Neetu Agarwal , Siliguri V. ITO, Ward - 2(4), Siliguri , Siliguri

ITA 1892/KOL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5185 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-07-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 03-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANKAR HALDER
• Assessee Lawyers: VAGUE OBSERVATIONS; DRAWING AN ADVERSE INFERENCE WITHOUT ANY ADMISSIBLE; RELYING UPON A PLETHORA OF JUDGMENTS OF
• Keywords: Unexplained cash credit; Business income; 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; Capital receipt; Onus to prove; Penny stocks; Set aside; Audi alteram partem; Capital Gains; Bogus
• Section: 147; 68; 69; 271(1)(c); 69C; 143(3); 260A; 133(6); 250; 73; 13; 22; 20

Judgement Text

1 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. , SMC , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: K OLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 1812/KOL/2018 ASSESSMENT YEAR 2015-16 NITU AGARWAL (PAN: AHJPB9389B) VS. ITO, WARD 2(4), SILIGURI APPELLANT RESPONDENT & ITA NO.1892/KOL/2018 ASSESSMENT YEAR: 2015-16 NEETU AGARWAL (PAN: AEEPA3423K) VS. ITO, WARD 2(4), SILIGURI APPELLANT RESPONDENT DATE OF HEARING 02.07.2019 DATE OF PRONOUNCEMENT 23.08.2019 FOR THE APPELLANT SHRI SUBASH AGARWAL, ADVOCATE FOR THE RESPONDENT SHRI SANKAR HALDER, JCIT, SR. D R ORDER PER SHRI A.T.VARKEY, JM BOTH THESE APPEALS PREFERRED BY THE DIFFERENT ASSES SEE ARE AGAINST THE SEPARATE ORDERS OF LD. CIT(A), SILIGURI DATED 03.07.2018 AND 04.07. 2018 FOR AY 2015-16 RESPECTIVELY. SINCE GROUNDS ARE COMMON AND FACTS ARE IDENTICAL, B OTH THESE APPEALS ARE DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY BY TREATING THE APPEAL IN ITA NO. 1812/KOL/2018 FOR AY 2015-16 AS THE LEAD CASE A ND THE RESULT OF WHICH WOULD BE APPLICABLE TO THE OTHER APPEAL ALSO 2. GROUND NOS. 1,2 AND 3 OF ASSESSEES APPEAL ARE A GAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.17,91,918/- MADE BY T HE AO U/S. 68 OF THE INCOME-TAX ACT, 2 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. 1961 (HEREINAFTER REFERRED TO AS THE ACT) IN RESP ECT OF SALE PROCEEDS OF SHARES OF M/S. JACKSON INVESTMENT LTD. (IN SHORT M/S. JIL) CLAIMIN G FOR LTCG EXEMPTION U/S. 10(38) OF THE ACT TREATING THE SAME AS UNEXPLAINED CASH CREDIT AN D CONFIRMING THE ADDITION OF RS.89,596/- ON ACCOUNT OF PAYMENT OF COMMISSION U/S. 69 OF THE ACT. 3. THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESS EE CLAIMED LONG TERM CAPITAL GAINS OF RS.17,91,918/- . THE AO FOUND THAT THE ASSESSEE HA S CLAIMED LTCG OF RS.17,91,918/- AND CLAIMED EXEMPTION U/S. 10(38) OF THE ACT. ACCORDIN G TO AO, THE ASSESSEE HAS BOUGHT 6000 SHARES OF M/S. JIL ON 12.10.2011 @ RS.10/- EACH FOR A TOTAL CONSIDERATION OF RS.60,000/-. AND LATER, THE ASSESSEE SOLD THE SHARES IN THIS ASS ESSMENT YEAR (AY) AS UNDER: DATE NO. OF SHARES RATE PER SHARE TOTAL SALE CONS IDERATION 23.06.2014 1500 RS.311/- RS.4,66,500 03.07.2014 2000 RS.309/- RS.6,18,000 07.07.2014 2500 RS.312/- RS.7,80,000 RS.18,64,500 THE ASSESSEE HAD SOLD THESE SHARES THROUGH M/S. GUI NESS SECURITIES LTD. WHICH IS A REGISTERED BROKER AT THE BSE AND CLAIMED LTCG OF RS .17,91,918/-. ACCORDING TO AO, THE SCRIP OF M/S. JIL IS AMONGST THE 84 PENNY STOCKS WH ICH WERE ENGAGED IN ARTIFICIAL RIGGING OF PRICES AND WAS MEANT FOR THE DESIRED PRE-PLANNED PU RPOSE. THE AO ON PERUSAL OF THE FINANCIAL RESULTS OF M/S. JIL TOOK NOTE THAT FOR LA ST FEW YEARS INCLUDING YEARS FROM PURCHASE TO SALE, FINANCIAL HEALTH OF THE COMPANY HAD BEEN D ETERIORATING CONTINUOUSLY OR NOT INCREASED SIGNIFICANTLY. HOWEVER, THE AO WONDERED AS TO HOW T HE SHARE PRICE AND MARKET CAPITALIZATION OF THE SCRIP WAS SHOOTING UP ALMOST VERTICALLY. ACCORDING TO AO, ALL THE BLUE CHIP COMPANIES WHICH ARE PRESENT IN THE SENSEX, THE SENSITIVE INDEX OF THE BSE, WHICH HAVE BULK MARKET SHARE IN TERMS OF MARKET CAPITALIZATION AND BUSINESS SUCH AS RELIANCE INDUSTRIES LTD, LARSEN & TUBRO LTD, TATA CONSULTANCY SERVICES LTD. & COAL INDIA LTD, WERE NOT EVEN ABLE TO DOUBLE THEIR PRICE IN THE MARKET DURING THE SAME PERIOD. ON THE OTHER HAND, JACKSON INVESTMENTS LTD WHICH HAS ALMOST ZERO FUNDA MENTAL STRENGTH HAS SHOT UP MORE THAN 30 TIMES IN A SHORT SPAN OF TIME. THIS, A CCORDING TO AO WAS BECAUSE, THE PARALLEL FORCES OF ACCOMMODATION ENTRY PROVIDERS WERE ACTIVE LY PARTICIPATING WITH THEIR PRE-SETTLED GAME PLAN. FURTHER, SCRIPS OF JACKSON INVESTMENTS L TD HAS BEEN BARRED FROM THE STOCK EXCHANGES ON THE DIRECTION FROM THE MINISTRY OF CORPORATE AFFAIRS, AS IT HAS BEEN 3 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. IDENTIFIED AS A 'SHELL COMPANY' BY THE MINISTRY. A CCORDING TO AO, THE ASSESSEE HAS SOLD SCRIPS OF M/S. JIL AT PRE-DETERMINED PRICE, AT PRE- DETERMINED TIME TO PRE-DETERMINED PARTIES WHO WERE SEEKING GAIN/LOSS FOR SETTING OFF GENUINE CAPITAL GAIN WITH THE HELP OF DIFFERENT OPERATORS, MEMBERS OF BSE, SHARE BROKERS AND SUB-BR OKERS OR FICTITIOUS ENTITIES MANAGED BY SOME UNSCRUPULOUS STOCK BROKERS. THE AO IN THE PRE SENT CASE ISSUED NOTICE U/S. 133(6) OF THE ACT TO THE PURCHASERS OF THE ASSESSEES SHARES, HOWEVER, LETTER WAS RETURNED BACK WITH REMARK INSUFFICIENT ADDRESS. THE AO OBSERVED FROM T HE TRANSACTION DETAILS THAT IN THE SCRIP OF M/S. JIL THE COUNTER PARTY MEMBER AND COUNTER PA RTY CLIENT ARE THOSE WHO WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRY ON LONG T ERM CAPITAL GAIN AND SHORT TERM CAPITAL LOSS TO THE DIFFERENT BENEFICIARIES. THE AO ALSO TOOK NOTE THAT THE ASSESSEE HAD PURCHASED SHARES OF M/S. JIL AT A MARKET PRICE OF R S. 10/- PER SHARE FROM M/S. UTTAM COMMODITIES PVT. LTD. WHOSE OFFICE IS IN KOLKATA. T HROUGH PRIVATE PLACEMENT PAYMENT WAS MADE IN CASH. NOTICE U/S 133(6) OF THE ACT WAS ISSU ED TO THIS M/S. UTTAM COMMODITIES PVT. LTD, KOLKATA IN ITS ADDRESS AS PER RECORD, HOWEVER LETTER RETURNED BACK WITH POSTAL REMARK 'MOVED'. AS PER AO, THE ASSESSEE AFTER PURCHASING THE SCRIPS OF M/S. JIL WAITED TILL THE COMPLETION OF 1 (ONE) YEAR FOR QUALIFYING THE GAIN (LTCG) AS EXEMPTED INCOME. ACCORDING TO AO, ON REACHING THE OPTIMUM LEVEL, ASSESSEE SOLD THESE SHARES TO THE PRE-ARRANGED BUYERS AT PRE-SETTLED PRICE. THUS, AO CONCLUDED THAT ASSES SEE HAD SOLD THESE SCRIPTS AT PRE- DETERMINED PRICE, PRE-DETERMINED TIME AND TO PRE-DE TERMINED BUYER WITH THE HELP OF ACCOMMODATION ENTRY' PROVIDERS UNDER THE SHELL OF D IRECTOR, SHARE BROKER ETC. TO BRING HIS UNACCOUNTED INCOME INTO THE REGULAR BOOKS OF ACCOUN TS IN THE FORM OF CLAIM OF EXEMPTION U/S 10(38) OF THE ACT ON LTCG AS PER PROVISION OF A CT. THEREFORE, ACCORDING TO AO, IT IS A FACT THAT ASSESEE HAD TAKEN ACCOMMODATION ENTRY OF RS 17,91,918/ - BY SELLING LISTED PENNY STOCK OF M/S. JIL THROUGH THE PRE-SETTLED TRANSACTI ONS UNDER THE CARPET. IN VIEW OF THE ABOVE DISCUSSION, ACCORDING TO AO, THE CLAIM OF LTCG OF R S. 17,91,918/ - HAVING BEEN PROVED TO BE BOGUS, AND PRE-ARRANGED. UNDER THESE CIRCUMSTANC ES ASSESSEE WAS REQUESTED TO EXPLAIN AS TO WHY THE SAID SUM OF RS. 17,91,918/-SHOULD NOT BE TREATED AS CREDIT IN HER ACCOUNTS AND ADDED IN THE TOTAL INCOME FOR THE ASSTT YEAR 2015-1 6 WITHIN THE SCOPE OF SECTION 68 OF THE ACT. CONSIDERING THE REPLY OF THE ASSESSEE, AO DID NOT ACCEPT THE ASSESSEES CLAIM OF LTCG AND EXEMPTION THEREOF CLAIMED BY THE ASSESSEE. THE REAFTER, THE AO TREATED THE SAME AS CASH CREDIT U/S 68 OF THE ACT AND ADDED THE ENTIRE LTCG TO THE INCOME OF THE ASSESSEE AND ALSO 4 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. THE COMMISSION EXPENSES AS UNEXPLAINED INCOME. ON F IRST APPEAL, THE LD. CIT(A) DISMISSED THE GROUNDS RAISED BY THE ASSESSEE AGAINST HIS CLAI M OF EXEMPTION U/S 10(38) OF THE ACT AND ALSO CONFIRMED THE ADDITIONS ON ACCOUNT OF COMMISSI ON EXPENSES MADE BY THE AO UNDER SECTION 69 OF THE ACT. AGGRIEVED, THE ASSESSEE IS I N APPEAL BEFORE THIS TRIBUNAL. 4. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE TIME OF HEARING THE LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PURCHASED 6,000 NUMBERS OF SHARES OF M/S. JIL ON 1 2.10.2011 AT A TOTAL CONSIDERATION OF RS.60,000/- FROM M/S. UTTAM COMMODITIES PVT. LTD. ( COPY OF THE PURCHASE BILL, MONEY RECEIPT, SHARE TRANSFER ADVICE AND SHARE CERTIFICAT E ARE AVAILABLE IN THE PAPER BOOK AT PAGES 9 TO 13). THEREAFTER, IN THE RELEVANT YEAR THE ASSE SSEE SOLD 1500 SHARES @ RS.311/- ON 23.06.2014, 2000 SHARES @ RS.309/- ON 03.07.2014 AN D 2500 SHARES @ RS.312/- THROUGH M/S. GUINESS SECURITIES LTD. WHICH IS A REGISTERED BROKER AT THE BSE AND CLAIMED LTCG OF RS.17,91,918/-. CONTRACT NOTES IN CONNECTION WITH S ALE OF SHARES ALONG WITH BANK STATEMENT REFLECTING THE RECEIPT OF SALE CONSIDERATION AND DE MAT STATEMENT WERE PRODUCED BEFORE THE LOWER AUTHORITIES AND ARE AVAILABLE IN THE PAPER BO OK PAGE NOS. 14 TO 22. HE ALSO SUBMITTED THAT THE A.O. AT THE TIME OF ASSESSMENT PROCEEDINGS DESCRIBED THE MODUS OPERANDI OF BOOKING THE ALLEGED BOGUS LTCG. HOWEVER, ACCORDING TO HIM, THE A.O. HAS NOWHERE IN THE ASSESSMENT ORDER REFERRED TO ANY MATERIAL WHICH CAN PROVE THE COMPLICITY OF ASSESSEE EITHER IN THE PRICE RIGGING OR IN THE ALLEGED ACCOMMODATIO N ENTRY OPERATION. THE LD. AR POINTED OUT THAT THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT THE ENTIRE TRANSACTIONS ENTERED INTO BY THE ASSESSEE ARE BEYON D HUMAN PROBABILITY. ACCORDING TO LD. AR, IN THE CASE IN HAND, THE ASSESSEE IS NOT CONNEC TED WITH M/S. JACKSON INVESTMENTS LTD. OR THEIR PROMOTERS, DIRECTORS AND ANY OTHER PERSON WHO EXERCISES ANY CONTROL OVER M/S. JACKSON INVESTMENTS LTD. OR ANY SO CALLED ENTRY OPERATOR. A CCORDING TO LD. AR, AS A MATTER OF FACT, THE ASSESSEE HAS NEVER INDULGED IN ANY SUCH ACTIVIT Y NOR HAS BEEN PART OF ANY MODUS OPERANDI AS STATED BY THE A.O. THE ASSESSEE HAS TRA NSACTED IN THE SHARES OF M/S. JIL IN THE NORMAL COURSE OF INVESTMENT LIKE MILLIONS OF INVEST ORS DO IN THE STOCK MARKET. THEREFORE, ACCORDING TO LD. AR, THE QUESTION OF ALLEGED CONVE RSION OF UNACCOUNTED MONEY IN THE FORM OF ALLEGED BOGUS LONG TERM CAPITAL GAINS WITH THE H ELP OF MANY ALLEGED CONNECTED PARTIES THROUGH PRICE RIGGING AND PRICE MANIPULATIONS DOES NOT ARISE. ACCORDING TO HIM, THERE IS NO 5 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. MATERIAL EVIDENCE FOR THE A.O. TO CONCLUDE WHAT IS APPARENT IS NOT REAL. IN THE ABSENCE OF ANY LINK BETWEEN THE ASSESSEE AND THE ALLEGED ADVERSE A DMISSIONS OF THE DIRECTORS AND BROKERS, HUMAN PROBABILITY HAS BEEN USED AS A VAGUE AND CONV ENIENT MEDIUM FOR THE DEPARTMENT TO DRAW ADVERSE VIEW/CONJECTURES AGAINST THE ASSESSEE. ACCORDING TO LD. AR, BLAMING THE ASSESSEE BY VAGUE OBSERVATIONS AND DRAWING AN ADVER SE INFERENCE WITHOUT ANY ADMISSIBLE EVIDENCE ON RECORD, ON THE PART OF THE LOWER AUTHOR ITIES IS NOT JUSTIFIED IN THE EYES OF LAW. IN THIS CONNECTION, HE PLACED RELIANCE ON THE FOLLOWIN G DECISIONS: I) LALCHAND BHAGAT AMBICA RAM VS. CIT [1959] 37 ITR 288 (SC); II) CIT (CENTRAL) CALCUTTA VS. DAULAT RAM RAWATMULL (87 ITR 349) III) ANDMAN TIMBER INDUSTRIES VS. CCE - [2015J 62 T AXMANN.COM 3 (SC) (IV) P.S. ABDUL MAJEED VS. AGRICULTURAL INCOME-TAX AND SALES TAX OFFICER AND OTHERS 209 ITR 821 (KER.) (V) CIT VS. EASTERN COMMERCIAL ENTERPRISES 210 ITR 103 (CAL) (VI) ASST. CIT VS AJNARA INDIA LTD (2011) 49 DTR 2 73 (DEL-TRIB) (VII) CALCUTTA HIGH COURT IN S.K.BOTHRA & SONS (HUF ) VS ITO (2011) 62 DTR (CAL)234 (VIII) DELHI HIGH COURT IN CIT VS RAJESH KUMAR (20 08) 306 ITR 27 (IX) CIT VS. CARBO INDUSTRIES HOLDINGS LTD. 244 IT R 422 (CAL) (X) CIT VS. EMERALD COMMERCIAL LTD. 250 ITR 539 (C AL) (XI) MANISH KUMAR BAID VS. ACIT, ORDER DATED 18.08 .2017; ITANO. 1236-1237/K/17 (XII) VASUDHA JAIN VS. ITO, ITA NO. 10181K/2018, O RDER DATED 15.02.2019 (XIII) PRAKASHO DEVI SARIA VS. ITO, ITA NO. 23601K /2017, ORDER DATED 17.05.2019 (XIV) CIT VS. BHAGWATI PRASAD AGARWAL (CALCUTTA HI GH COURT); ITA NO.22 OF 2009, DATED 29.04.09. 5. THE LD. AR ALSO CONTESTED THE AOS CONTENTION TH AT THE COMPANY IN QUESTION HAD INSIGNIFICANT BUSINESS OPERATION, WHICH FACT DOES N OT SUPPORT THE UNPRECEDENTED RISE IN ITS PRICE. ACCORDING TO LD. AR, THE PRICE OF ANY COMM ODITY INCLUDING SHARES IS DETERMINED BY THE MARKET FORCES OF DEMAND AND SUPPLY OF THE MARKE T PLAYERS AND NOT BY THEIR INTRINSIC WORTH. THUS, THE LD. AR CONTENDED THAT THE ASSESSEE HAD BONAFIDELY PURCHASED THE SHARES FROM A PRIVATE PLACEMENT IN ANTICIPATION OF SUBSTAN TIAL GAIN AND SOLD THE SHARES IN THE ONLINE SYSTEM, WHEN SUBSTANTIAL GAINS MATERIALISED. IT WAS POINTED OUT BY THE LD. AR THAT THE A.O. HAS ALSO NOWHERE IN THE ASSESSMENT ORDER REFERRED T O ANY MATERIAL WHICH CAN PROVE THE 6 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. COMPLICITY OF ASSESSEE IN THE ALLEGED ACCOMMODATION ENTRY OPERATION. ACCORDING TO LD. AR, THE AO/CIT(A) WAS NOT JUSTIFIED IN INVOKING THE PRO VISIONS OF SECTION 68 OF THE ACT IN REGARD TO THE SALE PROCEEDS OF SHARES. ACCORDING TO LD. AR, THERE IS NO EVIDENCE ON RECORD TO DISBELIEVE THAT THE ASSESSEE SOLD SHARES THROUGH RE GISTERED SHARE AND STOCK BROKER. THE ASSESSEE HAD PRODUCED ALL EVIDENCES TO EXPLAIN THE SOURCE OF THE AMOUNTS RECEIVED BY THE ASSESSEE FROM THE BROKERS. THUS, ACCORDING TO LD. A R, THE AO WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME. HE ALSO SUBMITTED THAT IN RESPECT OF SHARE OF M/S. JIL THE COORDINATE BENCH OF THIS TRIBUNAL H AS ALREADY ACCEPT THE SCRIP OF M/S. JIL VIDE ITS ORDER DATED 28.02.2019 IN THE CASE OF OMPR AKASH MUNDHRA & ORS VS. ITO IN ITA NO. 2235/KOL/2018. THEREFORE, HE PRAYED THAT THE AP PEAL BOTH OF THE ASSESSEES MAY BE ALLOWED. 6. PER CONTRA, THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND URGED BEFORE THE BENCH TO CONFIRM THE ORDERS OF THE LOWER AUTHORITIES AND EXPLAINED THE MODUS OPERANDI RESORTED BY THE BENEFICIARIES LIKE A SSESSEE WHO LAUNDER THEIR UNACCOUNTED MONEY THROUGH THIS COLOURABLE DEVICE AND WANTED US TO UPHOLD THE ACTION OF LD. CIT(A) AND AO. HE ALSO REFERRED TO CERTAIN CASE LAWS WHICH W E WILL REFER TO INFRA . 7. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE TIME OF HEARING IT WAS BROUGHT TO MY NOTICE BY THE LD. AR THAT THIS TRIBUNAL IN THE CASE OF OMPRAKASH MUNDHRA & ORS VS. ITO IN ITA NO. 2235/KOL/2018 (SUPRA) HAVE DECIDED THAT THE SCRIPS OF M/S. JIL ARE NOT BOGUS A ND HELD THAT THE LTCG CLAIM OF THE ASSESSEE NEEDS TO BE ALLOWED. IN THE SAID ORDER, THE TRIBUNAL HAS HELD AS UNDER: 3. I FIND IN THIS LEAD CASE ITA NO.2235/KOL/2018 TH AT THE ASSESSEE HAD DECLARED HIS LTCG OF 6,19,319/- DERIVED FROM TRANSFER OF SHARES HELD IN JACKSON INVESTMENTS LTD. LEARNED DEPARTMENTAL REPRESENTATIVE INVITES MY ATTE NTION TO A VOLUMINOUS EXERCISE UNDERTAKEN BY THE ASSESSING OFFICER INVOLVING A LON G DRAWN PROCESS OF STOCK MARKET PRICES RIGGING IN COLLUSION WITH IN THE VARIOUS ENTITY OPE RATORS. HE TAKES ME TO ASSESSMENT ORDER INDICATING THE ASSESSEE TO HAVE ALLEGEDLY INVESTED HER MONEY IN JACKSON INVESTMENTS LTD. NOT HAVING ANY SOUND FINANCIAL POSITION OR BUSINESS ACT IVITY SO AS TO JUSTIFY THE LTCG IN ISSUE. CASE LAW SUMATI DAYAL VS. CIT 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE (1971) 82 ITR (SC) IS QUOTED IN SUPPORT TO PLEAD THAT BOTH TH E LOWER AUTHORITIES HAVE MADE IT CLEAR IN THEIR RESPECTIVE ORDER(S) ABOUT THE ASSESSEE HAVING ACTED IN COLLUSION WITH VARIOUS ENTITY OPERATORS FOR THE PURPOSE OF BOGUS LTCG IN ISSUE. 4. I HAVE GIVEN MY THOUGHTFUL CONSIDERATION TO RIVA L CONTENTIONS. THERE IS NO DISPUTE THAT ASSESSEE HAVING DERIVED HER LTCG ON TRANSFER OF SHA RES HELD IN M/S KAILASH AUTO FINANCE LTD. 7 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUT E THAT VERY ISSUE STANDS ADJUDICATED IN ASSESSEES FAVOUR IN CO-ORDINATE BENCHS DECISION I N ITA NO.354KOL/2018 IN SANJEEV GOEL (HUF) VS. ITO DECIDED DATED 24.08.2018 AS FOLLOWS:- 4. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONS IDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 5. IN IDENTICAL CASES, THE SUBMISSION OF THE ASSESS EE, FINDINGS OF THE ASSESSING OFFICER, FINDINGS OF THE LD. CIT(A) AND THE CONCLUSION OF TH E TRIBUNAL HAVE BEEN BROUGHT OUT AS UNDER:- 6. THE ADDITION WAS MADE BY THE ASSESSING OFFICER B Y OBSERVING AS UNDER:- I. THE INITIAL ALLOTMENT OF SHARES TO BENEFICIARIES IS GENERALLY DONE THROUGH PREFERENTIAL ALLOTMENT. II. THE MARKET PRICE OF SHARES OF THESE COMPANIES R ISE TO VERY HIGH LEVEL WITHIN A SPAN OF ONE YEAR. III. THE TRADING VOLUME OF SHARES DURING THE PERIOD, IN WHICH MANIPULATIONS ARE DONE TO RAISE THE MARKET PRICE, IS EXTREMELY THIN. IV. MOST OF THE PURPORTED INVESTORS ARE RETURNED TH EIR INITIAL INVESTMENT AMOUNT IN CASH. ONLY SMALL AMOUNT IS RETAINED BY THE OPERATOR AS SEC URITY. THUS, AN ENQUIRY WOULD REVEAL THAT MOST OF THE CAPITAL RECEIPTS THROUGH PREFERENT IAL ALLOTMENT OR OTHER MEANS WOULD HAVE FOUND THEIR WAY OUT OF SYSTEM AS CASH. V. MOST OF THESE COMPANIES HAVE NO BUSINESS AT ALL. FEW OF THE COMPANIES WHICH HAVE SOME BUSINESS DO NOT HAVE THE CREDENTIALS TO JUSTIFY THE SHARP RISE IN MARKET PRICE OF THEIR SHARES. VI. THE SHARP RISE IN MARKET PRICE OF THE SHARES OF THESE ENTITIES IS NOT SUPPORTED BY FUNDAMENTALS OF THE COMPANY OR ANY OTHER GENUINE FAC TORS. VII. AN ANALYSIS IN RESPECT OF PERSONS INVOLVED IN T RANSACTIONS APPARENTLY CARRIED OUT IN ORDER TO JACK UP THE SHARE PRICES HAS BEEN DONE IN RE SPECT OF 84 COMPANIES. IT HAS BEEN NOTED THAT MANY COMMON PERSONS/ENTITIES WERE INVOLVE D IN TRADING IN MORE THAN 1 LTCG COMPANIES DURING THE PERIOD WHEN THE SHARES WERE MADE TO RISE WHICH IMPLIES THAT THEY HAD CONTRIBUTED TO SUCH PRICE RISE. VIII. NAMES OF MOST OF THE LTCG COMPANIES ARE CHANG ED DURING THE PERIOD OF THE SCAM. IX. MOST OF THE COMPANIES SPLIT THE FACE VALUE OF S HARES [THIS IS PROBABLY DONE TO AVOID THE EYES OF MARKET ANALYSTS]. X. THE VOLUME OF TRADE JUMPS MANIFOLD IMMEDIATELY WHE N THE MARKET PRICES OF SHARES REACH AT OPTIMUM LEVEL SO AS TO RESULT IN LTCG ASSU RED TO THE BENEFICIARIES. THIS MAXIMUM IS REACHED AROUND THE TIME WHEN THE INITIAL A LLOTTEES HAVE HELD THE SHARES FOR ONE YEAR OR LITTLE MORE AND THUS, THEIR GAIN ON SALE OF SUCH SHARES WOULD BE ELIGIBLE FOR EXEMPTION FROM INCOME TAX. XI. AN ANALYSIS OF SHARE BUYERS OF SOME OF LTCG COM PANIES WAS DONE TO SEE IF THERE WERE COMMON PERSONS/ENTITIES INVOLVED IN BUYING THE BOGUS INFLATED SHARES. IT WAS NOTED THAT THERE WERE MANY COMMON BUYERS [WHICH WERE PAPER COM PANIES]. XII. THE PRICES OF THE SHARES FALL VERY SHARPLY AFT ER THE SHARES OF LTCG BENEFICIARIES HAVE BEEN OFF LOADED THROUGH THE PRE-ARRANGED TRANSACTIONS ON THE STOCK EXCHANGE FLOOR/PORTAL TO THE SHORT TERM LOSS SEEKERS OR DUMMY PAPER ENTITIES. XIII. THE SHARES OF THESE COMPANIES ARE NOT AVAILAB LE FOR BUY/SELL TO ANY PERSON OUTSIDE THE SYNDICATE. THIS IS GENERALLY ENSURED BY WAY OF SY NCHRONIZED TRADING BY THE OPERATORS AMONGST THEMSELVES AND/OR BY UTILIZING THE MECHANISM OF UPPER/LOWER CIRCUIT OF THE EXCHANGE. 7. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APP EAL. 8 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. 8. THE FIRST APPELLATE AUTHORITY UPHELD THE ORDER O F THE ASSESSING OFFICER BY GIVING HIS FINDINGS AS FOLLOWS:- A) THE AO HAD PLACED ON RECORD THE ENTIRE GAMUT OF FIN DING AND THERE IS NO FURTHER REQUIREMENT FOR ELABORATION. B) THERE IS DIRECT EVIDENCE TO CLEARLY INDICATE THAT THE ENTIRE TRANSACTION UNDERTAKEN BY THE ASSESSEE WAS MERELY AN ACCOMMODATION TAKEN FOR T HE PURPOSE OF BOGUS LONG TERM CAPITAL GAINS TO CLAIM EXEMPT INCOME. THE AUTHORITI ES SUCH AS SEBI HAVE AFTER INVESTIGATING SUCH ABNORMAL PRICE INCREASE OF CERTA IN STOCKS, SUSPENDED CERTAIN SCRIPS. C) THE SUBMISSIONS OF THE ASSESSEE POINTED OUT TOWA RDS ELABORATE DOCUMENTATION SUCH AS : I) APPLICATION OF SHARES. II) ALLOTMENT OF SHARES. III) SHARE CERTIFICATES IV) PAYMENT BY CHEQUES V) FILINGS BEFORE REGISTRAR OF COMPANIES. VI) PROOF OF AMALAGAMATION OF COMPANIES. VII) COPIES OF BANK STATEMENT, VIII) BANK CONTRACT NOTES. IX) DELIVERY INSTRUCTION TO THE BROKER ETC. D) THE ELABORATE PAPER BOOK IS FILED TO STRENGTHEN THE MATTER RELEVANT TO BOGUS CLAIM OF LTCG, AND THIS IS CLEARLY BEEN SCHEMED AND PRE-PLANNED WITH MALA FIDE INTENTION. THEREFORE, ALL THESE DOCUMENTS ARE NOT EVIDENCE. E) THE TRANSACTIONS ARE UNNATURAL AND HIGHLY SUSPICIOU S. THERE ARE GRAVE DOUBTS IN THE STORY PROPOUNDED BY THE ASSESSEE BEFORE THE AUTHORITI ES BELOW. BANKING DOCUMENTS ARE MERE SELF-SERVING RECITALS. 9. THEREAFTER HE REFERRED TO A NUMBER OF JUDGMENTS RELATING TO HUMAN BEHAVIOR AND PREPONDERANCE OF HUMAN PROBABILITIES AND UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER BY RELYING ON WHAT HE CALLS RULES OF SUSPI CIOUS TRANSACTIONS. 10. THE ASSESSEE IN THIS CASE HAS FILED THE FOLLOWI NG EVIDENCE BEFORE THE ASSESSING OFFICER IN SUPPORT OF HIS CONTENTIONS:- A) COPIES OF BILLS, EVIDENCING PURCHASE OF SHARES B) COPIES OF CONTRACT NOTES OF SALE OF SHARES C) BANK STATEMENT COPIES D) COPY OF LEDGER A/C OF BROKER E) DEMAT STATEMENT ETC. THE ASSESSING OFFICER HAS JUST RELIED ON GENERAL OB SERVATIONS. NO EVIDENCE WAS CONTROVERTED BY THE ASSESSING OFFICER. 11. THE KOLKATA BENCH OF THE ITAT IN A NUMBER OF DE CISIONS HAVE, ON SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, DECIDED THE ISSUE IN FAV OUR OF THE ASSESSEE. WE LIST SOME OF THESE DECISIONS:- SHRI GAUTAM KUMAR PINCHA VS. ITO, ITA NO. 569/KOL/2 017, DT. 15/11/2017 ITO VS. SHRI SHALEEN KHEMANI, ITA NO. 1945/KOL/201 4, DT. 18/10/2017 MAHENDRA KUMAR BAID VS. ACIT, CIRCLE-35; ITA NO. 12 37/KOL/2017; ORDER DT. 18/08/2017 KIRAN KOTHARI HUF VS. ITO, ITA NO. 443/KOL/2017, OR DER DT. 15/11/2017 THE HONBLE JURISDICTIONAL HIGH COURT ON SIMILAR FA CTS, HAD IN THE FOLLOWING CASES, UPHELD THE CLAIM OF THE ASSESSEE:- CIT VS. SHREYASHI GANGULI (ITA NO. 196 OF 2012) (CA L HC) 2012 (9) TMI 1113 CIT VS. RUNGTA PROPERTIES PRIVATE LIMITED (ITA NO. 105 OF 2016) (CAL HC)DT. 08/05/2017 CIT VS. BHAGWATI PRASAD AGARWAL (2009 TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.04.2009 9 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. 11. RECENTLY, THE KOLKATA C BENCH OF THE TRIBUNAL IN THE CASE OF NAVNEET AGARWAL,-VS- ITO, WARD-35(3), KOLKATA; I.T.A. NO. 2281/KOL/2017; ASSESSMENT YEAR: 2014-15, WHILE DEALING WITH IDENTICAL ISSUE OF SALE OF SHARES OF M/S . CRESSENDA SOLUTIONS PVT. LTD., DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY RELYING UPON A PLETHORA OF JUDGMENTS OF VARIOUS COURTS. IT HELD AS FOLLOWS:- 12. THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A ) HAVE REJECTED THESE EVIDENCES FILED BY THE ASSESSEE BY REFERRING TO MODUS OPERANDI OF PERSON S FOR EARNING LONG TERM CAPITAL GAINS WHICH HIS EXEMPT FROM INCOME TAX. ALL THESE OBSERV ATIONS ARE GENERAL IN NATURE AND ARE APPLIED ACROSS THE BOARD TO ALL THE 60,000 OR MORE ASSESSEES WHO FALL IN THIS CATEGORY. SPECIFIC EVIDENCES PRODUCED BY THE ASSESSEE ARE NOT CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVIDENCE COLLECTED FROM THIRD PARTIES IS CONFRON TED TO THE ASSESSES. NO OPPORTUNITY OF CROSS-EXAMINATION OF PERSONS, ON WHOSE STATEMENTS T HE REVENUE RELIES TO MAKE THE ADDITION, IS PROVIDED TO THE ASSESSEE. THE ADDITION IS MADE B ASED ON A REPORT FROM THE INVESTIGATION WING. 13. THE ISSUE FOR CONSIDERATION BEFORE US IS WHETHE R, IN SUCH CASES, THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUIDE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILITIES, H UMAN BEHAVIOR AND DISCOVERY OF THE MODUS OPERANDI ADOPTED IN EARNING ALLEGED BOGUS LT CG AND STCG, THAT HAVE SURFACED DURING INVESTIGATIONS, SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCLUSION AS TO WHETHER THE CLAIM IN 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 ALLEGI NG SO, THAT THIS ASSESSEE IN QUESITON WAS PART OF THIS SCAM. THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESEES ACTION GIVING HER INVOLVEMENT IN THE SCAM SHOULD BE ESTABLISHED. THE ALLEGATION IMPLY THAT CASH WAS PAID BY THE ASSESSEE AND IN RETURN THE ASSESSEE RECEIVED LT CG, WHICH IS INCOME EXEMPT FROM INCOME TAX, BY WAY OF CHEQUE THROUGH BANKING CHANNELS. THI S ALLEGATION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVEN UE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIGATIONS OFFICE BY WAY OF STATEMENTS RECORDE D ETC. HAS TO ALSO BE BROUGHT ON RECORD IN EACH CASE, WHEN SUCH A STATEMENT, EVIDENCE ETC. IS RELIED UPON BY THE REVENUE TO MAKE ANY ADDITIONS. OPPORTUNITY OF CROSS EXAMINATION HAS TO BE PROVIDED TO THE ASSESSEE, IF THE AO RELIES ON ANY STATEMENTS OR THIRD PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATERIAL OR EVIDENCE IS SOUGHT TO BE RELIED UPON BY THE AO, 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 BEHAVIOR BY THE DEPARTMENT. 14. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PUT BEFORE HIM AND HE IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CASE, THE AO RELIES ONLY ON A REPORT AS THE BASIS FOR THE ADDITION. THE EVIDENCE BASED ON WHICH THE DDIT REPORT IS PREPARED IS NOT BROUGHT ON RECORD BY THE AO NOR IS IT PUT BEFORE THE ASSESSEE. THE SUBMISSION O F THE ASSESSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RECEIVED SOME TIPS AND SHE CHOSE TO INVE ST BASED ON THESE MARKET TIPS AND HAD TAKEN A CALCULATED RISK AND HAD GAINED IN THE PROCE SS AND THAT SHE IS NOT PARTY TO THE SCAM ETC., HAS TO BE CONTROVERTED BY THE REVENUE WITH EV IDENCE. WHEN A PERSON CLAIMS THAT SHE HAS DONE THESE TRANSACTIONS IN A BONA FIDE AND GENU INE MANNER AND WAS BENEFITTED, ONE CANNOT REJECT THIS SUBMISSION BASED ON SURMISES AND CONJECTURES. AS THE REPORT OF INVESTIGATION WING SUGGESTS, THERE ARE MORE THAN 60 ,000 BENEFICIARIES OF LTCG. EACH CASE HAS TO BE ASSESSED BASED ON LEGAL PRINCIPLES OF LEG AL IMPORT LAID DOWN BY THE COURTS OF LAW. 15. IN OUR VIEW MODUS OPERANDI, GENERALISATION, PRE PONDERANCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTING THE CLAIM OF THE ASSESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CONTROVERT THE VALIDITY AND CO RRECTNESS OF THE DOCUMENTARY EVIDENCES 10 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. PRODUCED, THE SAME CANNOT BE REJECTED BY THE ASSESS EE. THE HON'BLE SUPREME COURT IN THE CASE OF OMAR SALAV MOHAMED SAIT REPORTED IN (1959) 37 ITR 151 (S C) HAD HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF SURMISES, SUSP ICION AND CONJECTURES. IN THE CASE OF CIT(CENTRAL), KOLKATA VS. DAULAT RAM RAWATMULL REPO RTED IN 87 ITR 349, THE HON'BLE SUPREME COURT HELD THAT, THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO. THE BURDEN OF PROVING A TRA NSACTION TO BE BOGUS HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNERRINGLY AND REASONABLY RA ISING AN INTERFERENCE TO THAT EFFECT. THE HON'BLE SUPREME COURT IN THE CASE OF UMACHARAN SHAH & BROS. VS. CIT 37 ITR 271 HELD THAT SUSPICION HOWEVER STRONG, CANNOT TAKE THE PLACE OF EVIDENCE. 16. WE FIND THAT THE ASSESSING OFFICER AS WELL AS T HE LD. CIT(A) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER WE DO NOT FIND THAT, THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A), HAVE BROUGHT OUT ANY PART OF THE INVESTIGATION WING REPORT IN WH ICH THE ASSESSEE HAS BEEN INVESTIGATED AND /OR FOUND TO BE A PART OF ANY ARRANGEMENT FOR T HE PURPOSE OF GENERATING BOGUS LONG TERM CAPITAL GAINS. NOTHING HAS BEEN BROUGHT ON REC ORD TO SHOW THAT THE PERSONS INVESTIGATED, INCLUDING ENTRY OPERATORS OR STOCK BR OKERS, HAVE NAMED THAT THE ASSESSEE WAS IN COLLUSION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LINK THEIR WRONG DOINGS WITH THE ASSESSEE. IN FACT THE INVESTIGATION WING IS A SEPARATE DEPARTMENT WHICH HAS NOT BEEN ASSIGNED ASSESSMENT WORK AND HAS BEEN DELE GATED THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VESTED WIDEST POWERS ON THIS WING. IT IS THE DUTY OF THE INVESTIGATION WING TO CONDUCT PROPER AND DETAILED I NQUIRY IN ANY MATTER WHERE THERE IS ALLEGATION OF TAX EVASION AND AFTER MAKING PROPER I NQUIRY AND COLLECTING PROPER EVIDENCES THE MATTER SHOULD BE SENT TO THE ASSESSMENT WING TO ASSESS THE INCOME AS PER LAW. WE FIND NO SUCH ACTION EXECUTED BY INVESTIGATION WING AGAIN ST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALLY AGAINST THE ASSESSEE IN THE IN VESTIGATION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUILTY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CASE, IN OUR VIEW, THE ASSESSING OFFICER AT BEST CO ULD HAVE CONSIDERED THE INVESTIGATION REPORT AS A STARTING POINT OF INVESTIGATION. THE RE PORT ONLY INFORMED THE ASSESSING OFFICER THAT SOME PERSONS MAY HAVE MISUSED THE SCRIPT FOR T HE PURPOSE OF COLLUSIVE TRANSACTION. THE ASSESSING OFFICER WAS DUTY BOUND TO MAKE INQUIRY FR OM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION AND THEN TO COLLECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. WE, HOWEVER, FIND THAT 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 DOCUMENTS ARE COLLUSIVE TRANSACTIONS. 17. THE HONBLE SUPREME COURT WAY BACK IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT [1959] 37 ITR 288 (SC) HELD THAT ASSESSMENT COU LD NOT BE BASED ON BACKGROUND OF SUSPICION AND IN ABSENCE OF ANY EVIDENCE TO SUPPORT THE SAME. THE HONBLE COURT HELD: ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGH ED WITH THE INCOME-TAX OFFICER WE MAY OBSERVE THAT THE NOTORIETY FOR SMUGGLING FOOD GRAIN S AND OTHER COMMODITIES TO BENGAL BY COUNTRY BOATS ACQUIRED BY SAHIBGUNJ AND THE NOTORIE TY ACHIEVED BY DHULIAN AS A GREAT RECEIVING CENTRE FOR SUCH COMMODITIES WERE MERELY A BACKGROUND OF SUSPICION AND THE APPELLANT COULD NOT BE TARRED WITH THE SAME BRUSH A S EVERY ARHATDAR AND GRAIN MERCHANT WHO MIGHT HAVE BEEN INDULGING IN SMUGGLING OPERATIO NS, WITHOUT AN IOTA OF EVIDENCE IN THAT BEHALF. THE CANCELLATION OF THE FOOD GRAIN LICENCE AT NAWGACHIA AND THE PROSECUTION OF THE APPELLANT UNDER THE DEFENCE OF INDIA RULES WAS ALSO OF NO CONSEQUENCE INASMUCH AS THE APPELLANT WAS ACQUITTED OF THE OFFENCE WITH WHICH I T HAD BEEN CHARGED AND ITS LICENCE ALSO WAS RESTORED. THE MERE POSSIBILITY OF THE APPELLANT EARNING CONSIDERABLE AMOUNTS IN THE YEAR UNDER CONSIDERATION WAS A PURE CONJECTURE ON T HE PART OF THE INCOME-TAX OFFICER AND THE FACT THAT THE APPELLANT INDULGED IN SPECULATION (IN KALAI ACCOUNT) COULD NOT LEGITIMATELY 11 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. LEAD TO THE INFERENCE THAT THE PROFIT IN A SINGLE T RANSACTION OR IN A CHAIN OF TRANSACTIONS COULD EXCEED THE AMOUNTS, INVOLVED IN THE HIGH DENO MINATION NOTES,---THIS ALSO WAS A PURE CONJECTURE OR SURMISE ON THE PART OF THE INCOME-TAX OFFICER. AS REGARDS THE DISCLOSED VOLUME OF BUSINESS IN THE YEAR UNDER CONSIDERATION IN THE HEAD OFFICE AND IN BRANCHES THE INCOME- TAX OFFICER INDULGED IN SPECULATION WHEN HE TALKED OF THE POSSIBILITY OF THE APPELLANT EARNING A CONSIDERABLE SUM AS AGAINST WHICH IT SHOWED A NET LOSS OF ABOUT RS. 45,000. THE INCOME- TAX OFFICER INDICATED THE PROBABLE SOURCE OR SOURCE S FROM WHICH THE APPELLANT COULD HAVE EARNED A LARGE AMOUNT IN THE SUM OF RS. 2,91,000 BU T THE CONCLUSION WHICH HE ARRIVED AT IN REGARD TO THE APPELLANT HAVING EARNED THIS LARGE AM OUNT DURING THE YEAR AND WHICH ACCORDING TO HIM REPRESENTED THE SECRETED PROFITS O F THE APPELLANT IN ITS BUSINESS WAS THE RESULT OF PURE CONJECTURES AND SURMISES ON HIS PART AND HAD NO FOUNDATION IN FACT AND WAS NOT PROVED AGAINST THE APPELLANT ON THE RECORD OF T HE PROCEEDINGS. IF THE CONCLUSION OF THE INCOME-TAX OFFICER WAS THUS EITHER PERVERSE OR VITI ATED BY SUSPICIONS, CONJECTURES OR SURMISES, THE FINDING OF THE TRIBUNAL WAS EQUALLY P ERVERSE OR VITIATED IF THE TRIBUNAL TOOK COUNT OF ALL THESE PROBABILITIES AND WITHOUT ANY RH YME OR REASON AND MERELY BY A RULE OF THUMB, AS IT WERE, CAME TO THE CONCLUSION THAT THE POSSESSION OF 150 HIGH DENOMINATION NOTES OF RS. 1,000 EACH WAS SATISFACTORILY EXPLAINE D BY THE APPELLANT BUT NOT THAT OF THE BALANCE OF 141 HIGH DENOMINATION NOTES OF RS. 1,000 EACH. THE OBSERVATIONS OF THE HONBLE APEX COURT ARE EQUA LLY APPLICABLE TO THE CASE OF THE ASSESSEE. IN OUR VIEW THE ASSESSING OFFICER HAVING FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE TRANSACTION OF THE ASSESSEE WAS A CO LLUSIVE TRANSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. I N FACT IN THIS CASE NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT EVIDENC ES OR MATERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BEING INVESTIGATED BY VARIOUS WI NGS OF THE INCOME TAX DEPARTMENT HENCE IN OUR VIEW UNDER THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE. 18. WE NOW CONSIDER THE VARIOUS PROPOSITIONS OF LAW LAID DOWN BY THE COURTS OF LAW. THAT CROSS-EXAMINATION IS ONE PART OF THE PRINCIPLES OF NATURAL JUSTICE HAS BEEN LAID DOWN IN THE FOLLOWING JUDGMENTS: A) AYAAUBKHAN NOORKHAN PATHAN VS. THE STATE OF MAHA RASHTRA AND ORS. 23. A CONSTITUTION BENCH OF THIS COURT IN STATE OF M.P. V. CHINTAMAN SADASHIVA VAISHAMPAYAN AIR 1961 SC 1623, HELD THAT THE RULES OF NATURAL JUSTICE, REQUIRE THAT A PARTY MUST BE GIVEN THE OPPORTUNITY TO ADDUCE ALL RELEVAN T EVIDENCE UPON WHICH HE RELIES, AND FURTHER THAT, THE EVIDENCE OF THE OPPOSITE PARTY SH OULD BE TAKEN IN HIS PRESENCE, AND THAT HE SHOULD BE GIVEN THE OPPORTUNITY OF CROSS-EXAMINING THE WITNESSES EXAMINED BY THAT PARTY. NOT PROVIDING THE SAID OPPORTUNITY TO CROSS-EXAMINE WITNESSES, WOULD VIOLATE THE PRINCIPLES OF NATURAL JUSTICE. (SEE ALSO: UNION OF INDIA V. T. R. VARMA, AIR 1957 SC 882; MEENGLAS TEA ESTATE V. WORKMEN, AIR 1963 SC 1719; M/S. KESORAM C OTTON MILLS LTD. V. GANGADHAR AND ORS. ,AIR 1964 SC 708; NEW INDIA ASSURANCE CO. LTD. V. NUSLI NEVILLE WADIA AND ANR. AIR 2008 SC 876; RACHPAL SINGH AND ORS. V. GURMIT SINGH AND ORS. AIR 2009 SC 2448; BIECCO LAWRIE AND ANR. V. STATE OF WEST BENGAL AND ANR. AI R 2010 SC 142; AND STATE OF UTTAR PRADESH V. SAROJ KUMAR SINHA AIR 2010 SC 3131). 24. IN LAKSHMAN EXPORTS LTD. V. COLLECTOR OF CENTRA L EXCISE (2005) 10 SCC 634, THIS COURT, WHILE DEALING WITH A CASE UNDER THE CENTRAL EXCISE ACT, 1944, CONSIDERED A SIMILAR ISSUE I.E. PERMISSION WITH RESPECT TO THE CROSS-EXAMINATION OF A WITNESS. IN THE SAID CASE, THE ASSESSEE HAD SPECIFICALLY ASKED TO BE ALLOWED TO CROSS-EXAMI NE THE REPRESENTATIVES OF THE FIRMS CONCERN, TO ESTABLISH THAT THE GOODS IN QUESTION HA D BEEN ACCOUNTED FOR IN THEIR BOOKS OF ACCOUNTS, AND THAT EXCISE DUTY HAD BEEN PAID. THE C OURT HELD THAT SUCH A REQUEST COULD NOT 12 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. BE TURNED DOWN, AS THE DENIAL OF THE RIGHT TO CROS S-EXAMINE, WOULD AMOUNT TO A DENIAL OF THE RIGHT TO BE HEARD I.E. AUDI ALTERAM PARTEM. 28. THE MEANING OF PROVIDING A REASONABLE OPPORTUNI TY TO SHOW CAUSE AGAINST AN ACTION PROPOSED TO BE TAKEN BY THE GOVERNMENT, IS THAT THE GOVERNMENT SERVANT IS AFFORDED A REASONABLE OPPORTUNITY TO DEFEND HIMSELF AGAINST TH E CHARGES, ON THE BASIS OF WHICH AN INQUIRY IS HELD. THE GOVERNMENT SERVANT SHOULD BE G IVEN AN OPPORTUNITY TO DENY HIS GUILT AND ESTABLISH HIS INNOCENCE. HE CAN DO SO ONLY WHEN HE IS TOLD WHAT THE CHARGES AGAINST HIM ARE. HE CAN THEREFORE, DO SO BY CROSS-EXAMINING THE WITNESSES PRODUCED AGAINST HIM. THE OBJECT OF SUPPLYING STATEMENTS IS THAT, THE GOVERNM ENT SERVANT WILL BE ABLE TO REFER TO THE PREVIOUS STATEMENTS OF THE WITNESSES PROPOSED TO BE EXAMINED AGAINST HIM. UNLESS THE SAID STATEMENTS ARE PROVIDED TO THE GOVERNMENT SERVANT, HE WILL NOT BE ABLE TO CONDUCT AN EFFECTIVE AND USEFUL CROSS-EXAMINATION. 29. IN RAJIV ARORA V. UNION OF INDIA AND ORS. AIR 2 009 SC 1100, THIS COURT HELD: EFFECTIVE CROSS-EXAMINATION COULD HAVE BEEN DONE AS REGARDS T HE CORRECTNESS OR OTHERWISE OF THE REPORT, IF THE CONTENTS OF THEM WERE PROVED. THE PR INCIPLES ANALOGOUS TO THE PROVISIONS OF THE INDIAN EVIDENCE ACT AS ALSO THE PRINCIPLES OF N ATURAL JUSTICE DEMAND THAT THE MAKER OF THE REPORT SHOULD BE EXAMINED, SAVE AND EXCEPT IN C ASES WHERE THE FACTS ARE ADMITTED OR THE WITNESSES ARE NOT AVAILABLE FOR CROSS-EXAMINATION O R SIMILAR SITUATION. THE HIGH COURT IN ITS IMPUGNED JUDGMENT PROCEEDED TO CONSIDER THE ISSUE O N A TECHNICAL PLEA, NAMELY, NO PREJUDICE HAS BEEN CAUSED TO THE APPELLANT BY SUCH NON-EXAMINATION. IF THE BASIC PRINCIPLES OF LAW HAVE NOT BEEN COMPLIED WITH OR THERE HAS BEE N A GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE HIGH COURT SHOULD HAVE EXERCIS ED ITS JURISDICTION OF JUDICIAL REVIEW. 30. THE AFORESAID DISCUSSION MAKES IT EVIDENT THAT, NOT ONLY SHOULD THE OPPORTUNITY OF CROSS- EXAMINATION BE MADE AVAILABLE, BUT IT SHOULD BE ONE OF EFFECTIVE CROSS-EXAMINATION, SO AS TO MEET THE REQUIREMENT OF THE PRINCIPLES OF NATURAL J USTICE. IN THE ABSENCE OF SUCH AN OPPORTUNITY, IT CANNOT BE HELD THAT THE MATTER HAS BEEN DECIDED IN ACCORDANCE WITH LAW, AS CROSS-EXAMINATION IS AN INTEGRAL PART AND PARCEL OF THE PRINCIPLES OF NATURAL JUSTICE. B) ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF C . EX., KOLKATA-II WHEREIN IT WAS HELD THAT: 4. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COU NSEL APPEARING FOR THE ASSESSEE, AND MR. K. RADHAKRISHNAN, LEARNED SENIOR COUNSEL WHO APPEARED FOR THE REVENUE. 5. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE OR DER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EV EN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-E XAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOUL D BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOW EVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY TH E ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF TH IS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAI D DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE AP PELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT F OR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. 13 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. 6. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR T ESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT AP ART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEP OT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSE LF COULD BE THE SUBJECT MATTER OF CROSS- EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICA TING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATIO N AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCC ASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJEC TING THE SUBMISSIONS. 7. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTM ENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO W ITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE NOTICE. 19. ON SIMILAR FACTS WHERE THE REVENUE HAS ALLEGED THAT THE ASSESSEE HAS DECLARED BOGUS LTCG, IT WAS HELD AS FOLLOWS: A) THE CALCUTTA HIGH COURT IN THE CASE OF BLB CABL ES & CONDUCTORS [ITA NO. 78 OF 2017] DATED 19.06.2018. THE HIGH COURT HELD VIDE PA RA 4.1: 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 BOGU S, THERE HAS TO BE SOME CONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SU PPORTIVE EVIDENCE. HERE IN THE CASE THE TRANSACTIONS OF THE COMMODITY EXCHANGED HAVE NOT ON LY BEEN EXPLAINED BUT ALSO SUBSTANTIATED FROM THE CONFIRMATION OF THE PARTY. B OTH THE PARTIES ARE CONFIRMING THE TRANSACTIONS WHICH HAVE BEEN DULY SUPPORTED WITH TH E BOOKS OF ACCOUNTS AND BANK TRANSACTIONS. THE LD. AR HAS ALSO SUBMITTED THE BOA RD RESOLUTION FOR THE TRADING OF COMMODITY TRANSACTION. THE BROKER WAS EXPELLED FROM THE COMMODITY EXCHANGE CANNOT BE THE CRITERIA TO HOLD THE TRANSACTION AS BOGUS. IN V IEW OF ABOVE, WE REVERSE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE COMMON GROUNDS OF A SSESSEES APPEAL. [ QUOTED VERBATIM ] THIS IS ESSENTIALLY A FINDING OF THE TRIBUNAL ON FA CT. NO MATERIAL HAS BEEN SHOWN TO US WHO WOULD NEGATE THE TRIBUNALS FINDING THAT OFF MARKET TRANSACTIONS ARE NOT PROHIBITED. AS REGARDS VERACITY OF THE TRANSACTIONS, THE TRIBUNAL HAS COME TO ITS CONCLUSION ON ANALYSIS OF RELEVANT MATERIALS. THAT BEING THE POSITION, TRIBUN AL HAVING ANALYZED THE SET OF FACTS IN COMING TO ITS FINDING, WE DO NOT THINK THERE IS ANY SCOPE OF INTERFERENCE WITH THE ORDER OF THE TRIBUNAL IN EXERCISE OF OUR JURISDICTION UNDER SECT ION 260A OF THE INCOME TAX ACT, 1961. NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APP EAL. THE APPEAL AND THE STAY PETITION, ACCORDINGLY, SHALL STAND DISMISSED. B) THE JAIPUR ITAT IN THE CASE OF VIVEK AGARWAL [ ITA NO. 292/JP/2017] ORDER DATED 06.04.2018 HELD AS UNDER VIDE PAGE 9 PARA 3: WE HOLD THAT THE ADDITION MADE BY THE AO IS MERELY BASED ON SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO CONTROVERT THE EVIDE NCE FILED BY THE ASSESSEE IN SUPPORT OF THE CLAIM. FURTHER, THE AO HAS ALSO FAILED TO ESTAB LISH THAT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITA L GAIN. HENCE WE DELETE THE ADDITION MADE BY THE AO ON THIS ACCOUNT. C) THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PREM PAL GANDHI [ITA-95- 2017 (O&M)] DATED 18.01.2018 AT VIDE PAGE 3 PARA 4 HELD AS UNDER: 14 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. .. THE ASSESSING OFFICER IN BOTH THE CASES ADDED THE APPRECIATION TO THE ASSESSEES INCOME ON THE SUSPICION THAT THESE WERE FICTITIOUS TRANSAC TIONS AND THAT THE APPRECIATION ACTUALLY REPRESENTED THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. IN ITA-18-2017 ALSO THE CIT (APPEALS) AND THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT PRODUCED ANY EVIDENCE WHATSOEVER IN SUPPORT OF THE SUSPICION. ON THE OTHE R HAND, ALTHOUGH THE APPRECIATION IS VERY HIGH, THE SHARES WERE TRADED ON THE NATIONAL STOCK EXCHANGE AND THE PAYMENTS AND RECEIPTS WERE ROUTED THROUGH THE BANK. THERE WAS NO EVIDENCE TO INDICATE FOR INSTANCE THAT THIS WAS A CLOSELY HELD COMPANY AND THAT THE TRADIN G ON THE NATIONAL STOCK EXCHANGE WAS MANIPULATED IN ANY MANNER. THE COURT ALSO HELD THE FOLLOWING VIDE PAGE 3 PARA 5 THE FOLLOWING: QUESTION (IV) HAS BEEN DEALT WITH IN DETAIL BY THE CIT (APPEALS) AND THE TRIBUNAL. FIRSTLY, THE DOCUMENTS ON WHICH THE ASSESSING OFFICER RELIED UPON IN THE APPEAL WERE NOT PUT TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE CIT (APPEALS) NEVERTHELESS CONSIDERED THEM IN DETAIL AND FOUND THAT THERE WAS NO CO-RELAT ION BETWEEN THE AMOUNTS SOUGHT TO BE ADDED AND THE ENTRIES IN THOSE DOCUMENTS. THIS WAS ON AN APPRECIATION OF FACTS. THERE IS NOTHING TO INDICATE THAT THE SAME WAS PERVERSE OR I RRATIONAL. ACCORDINGLY, NO QUESTION OF LAW ARISES. D) THE BENCH D OF KOLKATA ITAT IN THE CASE OF G AUTAM PINCHA [ITA NO.569/KOL/2017] ORDER DATED 15.11.2017 HELD AS UN DER VIDE PAGE 12 PARA 8.1: IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I TO XI V) IN PARA 6(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASS ESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAND AND THEREFO RE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS SUPPORTED WITH MA TERIAL EVIDENCES WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT (A) . WE NOTE THAT IN THE ABSENCE OF MATERIAL/EVIDENCE THE ALLEGATIONS THAT THE ASSESSEE /BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE ALSO FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDEN CE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUI NENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG T ERM CAPITAL GAIN. THESE EVIDENCES WERE NEITHER FOUND BY THE AO NOR BY THE LD. CIT (A) TO B E FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENC E CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSE E THAT INCOME FROM LTCG IS EXEMPTED U/S 10(38) OF THE ACT. FURTHER IN PAGE 15 PARA 8.5 OF THE JUDGMENT, IT HEL D: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY BEEN INCO RPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED BY US TO ARRI VE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT TH E IMPUGNED DECISION OF THE LD. CIT (A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE, THERE FORE, DIRECT THE AO TO DELETE THE ADDITION. E) THE BENCH D OF KOLKATA ITAT IN THE CASE OF KI RAN KOTHARI HUF [ ITA NO. 443/KOL/2017 ] ORDER DATED 15.11.2017 HELD VIDE PARA 9.3 HELD AS UNDER: .. WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE M ATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS L EVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAN D AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS WHIC H ARE SUPPORTED WITH MATERIAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND C OULD ONLY RELY ON THE ORDERS OF THE 15 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. AO/CIT(A). WE NOTE THAT THE ALLEGATIONS THAT THE AS SESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE CONSE QUENTLY FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVAN T EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE TH E GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTI NG 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. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT O F 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 ASS ESSEE EXEMPTED U/S 10(38) OF THE ACT 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. IT FURTHER HELD AS FOLLOWS: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY BEEN INCO RPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IM PUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEED S OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. F) THE BENCH A OF KOLKATA ITAT IN THE CASE OF SH ALEEN KHEMANI [ITA NO. 1945/KOL/2014] ORDER DATED 18.10.2017 HELD AS UNDE R VIDE PAGE 24 PARA 9.3: WE THEREFORE HOLD THAT THERE IS ABSOLUTELY NO ADVE RSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGATIONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION, HAS NO LEGS TO STA ND IN THE EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE ARGUMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON THE ORDERS OF THE LD AO . WE FIND THAT THE ALLEGATION THAT THE ASSESSEE AND / OR BROKERS GETTING INVOLVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE FURNISHED ALL EV IDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO PURCHASE AND SALE OF SHARES RESULTING I N LTCG. THESE EVIDENCES WERE NEITHER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE F ACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THERE FORE THE LD AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER S ECTION 10(38) OF THE ACT. G) THE BENCH H OF MUMBAI ITAT IN THE CASE OF ARV IND KUMAR JAIN HUF [ITA NO.4682/MUM/2014] ORDER DATED 18.09.2017 HELD AS UN DER VIDE PAGE 6 PARA 8: WE FOUND THAT AS FAR AS INITIATION OF INVESTIGAT ION OF BROKER IS CONCERNED, THE ASSESSEE IS NO WAY CONCERNED WITH THE ACTIVITY OF THE BROKER. D ETAILED FINDING HAS BEEN RECORDED BY CIT (A) TO THE EFFECT THAT ASSESSEE HAS MADE INVESTMENT IN SHARES WHICH WAS PURCHASED ON THE FLOOR OF STOCK EXCHANGE AND NOT FROM M/S BASANT PER IWAL AND CO. AGAINST PURCHASES PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE, DELI VERY OF SHARES WERE TAKEN, CONTRACT OF SALE WAS ALSO COMPLETE AS PER THE CONTRACT ACT, THEREFORE, THE ASSESSEE IS NOT CONCERNED WITH ANY WAY OF THE BROKER. NOWHERE THE AO HAS ALLE GED THAT THE TRANSACTION BY THE ASSESSEE WITH THESE PARTICULAR BROKER OR SHARE WAS BOGUS, MERELY BECAUSE THE INVESTIGATION WAS DONE BY SEBI AGAINST BROKER OR HIS ACTIVITY, AS SESSEE CANNOT BE SAID TO HAVE ENTERED INTO INGENUINE TRANSACTION, INSOFAR AS ASSESSEE IS NOT CONCERNED WITH THE ACTIVITY OF THE BROKER AND HAVE NO CONTROL OVER THE SAME. WE FOUND THAT M/S BASANT PERIWAL AND CO. NEVER STATED ANY OF THE AUTHORITY THAT TRANSACTIONS IN M/ S RAMKRISHNA FINCAP PVT. LTD. ON THE FLOOR OF THE STOCK EXCHANGE ARE INGENUINE OR MERE A CCOMMODATION ENTRIES. THE CIT (A) AFTER 16 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. RELYING ON THE VARIOUS DECISION OF THE COORDINATE B ENCH, WHEREIN ON SIMILAR FACTS AND CIRCUMSTANCES, ISSUE WAS DECIDED IN FAVOUR OF THE A SSESSEE, CAME TO THE CONCLUSION THAT TRANSACTION ENTERED BY THE ASSESSEE WAS GENUINE. DE TAILED FINDING RECORDED BY CIT (A) AT PARA 3 TO 5 HAS NOT BEEN CONTROVERTED BY THE DEPART MENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON T O INTERFERE IN THE FINDINGS OF CIT (A). H) THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VIVEK MEHTA [ITA NO. 894 OF 2010] ORDER DATED 14.11.2011 VIDE PAGE 2 PARA 3 HELD AS UNDER: ON THE BASIS OF THE DOCUMENTS PRODUCED BY THE ASSESS EE IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEAL) RECORDED A FINDING OF FACT THAT TH ERE WAS A GENUINE TRANSACTION OF PURCHASE OF SHARES BY THE ASSESSEE ON 16.3.2001 AND SALE THEREOF ON 21.3.2002. THE TRANSACTIONS OF SALE AND PURCHASE WERE AS PER THE VA LUATION PREVALENT IN THE STOCKS EXCHANGE. SUCH FINDING OF FACT HAS BEEN RECORDED ON T HE BASIS OF EVIDENCE PRODUCED ON RECORD. THE TRIBUNAL HAS AFFIRMED SUCH FINDING. SUCH F INDING OF FACT IS SOUGHT TO BE DISPUTED IN THE PRESENT APPEAL. WE DO NOT FIND THAT TH E FINDING OF FACT RECORDED BY THE COMMISSIONER OF INCOME TAX IN APPEAL, GIVES GIVE RI SE TO ANY QUESTION(S) OF LAW AS SOUGHT TO BE RAISED IN THE PRESENT APPEAL. HENCE, THE PRESE NT APPEAL IS DISMISSED. I) THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT I N THE CASE OF CIT VS. BHAGWATI PRASAD AGARWAL IN I.T.A. NO. 22/KOL/2009 DATED 29.04.2009 AT PARA 2 HELD AS FOLLOWS: THE TRIBUNAL FOUND THAT THE CHAIN OF TRANSACTION ENT ERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTED BY EVID ENCE. THE ASSESSEE PRODUCED BEFORE THE COMMISSIONER OF INCOME TAX(APPEAL) THE C ONTRACT NOTES, DETAILS OF HIS DEMAT ACCOUNT AND, ALSO, PRODUCED DOCUMENTS SHOWING THAT ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANK. J) THE HONBLE SUPREME COURT IN THE CASE OF PCIT VS . TEJU ROHITKUMAR KAPADIA ORDER DATED 04.05.2018 UPHELD THE FOLLOWING PROPOSITION OF LAW LAID DOWN BY THE HONBLE GUJARAT HIGH COURT AS UNDER: IT CAN THUS BE SEEN THAT THE APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL CAME TO CONCURRENT CONCLUSION THAT THE PURCHASES ALREADY MADE BY THE ASSESSEE FROM RAJ IMPEX WERE DULY SUPPORTED BY BILLS AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE. RAJ IMPACTS ALSO CONFIRMED THE TRANSACTIONS. THERE WAS N O EVIDENCE TO SHOW THAT THE AMOUNT WAS RECYCLED BACK TO THE ASSESSEE. PARTICULARLY, WHE N IT WAS FOUND THAT THE ASSESSEE THE TRADER HAD ALSO SHOWN SALES OUT OF PURCHASES MADE FROM RAJ IMPEX WHICH WERE ALSO ACCEPTED BY THE REVENUE, NO QUESTION OF LAW ARISES. 20. APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE ABOVE JUDGMENTS TO THE FACTS OF THIS CASE WE ARE BOUND TO CONSIDER AND RELY ON THE EV IDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM AND BASE OUR DECISION ON SUCH EVIDENCE AND NOT ON SUSPICION OR PREPONDERANCE OF PROBABILITIES. NO MATERIAL WAS BROU GHT ON RECORD BY THE AO TO CONTROVERT THE EVIDENCE FURNISHED BY THE ASSESSEE. U NDER THESE CIRCUMSTANCES, WE ACCEPT THE EVIDENCE FILED BY THE ASSESSEE AND ALLOW TH E CLAIM THAT THE INCOME IN QUESTION IS LONG TERM CAPITAL GAIN FROM SALE OF SHARES AND HE NCE EXEMPT FROM INCOME TAX. 12. CONSISTENT WITH THE VIEW TAKEN THEREIN, AS THE FACTS AND CIRCUMSTANCES OF THIS CASE ARE SAME AS THE FACTS AND CIRCUMSTANCES OF THE CASE S OF NAVNEET AGARWAL (SUPRA), WE DELETE THE ADDITION MADE U/S 68 OF THE ACT, ON ACCOUNT OF SALE OF SHARES IN THE CASE OF BOTH THE ASSESSEES. THE CONSEQUENTIAL ADDITION U/S 69C IS AL SO DELETED. ACCORDINGLY BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. 5. THE REVENUE FAILS TO INDICATE ANY SPECIFIC EVIDE NCE AGAINST THE ASSESSEE IN ABOVE TERMS QUA HIS LTCG DERIVED FROM TRANSFER OF SHARE IN JACKSON INVESTMENTS LTD. I THEREFORE 17 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. ADOPT THE ABOVE EXTRACTED REASONING MUTATIS MUTANDIS TO DELETE THE IMPUGNED BOGUS LTCG ADDITION OF 37,07,717/-. THIS LEAD APPEAL ITA 2235/KOL/2018 IN CASE OF ASSESSEE OMPRAKASH MUNDHRA IS ALLOWED. 8. IT IS NOTED THAT THE ISSUE OF LTCG ON SALE OF S CRIP OF M/S. JIL WAS CONSIDERED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL AND HAS DELETED T HE ADDITION IN THE CASE OF OMPRAKASH MUNDHRA & ORS (SUPRA) IN RESPECT OF SALE OF SHARES OF M/S JIL. I NOTE THAT IN THE CASE IN HAND THE ASSESSEE HAD PURCHASED 6,000 NUMBERS OF SHARES OF M/S. JIL ON 12.10.2011 AT A TOTAL CONSIDERATION OF RS.60,000/- FROM M/S. UTTAM COMMOD ITIES PVT. LTD. (COPY OF THE PURCHASE BILL, MONEY RECEIPT, SHARE TRANSFER ADVICE AND SHAR E CERTIFICATE ARE AVAILABLE IN THE PAPER BOOK AT PAGES 9 TO 13. THEREAFTER, IN THE RELEVAN T YEAR THE ASSESSEE SOLD 1500 SHARES @ RS.311/- ON 23.06.2014, 2000 SHARES @ RS.309/- ON 0 3.07.2014 AND 2500 SHARES @ RS.312/- THROUGH M/S. GUINESS SECURITIES LTD. WHICH IS A REG ISTERED BROKER AT THE BSE AND CLAIMED LTCG OF RS.17,91,918/-. CONTRACT NOTES IN CONNECTIO N WITH SALE OF SHARES ALONG WITH BANK STATEMENT REFLECTING THE RECEIPT OF SALE CONSIDERAT ION AND DEMAT STATEMENT WERE PRODUCED BEFORE THE LOWER AUTHORITIES AND ARE AVAILABLE IN T HE PAPER BOOK PAGE NOS. 14 TO 22. I NOTE THAT THE A.O. HAS NOWHERE IN THE ASSESSMENT ORDER R EFERRED TO ANY MATERIAL WHICH CAN PROVE THE COMPLICITY OF ASSESSEE EITHER IN THE PRICE RIGG ING OR IN THE ALLEGED ACCOMMODATION ENTRY OPERATION. NOTHING ON RECORD/ASSESSMENT ORDER COULD SHOW THAT ASSESSEE WAS CONNECTED WITH M/S. JACKSON INVESTMENTS LTD. OR THEIR PROMOTERS, D IRECTORS AND ANY OTHER PERSON WHO EXERCISES ANY CONTROL OVER M/S. JACKSON INVESTMENTS LTD. OR ANY SO CALLED ENTRY OPERATOR. OTHER THAN ADVERSE ASSUMPTIONS THERE IS NO EVIDENCE ON RECORD TO DISBELIEVE THAT THE ASSESSEE SOLD SHARES THROUGH REGISTERED SHARE AND S TOCK BROKER. THE ASSESSEE HAD PRODUCED ALL EVIDENCES TO EXPLAIN THE SOURCE OF THE AMOUNTS RECEIVED BY THE ASSESSEE FROM THE BROKERS AND TO CORROBORATE THE TRANSACTION IN QUESTION. THU S I AM OF THE OPINION IN THE FACTS DISCUSSED SUPRA, THE AO WAS NOT JUSTIFIED IN ASSESS ING THE SALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME. I, THEREFORE, RESPECTFULLY FOLL OWING THE ORDER OF COORDINATE BENCH IN OM PRAKASH MUNDHRA (SUPRA) AND THE FINDING OF FACTS AS STATED IN (SUPRA) AM INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NO T TO TREAT THE LONG TERM CAPITAL ON SALE OF SHARES OF M/S JIL AND ALSO THE COMMISSION EXPENSES AS BOGUS AND DELETE THE CONSEQUENTIAL ADDITIONS. THEREFORE, THE APPEAL OF ASSESSEE IS AL LOWED. 18 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. 9. COMING TO THE ITA NO. 1892/KOL/2018, I NOTE THE FACTS AND GROUNDS ARE IDENTICAL AND THE LD. DR FAILED TO BRING TO MY NOTICE ANY CHANGE IN FACTS OR LAW SO ON THE SAME REASONING THE SAID APPEAL OF ASSESSEE IN RESPECT OF HER CLAIM OF LTCG ON SALE OF SCRIP OF M/S. JIL NEED TO BE ALLOWED. 10. BEFORE WE PART, I WOULD LIKE TO DEAL WITH THE C ASE LAWS CITED BY LD. DR. THE LD. DR RELIED ON 23 JUDICIAL PRONOUNCEMENTS IN HIS SUPPORT . I NOTE THAT THE SAID JUDICIAL PRONOUNCEMENTS ARE ALL DISTINGUISHABLE ON FACTS AS WELL AS ON LAW. THE SAID DECISIONS ARE DEALT WITH HEREIN BELOW IN SERIATIM AS UNDER: 1. RATNAKAR M. PUJARI VS. ASSESSEE -ITA NO.995/MUM/201 2, ORDER DT. 3RD AUGUST, 2016 [AY 2006-07] -ITAT MUMBAI IN THIS CASE THE ITAT, MUMBAI BENCH WERE CONSIDERIN G A CASE WHERE THE PURCHASES OF SHARES WERE TREATED AS BOGUS AND SHAM TRANSACTIO NS BY THE REVENUE IN THE IMMEDIATELY PRECEDING FINANCIAL YEAR 2005-06 AND TH E SAID FINDINGS OF THE AO WITH RESPECT TO BOGUS AND SHAM PURCHASES WERE NOT CHALLE NGED BY THE ASSESSEE. IN SUCH FACTS OF THE CASE THE TRIBUNAL HAD TREATED THE EXEM PT LONG TERM CAPITAL GAINS ARISING ON SALES OF SHARES AS BOGUS AND SHAM. HOWEVER, THER E IS NO SUCH FINDING OF FACT IN THE INSTANT CASE AND THUS THE FACTS IN THE INSTANT CASE ARE DISTINGUISHABLE. IT WAS BROUGHT TO MY NOTICE THAT THE AFORESAID ORDE R OF ITAT, MUMBAI, INTER-ALIA, HAD BEEN DISTINGUISHED BY CO-ORDINATE BENCHES OF THE TR IBUNAL IN THE FOLLOWING CASES: A. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KO/2018, O RDER DT. 03.06.2019 (KOL, ITAT)] B. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) 2. RITU SANJAY MANTRY VS. ITO - ITA NO.2003/MUM/2017, ORDER DT. 9TH FEBRUARY, 2018 - ITAT MUMBAI IN THIS CASE IS THAT WAS REOPENED BY THE AO ON THE BASIS OF INFORMATION RECEIVED FROM OFFICE OF DGIT (C&IB), NEW DELHI THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRY FROM M/S. MAGASAGAR SECURITIES PVT. LTD. (A COMPAN Y IN THE MAHASAGAR SECURITIES PVT. LTD. GROUP SHARE SCAM CASE) OF RS.10,32,289/-. SUBSEQUENTLY THE ASSESSMENT WAS COMPLETED U/S. 147 R.W.S. 143(3) OF THE ACT AFTER M AKING AN ADDITION OF RS.10,39,289/- ON ACCOUNT OF BOGUS SHARE TRANSACTIO NS AND RS.20,786/- BEING 19 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. COMMISSION PAID TO THE BROKER FOR ARRANGING ACCOMMO DATION ENTRIES IN THE FORM OF SHARE TRANSACTIONS. THE AO HAD GIVEN A FINDING THAT THE ASSESSEE HAD TAKEN ENTRIES FROM MAHASAGAR SECURITIES PVT. LTD. INVOLVED IN THE SHARES SCAM CASE FOR RS.10,39,289/- FOR BOGUS SPECULATION PROFIT DURING THE FINANCIAL YEAR 2007 -08. IT WAS FURTHER FOUND BY THE AO THAT THE ASSESSEE HAS PAID CASH OF EQUIVALENT AMOUNT AND RECEIVED BACK BY CHEQUE AND BOGUS CONTRACT NOTES AN D BILLS FOR THE TRANSACTIONS NOT ACTUALLY ROOTED THROUGH STOCK EXCHANGE. IT IS NOTE D THAT THE ITAT, MUMBAI HAD RELIED UPON AND FOLLOWED THE JUDGMENT OF HON'BLE BO MBAY HIGH COURT IN SANJAY BIMALCHAND JAIN V. PCIT, ORDER DATED 10.04.2017 (BO M.), BEING JUDGMENT OF JURISDICTIONAL HIGH COURT. HOWEVER, IN THIS CASE, THE AO OBSERVED THAT THE ASSESSEE HAD TAKEN ENTRIES AND PAID CASH OF EQUIVALENT AMOUN T AND RECEIVED BACK BY CHEQUE. AND ON THE BASIS OF SUCH ADVERSE INFERENCE, THE TRI BUNAL CONFIRMED THE ADDITION MADE BY THE AO. HOWEVER, IN THE PRESENT CASE IN HAN D, THERE IS NO SUCH FINDING MADE BY THE AO. FURTHER. IT IS NOTED THAT THE ABOVEMENTIONED JUDGME NT OF ITAT, MUMBAI BENCH HAS BEEN CONSIDERED AND DISTINGUISHED BY THE ITAT, KOLK ATA BENCHES AND OTHER BENCHES OF THE TRIBUNAL, INTER-ALIA, IN THE FOLLOWING CASES : A. SATYANARAYAN SARIA VS. ITO [ITA NO.1224/KOIL2016 , ORDER DT. 28.06.2019 (KOL ITAT)] B. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOIL2018, ORDER DT. 03.06.2019 (KOL, ITAT)] C. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) REFERENCE IS ALSO MADE TO THE RECENT JUDGMENT DATED 01.07.2019 RENDERED BY THIS TRIBUNAL IN THE CASE OF APARNA MISRA VS. ITO (ITA N O. 161/KOL/2019) WHEREIN THE TRIBUNAL HAD RELIED UPON THE FOLLOWING JURISDICTION AL CALCUTTA HIGH COURT JUDGMENTS TO DECIDE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. I) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 O F 2012] II) CIT VS. LAKSHMANGARH ESTATE & TRADING CO. LIMIT ED [2013] 40 TAXMANN.COM 439 (CAL) III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012 ] IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 105 OF 2016] 20 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. V) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] VI) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-3473 8-ITA NO. 22 OF 2009, ORDER DT. 29.4.09] 3) COMING TO THE CASE OF ITO VS. SHAMIM M. BHARWANI (2016) 69 TAXMANN.COM (MUM ITAT), ORDER DT. 27.03.2015 OF MUMBAI TRIABUNA L, THE BRIEF FACTS IN THIS CASE WAS THAT THE ASSESSEE PURCHASED 2500 SHARES OF EMR ALD COMMERCIAL LTD. (ECL). THE PURCHASE WAS IN CASH. ACCORDING TO THE AO SINCE THE PURCHASE WAS MADE IN CASH, THE SAME WAS NOT VERIFIABLE. FURTHER, THE A.O. FOUND TH AT SAID TRANSACTION WAS NOT THROUGH THE STOCK EXCHANGE. THE SHARES WERE IN A NO NDESCRIPT COMPANY, WITH NO FINANCIAL AND/OR PHYSICAL ASSETS OF VALUE OR REPORT ED EARNINGS. THE SHARES, PURCHASED AT AN AVERAGE RATE OF RS. 21.70 PER SHARE IN MAY 20 04, WENT UP TO AS MUCH AS FROM RS. 465 TO RS. 489 IN JULY, 2005, I.E., JUST OVER Y EARS' TIME. EACH OF THESE INCIDENTS MATCHED WITH THAT WHICH COULD BE EXPECTED IN A CASE OF A TRANSACTION IN A PENNY STOCK, THE MODUS OPERANDI OF THE TRANSACTIONS IN WH ICH WAS ALSO LISTED BY THE AO. ACCORDINGLY, RELYING ON THE DECISIONS BY THE APEX C OURT IN THE CASE OF SUMATI DAYAL V. CIT [1995] 214 ITR 801/80 TAXMAN 89 (SC); DURGA PRASAD MORE V. CIT [1971] 182 ITR 540 (SC) AND MC. DOWELL & CO. LTD. V. CTO [ 1985] 154 ITR 148/22 TAXMAN 11 (SC), BESIDES BY THE TRIBUNAL IN THE CASE OF ASSTT. CIT V. SOM NATH MAINI [2006] 7 SOT 202 (CHD.), HE ASSESSED THE IMPU GNED CREDIT OF RS. 12.15 LACS AS UNEXPLAINED INCOME U/S. 68 OF THE ACT. THE TRIBUNAL CONFIRMED THE ADDITION OBSERVING THAT THE PURCHASE OF SHARES WAS OFF MARKE T PURCHASE NOT REPORTED IN THE STOCK EXCHANGE. FURTHER, IT WAS OBSERVED BY THE TRI BUNAL THAT THE PURCHASE WAS THROUGH A BACK DATE CONTRACT NOTE IN CASH AND, THER E WAS NO TRAIL. THUS IT IS NOTED THAT TRIBUNAL IN THIS CASE CONFIRMED THE ADDITION O N A FACTUAL FINDING THAT THE PURCHASE WAS THROUGH A BACK DATED CONTRACT NOTE IN CASH AND, THERE WAS NO TRAIL. THIS FACT IS NOT APPLICABLE IN THE PRESENT CASE. FURTHER, IT IS NOTED THAT THE ABOVEMENTIONED JUDGME NT OF TRIBUNAL, MUMBAI BENCH WAS CONSIDERED/DISTINGUISHED BY THE MUMBAI ITAT IN ITS FOLLOWING JUDGMENTS WHILE ALLOWING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE: A. DCIT VS. ANIL KAINYA [ ITA NOS.4077 & 4078/MUM/2 013, ORDER DT. 22.03.16 MUM ITAT)] 21 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. B. ANJALI PANDIT VS. ACIT [2017] 88 TAXMANN.COM 657 (MUMBAI - TRIB.) FURTHER, IT IS NOTED THAT LTHE SAID JUDGMENT HAS BE EN CONSIDERED/DISTINGUISHED BY THE KOLKATA AND OTHER BENCHES OF THE TRIBUNAL, INTER-AL IA, IN THE FOLLOWING CASES WHILE ALLOWING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. A. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOL ITAT)] B. ANUPAMA GARG VS. ITO [ITA NO.5971/0EL/2018, ORDE R DT. 12.12.2018 (DEL, ITAT)] C. RADHIKA GARG. VS. ITO [ITA NO.4738/0EL/2018, ORD ER DT. 01.01.2019 (DEL-TRIB) 4. COMING TO THE CASE OF VIDYA REDDY - ITA NO.126/CHNY /2017 - CHENNAI ITAT HAD DISALLOWED THE CLAIM OF EXEMPT LTCG AND HAD CON FIRMED THE ADDITION MADE ON THE GROUND THAT THE ASSESSEE HAS NOT PLACED ANY MAT ERIAL BEFORE THE LOWER AUTHORITIES TO PROVE THAT HER TRANSACTIONS ARE GENUINE. THE TR IBUNAL OBSERVED SHE HAS ALSO NOT PLACED ANY MATERIAL TO PROVE THAT HER CLAIM OF EXEM PTION U/S. 10(38) IS GENUINE AND VALID. HOWEVER, IN THE CASE OF THE ASSESSEE COMPAN Y ALL RELEVANT DOCUMENTS WERE FURNISHED TO SUPPORT PURCHASES AS WELL AS SALE OF S HARES. FURTHER, THE CHENNAI TRIBUNAL HAD RELIED UPON AND FOLLOWED THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN SANJAY BIMALCHAND JAIN VS. PCIT, ORDER DATED 10. 04.2017, WHICH JUDGMENT HAS BEEN CONSIDERED AND DISTINGUISHED BY KOLKATA AND OT HER BENCHES OF THE TRIBUNAL, INTER-ALIA, IN THE FOLLOWING CASES: A. SATYANARAYAN SARIA VS. ITO [ITA NO.1224/KOL/2016 , ORDER DT. 28.06.2019 (KOL ITAT)] B. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOL, ITAT)] C. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) REFERENCE IS ALSO MADE TO THE RECENT JUDGMENT DATED 1ST JULY, 2019 RENDERED BY THE TRIBUNAL IN THE CASE OF APARNA MISRA VS. ITO [ITA N O.161/KOIL2019] WHEREIN THE TRIBUNAL HAD RELIED UPON THE JURISDICTIONAL CALCUTT A HIGH COURT JUDGMENTS, AS MENTIONED HEREINABOVE. 5. M. K. RAJESHWARI VS. ITO [2018] 99 TAXMANN.COM 339 THE BANGALORE TRIBUNAL NOTED THE ACTS IN THIS CASE AS THE ASSESSE E EARNED LONG-TERM CAPITAL GAIN ON 22 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. SALE OF SHARES OF MARL AND CLAIMED EXEMPTION ON IT UNDER SECTION 10(38). THE ASSESSING OFFICER RELYING UPON THE REPORT OF THE IN VESTIGATION WING, SEBI REPORT AND FINDINGS/OBSERVATIONS OF THE SIT, CONCLUDED THAT EX EMPTION UNDER SECTION 10(38) CLAIMED BY THE ASSESSEE WAS NOT ACCEPTABLE AND THE ACT OF THE ASSESSEE IN PURCHASING THE PENNY STOCK SHARES AND SALE OF FEE WITHIN THE A MBIT OF ADVENTURE IN THE NATURE OF TRADE. CONSEQUENTLY, AMOUNT IN QUESTION WAS LIABLE TO BE TAXED UNDER THE HEAD 'BUSINESS INCOME'. THE TRIBUNAL CONFIRMED THE ADDIT ION BY OBSERVING THAT THE DEPARTMENT HAD BROUGHT SUFFICIENT MATERIAL ON RECOR D TO DEMONSTRATE THAT UNACCOUNTED MONEY WAS INTRODUCED IN THE BOOKS OF AC COUNT THROUGH LONG-TERM CAPITAL GAIN BY ADOPTING SUCH METHOD. IT IS NOTED THAT IN THE AFORESAID CASE, THE TRIBUNA L CONFIRMED THE ADDITION ON A FACTUA1 FINDING THAT THE DEPARTMENT HAD BROUGHT SUFFICIENT MATERIAL ON RECORD TO DEMONSTRATE THAT UNACCOUNTED MONEY WAS INTRODUCED IN THE BOOKS OF ACCOUNT THROUGH LONG-TERM CAPITAL GAIN BY ADOPTING SUCH METHOD. THIS FACT IS NOT APPLICABLE IN THE PRESENT CASE. FURTHER, THE ABOVEMENTIONED JUDGMENT HAS BEEN CONSI DERED/DISTINGUISHED BY THIS TRIBUNAL, INTER-ALIA, IN THE FOLLOWING CASES WHILE ALLOWING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE: A. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOI ITAT)] B. YOGESH DALMIA VS. ACIT [ITA NO.113/KOL/2018, ORD ER DT. 03.06.2019 (KOI ITAT)] C. NAVIN KUMAR KAJARIA VS. ACIT [ITA NO.1254-55/KOL /2018, ORDER DT. 03.04.2019 (KOL- TRIB) D. SOUMITRA CHOUDHURY VS. ACIT [ITA NO.256/KOL/2019 , ORDER DT. 15.03.2019 (KOL ITAT)] 6. COMING TO THE CASE OF ABHIMANYU SOIN [2018-TIOL-733 -ITAT-CHD THE CHANDIGARH BENCH OF TRIBUNAL HAD CONFIRMED THE ADDI TION MADE BY AO AFTER OBSERVING THAT '11. THE ASSESSEE HAS FAILED TO PROVE THAT THE PURC HASE AND SALE TRANSACTIONS ARE GENUINE AND COULD NOT EVEN FURNISH AND IOTA OF EVID ENCE REGARDING THE SALE OF SHARES .............. HOWEVER, IN THE CASE OF THE ASSESSE E COMPANY ALL RELEVANT DOCUMENTS 23 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. WERE FURNISHED TO SUPPORT, AND PROVE BEYOND ALL DOU BTS, PURCHASES AND AS WELL AS SALE OF SHARES, WHICH WAS EVIDENTLY ABSENT IN THAT CASE, SO IS NOT APPLICABLE TO CASE IN HAND. 7. COMING TO THE CASE OF BALBIR CHAND MAINI VS. CIT (2011) 12 TAXMANN.COM 276 (P&H) THE HONBLE PUNJAB & HARYANA HIGH COURT HAD CONFIRMED T HE ADDITION MADE BY ASSESSING OFFICER ON THE BASIS OF FINDING O F FACT BY THE TRIBUNAL: 10. THE TRIBUNAL WHILE ADJUDICATING THE ISSUE AGAI NST THE ASSESSEE HAD RECORDED A FINDING OF FACT THAT THE TRANSACTION OF SALE AND PU RCHASE OF SHARES OF M/S. ANKUR INTERNATIONAL LTD., WAS NOT A GENUINE TRANSACTION, A PART WHERE OF RELEVANT TO THE PRESENT ISSUE, MENTIONED IN PARA NOS. 27 AND 28 OF THE ORDER, READS AS UNDER .... HOWEVER, IN THE CASE OF THE ASSESSEE COMPANY ALL RE LEVANT DOCUMENTS WERE FURNISHED TO SUPPORT, AND PROVE BEYOND ALL DOUBTS, PURCHASES AND AS WELL AS SALE OF SHARES. FURTHER THIS JUDGMENT HAS BEEN CONSIDERED AND DISTI NGUISHED BY THIS TRIBUNAL AND OTHER BENCHES OF THE TRIBUNAL, INTER-ALIA, IN THE F OLLOWING CASES WHILE ALLOWING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE: A. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOL ITAT)] B. KAMAL SINGH KUNDALIA VS. ITO [ITA NO.2359/KOL/20 17, ORDER DT. 08.05.2019 (KOL ITAT)] C. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) 8. COMING TO THE CASE OF CHANDAN GUPTA VS. CIT (2015) 54 TAXMANN.COM 10 (P&H ) THE HON'BLE PUNJAB & HARYANA HIGH COURT HAD CON FIRMED THE ADDITION MADE BY ASSESSING OFFICER ON THE BASIS OF FINDING O F FACT BY THE TRIBUNAL THAT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION OF SALE AND PURCHASE OF SHARES. THE RELEVANT OBSERVATION IS AS UNDER: ' ..... ON APPRECIATION OF THE EVIDENCE, THE TRIBUNAL HELD THAT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION OF SALE AN D PURCHASE OF SHARES. ONCE THE TRANSACTION OF PURCHASE AND SALE WAS FOUND TO BE BO GUS THEN THE SALE PROCEEDS HAD TO BE ADDED AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT BECAUSE THE MONEY RECEIVED ON THE BASIS OF BOGUS TRANSACTION HAD BEEN CREDITED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT WHICH REMAINED UNEXPLAINED. 24 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. 9. IN VIEW OF THE FINDINGS OF FACT RECORDED BY THE AUTHORITIES BELOW WHICH COULD NOT BE DEMONSTRATED TO BE ERRONEOUS OR PERVERSE IN ANY MAN NER, NO INTERFERENCE IS CALLED FOR. ' HOWEVER, IN THE INSTANT CASE OF THE ASSESSEE COMPAN Y ALL RELEVANT DOCUMENTS WERE FURNISHED TO SUPPORT AND PROVE BEYOND ALL DOUBTS, P URCHASES AS WELL AS SALE OF SHARES. FURTHER THIS JUDGMENT HAS BEEN CONSIDERED AND DISTI NGUISHED BY THIS TRIBUNAL AND OTHER BENCHES OF THE TRIBUNAL, INTER-ALIA, IN THE F OLLOWING CASES WHILE ALLOWING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE: A. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOL, ITAT)] B. KAMAL SINGH KUNDALIA VS. ITO [ITA NO.2359/KOL/20 17, ORDER DT. 08.05.2019 (KOL ITAT)] C. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) 9. COMING TO THE CASE OF CIT VS. SUNITA DHADDA (HONBL E SUPREME COURT JUDGMENT DATED 06.06.2018), IT IS NOTED THAT THIS JUDGMENT RELIED UPON BY THE DEPARTMENT HAS NO APPLICATION IN THE FACTS OF THE I NSTANT CASE. THE CONTENTION OF LD. DR THAT MATTER SHOULD BE SET ASIDE TO AO FOR SUPPLY ING THE ASSESSEE WITH INVESTIGATION WING REPORT AND STATEMENTS OF PARTIES RELIED UPON CANNOT BE APPLIED IN EACH AND EVERY CASE. THE ASSESSEE COMPANY HAD IN T HE CASE IN HAND DISCHARGED THE ONUS CASTED UPON IT TO PROVE THE CLAIM OF LTCG/STCL , THEN IT WAS THE BOUNDEN DUTY OF THE AO TO BRING OUT THE FALSITY/FABRICATION/WRON G DOING IF ANY ON THE PART OF ASSESSEE OR CONFRONT THE ASSESSEE WITH ANY MATERIAL WHICH IS ADVERSE AGAINST THE ASSESSEE AND TO PROCEED IN ACCORDANCE TO LAW I.E. I N CONFRONTING WITH PRINCIPLE OF NATURAL JUSTICE WITHOUT DOING SO, AND WHEN ASSESSEE PLACED ALL DOCUMENTARY EVIDENCES BEFORE THE AO/LD. CIT(A), THE ASSESSEE CA NNOT BE AGAIN SENT BACK BEFORE AO AND THE DECISION TO SEND BACK TO AO IS DECIDED W HEN PROPER OPPORTUNITY HAS NOT BEEN GIVEN BY AO DURING ASSESSMENT STAGE AND THAT I S NOT THE CASE HERE IN THE CASE IN HAND. 10. COMING TO THE FOLLOWING CASES. I NOTE THAT IN THESE CASES GIVEN BELOW MAHENDRA KUMAR BHANDARI VS. ITO [ORDER DT. 06.04.20 18] ARAVIND KUMAR, CHENNAI VS. ITO [ORDER DT. 08.11.201 8] VIKRAM DUGHAR, CHENNAI VS. ITO [ORDER DT. 13.11.201 8] 25 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. SADHANA, BANGALORE VS. ITO [ORDER DT. 26.05.2017] ARUN KUMAR BHAIYA, NEW DELHI VS. ITO [ORDER DT. 30. 08.2018] NATTI SINGH HUF, JAIPUR VS. ACIT [ORDER DT. 31.10.2 018] VINOD J. SHARMA, THANE [ORDER DT. 28.10.2015] ALL THE MATTERS WERE SET ASIDE TO THE FILE OF THE A O FOR FRESH CONSIDERATION AND/OR TO CONFRONT THE ASSESSEE WITH THE ADVERSE MATERIALS US ED AGAINST HIM. THE MATTERS IN EACH OF THE SAID CASES WERE SET ASIDE IN THE SPECIF IC FACTS AND CIRCUMSTANCES OF EACH OF THE CASES WERE SET ASIDE IN THE SPECIFIC FACTS AND CIRCUMSTANCES OF EACH OF THE CASES WHEREIN ALL FACTS WERE NOT AVAILABLE ON RECOR D AND/OR WHERE IN THE WORDS OF THE D/R THE AO HAS BOTCHED UP ENQUIRY. HOWEVER, IN THE CASE IN HAND THERE IS NO OCCASION FOR SETTING ASIDE THE MATTER IN AS MUCH AS THE ASSESSEE HAD FURNISHED ALL RELEVANT DOC UMENTS, MATERIALS AND/OR EVIDENCE TO SUPPORT ITS TRANSACTIONS OF PURCHASE AND AS WELL AS SALE OF SHARES AND THE AO HAD FAILED TO POINT OUT ANY DEFECT AND/OR LACUNA IN THE SAID DOCUMENTS, MATERIALS AND/OR EVIDENCE. FURTHER, THIS TRIBUNAL IN ITS ORDERS HAD DECIDED SI MILAR ISSUE IN FAVOUR OF THE ASSESSEE BY RELYING ON BINDING JUDICIAL PRONOUNCEMENTS. REF ERENCE IS ALSO MADE TO THE RECENT JUDGMENT DATED 1 ST JULY, 2019 RENDERED BY THE TRIBUNAL IN THE CASE OF APARNA MIWSRA, SUPRA WHEREIN THE TRIBUNAL HAD RELIED UPON THE FOLL OWING JURISDICTIONAL CALCUTTA HIGH COURT JUDGMENTS TO DECIDE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. I) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 2012] II)CIT VS. LAKSHMANGARH ESTATE & TRADING CO. LIMITE D [2013] 40 TAXMANN.COM 439 (CAL) III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA N O. 105 OF 2016] V) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA N O. 721 OF 2008] VI) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 -ITA NO. 22 OF 2009, ORDER DT. 29.4.09] 11. COMING TO THE CASES GIVEN BELOW PREM JAIN VS. ITO [ITAT, DELHI, ORDER DT. 22.03.201 8] SANJAY BIMALCHAND JAIN VS. PCIT [2018] 89 TAXMANN.C OM 196 (BOM) 26 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. THE DECISIONS OF THESE CASES HAD BEEN RELIED UPON B Y D/R TO CONTEND THAT GAINS FROM SALE OF SHARES SHOULD BE ASSESSED AS 'BUSINESS INCO ME' AND NOT UNDER THE HEAD 'CAPITAL GAINS'. IT IS NOTED THAT THE LEARNED D/R I S TRYING TO PUT FORWARD A COMPLETELY NEW ARGUMENT WHICH DO NOT EMANATE OUT OF THE ORDERS OF THE LOWER AUTHORITIES AND ALSO FROM THE RECORDS OF THE CASE A ND THUS IS NOT PERMISSIBLE TO BE RAISED AS THIS STAGE. EVEN OTHERWISE, THE ITAT, DELHI BENCH IN PREM JAIN (SUPRA) HAD HELD WHEN THE FACTS OF THE CASE WAS THAT THE ASSESSEE HAD CLAIMED THE I NCOME FROM SALE OF SHARES TO BE ASSESSED AT BUSINESS PROFITS AND NOT CAPITAL GAINS WHERE THERE WAS SHORT DURATION OF HOLDING OF SHARES AND LACK OF CLARITY IN ACCOUNT BO OKS, SALE AND PURCHASE OF SHARES. IN SUCH FACTS OF THE CASE, IT WAS HELD THAT PROFITS FR OM SALE OF SHARES WOULD AMOUNT TO BUSINESS INCOME AND NOT SHORT TERM CAPITAL GAIN. HO WEVER, NO SUCH CASE HAD BEEN MADE OUT BY THE ASSESSING OFFICER IN THE INSTANT CA SES. THE AFORESAID ORDER HAS BEEN CONSIDERED BY THIS TRI BUNAL WHILE DECIDING SIMILAR ISSUE IN FAVOUR OF AN ASSESSEE IN THE CASE OF KAUSHALYA A GARWAL VS. ITO (ITA NO. 194/KOL/2018, ORDER DATED 03.06.2019 (ITAT, KOL). MORE PARTICULARLY, THE JUDGMENT OF HONBLE BOMBAY H IGH COURT IN SANJAY BIMALCHAND JAIN V. PCIUT, ORDER DATED 10.04.2017 (B OM HC) HAD BEEN CONSIDERED AND DISTINGUISHED BY THIS TRIBUNAL AND OTHER BENCHE S OF THE TRIBUNAL, INTER-ALIA, IN THE FOLLOWING CASES: A. SATYANARAYAN SARIA VS. ITO [ITA NO.1224/KOL/2016 , ORDER DT. 28.06.2019 (KOL ITAT)] B. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOL, ITAT)] C. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) 12. COMING TO THE CASES GIVEN BELOW: ACIT VS. MADHURI SUNIL KOTECHA [ITAT, PUNE, ORDER D T. 28.03.2018] CHARU AGARWAL, MEERUT VS. ITO [ITAT, DELHI, ORDER D T. 10.09.2018] DAYARAM KHANDELWAL VS. PCIT [MP HIGH COURT, ORDER D T. 01.03.2018] SOURABH KHANDELWAL VS. PCIT [MP HIGH COURT, ORDER D T. 01.03.2018] 27 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. IT IS NOTED THAT IN ALL OF THESE CASES RELATES TO I MPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THE FACTS WHERE THE ASSESSE E HAD WITHDRAWN/SURRENDERED HIS/HER CLAIM OF EXEMPT L TCG U/S. 10(38) OF THE AC T AND PAID TAXES ON THE GAINS ARISING FROM SALE OF SHARES. ALL THESE JUDGMENTS AR E IRRELEVANT AND HAS NO APPLICATION TO THE FACTS OF THE INSTANT CASE BEFORE THE TRIBUN AL. 13. COMING TO THE CASE OF SEBI V. RAKHI TRADING P. LTD [CIVIL APPEAL NO.1969 OF 2011, JUDGMENT DATED 8TH FEBRUARY, 2018 (OF THE HON BLE SUPREME COURT ) IT IS NOTED THAT THE HON'BLE SUPREME COURT WAS CONCERNED WITH A CASE WHERE SEBI HAD INITIATED ACTIONS AGAINST FEW TRADERS AND BROKERS FOR VIOLATI ON OF REGULATIONS 3(A), (B) AND (C) AND 4 (1), (2)(A) AND (B) OF THE SECURITIES AND EXC HANGE BOARD OF INDIA (PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICES RELATING T O SECURITIES MARKET) REGULATIONS, 2003 ('THE PFUTP REGULATIONS'). IN THE SAID CASE, T HE HON'BLE APEX COURT UPHELD THE ACTION INITIATED IN THE CASE OF TRADERS AS THE SAID TRADERS HAVE ADMITTED OF BEING INVOLVED IN SYNCHRONIZED TRADE TO MANIPULATE THE PR ICES OF SHARES. THERE IS NO SUCH ADMISSION BY THE ASSESSEE IN THE INSTANT CASE THAT IT HAS INVOLVED IN ANY PRICE MANIPULATION AND/OR ANY DUBIOUS TAX PLANNING. MOREO VER, THE HON'BLE APEX COURT HAD SET ASIDE THE ACTION INITIATED BY SEBI IN THE C ASE OF BROKERS AS THERE WAS NO EVIDENCE ON RECORD TO SHOW INVOLVEMENT OF THE SAID BROKERS. SIMILARLY IN THE INSTANT CASES THE DEPARTMENT HAD FAILED TO BRING ON RECORD ANY EVIDENCE WHATSOEVER TO SHOW THAT THE ASSESSEE WAS INVOLVED IN ANY PRICE MANIPUL ATIONS. THUS THE JUDGMENT OF THE HON'BLE SUPREME COURT IS CLEARLY DISTINGUISHABLE ON FACTS. THE SAID JUDGMENT HAD BEEN HELD TO BE DISTINGUISHABLE BY THE ITAT, KOLKAT A BENCHES IN THE FOLLOWING JUDGMENTS:- I. SUMAN SARAF V. ITO IN ITA NO.1395/KOI/2018, ORDE R DATED 05.10.2018. II. JIGNESH DESAI V. ITO IN ITA NO.1394/KOI/2018, O RDER DATED 05.10.2018. III. RISHAB JAIN V. ITO IN ITA NO.1392/KOI/2018, OR DER DATED 05.10.2018. IV. REKHA DEVI V. ITO IN ITA NO.1269/KOI/2018, ORDE R DATED 05.10.2018. V. SUNITA DEVI V. ITO IN ITA NO. 1268/KO1/2018, ORD ER DATED 05.10.2018. VI. JAGAT LAL JAIN V.ITO IN ITA NO.1226/KOI/2018, O RDER DATED 05.10.2018. VII. SNEHA CHOUDHARY V. ITO IN ITA NO.1218/KOI/2018 , ORDER DATED 05.10.2018. VIII. U.C.CHOUDHARY & ORS (HUF) V. ITO IN ITA NO.12 17/KOI/2018, ORDER DATED 05.10.2018. IX. VIRENDARA BARMECHA V. ITO IN ITA NO.1201/KOI/20 18, ORDER DATED 05.10.2018. X. TARUNA DEVI BARMECHA V. ITO IN ITA NO.1199/KOI/2 018, ORDER DT. 05.10.2018. 28 ITA NOS. 1812/KOL/2018 & 1892/KOL/2018 NITU AGARWAL, AY 2015-16. XI. PREMLATA AGARWAL VS. ITO IN ITA NO.874/KOI/2018 , ORDER DT. 05.10.2018. XII. SUNIL KUMAR LADHA VS. ITO IN ITA NO.851/KOI/20 18, ORDER DT.05.10.2018. XIII. BALRAM GUPTA VS. ITO IN ITA NO.817/KOI/2018, ORDER DT.05.10.2018. XIV. ALKA CHANGOIWALA VS. ITO IN ITA NO.634/KOI/201 8, ORDER DT.05.10.2018. XV. SANTOSH CHORARIA VS. ITO IN ITA NO.521/KOI/2018 , ORDER DT.05.10.2018. XVI. SONAL BAJAJ VS. ITO IN ITA NO.239/KOI/2018, OR DER DT.05.10.2018. XVII. SUDHA KHANDELWAL V. ITO IN ITA NO.86/KOI/2018 , ORDER DT. 05.10.2018. XVIII. BINA AGARWAL VS. ITO IN ITA NO.1403/KOI/2018 , ORDER DT.05.1 0.2018. XIX. HARISH JAIN VS. ITO IN ITA NO. 1404/KO1/2018, ORDER DT.05.10.2018. THUS, IT IS NOTED THAT AFORESAID DECISION OF THE HO NBLE SUPREME COURT, HONBLE BOMBAY HIGH COURT AND TRIBUNAL ARE DISTINGUISHABLE AND SO THE RATIO IS NOT APPLICABLE TO THE CASE/CASES IN HAND. THEREFORE FOR THE REASONS AND F ACTS DISCUSSED AT PARA 8 SUPRA I AM INCLINED TO ALLOW BOTH THE APPEALS OF ASSESSEES. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23RD AUGUST, 2019 SD/- (A. T. VARKEY) JUDICIAL MEMBER DATED: 23RD AUGUST, 2019 JD. (SR. PS) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT SMT. NITU AGARWAL & SMT. NEETU AGARWAL, C/O SUBASH AGARWAL & ASSOCIATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE-21 3, 2 ND FLOOR, KOLKATA-69. 2 RESPONDENT ITO, WARD-2(4), SILIGURI. 3 4 5 CIT(A) , SILIGURI. CIT , SILIGURI DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES