Megha Garg, Delhi V. ITO, Ward- 40(1), Delhi

ITA 1908/DEL/2019

AI Insights

The case involves two appeals by Megha Garg and Manish Garg against the orders of the CIT(A)-14, New Delhi, which confirmed the additions made by the Assessing Officer under sections 68 and 69C of the Income Tax Act, 1961. The additions pertained to the sale proceeds of shares of M/s Kappac Pharma Ltd, which were treated as unexplained credits and unexplained expenditure, respectively. The main legal contention was whether the income from these shares qualified for exemption under section 10(38) as long-term capital gains. The Tribunal found that the transactions were part of a scheme to provide accommodation entries and thus did not qualify for the exemption claimed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131796 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-12-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 04-03-2019
• Other Referred Cases: Naresh Kumar, Mayurbhai Mangal das Patel, Sanjay Bimalchand Jain, L/H Shantidevi Bimalchand Jain
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Unexplained expenditure; Business income; Principle of natural justice; Accommodation entries; Capital Gains
• Section: 68; 69C; 80C; 143(3); 50C; 205; 195; 251; 69A; 208; 43; 48; 73; 72; 13; 22; 101; 20

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar US, Judicial Member ITA No. 1908/Del/2019: Asstt. Year: 2015-16 Megha Garg, 160, Vaishali, Pitampura, New Delhi-110034 Vs. ITO, Ward-40(1), Delhi (APPELLANT) (RESPONDENT) PAN No. AECPG7098C ITA No. 1909/Del/2019: Asstt. Year: 2014-15 Manish Garg, 160, Vaishali, Pitampura, New Delhi-110034 Vs. ITO, Ward-40(1), Delhi (APPELLANT) (RESPONDENT) PAN No. AAOPG3605M Assessee by : None Revenue by : Sh. Ajay Kumar Arora, Sr. DR Date of Hearing: 06.12.2022 Date of Pronouncement: 03.03.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeals are filed by the assessees against the orders of the ld CIT(A)-14, New Delhi dated 07.02.2019. 2. Since, the issues involved both the appeals are similar, they were heard together and being adjudicated by a common order. ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 2 3. The assessee has raised the following grounds of appeal: “1. That the order of the CIT(Appeals) 14, New Delhi is arbitrary, biased and bad in law and in facts and circumstances of the case in so far as it confirms the order of the Assessing Officer. 2. That the CIT(Appeals) has grossly erred in confirming an addition of Rs. 2,04,07,951/- (where as the correct amount is Rs. 2,06,92,178/-) made by the Assessing Officer being the amount of sale proceeds of shares of M/s Kappac Pharma Limited under section 68 of the Act by denying the claim of exemption under section 10(38) of the Act and by treating the same as unexplained credit. 3. That the CIT(Appeals) has grossly erred in confirming the action of Assessing Officer in not accepting the claim of exempt capital gains under section 10(38) of the Act despite the appellant fulfilling the conditions enumerated in the section for availing exemption under section 10(38) of the Act. 4. That the CIT(Appeals) has grossly erred in confirming an addition of Rs.2,04,07,951//- (whereas the correct amount is 2,06,92,178) under section 68 read with section 115BBE for sale proceeds of equity shares on presumptions and assumptions and by quoting out of context the general modus operandi adopted by the operators with which the appellant had nothing to do nor did the same concern him. 5. That the CIT(Appeals) has grossly erred in confirming the addition made by the Assessing Officer of Rs. 6,12,238/- under section 69C read with section 115BBE of the Act for alleged unexplained expenditure on notional hypothetical basis for arranging the so called accommodation entry for long term capital gain. 6. That the Learned CIT(Appeals) has grossly erred in confirming the action of the Assessing Offer in not providing the copy of material, if any, relied upon by him. 7. That the Learned CIT(Appeals) has grossly erred in invoking the provision of section 251 of the Act, and in giving stereotyped show cause notice without affording a proper and meaningful opportunity to the appellant to ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 3 represent her case and in summarily dismissing the contention of the appellant. 8. That the Learned CIT(Appeals) has grossly erred in unilaterally adjudicating the appeal on the hypothesis of, if the claim of the appellant is accepted that the income is not unexplained u/s 68 of the Act, by the higher authorities, the same may be treated as an adventure in the nature of trade and thus the resultant difference in the transaction of sale purchase be not entitled to exemption u/s 10(38) of the Act. 9. Without prejudice the above, the CIT(A) has grossly erred in passing a premeditated order by quoting out of context the observations of Ahmedabad Tribunal in the case of Mayurbhai Mangal das Patel which decision was rendered in a different context where the Tribunal did not follow the precedent on a technical issue, which could not made applicable the facts of the appellant case.” 4. The relevant facts are as under: “4. The main issue involved in this appeal is an addition of accommodation entry of long term capital gain from the shares of M/s Kappac Pharma Ltd. The addition has been made u/s 68 with corresponding addition u/s 69C being estimated addition for taking the accommodation entry. During the course of appellate proceedings the appellant was asked to furnish the following information. a) Trading history of the script on BSE and NSE I.e. trading volume, number of trades, trading turnover from A.Y. 2010-11 to A.Y. 2017-18. Daily, monthly and yearly charts. b) Movement of Sensex of major exchange indices including sector index during the same period. c) Summarised financials l.e. balance sheet and profit and loss account of the said company/script from A.Y. 2010-11 to 2017-18. d) Share transaction history of the assessee from A.Y. 2010-11 to 2017-18 including Demat account, client ledger account with the brokers, investments in shares and statement of income. ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 4 e) Evidence for purchase of shares, corresponding payment, dematerialization and transfer with dates and the evidence of the said date. f) Show cause u/s 251(2) as to why a claim of long term capital gain should not be rejected and why the corresponding income should not be taxed as the business income, without prejudice to the decision which may be taken in respect of the addition u/s 68/69C, as the script was purchased with the intention to earn phenomenal profits. g) Details of transactions in the same script by associate persons/ family members of the assessee. 5. As regards information as per point 'a', 'b' and 'c' the said information is available in public domain also. Regarding item 'f' the assessee submitted that the investment was made for capital appreciation and therefore the profits should be assessed under the head long term capital gains only and should be treated as exempt u/s 10(38). The assessee claimed to have purchased shares in physical form in cash from a person located in Mumbai with no evidence of travel of assessee or seller for cash payment. The shares have been dematerialized just before the sale and the assessee does not have an exposure to the share transactions/markets to support assessee's claim of prudent Investment in a potential script which is claimed to have yielded unrealistic results. There are very few other investments in shares. 6. On the basis of the similar facts this office has already passed an order on 27.11.2018 in the case of Naresh Kumar, Appeal no. 259/16- 17(10364). AY 14-15 which is reproduced here in under: "APPELLATE ORDER 1. This appeal is against the order passed U/s 143(3) of the IT. Act 1961 on 27.12.2016 by I.T.O Ward 42(5), Delhi. In Form No. 35, the appellant has mentioned the date of service of demand notice as 31.12.2016. 3. In response to notice u/s 250, Shri R S Sharma, CA attended the hearing and the appeal was heard. 2.1 The AO was given an opportunity of hearing u/s 250(2)b and also asked to confirm the statutory validity of the appellant filed u/s 249(2) and 249(4) of the I.T. Act vide notice served on 24.10.18. However, no reply has been received from the AO. Therefore, it is presumed that AO ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 5 does not wish to remain present in appellate proceedings. It is also presumed that he confirms the statutory validity of the appeal filed u/s 249(2) and 249(4) of the LT. Act, though there is considerable time gap between the date of order and date of service. 3. The appellant has raised the following grounds of appeal. 1. On the facts and circumstances of the case and in law, the order passed by the Assessing Officer is contrary to the facts and bad in law. B. The Ld. AO has erred in completing the assessment at an income of Rs. 17,24,817/-as against Rs. 3,19,285/- declared by the assessee. iii. The Ld. AO was not justified in making addition of Rs. 14,05,532/- as unexplained amount u/s 69A read with section 115BBE of the IT Act, 1961. iv. That the Ld. AO has grossly erred in denying the exemption u/d 10(38) of the I.T Act, 1961 in respect of long term capital gain of Rs. 14,05,532/-. v. On the facts and circumstances of the case and in law, the additions made/remarks made/interference drawn by the assessing officer for making addition of Rs. 14,05,532/- u/s 69A of the Income Tax Act is erroneous and the same are not sustainable. vi. On the facts and circumstances of the case and in law, the addition of Rs. 14,05,532/- made by the Ld. AO is arbitrary and against the principles of natural justice and therefore, the addition made is liable to be deleted. vii. The Ld AO failed to appreciate that 1. That the assessee has filed the entire document in support of the purchase and sale of shares. 2. That by submitting the documents as mentioned above in point no. (i) and (ii) the assessee has discharged his onus as per section 69A of the IT Act. 3. The Ld. AO has not provided any copy of statement recorded by the department which was specifically demanded. 4. The Ld. AO has not afforded any opportunity to rebut the material used against him. 5. The Ld. AO has miserably failed to consider the provisions of section 10(38) of the IT Act for not allowing the exemption. ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 6 viii. The Ld. AO has grossly erred while making additions without providing the opportunity of cross-examination of the parties who were examined by the revenue on the back of the assessee. The addition made by the Ld. AO is unjustified and is unreasonable. ix. The Ld. AO has simply made the addition only on the basis of information of Investigation Report of DGIT (Inv), Kolkata and has not applied his own mind. x. The addition of Rs. 14,05,532/- has only been made on surmises and conjectures. xi. That the order passed by the Ld. AO is contrary to the facts and law of the case." 4. In the multiple grounds of appeals raised, the appellant has challenged the rejection of assessee's claim of long term capital gain under section 10(38) of Rs. 14,05,532/- in respect of the shares of KAPPAC Pharma Ltd. The AO has invoked section 69A for making the addition and has also charged tax on the said amount under section 115BBE of the I.T Act. Ground no. 1,,x and xi are of general nature and therefore do not require separate adjudication. Ground no. iii to ix are related to the above referred addition. Out of the said grounds the assessee has raised the issue of cross-examination in ground no. vii and lack of application of mind in ground no. ix. In ground no. vii the assessee has raised sub grounds like not supplying of statements recorded by the department, principles of natural Justice and grounds of general nature. Ground no, vi also raises the issue of principles of natural justice. Therefore, to summarize, the assessee has raised the issue of principles of natural justice and merits of addition of Rs. 14,05,532/- made in the assessment order. 5. As evident from page 4 of the assessment order the assessee purchased 4,000 shares of M/s KAPPAC Pharma Ltd on 1" October 2012 for Rs. 56,000/- 1.e. the shares of face value of Rs. 10 were purchased at the rate of Rs. 14. On 12th March 2014, 2,000 shares out of the same were sold for which an amount of Rs. 14,33,532/- was received after deduction of STT, commission and other charges. The shares were sold through Intouch Securities Ltd, now known as Maashitla Securities Pvt. Ltd, a member of Bombay Stock Exchange. The remaining 2,000 shares were sold in May 2014 through the same broker. The shares are claimed ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 7 to have been purchased in physical form against cash payment. The name of seller is mentioned as Northpole Finance Ltd., who got these shares on 30th November 2010. The share transfer form is dated 12 October 2012, signed in Delhi on behalf of assessee. However, the witness on the said share transfer form has an address in Baroda. On 9th October 2012, the shares were transferred in the names of assessee as per the endorsement on the backside of share certificate. The dematerialization was done on 24th February 2014 and 2,000 shares were sold on 12th March 2014, as already mentioned. The assessee received the money of Rs. 14,33,532/- in his account on 20th March 2014. No bill of purchase has been filed. The payment in cash is claimed to have been made on 1" October 2012 out of cash in hand claimed of Rs. 2,32,668/- on 31 March 2012. Though the address of Northpole Finance Ltd. and the purchase bill has not been furnished, there is a company with this name with CIN no. U65910GJ1996PLC029613 with address in Rajkot, Gujarat as per the information in public domain. 6. The demat account was opened only in January 2014 and does not have transactions related to any other script in assessment year 14-15 or 15-16 except the script of KAPPAC Pharma Ltd and one script of Ace Tours World Wide Ltd. 8,000 shares of Ace Tours World Wide Ltd were transferred on 24th February 2014 in the demat account, apparently by an off market transaction, and were transferred on 25th March 2014 to Alankit Assignments Ltd, again through an off-market transaction. The assessee has not done any other transactions in shares during the period from assessment year 10-11 to assessment year 15-16 as admitted on 26th November 2018 except day trading of the script of B.F Utilities Ltd. on 14th March 2014 for a small amount under Rs. 65,000/-in total. 7. The Assessing Officer discussed the report of Investigation Wing of Kolkata regarding survey/search on certain brokers. Some brokers confirmed having given accommodation entries in respect of the scripts of KAPPAC Pharma Ltd. The Assessing Officer also received one information from BSE, vide letter dated 25th October 2016 confirming that the trading in the shares of KAPPAC Pharma Ltd have been suspended with effect from 7th January 2015, as it satisfies certain parameters justifying the said suspension in view of nature of transactions in respect of the said some and other details related to the said script. The AO has also discussed the intrinsic strength of the said company and analyses its P & L account to ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 8 hold that the company has no business and its share prices were artificially jacked through collusive transaction, resulting an accommodation entry of long term capital gains. 8. During the course of appellate proceedings the assessee was also asked to show cause why the corresponding income should not be treated as business Income? Without prejudice to the decision which may be taken in respect of the addition under section 69A. The said show cause was given by virtue of powers under section 251(2) on 22.11.2018 in respect of assessee's appeals for assessment year 14-15 and 15-16. The assessee filed a reply dated 26th November 2018 objected to the said show cause and submitted as under: "Dated: 26.11.2018 The CIT (Appeals)-XIV New Delhi Civic Centre, Dear Sir, SUB: Reply of show cause dated 22.11.2018 in respect of Appeal no. 259/16-17 for the A.Y 2014-15 in case of Sh. Naresh Kumar We strongly object to treat Long Term Capital Gain in Business Profit as the appellant has invested in shares of M/s Kappac Pharma Ltd to earn dividend and capital gain not the profit. The entire document in support of the claim of capital gain is already been placed on records. Assuring my full co-operation always. Sincerely, For RadheyShyam Sharma and Co. (CA R.S Sharma) Counsel of the appellant" 9. The Assessing Officer has made an addition by rejecting the claim of capital gain by treating credits to be an accommodation entry. AO has also made an addition u/s 69A as unexplained money in the hands of the assessee. The Assessing Officer has demonstrated the company M/s KAPPAC Pharma Ltd did not have any revenue and practically NIL expenditure to establish that this company was not doing any business, which could justify the phenomenal rise in the price of shares within a short period. Even the balance sheet of the company shows no activity or investments in fixed assets and the share capital money has gone into loans and advances and investments. There are negligible debtors, ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 9 creditors and current liabilities/assets except loans and advances and investments, where share capital is parked. The Director's reports on Page 9 of assessment order also reflect to business prospects. In this background the Assessing Officer concluded that the said company was a paper company with no real business activity and the phenomenal price rise of the shares was a manipulated activity for giving accommodation entries of fictitious capital gains. The corresponding addition has been made by relying on various case laws. The enquiry reports of SIT constituted constituted by Hon'ble Supreme Court, SEBI and Investigation wing have also been discussed by the Assessing Officer to justify the addition. 10. The assessee has filed written submission relying on various case laws, the sum and substances of which is that the transaction of the assessee were executed on stock exchange, the payment was received, through banking channels and there is no evidence of price rigging and even if it was there the assessee was not involved in it. The assessee also submitted that the reports of investigation wing does not have any basis and the assessee has discharged its onus to establish that the claim of capital gain was genuine. The issues natural justice have also been raised. 11. If we examine the annual reports of KAPPAC Pharma Ltd., available in public domain, we notice that the pattern remains the same in assessment year 2015-16, 2016-17, 2017-18 and 2018-19 as well i.e. no income or expenses and the shareholder funds have been invested in investments and loans and advances, mostly investments. There are practically no creditors, no debtors or any other activity. If we see the price movement chart of KAAPAC Pharma Ltd, we notice that the corresponding stock is not being traded now and the remark on the website of BSE is suspended- surveillance measures. 12. The above background presents the scenario, which fails the test of evidence on the principles of preponderance of probabilities, which has to be tested on the basis of the prudence of a common man. No person would invest in the shares of a company which has no business, no projects in hand, no activity and no profits. There is no reason for the phenomenal rise of the shares of such company, unless its prices are rigged by way of collusive transactions involving owners/shareholders, brokers and the middle men. From the assessment order and facts on ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 10 records it is apparent that this is a solitary such transaction with the said seller, broker and in demat account. No man of ordinary prudence would enter into such transactions unless the person has certain prior information of the future price rise or price rigging. Else it has be a case of accommodation entry with ante-dating of cash purchases. It is highly improbable for a Delhi assessee to make a direct purchase from a Gujrat seller and pay in cash for such purchase. Moreover, no evidence of travel to Gujrat on purchase date has been furnished. 13. Without prejudice to the above circumstantial evidence, and findings regarding the genuineness of above transactions, even if the transactions are treated as genuine, in the sense that the assessee himself was not directly involved in the collusive transaction and has not taken accommodation entry against cash,, even then the transactions cannot result in long term capital gain. The profile of KAPPAC Pharma Ltd cannot attract any prudent person with an intention of investment for earning dividend and capital appreciation over a period of time due to performance of the company. So, even if it was not a case of accommodation entry, the asssessee was aware that abnormal and unreasonable price rise was going to take place in respect of the corresponding scripts and such information could only be based on insider's information regarding price manipulations and rigging of price. In such a situation, even if the transaction was not an accommodation entry, it was with the sole Intention to earn profits, within short period of time, with specific Information and absolute certainty of phenomenal profits in short run. That brings the corresponding income under the head business income as this is an adventure in the nature of trade and in that case also the claim of long term capital gain and exemption under section 10(38) cannot be allowed. 14. Considering the same Irrespective of whether it was case of accommodation entry or not the assessee's appeal falls as far as claim of exemption u/s 10(38) is claimed. 14.1 Reliance is also placed on following decisions to suppost the view that even an isolated transaction can result in business income. (A) 180 ITR 208 (Calcutta)-JAIPURIA BROS LTD (B) 100 ITR 706 (SC)-Sutlej Cotton Mills Supply Agency Ltd ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 11 (C) 33 CCH 650 (ITAT-DEL)- SAT SAHIB SECURITIES Ltd (D) 26 CCH 193 ISCC-G Venkataswami Naidu and Co. (E) 106 DTR 269 (P and H) Pooja Investment Pvt. Ltd 14.2 The combined ratio of all these decisions is that a single transaction in an investment, which is not freely tradable, can also fall in the category of an adventure in the nature of trade l.e. the frequency and volume of transaction do not necessarily decide whether the corresponding Income is business income or capital gains. It is the intention of the assessee which is to be inferred from circumstantial evidence. If an activity is guided by an intention to earn dividend and capital appreciation on the basis the intrinsic strength of an asset, It amounts to capital gains. However if the Intention is to make profits in a short period of time and the guiding force behind the decision is an information regarding almost certain phenomenal profits in a short period of time, it amounts to business income. 14.3 It may not be out of place to mention that during the period from June 2012 to March 2014, the price of the script. KAPPAC Pharma Ltd increased from Rs. 72 per share to Rs. 717. However, the increase in Sensex and other incidices during this period was as under: 31.05.2012 31.03.2014 (a) Sensex 16218.53 22386.27 (b) BSE 100 4942.13 6707.28 (c) BSE 200 2003.10 2681.35 (d) BSE 500 6280.04 8295.26 (e) BSE Mid Cap 5907.95 7082.86 (f) BSE Small Cap 6271.00 7071.96 So the movement of scripts of KAPPAC Pharma Ltd, was at variance with all major indices, which reflect general market movement. 15. If we examine yearly pattern of trade of the script Kappac Pharma Ltd, available on the web site of BSE from 2001 to 2018, we get the following data ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 12 Year Open Price Close Price No.of Shares No. of Trades Total Turnover (Rs.) Spread Close- Open Demat/Physi cal 2001 9 7.3 8000 61 697 3( -1.7 PHYSICAL FORM 2003 8.5 8.5 100 1 850 0 DEMAT FORM 2004 6.81 27.6 14500 92 312445 20.79 DEMAT FORM 2005 26.2 5 16 34800 185 610330 -10.25 DEMAT FORM 2006 16.8 13.75 2900 22 453 9 5 -3.05 DEMAT FORM 2007 13.1 15 2200 20 288 7 1 1.9 DEMAT FORM 2008 15 17 8100 49 146048 2 DEMAT FORM 2009 16.2 8.26 2900 29 282 9 3 -7.94 DEMAT FORM 2010 8.67 24.15 56800 389 2697155 15.48 DEMAT FORM 2011 25.3 5 26.15 10900 73 304105 0.8 DEMAT FORM 2012 24.8 5 12.12 14400 85 209827 -12.73 DEMAT FORM 2013 12.7 2 625 1670477 2167 904806938 612.28 DEMAT FORM 2014 635 138.4 2072594 4 54038 103106332 47 -496.6 DEMAT FORM 2015 131. 5 112.8 5 92503 102 11123134 -18.65 DEMAT FORM It is evident from the above data that till the year 2001, the script was traded in physical form in small volumes and after that it was traded in demat form again in small volumes till 2012. This conveys that even after the shares started trading in demat form, the assessee chose to purchase those shares in physical form, got them transferred in his name in physical form but got them dematerialized just before the sale. The script has not been traded after 2015 as suspended by BSE. On 31-3-2013, the total assets (mainly loans & advances and investments) were Rs. 23.91Cr, while on 31-3.2014, the figure was Rs 38.6 Cr. But the trading volume was Rs. 90.48 Crores in 2013 and Rs. 1031 Crores in 2014. So the trade volume of shares in 2014 was almost 27 times the total assets of the company on 31- 3.2014. The number of trades increased abnormally in 2014 and also in 2013 to 54038 and 2167, from very small average number of trades in earlier years and suddenly dropping to only 102 trades in 2015. ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 13 17. This needs to be again compared with movement of major indices from 1.1.2012 to 31.12.2015, to find out if something abnormal happened in the markets during this period. Sr. No Index/Script 2012 Closing value 2013 Closing Value % Change over 2012 values 2014 Closing Value % Change over 2013 values 1 Kappac Pharma Ltd 12.12 625 5057 138.4 -82.2 2 S&P BSE Healthcare 8132.35 9966.26 22.6 14692.95 47.43 3 S&P BSE SENSEX 19426.7 1 21170.68 9 27499.42 29.89 4 S&P BSE 100 5975.74 6326.72 5.9 8369.27 32.28 17.1 It is evident that the increase in value of script in 2013 is 5057 % against increase in other indices in the range of 5.9 % to 22.6 %. In 2014, the fall of 82.2 % is again against the general trend of increase of 29.89 % to 47.43 %. The Healthcare sector growth in these two years is also not compatible with the script movement of Kappac Pharma Lts, which by name conveys it to be in the same/related sector. The GDP of India in 2012 was approximately $ 1827.64 billion and In 2014 it was approximately $ 2039.1 billion i.e. an increase of only 11.57 %. So what was such an intrinsic strength in the script of Kappac Pharma Ltd, which led to this pattern when it never had any fixed assets, revenues, expenditure, profits or projects? 18. As regards decisions relied upon by the assessee and some other decisions on the issue involved, most of those decisons are sub silientlo on the detailed analysis of factual matrix of market and script and discussion made in this order. Those decisions are mostly on the issue of onus of the department u/s 68 to establish that the assessee paid cash to take accomodation entry and have not laid down a law on the issues involved, as decision on in each case depends on facts of that case, to the extent discussed in the order, and brought on record by lower authorities. It cannot be a proposition of law if new facts or arguments emerge. Each decision is based on legal and factutal matrix available before the concerned court or quasi judicial authority at the time of taking decision. ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 14 The Hon'ble ITAT, CIT(A) and Assessing Officer are not courts and not bound by strict rules of procedural law. Quasi judicial authorities are expected to do substantial justice and weigh evidence on the principles of preponderance of probabalities. In this regard I would like to quote from a decision of Ahmedabad ITAT, later confirmed by Hon'ble Gujrat High Court, in which the Hon'ble ITAT departed from several decisions of coordinate benches and High Courts, on the Issue of validity of notice u/s 148. The said observation in I.T.A. No.3451/Ahd/2014, assessment Year : 2005-06, order dated 30.11.2017, in the case of Mayurbhai Mangaldas Patel is as under "It is extremely painful to us to depart from the views that the coordinate benches have taken in the earlier cases, or to distinguish the judgments of Hon'ble Courts above, but then, as complete facts having come to light, and duly evidenced, before us, we cannot knowingly perpetuate the errors in the name of reverence to binding judicial precedents. In the case of Mumbai Kamgar Sabha vs. Abdulbahi Faizullbhai AIR 1976 SC 1455, Their Lordships have, in their inimitable and felicitous words observed thus, "It is trite, going by anglophonic principles that a ruling of a superior Court is binding law. It is not of scriptural sanctity but of ratio- wise luminosity within the edifice of facts where the judicial lamp the legal flame. Beyond those walls and de hors the milieu we cannot impart eternal vernal value to the decisions, exalting the precedents Into a prison house of bigotry, regardless of the varying circumstances and myriad developments. Realism dictates that a judgment has to be read, subject to the facts directly presented for consideration and not affecting the matters which may lurk in the dark". Lest we may be blamed for departing from, in the name of reverence to the judicial precedents, a judicial forum's unflinching commitment for cause of justice, once the factual motrix has admittedly shown a different shade of truth, we must not remain constrained by the judicial precedents which were given of the facts now glaring at us." 19. At the cost of repetition, detailed trading pattern of the script, Kappac Pharma Ltd in financial year 13-14 is here in under, which again establishes the conclusions in earlier part of this order. ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 15 Date Open Price Close Price No.of Shares No. of Trades Total Turnover (Rs.) Spread Close- Open 31-Mar-14 702 688.7 94952 178 65799865 -13.3 28-Mar-14 632 686.15 130453 344 89559330 54.15 27-Mar-14 675 665.1 127816 195 85737202 -9.9 26-Mar-14 700 695.9 205448 532 143815211 -4.1 25-Mar-14 675 695.7- 206011 434 146736535 20.7 24-Mar-14 689.9 702.6 189614 721 133746599 12.7 22-Mar-14 708.5 697 65450 182 45698047 -11.5 21-Mar-14 671.55 694.6 170126 363 118551508 23.05 20-Mar-14 711.75 706.2 193275 471 137345194 -5.55 19-Mar-14 666.7 699.8 177415 359 124606978 33.1 18~Mar-14 664.5 701.5 231542 392 163411861 37 14-Mar-14 718 699.15 184715 335 130874507 -18.85 13-Mar-14 686 712 161028 325 115321500 26 12-Mar-14 688.05 720.45 2088C5 490 150810855 32.4 ll-Mar-14 718 723.8 189200 422 136314506 5.8 10-Mar-14 658 692.6 203176 370 142816051 34.6 07-Mar-14 716.95 688.2 160436 322 113187785 -28.75 06-Mar-14 680 708.95 122787: 343 87787331 28.95 05-Mar-14 690.5 715.3 158706 364 113801748 24.8 04-Mar-14 680 726.45 131152; 353 94941674 46.45 03-Mar-14 655.6 707.85 249036 560 175617674 52.25 28-Feb-14 708.85 689.7 89899 431 62733860 -19.15 26-Feb-14 670 722.8 135587 388 97603591 52.8 25-Feb-14 686.1 702.75 99567 240 70639108 16.65 24-Feb-14 724.95 720.5 168874 348 122282515 -4.45 21-Feb-14 , 700 706.35 120704 457 86012384 6.35 20-Feb-14 683.95 713.55 140459 437 99676690 29.6 19-Feb-14 693.5 691.55 143782 368 99548866 -1.95 18~Feb-14 686.95 676.6 128114 388 87241256 -10.35 17-Feb-14 680 679.3 159119 404 108892355 -0.7 14-Feb-14 65.2 681.4 94906 205 65041669 29.4 13-Feb-14 644 686.2 170737 448 117100191 42.2 12-Feb-14 679.85 676.8 111224 241 75313395 -3,05 ll-Feb-14 648 680.25 122773 328 83448522 32.25 10-Feb-14 679 652.7 145708 324 97212034 -26.3 07-Feb-14 699 651.75 89853 141 60044606 -47.25 06-Feb-14 684.6 686.05 113045 208 77854939 1.45 05-Feb-14 699.5 672.1 131645 333 89964056 -27.4 04-Feb-14 663.5 686.05 104765 456 72619750 22.55 03-Feb-14 725 698.1 162665 455 115159599 -26,9 31-ian-14 679.65 590.95 110762 174 77863727 11.3 30-Jan-14 729 715.4 73015 157 52625390 -13.6 29-Jan-14 714 723.5 137942 251 100164085 9.5 28-Jart-14 720 725.2 109797 164 79884832 5.2 27-Jan-14 700 716.9 138430 319 100143608 16.9 24-Jan-14 698 713.55 128413 318 92082550 15.55 23-Jan-14 700 692.2. 94205 214 66069933 -7.8 ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 16 22-Jan-14 710.15 681.85 132950 293 91905539 -28.3 21-Jan-14 667 710.15 137221 1 271 96995539 43.15 20-Jan-14 664.65 701.55 133630 263 95026929 36.9 17-Jan-14 706 699.6 121640 211 85170815 -6.4 16-Jan-14 660 673.95 112076 157 76553826 13.95 15-Jan-14 630 663.1 68600 133 45897790 33.1 14-Jan-14 685 658.65 59899 133 41373297 -26.35 13-Jan-14 680 690.5 103287 223 70868235 10.5 10-Jan-14 640 680 97054 77 64360560 40 09-Jan-14 640 660 93800 79 62230000 20 08-Jan-14 655 645 35951 37 23380900 -10 07-Jan-14 603.3 650 33650 35 21847982 46.7 06-Jan-14 650 635 56100 ; 48 36315000 -15 03-Jan-14 650 650 63220 58 41093000 0 02-Jan-14 650 635 750111 66 48232145 -15 01-Jan-14 635 630 67000! 57 42492500 -5 31-Dec-13 635 \ 625 50105 42 31316625 30-Dec-13 622 615 68500 33 42404500 • -i 27-Dec-13 625 623 102605 73 63973520 -2 26-Dec-13 605 620 55718 49 35413770 15 24-Dec-13 625 625 106844 89 66777500 0 23-Dec-13 546.3 600 127900 106 76602860 53.7 20-Dec-13 571.5 575 205 7 117185 3.5 19-Dec-13 614 599 61500 39 36938500 -15 18-Dec-13 610 609 45100 39 27485900 -1 17-Dec-13 609 607 95100 58 57817400 -2 16-Dec-13 600 600 98200 81 58920000 0 13-Dec-13 595 600 74500 61 44462000 5 12-Dec-13 552.1 579 53600 45 31093135 26.9 ll-Dec-13 580 580 45000 36 26100000 0 10-Dec-13 542.1 560 30100 31 16844050 17.9 09-Dec-13 580 569 41800 30 24180600 -11 06-Dec-13 558 560 39200 38 21856350 2 05-Dec-13 487 533.5 16700 24 8845750 46.5 04-Dec-13 509 512 27700 30 14215800 3 03-Dec-13 534 493 21400 22 11409400 -4.1 02-Dec-13 565 512.1 46300 43 24414520 -52.9 29-Nov-13 500 539 45000 41 24256900 39 28-NOV-13 530 523 41400 23 21838600 -7 27-Nov-13 529 526 36900 31 19480700 -3 26-Nov-13 550 510 25200 36 13726400 -40 25-Nov-13 535 535 26100 22 13963500 0 22-NOV-13 515 515 33100 29 17042200 0 21-NOV-13 495 495 21000 14 10395000 0 20-Nov-13 480 476 ' 41000 52 19570300\ -4 \ 19-Nov-13 462 462 5400 15 2494800 0 18-Nov-13 468 468 2400 5 1123200 0 Ol-Nov-13 452 452 100 1 45200 0 31-Oct-13 475.7 475.7 2000 1 951400 0 ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 17 2 8-0 ct-13 501 500.7 700 7 350880 -0.3 25-Oct-13 504 527 8200 21 4316745 23 24-Oct-13 491 529.9 2100 6 1108900 38.9 23-Oct-13 485 513.9 1200 4 610900 28.9 22-Oct-13 508 508 1800 8 914400 0 18-Oct-13 490 490 200 2 98000 0 17-Oct-13 484.9 480 1000 9 482450 -4.9 15-Oct-13 464 464 200 2 92800 0 14-Oct-13 465 465 200 2 93000 0 ll-0ct-13 445 449.85 700 7 313925 4.85 10-0ct-13 430.5 430.5 600 5 258300 0 09-Oct-13 410 410 600 5 246000 0 08-Oct-13 425 425 200 2 85000 0 07-0ct-13 425 425 200 2 85000 0 04-0ct-13 405 407 700 7 284100 2 03-Oct-13 388.5 388 1200 10 463150 -0.5 01-0ct-13 370 370 100 1 37000 0 30-Sep-13 407.4 388 600 5 242500 -19.4 27-Sep-13 388 388 1200 6 465600 0 26-Sep-13 370 370 300 3 111000 0 25-Sep-13 389 389 100 1 38900 0 24-Sep-13 375 375 300 1 112500 0 23-Sep-13 376.5 377 2400 10 904750 0.5 20-Sep-13 396 396 3700 17 1470700 0 19-Sep-13 418 416 1300 7 510200 -2 18-Sep-13 404 403 400 4 161500 -1 17-Sep-13 355 387.5 1900 10 699300 32.5 16-Sep-13 355 371 700 6 253300 16 13-Sep-13 355 353.95 500 5 177185 -1.05 12-Sep-13 341 340 700 7 238200 -1 ll-Sep-13 325 325 900 3 292500 0 10-Sep-13 320 310 500 5 159015 -10 06-Sep-13 305.5 305 300 3 91550 -0.5 05-Sep-13 291 291 100 1 29100 0 04-Sep-13 286.85 286.85 200 2 57370 0 03-Sep-13 281.25 281.25 700 5 196875 0 02-Seo-13 275.75 275.75 200 2 55150 0 30-Aug-13 270.35 270.35 800 5 216280 0 29-Aug-13 265.05 265.05 1100 5 291555 0 28-Aug-13 249.8 259.9 4000 14 1038590 10.1 27-Aug-13 259.9 254.85 1300 9 333880 -5.05 26-Aug-13 260.2 260 300 3 78040 -0.2 23-Aug-13 260.2 260.2 600 4 156120 0 22-Aug-13 260.2 260.2 9900 13 2575980 0 21-Aug-13 274.7 265.5 2000 9 550560 -9.2 19-Aug-13 270.9 270.9 100 1 27090 0 16-Aug-13 276.4 276.4 2400 13 663360 0 14-Aug-13 282 282 4000 11 1128000 0 12-Aug-13 286 286 700 4 200200 0 08-Aug-13 287 286 4900 26 1400150 -1 ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 18 07-Aug-13 284.5 287 2200 11 627845 2.5 06-Aug-13 286 282.05 1100 3 314205 -3.95 05-Aug-13 275.9 286 1500 12 419940 10.1 02-Aug-13 270.9 281.5 4300 29 1179710 10.6 Ol-Aug-13 276.4 276.4 1100 7 304040 0 3 l-Jul-13 282 282 600 6 169200 0 30-Jul-13 282.1 287.65 700 6 200265 5.55 29-Jul-13 271.1 282.1 3700 25 1042370 11 26-Jul-13 276.6 276.6 1300 13 359570 0 25-Jul-13 271.2 271.2 1700 16 461030 0: 24-JUI-13 265.9 265.9 100 1 26590 0 23-Jul-13 260 260.7 1300 4 338840 0.7 22-Jul-13 255.6 255.6 1000 8 255590 0 19-Jul-13 250.6 250.6 1300 10 325780 0 18-Jul-13 245.7 245.7 500 4 122850 0 17-Jul-13 240.9 240.9 9001 4 216810 0 16-Jul-13 236.2 236.2 200! 2 47240 0 15-Jui-13 231.6 231.6 400! 4 92640 0 12-Jul-13 227.1 227.1 700) 7 158970 0 ll-Jul-13 222.65 222.65 300 3 66795 0 10-Jul-13 218.3 2183 1600 7 349280 0 09-Jul-13 214.05 214.05 700; 6 149835 0 08-Jul-13 209.9 209.9 700 4 146930 0 05-Jul-13 205.8 205.8 1400! 11 288120 0 04-Jul-13 201.8 201.8 1000 9 201800 0 03-Jul-13 197.85 197.85 700! 6 138495 0 02-Jul-13 194 194 400! 3 77600 0 Ol-Jul-13 190.2 190.2 200 2 38040 0 28-Jun-13 186.5 186.5 600 6 111900 0 27-Jun-13 182.85 182.85 300 2 54855 0 26-Jun-13 179.3 179.3 300 3 53790 0 25-Jun-13 175.8 175.8 1300 4 228540 0 24-Jun-13 172.4 172.4 400 4 68960 0 21-Jun-13 169.05 169.05 1600 9 270480 0 20-Jun-13 165.75 165.75 100 1 16575 0 19-Jun-13 162.5 162.5 1200 7 195000 0 18-Jun-13 159.35 159.35 100 1 15935 0 17-Jun-13 156.25 156.25 500 5 78125 0 14-Jun-13 153.2 153.2 200 2 30640 0 13-Jun-13 150.2 150.2 200 2 30040 0 12-Jun-13 147.3 147.3 200 2 29460 0 ll-Jun-13 144.45 144.45 200 2 28890 0 10-Jun-13 141.65 141.65 500 3 70825 0 07-Jun-13 138.9 138.9 200 2 27780 0 06-Jun-13 136.2 136.2 200 2 27240 0 05-Jun-13 133.55 133.55 600 6 80130 0 04-Jun-13 130.95 130.95 200 2 26190 0 03-Jun-13 128.4 128.4 50Q 4 64200 0 31-May-13 125.9 125.9 100 1 12590 0 30-May-13 123.45 123.45 400 1 49380 0 ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 19 29-May-13 121.05 121.05 100 1 12105 0 28-May-13 118.7 118.7 200 2 23740 0 27-May-13 116.4 116.4 600 4 69840 0 24-May-13 114.15 114.15 800 4 91320 0 23-May-13 111.95 111.95 400 4 44780 0 22-May-13 109.8 109.8 500 3 54900 0 21-May-13 107.65 107.65 1100 4 118415 0 20-May-13 105.55 105.55 400 3 42220 0 17-May-13 103.5 103.5 200 2 20700 0 16-May-13 101.5 101.5 800 5 81200 0 15-May-13 99.55 99.55 100 1 9955 0 14-May-13 97.6 97.6 700 3 68320 0 13-May-13 95.7 95.7 700 6 66990 0 ll-May-13 93.85 93.85 100 1 9385 0 10-May-13 92.05 92.05 300: 2 27615 0 09-May-13 90.25 90.25 800 3 72200 0 08-Mav-13 88.5 88.5 200 2 17700 0 07-May-13 86.8 86.8 800 7 69440 0 06-May-13 85.1 85.1 100 1 8510 0 03-May-13 83.45 83.45 300: 2 25035 0 02-May-13 81.85 81.85 i50o; 3 122775 0 30-Apr-13 80.25 80.25 400 3 32100 0 29-Apr-13 78.7 78.7 1900 4 149530 0 26-Apr-13 77.2 77.2 1600 9 123520 0 25-Apr-13 75.7 75.7 10 0 1 7570 0 23-Apr-13 74.25 74.25 60 0 4 44550 0 22-Apr-13 72.8 72.8 1100 4 80080 0 18-Apr-13 71.4 71.4 2400 13 171360 0 17-Apr-13 71 70 230 0 10 163200 -1 16-Apr-13 69.65 69.65 o 00 0 5 55720 0 15-Apr-13 68.3 68.3 80 0 4 54615 0 12-Apr-13 67 67 10 0 1 6700 0 ll-Apr-13 65.9 65.9 10 0 1 6590 0 10-Apr-13 64.65 64.65 40 0 3 25860 0 08-Apr-13 63.4 63.4 10 0 1 6340 0 05-Apr-13 62.2 62.2 10 0 1 6220 0 04-Apr-13 61 61 30 0 3 18300 0 03-Apr-13 59.85 59.85 80 0 5 47880 0 02-Apr-13 58.7 58.7 20 0 2 11740 0 Ol-Apr-13 57.55 57.55 20 0 1 11510 0 20. An analysis of monthly trades from FY 2001-02 onwards, also reflects the same pattern. Month Open Price Close Price No.of Share s No. of Trades Total Turnover (Rs.) Spread Close- Open Apr-01 8.2 8.4 40 0 3 3320 0.2 @ May-01 8.75 10.05 100 0 8 10400 1J 1 @ Aug-01 9.25 7.9 1200 10 9685 -1.35 @ Sep-01 7.75 7.75 100 1 775 0 @ Nov-01 5.85 5.85 100 1 585 0 @ Dec-01 7.3 7.3 l- i. O . O i 1 730 0 @ Aug-03 8.5 8.5 100 1 850 0 ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 20 Sep-04 6.81 6.81 100 1 681 0 Oct-04 5.55 7.99 300 3 2020 2.44 Nov-04 9.58 30.5 12400 83 262264 20;92 Dec-04 29 27.6 1700 5 47480 -1.4 Jan-05 26.25 24.95 200 2 5120 . -1.3 Feb-05 22.5 13.5 2600 18 50405 -9 Mar-05 14.8 11 4100 16 56392 -3.8 Apr-05 10.95 9.1 1700 6 17020 -1.85 May-05 9.9 15.12 2200 16 25441 5.22 Jun-05 16.6 15.7 7500 37 144700 -0.9 Jul-05 17 14.75 1900 13 29165 -2.25 Aug-05 16 22.37 7200 29 123022 6.37 Sep-05 23.45 20.5 6400 40 141810 -2.95 Nov-05 19.5 •re 900 7 15655 -3.5 Dec-05 16 16 IOC 1 1600 0 Jan-06 16.8 16 130C 8 20960 -0.8 Feb-06 16 16 70C 6 11275 0 Mar-06 15.25 15.25 IOC 1 1525 0 Nov-06 14.5 14.45 50C 5 7460 -0.05 Dec-06 14 13.75 30C 2 4175 -0.25 Feb-07 13.1 13.65 80C 8 10295 0.55 Mar-07 13 13 20C 2 2600 0 Aug-07 12.36 12.36 100 1 1236 0 0ct-07 11.76 14.96 iooc: 8 13240 3.2 Nov-07 15 15 IOC 1 1500 0 Jan-08 15 23.16 570C 29 94903 8.16 Apr-08 24.3 21.95 70C 5 16655 -2.35 May-08 23 21.9 30C 2 6680 -1.1 Jul-08 20.85 20.85 30C 2 6255 0 Aug-08 21.8 20.7 60C 6 12440 -1.1 Sep-08 19.7 18.75 20C 2 3845 -0.95 0ct-08 17.85 17.85 IOC 1 1785 0 Nov-08 17.85 17.85 IOC 1 1785 0 Dec-08 17 17 IOC 1 1700 0 Jan-09 16.2 13.3 50C 5 7350 -2.9 Feb-09 12.64 12.64 IOC 1 1264 0 Mar-09 12.01 10.4 40C 4 4466 -1.61 Apr-09 9.89 6.95 120C 12 9922 -2.94 May-09 7.29 7.45 300 3 2184 0.16 Jun-09 7.5 7.5 100 1 750 0 0ct-09 7.5 7.5 100 1 750 0 Dec-09 7.87 8.26 200 2 1613 0.39 Jan-10 8.67 12.76 120C 10 12316 4.09 Feb-10 13.39 21.75 190C 17 33519 8.36 Mar-10 22,8 44.6 400G 25 132365 21.8 Apr-10 46.8 52.5 8700 ■58 488430 5.7 May-10 49.9 38.25 2700 16 108970 -11.65 Jun-10 38.3 38.2 2700 22 111755 -0.1 Jul-10 37.3 46.35 7300 53 259080 9.05 Aug-10 48.65 56.5 14300 93 953535 7.85 ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 21 Sep-10 55.05 56 3500 25 192365 0.95 0ct-10 53.5 40.65 4400 30 206755 -12.85 Nov-10 40 25.35 5000 32 172560 -14.65 Dec-10 24.1 24.15 1100 8 25505 0.05 Feb-11 25.35 32.2 700 6 20270 6.85 Mar-11 31.05 33.55 2800 . . 20 93270 2.5 Apr-11 34.95 28.6 700 6 22670 -6.35 ay-11 27.2 27 400 4 10590 -0.2 Jun-11 28 28 100 1 2800 0 Jul-11 27 21.1 700 7 16570 -5.9 Aug-11 21.1 25.6 500 5 11650 4.5 Sep-11 24.35 24.3 2100 16 53060 -0.05 Nov-11 25.4 26.15 2900 8 73225 0.75 Jan-12 24.85 20.7 1700 9 39880 -4.15 Feb-12 19.7 16.15 1800 11 31430 -3.55 Mar-12 15.35 16.65 800 6 12940 1.3 Apr-12 17.45 17.45 500 2 8725 0 May-12 16.5 15.05 500 3 8065 -1.55 Jun-12 14.3 12.5 2600 21 31800 -1.8 Jul-12 12.5 12.47 2400 11 28217 -0.03 Aug-12 13.09 13.09 1100 3 14399 0 Nov-12 12.44 11 2400 14 27382 -1.44 Dec-12 11 12.12 600 5 6989 1.12 Jan-13 12.72 17.87 1700 11 24828 5.15 Feb-13 18.7 24.85 1900 12 42375 6.15 Mar-13 26.05 56.45 43700; 146 2123185 30.4 Apr-13 57.55 80.25 14300 75 1023385 22.7 May-13 81.85 125.9 11200 65 1119115 44.05 Jun-13 128.4 186.5 9400 69 1509555 58.1 Jul-13 190.2 282 21400 161 5274640 91.8 Aug-13 276.4 270.35 42300 179 11505545 -6.05 Sep-13 275.75 388 17000 103 6267195 112.25 Oct-13 370 475.7 21900 101 10791950 105.7 Nov-13 452 539 277600 269 143936800 87 Dec-13 565 625 1208077 976 721188365 60 Jan-14 635 690.95 2183653; 3738 1512578182 55.95 Feb-14 725 689.7 2433426 6600 1688389386 -35.3 Mar-14 655.6 688.7 3561143 8055 2516481961 33.1 Apr-14 690 537.4 1263452: 2551 721544859 -152.6 May-14 530 452.15 2027272 4595 1105846000 -77.85 Jun-14 430 307.95 1010536 3522 385996703 -122.05 Jul-14 307.95 245.15 1543121 5272 382713421 -62.8 Aug-14 247 383.1 1098995 4610 392101570 136.1 Sep-14 390 356.65 1009145 2610 364887598 -33.35 Oct-14 353.95 300.6 716568 2253 267025996 -53.35 Nov-14 302 269.4 2252318 5936 592428548 -32.6 Dec-14 270 138.4 1626315 4296 380639023 -131.6 Jan-15 131.5 112.85 92503 102 11123134 -18.65 @ Shares traded in Physical forrr 21. The pattern of balance sheet of Kappac Pharma Ltd, discussed earller in part of this order, from AY 14 under. Pattern till A.Y 14 21.1 Therefore, the reliance of the assessee (in written submissions) on the IPO's of companies of Reliance Group to justify high price, is misplaced as there is strong standing of the group and companies of the group coming for for IPO have projects s and plan business in specific terms. 22. In the INCOME TAX APPEAL NO. 18/2017 in the case of SANJAY BIMALCHAND JAIN, L/H SHANTIDEVI BIMALCHAND JAIN, order dated APRIL 10, 2017, the Hon'ble Bombay High Court held has as under: "By this income tax orders of the Assessing Officer, the Commissioner of Income Tax as also the Income Tax Appellate Tribunal holding that the assessee had traded in shares and the income was liable to be taxed as "business" income. ITA No. 1908/Del/2019 ITA No. 1909/Del/2019 22 The pattern of balance sheet of Kappac Pharma Ltd, discussed earller in part of this order, from AY 14-15 is also reproduced here in under. Pattern till A.Y 14-15 is there in the assessment order. Therefore, the reliance of the assessee (in written submissions) on the IPO's of companies of Reliance Group to justify high price, is misplaced as there is strong standing of the group and companies of the group coming for for IPO have projects s and plan business in specific terms. 22. In the INCOME TAX APPEAL NO. 18/2017 in the case of SANJAY BIMALCHAND JAIN, L/H SHANTIDEVI BIMALCHAND JAIN, order dated APRIL 10, 2017, the Hon'ble Bombay High Court held has as under: "By this income tax appeal, the appellant-assessee challenges the orders of the Assessing Officer, the Commissioner of Income Tax as also the Income Tax Appellate Tribunal holding that the assessee had traded in shares and the income was liable to be taxed as e. ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg The pattern of balance sheet of Kappac Pharma Ltd, discussed 15 is also reproduced here in 15 is there in the assessment order. Therefore, the reliance of the assessee (in written submissions) on the IPO's of companies of Reliance Group to justify high price, is misplaced as there is strong standing of the group and companies of the group coming for for IPO have projects s and planned future 22. In the INCOME TAX APPEAL NO. 18/2017 in the case of SANJAY BIMALCHAND JAIN, L/H SHANTIDEVI BIMALCHAND JAIN, order dated APRIL 10, 2017, the Hon'ble Bombay High Court held has as under:- assessee challenges the orders of the Assessing Officer, the Commissioner of Income Tax as also the Income Tax Appellate Tribunal holding that the assessee had traded in shares and the income was liable to be taxed as ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 23 The assessee had on the advice of an income tax consultant purchased shares of two penny stock Kolkata based companies i.e., 8000 shares at the rate of Rs. 5.50 per share on 08.08.2003 and 4000 shares at the rate of Rs. 4/- per share on 05.08.2003 from Syncom Marketing Pvt. Ltd. and of Skyzoom Distributors Pvt. Ltd. the payments were made by the assessee in cash for acquisition of shares of both the companies. The oddress of both the companies was interestingly, the same. The authorized signatory of both the companies was also the same person. The purchase of shares of both the companies was done by the assessee through Global Stock and Securities Ltd and the address of the said broker was incidently the address of the two companies. Both the companies intimoted the assessee on 07.04.2004 regarding the merger of the companies with another company, viz. Khoobsurat Limited, Kolkata and the assessee received the shares of the new company in the ratio of 1:4 of the number of shares of the previous two companies held by the assessee. The assessee sold 2200 shares at an exorbitant rate of Rs. 486.55 per share on 07.06.2005 and 800 shares on 20.06.2005 at the rate of Rs. 485.65. The shares were sold through another broker, viz. Ashish Stock Broking Private Limited. The proceeds from the aforesaid sale transaction were directly credited by the broker in the Savings Bank Account of the assessee in the Union Bank of Indio. The assessing officer did not accept the case of the assessee that she was entitled to exemption under section 10(38) of the Income Tax Act. The assessing officer held that the aforesaid transactions of purchase of two penny stock shares for Rs. 60,000/- the merger of the companies with a new company and the sale of the shares for Rs. 11,58,930/- fell within the ambit of adventure in the nature of trade and the assessee had profited by Rs. 13,98,930/- The assessing officer, therefore, brought the aforesaid amount to tax under the head 'business income'. Being aggrieved by the order of the assessing officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The appeal filed by the assessee was dismissed and so was the subsequent appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals) before the Income Tax Appellate Tribunals. On hearing the learned counsel for the assessee and on a perusal of the orders of the income tax authorities, it appears that there is no scope for interference with the said orders in this appeal. By referring to the aforesaid facts, which are narrated in the earlier part ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 24 of this order, the authorities found that the assessee had made investment in two unknown companies of which the details were not known to her. It was held that the transaction of sale and purchase of shares of two penny stock companies, the merger of the two companies with another company, viz. Khoobsurat Limited did not qualify on investment and rather it was an adventure in the nature of trade. It was held by all the authorities that the motive of the investment made by the assessee was not to derive income but to earn profit. Both the brokers, i.e. the broker through whom the assessee purchased the shares and the broker through whom the shares were sold, were located in Kolkata and the assessee did not have an inkling as to what was going on in the whole transaction except paying a sum of Rs. 65,000/- in cash for the purchase of shares of the two penny stock companies. The authorities found that though the shares were purchased by the assessee at Rs. 5.50 Ps. Per share and Rs. 4 per share from the two companies in the year 2003, the assessee was able to sell the shares just within a years time at Rs. 486.55 Ps and Rs. 485.65 Ps per share. The broker through whom the shares were sold by the assessee did not respond to the assessing officer's letter seeking the names, addresses and the bank accounts of the persons that had purchased the shares sold by the assessee. The authorities have recorded a clear finding of fact that the assessee had indulged in a dusions share transaction meant to account for the undisclosed income in the grab of long term capital gain. While so observing, the authorities held that the assessee had not tendered cogent evidence to explain as to how the shares in an unknown company worth Rs. 5/- had jumped to Rs. 485/- in no time. The Income Tax Appellate Tribunal held that the fantastic sale price was not at all possible as there was no economic or financial basis as to how a share worth Rs. 5/- of a little known company would jump from Rs. 5/- to Rs. 485/- The findings recorded by the authorities are pure findings of facts based on a proper appreciation of the material on record. While recording the said findings, the authorities have followed the tests laid down by the Hon'ble Supreme Court and this Court in several decisions. The findings do not give rise to any substantial question of low. The judgments reported in (2012) 20 Taxman.com 529 (Bombay) (CIT Versus Jamnadevi Agrawal), (1957) 31 ITR 294 (Bombay) (Puranmal Radhakishan Versus CIT), (1970) 77 ITR 253 (SC) (Raja Bahadur Versus CIT) and (2015) 235 Taxman 1 (Bom) (CIT Versus Smt. Datta M. Shah) and relied on by the learned counsel for the assessee are distinguishable on facts and cannot be applied to the case in hand. Since no substantial question of law arises in this appeal, the appeal is dismissed with no order as to costs." ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 25 23. Therefore, the view taken in the order is also supported by the above decision of Hon'ble High Court, that the transactions are in the nature of an adventure in the nature of trade, resulting in business income and not capital gains. 24. The above discussion leads to a conclusion that the so called transactions, even if genuine l.e. no ante dating of purchases and cash payment for taking accommodation entry is Involved, would result in business profits and not long term capital gains and corresponding grounds would still be dismissed, though the section for addition/disallowance would change. 25. However, and without prejudice to findings in Para 24, purchase by a Delhi person from a Gujarat seller in cash of physical shares, when trading was permitted only in demat form, and other factors discussed in this order establish that it was an accommodation entry only. So the addition is confirmed u/s 69A. There may be a view that this addition should have been made u/s 68. However, that does not change the fact that the claim of exemption u/s 10(38) was wrong and it was assessee's own unexplained money (section 69A), Introduced in book (section68). 26. However, if at further appellate level, the decision on addition u/s 69A/68 is reversed, the profits shall be taken as business Income and not long term capital gains. It means that without prejudice to the reasoning given on section 69A/68, even if the above transaction are treated as genuine, it would result in business profits and not long term capital gains and therefore the exemption under section 10(38) would not be allowed. Therefore, if at further appellate level the above decision on section 69A/68 is reversed the assessee would still not be eligible to claim exemption under section 10(38), as in that case the corresponding income would be treated as business income. 27. In the result the appeal is dismissed." 7. The script of Kappac Pharma Ltd. was investigated by Bombay Stock Exchange/SEBI and the trading was suspended due to surveillance reasons. Considering the facts discussed in the above order, it is apparent that the script had no intrinsic value, no projects in hand, no financials to support movement of scripts as claimed and was practically trash of no value. Since the Revenue detected evidence of this script being used for giving accommodation entries the addition made under section 68/69C is confirmed. In the case of Naresh Kumar, the addition was made u/s 69A. However, that does not make any difference. Urexplained money in the ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 26 hands of assessee is laxable u/s 69A. When the money credited in books as unsubstantiated capital gains, the amount also becomes deemed income U/s 68. 8. However as mentioned the assessee was also required to show cause why the corresponding should not be treated as business income. Assessee. claimed that the assessee had never done share transactions in past and has never shown such business income. However, as held in the case of Naresh Kumar (supra) a single transaction with profit motive can also be an adventure in the nature of trade if the intention is to make profits and not earn dividends and normal capital appreciation. Therefore without prejudice to the above decision, the corresponding income will be treated as business income, if at further appellate level, the decision on addition u/s 69C/68 is reversed. In that case, the profits shall be taken as business income and not long term capital gains by following the decision given in the case of Naresh Kumar (supra). It means that without prejudice to the reasoning given for addition u/s 69C/68, even if the above transaction are treated as genuine, it would result in business profits and not long term capital gains and therefore exemption under section 10(38) would not be allowed. Therefore, it is again clarified that if at further appellate level the above decision on section 69C/68 is reversed, the assessee would still not be eligible to claim exemption under section 10(38), as In that case the corresponding income would be treated as business income. The assessee has also relied on certain decisions of Hon'ble ITAT to support the claim that the addition u/s 68/69C cannot be made. However those decisions are sub-silentio, the arguments and facts discussed in the order in the case of Naresh Kumar (supra). 10. In view of the above, the appeal is dismissed. Since addition made has been confirmed, individual ground wise decision is not being reiterated.” 5. We have perused the order of the ld. CIT(A) and the details of the scrip involved. We have gone through the submissions given before the revenue authorities by the assessee. We have also gone through the rationale given by the ld. CIT(A) and also perused the analysis of monthly trades, judicial pronouncements, financials and the data from 2001 to 2015. The same issue has been covered by the orders of the ITA No. 1908/Del/2019 Megha Garg ITA No. 1909/Del/2019 Manish Garg 27 ITAT New Delhi involving the same scrip. Hence, in the absence of any change in the material facts, we decline to interfere with the order of the ld. CIT(A). 6. In the result, the appeals of the assessees are dismissed. Order Pronounced in the Open Court on 03/03/2023. Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 03/03/2023 *Ajay Kumar Keot, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR