Sumaysh Agrrawal , Kolkata V. ITO, Ward - 29(1), Kolkata , Kolkata

ITA 1790/KOL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6313 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 20-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: M D SHAH
• Keywords: Income from undisclosed sources; Share purchase agreement; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Transactions in derivatives; Question of law; Accommodation entries; Scheme of amalgamation; Assessment record; Penny stocks; Set aside
• Section: 143(3); 142(1); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.1790/KOL/2018 ( / ASSESSMENT YEAR:2014-15) SUMAYSH AGRRAWAL C/O, ACCORD INDIA INTERNATIONAL PVT. LTD. 224, A.J.C. BOSE ROAD, KRISHNA BUILDING, 4 TH FLOOR, R. NO. 414, KOLKATA-700017 VS. ITO, WARD-29(1), KOLKATA ./ ./PAN/GIR NO.: AEBPA 0601 E (ASSESSEE) .. (REVENUE) ASSESSEE BY : SHRI M. D. SHAH, AR RESPONDENT BY :SHRI ROBIN CHOWDHURY, ADDL. CIT SR. DR / DATE OF HEARING : 20/06/2019 /DATE OF PRONOUNCEMENT : 02/08/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAIN ING TO ASSESSMENT YEAR 2014-15, IS DIRECTED AGAINST AN ORDER PASSED BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-8, 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 3/12/2016. 2. HOWEVER, IN THIS APPEAL, THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BUT AT THE TIME OF HEARING, THE MAIN GRIEVANCE OF THE A SSESSEE HAS BEEN CONFINED TO THE ISSUE OF ADDITION TO THE TUNE OF RS. 38,02,285/- MA DE U/S 68 OF THE ACT ON ACCOUNT OF BOGUS LONG TERM CAPITAL GAIN. SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 2 3. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 28/07/2014,DECLARING TOTAL INCOME TO THE TUNE OF RS . 22,36,510/-. LATER ON, THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY U/S 143(2 ) OF THE ACT. DURING THE SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER NOTICED FROM THE COMPUTATION SHEET AND DETAILS FILED BY THE ASSESSEE THAT ASSESSEE HAD CLAIMED LO NG TERM CAPITAL GAIN ON SALE OF SHARES OF M/S UNNO INDUSTRIES PVT. LTD. THE ASSESSE E HAS PURCHASED125 NUMBER OF SHARES OF M/S PINNACLE VINTRADE LTD, OFFLINE, ON 06 .01.2012 @ RS. 1000/- PER SHARE FOR RS. 1,25,000/- FROM UNIGLORY DEVELOPERS P VT. LTD. SUBSEQUENTLY, ON 23/03/2012 (RECORD DATE) BONUS SHARES WERE ALLOTTED . AFTER THAT THE SAID PINNACLE VINTRADE LTD. HAS BEEN AMALGAMATED WITHM/S UNNO IND USTRIES LTD., AND 10 SHARES OF UNNO INDUSTRIES LTD. WERE ALLOTTED FOR 1 SHARE O F PINNACLE VINTRADE LTD. AFTER COMPLETION OF ONE YEAR PERIOD, THE SAID 1,13,750 SH ARES OF UNNO INDUSTRIES LTD. HAVE BEEN SOLD ON PART BY PART IN THE MONTH OF MAY, JUNE & JULY, 2013 THROUGH THE BROKER, M/S. RELIGARE SECURITIES LTD. FOR TOTAL RS. 38,20,475/- AND EARNED PROFIT MORE THAN 30 TIMES IN SUCH A SHORT SPAN OF TIME. T HE AO NOTICED THAT THIS SHARP RISE IN THE VALUE OF SHARES WITHIN SUCH A SHORT TIM E DOES NOT APPEAR NORMAL. IT IS MORE SO THAT TOO WHEN THE GENERAL TREND IN THE MARK ET WAS NEGATIVE DURING THE RELEVANT PERIOD AND FINANCIAL RESULT OF THE COMPANY HAD NOT SHOWN ANY SIGN OF BRIGHT RESULT. THE AO NOTICED THAT DIRECTORATE OF I NVESTIGATION HAS ALSO CONDUCTED ENQUIRIES IN CERTAIN SUSPICIOUS SHARES AND SHARE BR OKERS AND HAS REPORTED THAT CERTAIN SCRIPTS WHICH WERE TRADED ON BSE, WERE USED FOR EARNING BOGUS LONG TERM CAPITAL GAIN. SHARES OF M/S UNNO INDUSTRIES PVT. LT D. ALSO FIND PLACE IN THE LIST. THE PREMIER REGULATORY BODY OF SHARE MARKET SECURITIES AND STOCK EXCHANGE BOARD OF INDIA (SEBI) HAS TAKEN THE MATTER OF PRICE MANIPULA TION VERY SERIOUSLY. IN VIEW OF THE ABOVE FACTS, AO WAS OF THE VIEW THAT THE CAPITA L GAIN ARISING OUT OF THE SHARE TRANSACTIONS OF THE SCRIPTS OF PINNACLE VINTRADE LI MITED AND UNNO INDUSTRIES LIMITED IN THIS CASE, APPEARS BOGUS. THE ASSESSEE W AS REQUESTED TO EXPLAIN THE POSITION IN THIS REGARD WITH EVIDENCES. IN REPLY TO THE ABOVE SHOW CAUSE NOTICE, THE ASSESS EE MADE GENERAL OBSERVATIONS AND CLAIMED OF INNOCENCE.THEREFORE, IN VIEW OF THE ABOVE FACTS, THE AO HELD THAT THE ASSESSEES CLAIM IS NOT ACCEPTABLE AS GENUINE A ND SATISFYING THE TEST OF PREPONDERANCE AND PROBABILITIES. THEREFORE, THE TRA NSACTIONS OF PURCHASE OF SHARES SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 3 33 3 WAS TREATED AS NON-GENUINE, BOGUS AND SHAM AND CLA IM OF LONG TERM CAPITAL GAIN WAS NOT TENABLE AND SALE PROCEEDS OUT OF SALES OF SHARES OF UNNO INDUSTRIES LTD. RS. 38,02,285/- WAS TREATED AS UNEXPLAINED CAS H CREDITS U/S 68 OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED T HE ADDITION MADE BY AO. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSES SEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRICE AT WHICH SHARES WERE TRADED ARE DEPENDENT ON SO MANY FACTORS, FINANCIAL FACTORS ARE ONE OF THEM AND NOT THE ONLY ONE ON WHICH THE PRICES OF SHARES DEPENDS. ALSO, THE ASSESSEE DOES NOT HAVE ANY CONTROL ON THE RISE OR FALL OF THE SHARE P RICES AND WHY IT HAS RISEN IS NOT KNOWN TO THE ASSESSEE. AT ANY GIVEN SCENARIO SOME S HARE PRICES INCREASE AND OTHER SHARE PRICES DECREASES. EVEN IF ON THE DAY OF BIGGE ST FALL OF SENSEX ON 24 TH AUGUST 2015 WHEN THE BSE SENSEX HAS FALLEN BY 1624 POINTS, THERE WERE MANY SCRIPTS WHICH HAVE BEEN APPRECIATED. HENCE CONTENTION OF TH E ASSESSING OFFICER THAT SHARP RISE IN VALUE OF SHARES WHEN GENERAL TREND IN THE M ARKET IS NEGATIVE DOES NOT HOLD GOOD. FURTHER, THERE ARE MANY SHARES WHICH ARE TRAD ING IN MARKET, PRICES OF WHICH DO NOT CORRESPOND WITH ITS FINANCIALS. MERELY ON T HE GROUND THAT FEW BROKERS WERE INVESTIGATED AND FEW ENQUIRIES HAVE BEEN MADE SO A LL THE TRANSACTIONS IN THE SCRIPT IS BOGUS, IS NOT RIGHT MORE SPECIFICALLY WHEN THERE IS NO SPECIFIC MATERIAL OR EVIDENCE IS AVAILABLE AGAINST THE ASSESSEE. ONE SHO ULD NOT BE HELD GUILTY MERELY ON THE GROUND OF SUSPICION OR SURMISE. IT IS PERTINEN T TO NOTE THAT SECTION 10(38) OF ACT WHICH CATEGORICALLY STATES THAT IN ORDER OF CLA IM INCOME EXEMPT FROM TAX UNDER SECTION 10(38), THE SHARES ARE TO BE SOLD ON THE RECOGNIZED STOCK EXCHANGE, STT HAS TO BE PAID ON THE SALE CONSIDERATION AND S HARES ARE TO BE HELD FOR MORE THAN 12 MONTHS. THE SHARES WERE PURCHASED AND THE PAYMENT HAS BEEN MADE THROUGH THE ACCOUNT PAYEE CHEQUE. PURCHASE BILL, BA NK STATEMENT, MONEY RECEIPT, ACCOUNT CONFIRMATIONS WERE SUBMITTED. THE SHARES WE RE SOLD ON BOMBAY STOCK EXCHANGE (BSE) PLATFORM THROUGH M/S RELIGARE SECURI TIES LTD. PAYMENT FOR SALE OF SHARES WAS RECEIVED THROUGH THE BROKER IN ASSESS EES REGULAR BANK ACCOUNT. ALL THE DETAILS AND DOCUMENTS SUBMITTED ARE VERIFIABLE. THERE IS NO EVIDENCE AGAINST SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 4 44 4 THE ASSESSEE SO AS TO JUSTIFY THE CLAIM THAT THE TR ANSACTIONS ARE NOT GENUINE. NATURAL JUSTICE AND SPECIFIC PROVISION OF ACT REQUIRES THAT IF ANY EVIDENCE IS TO BE USED AGAINST THE ASSESSEE, AN OPPORTUNITY OF BEING HEARD IS TO BE PROVIDED TO THE ASSESSEE. THEREFORE, LD COUNSEL PRAYED THE BENCH TH E ADDITION MADE BY AO MAY BE DELETED. 6. ON THE OTHER HAND, THE LD. D.R. FOR THE REVENUE SUBMITTED BEFORE US A COPY OF STATEMENT OF SHRI PAWAN DALMIA U/S 131 OF THE ACT, TAKEN ON 29.9.2015, WHEREIN THE QUESTION ASKED BY THE DDIT(INV.), KOLKATA AND R EPLY SUBMITTED BY SHRI PAWAN DALMIA IS GIVEN. APART FROM THIS, THE LD. D.R. FOR THE REVENUE RELIED ON THE JUDGMENT OF SMC BENCH OF ITAT, DELHI IN THE CASE OF ANIP RASTOGI, IN ITA NO.3809/DEL/2018 AND HE ALSO RELIED ON THE JUDGMENT OF CO-ORDINATE BENCH OF ITAT, BANGALORE BENCH REPORTED IN [2018] 99 TAXMANN .COM 339 (BANGALORE-TRIB.) WHEREIN IT WAS HELD THAT BOGUS LONG TERM CAPITAL GA IN GENERATED BY THE ASSESSEE SHOULD BE TAXABLE. BASED ON THESE PRECEDENTS, THE L D DR PRAYED THE BENCH THAT ORDER OF LD AO SHOULD BE UPHELD. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT BEFORE US THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THE FOLLOWING DOCUMENTS AND EVIDENCES: (I).STATEMENT SHOWING PURCHASES, ALLOTMENT OF SHARE S IN AMALGAMATED COMPANYAND SALE OF EQUITY SHARES (VIDE PB 1-2). (II). PURCHASE BILLS FOR 125 SHARES IN PANNACLEVINT RADE PVT. LTD. (PB-3). (III) BANK STATEMENT AND PAYMENT BY ACCOUNT PAYEE C HEQUES. (IV) SHARE CERTIFICATE IN THE NAME OF THE ASSESSEE (PB 6-7). THAT IS, SHARE CERTIFICATE FOR ISSUE OF 11,250 BONUS SHARES OF PINNACLE VINTRA DE LTD. (VIDE PB8). (V).COMPUTATION, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ALONG WITH INVESTMENT SCHEDULE FOR THE YEAR ENDED 2012 SHOWING INVESTME NT IN PINNACLE VINTRADE PVT. LTD. ALONG WITH BONUS SHARES (VIDE PB 9-11). (VI).SCHEME OF ARRANGEMENT APPROVED FROM BOMBAY HI GH COURT WITH UNNO INDUSTRIES LTD. THAT IS, MERGER ORDER OF HON`BLE BO MBAY HIGH COURT (VIDE PB 12- 49). SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 5 55 5 (VII).DOCUMENTS SHOWING ALLOTMENT OF 1,13,750 SHARE S IN UNNO INDUSTRIES LTD. (PB 50-51). (VIII).SHARE CERTIFICATE SHOWING 1,13,750 SHARES IN THE NAME OF THE ASSESSEE (PB 52). (IX).DEMAT STATEMENT SHOWING 1,13,750 SHARES OF UNN O INDUSTRIES LTD, ALLOTTED TO THE ASSESSEE AFTER SCHEME OF ARRANGEMENT (VIDE PB 5 3-55). (X). BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ALON G WITH INVESTMENT SCHEDULE FOR THE YEAR ENDED 2013 SHOWING INVESTMENT IN UNNO INDU STRIES LTD, ALONG WITH BONUS SHARES VIDE PB 56-58. (XI)CONTRACT NOTES FOR SALE OF 1,13,750 SHARES IN U NNO INDUSTRIES LTD. (PB 59-70). (XII).DEMAT STATEMENT SHOWING SALE OF 1,13,750 SHAR ES OF UNNO INDUSTRIES LTD. (PB 71-73). (XIII).BANK STATEMENT REFLECTING RECEIPT OF SALE CO NSIDERATION FOR SALE OF 1,13,750 SHARES OF UNNO INDUSTRIES LTD AND BROKERS STATEMEN TSHOWING SALE AND PAYMENT CONSIDERATION FOR SALE OF 1,13,750 SHARES IN UNNO INDUSTRIES LTD. BY SUBMITTING THESE PLETHORA DOCUMENTS AND EVIDENCE S, THE LD COUNSEL CLAIMED THAT THE LONG TERM CAPITAL GAIN (LTCG) OF RS.38,02, 285/- EARNED BY THE ASSESSEE IS GENUINE. THE TRANSACTION HAS BEEN MADE BY ASSESSEE WITHIN FOUR CORNERS OF LAW THEREFORE, ADDITION MADE BY ASSESSING OFFICER SHOUL D BE DELETED. 8. BASED ON THIS FACTS AND CIRCUMSTANCES NARRATED A BOVE, WE NOTE THAT THIS ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF CO-ORDINATE BEN CH OF ITAT KOLKATA IN THE CASE OF SANJIB KUMAR PATWARI(HUF) IN I.T.A. NO.20 5/KOL/2018 FOR A.Y. 2014- 15, WHEREIN IT WAS HELD 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 SHARES AND HAS BEEN INVESTING IN SHARES SINCE PAST SEVERAL YEARS. THE SAID FACT IS E VIDENT FROM THE DETAILS GIVEN BELOW: SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 6 66 6 THUS, FROM THE ABOVE TABLE, IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE IS A REGULAR INVESTOR IN SHARES AND IS HAVING A SUBSTANTIAL AMOU NT OF INVESTMENTS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD THE IMPUGNED THREE SCRIPS AND EARNED CAPITAL GAINS ON THE SAME WHICH IS CLAIMED Y EAR AFTER YEAR CONSISTENTLY. THE DETAILS OF LONG TERM CAPITAL GAIN EARNED BY THE ASS ESSEE 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 WER E LISTED SHARES AND WERE PURCHASED AND SOLD THROUGH STOCK BROKER IN STOCK EX CHANGE AND STT WAS DEDUCTED AT THE TIME OF SALE. THE DETAILS OF PURCHASE AND SA LES TRANSACTION MADE BY THE ASSESSEE IS GIVEN BELOW: SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 7 77 7 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 S TOCK BROKER IN A RECOGNIZED STOCK EXCHANGE AND CLAIMED AS EXEMPT U/S 10(38) OF THE AC T IS AS UNDER: SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 8 88 8 SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 9 99 9 WE NOTE THAT THE AO IN HIS ORDER HAS DISCUSSED ABOU T THE INTERIM ORDER OF SEBI, WHERE SEBI HAS RESTRAINED SOME PERSONS INCLUDING AS SESEE FROM ACCESSING THE SECURITIES MARKET. HOWEVER, SEBI IN ITS FINAL ORDER DID NOT GIVE ADVERSE COMMENT.THE SAME WAS REVOKED BY SEB1, VIDE ITS FINA L 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) REA D WITH PARA 7 OF PAGE NO. 83. THE AO HAS MADE SOME OTHER GENERAL ALLEGATIONS INCLUDIN G THE STATEMENT OF AN ALLEGED ENTRY OPERATOR SRI SUNIL DOKANIA 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 THE ASSESSE E. 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 ST ATEMENTS OF THOSE WITNESS WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS F LAW WHICH MAKES THE ORDER NULLITY. WE NOTE THAT SAME VIEW EXPRESSED BY THE HO N`BLE CALCUTTA HIGH COURT IN 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 SIN E QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAI NST THE PARTY UNLESS THE PARTY IS PUT ON NOTICE OF THE CASE MADE OUT AGAINST HIM. THE REFORE, THE ADDITION MADE BY THE ASSESSING OFFICER BASED ON THESTATEMENT OF AN ALLEG ED ENTRY OPERATOR SRI SUNIL DOKANIAIS NOT SUSTAINABLE IN LAW, AS THE ASSESSING OFFICER DID NOT PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE ST ATEMENT 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 WH ICH THE LONG TERM CAPITAL GAIN(LTCG) AROSE TO THE ASSESSEE. THESE ALL DOCUMEN TS AND EVIDENCES WERE AVAILABLE BEFORE THE LD CIT(A) AS WELL AS BEFORE TH E LD AO. THE ASSESSEE SUBMITTED BEFORE US FOLLOWING DOCUMENTS AND EVIDENCES IN RESP ECT 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 TRADER S PVT. LTD. (PAPER BOOK PAGE NO. 4) SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 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 TRADER S PVT. LTD. (PAPER BOOK PAGE NO. 5) 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 FI NANCE LTD. AND CAREFUL PROJECTS ADVISORY LTD. AND PANCHSHUL MARKETING LTD. (PAPER B OOK 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 AN D BUYING & SELLING IN SECURITIES, DIRECTLY OR INDIRECTLY IN ANY MANNER WHATSOEVER TIL L ANY FURTHER DIRECTIONS (PAGE NO. 69) AND INCLUDED KAILASH AUTO FINANCE LTD. AND ASSE SSEE 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). ASSES SEE'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, 11.0 7.2014, 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.; SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 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.) 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 CHEQU E 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, 11.12.2014 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 (L TCG) 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 AL SO NOTE THAT THE SECURITIES EXCHANGE BOARD OF INDIA (SEBI) ALSO DECLARED THESE SCRIPS AN D SHARES AS GENUINE 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 (P AGE NOS. 69-84). ASSESSEE'S NAME IS AT S.N. 154 (AT PAGE NO. 80) REA D WITH PARA 7 OF PAGE NO. 83. HENCE, WE NOTE THAT SINCE THESE SHARES/SCRIPS WERE TRADED ON THE PLATFORM OF RECOGNIZED STOCK EXCHANGE AND THE SECURITIES EXCHANGE BOARD OF INDIA (SEBI) DID N OT GIVE ANY ADVERSE REPORT THEREFORE, LONG TERM CAPITAL GAIN ARISE OR EARNED B Y THE ASSESSEE SHOULD BE GENUINE AND IT SHOULD NOT BE BOG US BY ANY STRETCH OF IMAGINATION. MOREOVER, THE ASSESSING OFFICER DID NOT DOUBT ON TH E DOCUMENTS AND EVIDENCES AS NOTED BY US ABOVE. THE ASSESSING OFFICER MAINLY MAD E ADDITION BASED ON SUSPICION, AND PROBABILITY. AS WE HAVE NOTED THAT IN THE COURS E OF ASSESSMENT PROCEEDINGS, ALL THE RELEVANT DETAILS AND DOCUMENTS REQUISITIONED BY THE LD. ASSESSING OFFICER IN NOTICE U/S 142(1) WAS FILED BEFORE HIM. THE ASSESSE E HAS SUBMITTED THE DETAILS OF LTCG, COPY OF CONTRACT NOTES, BANK STATEMENTS, ALLO TMENT ADVISE, COPY OF BILLS, DEMAT ACCOUNT AND OTHER NECESSARY DETAILS BEFORE AO AND THE AO FAILED TO BRING ANY COGENT EVIDENCE ON RECORD TO SHOW THAT THESE DO CUMENTS 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. SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 12 22 2 (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. (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 ASS ESSMENT ORDER THAT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING, K OLKATA, THE CLAIM OF LTCG U/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 SCRIPS IN WHICH THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER ALLEGED THAT THE TRANSACTIONS WERE PRE-ARRANGED TO BOOK SUCH GAI N IN THE HANDS OF THE PRE-FIXED BENEFICIARIES. THE ABOVE ALLEGATIONS ARE GENERALIZE D 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 SCRIPS WOULD NOT BE CONSIDERED BOGUS, AND CONSEQUEN TLY, BE ADDED TO HIS TOTAL INCOME. THE ASSESSEE DULY REPLIED TO THE SHOW CAUSE NOTICE VIDE HIS LETTER DATED 22.12.2017 THEREBY GIVING ALL THE DETAILS AND REASO NS AS REQUIRED BY THE AO TO PROVE THAT THE LTCG INCURRED BY THE ASSESSEE ON SALE OF A BOVE MENTIONED SHARES ARE GENUINE AND CANNOT BE CONSIDERED AS BOGUS. HOWEVER, THE LD. AO DID NOT CONSIDER THE SUBMISSION OF THE ASSESSEE AND MADE THE ADDITIO N OF LTCG IN THE HANDS OF THE ASSESSEE TREATING THE SAME TO BE UNEXPLAINED. WE NO TE THAT IT APPEARS FROM THE SHOW CAUSE NOTICE THAT THE LD. AO HAS RELIED ON THE FOLL OWING 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 PENNY STOCKS. SO FAR FIRST ALLEGATION OF AO IS CONCERNED, WE NOTE THAT THE ASSESSEE HAS PURCHASED THE SHARES FROM THE RECOGNIZED STOCK EXCHANGE THROU GH HIS BROKER I.E. EUREKA STOCK & SHARE BROKING SERVICES LTD. ON VARIOUS DATES. THE ASSESSEE SUBMITTED CONTRACT NOTES. THIS TRANSACTION IS NOT THROUGH ANY PREFEREN TIAL ALLOTMENT OR OFFLINE SALE. ALL THE TRANSACTIONS ARE MADE THROUGH PROPER BANKING CH ANNELS. THE SHARES WERE SOLD THROUGH REGISTERED SHARE BROKER, M/S EUREKA STOCK & SHARE BROKING SERVICES LTD. IN SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 13 33 3 THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED ALL THE DETAILS AND DOCUMENTS THAT WERE NECESSARY FOR ALLOWING THE CLAI M OF THE ASSESSEE. IN THE ASSESSMENT ORDER U/S. 143(3), LD. AO HAS STATED THA T THERE WAS INFLOW OF SOME INFORMATION FROM THE INVESTIGATION WING ALLEGING TH AT THE ASSESSEE WAS INVOLVED 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. 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 21.0 9.2017,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 REGU LAR 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 MAR KET CONDITION. THE PAYMENTS WERE RECEIVED THROUGH PROPER BANKING CHANNEL. THE P URCHASE AND SALE TRANSACTIONS WERE SUBJECTED TO SECURITY TRANSACTION TAX, SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. THE SHARE PURCHASE AND SALE TRANSACTIO NS ARE REFLECTED IN THE D-MAT ACCOUNT. THE PURCHASE OF SHARES (INVESTMENTS) WAS N OT DISPUTED IN EARLIER YEAR, WHERE ASSESSMENT IS COMPLETED U/S. 143(3) OF THE IN COME TAX ACT. THESE FACTS ARE VERIFIABLE FROM THE REGULAR BOOKS OF ACCOUNTS. THE TRANSACTIONS CAN ALSO BE VERIFIED FROM THE STOCK EXCHANGE. THEREFORE, WE DO NOT AGRE E WITH THE ASSESSING OFFICER AND HENCE THE ADDITION 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 ALLE GATIONS ABOUT THE ALLEGED ENTRY OPERATOR, SRI SUNIL DOKANIA, VIDE PAGE NO. 22 OF T HE ASSESSMENT ORDER. WE NOTE THAT NO COPY OF SUCH STATEMENT WAS GIVEN TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS EXAMINATION OF THE PARTY WAS ALLOWED TO THE ASSESSE E. FURTHER, THE AO DID NOT SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 14 44 4 BROUGHT ANY CORROBORATIVE EVIDENCE ON RECORD TO SUB STANTIATE THE CONTENTS OF THE STATEMENT RELIED ON. WE NOTE THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESS BY THE ADJUDICATING AUTHORITY THOUGH THE ST ATEMENTS OF THOSE WITNESS WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS F LAW WHICH MAKES THE ORDER NULLITY. WE NOTE THAT SAME VIEW EXPRESSED BY THE HO N`BLE CALCUTTA HIGH COURT IN 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 SIN E QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAI NST THE PARTY UNLESS THE PARTY IS PUT ON NOTICE OF THE CASE MADE OUT AGAINST HIM. WE NOTE THAT THE FACT THAT NEITHER THE STATEMENT RE LIED ON BYTHE AUTHORITIES BELOW WERE PROVIDED TO THE ASSESSEE NOR ANY CROSS EXAMIN ATION WAS ALLOWED TO PROVE THE VERACITY OF THE STATEMENT. WE NOTE THAT THE FACT TH AT IN THE STATEMENT OF THIRD PARTY, THE NAME OF THE ASSESSEE WAS NOT IMPLICATED. EVEN O THERWISE, ACCORDING TO LEARNED COUNSEL, NO ADVERSE INFERENCE COULD BE DRAWN AGAINS T THE ASSESSEE ON THE 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. BIJAYAGANGULY- ITA NOS. 624 & 625/KOL /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/2011 (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 CIRCULAR DATED 10.03.2003 ITSELF MADE IT CLEAR THAT SUCH ADMISSIONS OR STATEMENTS WI THOUT 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 SUPPOS ED TO FOLLOW THE RULES, REGULATIONS AND DIRECTIONS GIVEN BY SEBI. WE NOTE T HAT SEB1 BY ITS INTERIM ORDER DATED 29.03.2016 RESTRAINED 246 ENTITIES FROM ACCES SING THE SECURITIES MARKET AND FROM DEALING AND BUYING & SELLING IN SECURITIES, DI RECTLY 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 SERIA L NO. 156 (PAGE NOS. 70 & 74 RESPECTIVELY) . SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 15 55 5 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). ASSESSEE'S NAME IS AT S.N. 154 (AT PAGE NO. 80) READ WITH PARA 7 OF PAGE NO. 83. W E NOTE THAT THE SEBI BY ITS ORDER BEARING REFERENCE NO. SEBI/WTM/MPB/EFD- DRA-I/31/20 17, DATED 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, S EPTEMBER 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, 199 2 READ WITH SECTIONS 11, 11(4) AND 11B OF THE SEBI ACT, HEREBY REVOKE THE INTERIM ORDER DA TED MARCH 29, 2016 AND CONFIRMATORY ORDERS DATED JUNE 15, 2016, SEPTEMBER 30,2016, OCTO BER 21,2016, OCTOBER 27,2016 AND JULY 13, 2017 QUA AFORESAID 244 ENTITIES (PARAGRAPH 5 ABOVE) WITH IMMEDIATE 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 PARAGR APH 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 SHA LL CONTINUE ITS PROCEEDINGS AGAINST THEM. HENCE, THE DIRECTIONS ISSUED VIDE CONFIRMATOR Y ORDER DATED JUNE 15, 2016 AGAINST THE REMAINING 2 ENTITIES SHALL CONTINUE. THIS REVOCATIO N ORDER IS WITHOUT 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 SEB I ITSELF HAS FREED THE ASSESSEE FROM MARKET RIGGING ALLEGATION AND THUS THE ASSESSE E 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 DOKANIA GIVEN IN THE SHOW CAUSE NOTICE, IT IS NOWHERE MENTIONED THAT THE ALLEGED PE RSON HAS PROVIDED ANY ENTRY TO THE ASSESSEE DIRECTLY. THE STATEMENT TALKS ABOUT THE EN TRIES PROVIDED BY HIM TO PREFERENTIAL ALLOTTEES AND THE MODUS OPERANDI ADOPT ED BY HIM FOR PROVIDING THE BOGUS LTCG. THE ASSESSEE BEING A GENUINE INVESTOR W AS UNAWARE OF THE FACT THAT ANY SUCH ACTIVITY WAS UNDERTAKEN IN THE SCRIPS PURC HASED BY HIM. HE WAS NOWHERE, ASSOCIATED WITH THE PERSON ALLEGED TO PROVIDE THE E NTRIES AS ALLEGED BY THE AO. WE ALSO NOTE THAT SEBI HAS GIVEN A CLEAN CHIT TO THE C OMPANY AND HAS FREED IT FROM THE ALLEGATION OF MARKET RIGGING. THEREFORE, THE ALLEGA TION 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 PR OVIDE ANY OPPORTUNITY FOR CROSS EXAMINE THE SO-CALLED OPERATORS. IT IS WELL ESTABLI SHED LAW THAT NO ADVERSE VIEW CAN BE TAKEN AGAINST AN ASSESSEE ON THE BASIS OF STATEM ENT RECORDED BY DEPARTMENT OF ANY PERSON WITHOUT PROVIDING COPY OF THE STATEMENT TO THE ASSESSEE AND ALSO WITHOUT PROVIDING OPPORTUNITY FOR CROSS EXAMINATION 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 TOALLEGE THAT MONEY CHANGED HANDS BETWEE N THE ASSESSEE AND THE BROKER SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 16 66 6 OR ANY OTHER PERSON INCLUDING THE ALLEGED EXIT PROV IDER WHATSOEVER TO CONVERT UNACCOUNTED MONEY FOR GETTING BENEFIT OF LTCG AS AL LEGED. IN THE SAID CASE, THE HONBLE HIGH COURT AT PARA 21 HELD THAT IN ABSENCE OF ANY MATERIAL TO SHOW THAT HUGE 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 RU MOR. IT IS TRITE LAW THAT THE SUSPICION HOWSOEVER STRONG CANNOT PARTAKE THE CHARA CTER OF LEGAL EVIDENCE. REFERENCE WAS MADE TO THE JUDGEMENT OF HONBLE SUPR EME COURT IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT (1959) 37ITR 288 (SC, UMACHARAN SHAW 37 ITR 271 AND OMAR SALAY MOHAMED SAIT 37ITR 151. WE N OTE 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. HO WEVER, THIS PRESUMPTION OR SUSPICION HOWSOEVER STRONG IT MAY APPEAR TO BE, BUT NEEDS TO BE CORROBORATED BY SOME EVIDENCE 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 AC CEPTED BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPL Y ON THE BASIS OF SOME REPORTS OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AN D/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, T HE LD COUNSEL, IN ADDITION TO THE AFORESAID 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) (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 TRANSACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMEN T OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADESH [1977] 1 SCC SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 17 77 7 816 (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 OWNER ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AN D THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFINITE CHARA CTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERR INGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURT HER 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 G ROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RELATING 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) 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 T HE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SU BMITTED 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 HI S BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN BSE/CSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SUPPORT OF THIS CONTENTION WHEREIN UND ER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO A LLOW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSESS THE SALE PROCEEDS O F SHARES AS UNDISCLOSED 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/(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 BIM ALCHAND JAIN IN TAX APPEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UP ON BY THE LD. D.R,WE FIND THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN H AND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MADE BY THE ASSESSEE IN CASH FOR ACQ UISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DON E THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WAS INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOWN AS CAPITAL GAINS WHICH WA S 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 T RADE. THUS, 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 . 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 REFLECTED IN DEMAT ACCOUNT. AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBM ITTED BY ASSESSEE. THE LD AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST T HAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. THE ASSESSEE PRODUCED TH E CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL P AYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. IN THESE CIRCUMSTANCES, THE LONG TERM CAPITAL GAIN (LTCG) SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 18 88 8 EARNED BY THE ASSESSEE SHOULD NOT BE TREATED AS BOG US, AS HELD BY THE JURISDICTIONAL HON`BLE CALCUTTA HIGH COURT IN VARIOUS CASES, AS ME NTIONED 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 SUBJE CTED TO SEBISACTION. HOWEVER, THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT , BROKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THETRANSACT IONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THEREVENUE WAS DISMISS ED. (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 TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUNDTHAT THE LD AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON THE BASIS OFSOME INFORMATION RECEIVED BY H IM. 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 CONCLU SIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED BY TH E 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 SHARES 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 ASSESSEECLAIMED EXEMPTION OF INCOM E FROM LONG TERM CAPITAL GAINS. HOWEVER, THE LD AO, BASED ON THE INFORMATION RECEIVED BY HIM FROM CALCUTTA STOCKEXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONALHIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WA S FOUNDTHAT THE CLAIM OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSOFO UND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND P RODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANK S. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS 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 RECOGNIZED STOCKBROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE PAYMENTS MADE T O THE STOCKBROKER AND ALL THE PAYMENTS RECEIVEDFROM STOCKBROKER THROUGH ACCOUNT P AYEE 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 CONCLUS ION AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. IN DOING SO, THE TRIBUNAL HE LD THAT THE TRANSACTION FULLY SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 19 99 9 SUPPORTED BY THE DOCUMENTARY EVIDENCES COULD NOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER, IT WAS HELD THAT THE TRANSAC TIONS OF SHARE ARE GENUINE. THEREFORE, WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS ANY SUBSTANTIAL 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 RUNNING 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 OR DER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH T HE 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 B OTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBMITTED THE IT RETURN, LEDGER COPY, LETTER TO AO AND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM WHICH IS PLACED AT P AGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTRACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REGISTERS WERE ALSO SUBMITTE D IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. THE BOARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIONS IN COMMODITY WAS PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER H AND, 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 SUCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME LOSS WAS ALSO CONFIRMED BY THE LD. CIT(A). HOWEVER, WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME CONCRETE EVIDENCE WHERE THE TRANSACTIONS CA NNOT BE PROVED WITH THE SUPPORTIVE 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 OPINION OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGH T HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY FAILED TO SUBSTANTIAT E THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING PRICE AND T HEREFORE 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 RE CORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE O F PROOF. IT WAS FURTHER HELD 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 CO LOURABLE TRANSACTIONS OR WERE RESORTED TO WITH ULTERIOR MOTIVE. WE NOTE THAT ABOVE MENTIONED JUDGMENTS OF HON`BLE C ALCUTTA HIGH COURT, BY AND LARGE HELD THAT WHERETHE WHOLE TRANSACTIONS WERE SU PPORTED 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 PAYMEN TS RECEIVEDFROM STOCKBROKER THROUGH ACCOUNT PAYEE CHEQUES, THEN IN THESE FACTS AND CIRCUMSTANCES ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF BOGUS LONG TERM CAPITAL GAIN SHOULD BE DELETED. SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 20 00 0 WE NOTE THAT UNLESS AND UNTIL THE ORDER OF JURISDIC TIONAL HON`BLE HIGH COURT IS REVERSED BY HON`BLE SUPREME COURT, THE SAME HAS TO BE GIVEN DUE EFFECT. JUDICIAL DISCIPLINE DEMANDS THAT ONCE AN ORDER HAS BEEN PASS ED IN THE ASSESSEES OWN CASE, BY THE JURISDICTIONAL HIGH COURT, THE TRIBUNAL IS D UTY BOUND TO ACT IN ACCORDANCE WITH THE SAME. WE NOTE THAT IN THE CASE OF UNION OF INDIA V. RAGHUBIR SINGH (1989) 178 ITR 548 (SC), THE SUPREME COURT HELDTHAT THE DOCTRINE OF BINDING PRECEDENT HAS MERI T OF PROMOTING CERTAINTY AND CONSISTENCY IN JUDICIAL DEC ISIONS. AS PER THE DOCTRINE OF PRECEDENT, ALL LOWER COURTS, TRIBUNALS AND AUTHORIT IES EXERCISING JUDICIAL OR QUASI- JUDICIAL FUNCTIONS ARE BOUND BY THE DECISIONS OF TH E HIGH COURT WITHIN WHOSE TERRITORIAL JURISDICTION THESE COURTS, TRIBUNALS &A UTHORITIES FUNCTIONS. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE JURISDICTIONAL, HON`BLE HIGH COURT OF CALCUTTA, ON SIMILAR AND IDENTICAL FACTS, THE ADDITION 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,BROKERAGE , SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THETRANSACTIONS AS IT W ERE REFLECTED IN DEMAT ACCOUNT. AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBM ITTED BY ASSESSEE. THELD AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGESTTH AT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. THE ASSESSEE PRODUCED TH E CONTRACT NOTES, DETAILS OF DEMATACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PA YMENTS WERE RECEIVED BYTHEASSESSEE 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 FOLLOWIN G 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 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 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 AFORESAI D 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) SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 21 11 1 (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 SU PREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADESH [1977] 1 SCC 816 (SC). IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A P ARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNER ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EV IDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLIS H CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HON BLE APEX COURT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUS PICION BECAUSE 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 JUDGMENTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAIMED BY THE ASSE SSEE ON LTCG ON ALLEGED PENNY SOCKS. (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (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 T HE FACTS 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 OF THE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WA S INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOW N AS CAPITAL GAINS WHICH WAS NOT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTU RE IN NATURE OF TRADE. THUS, 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 SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 22 22 2 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 STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS WHIC H ARE SUPPORTED WITH MATERIAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RE CORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT THE ALLEGATIO NS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MU ST THEREFORE CONSEQUENTLY FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE H AD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PUR CHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. NEITHER THESE EVIDENCES WERE FOUND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS NOR T HE AO HAD ISSUED ANY NOTICE TO THE BROKERS FOR CONFIRMATION. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE EXEMPTED U/S 10(38) OF THE AC T ON THE BASIS OF SUSPICION, SURMISES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRONG, CANNOT PARTAKE THE CHARACTER OF LEGAL EVIDENCE. IN THE AFORESAID FACTS AND CIRCUMSTANCE, FOR ALLOWING THE APPEAL WE RELY ON TH E DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INV ESTMENTS IN ITA NO.620 OF 2008 DATED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOW S : IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCK BROKE R OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECEIVED FROM THE SHARE BROKER THROUGH A CCOUNT PAYEE WHICH ARE 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 ALLOWED THE APPEAL BY THE ASSESSEE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANSACTIONS CANNOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER IT WAS HELD THAT THE TRANSACTIONS OF THE SH ARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS NO SUBSTA NTIAL QUESTION OF LAW HELD IN THIS MATTER. HENCE TH E APPEAL 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 JUSTI FIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME O F THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. (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 S OURCE OF MONEY). ANNUAL RETURN NO. 20B WAS FILED WITH REGISTRAR OF COMPANIES BY SCITIL SHO WING 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 CO PY OF DEMAT REQUEST SLIP ALONG WITH THE SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 23 33 3 TRANSACTION STATEMENT IS PLACED ON RECORD. 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 50000 EQUITY SHARES OF CS L. THE DEMAT SHARES ARE REFLECTED IN THE TRANSACTION STATEMENT OF THE PERIOD FROM 1-11-2011 TO 31-12-2013. THE ASSESSEE SOLD 50000 SHARES THROUGH HER BROKER SKP WHICH WAS A SEBI REGI STERED BROKER AND EARNED A LONG TERM CAPITAL GAIN. 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 (ABO VE 500 DAYS) THROUGH IN ORDER TO GET THE BENEFIT OF CLAIM OF LONG TERM CAPITAL GAIN THE HOLD ING 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 'MODUS OPERAN DI' 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 EVIDE NCES PRODUCED BY THE ASSESSEE WERE NOT CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVIDENC E COLLECTED FROM THIRD PARTIES WAS CONFRONTED TO THE ASSESSEES. NO OPPORTUNITY OF CROS S-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 REPORT FROM THE INVESTI GATION 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 IN EARNING ALLEGED BOGUS LTCG AND STCG, THAT HAVE SURF ACED DURING INVESTIGATIONS, SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCLUSION A S TO WHETHER THE CLAIM IS GENUINE OR NOT. AN ALLEGED SCAM MIGHT HAVE TAKEN PLACE ON LTCG ETC. BUT IT HAS TO BE ESTABLISHED IN EACH CASE, BY THE PARTY ALLEGING SO, THAT THIS ASSESSEE IN QUESTION WAS PART OF THIS SCAM. THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESSEE'S ACTIO N GIVING HER INVOLVEMENT IN THE SCAM SHOULD BE ESTABLISHED. THE ALLEGATION IMPLY THAT CASH WAS PAID BY THE ASSESSEE AND IN RETURN THE ASSESSEE RECEIVED LTCG, WHICH IS INCOME EXEMPT FROM INCOME TAX, BY WAY OF CHEQUE THROUGH BANKING CHANNELS. THIS ALLEGATION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVENUE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIGATION'S OFFICE BY WAY OF STATEMENTS RECORDED ETC. HAS TO ALSO BE BROU GHT ON RECORD IN EACH CASE, WHEN SUCH A STATEMENT, EVIDENCE ETC. IS RELIED UPON BY THE REVE NUE TO MAKE ANY ADDITIONS. OPPORTUNITY OF CROSS EXAMINATION HAS TO BE PROVIDED TO THE ASSESSE E, IF THE ASSESSING OFFICER RELIES ON ANY STATEMENTS OR THIRD PARTY AS EVIDENCE TO MAKE AN AD DITION. 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 CLAIM OF THE ASSESSEE CANNOT BE REJEC TED BASED ON MERE CONJECTURES UNVERIFIED BY EVIDENCE UNDER THE PRETENTIOUS GARB OF PREPONDER ANCE 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 ASSESSING OFFICER R ELIED ONLY ON A REPORT AS THE BASIS FOR THE ADDITION. THE EVIDENCE BASED ON WHICH THE DDIT REPO RT WAS PREPARED IS NOT BROUGHT ON RECORD BY THE ASSESSING OFFICER NOR IS IT PUT BEFOR E THE ASSESSEE. THE SUBMISSION OF THE ASSESSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RE CEIVED SOME TIPS AND SHE CHOSE TO INVEST BASED ON THESE MARKET TIPS AND HAD TAKEN A CALCULAT ED 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 THAT SHE HAS DONE TH ESE TRANSACTIONS IN A BONA FIDE AND GENUINE MANNER AND WAS BENEFITTED, ONE CANNOT REJEC T THIS SUBMISSION BASED ON SURMISES AND CONJECTURES. AS THE REPORT OF INVESTIGATION WIN G SUGGESTS, THERE ARE MORE THAN 60,000 BENEFICIARIES OF LTCG. EACH CASE HAS TO BE ASSESSED BASED ON LEGAL PRINCIPLES OF LEGAL IMPORT LAID DOWN BY THE COURTS OF LAW JUST THE MODUS OPERANDI, GENERALISATION, PREPONDERA NCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTING THE CLAIM OF THE ASSES SEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CONTROVERT THE VALIDITY AND CORRECTNESS O F THE DOCUMENTARY EVIDENCES PRODUCED, SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 24 44 4 THE SAME CANNOT BE REJECTED BY THE ASSESSEE. THE BU RDEN OF PROVING A TRANSACTION TO BE BOGUS HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEG AL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNE RRINGLY AND REASONABLY RAISING AN INTERFERENCE TO THAT EFFECT. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER ( APPEALS) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER, THE ASSESSING OFFICER AS WELL AS THE COMMI SSIONER (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 ARRANGEMENT FOR THE PURPO SE OF GENERATING BOGUS LONG TERM CAPITAL GAINS. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW T HAT THE PERSONS INVESTIGATED, INCLUDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT T HE ASSESSEE WAS IN COLLUSION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LI NK THEIR WRONG DOINGS WITH THE ASSESSEE. IN FACT, THE INVESTIGATION WING IS A SEPARATE DEPARTME NT WHICH HAS NOT BEEN ASSIGNED ASSESSMENT WORK AND HAS BEEN DELEGATED THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VESTED WIDEST POWERS ON THIS WING. IT IS THE DUTY O F THE INVESTIGATION WING TO CONDUCT PROPER AND DETAILED INQUIRY IN ANY MATTER WHERE THERE IS A LLEGATION OF TAX EVASION AND AFTER MAKING PROPER INQUIRY AND COLLECTING PROPER EVIDENCES THE MATTER SHOULD BE SENT TO THE ASSESSMENT WING TO ASSESS THE INCOME AS PER LAW. NO SUCH ACTIO N EXECUTED BY INVESTIGATION WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALL Y AGAINST THE ASSESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUIL TY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CASE, THE ASSESSING O FFICER AT 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 DUTY BOUND T O MAKE INQUIRY FROM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION AND THEN TO COL LECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTI ON. HOWEVER, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT THE TR ANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHERWISE SUPPORTED BY PROPER THIRD PARTY DOCUM ENTS 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 THIS CASE NO THING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT EVIDENCES OR MATERIAL AGAINS T THE ASSESSEE DESPITE THE MATTER BEING INVESTIGATED BY VARIOUS WINGS OF THE INCOME TAX DEP ARTMENT HENCE UNDER THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAINST 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 NOT 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 CIR CUMSTANCES, THE EVIDENCE FILED BY THE ASSESSEE IS ACCEPTED AND THE CLAIM THAT THE INCOME IN QUESTION IS A BONA FIDE LONG TERM CAPITAL GAIN ARISING FROM THE SALE OF SHARES IS ALL OWED AND HENCE EXEMPT FROM INCOME TAX. [PARA 20] 26. TO CONCLUDE, WE NOTE THAT SEBI HAS GIVEN A CLE AN CHIT TO THE COMPANY AND HAS FREED IT FROM THE ALLEGATION OF MARKET RIGGING. THE REFORE, THE ALLEGATION OF THE AO ITSELF BECOMES INFRUCTUOUS. FURTHER, THE ASSESSEE H AD ALSO REQUESTED FOR AN OPPORTUNITY TO CROSS EXAMINE SRI SUNIL DOKANIA, WHO SE 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 OPERAT ORS. IT IS WELL ESTABLISHED LAW THAT NO ADVERSE VIEW CAN BE TAKEN AGAINST AN ASSESS EE, ON THE BASIS OF STATEMENT RECORDED BY DEPARTMENT OF ANY PERSON WITHOUT PROVID ING COPY OF THE STATEMENT TO THE ASSESSEE AND ALSO WITHOUT PROVIDING OPPORTUNITY FOR CROSS EXAMINATION OF THE SAID PERSON.WE NOTE THAT THE ASSESSEE HAD NEVER ENTERED INTO ANY TRANSACTION WITH SRI SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 25 55 5 SUNIL DOKANIA, AGAINST WHOM 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 MENTIONED THAT THE ALLE GED PERSON HAS PROVIDED ANY ENTRY TO THE ASSESSEE DIRECTLY. WE NOTE THAT THE LD COUNSEL HAS PROVED THAT ASSESSE E 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 PREVAIL ING MARKET CONDITION. THE PAYMENTS WERE RECEIVED THROUGH PROPER BANKING CHANN EL. THE PURCHASE AND SALE TRANSACTIONS WERE SUBJECTED TO SECURITY TRANSACTION TAX (STT), SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. THE SHARE PURCHA SE AND SALE TRANSACTIONS ARE REFLECTED IN THE DMAT ACCOUNT. THE PURCHASE OF SHAR ES (INVESTMENTS) WAS NOT DISPUTED IN EARLIER YEAR, WHERE ASSESSMENT IS COMPL ETED U/S. 143(3) OF THE INCOME TAX ACT. THESE FACTS ARE VERIFIABLE FROM THE REGUL AR BOOKS OF ACCOUNTS. THE TRANSACTIONS CAN ALSO BE VERIFIED FROM THE STOCK EX CHANGE.IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE IDEN TICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BENCHES OF THIS TRIBUNAL HA S DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG. THE ASSESSEE`S CASE IS A LSO COVERED BY THE VARIOUS JUDGMENTS OF JURISDICTIONAL HIGH COURT OF CALCUTTA, AS NOTED (SUPRA). WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, SET ASIDE THE ORDE R OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND HEN CE 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 UNEXPL AINED EXPENDITURE TOWARDS COMMISSION CHARGES OF SALE OF SUCH SHARES BY THE OP ERATOR. WE HAVE ALREADY HELD THAT THE TRANSACTIONS RELATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODATION ENTRIES AS ALLEGED BY THE AO. CONSEQUENTLY, THE ADD ITION OF RS.57,02,785/- IS HEREBY DIRECTED TO BE DELETED. WE ACCORDINGLY HOLD THAT T HE ISSUE IS ALLOWED IN FAVOUR 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 TRANSPIRES THAT THERE ARE COMMON AND IDENTICAL ISSUES ARE INVOLVED IN THESE T WO ASSESSEES 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/KOL/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 DRUGS & PHARMA LTD, WHICH ARE EXACTLY IDENTICAL& COMMON AND SCRIPS OF M/S NCL RESEARCH &FINANCIAL SERVICES AND ESSAR INDIA LIMITE D WERE ALSO COVERED BY THE IDENTICAL FACTS AND ISSUES BY OUR THIS ORDER AND OT HER ORDERS OF THE COORDINATE BENCHES. WE ADOPT THE PRECEDING DETAILED REASONING MUTATIS MUTANDIS TO DELETE ALL THE CORRESPONDING LONG TERM CAPITAL GAIN(LTCG) ADDI TION HEREINABOVE. 9. WE NOTE THAT ON IDENTICAL FACTS AND CIRCUMSTANCE S, THE ASSESSEE`S CASE IS COVERED BY THEJUDGMENT OF CO-ORDINATE BENCH OF ITAT KOLKATA IN THE CASE OF SANJIB KUMAR PATWARI(HUF) IN I.T.A. NO.205/KOL/2018 FOR A. Y. 2014-15 (SUPRA). LD DR SUMAYSHAGRRAWAL ITA NO.1790/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 26 66 6 FOR THE REVENUE HAS FAILED TO CONTROVERT THE FINDIN GS OF THE COORDINATE BENCH (SUPRA) THEREFORE, RESPECTFULLY FOLLOWING THE JUDGM ENT OF THE CO-ORDINATE BENCH OF ITAT, KOLKATA (SUPRA), WE DELETED THE ADDITION OF R S.38,02,285/-. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 02.08.2019 SD/- ( A.T.VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 02/08/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. SUMAYSH AGRRAWAL 2. ITO, WARD-29(1), KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATABENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES