORDER DATED 21.9.2017, SUCH RESTRAINT ORD ERS AND OTHER BANS HAD BEEN REVOKED BY SEBI ITSELF. HENCE THE PRIMARY RELIANCE PLACED ON A DOCUMENT BY THE LD AO WHILE FRAMING THE ASSESSMENT GOES AGAINST THE REVENUE NOW . 20 ITA NO.1724/KOL/2017 RUKMINI DEVI MANPURIA A.YR. 2014-15 20 7.8. IN VIEW OF THE AFORESAID OBSERVATIONS AND RESP ECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE DIRECT THE L D AO TO DELETE THE ADDITION MADE U/S 68 OF THE ACT IN RESPECT OF LTCG ON SALE OF SHARES OF KAFL. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 24.10.2 018 SD/- SD/- [A T VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24.10.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. SMT. RUKMINI DEVI MANPURIA, 4B, MAYFAIR TOWER, 2 , PALM AVENUE, KOLKATA-700019 2. DCIT(IT), CIRCLE-2(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-69. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES