Rohit Jalan, Kolkata V. ITO, Ward - 36(1), Kolkata

ITA 2205/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4807 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-02-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 22-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY ACIT
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained cash credit; Unexplained expenditure; Capital asset; Search and seizure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Transactions in derivatives; Question of law; Accommodation entries; Onus to prove; Sham transactions; Penny stocks; Set aside
• Section: 69C; 153A; 143(1); 205; 147; 68; 132

Judgement Text

1 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH, SMC AT KOLKATA () . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 2205/KOL/2018 ASSESSMENT YEAR: 2013-14 ROHIT JALAN (PAN: AEZPJ1210L) VS. ITO, WARD-36(1), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 20.02.2019 DATE OF PRONOUNCEMENT 17.05.2019 FOR THE APPELLANT SHRI S. M. SURANA, ADVOCATE FOR THE RESPONDENT SHRI ROBIN CHOUDHURY, ACIT, SR. DR ORDER THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) 10, KOLKATA DATED 19.09.2018 FOR ASSESSMENT YEAR 2013-1 4. 2. THOUGH THE ASSESSEE HAS RAISED THE LEGAL ISSUE A GAINST VALIDITY OF REOPENING U/S. 147 READ WITH 148 OF THE INCOME-TAX ACT, 1961 (HEREINAF TER REFERRED TO AS THE ACT), I NOTE THAT THE ADDITION IS BASED ON THE LONG TERM CAPITAL GAIN S CLAIM OF THE ASSESSEE IN RESPECT OF SALE OF SCRIP OF M/S. TUNI TEXTILE MILLS LTD. AS EX EMPT U/S. 10(38) OF THE ACT WHICH WAS HELD BY AO TO BE BOGUS AND THAT ACTION OF AO WAS C ONFIRMED BY THE LD. CIT(A) ON APPEAL OF THE ASSESSEE. THEREFORE THIS APPEAL OF ASSESSEE BEFORE THIS TRIBUNAL. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.8,11,164/-. THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND NO SCRUTINY ASSESSMENT WAS MADE. THEREAFTER, THE AO ISSUED NOT ICE U/S. 148 OF THE ACT. THE ASSESSEE IS AN INDIVIDUAL WHO CLAIMED LTCG TO THE TUNE OF RS .28,93,483/- ON SALE OF SHARES OF M/S. TUNI TEXTILES LTD. THE AO REOPENED THE ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED FROM DIRECTORATE OF INCOME TAX (INV.) THAT THE ASSE SSEE HAD TRANSACTED IN PENNY STOCK SHARES. THEREAFTER, THE AO MADE THE ASSESSMENT U/S . 147/143(3) OF THE ACT TREATING THE LTCG OF RS.28,93,483/- AS UNEXPLAINED CASH CREDIT U /S. 68 OF THE ACT. THE AO FURTHER MADE ADDITION OF RS.14,467/- FOR ALLEGED COMMISSION @ .5% PAID TO OBTAIN THE ALLEGED 2 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 BOGUS LTCG U/S. 69C OF THE ACT. AGGRIEVED, ASSESSE E PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF AO. AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THOUGH THE ASSESSEE HAS RAISED THE LEGAL ISSUE AGAINST VALIDITY OF REOPENING U/S. 147 READ WITH SEC. 148 OF THE ACT, I T IS NOTED THAT IN THE REASSESSMENT ORDER THE ADDITION IS IN RESPECT OF THE LTCG CLAIM OF THE ASSESSEE IN RESPECT OF SALE OF SCRIP OF M/S. TUNI TEXTILE MILLS LTD. AS EXEMPT U/S. 10(38) OF THE ACT WHICH WAS HELD BY AO TO BE BOGUS AND THAT ACTION OF AO HAS BEEN CONFIRMED BY THE LD. CIT(A) ON APPEAL OF THE ASSESSEE. HOWEVER, WE NOTE THAT IN A NUMBER OF CAS ES, THIS TRIBUNAL HAS HELD THAT THE SCRIP OF M/S. TUNI TEXTILE MILLS IS NOT BOGUS AND HAS ALL OWED THE CLAIM OF ASSESSEE IN RESPECT OF LTCG CLAIM ON THE SALE OF THIS SCRIP I.E. M/S. TUNI TEXTILE MILLS LTD. (IN SHORT M/S. TTML). WE NOTE THAT THE ISSUE IS NO LONGER RES INT EGRA AS THE TRIBUNAL IN IT(SS) A NOS. 112 & 113/KOL/2018 RAMESH CHANDRA K. SHAH VS. ACIT FOR AYS 2011-12 AND 2012-13 ORDER DATED 12.02.2019 WHEREIN THE TRIBUNAL HAS HEL D THAT THE SCRIP OF M/S. TTML IS NOT A BOGUS SCRIP. WE NOTE THAT IN THIS CASE THE TRIBUNA L HAS HELD AS UNDER: 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH THE FACTS AND CIRCUMSTANCES OF THE CASE. FIRST, WE MAKE IT CLEAR THAT AS PER THE ADMIT TED FACTS ENUMERATED IN PARA 4 SUPRA, BOTH THE ASSESSMENT YEARS BEFORE US ARE UNABATED ASSESSMENTS , SINCE THESE ASSESSMENT YEARS WERE NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH ON 12.0 8.2015, SO NO ADDITION CAN BE MADE BY THE AO, WITHOUT THE AID OF INCRIMINATING MATERIALS. WI TH THAT BACKGROUND IN MIND, LET US SEE WHETHER THERE ARE ANY INCRIMINATING MATERIALS UNEAR THED AGAINST THE ASSESSEE DURING SEARCH, WHICH CAN JUSTIFY THE ADDITION MADE BY THE AO. IN T HE SAID LOOK-OUT, WE NOTE THAT THE AOS ASSERTION THAT INCRIMINATING MATERIAL I.E. CJ-2 AND CJ-13 WERE RECOVERED DURING SEARCH WHICH SHOW THAT THE ASSESSEE DEALT WITH M/S. TTML WHICH R ESULTED IN BOGUS LTCG, OUR OPINION AFTER EXAMINING CAREFULLY EACH DOCUMENTS WHICH ARE PLACED FROM PAGES 32 TO 69 ARE THAT THEY ARE NOTHING BUT BANK STATEMENT, LEDGERS, ACCOUNTS M AINTAINED BY ASSESSEE OF GCM SECURITIES[BROKER], LEDGER ACCOUNT OF BANK OF INDIA , BURRA BAZAR BRANCH, CONTRACT NOTES OF SALE, SUMMARY OF LTCG, BALANCE SHEET, INCOME TAX RETURN W HICH DOCUMENTS ACCORDING TO US, CAN BY NO STRETCH OF IMAGINATION BE TERMED AS INCRIMINA TING MATERIAL, RATHER WE NOTE THAT THESE WERE THE VERY SAME DOCUMENTS THE ASSESSEE HAD ALREA DY DISCLOSED BEFORE SEARCH AND ON THE STRENGTH OF WHICH THE ASSESSEE, IN FACT HAD CLAIME D AUTHENTICALLY TO HIS TRANSACTION FOR CLAIMING LTCG. SO, WE FIND THAT THERE IS NO INCRIMI NATING MATERIAL UNEARTHED AGAINST THE ASSESSEE DURING SEARCH AS MISUNDERSTOOD BY THE AO A ND THE LD. CIT DR BEFORE US. ONLY OTHER INCRIMINATING MATERIAL ACCORDING TO LD. DR BEFORE U S IS THE STATEMENT OF SHRI NARENDRA PRABHUDAYAL SUREKA WHICH HAS BEEN RECORDED BY THE D EPARTMENT. THE AO HAS REPRODUCED HIS STATEMENT IN THE ASSESSMENT ORDER ITSELF. AFTER CA REFULLY GOING THROUGH THE CONTENTS OF THE STATEMENT WE NOTE THAT THIS STATEMENT WAS RECORDED BY THE DEPARTMENT BEFORE THE SEARCH I.E. ON 02.06.2015 WHEREAS SEARCH TOOK PLACE ON 12.08.2015. SO ADMITTEDLY NO INCRIMINATING STATEMENT WAS RECORDED DURING SEARCH UNDER SECTION 132(4) OF THE ACT. AS WE NOTED THIS STATEMENT WAS RECORDED BY THE DEPARTMENT BEFORE THE SEARCH AND THE INFERENCE THAT CAN BE DRAWN IS THAT THE SEARCH TEAM LEADERS WOULD BE AWAR E OF THE STATEMENT OF SHRI NARENDRA 3 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 PRABHUDAYAL SUREKA IN RESPECT OF SHARES OF M/S. TTM L, SO WHILE CONDUCTING SEARCH, THEY WOULD ENTHUSIASTICALLY LOOK FOR SOME MATERIAL/DIARY /ELECTRONIC ENTRY/COMPUTER ENTRY/PRINT OUT TO SHOW THE MOVEMENT OF CASH FROM ASSESSEES COFFER TO THE PURCHASE OF SHARES FROM ASSESSEE (I.E. TO THE PRE-ARRANGED BUYER AT THE BOMBAY STOCK EXCHANGE WHO BOUGHT ASSESSEES SHARE OF M/S. TTML FOR ASTRONOMICAL PRICE) OR AS TO FIND OU T ANY CORRESPONDENCE/LINK/NEXUS TO ESTABLISH THE ASSESSEES RELATIONSHIP BETWEEN SHRI NARENDRA PRABHUDAYAL SUREKA OR SHRI MANISH BAID. THOUGH DURING HEARING WE ASKED THE DE PARTMENT TO SHOW SOME MATERIAL LEAVE ALONG EVIDENCE TO SUGGEST ANY LINK OF ASSESSEE WITH SHRI NARENDRA PRABHUDAYAL SUREKA OR SHRI MANISH BAID, THEY COULD NOT PRODUCE BEFORE US. SO, UNDISPUTEDLY SINCE THE STATEMENT OF SHRI NARENDRA PRABUDAUAL SUREKA HAS BEEN RECORDED BEHIND THE BACK OF ASSESSEE THAT TOO BEFORE SEARCH AND DOES NOT DIRECTLY IMPLICATE THE ASSESSEE IN ANY WRONG DOING CANNOT BE TERMED AS INCRIMINATING MATERIAL AGAINST ASSESSEE. MOREOVER, WE SHOULD HASTEN TO ADD THAT SHRI NARENDRA PRABHUDAYAL SUREKAS STATEMENT (IN DETAIL WE WILL DISCUSS LATER) IS A GENERAL STATEMENT THAT M/S. TTML IS A PENNY STOCK. HOWEVER , WE NOTE THAT SHRI NARENDRA PRABHUDAYA SUREKA HAS ATTRIBUTED NO KNOWLEDGE ABOUT THE BENEFI CIARIES AND HAS PUT THE ENTIRE BLAME ON SHRI MANISH BAID, WHOSE STATEMENT AO HAS NOT PLACED ON RECORD AND SO SHRI NARENDRA PRABHUDAYAL SUREKAS STATEMENT IN NO WAY ADVANCES T HE CASE AGAINST THE ASSESSEE, BECAUSE SHRI NARENDRA PRABHUDAYAL SUREKA IS IGNORANT ABOUT ANY PREFERENTIAL SHARE HOLDERS. SO WITHOUT ANY INCRIMINATING MATERIAL AGAINST THE ASSE SSEE FOUND DURING SEARCH IN RESPECT TO SHARES OF M/S. TTML, NO ADDITION CAN BE MADE WITHOU T INCRIMINATING MATERIAL FOUND DURING SEARCH. SO, SINCE BOTH THE AYS BEFORE US WERE NOT PENDING BEFORE AO ON DATE OF SEARCH, SO WITHOUT INCRIMINATING MATERIALS UNEARTHED DURING SE ARCH, NO ADDITION CAN BE MADE AS HELD BY HONBLE DELHI HIGH COURT IN KABUL CHAWLA (SUPRA) WH EREIN THEIR LORDSHIPS HELD AS UNDER: SUMMARY OF LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DE CISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHE D REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN S EPARATE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE D ISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A ME RGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS O F THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE A O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATI NG MATERIAL UNEARTHED DURING THE COURSE OF 4 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 11. THE HON'BLE JURISDICTIONAL CALCUTTA HIGH COURT IN ITA NO. 661 OF 2008 COMMISSIONER OF INCOME TAX VS.VEERPRABHU MARKETING LTD. HAS ALSO HELD AS UNDER: WE AGREE WITH THE VIEW EXPRESSED BY THE KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS PRE-REQUISITE BEFORE POWER COULD HAVE BEEN EXERC ISED U/S 153(C) R.W SECTION 153(A). IN THE CASE BEFORE US, THE AO HAS MADE A DISALLOWANCE OF T HE EXPENDITURE, WHICH WAS HELD DISCLOSED, FOR ONE REASON OR THE OTHER, BUT SUCH DISALLOWANCES MADE BY THE AO WERE UPHELD BY THE LD.CIT(A) BUT THE LD. TRIBUNAL DELETED THESE DISALL OWANCE. WE FIND NO INFIRMITY IN THE AFORESAID ACT OF THE LD. TRIBUNAL. THE APPEAL IS, T HEREFORE, DISMISSED. 12. IN A SIMILAR CASE M/S. KURELE PAPER MILLS PVT. LTD. ADDITION WAS MADE BY THE AO (IN SEC. 153A PROCEEDINGS) WITHOUT INCRIMINATING MATERI AL UNEARTHED DURING SEARCH, THE SHARE CAPITAL RECEIVED BY THE ASSESSEE U/S. 68 OF THE AC T WAS DELETED BY THE TRIBUNAL, WHICH ORDER HAS BEEN UPHELD BY HONBLE DELHI HIGH COURT IN PR. CIT VS. KURELE PAPER MILLS PVT. LTD. (2016) 380 ITR 571 (DEL) WHICH DECISION HAS NOT BEE N DISTURBED BY THE HONBLE SUPREME COURT (2016) 380 ITR (ST.) 69-ED AND WAS PLEASED TO DISMISS THE SLP. 13. BEFORE WE PART FOR COMPLETENESS, WE WOULD LIKE TO ANALYZE THE STATEMENT OF SHRI NARENDRA PRABHUDAYAL SUREKA WHO ACCORDING TO REVENU E HAS GIVEN INCRIMINATING OCULAR EVIDENCE AGAINST THE ASSESSEE IN-RESPECT OF SCRIPS OF M/S TTML. FROM THE STATEMENT OF SHRI NARENDRA PRABHUDAYAL SUREKA IT REVEALS THAT HE IS T HE MANAGING DIRECTOR OF M/S. TTML. HIS STATEMENT HAS BEEN RECORDED ON 02.06.2015 (BEFORE S EARCH WHICH HAPPENED ON 12.08.2015) (APPEAL PAPER PAGES 72 TO 81). FROM A PERUSAL OF T HE STATEMENT OF SHRI NARENDRA PRABHUDAYAL SUREKA WE NOTE THAT HIS COMPANY M/S. TTML WAS NOT A FLY BY NIGHT COMPANY. IT HAS A RUNNING FACTORY WHICH IS SITUATED AT B4/5, MIDC, MURBAD, TH ANE AND HE WAS THE MANAGING DIRECTOR OF THE COMPANY SINCE 06.07.1987 AND THIS COMPANY WAS L ISTED WITH THE BSE IN 1996 AND IT WAS IN THE BUSINESS OF MANUFACTURING CLOTH FROM YARN. IT I S DISCERNED THAT M/S. TTML WAS DELISTED DUE TO NON-COMPLIANCE WITH THE STATUTORY REQUIREMEN T OF BSE AND THE COMPANY INCURRED LOSSES SO, HAD APPLIED WITH THE BIFR IN THE YEAR 2000 AND WAS DECLARED AS A SICK UNIT ON 16.04.2002. THEREAFTER, HE SAID THAT WHEN THE PROCEEDINGS WERE GOING ON AT BIFR, SINCE NO FINANCIAL INSTITUTION WAS FORTHCOMING TO FINANCE THE COMPANY, HE CAME INTO CONTACT WITH SHRI MANISH BAID WHO SUGGESTED HIM THE ROUTE OF PREFERENTIAL SH ARES TO RAISE CAPITAL AND HE HAS REPLIED TO QUESTION NO. 12 THAT THE LIST OF PREFERENTIAL ALLOT TEES WAS GIVEN AT ANNEXURE I (WHICH IS NOT ANNEXED BEFORE US) AND THAT HE HAS RAISED CAPITAL O F RS.7,50,00,000/- AT RS. 10/- FACE VALUE FROM 47 HUF/INDIVIDUAL ON 25.01.2010. ACCORDING TO SHRI NARENDRA PRABHUDAYAL SUREKA THESE PREFERENTIAL SHARES WERE ALLOTTED TO PEOPLE WHO WAS KNOWN ONLY TO SHRI MANISH BAID AND TO QUESTION NO. 31 HE HAS ANSWERED THAT THE AMOUNT REC EIVED AS INVESTMENT THROUGH PREFERENTIAL SHARE ALLOTMENT WAS UTILIZED FOR THE BUSINESS AFFAI RS OF THE M/S. TTML IN THE FORM OF CAPITAL INVESTMENT AND A SEPARATE BANK ACCOUNT WAS CREATED WITH THE INDIAN OVERSEAS BANK, NARIMAN POINT. THE COMPANY WAS AGAIN LISTED WITH BSE ON 1 3.03.2009. AFTER SAYING ALL THE AFORESAID FACTS, TO A QUESTION AS TO HOW THE SHARE PRICE SHOT UP TO HIGH PRICE, SHRI NARENDRA PRABHUDAYAL SUREKA HAS STATED THAT IT IS A PENNY STOCK COMPANY AND THAT THE SHARES OF THE COMPANY HAVE BEEN USED TO PROVIDE ENTRY FOR BOGUS LTCG TO THE PR EFERENTIAL ALLOTTEES AND ON THE SAME BREATH AGAIN HAS SAID THAT THE ENTIRE SCHEME HAS BE EN MANAGED AND CONTROLLED BY SHRI MANISH BAID. FROM THE REPLY OF SHRI SUREKA, IT TRANSPIRES THAT M/S. TTML IS A RUNNING CLOTH MILL AND THERE ARE STILL EMPLOYEES WORKING IN HIS FACTORY AN D ALSO HE DOES NOT KNOW PERSONALLY ABOUT THE PREFERENTIAL SHAREHOLDERS AND CONVENIENTLY HAS STATED THAT ONE SHRI MANISH BAID HAS BROUGHT THESE SHAREHOLDERS FROM WHOM RS. 7.50 CR. W AS COLLECTED AND IT WAS INFUSED AS CAPITAL INTO HIS COMPANY M/S. TTML. IT IS ALSO NOTED THAT T HOUGH SHRI NARENDRA PRABHUDAYAL SUREKA HAS STATED THAT HE DOES NOT KNOW ANY OF THE PREFERE NTIAL ALLOTTEES, WE NOTE THAT THE AO HAS NOT MADE ANY ATTEMPT TO GET THE STATEMENT OF SHRI MANIS H BAID ON BOARD, WHICH WOULD HAVE THROWN LIGHT AS TO WHETHER THE ASSESSEE HAD ANY CON TACT WITH MR. MANISH BAID WHO IS SUPPOSED TO HAVE BEEN MAIN PLAYER, AND WOULD HAVE C LEARED THE AIR OF SUSPICION. WE NOTE THAT THE ASSESSEE HAS BEEN ALLOTTED PREFERENTIAL SHARES VIDE LETTER DATED 27.01.2010 OF RS. 2 LACS VIDE 5 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 COMPANYS SHARE CERTIFICATE DATED 25.01.2010 WHICH THOUGH CASTS DOUBT, BUT IT CANNOT BE THE SOLE BASIS FOR TERMING THE ENTIRE CLAIM OF ASSESSEE AS BOGUS OR THAT ASSESSEES MONEY WAS LAUNDERED IN THE MODUS OPERANDI AS SUGGESTED BY THE DEPARTMENT, BECAUSE AS PER HIS STATEMENT SHRI SUREKA WHEN HE WAS FACING FINANCIAL CRISIS WEN T TO SHRI MANISH BAID AND SOUGHT HIS HELP TO RAISE THE FUNDS AND BY THAT PROCESS RS 7.50 CRO RES WAS COLLECTED BY ALLOTMENT OF SHARES AND THAT FUND WAS INFUSED AS CAPITAL INTO HIS COMPANY M /S TTML AND THEN M/S TTML WAS AGAIN LISTED IN BSE. THEREAFTER, THE SHARE VALUE PURCHASE D BY ASSESSEE FOR RS 10/- PER SHARE STARTED RISING, WHICH ACCORDING TO SHRI SUREKA WAS AS PER T HE SCHEME AND PLAN OF SHRI BAID AND INORDER TO RIGGLE OUT OF THE QUESTION HOW THE PRICE OF SHAR ES OF M/S TTML SUDDENLY ROSE TO ASTRONOMICAL PRICE HAS PUT THE BLAME ON SHRI BAID. SO, IF SHRI SUREKA HAS TO BE BELIEVED, THEN IT TURNS OUT THAT HE WAS AN ACCOMPLICE ALONG WITH SHRI BAID, FOR COLLECTION OF RS 7.5 CR BY WAY OF PREFERENTIAL SHARE ALLOTMENT, WHICH PAVED THE WAY F OR LTCG. THOUGH WE NOTE THAT SHRI SUREKA HAS CONVENIENTLY PALMED OFF THE WRONG ACTS ATTRIBU TABLE TO SHRI BAID ALONE AND THE DEPARTMENT HAS NOT SPELLED OUT WHAT ACTION HAS BEEN TAKEN AGAI NST SHRI NARENDRA PRABHUDAYAL SUREKA IN THE LIGHT OF HIS OWN STATEMENT OR IT HAS BEEN EXAMI NED AS TO WHETHER HIS STATEMENT IS SELF SERVING OR NOT, COULD HAVE BEEN CLEARED ONLY IF STA TEMENT OF SHRI MANISH BAID WAS RECORDED WHICH CLEARLY COULD HAVE BROUGHT OUT THE CORRECT FA CTS. SO WITHOUT THE STATEMENT OF SHRI MANISH BAID WE CANNOT ATTRIBUTE ANY WRONG DOING ON THE PART OF ASSESSEE. FROM THE AFORESAID DISCUSSION WE NOTE THAT THE STATEMENT OF SHRI SUREK A DOES NOT IN ANY MANNER DIRECTLY IMPLICATE THE ASSESSEE AND SO BASED ON THE STATEMENT OF SHRI SUREKA ALONE, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE. THEREFORE, WE MADE A FI NDING SUPRA THAT SHRI SUREKA STATEMENT REPRODUCED IN THE ASSESSMENT ORDER AS NOT INCRIMINA TING QUA THE ASSESSEE. 14. COMING TO THE MERITS OF THE CASE WE NOTE THAT T HE ASSESSEE HAS APPLIED FOR ALLOTMENT OF 2,00,000 EQUITY SHARES AT FACE VALUE @ RS. 10 EACH ON 4.01.2010 IN M/S. TTML. THE COMPANY ISSUED AND ALLOTTED 2,00,000 EQUITY SHARES ON PREFERENTIAL BASIS ON 25.01.2010 AND INFORMED ASSESSEE ON 27.01.2010 WITH A CONDITION TH AT THE SHARES SHALL BE HELD IN FOR A LOCK IN PERIOD FOR ONE YEAR. COPIES OF APPLICATION FOR ALLO TMENT, ALLOTMENT LETTER & PHOTOCOPY OF SHARE CERTIFICATE ARE AVAILABLE IN PAPER BOOK PAGES 70 -7 2. THE ASSESSEE HAD PAID THE PURCHASE CONSIDERATION OF RS.20,00,000/- VIDE ACCOUNT PAYEE CHEQUE ISSUED UPON BANK OF INDIA ON 14/01/2010, WHICH WAS CLEARED ON 15/01/2010. COPY O F BANK STATEMENT IS AVAILABLE AT PAGE ENCLOSED AT PAGE-73 OF THE PAPER BOOK. SUCH INVEST MENT OF RS.20,00,000/- MADE IN M/S. TTML WAS DULY REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31/03/2010. COPY OF BALANCE SHEET AND P&L ACCOUNT IS SEEN PLACED AT PAG ES 74-75 OF THE PAPER BOOK. THE SHARES WERE DE-MATTED WITH NSDL AND KEPT IN THE DE-MAT ACC OUNT OPENED WITH DEPOSITORY PARTICIPATORY M/S EUREKA STOCK & SHARE BROKING SERV ICES LIMITED (DPID: IN302105). COPY OF DE-MAT REQUEST FORM IS SEEN PLACED AT PAGE 76 OF THE PAPER BOOK. THE SHARES WERE RELEASED AFTER COMPLETION OF THE LOCK-IN PERIOD I.E. AFTER 2 5/01/2011 AND THEREAFTER THE ASSESSEE SOLD SOME OF HIS HOLDING THROUGH THE BOMBAY STOCK EXCHAN GE AT VARIOUS DATES FROM 02/02/2011 THROUGH SEBI REGISTERED BROKER (NO. INB 010793439), M/S GCM SECURITIES LIMITED (BSE CODE 6250). IN THIS PROCESS 1,09,000 SHARES WERE S OLD TILL 30/03/2011 AGAINST CONTRACT NOTES, FOR TOTAL CONSIDERATION OF RS.2,46,83,694, WHICH WA S INCLUSIVE OF SECURITY TRANSACTION TAX (SIT) OF RS.35,523. COPY OF CONTRACT NOTES EVIDENCI NG SALE OF SHARES ARE FOUND PLACED AT PAGES 77-85 OF PAPER BOOK. WE NOTE THAT THE ASSESSEE RECE IVED THE MONEY INTO HIS BANK ACCOUNT MAINTAINED WITH BANK OF INDIA WITHIN THE TIME PERIO D AS PRESCRIBED UNDER STOCK EXCHANGE REGULATIONS AND THE COPY OF BANK STATEMENT REFLECTI NG RECEIPT IS AVAILABLE AT PAGES 86-91 OF PAPER BOOK. WE NOTE THAT THE SHARES WERE DEBITED IN THE DE-MAT ACCOUNT IN VARIOUS DATES AS PER THE VARIOUS DATES IN CONSONANCE WITH THE CONTRACT NOTES. COPY OF DE-MAT TRANSACTION STATEMENT IS FOUND PLACED AT PAPER BOOK PAGE 92. SI NCE ASSESSEE PURCHASED SHARES OF THIS SCRIPS OF 1,09,000 AT RS.10,90,000 AND SOLD THE SHARES FOR RS. 2,46,83,694, HE MADE A CAPITAL GAIN OF RS.2,35,93,694. COPY OF LONG TERM CAPITAL GAIN STAT EMENT IS AVAILABLE AT PAGE 93 OF PAPER BOOK. SINCE THE SALE WAS MADE AFTER ONE YEAR OF HO LDING AND AFTER PAYMENT OF STT AND TRANSACTIONS TOOK PLACE IN THE FLOOR OF THE RECOGNI ZED STOCK EXCHANGE (BSE), THE INCOME WAS COMPUTED BY ASSESSEE UNDER LONG TERM CAPITAL GAIN W HICH IS EXEMPTED FROM TAX U/S. 10(38) OF THE ACT. THE ASSESSEE PRODUCED ALL RELEVANT DOCUME NTS IN SUPPORT OF THE TRANSACTION INCLUDING PURCHASE BILLS, SALE CONTRACT NOTES, BANK STATEMENT AND D-MAT STATEMENT REFLECTING PURCHASE 6 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 AND SALE OF SHARES THE LTCG CLAIM OF ASSESSEE CANNO T BE BRUSHED ASIDE WITHOUT ADVERSE MATERIAL TO SUGGEST IT AS BOGUS. WE NOTE THAT THE B ALANCE 91,000 SHARES WERE CONTINUED TO BE REFLECTED IN THE DE-MAT STATEMENT. IN THE COMPUTAT ION OF INCOME, INCOME UNDER VARIOUS HEADS, WERE STATED INCLUDING INCOME FROM LONG TERM CAPITAL GAIN. FURTHER THE LTCG WAS SHOWN IN THE INCOME SIDE OF THE INCOME-EXPENDITURE A/C FOR FY 20 10-11. COMPUTATION OF INCOME FOR AY 11-12 & I & E A/C IS FOUND PLACED AT PAGE 94 OF THE PAPER BOOK. BALANCE INVESTMENT IN M/S. TTML FOR 91,000 AT A COST OF RS.9,10,000 WAS CONTIN UED TO BE REFLECTED IN THE BALANCE SHEET AS ON 31/03/2011. COPY OF BALANCE SHEET AS ON 31/0 3/2011 IS FOUND PLACED AT PAGE 95 OF PAPER BOOK. WE ALSO NOTE THAT THE ASSESSEE HAS SUB MITTED AN EXTRACT OF PRICE DATA OF BSE TO SUBSTANTIATE THAT THE SHARES WERE SOLD AT PREVAILIN G MARKET PRICE. COPY OF THE BSE PRICE DATA DURING THE PERIOD OF SALE IS FOUND PLACED AT PAGES 96 AND 97 OF PAPER BOOK. WE NOTE THAT THE AO DID NOT FIND ANY DEFECT/ DISCREPANCY ABOUT THE D OCUMENTS WHICH WERE PRODUCED TO ESTABLISH THE GENUINENESS OF THE SHARE TRANSACTION. BEFORE US THE LD. AR SUBMITTED THAT THE AOS SHOW CAUSE NOTICE WAS REPLIED DENYING ANY RELA TION WITH THE PARTIES REFERRED IN THE INVESTIGATION REPORT. COPY OF THE REPLY IS FOUND PL ACED AT PAGES 98 TO 100 OF THE PAPER BOOK. WE NOTE THAT THE AO BASED ON THE GENERAL INVESTIGAT ION REPORT OF THE DEPARTMENT DISCARDED ALL THE ABOVE EVIDENCES. FURTHER THE AO TAKING NOTE OF THE PRICE RISE, HIGH VOLUME, LOW FUNDAMENTALS ETC. HELD THAT THE SHARE TRANSACTION A S BOGUS. IT WAS BROUGHT TO OUR NOTICE THAT THE AO DID NOT PROVIDE DURING THE ASSESSMENT PROCEE DINGS, ANY COPIES OF THE MATERIAL, INVESTIGATION REPORTS, STATEMENTS PURPORTEDLY RECOR DED BEHIND THE BACK OF THE ASSESSEE TO CREATE A SMOKE SCREEN OF SUSPICION AND DOUBT AGAINST THE A SSESSEE. AND AO BASED ON THIRD PARTY EVIDENCE WHICH WERE NOT SUPPLIED TO THE ASSESSEE BR USHED ASIDE THE AFORESAID DOCUMENTS WHICH SUBSTANTIATED THE LTCG AND HELD THE TRANSACTI ON TO BE BOGUS, WHICH ACCORDING TO LD. AR, IS NOT FAIR JUST AND REASONABLE AND SO WANTS TH E CLAIM OF ASSESSEE ALLOWED AS DONE IN SIMILAR CASE. 15. WE NOTE THAT FOR CLAIMING EXEMPTION U/ S 10(38 ) OF ACT THREE REQUIREMENT NEEDS TO BE FULFILLED. FIRSTLY, THE SHARE PURCHASED SHOULD BE H ELD FOR MORE THAN 1 YEAR. SECONDLY THE SHARES SHOULD BE LISTED & SOLD ON RECOGNIZED STOCK EXCHANG E. THIRDLY ON THE SAID SALE, NECESSARY SECURITY TRANSACTION TAX (STT) HAS BEEN PAID. IN TH E PRESENT CASE, THE SHARES OF M/S. TTML WAS ACQUIRED BY ASSESSEE ON 25/01/2010 FROM THE COMPANY ON PREFERENTIAL BASIS. AFTER THE LOCK-IN PERIOD OF ONE YEAR, THE SHARES WERE PLACED IN THE D E-MAT ACCOUNT. SOME SHARES WERE SOLD IN BSE ON VARIOUS DATES STARTING FROM 02/02/2011 ONWAR DS AFTER PAYMENT OF ALL STATUTORY LEVIES INCLUDING STT & BROKERAGE. THUS, AFTER THE SHARES W ERE HELD FOR MORE THAN 1 YEAR, THE SAME WAS SOLD ON RECOGNIZED STOCK EXCHANGE AND NECESSARY STT PAID. HENCE THE ASSESSEE IS LEGALLY ELIGIBLE TO AVAIL THE EXEMPTION U/S. 10(38) OF THE ACT AND THE AO ONLY CAN DENY THE CLAIM ON COGENT GROUNDS WITH MATERIAL TO SUBSTANTIATE HIS CO NCLUSION THAT ASSESSEE INDULGED ALONG WITH PERSONS STATEMENT RECORDED (WHICH IS SUPPORTED BY SOME MATERIAL TO SUGGEST) THAT ASSESSEE WAS BENEFICIARY TO THE WHOLE STAGE MANAGED CLAIM OF EXEMPT GAIN. 16. AO INVOKED SECTION 68 OF THE ACT TREATING THE SHARE TRANSACTION AS SHAM AND ADDED THE LTCG OF RS.2,35,93,694 INVOKING SECTION 68 OF THE A CT. SECTION 68 OF THE INCOME TAX ACT, READS AS UNDER: WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INC OME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 17. FROM THE ABOVE IT MAY BE SEEN THAT THE PRIMARY LIABILITY, U/S 68 OF THE ACT, IS THAT OF THE ASSESSEE IN WHOSE BOOKS THE CASH CREDIT ENTRY I S FOUND. THIS LIABILITY ARISES ONLY WHEN THE ASSESSEE FAILS TO PROVE SATISFACTORILY THE SOURCE F ROM WHERE IT RECEIVED THE AMOUNT AND THE NATURE OF THE AMOUNT SO RECEIVED THAT IS, IT HAS TO SHOW HOW THE SAID AMOUNT IS NOT AN INCOME- RECEIPT. 7 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 18. FROM THE AFORESAID DOCUMENTS DISCUSSED IN DETA IL HEREIN ABOVE AT PARA 14 (SUPRA) IT CAN BE SEEN THAT THE ASSESSEE HAD EXPLAINED THE NAT URE & SOURCE OF TRANSACTION IN DETAIL IN ORDER TO DISCHARGE ITS ONUS/PRIMARY LIABILITY. THE ASSESS EE AS WE HAD TAKEN NOTE HAS SOLD THE EQUITY SHARES OF M/S. TTML AS LONG TERM CAPITAL ASSETS AND RECEIVED PAYMENT FROM THE BOMBAY STOCK EXCHANGE THROUGH THE SEBI REGISTERED BROKER M /S GCM SECURITIES LIMITED. THE AO, WE NOTE HAS NOT SPELLED OUT SPECIFICALLY ANY DEFECT S IN THE DOCUMENTS COVERING THE TRANSACTION NEITHER IN THE SHARE ALLOTMENT LETTER FOR ACQUISITI ON NOR IN RESPECT OF CONTRACT NOTES FOR SALE, BANK STATEMENT SHOWING PAYMENT FOR PURCHASE & RECEI PT FOR SALES, DE-MAT STATEMENT SHOWING MOVEMENT OF SHARES, BALANCE SHEET REFLECTING INVEST MENT & CORRESPONDING BOOKING OF CAPITAL GAINS IN THE P&L A/C FOR CORRESPONDING SALE OF SHAR ES IN DIFFERENT YEARS. IT IS TRITE THAT ONCE THE ASSESSEE HAS DISCHARGED ITS ONUS/PRIMARY LIABILITY, IT WILL BE AO'S BURDEN TO BRING ON RECORD ANY COGENT MATERIAL IN SUPPORT OF THE CONTRARY CONT ENTION THAT THE TRANSACTION ENCOMPASSING THE SALE WAS SHAM. HOWEVER, IN THE BACKGROUND OF TH E FACTS DISCUSSED ABOVE, THE AO FAILED TO BRING ON RECORD ANY MATERIAL TO SUBSTANTIATE THE FA CT THAT THE SHARE TRANSACTION IN QUESTION WAS BOGUS. THE STATEMENT OF SHRI NARENDRA PRABHUDAYAL S UREKA TO THE DEPARTMENT/INVESTIGATION WING REPRODUCED IN THE ASSESSMENT ORDER MIGHT SHOW THEIR COMPLICITY IN INDULGING IN THE NEFARIOUS ACTIVITY OF PROVIDING ACCOMMODATION ENTRY FOR BENEFICIARIES TO CLAIM LTCG ON SALE OF SHARES OF M/S. TTML, BUT THESE ARE GENERAL STATE MENTS EXPLAINING THE MODUS OPERANDI AND FEW NAMES BUT THE DEPARTMENT HAS NOT BROUGHT OUT AN Y DIRECT STATEMENT OF THIS PERSON TO IMPLICATE THE ASSESSEE AS AN ACCOMPLICE IN THEIR PU RPORTED STAGE MANAGED ILLEGAL ACTIVITY. WITHOUT WHICH WE ARE AFRAID WE CANNOT JUSTIFY THE A CTION OF AO/LD. CIT(A). IN THIS RESPECT, WE TAKE NOTE OF THE OBSERVATION MADE BY THE COORDIN ATE BENCH OF THIS TRIBUNAL IN THE CASE OF NAVNEET AGARWAL VS. ITO, KOLKATA, ITA NO. 2281/KOL/ 2017 DATED 20.07.2018: THE HON'BLE SUPREME COURT IN THE CASE OF OMAR SALA V MOHAMED SAIT REPORTED IN (1959) 37 ITR 151 (S C) HAD HELD THAT NO ADDITION C AN BE MADE ON THE BASIS OF SURMISES, SUSPICION AND CONJECTURES. IN THE CASE OF CIT (CENT RAL), KOLKATA VS. DAULAT RAM RAWATMULL REPORTED IN 87 ITR 349, THE HON'BLE SUPREME COURT H ELD 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 TRANSACTION TO BE BOGUS HAS TO BE STRICTLY DISCHARG ED BY ADDUCING LEGAL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTAB LISH CIRCUMSTANCE UNERRINGLY AND REASONABLY RAISING 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. IN THIS CONNECTION WE REFER TO THE GENERAL VIEW ON THE TOPIC OF CONVEYANCE OF IMMOVABLE PROPERTIES. THE RATES/SALE PRICE ARE AT V ARIANCE WITH THE CIRCLE RATES FIXED BY THE REGISTRATION AUTHORITIES OF THE GOVERNMENT IN MOST CASES AND THE GENERAL IMPRESSION IS THAT CASH WOULD HAVE CHANGED HANDS. THE COURTS HAVE LAID DOWN THAT JUDICIAL NOTICE OF SUCH NOTORIOUS FACTS CANNOT BE TAKEN BASED ON GENERALIZA TIONS. COURTS OF LAW ARE BOUND TO GO BY EVIDENCE. 19. SECTION 68 OF THE ACT REQUIRES THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF SUCH CREDIT. ON THE ISSUE OF BURDEN OF PROOF, THE HON'BL E CALCUTTA HIGH COURT, IN THE CASE OF CIT VS. PRECISION FINANCE PVT. LTD. (1994) 208 ITR 465 (CAL ) LAID DOWN THAT THE ASSESSEE IS REQUIRED TO ESTABLISH: A) IDENTITY OF PAYER, B) GENUINENESS OF TRANSACTION AND C) CREDITWORTHINESS OF PAYER 20. AS EXPLAINED, THE TRANSACTION WAS MADE IN THE B OMBAY STOCK EXCHANGE THROUGH A SEBI REGISTERED BROKER. AS PER THE ESTABLISHED PROC ESS, ON EXECUTION OF THE ORDERED TRANSACTION, THE EXCHANGE SHALL HANDOVER THE PAYMEN T TO THE BROKER AND IN TURN THE BROKER SHALL ARRANGE FOR PAYMENT TO THE SELLER I.E. THE ASSESSEE . IN THIS CASE, M/S GCM SECURITIES LIMITED, HAVING SEBI REGISTRATION NO.INB 010793439, BSE MEMB ERSHIP NO. 6250 HAD EXECUTED THE 8 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 TRANSACTION. THUS THE IDENTITY OF THE BROKER IS EST ABLISHED FROM M/S. GCM SECURITY LTD. THE BROKER. 21. FROM THE RECORDS, THE ASSESSEE RECEIVED THE SAL E CONSIDERATION AFTER SALE OF SCRIPS OF M/S. TTML SINCE M/S. GCM SECURITIES LIMITED IS A SE BI REGISTERED BROKER HAVING MEMBERSHIP BOTH IN NSE & BSE, THERE CANNOT BE ANY Q UESTION ABOUT THE WORTHINESS OF THE SAME AS THE SAME IS COVERED UNDER THE KYC NORMS OF THE EXCHANGES. IT IS NOTED THAT THE BROKER HAD ALL ALONG COMPLIED WITH THE REQUIREMENT TO MAIN TAIN THE MARGIN MONEY AS PER EXCHANGE NORMS AND SEBI HAD NEVER PUT ANY RESTRICTION ON M/S . GCM SECURITIES LIMITED FOR CAPITAL MARKET OPERATIONS. 22. TO SUBSTANTIATE THE GENUINENESS OF THE TRANSAC TION, THE ASSESSEE HAD PLACED COMPLETE DOCUMENTS BEFORE THE AO. IN RESPECT OF ACQUISITION OF SHARES IN M/S. TTML, THE ASSESSEE SUBMITTED ALLOTMENT LETTER OF THE COMPANY & BANK ST ATEMENT SHOWING PAYMENT OF RS.20,00,000/- AS CONSIDERATION. SUCH PURCHASE WAS ALSO REFLECTED IN THE DE-MAT STATEMENT OF THE ASSESSEE AS A GENUINE HOLDER OF SHARES. FOR SAL E, THE ASSESSEE PLACED CONTRACT NOTE ISSUED BY BROKER, BANK STATEMENT SHOWING RECEIPT OF CONSIDERA TION & DE-MAT STATEMENT REFLECTING THE MOVEMENT OF SHARES. IN THE BALANCE SHEET OF THE ASS ESSEE, INVESTMENTS MADE IN THE SHARES OF M/S. TTML WERE REFLECTED AND IN THE PROFIT & LOSS A CCOUNT, THE LTCG AS EARNED BY THE ASSESSEE, WAS DISCLOSED. THE AO HAS NOT FOUND FAULT WITH THE GENUINENESS OF SUCH DOCUMENTS. IN FACT THE SALE TRANSACTION WAS EXECUTED THROUGH S EVERAL INDEPENDENT BODIES LIKE THE DEPOSITORY PARTICIPANT, THE BANKER, THE STOCK EXCHA NGE ETC. 23. THE ASSESSEE SOLD THE SHARES ON THE BSE THROUGH HIS STOCK BROKER M/S GCM SECURITIES LIMITED. IN SUPPORT OF THE SALE OF SHARES CONTRACT NOTE IN THE PRESCRIBED FORM WAS ISSUED BY THE BROKER. THE CONTRACT NOTE INCLUDED RELEVANT INFORMA TION SUCH AS DATE AND TIME OF TRANSACTION, CONTRACT NOTE NUMBER, SETTLEMENT NUMBER, DETAILS OF SERVICE TAX PAID, DETAILS OF BROKERAGE AND DETAILS OF STT PAID. NO MATERIAL WAS BROUGHT ON REC ORD BY THE AO THAT THE INFORMATION CONTAINED IN CONTRACT NOTE WAS FALSE OR THAT THE SA LE OF SHARES ACTUALLY NEVER HAPPENED. ON THE CONTRARY THE INFORMATION SHOWS THAT THE ASSESSEE CA RRIED OUT SALE THROUGH BSE, THE SALE WAS MADE AT THE PREVAILING PRICE AT THE EXCHANGE AND TH E CONSIDERATION WAS RECEIVED THROUGH BSE VIA BANKING CHANNEL AFTER DELIVERY OF SHARES FROM T HE DE-MAT ACCOUNT. 24. AFTER DISPOSAL OF SHARES, DELIVERY OF SHARES WA S MADE THOROUGH ASSESSEE'S DE-MAT ACCOUNT WITH M/S EUREKA STOCK & SHARE BROKING SERVI CES LIMITED. THE ENTRIES IN THE DE-MAT ACCOUNT SHOWED THAT DELIVERY OF SHARES WAS RECORDED IN THE NSDL'S RECORD AND THE SHARES WERE DELIVERED TO THE DE-MAT ACCOUNT OF M/S. GCM SECURIT IES LIMITED. THESE FACTS WERE NEITHER CONTROVERTED NOR DISPROVED BY THE AO. 25. ON THE CONTRARY, WE NOTE THAT DESPITE SPECIFIC REQUEST MADE BY ASSESSEE DURING ASSESSMENT PROCEEDINGS THE AO DID NOT CONDUCT ANY I NVESTIGATION IN RELATION TO THE ALLEGED CHAIN OF TRANSACTIONS LEADING TO ULTIMATE DESTINATI ON OF THE CASH WHICH COULD HAVE SHED LIGHT ON THE ASSESSEE'S CONNIVANCE IF HE HAD INDULGED IN THE PRE-PLANNED SHAM TRANSACTION. FURTHER, WE NOT THAT THE AO NEITHER EXAMINED THE BROKER NOR TH E STOCK EXCHANGE AUTHORITY OR PROVIDE THE REFERRED REPORT OF THE INVESTIGATION WING TO THE AS SESSEE WHICH WAS RELIED HEAVILY WHILE FRAMING THE ASSESSMENT AND PREJUDICES THE MIND OF A O. SO, HE BRUSHED ASIDE ALL THE DOCUMENTS PRODUCED BY THE ASSESSEE WITHOUT ANY REAS ON. 26. THE AO VIEWED THAT BECAUSE OF VARIOUS ADVERSE REPORTS AS WELL AS UNNATURAL PRICE MOVEMENT, THE TRANSACTIONS MADE IN M/S. TTML WERE B OGUS, THE COORDINATE BENCH OF THIS TRIBUNAL HAD OCCASION TO DEAL WITH THE ISSUES RAISE D FOR THE SHARES OF M/S. TTML IN THE CASE OF KIRAN KOTHARI. HUF VS. ITO, ITA NO. 443/KOL/2017, W HERE THE SHARES WERE SOLD AT A HIGH PRICE. ALLOWING THE ASSESSEE'S APPEAL, THE TRIBUNAL HELD: '9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS. WE NOTE THAT IN THE PRESENT CASE, THE APPELLANT HAD PURCHASED 13500 SHARES OF M /S. TUNI TEXTILE MILLS PRIVATE LIMITED ON 9 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 06.04.2011 FROM A STOCK BROKER IN OFF-MARKET TRANSA CTIONS FROM M/S BADRI PRASAD & SONS, WHO WAS A MEMBER OF CALCUTTA STOCK EXCHANGE. THESE SHARES WERE HELD IN THE DEMAT ACCOUNT OF THE ASSESSEE MAINTAINED WITH M/S. C. D EQUISEARC H PVT. LTD, A MEMBER OF MUMBAI STOCK EXCHANGE AND ULTIMATELY THESE SHARES WERE SOLD THRO UGH M/S. C.D EQUISEARCH AND ON SUCH SALE, SECURITY TRANSACTION TAX WAS DULY PAID. PAYME NTS WERE DULY RECEIVED IN THE BANK ACCOUNT OF THE ASSESSEE. WE TAKE NOTE THAT THE PURC HASE OF SHARES BY OFF-MARKET TRANSACTIONS FOR PURCHASE OF SHARES IS NOT ILLEGAL AS WAS HELD B Y THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DOLARRAI HEMANI VS ITO IN ITA NO. 19/KO L/2014 DATED 02.12.2016. THE TRANSACTIONS WERE ALL THROUGH A REGISTERED BROKER ( PAGES 18 AND 19 OF THE PAPER BOOK), BACKED BY A CONTRACT NOTE (PAGE 22 OF THE PAPER BOOK) AND SHARES WERE CREDITED IN THE DEMAT ACCOUNTS (PAGE 25 OF THE PAPER BOOK) AND DULY REFLECTED IN T HE BOOKS OF ACCOUNT. IN THE LIGHT OF THESE EVIDENCES ON RECORD WE ARE OF THE OPINION THAT THE PURCHASE OF SHARES PER-SE CANNOT BE HELD TO BE BAD. 9.2. WE FIND FORCE IN THE CONTENTIONS OF THE LD. AR THAT THE AO AND CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCE, HUMAN CONDUCT AND PREPONDERANCE OF PROBABILITY WITHOUT BR INGING ON RECORD ANY RELEVANT LEGALLY ADMISSIBLE EVIDENCE AGAINST THE ASSESSEE. FOR THE S AID PROPOSITION WE RELY ON THE JUDGMENT OF THE SPECIAL BENCH OF MUMBAI BENCH IN THE CASE OF GT C INDUSTRIES LTD. (SUPRA). THE VARIOUS FACETS OF THE CONTENTION OF THE AO, TO ROPE IN THE ASSESSEE FOR DRAWING ADVERSE INFERENCES WHICH REMAIN UNPROVED BASED ON THE EVIDENCE AVAILAB LE ON RECORD ARE NOT REITERATED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOU S CASE LAWS RELIED UPON BY THE LD. AR ARE ALSO NOT REITERATED FOR THE SAKE OF BREVITY. WE FUR THER FIND THAT NEITHER THE REPORTS RELIED ON BY THE AO HAS NOT BEEN BROUGHT ON RECORD NOR IS THERE ANY REFERENCE OF FINDING OF SUCH REPORT TO IMPUTE THE ASSESSEE IS THERE ON RECORD. THE AO HAS MERELY CARVED OUT CERTAIN FEATURES/MODUS OPERANDI OF COMPANIES INDULGING IN PRACTICES NOT SA NCTIONED BY LAW AND AS MENTIONED IN SUCH REPORT. HOWEVER, WE NOTE THAT NEITHER ANY INVESTIGA TION WAS CARRIED OUT AGAINST THE ASSESSEE NOR AGAINST THE BROKERS TO WHOM THE ASSESSEE DEALT WITH THE PURCHASE AND SALE OF SHARES IN QUESTION. THUS THE AO HAS FAILED TO BRING ON RECORD ANY MATERIAL CONTAINED IN THE PURPORTED REPORTS WHICH ARE HAVING SO CALLED ADVERSE IMPACT ON THE ASSESSEE. 9.3. IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I TO V) IN PAGE14(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASS ESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAND AND THEREFO RE HAS TO FAIL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS WHICH ARE SUPPORTED WITH MATERIAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/LD. CIT(A). WE NOTE THAT THE ALLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION SHARES MUST THEREFORE CONSEQUENTLY FAIL. AT THE COS T OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILL S, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTION S RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. NEITHER THESE EVIDENCES WERE FOUND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGU S. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM O F THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE EXEMPTED U/S. 10(38) THE ACT ON THE BASIS OF SUSPICION, SURMISES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOWSOEVER STRO NG, CANNOT PARTAKE THE CHARACTER OF LEGAL EVIDENCE. 27. LET US LOOK AT CERTAIN JUDICIAL DECISIONS ON SI MILAR FACTS:- 28. THE CASE OF THE ASSESSEES IS SIMILAR TO THE DE CISION OF HONBLE BOMBAY HIGH COURT, NAGPUR BENCH IN CIT VS. SMT. JAMNADEVI AGRAWAL & OR S. DATED 23RD SEPTEMBER, 2010 REPORTED IN (2010) 328 ITR 656 WHEREIN IT WAS HELD THAT: 10 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 'THE FACT THAT THE ASSESSEES IN THE GROUP HAVE PURC HASED AND SOLD SHARES OF SIMILAR COMPANIES THROUGH THE SAME BROKER CANNOT BE A GROUN D TO HOLD THAT THE TRANSACTIONS ARE SHAM AND BOGUS, ESPECIALLY WHEN DOCUMENTARY ITA NOS. 93 TO 99/RPR/2014 & C.O. NOS. 12 TO 18/RPR/2014 . A.Y. 2004-05 10 PRODUCED TO ESTABLISH THE GENUINENESS OF THE CLAIM. FROM THE DOCUMENTS PRODUCED, IT IS SEEN THAT THE SHARES IN Q UESTION WERE IN FACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY H AS CONFIRMED TO HAVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEES. SIMILARLY, THE S ALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRODUCING DOCUMENTARY EVIDENCE. IT IS TRUE THAT SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS. HOWEVER, THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET RA TES PREVAILING ON THE RESPECTIVE DATES AS IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEES. THEREFORE, THE FACT THAT SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHAM TRANSACTIONS. THE STATEMENT OF THE BROKER P TH AT THE TRANSACTIONS WITH THE H GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCIN G DOCUMENTARY EVIDENCE TO THE EFFECT THAT THE SHARES SOLD BY THE ASSESSEES WERE IN CONSO NANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EVIDENCE, THE TRIBUNAL HAS ARRIVE D AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT ON RECORD TO SHOW THAT THE FINDINGS RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE DOCUMENTARY EVIDENCE ON RECORD. THE TRIBUNAL HAS FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE,BANK A CCOUNTS OF SOME OF THE BUYERS OF SHARES CANNOT BE LINKED TO THE ASSESSEES. MOREOVER, YN THE LIGHT OF THE DOCUMENTARY EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE A SSESSEES WERE IN CONFORMITY WITH THE MARKET PRICE, THE TRIBUNAL RECORDED A FINDING OF FA CT THAT THE CASH CREDITS IN THE BUYERS' BANK ACCOUNTS CANNOT BE ATTRIBUTED TO THE ASSESSEES. NO FAULT CAN BE FOUND WITH THE ABOVE FINDING RECORDED BY THE TRIBUNAL. THEREFORE, THE DECISION O F THE TRIBUNAL IS BASED ON FINDING OF FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDE R OF THE TRIBUNAL.ASSTT. CIT VS. KAMAL KUMAR S. AGRAWAL (INDL.) & ORS. (2010) 41 DTR (NAG) (TRIB) 105: (2010) 133 TTJ (NAG) 818 AFFIRMED; SUMATI DAYAL VS. CIT (1995) 125 CTR (SC) 124: (1995) 80 TAXMAN 89 (SC) DISTINGUISHED. 12. THE HON'BLE HIGH COURT OF RAJASTHAN IN CIT VS. SMT. PUSHPA MALPANI - REPORTED IN (2011) 242 CTR (RAJ.) 559; (2011) 49 DTR 312 DISMIS SED THE APPEAL OF DEPARTMENT OBSERVING 'WHETHER OR NOT THERE WAS SALE OF SHARES AND RECEIP T OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSENTIALLY A QUESTION OF FACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT AT THE TIME O F TRANSACTIONS, THE BROKER IN QUESTION WAS NOT BANNED BY SEBI AND THAT ASSESSEE HAD PRODUCED COPIE S OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICATE, APPLICATION FOR TRANSFER OF SHAR E CERTIFICATE TO DEMAT ACCOUNT ALONG WITH COPIES OF HOLDING STATEMENT IN DEMAT ACCOUNT, BALAN CE SHEET AS ON 31ST MARCH, 2003, SALE BILL, BANK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS, OF CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. ON 23RD JULY, 2003. THEREFORE, 'TH E PRESE/ITDPPEAL DOES NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. 29. THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF ANUPAM KAPOOR 299 ITR 0179 HAS HELD AS UNDER:- THE TRIBUNAL ON THE BASIS OF THE MATERIAL ON RECOR D, HELD THAT PURCHASE CONTRACT NOTE, CONTRACT NOTE FOR SATES, DISTINCTIVE NUMBERS OF SHA RES PURCHASED AND SOLD, COPY OF SHARE CERTIFICATES AND THE QUOTATION OF SHARES ON THE DAT E OF PURCHASE AND SALE WERE SUFFICIENT MATERIAL TO SHOW THAT THE TRANSACTION WAS NOT BOGUS BUT A GENUINE TRANSACTION. THE PURCHASE OF SHARES WAS MADE ON 28TH APRIL, 1993 I.E.. ASST. YR. 1993-94 AND THAT ASSESSMENT WAS ACCEPTED BY THE DEPARTMENT AND THERE WAS NO CHALLEN GE TO THE PURCHASE OF SHARES IN THAT YEAR. IT WAS ALSO PLACED BEFORE THE RELEVANT AO AS WELL A S BEFORE THE TRIBUNAL THAT THE SALE PROCEEDS HAVE BEEN ACCOUNTED FOR IN THE ACCOUNTS OF THE ASSE SSEE AND WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE TRIBUNAL WAS RIGHT IN REJECTING T HE APPEAL OF THE REVENUE BY HOLDING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPAN Y. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CO NTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTE D AND THE TRANSACTION TOOK PLACE THROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHICH COULD 11 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITIER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUCH PRESUMP TION COULD BE DRAWN BY THE AO MERELY ON SURMISES AND CONJECTURES. IN THE ABSENCE OF ANY COG ENT MATERIAL IN THIS REGARD, HAVING BEEN PLACED ON RECORD, THE AO COULD NOT HAVE REOPENED TH E ASSESSMENT. THE ASSESSEE HAD MADE AN INVESTMENT IN A COMPANY, EVIDENCE WHEREOF WAS WITH THE AO. --THEREFORE, THE AO COULD NOT HAVE ADDED INCOME, WHICH WAS RIGHTLY DELETED BY THE CIT(A) AS WELL AS THE TRIBUNAL. IT IS SETTLED LAW THAT SUSPICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. CONSEQUENTLY, NO QUESTION OF LAW, MUCH LESS A SUBST ANTIAL QUESTION OF LAW, ARISES FOR ADJUDICATION. C. VASANTLAL & CO. VS. CIT (1962) 45 ITR 206 (SC), M.O. THOMAKUTTY VS. CIT (.1958) 34 ITR 501 (KER)) AND MUKAND SINGH VS. SALE S TAX TRIBUNAL (1998) 107 STC 300 (PUNJAB) RELIED ON; UMACHARAN SHAW &BROS. VS. CIT ( 1959) 37 ITR 271 (SC) APPLIED; JASPAL SINGH VS. CIT (2006) 205 CTR (P & H) 624 DISTINGUIS HED 30. THE CO-ORDINATE BENCH OF AHMEDABAD IN ITA NOS. 501 & 502/AHD/2016 HAD THE OCCASION TO CONSIDER A SIMILAR ISSUE WHICH WAS WHER EIN THE ASSESSMENT WAS FRAMED ON THE STRENGTH OF THE STATEMENT OF A BROKER. THE RELEVANT PART READS AS UNDER:- 14. THE ENTIRE ASSESSMENT IS BASED UPON THE STATEMENT O F SHRI MUKESH CHOKSI. IT IS AN UNDISPUTED FACT THAT NEITHER A COPY OF THE STATEMEN T WAS SUPPLIED TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN BY THE A SSESSING OFFICER/CIT(A). THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES IN CIVIL APPEAL NO. 4228 OF 2006 WAS SEIZED WITH THE FOLLOWING ACTION OF THE TRIBUNA L :- 6. THE PLEA OF NO CROSS EXAMINATION GRANTED TO THE VARIOUS DEALERS WOULD NOT HELP THE APPELLANT CASE SINCE THE EXAMINATION OF THE DEALERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE POSSESSION OF THE APPELLANT THE MSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PRICES REMAIN STATIC. SINCE WE ARE NOT UPHOLDING AN D APPLYING THE EX FACTORY PRICES, AS WE FIND THEM CONTRAVENED AND NOT NORMAL PRICE AS ENVISAGED UNDER SECTION 4(1), WE FIND NO REASON TO DISTURB THE COMMISSIONERS ORDERS. 15. THE HONBLE APEX COURT HELD AS UNDER :- ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF 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 COM MISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENT IONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS G RANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAI N AS TO WHY THEIR EXFACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS W ORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTR ACTION THE APPELLANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMO NY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS EXAMINATION. THAT APART, THE A DJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERM INE 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 ITSELF COULD BE THE SUB JECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOS E AS TO WHAT COULD BE THE SUBJECT MATTER OF 12 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTI ONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING T HE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF TH E TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTM ENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO W ITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE. WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. 16. ON THE STRENGTH OF THE AFOREMENTIONED DECISIO N OF THE HONBLE SUPREME COURT, THE ASSESSMENT ORDER HAS TO BE QUASHED . 17. EVEN ON FACTS OF THE CASE, THE ORDERS OF THE AU THORITIES BELOW CANNOT BE ACCEPTED. THERE IS NO DENYING THAT CONSIDERATION WAS PAID WHEN THE SHA RES WERE PURCHASED. THE SHARES WERE THEREAFTER SENT TO THE COMPANY FOR THE TRANSFER OF NAME. THE COMPANY TRANSFERRED THE SHARES IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECOR D WHICH COULD SUGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THER E IS ALSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE NEVER WITH THE ASSESSEE. ON THE CON TRARY, THE SHARES WERE THEREAFTER TRANSFERRED TO DEMAT ACCOUNT. THE DEMAT ACCOUNT WAS IN THE NAME OF THE ASSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF TH E SHARES WERE OF SOME FICTITIOUS COMPANY WHICH WAS NOT LISTED IN THE BOMBAY STOCK EXCHANGE/N ATIONAL STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFERRED TO DEMAT ACCOUNT. SHRI MUKESH CHOKSI MAY HAVE BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT THE TRANSACTIONS WERE GENUINE AND THER EFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN. 18. IN THE LIGHT OF THE DECISIONS OF THE HONBLE S UPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND CONSIDERING THE FACTS IN TOT ALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PRESUMPTION AND SURMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT EVIDENCES ON RECORD RELATING TO THE SALE/PUR CHASE TRANSACTIONS IN SHARES SUPPORTED BY BROKERS CONTRACT NOTES, CONFIRMATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE DEMAT ACCOUNT. 19. ACCORDINGLY, WE DIRECT THE A.O. TO TREAT THE GA INS ARISING OUT OF THE SALE OF SHARES UNDER THE HEAD CAPITAL GAINS- SHORT TERM OR LONG TERM AS THE CASE MAY BE. THE OTHER GRIEVANCE OF THE ASSESSEE BECOMES INFRUCTUOUS. THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE CH EQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE OF SHARES AND THE SALE OF SH ARES WERE ALSO REFLECTED IN DEMAT ACCOUNT STATEMENTS. THE SALE OF SHARES SUFFERED STT, BROKER AGE ETC. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE HELD THAT THE TRANSACTIONS W ERE BOGUS. THE FOLLOWING JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT:- THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME VS M/S. BLB CABLES AND CONDUCTORS ; ITAT NO.78 OF 2017, GA NO.747 OF 2017; DT. 19 JUNE, 2018, HAD UPH ELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS FOLLOWS:- '4. WE HAVE HEARD BOTH THE SIDE AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE LD. AR SUBMITTED TWO PAPERS BOOKS. FIRST BOOK IS RUNNING I N PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US THE LD. AR SUBM ITTED THAT THE ORDER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH THE BROKER WAS EXPELLED. 13 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF B OTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBMITTE D THE IT RETURN, LEDGER COPY, LETTER TO AO LAND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM WHIC H IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTR ACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REG ISTERS WERE ALSO SUBMITTED IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. T HE BOARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIONS IN COMMODITY WAS PLACE D AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER HAND THE LD. DR RELIED IN THE ORDER OF THE LO WER AUTHORITIES. 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD SUCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME LOSS WAS ALSO CONFIRMED B Y THE LD. CIT(A). HOWEVER WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY RECOR DED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS A ND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME CONCRE TE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. II) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDENCES PRODUCED BY THE ASS ESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE ST AGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERA TED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTU M OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY F AILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING P RICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. III)CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITE D [2013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RECORD ANY F INDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER H ELD THAT IN ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANSACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTE D TO WITH ULTERIOR MOTIVE. IV) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CA L HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BROKERAGE, SERVICE TAX, AND CESS. THE RE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. V) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE DECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHERE T HE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON TH E BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT T HE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED B Y THE REVENUE WAS DISMISSED. VI) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM ED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. 14 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 VII) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE AO, BASED ON THE I NFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTE D AND SUPPORTED BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES , DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED B Y HIGH COURT. 31. WE NOTE THAT SINCE THE PURCHASE AND SALE TRA NSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND BANK ST ATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTED BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BASIS OF SOME REPORT S OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTI ES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAID JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLOWING CASES:- (I) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (II) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (IV) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (V) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VI) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (VII) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (IX) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (X) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XI) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XII) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XIII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XIV) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XVI) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XVII) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XVIII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XIX) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 32. THE LD AR ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRAN SACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADE SH [1977] 1 SCC 816 (SC) . IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOW ING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNER ALWAY S RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADD UCING EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLIS H CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX CO URT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BEC AUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABL ISHED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGME NTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAIMED BY THE ASSESSEE ON LTCG ON ALLEGE D PENNY SOCKS. 15 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 33. MOREOVER IT WAS SUBMITTED BEFORE US BY LD AR TH AT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SUBMITTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFF ECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HIS BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN CSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SUPPORT OF T HIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSESS THE SALE PROCEEDS O F SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. AMITA AGARWAL & OTHERS - ITA NOS. 247/(KO L)/ OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 34. WE NOTE THAT THE LD. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMALCHAND JAIN IN TAX AP PEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIND THAT THE F ACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MAD E BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF T HE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WAS INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOWN AS CAPITAL GAINS WHICH WA S NOT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTURE IN NATURE OF TRADE. THUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UPON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARN ED ON SALE OF SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT. 35. IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF T HE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASE OF KIRAN KOTHARI HUF (SUPRA ), WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE C LAIM OF LTCG ON SALE OF SHARES OF M/S TTML. SO WE, RESPECTFULLY FOLLOWING THE SAME, SET A SIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND DELETE THE CONSEQUENTIAL ADDITION. 36. THE NEXT ISSUE IN CONFIRMING THE ADDITION O F RS.1,17,791/- AS UNEXPLAINED EXPENDITURE TOWARDS COMMISSION CHARGES OF SALE OF SUCH SHARES B Y THE OPERATOR. WE HAVE ALREADY HELD THAT THE TRANSACTIONS RELATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODATION ENTRIES AS ALLEGED BY THE AO. CONSEQUENTLY THE ADDITION OF RS.1,17,791 /- IS HEREBY DIRECTED TO BE DELETED. WE ACCORDINGLY HOLD THAT THE ISSUE IS ALLOWED IN FAVOU R OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION CITED SUPRA, I SET ASIDE THE ORDER OF LD. CIT(A) AND ALLOW THE CLAIM OF THE ASSESSEE. THEREFORE, THIS G ROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 5. THE NEXT GROUND OF APPEAL OF ASSESSEE IS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.14,467/- BEING COMMIS SION EXPENDITURE INCURRED. 6. BRIEFLY STATED FACTS ARE THAT ACCORDING TO AO, S INCE IT HAS BEEN PROVED BEYOND DOUBT THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRY, TH E ASPECT OF PAYMENT OF COMMISSION 16 ITA NO.2205/KOL/2018 ROHIT JALAN, AY- 2013-14 CANNOT BE RULED OUT. IN THE CASE OF THE ASSESSEE, THE AMOUNT CALCULATED @ 0.5% COMES TO RS.14,467/- WHICH REPRESENTS UNEXPLAINED EXPENDITUR E OF THE ASSESSEE AND HENCE THE AO ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE U/S. 69C OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO CONF IRMED THE ACTION OF THE AO. AGGRIEVED, ASSESSEE IS BEFORE THIS TRIBUNAL. SINCE WE HAVE ALR EADY ALLOWED THE CLAIM OF LTCG ON SALE OF SCRIP OF M/S. TTML AS EXEMPT U/S. 10(38) OF THE ACT, AND HELD IT AS A GENUINE TRANSACTION, CONSEQUENTLY, THE ADDITION OF RS.14,467/- AS UNEXPL AINED EXPENDITURE IS DIRECTED TO BE DELETED. 7. SINCE ON MERITS THE ASSESSEE SUCCEEDS, THE LEGAL ISSUE RAISED BEFORE US IS NOT ADJUDICATED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 17TH MA Y, 2019 SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED : 17TH MAY, 2019 JD (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT SHRI ROHIT JALAN, 3 RD FLOOR, STEPHEN HOUSE , 4, B.B.D. BAG, KOLKATA-700 001. 2 RESPONDENT ITO, WARD-36(1), KOLKATA. 3 . THE CIT(A)-10, KOLKATA. (SENT THROUGH E-MAIL) 4. 5. CIT , KOLKATA DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR ITAT, KOLKATA