Alliance Vintrade Private Limited , Kolkata V. ITO, Ward - 1(4), Kolkata , Kolkata

ITA 1855/KOL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2650 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 29-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADHU MALATI GHOSH
• Assessee Lawyers: ANIKESH BANERJEE
• Keywords: Unexplained cash credit; Unexplained expenditure; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Transactions in derivatives; Earning of tax free income; Question of law; Wrong claim; Accommodation entries; Onus to prove; Sham transactions; Penny stocks
• Section: 133(6); 205; 131; 68

Judgement Text

1 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH, SMC AT KOLKATA () . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 1855/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. ALLIANCE VINTRADE PVT. LTD. C/O. RSVPC & COMPANY. [PAN: AAHCA 5283 F] VS. ITO, WARD 1(4), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 20.12.2018 DATE OF PRONOUNCEMENT 08.03.2019 FOR THE APPELLANT SHRI ANIKESH BANERJEE, ADVOCATE FOR THE RESPONDENT SMT. MADHUMALATI GHOSH, ADDL. CI T ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) 1, KOLKATA DATED 10.07.2018 FOR ASSESSMENT YEAR 2014-1 5. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFIC ER OF RS. 14,92,194/- WHICH THE ASSESSEE CLAIMED AS LOSS AND THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 3 LAKHS WHICH THE ASSESSEE CLAIMED AS LOSS. 3. THE BRIEF FACT OF THE CASE IS THAT THE ASSESSEE- COMPANY HAS DECLARED IN ITS RETURN OF INCOME AN INCOME OF RS. 14,711/-. THE ASSESSEE HAD SHOWN INTEREST INCOME OF RS. 17,53,963/-. HOWEVER, THE AO NOTED THAT THE ASSESSE E HAD CLAIMED LOSS FROM DEALING SHARES TO THE TUNE OF RS. 17,92,194/-. THIS CLAIM OF LOSS ACCORDING TO THE AO WAS WITH THE INTENTION TO BRING DOWN THE TAXABLE INCOME. ON BEIN G ASKED BY THE AO TO PRODUCE THE DETAILS OF THE TRADING OF SHARES ON WHICH ASSESSEE SUFFERED, THE ASSESSEE BROUGHT TO THE NOTICE OF THE AO THE FOLLOWING SALE OF LISTED EQUIT IES: 2 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 1. M/S. RUTRON INTERNATIONAL LTD. RS. 9,54,023/- (LOSS) 2. M/S. SHREE SHALEEN TEXTILES LTD. RS. 5,36,171/- (LOSS) THUS CLAIMED TOTAL LOSS OF RS. 14,90,194/- AND ALSO BROUGHT TO THE NOTICE OF THE AO THE LOSS ON UNLISTED EQUITIES M/S. OJA MOTORS DEALERS PVT. LTD. RS. 3,00,000/- (LOSS) 4. THE AO DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AS GENUINE AFTER GOING THROUGH THE DIRECTORATE OF INVESTIGATION CALCUTTA REPORT ON THE MODUS OPERANDI ADOPTED BY UNSCRUPULOUS BROKERS / ENTITIES WHO IN A SYSTEMATIC MANNER TRADE S IN SHARES OF PENNY STOCKS WHEREIN THEY (BENEFICIARY) EITHER BUY THE SHARES FOR VERY LOW AM OUNT AND AFTER A YEAR RIGS IT VALUE SKY HIGH AND THEN THE PRE-DETERMINED PARTY BUY THOSE SH ARES, FROM THE CASH GIVEN BY THE BENEFICIARY AND THUS THE BENEFICIARY GETS HUGE LTCG WHICH WILL BE CLAIMED BY THE BENEFICIARY AS EXEMPT INCOME. LIKEWISE IN SOME CASE S, AS IN THIS CASE THE AO NOTED THAT THE OPERATORS ARRANGED SALE OF PENNY STOCK FOR HIGH AMO UNT TO BENEFICIARY LIKE THE ASSESSEE AND THEREAFTER WHEN THE PRICE DROPS DOWN, IT IS SOLD TO PRE-DETERMINED ENTITIES AND THEREAFTER THE BENEFICIARY BOOKS HUGE LOSSES. THUS ACCORDING TO TH E AO, M/S. SHREE SHALEEN TEXTILES PRICE ROSE FROM RS. 6.68 TO RS. 64 IN JUST 162 DAYS LIKEW ISE M/S. RUTRON INTERNATIONAL LTD. PRICE ROSE FROM RS. 0.812 TO RS. 26.83 IN 9 MONTHS AND FE LL DOWN TO RS. 24.60 TO RS. 7.20 IN 3 MONTHS. SO ACCORDING TO THE AO THIS WAS NOTHING OTH ER THAN SHAM TRANSACTION AND HELD THAT THE ASSESSEES CLAIM WAS BOGUS AND THUS MADE AN ADD ITION OF RS. 17,92,194/- TO THE INCOME OF THE ASSESSEE (WHICH THE ASSESSEE CLAIMED AS LOSS ). THEREAFTER, THE AO ALSO MADE AN ADDITION OF COMMISSION TO AGENT @ 5% OF RS. 17,92,1 94/- TO GET THE ACCOMMODATION ENTRY AND ADDED RS. 89,610/-. AGGRIEVED THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ORDER OF THE AO AND DISMISS THE A PPEAL OF THE ASSESSEE. AGGRIEVED THE ASSESSEE IS BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. THE LEARNED AR ASSAILING THE DECISION OF THE LD. CIT(A) BROUGHT TO OUR NOTICE TH AT THE ASSESSEE HAD FURNISHED THE 3 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 FOLLOWING DOCUMENTS DURING THE ASSESSMENT PROCEEDIN GS: (I) COPY OF BANK STATEMENT (II) COPY OF DEMAT STATEMENT (III) DETAILS OF SHARE DEAL ING DURING THE YEAR (IV) THE CONTRACT NOTES OF SHARES TRADERS (V) LEDGER ACCOUNTS OF THE SHARE BROKERS (VI) BANK STATEMENT SHOWING THE TRANSACTIONS WITH BROKERS (VII) PRICE M OVEMENT WITH VOLUME FOR THE PERIOD 2 MONTHS PRIOR AND 2 MONTHS AFTER THE PURCHASE, AS WE LL FOR SALE. 6. ACCORDING TO THE LEARNED AR, THE AO HAS TREATED THE TRANSACTION AS BOGUS ONLY ON THE BASIS OF SUSPICION OR SURMISES. ACCORDING TO HIM, T HE AO HAS MADE THE ADDITION WITH PREJUDICED MIND AFTER GOING THROUGH THE INVESTIGATI ON REPORT OF THE INVESTIGATION WING OF THE DEPARTMENT AND HAS NOT BOTHER TO FIND OUT IF TH ERE IS ANY COLLUSION BETWEEN THE BROKER AND THE ASSESSEE IN RESPECT TO THE TRANSACTION IN Q UESTION TO CREATE BOGUS LOSS. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE SUSPENSION OF SHARE TRADING IN M/S. RUTRON INTERNATIONAL LTD. HAS BEEN REVOKED BY THE SEBI ON 24.09.2018. IT WAS ALSO BROUGHT TO OUR NOTICE THAT SUSPENSION OF SHARES OF M/S. SHREE SHALEEN TEXTILES LTD. WAS FROM 06.01.2015 WHEREAS THE ASSESSEE HAD SOLD THE SHARES ON 13.03.2014 WHICH ME ANS THE SALE OF SHARES WAS NOT SUSPENDED AT THE TIME WHEN THE ASSESSEE SOLD THE SH ARES. THEREFORE, ACCORDING TO THE LEARNED AR, THE AO OUGHT TO HAVE ALLOWED THE CLAIM OF LOSS ON THE LISTED EQUITIES TO THE TUNE OF RS. 14,92,194/-. LIKEWISE LOSS ON UNLISTED EQUITIES WAS ONLY TO THE TUNE OF RS. 3 LAKHS AND THE LEARNED AR POINTED OUT THAT THE ASSESSEE HAD PURCHA SED THE SHARES OF M/S. OJA MOTORS DEALERS PVT. LTD. FOR RS. 15 LAKHS @ RS. 50/- PER S HARE AND WHEN HE FOUND THAT THE SHARE PRICES WERE DROPPING IMMEDIATELY SOLD THE SHARE WHE N THE PRICE WAS RS. 40/- AND THUS RECEIVED SALE CONSIDERATION OF RS. 12 LAKHS AND THE REBY SUFFERED LOSS OF RS. 3 LAKHS. SO ACCORDING TO LD. AR THIS WAS A DECISION WHICH ANY P RUDENT BUSINESSMAN WOULD TAKE IN SUCH CIRCUMSTANCES AND PURCHASE AND SALE ARE SUPPORTED B Y DOCUMENTS AS WELL AS THE TRANSACTION ARE BY ACCOUNT PAYEE CHEQUES. THEREBY THE CLAIM OF LOSS TO THE TUNE OF RS. 17,92,194/- NEED TO BE ALLOWED. ON THE OTHER HAND, THE LEARNED DR FU LLY SUPPORTED THE ORDER OF THE LD. CIT(A) AS WELL AS THE AO AND WONDERED AS TO HOW THE PRICE CAN FLUCTUATE FROM RS. 6.68 TO RS. 64 IN THE CASE OF SHREE SHALEEN TEXTILE LTD. AN D FELL DOWN FROM RS. 64.45 LIKEWISE TO RS. 40/- M/S. RUTRON INTERNATIONAL LTD. ALSO HE WON DERED AS TO HOW THE PRICE CAN FLUCTUATE 4 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 FROM RS. 0.812 TO RS. 26.83 AND FELL DOWN TO RS. 24 .60. ACCORDING TO THE LEARNED DR THE INVESTIGATION WING OF THE DEPARTMENT HAS GONE INTO THE DEPTH OF THIS UNSCRUPULOUS PRACTICE AND HAS DUG OUT THE MODUS OPERANDI AND HAS IDENTIFI ED THE PERSONS LIKE ASSESSEE, WHO IN ORDER TO AVOID GIVING TAX HAS BOOKED THE LOSS WHEN HE HAS INTEREST INCOME OF RS. 17,53,963/- AND THAT THE SEBI HAS SUSPENDED THE SALES OF M/S. R UTRON INTERNATIONAL LTD. AND SHREE SHALEEN TEXTILE LTD. AND THE AO HAS ALSO TAKEN NOTE OF THE OBSERVATIONS MADE BY THE SIT TO CURB LAUNDERING OF BLACK-MONEY BY BOGUS CLAIM OF LT CG / LOSS. THEREFORE, HE DOES NOT WANT US TO INTERFERE WITH THE ORDER OF THE LD. CIT( A). 7. AFTER GIVING OUR CAREFUL CONSIDERATIONS TO THE C ONTENTION AND THE DOCUMENTS PLACED BEFORE US WHICH IS RUNNING TO 350 PAGES OF PAPER BO OK, WE NOTE THAT THE ASSESSEE HAS DECLARED INTEREST INCOME OF RS. 17,53,963/- AND HAD CLAIMED LOSS TRANSACTION OF SHARES ON LISTED AND UNLISTED EQUITIES TO THE TUNE OF RS. 17, 92,194/-. ACCORDING TO THE AO, THE LOSS HAS BEEN CLAIMED BY THE ASSESSEE FOR BRINGING DOWN THE PROFIT SO THAT THE ASSESSEE CAN AVOID GIVING TAX. THE AO TOOK NOTE OF THE INVESTIGATION C ARRIED OUT BY THE INVESTIGATION WING OF THE DEPARTMENT AND OBSERVATIONS OF THE SIT TO DRAW A CONCLUSION THAT THE ASSESSEES CLAIM OF LOSS ON SALE OF M/S. RUTRON INTERNATIONAL LTD. TO T HE TUNE OF LOSS RS. 9,54,023/- AND LOSS ON SALE OF SHARES OF SHREE SHALEEN TEXTILE LTD. TO THE TUNE OF RS. 5,38,171/- AS BOGUS CLAIM AND MADE THE ADDITION. LIKEWISE IN RESPECT OF THE ASSES SEES CLAIM OF LOSS OF UNLISTED EQUITIES TO THE TUNE OF RS. 3 LAKHS WAS ALSO HELD TO BE BOGUS A ND DENIED THE CLAIM OF LOSS TO THE TUNE OF RS. 17,92,194/-. ON APPEAL, THE LD. CIT(A) CONFIRME D THE ACTION OF THE AO. WE NOTE THAT THE ASSESSEE HAS FILED A PAPER BOOK CONTAINING 350 PAGES FROM WHERE WE NOTE THAT THE ASSESSEE HAD FILED THE REQUISITE DOCUMENTS CALLED U PON BY THE AO. THE ASSESSEE HAD FURNISHED THE FOLLOWING DOCUMENTS: (I) COPY OF BANK STATEMENT (II) COPY OF DEMAT STATEMENT (III) DETAILS OF SHARE DEALING DURING THE YEAR (IV) THE CONTRACT NOTES OF SHARES TRADERS (V) LEDGER ACCOUNTS OF THE SHARE BROKERS 5 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 (VI) BANK STATEMENT SHOWING THE TRANSACTIONS WITH B ROKERS (VII) PRICE MOVEMENT WITH VOLUME FOR THE PERIOD 2 M ONTHS PRIOR AND 2 MONTHS AFTER THE PURCHASE, AS WELL FOR SALE. 8. WE NOTE THAT THE AFORESAID DOCUMENTS FILED BY TH E ASSESSEE BEFORE THE AO IN ORDER TO SUBSTANTIATE SALE OF LISTED SHARES HAS NOT BEEN FOU NDED TO BE FALSE, FABRICATED AND FICTITIOUS. THE ASSESSEE HAD FURNISHED THE COPIES OF CONTRACT N OTES, DEMAT STATEMENT, BANK STATEMENT, LEDGER ACCOUNTS OF BROKERS. THE TRANSACTIONS IN LIS TED SHARES TOOK PLACE THROUGH A REGISTERED SHARE BROKER, NAMELY M/S. DHAN STOCK & SHARE BROKER PVT. LTD. THE PURCHASE AND SALES TOOK PLACE ON SCREEN BASED TRADING PLATFORM OF BOMB AY STOCK EXCHANGE. THE TRANSACTION WAS SETTLED BY MAKING / RECEIVING PAYMENT BY ACCOUN T PAYEE CHEQUES THROUGH PROPER BANKING CHANNEL. THE ASSESSEE HAD PAID SECURITIES T RANSACTION TAX (STT) ON BOTH PURCHASE AND SALES. THE TRANSACTION TOOK PLACE AT THE PRICE QUOTED ON STOCK EXCHANGE ON RESPECTIVE TRANSACTION DATES AND THERE IS NO ADVERSE FINDING B Y THE AO IN RESPECT TO THE DOCUMENTS PRODUCED BY THE ASSESSEE TO SUBSTANTIATE THE SALE O F UNLISTED EQUITY AS WELL. THE ASSESSEE SUFFERED A LOSS OF RS. 3 LAKHS ON SALE OF UNLISTED SHARES OF M/S. OJA MOTORS PVT. LTD. WE NOTE THAT THE TRANSACTION WAS CONDUCTED BY THE ACCO UNT PAYEE CHEQUE FROM THE IDENTIFIED SOURCE WHICH IS A BODY CORPORATE WITH PAN. THE SUSP ENSION IN RESPECT OF SALE OF SHARES OF M/S. RUTRON INTERNATIONAL LTD. IS CONCERNED, WE NOT E THAT IT HAS BEEN REVOKED BY THE SEBI VIDE AN ORDER DATED 24.09.2018 WHICH WE FIND PLACE AT PAGE 347 OF THE PAPER BOOK. WE ALSO NOTE THAT THE ASSESSEE SOLD THE SHARES OF SHREE SHA LEEN TEXTILE LTD. ON 13.03.2014 WHEREAS THE SALE OF THIS SCRIP WAS SUSPENDED ON 06.01.2015. SO THE SALE OF SCRIP OF M/S. SHREE SHALEEN TEXTILE TOOK PLACE BEFORE THE SUSPENSION OF THIS SCRIP IS CONCERNED. WE ALSO NOTE FROM PERUSAL OF PAGE 94 OF THE PAPER BOOK THE DETAI LS OF GAIN/LOSS ON ACCOUNT OF DEALING SHARES DURING A.Y. 2014-15. WE NOTE THAT THE ASSESS EE HAD MADE GAIN OF RS. 7,92,000/- FROM SALE OF UNQUOTED SHARES OF M/S. BAHETI PVT. LT D. WHICH THE AO HAS NOT MADE ANY ADVERSE COMMENT. WE NOTE THAT THE ASSESSEE HAD BEEN IN THE BUSINESS OF TRADING OF SHARES AND THE ASSESSEE HAD KEPT ON RECORD THE DETAILS OF GAINS/LOSS FOR THE EARLIER ASSESSMENT YEARS FROM PAGE 105 TO 107 WHICH CLEARLY INDICATES THAT T HE ASSESSEE WAS IN THE REGULAR BUSINESS OF 6 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 TRADING IN SHARES BOTH LISTED AS WELL AS UNLISTED A ND USE TO GET GAIN/LOSS AND SO IN THIS RELEVANT ASSESSMENT YEAR, THIS EVENT OF LOSS IS NOT AN INCIDENT OUT OF THE BLUE. IN THE LIGHT OF THE DOCUMENTS FILED AS AFORESTATED, THE ASSESSEE HA S DISCHARGED THE ONUS TO PROVE THE GENUINENESS OF THE LOSS SUFFERED. THERE IS NO EVIDE NCE TO SHOW THAT THE DOCUMENTS FILED BY THE ASSESSEE BEFORE THE AO ARE FALSE AND FABRICATED . SO, THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSEES CLAIM HAD TO BE UPHELD, FOR DOING SO , WE RELY ON THE FOLLOWING JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT AS WELL AS TH E OTHER HIGH COURTS AND COORDINATE BENCH OF THIS TRIBUNAL AS DISCUSSED BELOW. (I) 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 THE BROKER WAS EXPELLED. THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF 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 LAND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM WHICH IS PLACED AT PAGES 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 T HE COMPANY FOR THE TRANSACTIONS IN COMMODITY WAS PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTH ER HAND THE LD. DR RELIED IN THE ORDER OF THE LOWER AUTHORITIES. 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD 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 CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE . 9. WE NOTE THAT IN ORDER TO CREATE A TAX LIABILITY IN A CASE OF THIS NATURE, THE AO HAS TO PROVE AND ESTABLISH THE CASH TRAIL AND THE ALLEGATI ONS, PARTICULARLY IN RESPECT OF THE APPELLANT, WHICH IS YET TO BE PROVED IN THE INSTANT CASE. SIMI LAR VIEW HAS BEEN PRONOUNCED BY HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS JATIN IN VESTMENT (P) LTD. WHEREIN IT WAS 7 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 OBSERVED 'A TRANSACTION CANNOT BE TREATED AS FRAUDULENT IF T HE APPELLANT HAS FURNISHED THE DOCUMENTARY PROOF AND PROVED THE IDENTITY OF THE PU RCHASER AND NO DISCREPANCY IS FOUND. THE AO HAS TO EXERCISE HIS POWERS U/S 131 & 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF THE CLAIM AND CANNOT PROCEED ON SURMISES. THE AO MU ST ESTABLISH THAT CASH HAS CHANGED HANDS. THERE IS NO MATERIAL OR EVIDENCE EVEN TO SUG GEST THAT THE CHEQUES DIRECTLY OR INDIRECTLY EMANATED FROM THE APPELLANT SO THAT IT C OULD BE SAID THAT THE APPELLANTS' OWN MONEY WAS BROUGHT BACK IN THE GUISE OF SALE PROCEED S. 10. IN THE CASE OF CIT VS. LAVANYA LAND PVT LTD. TH E HONBLE BOMBAY HIGH COURT RULED THAT THE ALLEGATIONS MADE BY THE AUTHORITIES HAVE T O BE SUPPORTED BY ACTUAL CASH PASSING HANDS OR ACTUALLY HAS CHANGED HANDS. 11. IN THE CASE OF DOLARRAI HEMANI VS. ITO, THIS TR IBUNAL HELD THAT THE FACT THAT THE STOCK IS THINLY TRADED & THERE IS UNUSUALLY HIGH GA IN, IS NOT SUFFICIENT TO TREAT THE LTCG AS BOGUS WHEN ALL THE PAPERWORK IS IN ORDER. THE REVEN UE HAS TO BRING MATERIAL ON RECORD TO SUPPORT IT'S FINDINGS THAT THERE HAS BEEN COLLUSION /CONNIVANCE BETWEEN THE BROKER & THE APPELLANT FOR THE INTRODUCTION OF UNACCOUNTED MONEY . 12. IN THE CASE OF DCIT VS. SUNITA KHEMKA, ITAT KOL KATA RULED THAT THE AO CANNOT TREAT A TRANSACTION AS BOGUS ONLY THE BASIS OF SUSP ICION OR SURMISES. HE HAS TO BRING MATERIAL ON RECORD TO SUPPORT HIS FINDINGS THAT THERE HAS BE EN A COLLUSION/CONNIVANCE BETWEEN THE BROKER AND THE APPELLANT FOR THE INTRODUCTION OF IT S UNACCOUNTED MONEY. A TRANSACTION OF PURCHASE AND SALE OF SHARES, SUPPORTED BY CONTRACT NOTES AND D-MAT STATEMENTS AND ACCOUNT PAYEE CHEQUES CANNOT BE TREATED AS BOGUS. 13. IN THE CASE OF KAMALA DEVI S DOSHI VS. ITO ITAT MUMBAI, VIDE IT'S ORDER DATED 22.5.2017 HELD THAT STATEMENT U/S 131 OF THE ACT IMPLICATING APPELLANT IS NOT SUFFICIENT TO DRAW ADVERSE INFERENCE WHERE DOCUMENT S IN THE FORM OF CONTRACT NOTES, BANK 8 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 STATEMENTS, STT PAYMENT ETC. PROVES THE GENUINENESS OF PURCHASE AND SALE OF PENNY STOCK. FAILURE TO PROVIDE CROSS EXAMINATION IS A FATAL ERR OR. 14. SO, AS THE FACTS OF THE CASE ARE VERY SIMILAR, THE AO HAS FAILED TO ESTABLISH ANY LINK AND THEREFORE THE ORDER IS BASED ON SURMISES, PREDE TERMINED, SOLELY RELYING UPON THE INVESTIGATION REPORT WHICH IS GENERAL IN NATURE AND NO CONCRETE MATERIAL HAS BEEN BROUGHT ON RECORD PROVING OTHERWISE. 15. WE NOTE THAT THE AO IN HIS ORDER HAS MENTIONED THAT SEBI HAS GIVEN ADVERSE REPORT ON SO MANY SCRIPS INCLUDING THAT OF KAILASH AUTO. FURTHER, WE NOTE THAT SEBI, IN ITS TWO REPORTS ON THE SAID SCRIP, HAS NAMED AND BANNED/SUS PENDED THE BENEFICIARIES IN PARTICULAR. HOWEVER, WE NOTE THAT THE APPELLANTS NAME DOES NOT APPEAR IN THIS LIST. AND THAT THE SEBI DID NOT STOP/SUSPEND THE TRADE OF SALE OF M/S. KAFL WHEN ASSESSEE SOLD THE SCRIP. WE NOTE THAT M/S. KAFL WAS VERY MUCH LISTED ON THE STOCK EX CHANGE AND TRADING IN THE SAID SCRIP WAS PERMISSIBLE ON THE STOCK EXCHANGE. MOREOVER SE BI REPORT AGAINST CERTAIN BENEFICIARIES OF KAILASH AUTO WAS IN PUBLIC MUCH AFTER THE APPEL LANT HAS SOLD THE SHARES, AND WE NOTE THAT ON 29.03.2016 SEBI HAS REVOKED THE BAN ON SUCH ENTI TIES WHICH IMPLIES THAT THERE WAS NO EVIDENCE AGAINST THEM. 16. WE NOTE THAT AT PARA -18 OF THE ASSESSMENT ORDE R AO MENTIONS ABOUT THE ROLE OF BROKERS IN ALLOWING ENTRY OPERATORS TO REGISTER THE IR BOGUS COMPANIES AS THEIR CLIENT AND ALSO CERTAIN ADMISSION MADE BY SOME BROKERS ABOUT THEIR INVOLVEMENT IN SO CALLED JAMA KHARCHI COMPANIES. IN THE SAID PARA SOME NAMES OF FEW BROK ERS AND JAMA KHARCHI OPERATORS HAVE BEEN MENTIONED. HOWEVER, WE NOTE THAT THE NAME OF ASSESSEES BROKER, M/S. GUINESS SECURITIES LTD., THROUGH WHOM THE ASSESSEE SOLD HIS SHARES, DOES NOT APPEAR AT ALL IN THAT REPORT. 17. WE NOTE THAT M/ S GUINESS SECURITIES LTD WAS NO T NAMED IN THE ASSESSMENT ORDER / D.I. REPORT AS A BROKER WHO WAS INVOLVED IN PRICE R IGGING OF PENNY STOCKS. ON THE OTHER 9 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 HAND, WE NOTE THAT M/S. GUINESS SECURITIES LTD IS A SEBI REGISTERED STOCK BROKING COMPANY HAVING REGISTRATION NO. INB 011146033 AND ALSO IS A MEMBER OF BOMBAY STOCK EXCHANGE HAVING MEMBERSHIP NO. 3027; NEITHER DURING THE TIME OF EXECUTION OF THE CONTRACT IN FY 2013-14 NOR EVEN TODAY, THIS STOCK-BROKING COMPANY WAS SUSPENDED BY SEBI OR BSE ON ANY CHARGE OF IRREGULARITIES LIKE PRICE RIGGING ETC AS ALLEGED BY THE AO. WE NOTE THAT AO FAILED TO BRING ON RECORD ANY MATERIAL TO CONNECT T HE ASSESSEE TO ANY OF THE ALLEGED ENTRY OPERATORS/ BROKERS WHO ARE A PART OF THIS SO CALLED PRICE RIGGING GROUP OR LTCG GENERATOR GROUP. 18. WE NOTE THAT IN AN IDENTICAL/SIMILAR CASE, WHER EIN THE AO MADE ADDITION OF THE LTCG CLAIM MADE ON SALE OF M/S. KAFL SCRIPS ON SIMILAR R EASONING BASED ON THE SEBI INTERIM REPORT, INVESTIGATION REPORT OF THE WING OF THE DEP ARTMENT AND CERTAIN STATEMENTS RECORDED BY THE DEPARTMENT IN THE CASE OF SANJIV SHROFF VS. ACIT IN ITA NO. 1197/KOL/2018 DATED 02,01.2019 WHEREIN THE SAME BENCH OBSERVED AS UNDER AND GAVE RELIEF TO THE ASSESSEE: WE NOTE THAT SHARES OF M/S. KAFL WERE SOLD BY ASSE SSEE THROUGH RECOGNIZED BROKER IN A RECOGNIZED BOMBAY STOCK EXCHANGE. THE DETAILS OF SU CH SALE AND CONTRACT NOTE HAVE BEEN SUBMITTED BEFORE AO/LD. CIT(A). WE TAKE NOTE THAT W HEN THE TRANSACTIONS HAPPENED IN THE STOCK EXCHANGE, THE SELLER WHO SELLS HIS SHARES ON THE STOCK EXCHANGE DOES NOT KNOW WHO PURCHASES SHARES. ACCORDING TO OUR KNOWLEDGE, THE SHARES ARE SOLD AND BOUGHT IN AN ELECTRONIC MODE ON THE COMPUTERS BY THE BROKERS AND THERE IS A LSO NO DIRECT CONTACT AT ANY LEVEL EVEN BETWEEN THE BROKERS. WE NOTE THAT AS AND WHEN ANY SHARES ARE OFFERED FOR SALE IN THE STOCK EXCHANGE PLATFORM, ANY ONE OF THE THOUSANDS OF BROK ERS REGISTERED WITH THE STOCK EXCHANGE IS AT LIBERTY TO PURCHASE IT. AS FAR AS OUR UNDERSTANDIN G, THE SELLING BROKER DOES NOT EVEN KNOW WHO THE PURCHASING BROKER IS. THIS IS HOW THE SEBI KEEP S A STRICT CONTROL OVER THE TRANSACTIONS TAKING PLACE IN RECOGNIZED STOCK EXCHANGES. UNLESS THERE I S A EVIDENCE TO SHOW THAT THERE IS A BREACH IN THE AFORESAID PROCESS WHICH FACT HAS BEEN UNEARTHED BY METICULOUS INVESTIGATION, WE ARE OF THE OPINION THAT THE UNSCRUPULOUS ACTIONS OF FEW PLAYER S EXPLOITING THE LOOPHOLES OF THE STOCK EXCHANGE CANNOT BE THE BASIS TO PAINT THE ENTIRE SA LE/PURCHASE OF A SCRIP LIKE THAT OF M/S. KAFL AS BOGUS WITHOUT BRINGING OUT ADVERSE MATERIAL SPEC IFICALLY AGAINST THE ASSESSEE. 17. THE FACT OF HOLDING THE SHARES OF M/S. KAFL IN THE D-MAT ACCOUNT CANNOT BE DISPUTED. FURTHER, THE ASSESSING OFFICER HAS NOT EVEN DISPUTE D THE EXISTENCE OF THE D-MAT ACCOUNT AND SHARES CREDITED IN THE D-MAT ACCOUNT OF THE ASSESSE E. THEREFORE, ONCE, THE HOLDING OF SHARES IS D-MAT ACCOUNT CANNOT BE DISPUTED THEN THE TRANSACTI ON CANNOT BE HELD AS BOGUS. THE AO HAS NOT DISPUTED THE SALE OF SHARES FROM THE D-MAT ACCOUNT OF THE ASSESSEE AND THE SALE CONSIDERATION WAS DIRECTLY CREDITED TO THE BANK ACCOUNT OF THE AS SESSEE, THEREFORE, ONCE THE ASSESSEE PRODUCED ALL RELEVANT EVIDENCE TO SUBSTANTIATE THE TRANSACTI ON OF PURCHASE, DEMATERIALIZATION AND SALE OF SHARES THEN, IN THE ABSENCE OF ANY CONTRARY MATERIA L BROUGHT ON RECORD THE SAME CANNOT BE HELD AS BOGUS TRANSACTION MERELY ON THE BASIS OF STATEME NT OF SHRI SUNIL DOKANI, SHRI BIDYOOT SARAL, SHRI NARENDRA BASIN AND SHRI AMIT DOKANI RECORDED B Y THE INVESTIGATION WING, KOLKATA 10 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 WHEREIN THERE IS A GENERAL STATEMENT OF PROVIDING B OGUS LONG TERM CAPITAL GAIN TRANSACTION TO THE CLIENTS WITHOUT STATING ANYTHING ABOUT THE TRANSACT ION OF ALLOTMENT OF SHARES BY THE COMPANY TO THE ASSESSEE. 18. THE ASSESSEE HAS REQUESTED THE CROSS EXAMINATI ON OF SHRI SUNIL DOKANI, SHRI BIDYOOT SARAL, SHRI NARENDRA BASIN AND SHRI AMIT DOKANI WHI CH WAS NOT PROVIDED TO THE ASSESSEE BY THE AO. THUS, IN VIEW OF THE DECISION OF HON'BLE SUPREM E COURT IN CASE OF CCE VS. ANDAMANTIMBER INDUSTRIES 127 DTR 241(SC) THE ASSESSMENT BASED ON STATEMENT W ITHOUT GIVING AN OPPORTUNITY TO ASSESSEE TO CROSS EXAMINE THE MAKER OF THE ADVERSE STATEMENTS RELIED ON BY THE AO, IS NOT SUSTAINABLE IN LAW. WE FIND THAT THE STATEMENT CANNOT BE USED BY THE AO WITHOUT GIVING AN OPPORTUNITY TO CROSS EXAMINATION OF SHRI SUNIL DOKANI, SHRI BIDYOOT SARAL, SHRI NARENDRA BASIN AND SHRI AMIT DOKANI. THEREFORE , THE STATEMENT OF WITNESS CANNOT BE SOLE BASIS OF THE ASSESSMENT WITHOUT GIVEN AN OPPORTUNIT Y OF CROSS EXAMINATION AND CONSEQUENTLY IT IS A SERIOUS FLAW WHICH RENDERS THE ORDER A NULLITY . THE MUMBAI SPECIAL OF THE TRIBUNAL IN CASE OF GTC INDUSTRIES VS. ACIT (SUPRA) HAD THE OCCASION TO CONSIDER THE ADDITION MADE BY THE AO ON THE BASIS OF SUSPICION AND SURMISES AND OBSERVED IN PAR 46 AS UNDER:- 46. IN SITUATIONS LIKE THIS CASE, ONE MAY FALL INT O REALM OF 'PREPONDERANCE OF PROBABILITY' WHERE THERE ARE MANY PROBABLE FACTORS, SOME IN FAVOUR OF THE ASSESSEE AND SOME MAY GO AGAINST THE ASSESSEE. BUT THE PROBABLE FACTORS HAVE TO BE WEIGH ED ON MATERIAL FACTS SO COLLECTED. HERE IN THIS CASE THE MATERIAL FACTS STRONGLY INDICATE A PR OBABILITY THAT THE WHOLESALE BUYERS HAD COLLECTED THE PREMIUM MONEY FOR SPENDING IT ON ADVE RTISEMENT AND OTHER EXPENSES AND IT WAS THEIR LIABILITY AS PER THEIR MUTUAL UNDERSTANDING W ITH THE ASEESSEE. ANOTHER VERY STRONG PROBABLE FACTOR IS THAT THE ENTIRE SCHEME OF 'TWIN BRANDING' AND COLLECTION OF PREMIUM WAS SO DESIGNED THAT ASSESSEE COMPANY NEED NOT INCUR ADVER TISEMENT EXPENSES AND THE RESPONSIBILITY FOR SALES PROMOTION AND ADVERTISEMENT LIES WHOLLY U PON WHOLESALE BUYERS WHO WILL BORNE OUT THESE EXPENSES FROM ALLEGED COLLECTION OF PREMIUM. THE PROBABLE FACTORS COULD HAVE GONE AGAINST THE ASSESSEE ONLY IF THERE WOULD HAVE BEEN SOME EVIDENCE FOUND FROM SEVERAL SEARCHES EITHER CONDUCTED BY DRI OR BY THE DEPARTMENT THAT A SSESSEE-COMPANY WAS BENEFICIARY OF ANY SUCH ACCOUNTS. AT LEAST SOMETHING WOULD HAVE BEEN U NEARTHED FROM SUCH GLOBAL LEVEL INVESTIGATION BY TWO CENTRAL GOVERNMENT AUTHORITIES . IN CASE OF CERTAIN DONATIONS GIVEN TO A CHURCH, ORIGINATING THROUGH THESE BENAMI BANK ACCOU NTS ON THE BEHEST OF ONE OF THE EMPLOYEES OF THE ASSESSEE COMPANY, DOES NOT IMPLICATE THAT GT C AS A CORPORATE ENTITY WAS HAVING THE CONTROL OF THESE BANK ACCOUNTS COMPLETELY. WITHOUT GOING INTO THE AUTHENTICITY AND VERACITY OF THE STATEMENTS OF THE WITNESSES SMT. NIRMALA SUNDAR AM, WE ARE OF THE OPINION THAT THIS ONE INCIDENT OF DONATION THROUGH BANK ACCOUNTS AT THE D IRECTION OF ONE OF THE EMPLOYEE OF THE COMPANY DOES NOT IMPLICATE THAT THE ENTIRE PREMIUM COLLECTED ALL THROUGHOUT THE COUNTRY AND DEPOSITED IN BENAMI BANK ACCOUNTS ACTUALLY BELONGS TO THE ASSESSEE-COMPANY OR THE ASSESSEE- COMPANY HAD DIRECT CONTROL ON THESE BANK ACCOUNTS. ULTIMATELY, THE ENTIRE CASE OF THE 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. H OWEVER, THIS PRESUMPTION OR SUSPICION HOW STRONG IT MAY APPEAR TO BE TRUE, BUT NEEDS TO BE CO RROBORATED 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 STRONG 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 F AVOUR OF A PARTY WHICH HAS MORE FAVOURABLE FACTORS IN HIS SIDE. THE CONCLUSIONS HAVE TO BE DRA WN ON THE BASIS OF CERTAIN ADMITTED FACTS AND MATERIALS AND NOT ON THE BASIS OF PRESUMPTION OF FA CTS THAT MIGHT GO AGAINST ASSESSEE. ONCE NOTHING HAS BEEN PROVED AGAINST THE ASSESSEE WITH A ID OF ANY DIRECT MATERIAL ESPECIALLY WHEN VARIOUS ROUNDS OF INVESTIGATION HAVE BEEN CARRIED O UT, THEN NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE.' 11 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 19. SINCE, WHEN THE ASSESSING OFFICER HAS NOT BROU GHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PAID OVER AND ABOVE THE PURCHASE C ONSIDERATION AS CLAIMED AND EVIDENT FROM THE BANK ACCOUNT THEN, IN THE ABSENCE OF ANY EVIDEN CE IT CANNOT BE HELD THAT THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED MONEY BY WAY OF BOGU S LONG TERM CAPITAL GAIN. THE HON'BLE RAJASTHAN HIGH COURT DATED 11-09-2017IN CASE OF CIT VS. SMT. POOJA AGRAWAL [ ITA NO 385/2011 ] HAS UPHELD THE FINDING OF THE TRIBUNAL O N THIS ISSUE IN PARA 12 AS UNDER:- '12. HOWEVER, COUNSEL FOR THE RESPONDENT HAS TAKEN US TO THE ORDER OF CIT(A) AND ALSO TO THE ORDER OF TRIBUNAL AND CONTENDED THAT IN VIEW OF THE FINDING REACHED, WHICH WAS DONE THROUGH STOCK EXCHANGE AND TAKING INTO CONSIDERATION THE RE VENUE TRANSACTIONS, THE ADDITION MADE WAS DELETED BY THE TRIBUNAL OBSERVING AS UNDER :- 'CONTENTION OF THE AR IS CONSIDERED. ONE OF THE MAI N REASONS FOR NOT ACCEPTING THE GENUINENESS OF THE TRANSACTIONS DECLARED BY THE APPELLANT THAT AT THE TIME OF SURVEY THE APPELLANT IN HIS STATEMENT DENIED HAVING MADE ANY TRANSACTIONS IN SH ARES. HOWEVER, SUBSEQUENTLY THE FACTS CAME ON RECORD THAT THE APPELLANT HAD TRANSACTED NO T ONLY IN THE SHARES WHICH ARE DISPUTED BUT SHARES OF VARIOUS OTHER COMPANIES LIKE SATYAM COMPU TERS, HCL, IPC L, BPCL AND TATA TEA ETC. REGARDING THE TRANSACTIONS IN QUESTION VARIOUS DETA ILS LIKE COPY OF CONTRACT NOTE REGARDING PURCHASE AND SALE OF SHARES OF LIMTEX AND KONARK CO MMERCE & IND. LTD., ASSESSEE'S ACCOUNT WITH P.K. AGARWAL & CO. SHARE BROKER, COMPANY'S MAS TER DETAILS FROM REGISTRAR OF COMPANIES, KOLKATA WERE FILED. COPY OF DEPOSITORY A/C OR DEMAT ACCOUNT WITH ALANKR IT ASSIGNMENT LTD., A SUBSIDIARY OF NSDL WAS ALSO FILED WHICH SHOWS THAT THE TRANSACTIONS WE RE MADE THROUGH DEMAT A/C. WHEN THE RELEVANT DOCUMENTS ARE AVAILABLE THE FACT OF TRANSA CTIONS ENTERED INTO CANNOT BE DENIED SIMPLY ON THE GROUND THAT IN HIS STATEMENT THE APPELLANT D ENIED HAVING MADE ANY TRANSACTIONS IN SHARES. THE PAYMENTS AND RECEIPTS ARE MADE THROUGH A/C PAYEE CHEQUES AND THE TRANSACTIONS ARE ROUTED THROUGH KOLKATA STOCK EXCHANGE. THERE IS NO EVIDENCE THAT THE CASH HAS GONE BACK IN APPELLANTS'S ACCOUNT. PRIMA FACIE THE TRANSACTIO N WHICH ARE SUPPORTED BY DOCUMENTS APPEAR TO BE GENUINE TRANSACTIONS. THE AO HAS DISCUSSED MO DUS OPERANDI IN SOME SHAM TRANSACTIONS WHICH WERE DETECTED IN THE SEARCH CASE OF B.C. PURO HIT GROUP. THE AO HAS ALSO STATED IN THE ASSESSMENT ORDER ITSELF WHILE DISCUSSING THE MODUS OPERANDI THAT ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN WERE PURCHASED AS LONG TERM CAPIT AL GAIN EITHER WAS EXEMPTED FROM TAX OR WAS TAXABLE AT A LOWER RATE. AS THE APPELLANT'S CAS E IS OF SHORT TERM CAPITAL GAIN, IT DOES NOT EXACTLY FALL UNDER THAT CATEGORY OF ACCOMMODATION T RANSACTIONS. FURTHER AS PER THE REPORT OF DCIT, CENTRAL CIRCLE-3 SH. P.K. AGARWAL WAS FOUND T O BE AN ENTRY PROVIDER AS STATED BY SH. PAWAN PUROHIT OF B.C. PURIHIT AND CO. GROUP. THE AR MADE SUBMISSION BEFORE THE AO THAT THE FACT WAS NOT CORRECT AS IN THE STATEMENT OF SH. PAW AN PUROHIT THERE IS NO MENTION OF SH. P. K. AGARWAL. IT WAS ALSO SUBMITTED THAT THERE WAS NO ME NTION OF SH. P. K. AGARWAL IN THE ORDER OF SETTLEMENT COMMISSION IN THE CASE OF SH. SUSHIL KUM AR PUROHIT. COPY OF THE ORDER OF SETTLEMENT COMMISSION WAS SUBMITTED. THE AO HAS FAILED TO COUN TER THE OBJECTIONS RAISED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS. SIMPLY MENTIONIN G THAT THESE FINDINGS ARE IN THE APPRAISAL REPORT AND APPRAISAL REPORT IS MADE BY THE INVESTIN G WING AFTER CONSIDERING ALL THE MATERIAL FACTS AVAILABLE ON RECORD DOES NOT HELP MUCH. THE A O HAS FAILED TO PROVE THROUGH ANY INDEPENDENT INQUIRY OR RELYING ON SOME MATERIAL THA T THE TRANSACTIONS MADE BY THE APPELLANT THROUGH SHARE BROKER P.K. AGARWAL WERE NON-GENUINE OR THERE WAS ANY ADVERSE MENTION ABOUT THE TRANSACTION IN QUESTION IN STATEMENT OF SH. PAW AN PUROHIT. SIMPLY BECAUSE IN THE SHAM TRANSACTIONS BANK A/C WERE OPENED WITH HDFC BANK AN D THE APPELLANT HAS ALSO RECEIVED SHORT TERM CAPITAL GAIN IN HIS ACCOUNT WITH HDFC BANK DOE S NOT ESTABLISH THAT THE TRANSACTION MADE BY THE APPELLANT WERE NON GENUINE. CONSIDERING ALL THESE FACTS THE SHARE TRANSACTIONS MADE THROUGH SHRI P.K. AGARWAL CANNOT BE HELD AS NON-GEN UINE. CONSEQUENTLY DENYING THE CLAIM OF SHORT TERM CAPITAL GAIN (6 OF 6) [ ITA-385/2011] MA DE BY THE APPELLANT BEFORE THE AO IS NOT 12 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 APPROVED. THE AO IS THEREFORE, DIRECTED TO ACCEPT C LAIM OF SHORT TERM CAPITAL GAIN AS SHOWN BY THE APPELLANT.' IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AO IS BASED ON MERE SUSPIC ION AND SURMISES WITHOUT ANY COGENT MATERIAL TO SHOW THAT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN. ON THE OTHER HAND, THE ASSESSEE HAS BROUGHT ALL THE RELEVANT MATERIAL TO SUBSTANTIATE ITS CLAIM THAT TRANSACTIONS OF THE PUR CHASE AND SALE OF SHARES ARE GENUINE. EVEN OTHERWISE THE HOLDING OF THE SHARES BY THE ASSESSEE AT THE TIME OF ALLOTMENT SUBSEQUENT TO THE AMALGAMATION/MERGER IS NOT IN DOUBT, THEREFORE, THE TRANSACTION CANNOT BE HELD AS BOGUS. ACCORDINGLY WE DELETE THE ADDITION MADE BY THE AO O N THIS ACCOUNT.' 20. WE NOTE THAT THE SALE OF SHARES OF M/S. KAFL WH ICH WAS DEMATERLIZED IN DEMAT ACCOUNT HAS TAKEN PLACE THROUGH RECOGNISED STOCK EX CHANGE AND ASSESSEE RECEIVED MONEY THROUGH BANKING CHANNEL. SO, ASSESSEE HAS EXPLAINED THE NATURE AND SOURCE OF THE MONEY WITH SUPPORTING DOCUMENTS AND THUS HAS DISCHARGED THE ON US CASTED UPON HIM BY PRODUCING THE RELEVANT DOCUMENTS MENTIONED IN PARA 15 (SUPRA), AC CORDINGLY, THE QUESTION OF TREATING THE SAID GAIN AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT CANNOT ARISE UNLESS THE AO IS ABLE TO FIND FAULT/INFIRMITY WITH THE SAME. WE NOTE THAT TH E SOURCE OF THE RECEIPT OF THE AMOUNT HAS BEEN EXPLAINED AND THE TRANSACTION IN RESPECT OF WHICH T HE SAID AMOUNT HAS BEEN RECEIVED BY ASSESSEE HAS NOT BEEN CANCELLED BY THE STOCK EXCHANGE/SEBI. SO, IT IS DIFFICULT TO COUNTENANCE THE ACTION OF AO/LD. CIT(A) IN THE AFORESAID FACTS AND CIRCUMS TANCES EXPLAINED ABOVE. 21. EVEN ASSUMING THAT THE BROKERS MAY HAVE DONE SO ME MANIPULATION THEN ALSO THE ASSESSEE CANNOT BE HELD LIABLE FOR THE ILLEGAL ACTI ON OF THE BROKERS WHEN THE ENTIRE TRANSACTIONS HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS DULY RECORDED IN THE DEMAT ACCOUNTS WITH A GOVERNMENT DEPOSITORY AND TRADED ON THE STOCK EXCHA NGE UNLESS SPECIFIC EVIDENCE EMERGES THAT THE ASSESSEE WAS IN HAND IN GLOVES WITH THE BROKER FOR COMMITTING THE UNSCRUPULOUS ACTIVITY TO LAUNDER HIS OWN MONEY IN THE GUISE OF LTCG IS BROUG HT ON RECORD BY THE AO. 22. THERE IS ALSO NOTHING ON RECORD WHICH COULD SUG GEST THAT THE ASSESSEE GAVE HIS OWN CASH AND GOT CHEQUE FROM THE ALLEGED BROKERS/BUYERS . THE ASSESSMENT IS BASED UPON SOME THIRD PARTIES STATEMENTS RECORDED BEHIND THE BACK OF THE ASSESSEE AND THE ASSESSEE HAS NOT BEEN ALLOWED TO CROSS EXAMINE THOSE PERSONS, SO THE STA TEMENTS EVEN IF ADVERSE AGAINST THE ASSESSEE CANNOT BE RELIED UPON BY THE AO TO DRAW ADVERSE INF ERENCE AGAINST THE ASSESSEE IN THE LIGHT OF THE DOCUMENTS TO SUBSTANTIATE THE CLAIM OF LTCG, WH ICH HAS NOT BEEN FOUND FAULT WITH BY THE AO. 23. LET US LOOK AT CERTAIN JUDICIAL DECISIONS ON SI MILAR FACTS:- 24. THE CASE OF THE ASSESSEES IS SIMILAR TO THE DE CISION OF HONBLE BOMBAY HIGH COURT, NAGPUR BENCH IN CIT VS. SMT. JAMNADEVI AGRAWAL & OR S. DATED 23RD SEPTEMBER, 2010 REPORTED IN (2010) 328 ITR 656 WHEREIN IT WAS HELD THAT: 'THE FACT THAT THE ASSESSEES IN THE GROUP HAVE PURC HASED AND SOLD SHARES OF SIMILAR COMPANIES THROUGH THE SAME BROKER CANNOT BE A GROUND TO HOLD THAT THE TRANSACTIONS ARE SHAM AND BOGUS, ESPECIALLY WHEN DOCUMENTARY ITA NOS. 93 TO 99/RPR/2 014 & C.O. NOS. 12 TO 18/RPR/2014 . A.Y. 2004-05 10 PRODUCED TO ESTABLISH THE GENUINENE SS OF THE CLAIM. FROM THE DOCUMENTS PRODUCED, IT IS SEEN THAT THE SHARES IN QUESTION WE RE IN FACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY HAS CONFIRMED TO H AVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEES. SIMILARLY, THE SALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRODUCING DOCUMENTARY EVIDENCE. IT IS TRUE THAT SOM E OF THE TRANSACTIONS WERE OFF-MARKET 13 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 TRANSACTIONS. HOWEVER, THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET RATES PREVAILING ON T HE RESPECTIVE DATES AS IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEES. THEREFORE, TH E FACT THAT SOME OF THE TRANSACTIONS WERE OFF- MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHAM TRANSACTIONS. THE STATEMENT OF THE BROKER P THAT THE TRANSACTIONS WIT H THE H GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCING DOCUMENTARY E VIDENCE TO THE EFFECT THAT THE SHARES SOLD BY THE ASSESSEES WERE IN CONSONANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EVIDENCE, THE TRIBUNAL HAS ARRIVED AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT ON RECORD TO SHOW THAT THE FINDI NGS RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE DOCUMENTARY EVIDENCE ON RECORD. THE TRIBUNAL HA S FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE,BANK ACCOUNTS OF SOME OF TH E BUYERS OF SHARES CANNOT BE LINKED TO THE ASSESSEES. MOREOVER, YN THE LIGHT OF THE DOCUMENTAR Y EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE ASSESSEES WERE IN CONFORM ITY WITH THE MARKET PRICE, THE TRIBUNAL RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE BUYERS' BANK ACCOUNTS CANNOT BE ATTRIBUTED TO THE ASSESSEES. NO FAULT CAN BE FOUND WITH THE AB OVE FINDING RECORDED BY THE TRIBUNAL. THEREFORE, THE DECISION OF THE TRIBUNAL IS BASED ON FINDING OF FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL.ASSTT. C IT VS. KAMAL KUMAR S. AGRAWAL (INDL.) & ORS. (2010) 41 DTR (NAG) (TRIB) 105: (2010) 133 TTJ (NAG) 818 AFFIRMED; SUMATI DAYAL VS. CIT (1995) 125 CTR (SC) 124: (1995) 80 TAXMAN 89 (S C) DISTINGUISHED. 12. THE HON'BLE HIGH COURT OF RAJASTHAN IN CIT VS. SMT. PUSHPA MALPANI - REPORTED IN (2011) 242 CTR (RAJ.) 559; (2011) 49 DTR 312 DISMISSED THE APPEAL OF DEPARTMENT OBSERVING 'WHETHER OR NOT THERE WAS SALE OF SHARES AND RECEIP T OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSENTIALLY A QUESTION OF FACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT AT THE TIME O F TRANSACTIONS, THE BROKER IN QUESTION WAS NOT BANNED BY SEBI AND THAT ASSESSEE HAD PRODUCED COPIE S OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICATE, APPLICATION FOR TRANSFER OF SHAR E CERTIFICATE TO DEMAT ACCOUNT ALONG WITH COPIES OF HOLDING STATEMENT IN DEMAT ACCOUNT, BALAN CE SHEET AS ON 31ST MARCH, 2003, SALE BILL, BANK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS, OF CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. ON 23RD JULY, 2003. THEREFORE, 'TH E PRESE/ITDPPEAL DOES NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. 25. THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF ANUPAM KAPOOR 299 ITR 0179 HAS HELD AS UNDER:- THE TRIBUNAL ON THE BASIS OF THE MATERIAL ON RECOR D, HELD THAT PURCHASE CONTRACT NOTE, CONTRACT NOTE FOR SATES, DISTINCTIVE NUMBERS OF SHARES PURCH ASED AND SOLD, COPY OF SHARE CERTIFICATES AND THE QUOTATION OF SHARES ON THE DATE OF PURCHASE AND SALE WERE SUFFICIENT MATERIAL TO SHOW THAT THE TRANSACTION WAS NOT BOGUS BUT A GENUINE TRANSAC TION. THE PURCHASE OF SHARES WAS MADE ON 28TH APRIL, 1993 I.E.. ASST. YR. 1993-94 AND THAT A SSESSMENT WAS ACCEPTED BY THE DEPARTMENT AND THERE WAS NO CHALLENGE TO THE PURCHASE OF SHARES IN THAT YEAR. IT WAS ALSO PLACED BEFORE THE RELEVANT AO AS WELL AS BEFORE THE TRIBUNAL THAT THE SALE PROCEEDS HAVE BEEN ACCOUNTED FOR IN THE ACCOUNTS OF THE ASSESSEE AND WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE TRIBUNAL WAS RIGHT IN REJECTING THE APPEAL OF THE REVENUE BY HOL DING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPANY. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CONTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTED AND THE TRANSACTION TOOK PLA CE THROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHIC H COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITIER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUCH PRESUMPTION COULD BE DRAWN BY THE AO MERELY ON SURM ISES AND CONJECTURES. IN THE ABSENCE OF ANY COGENT MATERIAL IN THIS REGARD, HAVING BEEN PLA CED ON RECORD, THE AO COULD NOT HAVE REOPENED THE ASSESSMENT. THE ASSESSEE HAD MADE AN I NVESTMENT IN A COMPANY, EVIDENCE WHEREOF WAS WITH THE AO. --THEREFORE, THE AO COULD NOT HAVE ADDED INCOME, WHICH WAS RIGHTLY DELETED 14 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 BY THE CIT(A) AS WELL AS THE TRIBUNAL. IT IS SETTLE D LAW THAT SUSPICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. CONSEQUENTLY, NO QUE STION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW, ARISES FOR ADJUDICATION. C. VASANTLAL & CO . VS. CIT (1962) 45 ITR 206 (SC), M.O. THOMAKUTTY VS. CIT (.1958) 34 ITR 501 (KER)) AND MU KAND SINGH VS. SALES TAX TRIBUNAL (1998) 107 STC 300 (PUNJAB) RELIED ON; UMACHARAN SHAW &BRO S. VS. CIT (1959) 37 ITR 271 (SC) APPLIED; JASPAL SINGH VS. CIT (2006) 205 CTR (P & H ) 624 DISTINGUISHED 26. THE CO-ORDINATE BENCH OF AHMEDABAD IN ITA NOS. 501 & 502/AHD/2016 HAD THE OCCASION TO CONSIDER A SIMILAR ISSUE WHICH WAS WHER EIN THE ASSESSMENT WAS FRAMED ON THE STRENGTH OF THE STATEMENT OF A BROKER. THE RELEVANT PART READS AS UNDER:- 14. THE ENTIRE ASSESSMENT IS BASED UPON THE STATEMENT O F SHRI MUKESH CHOKSI. IT IS AN UNDISPUTED FACT THAT NEITHER A COPY OF THE STATEMEN T WAS SUPPLIED TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN BY THE A SSESSING OFFICER/CIT(A). THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES IN CIVIL APPEAL NO. 4228 OF 2006 WAS SEIZED WITH THE FOLLOWING ACTION OF THE TRIBUNA L :- 6. THE PLEA OF NO CROSS EXAMINATION GRANTED TO THE VARIOUS DEALERS WOULD NOT HELP THE APPELLANT CASE SINCE THE EXAMINATION OF THE DEALERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE POSSESSION OF THE APPELLANT THE MSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PRICES REMAIN STATIC. SINCE WE ARE NOT UPHOLDING AN D APPLYING THE EX FACTORY PRICES, AS WE FIND THEM CONTRAVENED AND NOT NORMAL PRICE AS ENVISAGED UNDER SECTION 4(1), WE FIND NO REASON TO DISTURB THE COMMISSIONERS ORDERS. 15. THE HONBLE APEX COURT HELD AS UNDER :- ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMU CH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WA S ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON T HE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORR ECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT G RANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORD ER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROS S-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EXFACTORY PRICES REMAIN STA TIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED T O CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMONY F OR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS EXAMINATION. THAT APART, THE A DJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID D EALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUB JECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOS E AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTI ONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 15 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING T HE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF TH E TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTM ENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNE SSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE. WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. 16. ON THE STRENGTH OF THE AFOREMENTIONED DECISIO N OF THE HONBLE SUPREME COURT, THE ASSESSMENT ORDER HAS TO BE QUASHED . 17. EVEN ON FACTS OF THE CASE, THE ORDERS OF THE AU THORITIES BELOW CANNOT BE ACCEPTED. THERE IS NO DENYING THAT CONSIDERATION WAS PAID WHEN THE SHARES WERE PURCHASED. THE SHARES WERE THEREAFTER SENT TO THE COMPANY FOR THE TRANSFER OF NAME. THE C OMPANY TRANSFERRED THE SHARES IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECORD WHICH COUL D SUGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THERE IS A LSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE NEVER WITH THE ASSESSEE. ON THE CONTRARY, THE SHARES WERE THEREAFTER TRANSFERRED TO DEMAT ACCOUNT. THE DEMAT ACCOUNT WAS IN THE NAME OF THE A SSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF THE SHARES WE RE OF SOME FICTITIOUS COMPANY WHICH WAS NOT LISTED IN THE BOMBAY STOCK EXCHANGE/NATIONAL STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFERRED TO DEMAT ACCOUNT. SHRI MUKESH CHOK SI MAY HAVE BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT THE TRANSACTIONS WERE GENUINE AND THEREFORE, NO ADV ERSE INFERENCE SHOULD BE DRAWN. 18. IN THE LIGHT OF THE DECISIONS OF THE HONBLE S UPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND CONSIDERING THE FACTS IN TOT ALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PRESUMPTION AND SURMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT EVIDENCES ON RECORD RELATING TO THE SALE/PUR CHASE TRANSACTIONS IN SHARES SUPPORTED BY BROKERS CONTRACT NOTES, CONFIRMATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE DEMAT ACCOUNT. 19. ACCORDINGLY, WE DIRECT THE A.O. TO TREAT THE GA INS ARISING OUT OF THE SALE OF SHARES UNDER THE HEAD CAPITAL GAINS- SHORT TERM OR LONG TERM AS THE CASE MAY BE. THE OTHER GRIEVANCE OF THE ASSESSEE BECOMES INFRUCTUOUS. 27. THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SU PPORT OF THE CLAIM OF THE ASSESSEE THAT IT EARNED LTCG ON TRANSACTIONS OF HIS INVESTMENT IN SH ARES. THE PURCHASE OF SHARES HAD BEEN ACCEPTED BY THE AO IN THE YEAR OF ITS ACQUISITION AND THEREAFTER UNTIL THE SAME WERE SOLD. THE OFF MARKET TRANSACTION FOR PURCHASE OF SHARES IS NO T ILLEGAL AS WAS HELD BY THE DECISION OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DOLA RRAI HEMANI VS. ITO IN ITA NO. 19/KOL/2014 DATED 2.12.2016 AND THE DECISION BY HONBLE CALCUTTA HIGH COURT IN PCIT VS. BLB CABLES & CONDUCTORS PVT. LTD. IN ITAT NO. 78 OF 2017 DATED 1 9.06.2018 WHEREIN ALL THE TRANSACTIONS TOOK PLACE OFF MARKET AND THE LOSS ON COMMODITY EXCHANGE WAS ALLOWED IN FAVOUR OF ASSESSEE. THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE CHEQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE OF SHARES AND 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 CANNOT BE HELD THAT THE TRANSACTIONS WERE BOGUS. THE FOLL OWING JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT:- 16 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 (I) 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 JUN E, 2018, HAD UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING A S 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 I N PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US THE LD. AR SUBM ITTED THAT THE ORDER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH THE BROKER WAS EXPELLED. THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF B OTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBMITTE D THE IT RETURN, LEDGER COPY, LETTER TO AO LAND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM WHIC H IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTR ACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REGIST ERS WERE ALSO SUBMITTED IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. THE B OARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIONS IN COMMODITY WAS PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER HAND THE LD. DR RELIED IN THE ORDER OF THE LOWER AUTHORITIES . 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD 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 WH ERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. II) 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 T HE 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 G ENERATED 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 AO WAS MISPLACED AND NOT SUBSTANTIATED. III)CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITE D [2013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RECORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER HELD THAT I N ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANS ACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTED TO WITH UL TERIOR MOTIVE. IV) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CA L 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. HOWE VER 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 F ILED BY THE REVENUE WAS DISMISSED. V) 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 17 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHERE T HE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON TH E BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE AO DID NOT DOUB T THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT T HE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED BY TH E REVENUE WAS DISMISSED. VI) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. VII) 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 AO, BASED ON THE I NFORMATION 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 JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRA NSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTE D BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DE MAT 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 COURT. 28. WE NOTE THAT SINCE THE PURCHASE AND SALE TRA NSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND BANK ST ATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTED BY THE LD AO IN EA RLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BASIS OF SOME REPORTS OF THE IN VESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAID JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLOWING CASES:- (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) 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) 18 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 (XVIII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XIX) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 29. THE LD AR ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AG NIHOTRI VS. THE STATE OF MADHYA PRADESH [1977] 1 SCC 816 (S C) . IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR T RANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNER ALWAYS RESTS ON THE PERSON AS SERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFIN ITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGL Y AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT I S NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DEC IDE ON THE BASIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SU BMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RE LATING TO EXEMPTION CLAIMED BY THE ASSESSEE ON LTCG ON ALLEGED PENNY SOCKS. (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 30. MOREOVER IT WAS SUBMITTED BEFORE US BY LD AR TH AT 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 EFF ECT 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 SUPPORT OF T HIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO ALLOW 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/(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) 31. WE NOTE THAT THE LD. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMALCHAND JAIN IN TAX AP PEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIND THAT THE F ACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MAD E BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF T HE COMPANIES WAS DONE 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 WAS N OT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREAT ING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTURE 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 O F SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT. 32. IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF T HE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BENCH O F THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG ON SALE OF SHARES OF M/S KAFL. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, AND SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND DELETE THE CONSEQUEN TIAL ADDITION. 19 ITA NO.1855/KOL/2018 M/S. ALLIANCE VINTRADE PVT. LTD. AY- 2014-15 33. THE NEXT ISSUE IN CONFIRMING THE ADDITION OF RS .1,83,020/- AS UNEXPLAINED EXPENDITURE TOWARDS COMMISSION CHARGES OF SALE OF SUCH SHARES B Y THE OPERATOR. WE HAVE ALREADY HELD THAT THE TRANSACTIONS RELATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODATION ENTRIES AS ALLEGED BY THE AO. CONSEQUENTLY THE ADDITION OF RS.1,83,020 /- IS HEREBY DIRECTED TO BE DELETED. WE ACCORDINGLY HOLD THAT THE ISSUE IS ALLOWED IN FAVOU R OF THE ASSESSEE. 19. FROM THE FACTS DISCUSSED IN PARA 7 AND 8 SUPRA, AND THE RATIO DECIDENDI OF THE HONBLE JURISDICTIONAL HIGH COURT AND OTHER HONBLE HIGH CO URTS, AND PARTICULARLY THE HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF M/S. BLB CABLES AND CONDUCTORS,(SUPRA) WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, ALL OW THE CLAIM OF LOSS AS MADE BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 8TH MARC H, 2019 SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED : 8TH MARCH, 2019 BISWAJIT (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ALLIANCE VINTRADE PVT. LTD., C/O. RSVPC & COMPANY, 41A, A.J.C. BOSE ROAD, SUITE NO. 613, 6 TH FLOOR, KOLKATA 700 017. 2 RESPONDENT ITO, WARD 1(4), P-7, CHOWRINGHEE SQUAR E, KOLKATA 69. 3 . THE CIT(A), 4. 5. CIT , DR, / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O ITAT, KOLKATA