DEEPAK KUMAR AGARWAL, HUF, JAIPUR V. ITO, WARD-2(3), JAIPUR

ITA 222/JPR/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5141 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 05-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUNI PAL CIT DHK
• Assessee Lawyers: B P MUNDRA
• Keywords: Unexplained cash credit; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Question of law; Tangible material; Fair market value; Wrong claim; Corroborative evidences; Accommodation entries; Scheme of amalgamation; Onus to prove; Retraction; Sham transactions; Capital Gains
• Section: 69C; 43; 13; 22; 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 223/JP/2020 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 NILESH AGARWAL HUF 39-40-41 GYAN VIHAR, NIRMAN NAGAR, JAIPUR CUKE VS. THE INCOME TAX OFFICER, WARD 2(3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAFHN7625H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 222/JP/2020 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 DEEPAK KUMAR AGARWAL HUF, 47, AJMER ROAD NIRMAN NAGAR AB JAIPUR CUKE VS. THE INCOME TAX OFFICER, WARD 2(3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAGHD6715F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B. P. MUNDRA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. RUNI PAL (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 10/12/2020 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 09/02/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE AFORESAID ASSES SEES AGAINST THE RESPECTIVE ORDERS OF LD. CIT(A)-1, JAIPUR DATED 16. 01.2020 & 07.01.2020 ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 2 FOR A.Y 2014-15 RESPECTIVELY. SINCE THE COMMON ISSU ES ARE INVOLVED, BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OFF BY THIS CONSOLIDATED ORDER. ITA NO. 223/JP/2020 2. WITH THE CONSENT OF BOTH THE PARTIES, THE CASE O F ASSESSEE, NILESH AGARWAL HUF IN ITA NO. 223/JP/2020 FOR A.Y 2014-15 IS TAKEN AS THE LEAD CASE FOR THE PURPOSES OF PRESENT DISCUSSION WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW C ONFIRMING ADDITION U/S 68 OF THE I.T. ACT, 1961 OF RS. 23,70, 660/- AS ACCOMMODATION ENTRIES. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW CON FIRMING ADDITION U/S 69C OF THE I.T. ACT, 1961 OF RS. 47,41 3/- AS COMMISSION WAS PROVIDED FOR SALE OF SHARES AS ACCOM MODATION ENTRIES. 3. THE RELEVANT FACTS LEADING TO THE CONTROVERSY O F TREATING THE LONG TERM CAPITAL GAIN ON SALE OF SHARES AS SHAM/BOGUS T RANSACTION AND ADDITION UNDER SECTION 68 OF THE ACT WHICH WAS SUST AINED BY THE LD. CIT (A) IS THAT THE ASSESSEE PURCHASED 4,80,000 SHARES OF FACE VALUE OF RS. 1/- EACH OF M/S. CAREFUL PROJECTS ADVISORY LTD ON 24.11.2011 FROM ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 3 M/S. SANSKRITI VINCOM PVT. LTD. FOR A CONSIDERATION OF RS. 4,80,000/-. THE SHARES WERE DEMATERIALIZED AND LATER ON THE SAID CO MPANY M/S. CAREFUL PROJECTS ADVISORY LTD. MERGED WITH M/S. KAILASH AUT O FINANCE LTD. (KAFL) PURSUANT TO THE AMALGAMATION PLAN APPROVED BY THE H ON'BLE ALLAHABAD HIGH COURT VIDE JUDGMENT DATED 9TH MAY, 2013 WITH E FFECT FROM 01.04.2012. PURSUANT TO SUCH AMALGAMATION, THE ASSE SSEE WAS ALLOTTED 4,80,000 SHARES OF M/S. KAILASH AUTO FINANCE LTD. O F THE FACE VALUE OF RS. 1/- EACH AND ACCORDINGLY THE SAME WERE CREDITED IN THE DEMAT ACCOUNT OF THE ASSESSEE IN LIEU OF THE SHARES OF ERSTWHILE COM PANY M/S. CAREFUL PROJECTS ADVISORY LTD. OUT OF TOTAL SHAREHOLDING OF 4,80,000 SHARES, THE ASSESSEE SOLD 66,500 SHARES BETWEEN 16.01.2014 TO 2 1.01.2014 IN THE STOCK EXCHANGE FOR A SALE CONSIDERATION OF RS. 24,3 7,162/- AND EARNED LONG TERM CAPITAL GAIN OF RS. 23,70,660/- ON THE SA LE OF THESE SHARES WHICH WAS CLAIMED AS EXEMPT UNDER SECTION 10(38) OF THE IT ACT. THE AO ON THE BASIS OF THE REPORT OF THE INVESTIGATION WIN G, KOLKATA BASED ON THE STATEMENT OF SHRI SUNIL DOKANIA RECORDED UNDER SECT ION 131/133A WHEREIN HE ADMITTED TO HAVE ENGAGED IN PROVIDING ACCOMMODAT ION ENTRIES OF LONG TERM CAPITAL GAIN IN THE SHARES OF VARIOUS ENTITIES INCLUDING M/S. KAILASH AUTO FINANCE LTD. TREATED THE CLAIM OF LONG TERM CA PITAL GAIN AS SHAM AND BOGUS AND MADE THE ADDITION OF LONG TERM CAPITA L GAIN UNDER SECTION 68 OF THE IT ACT AS UNDISCLOSED CASH CREDIT AS WELL AS AN ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 4 ADDITION OF RS. 47,413/- BEING COMMISSION PAID FOR ACQUIRING SUCH ACCOMMODATION ENTRY. THE ASSESSEE CHALLENGED THE AC TION OF THE AO BEFORE THE LD. CIT (A) AND REFERRED TO THE DOCUMENT ARY EVIDENCE OF PURCHASING OF SHARES AGAINST THE PAYMENT THROUGH BA NKING CHANNEL, THE SHARES WERE DULY DEMATERIALIZED IN THE DEMAT ACCOUN T OF THE ASSESSEE AND THEREAFTER THE ERSTWHILE COMPANY M/S. CAREFUL P ROJECTS ADVISORY LTD. WAS MERGED WITH M/S. KAILASH AUTO FINANCE LTD. BY V IRTUE OF A JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT AND CONSEQUENTLY TH E SHARES OF M/S. KAILASH AUTO FINANCE LTD. WERE ALLOTTED TO THE ASSE SSEE IN LIEU OF THE SHARES OF M/S. CAREFUL PROJECTS ADVISORY LTD. THE L D CIT(A) HOWEVER SUSTAINED THE ADDITION MADE BY THE AO. AGGRIEVED BY THE ORDER OF LD. CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. DURING THE COURSE OF HEARING, THE LD. A/R HAS S UBMITTED THAT THE ASSESSEE HAS ESTABLISHED THE GENUINENESS OF THE TRA NSACTION BY PRODUCING ALL THE RELEVANT EVIDENCES INCLUDING THE PURCHASE O F 4,80,000 SHARES OF M/S. CAREFUL PROJECTS ADVISORY LTD. AGAINST THE PAY MENT OF RS. 4,80,000/- THROUGH BANKING CHANNEL. HE HAS REFERRED TO THE BAN K ACCOUNT STATEMENT AT PAGES 34-36 OF THE PAPER BOOK AND SUBMITTED THAT THE PAYMENT IS REFLECTED IN THE BANK STATEMENT. THE LD. A/R HAS TH EN REFERRED TO THE DEMAT ACCOUNT AT PAGE 33 OF THE PAPER BOOK AND SUBM ITTED THAT THE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 5 SHARES OF M/S. CAREFUL PROJECTS ADVISORY LTD WERE D EMATERIALIZED AND CREDITED IN THE DEMAT ACCOUNT. SUBSEQUENTLY THE SAI D COMPANY MERGED WITH M/S. KAILASH AUTO FINANCE LTD. AS PER THE JUDG MENT OF HON'BLE ALLAHABAD HIGH COURT DATED 09.05.2013. THE ASSESSEE WAS ALLOTTED 4,80,000 SHARES OF M/S. KAILASH AUTO FINANCE LTD. I N LIEU OF THE SHARES OF M/S. CAREFUL PROJECTS ADVISORY LTD. WHICH WERE ALSO CREDITED IN THE DEMAT ACCOUNT OF THE ASSESSEE ON 22.07.2013. THUS THE GEN UINENESS OF THE PURCHASE OF SHARES IS ESTABLISHED BY PRODUCING ALL THE RELEVANT EVIDENCES. THE SALE OF THE SHARES IS ALSO NOT IN DISPUTE AS TH ESE WERE SOLD IN THE STOCK EXCHANGE ON WHICH STT WAS PAID THROUGH M/S. J SEL LTD., A REGISTERED SHARE BROKER OF SEBI. THE LD. A/R HAS RE FERRED TO THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S. JSEL L TD. AT PAGE 1 OF THE PAPER BOOK AND THE CONTRACT NOTES FOR SALE OF SHARE S AT PAGES 2 TO 31 OF THE PAPER BOOK. HE HAS ALSO REFERRED TO THE SBBJ BA NK STATEMENT SHOWING THE SALE CONSIDERATION RECEIVED IN THE BANK ACCOUNT OF THE ASSESSEE. THUS WHEN THE ASSESSEE WAS HOLDING 4,80,000 SHARES SINCE 24.11.2011 AND SOLD ONLY 66,500 SHARES BETWEEN 16.01.2014 TO 21.01 .2014 THEN HOLDING PERIOD OF THESE SHARES IS MORE THAN 2 YEARS AND IT IS STILL HOLDING REST ALL SHARES. HENCE, THE LD. A/R HAS SUBMITTED THAT WHEN THE ASSESSEE HAS PURCHASED THE SHARES OF M/S. CAREFUL PROJECTS ADVIS ORY LTD., THEN THE STATEMENT OF SHRI SUNIL DOKANIA RECORDED BY THE INC OME TAX DEPARTMENT, ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 6 KOLKATA CANNOT BE A RELEVANT MATERIAL TO HOLD THE T RANSACTION OF PURCHASE AS BOGUS MORE SO WHERE SUCH STATEMENT WAS NOT MADE AVAILABLE TO THE ASSESSEE INSPITE OF SPECIFIC REQUEST MADE DURING TH E ASSESSMENT PROCEEDINGS. FURTHER, EVEN ON PERUSAL OF THE SAID S TATEMENT AS REPRODUCED IN THE ASSESSMENT ORDER, THE AO HAS NOT MENTIONED THE NAME OF THE ASSESSEE OR THE COMPANY FROM WHOM THE ASSESS EE PURCHASED THE SHARES. THEREFORE, A GENERAL STATEMENT MADE BY SHRI SUNIL DOKANIA CANNOT BE USED AGAINST THE ASSESSEE. IT WAS SUBMITT ED THAT THE ASSESSEE HAS SUBMITTED ALL THE RELEVANT FACTS AND EVIDENCES BEFORE THE AO AND THE LD CIT(A) AND NO ADVERSE FINDING HAS BEEN RECORDING DISPROVING SUCH MATERIAL EVIDENCES PLACED ON RECORD. IT WAS SUBMIT TED THAT THE AO IN THE ENTIRE ASSESSMENT ORDER HAS NOT MADE REFERENCE TO A NY SINGLE DOCUMENTARY EVIDENCE WHICH CAN BE SAID TO BE INCRIM INATING MATERIAL AGAINST THE ASSESSEE TO SHOW THAT THE ASSESSEE HAS AVAILED ANY ACCOMMODATION ENTRY OF BOGUS LTCG. IT WAS SUBMITTE D THAT MERE SUSPICION CANNOT BE A GROUND FOR TREATING THE TRANS ACTION AS BOGUS IN ABSENCE OF ANY EVIDENCE OR MATERIAL ON RECORD. THE LD. A/R HAS RELIED UPON THE FOLLOWING DECISIONS:- CIT VS. SMT. POOJA AGARWAL (DB APPEAL NO. 385/2011 DATED 11.09.2017) ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 7 PCIT VS PRAMOD JAIN & OTHERS (DB APPEAL NO. 209/2018 DATED 24.07.2018) MANISH KUMAR BAID VS. ACIT (1236/KOL/2017 DATED 18.08.2017) MEGHRAJ SINGH SHEKHAWAT VS. DCIT (ITA NO. 444/JP/17 DATED 07.03.2018) DCIT VS. SAURABH MITTAL (ITA NO. 16/JP/2018 DATED 29.08.2018) ITO VS LALIT KUMAR BIYANI (ITA NO. 1153/JP/2019 DATED 03.02.2020) 5. IN HER SUBMISSIONS, THE LD. D/R HAS SUBMITTED TH AT DURING THE SURVEY OPERATIONS CARRIED OUT BY THE INVESTIGATION WING OF THE DEPARTMENT, KOLKATA, SHRI SUNIL DOKANIA ADMITTED TH AT HE IS AWARE OF SUSPICIOUS TRANSACTIONS DONE BY SOME COMPANIES IN T HE SCRIPT OF M/S. KAILASH AUTO FINANCE LTD. THROUGH THE BROKER HOUSES . IT WAS SUBMITTED THAT THE ASSESSEE HAS SHOWN HUGE CAPITAL GAINS EARN ED FROM PURCHASE AND SALE OF THE SHARES OF M/S. KAILASH AUTO FINANCE LTD. WITHIN A VERY SHORT PERIOD OF TIME. THUS IT IS A CASE OF INVESTME NT IN PENNY STOCK OF A COMPANY WHOSE SHARES WERE USED FOR THE PURPOSE OF P ROVIDING ACCOMMODATION ENTRIES BY THE PERSONS INVOLVED IN SU CH ACTIVITY. THE LD. D/R HAS REFERRED TO THE ASSESSMENT ORDER AND SUBMIT TED THAT THE AO HAS DISCUSSED THE MODUS OPERANDI OF SUCH TRANSACTIONS O F ACCOMMODATION ENTRIES IN THE SCRIPT OF PAPER/BOGUS COMPANIES AND THUS THE UNACCOUNTED MONEY OF THE BENEFICIARY IS ROUTED BACK IN THE SHAP E OF LONG TERM CAPITAL GAIN CLAIMED AS EXEMPT UNDER SECTION 10(38) OF THE IT ACT. THOUGH THE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 8 ASSESSEE HAS PURPORTED TO HAVE RECEIVED THE SALE CO NSIDERATION ON SALE OF SHARES, HOWEVER, IN REALITY IT WAS HIS OWN CASH WHI CH HE RECEIVED BACK THROUGH SOME CLANDESTINE DEALS. THE AO HAS REFERRED TO THE REPORT OF THE SIT AS WELL AS THE STATEMENT OF SHRI SUNIL DOKANIA RECORDED BY THE INVESTIGATION WING KOLKATA WHICH PROVED THE TRANSAC TION AS SHAM/BOGUS AND THE AO IN THE ASSESSMENT PROCEEDINGS IS NOT REQ UIRED TO ESTABLISH THE FINDING THROUGH FULL-PROOF DOCUMENTARY EVIDENCE BUT THE INCOME TAX LIABILITY IS ASCERTAINED ONLY ON THE BASIS OF MATER IAL AVAILABLE ON RECORD, SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT AND PREPON DERANCE OF PROBABILITIES. ALL THESE CRITERIA HAVE BEEN SATISFI ED BY THE AO WHILE PASSING THE ASSESSMENT ORDER AS THERE WERE MATERIAL AVAILAB LE WITH THE AO, THE CIRCUMSTANCES CLEARLY INDICATED THE NON-GENUINENESS OF THE TRANSACTION AND, THEREFORE WHEN THE STRICT RULE OF EVIDENCE AS PER EVIDENCE ACT IS NOT APPLICABLE IN THE MATTER OF TAXATION, THEN THE MATE RIAL AS BROUGHT ON RECORD BY THE AO IS SUFFICIENT TO HOLD THAT THE ASS ESSEE HAS AVAILED THE BENEFIT OF ACCOMMODATION ENTRY BY CREATING BOGUS L ONG TERM CAPITAL GAIN AGAINST THE PAYMENT OF HIS OWN UNACCOUNTED INC OME. SHE HAS ACCORDINGLY RELIED UPON THE ORDER OF THE LOWER AUTH ORITIES. SHE HAS RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF SUMATI DAYAL VS. CIT (SUPRA) AS WELL AS IN CASE OF DURGA PRASAD MORE (SUPRA). THE LD. D/R HAS ALSO RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 9 SUMAN PODDAR VS. ITO, 112 TAXMANN.COM 329 (DELHI). THE LD. D/R HAS SUBMITTED THAT THE HONBLE HIGH COURT HAS CONFIRMED THE DECISION OF THE TRIBUNAL WHEREBY THE LONG TERM CAPITAL GAINS CLAIME D BY THE ASSESSEE IN RESPECT OF PURCHASE AND SALE OF PENNY STOCK WERE TR EATED AS BOGUS TRANSACTIONS BEING ACCOMMODATION ENTRIES. SHE HAS ALSO POINTED OUT THAT THE SLP FILED BY THE ASSESSEE AGAINST THE JUDGMENT OF THE HONBLE DELHI HIGH COURT HAS BEEN DISMISSED BY THE HONBLE SUPREM E COURT REPORTED IN 112 TAXMANN.COM 330 (SC). 6. IN HIS REJOINDER, THE LD. A/R SUBMITTED THAT TH E DECISION RELIED UPON BY THE LD. D/R IN CASE OF SUMAN PODDAR VS. ITO (SUP RA) IS NOT APPLICABLE IN THE FACTS OF THE ASSESSEES CASE AS IN THE SAID CASE IT WAS A FINDING OF FACT BY THE TRIBUNAL HOLDING THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE OF ACTUAL SALE EXCEPT THE CONTRACT NOTES I SSUED BY THE SHARE BROKER WHEREAS IN THE CASE OF THE ASSESSEE, THE ASS ESSEE PRODUCED ALL THE DOCUMENTARY EVIDENCES RIGHT FROM PURCHASE OF SHARE HOLDING IN DEMAT ACCOUNT, PAYMENT OF PURCHASE CONSIDERATION AS WELL AS RECEIPT OF THE SALE CONSIDERATION THROUGH BANKING CHANNEL, THUS THE SAI D DECISION CANNOT BE APPLIED IN THE PRESENT CASE. ON THE OTHER HAND, TH E DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS . SMT. POOJA AGARWAL ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 10 (SUPRA) AS WELL AS PCIT VS. SHRI PRAMOD JAIN & OTHE RS (SUPRA) ARE BINDING PRECEDENTS ON THIS ISSUE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. WE HAVE ALSO CAREFULLY GONE THR OUGH THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE AO AND COPY OF WHICH IS ALSO PRODUCED BEFORE US IN THE PAPER BOOK FILED BY THE ASSESSEE. THE ASSESSEE HAS PRODUCED THE SHARE PURCHASE BILL DATED 24.11.2011 ISSUED BY M/S. SANSKRITI VINCOM PVT. LTD. FOR PURCHASE OF 4,80,000 SHARES OF M/S. CAREFUL PROJECTS ADVISORY LTD. OF FACE VALUE OF RE. 1/- EACH FOR A TOTAL CONSIDERATION OF RS. 4,80,000/-. THE PAYMENT WAS RE FLECTED IN THE BANK ACCOUNT MAINTAINED WITH STATE BANK OF BIKANER AND J AIPUR OF RS. 4,80,000/- VIDE CHEQUE NO. 751680 WHICH WAS CLEARED ON 16.12.2011. THUS THE PAYMENT OF PURCHASE CONSIDERATION THROUGH BANKING CHANNEL IS PROVED FROM THE RECORD WHICH CAN BE VERIFIED INDEPE NDENTLY AND ASSESSEE HAS NO ROLE TO MANIPULATE THE BANK ACCOUNT WITH STA TE BANK OF BIKANER AND JAIPUR. THUS IT IS CLEARLY ESTABLISHED THAT THE ASSESSEE HAS PURCHASED THE SHARES OF M/S. CAREFUL PROJECTS ADVISORY LTD ON 24.11.2011. THESE SHARES WERE THEREAFTER DEMATERIALIZED AS REFLECTED IN THE DEMAT ACCOUNT STATEMENT OF THE ASSESSEE AS ON 29.09.2012. THE HOL DING OF THESE SHARES OF M/S. CAREFUL PROJECTS ADVISORY LTD BY THE ASSESS EE AS CREDITED IN THE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 11 DEMAT ACCOUNT OF THE ASSESSEE CANNOT BE DISPUTED AS THE DEMAT ACCOUNT IS ALSO AN EVIDENCE WHICH CAN BE VERIFIED INDEPENDE NTLY. IT IS ALSO NOT IN DISPUTE THAT THE SAID COMPANY M/S. CAREFUL PROJECTS ADVISORY LTD WAS SUBSEQUENTLY MERGED WITH M/S. KAILASH AUTO FINANCE LTD. AND THE SCHEME OF THE MERGER/AMALGAMATION WAS APPROVED BY HON'BLE ALLAHABAD HIGH COURT VIDE JUDGMENT DATED 9TH MAY, 2013 WITH EFFECT FROM 01.04.2012. IN PURSUANCE TO THE SCHEME OF MERGER OF M/S. CAREFUL P ROJECTS ADVISORY LTD. WITH M/S. KAILASH AUTO FINANCE LTD., THE ASSESSEE W AS ALLOTTED 4,80,000 SHARES OF M/S. KAILASH AUTO FINANCE LTD. IN LIEU OF THE EQUAL NUMBER OF SHARES OF M/S. CAREFUL PROJECTS ADVISORY LTD. THESE SHARES WERE ALSO CREDITED TO THE DEMAT ACCOUNT OF THE ASSESSEE ON 22 .07.2013 AS REFLECTED IN THE DEMAT ACCOUNT OF THE ASSESSEE. THEREFORE, TH E PURCHASE OF SHARES BY THE ASSESSEE OF M/S. CAREFUL PROJECTS ADVISORY L TD CANNOT BE DISPUTED DUE TO THE REASON THAT CERTAIN PERSONS WERE INDULGE D IN PROVIDING ACCOMMODATION ENTRIES IN THE SHARES OF M/S. KAILASH AUTO FINANCE LTD. IT IS NOT THE CASE OF PURCHASE OF SHARES OF M/S. KAILA SH AUTO FINANCE LTD. BUT THE ASSESSEE WAS ALLOTTED THE SHARES OF THE SAID CO MPANY BY VIRTUE OF MERGER AND IN LIEU OF THE SHARES OF M/S. CAREFUL PR OJECTS ADVISORY LTD. FURTHER, THE AO HAS GIVEN MUCH EMPHASIS TO THE STAT EMENT OF SHRI SUNIL DOKANIA RECORDED BY THE INVESTIGATION WING KOLKATA ON 06.03.2013 AND 12.06.2015 WHEREAS THE SHARES OF M/S. CAREFUL PROJE CTS ADVISORY LTD. ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 12 WERE PURCHASED ON 24.11.2011. THEREFORE, EVEN IF SH RI SUNIL DOKANIA HAS ACCEPTED THE ACTIVITY OF PROVIDING ACCOMMODATION EN TRIES IN THE SHARES OF M/S. KAILASH AUTO FINANCE LTD., BUT WHEN THE ASSESS EE HAS NOT PURCHASED THE SHARES OF THE SAID COMPANY, THEN THE TRANSACTIO N OF THE ASSESSEE CANNOT BE DOUBTED ON THE BASIS OF THE SAID STATEMEN T. EVEN OTHERWISE, WHEN THE ASSESSEE HAS PRODUCED DOCUMENTARY EVIDENCE WHICH IS NEITHER FOUND TO BE BOGUS OR THE CORRECTNESS OF THE SAME IS DOUBTED BY THE AO, THE SAID DOCUMENTARY EVIDENCE IS OTHERWISE NOT ASSE SSEE'S OWN RECORD BUT IT IS THE RECORD OF BANK, DEPOSITORY SERVICES A ND THIRD PARTY DOCUMENTS BEING BILLS, LEDGER ACCOUNT ETC. THE AO H AS NOT EVEN WHISPERED OR DOUBTED THE CORRECTNESS OF THESE DOCUM ENTS FILED BY THE ASSESSEE. ONCE THE ASSESSEE HAS PRODUCED THE DOCUME NTARY EVIDENCE WHICH ESTABLISHED THE FACT OF PURCHASE OF SHARES OF M/S. CAREFUL PROJECTS ADVISORY LTD AND THEREAFTER THE DEMATERIALIZATION O F SHARES IN THE DEMAT ACCOUNT OF THE ASSESSEE AND SUBSEQUENTLY ALLOTMENT OF THE SHARES OF M/S. KAILASH AUTO FINANCE LTD. DUE TO THE MERGER AS APPR OVED BY THE HON'BLE ALLAHABAD HIGH COURT WHICH WERE ALSO CREDITED TO TH E DEMAT ACCOUNT OF THE ASSESSEE, THEN THE DOCUMENTARY EVIDENCE CANNOT BE IGNORED OR BRUSHED ASIDE MERELY ON THE BASIS OF THE STATEMENT OF SOME THIRD PERSON RECORDED BY THE INVESTIGATION WING, KOLKATA, THAT T OO, WITHOUT CONFRONTING THE ASSESSEE BY PROVIDING A COPY OF SUCH STATEMENT. ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 13 8. IN CASE OF MANISH KUMAR BAID VS. ACIT (SUPRA), THE KOLKATA BENCHES OF THE TRIBUNAL WHILE CONSIDERING AN IDENTI CAL ISSUE OF LONG TERM CAPITAL GAIN ON SALE OF SHARES OF M/S. KAILASH AUTO FINANCE LTD. HAS HELD IN PARA 6 AS UNDER :- '6. WE HAVE HEARD BOTH THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LD AR THAT THE LD AO WAS NOT JUSTIFIED IN RE JECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT, AND PREPONDERANCE OF PROBABILITY WIT HOUT BRINGING ON RECORD ANY LEGAL EVIDENCE AGAINST THE ASSESSEE. WE RELY ON THE JUDGEMENT OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN TH E CASE OF GTC INDUSTRIES LTD. (SUPRA) FOR THIS PROPOSITION. THE V ARIOUS FACETS OF THE ARGUMENTS OF THE LD AR SUPRA, WITH REGARD TO IMPLEA DING THE ASSESSEE FOR DRAWING ADVERSE INFERENCES WHICH REMAI N UNPROVED BASED ON THE EVIDENCES AVAILABLE ON RECORD, ARE NOT REITERATED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VA RIOUS CASE LAWS RELIED UPON BY THE LD AR ARE ALSO NOT REITERATED FO R THE SAKE OF BREVITY. WE FIND THAT THE AMALGAMATION OF CPAL WITH KAFL HAS BEEN APPROVED BY THE ORDER OF HON'BLE HIGH COURT. THE LD AO OUGHT NOT TO HAVE QUESTIONED THE VALIDITY OF THE AMALGAMATION SCHEME ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 14 APPROVED BY THE HON'BLE HIGH COURT IN MAY 2013 MERE LY BASED ON A STATEMENT GIVEN BY A THIRD PARTY WHICH HAS NOT BEEN SUBJECT TO CROSS -EXAMINATION. MOROEVER, IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE AND / OR THE STOCK BROKER ASHITA STOCK BRO KING LTD NAME IS NEITHER MENTIONED IN THE SAID STATEMENT AS A PERSON WHO HAD ALLEGEDLY DEALT WITH SUSPICIOUS TRANSACTIONS NOR TH EY HAD BEEN THE BENEFICIARIES OF THE TRANSACTIONS OF SHARES OF KAFL . HENCE WE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMP LICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALL EGATIONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CON SIDERED OPINION, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND TH AT THE LD DR COULD NOT CONTROVERT THE ARGUMENTS OF THE LD AR WIT H CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON T HE ORDERS OF THE LOWER AUTHORITIES APART FROM PLACING THE COPY OF SE BI'S INTERIM ORDER SUPRA. WE FIND THAT THE SEBI'S ORDERS RELIED ON BY THE LD AO AND REFERRED TO HIM AS DIRECT EVIDENCE AGAINST THE ASSESSEE DID NOT CONTAIN THE NAME OF THE ASSESSEE AND/OR THE NAME OF ASHIKA STOCK BROKING LTD. THROUGH WHOM THE ASSESSEE SOLD THE SHA RES OF KAFL AS A BENEFICIARY TO THE ALLEGED ACCOMMODATION ENTRIES PROVIDED BY THE RELATED ENTITIES / PROMOTERS / BROKERS / ENTRY OPER ATORS. IN THE INSTANT CASE, THE SHARES OF CPAL WERE PURCHASED BY THE ASSESSEE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 15 WAY BACK ON 20.12.2011 AND PURSUANT TO MERGER OF CP AL WITH KAFL, THE ASSESSEE WAS ALLOTTED EQUAL NUMBER OF SHA RES IN KAFL, WHICH WAS SOLD BY THE ASSESSEE BY EXITING AT THE MO ST OPPORTUNE MOMENT BY MAKING GOOD PROFITS IN ORDER TO HAVE A GO OD RETURN ON HIS INVESTMENT. WE FIND THAT THE ASSESSEE AND / OR THE BROKER ASHITA STOCK BROKING LTD WAS NOT THE PRIMARY ALLOTT EES OF SHARES EITHER IN CPAL OR IN KAFL AS COULD BE EVIDENT FROM THE SEBI'S ORDER. WE FIND THAT THE SEBI ORDER DID MENTION THE LIST OF 246 BENEFICIARIES OF PERSONS TRADING IN SHARES OF KAFL, WHEREIN, THE ASSESSEE AND / OR ASHITA STOCK BROKING LTD'S NAME IS NOT REFLECTED AT ALL. HENCE THE ALLEGATION THAT THE ASSESSEE AND / OR ASHITA STOCK BROKING LTD GETTING INVOLVED IN PRICE RIGGING OF KAFL SHARES FA ILS. WE ALSO FIND THAT EVEN THE SEBI'S ORDER HEAVILY RELIED UPON BY T HE LD AO CLEARLY STATES THAT THE COMPANY KAFL HAD PERFORMED VERY WEL L DURING THE YEAR UNDER APPEAL AND THE P/E RATIO HAD INCREASED S UBSTANTIALLY. THUS WE HOLD THAT THE SAID ORDERS OF SEBI IS NO EVI DENCE AGAINST THE ASSESSEE, MUCH LESS TO SPEAK OF DIRECT EVIDENCE . THE ENQUIRY BY THE INVESTIGATION WING AND/OR THE STATEMENTS OF SEV ERAL PERSONS RECORDED BY THE INVESTIGATION WING IN CONNECTION WI TH THE ALLEGED BOGUS TRANSACTIONS IN THE SHARES OF KAFL ALSO DID N OT IMPLICATE THE ASSESSEE AND/OR HIS BROKER. IT IS ALSO A MATTER OF RECORD THAT THE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 16 ASSESSEE FURNISHED ALL EVIDENCES IN THE FORM OF BIL LS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO PURCHASE AND SALE O F SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEITHER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEE'S CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THEREFORE THE LD AO WAS NOT JUSTIFIED I N REJECTING THE ASSESSEE'S CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. WE ALSO FIND THAT THE VARIOUS CASE LAWS OF HON'BLE JUR ISDICTIONAL HIGH COURT RELIED UPON BY THE LD AR AND FINDINGS GIVEN T HEREON WOULD APPLY TO THE FACTS OF THE INSTANT CASE. THE LD DR W AS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFECT. HENCE WE HOLD THAT THE LD AO WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF KAFL AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 O F THE ACT. WE ACCORDINGLY HOLD THAT THE REFRAMED QUESTION NO. 1 R AISED HEREINABOVE IS DECIDED IN THE NEGATIVE AND IN FAVOU R OF THE ASSESSEE.' 9. THUS THE COORDINATE BENCH IN THE AFORESAID CASE AFTER CONSIDERING ALL THE MATERIAL, WHICH WERE RELIED UPON BY THE AO INCLUDING THE ORDER OF ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 17 SEBI HELD THAT THE ORDER OF SEBI IS NO EVIDENCE AGA INST THE ASSESSEE. FURTHER, WHEN THE ASSESSEE FURNISHED ALL EVIDENCES IN THE FORM OF BILL, CONTRACT NOTE, DEMAT STATEMENT, BANK ACCOUNT STATEM ENT TO PROVE THE GENUINENESS OF THE TRANSACTION, THEN IN THE ABSENCE OF ANY FINDING BY THE AO TO SHOW THAT THESE DOCUMENTS ARE EITHER BOGUS OR FABRICATED, THE CLAIM OF THE ASSESSEE CANNOT BE TREATED AS BOGUS. 10. THE COORDINATE JAIPUR BENCHES OF THE TRIBUNAL I N CASE OF DCIT VS. SAURABH MITTAL (ITA NO. 16/JP/2018 DATED 29.08.2018) HAS ALSO CONSIDERED AN IDENTICAL ISSUE OF LONG TERM CAPITAL GAIN ON SALE OF SHARES OF M/S. KAILASH AUTO FINANCE LTD AND IN PARA 6 HAS HELD AS UNDER :- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AS WELL THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE STATED TO HAVE PUR CHASED THREE LACS SHARES OF CAREFUL PROJECTS ADVISORY LTD. FOR A CONSIDERATION OF RS. 3.00 LACS VIDE INVOICE DATED 12/3/2012. WE FIND THAT M/S SANSKRITI VINCOM PVT. LTD. HAS ISSUED THE INVOICE D ATED 12/3/2012 FOR THE PURCHASE MADE BY THE ASSESSEE OF THREE LACS SHARES OF CAREFUL PROJECTS ADVISORY LTD.. THE PAYMENTS OF THE CONSIDERATION OF RS. 3.00 LACS WAS MADE BY THE ASSESSEE THROUGH HIS BANK ACCOUNT WITH ICICI BANK AND THE STATEMENT OF BANK ACCOUNT R EFLECTED SAID PAYMENT OF RS. 3.00 LACS ON N14/3/2012. THUS, THE P AYMENT OF ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 18 CONSIDERATION THROUGH BANK ACCOUNT FOR PURCHASE OF SHARES IS NOT IN DISPUTE AS THE SAME HAS BEEN PROVED BY THE EVIDENCE WHICH CAN BE VERIFIED INDEPENDENTLY WITHOUT EVEN ANY SCOPE OF MA NIPULATION OR CONTROL BY THE ASSESSEE. SIMILARLY, THE PURCHASE TR ANSACTION OF FOUR LACS SHARES OF M/S PANCHSHUL MARKETING LTD. VIDE IN VOICE DATED 12/7/2012 ISSUED BY M/S SANSKRITI VINCOM PVT. LTD. IS ALSO ESTABLISHED TO THE EXTENT THAT THE ASSESSEE MADE PA YMENT OF PURCHASE CONSIDERATION OF RS. 4.00 LACS THROUGH HIS BANK ACCOUNT WITH ICICI BANK AND THE PAYMENT IS DULY REFLECTED I N THE BANK ACCOUNT STATEMENT. THEREFORE, THE PAYMENT OF PURCHA SE CONSIDERATION HAS BEEN ESTABLISHED BEYOND ANY DOUBT . THE ONLY QUESTION WHICH CAN BE RAISED FOR THIS TRANSACTION O F PURCHASE OF SHARES OF THESE TWO COMPANIES IS THE SUPPRESSION OF PURCHASE PRICE SO AS TO CREATE AN ARTIFICIAL CAPITAL GAIN OF MAXIM UM AMOUNT. HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY FI NDING THAT THE PURCHASE PRICE WAS ARTIFICIAL SUPPRESSED BY THE PAR TIES WITH INTENTION TO MAXIMIZE THE CAPITAL GAIN THROUGH THE MODUS OPERANDI OF BRINGING THE ASSESSEE UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN EXEMPT U/S 10(38) OF THE ACT. THE ASSESSING OFFICER HAS GIVEN MUCH EMPHASIS ON THE REPORT OF DD IT(INV.), KOLKATA AND SOME STATEMENTS WERE RECORDED DURING TH E ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 19 INVESTIGATION PROCEEDINGS BY KOLKATA WING WHEREIN T HREE PERSONS WHO WERE BROKERS NAMELY SHRI ANIL KHEMKA, SHRI DEVE SH UPADHYAY AND SHRI PANKAJ AGARWAL WERE EXAMINED BY THE DDIT(I NV.), KOLKATA AND IN THEIR STATEMENTS RECORDED U/S 131(1) AND 133 A OF THE ACT, THEY ADMITTED THEIR INDULGENCE IN PROVIDING ACCOMMO DATION ENTRIES OF BOGUS CAPITAL GAIN IN SOME OF THE SCRIPTS INCLUD ING THE SCRIPTS OF M/S KAILASH AUTO FINANCE LTD. HOWEVER, WE FIND THAT IN THE ENTIRE REPORT OF INVESTIGATION WING OF WHICH THE RELEVANT PART IS REPRODUCED BY THE ASSESSING OFFICER AS WELL AS THE STATEMENTS OF THESE PERSONS, THERE IS NO MENTION EITHER OF THE AS SESSEE OR M/S SANSKRITI VINCOM PVT. LTD. THROUGH WHOM THE ASSESSE E PURCHASED THESE SHARES. THUS, EVEN IF THREE PERSONS ARE CONSI DERED TO HAVE INDULGED IN THE TRANSACTION OF PROVIDING ACCOMMODAT ION ENTRIES, IT WOULD NOT AUTOMATICALLY LEAD TO THE CONCLUSION THAT EACH AND EVERY TRANSACTION IN PURCHASE AND SALE OF SHARES OF THOSE COMPANIES ARE BOGUS TRANSACTIONS, WHICH WERE BETWEEN THE SOME OTH ER PARTIES NOT CONNECTED WITH THOSE OPERATORS. EVEN OTHERWISE IN T HE CASE IN HAND, THE ASSESSEE DID NOT PURCHASE THE SHARES OF M /S KAILASH AUTO FINANCE LTD. BUT THE ASSESSEE PURCHASED THE SHARES OF CAREFUL PROJECTS ADVISORY LTD. AND M/S PANCHSHUL MARKETING LTD.. THESE TWO COMPANIES WERE SUBSEQUENTLY AMALGAMATED WITH M/S KA ILASH AUTO ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 20 FINANCE LTD. IN PURSUANT TO THE SCHEME OF AMALGAMAT ION APPROVED BY THE HONBLE ALLAHABAD HIGH COURT AS WELL AS THE HONBLE BOMBAY HIGH COURT VIDE THEIR RESPECTIVE DECISIONS DATED 09 TH & 10 TH MAY, 2013. CONSEQUENTLY, THE ASSESSEE WAS ALLOTTED EQUAL NUMBER OF SHARES OF THE AMALGAMATED ENTRIES OF M/S KAILASH AU TO FINANCE LIMITED IN LIEU OF THE SHARES HELD BY THE ASSESSEE IN ERSTWHILE TWO COMPANIES NAMELY CAREFUL PROJECTS ADVISORY LTD. AND PANCHSHUL MARKETING LTD.. THE ALLOTMENT OF THESE SHARES ARE D ULY REFLECTED IN THE RECORD THROUGH THE CORRESPONDENCE OF THE ALLOTM ENT AND THE SAME COMPANY M/S KAILASH AUTO FINANCE LTD. IS A LIS TED COMPANY IN THE STOCK EXCHANGE, THEREFORE, THE ALLOTMENT OF SHA RES BY THE SAID COMPANY IS VERIFIABLE TRANSACTION FROM AN INDEPENDE NT RECORD. THE ASSESSEE HAS ALSO PRODUCED DEMAT ACCOUNT SHOWING TH E SHARES HELD IN THE DEMATERIALIZED FORM AND THEREFORE, THE HOLDING OF THE SHARES BY THE ASSESSEE AFTER THE DEMATERIALIZATION CANNOT BE QUESTIONED FROM ANY ANGLE. DURING THE FINANCIAL YEA R RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE S OLD THESE SHARES THROUGH STOCK EXCHANGE AND FROM HIS DEMAT AC COUNT. THE SALE TRANSACTION OF SHARES THROUGH STOCK EXCHANGE I S NOT IN DOUBT AND THE SHARES WERE SOLD FROM THE DEMAT ACCOUNT OF THE ASSESSEE IS ALSO CANNOT BE DOUBTED. THE SALE PRICE AS ON THE DATE OF ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 21 TRANSACTION IS ALSO THE PREVAILING PRICE IN THE STO CK EXCHANGE. HENCE IT IS NOT A CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS SHOWN AN INFLATED SALE PRICE WHICH IS NOT AS PER THE PREV AILING MARKET PRICE OF THE SHARES OF M/S KAILASH AUTO FINANCE LTD.. IT IS PERTINENT TO NOTE THAT THE SHARES OF M/S KAILASH AUTO FINANCE LT D. WERE ISSUED TO THE ASSESSEE ONLY IN LIEU OF THE SHARES OF ERSTW HILE TWO COMPANIES M/S CAREFUL PROJECTS ADVISORY LTD. AND M/ S PANCHSHUL MARKETING LTD. AND IT IS NOT A TRANSACTION OF ACQUI RING THE SHARES OF M/S KAILASH AUTO FINANCE LTD AGAINST THE CONSIDERAT ION. THUS, THE ALLOTMENT OF SHARES BY M/S KAILASH AUTO FINANCE LTD . IN PURSUANT TO THE SCHEME OF AMALGAMATION ESTABLISHED THE FACT THA T THE ASSESSEE WAS ALREADY HOLDING THE EQUAL NUMBER OF SHARES IN T HE ERSTWHILE COMPANIES NAMELY M/S CAREFUL PROJECTS ADVISORY LTD. AND M/S PANCHSHUL MARKETING LTD. THUS THE HOLDING OF SHARES BY THE ASSESSEE AND ALLOTMENT OF SHARES OF M/S KAILASH AUT O FINANCE LTD. ARE THE MATERIAL FACTS EMERGING FROM THE RECORDS, W HICH CANNOT BE DISPUTED. THE ALLOTMENT OF SHARES OF M/S KAILASH AU TO FINANCE LTD. ITSELF IS A PROOF OF HOLDING OF SHARES BY THE ASSES SEE IN THE ERSTWHILE COMPANIES WHICH GOT AMALGAMATED INTO NEW ENTITY. HE NCE, ALL THESE FACTS GO TO PROVE BEYOND ANY DOUBT THAT THE A SSESSEE WAS HOLDING THE SHARES IN QUESTION AND THE PAYMENT OF C ONSIDERATION ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 22 WAS DULY MADE THROUGH BANKING CHANNEL, WHICH IS ALS O NOT IN DISPUTE. THE ASSESSING OFFICER HAS TREATED THE TRAN SACTION AS BOGUS ONLY ON THE BASIS OF THE STATEMENTS RECORDED BY THE INVESTIGATION WING, KOLKATA, HOWEVER, EVEN IF THOSE STATEMENTS AR E CONSIDERED AND TAKEN INTO ACCOUNT, IT CANNOT LEAD TO THE CONCL USION OR ESTABLISH THE FACT THAT THE ASSESSEE WAS PART OF THE SAID RAC KET OF PROVIDING ACCOMMODATION ENTRIES OF BOGUS CAPITAL GAIN. WE FURTHER NOTE THAT THIS TRIBUNAL HAS ALSO CONSIDE RED THE SIMILAR ISSUE IN THE CASE OF SHRI PRAMOD JAIN VS DCIT (SUPR A) AND SHRI MEGHRAJ SINGH SHEKHAWAT VS DCIT (SUPRA). IN THE CAS E OF SHRI MEGHRAJ SINGH SHEKHAWAT VS DCIT (SUPRA), THE TRIBUNAL VIDE ORDER DATED 07/3/2018 HAS HELD IN PARA 5 AND 6 AS U NDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS PRODUCED RECORD OF ALLOTME NT OF 3,50,000 EQUITY SHARES OF M/S RUTRON INTERNATIONAL LTD. UNDER PREF ERENTIAL ISSUE AT PAR OF FACE VALUE OF RS. 10/- EACH VIDE ALLOTMENT LETTER D ATED 08.03.2012. THE ASSESSING OFFICER HAS NOT DISPUTED THE GENUINENESS OF THE LETTER OF ALLOTMENT ISSUED BY THE COMPANY TO THE ASSESSEE WHE REIN IT HAS BEEN COMMUNICATED THAT THE ASSESSEE HAS BEEN ALLOTTED 3, 50,000 EQUITY SHARES VIDE ALLOTMENT LETTER DATED 08.03.2012 AGAIN ST THE APPLICATION OF THE ASSESSEE AT PAR OF FACE VALUE OF RS. 10/- EACH WITHOUT ANY PREMIUM. THE ASSESSEE HAS ALSO PRODUCED THE BANK STATEMENT S HOWING THE PAYMENT OF CONSIDERATION OF THE ACQUISITION OF SHAR ES ON 29.02.2012. IT APPEARS THAT THE SAID PAYMENT WAS MADE BY THE ASSES SEE AT THE TIME OF ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 23 APPLYING FOR ALLOTMENT OF SHARES AND SUBSEQUENTLY T HE SHARES WERE ALLOTTED BY THE COMPANY ON 01.03.2012. THUS, IT IS CLEAR THAT THE SHARES ACQUIRED BY THE ASSESSEE IS NOT A TRADING TRANSACTI ON BUT THESE WERE ALLOTTED DIRECTLY BY THE COMPANY UNDER THE PREFEREN TIAL ISSUE AND HENCE, THE ROLE OF INTERMEDIATE IS RULED OUT. ONCE, THE SH ARES WERE DIRECTLY ALLOTTED BY THE COMPANY M/S RUTRON INTERNATIONAL LT D. AGAINST THE CONSIDERATION PAID BY THE ASSESSEE THROUGH CHEQUE. THEN THE ROLE OF ANY INTERMEDIATELY PARTICULAR OF SHRI ANIL AGRAWAL IS S AID ALLOTMENT DOES NOT APPEAR FROM ANY OF THE RECORD. EVEN AS PER THE STAT EMENT AS REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER SH RI ANIL AGRAWAL HAS STATED THAT HE IS HAVING BUSINESS NEXUS WITH THE CO MPANIES INCLUDING M/S RUTRON INTERNATIONAL LTD. THE DEPARTMENT PUT A QUES TION ABOUT THE ASSOCIATION WITH AS MANY AS 13 COMPANIES AND IN RES PONSE TO THAT HE HAS ACCEPTED THAT HE IS HAVING BUSINESS NEXUS WITH THES E COMPANIES INCLUDING M/S RUTRON INTERNATIONAL LTD. THE NATURE OF SERVICE WAS ALSO EXPLAINED BY SHRI ANIL AGRAWAL AS THE CONSULTANCY S ERVICES. FOR READY REFERENCE WE QUOTE QUESTION NO. 4 AND 5 AND ANSWER, THERETO IN THE STATEMENT OF SHRI ANIL AGARWAL AS REPRODUCED AS UND ER:- Q 4. WHETHER M/S COMFORT SECURITIES PVT. LTD. OR YOU HA VE ANY ASSOCIATION WITH THE FOLLOWING COMPANIES OR HAVE EV ER HAD ANY BUSINESS TRANSACTIONS WITH THE COMPANIES AS MENTIONED BELOW: 1. FIRST FINANCIAL SERVICES LTD. (FFSL) 2. SPLASH MEDIA AND INFRA LTD. ( SPMIL) 3. D B (INTERNATIONAL) STOCK BROKERS LTD. ( DBSBL) 4. UNISYS SOFTWARES & HOLDINGS INDUSTRIES LTD. (USH L) 5. FACT ENTERPRISES LTD. ( FEL) 6. PARIKH HERBAL LTD. ( NOW SAFAL HERBS LTD) 7. PREMIER CAPITAL SERVICE 8. RUTRON INTERNATIONA LTD. 9. RADFORD GLOBAL LTD 10. JMD TELEFILMS INDUSTRIES LTD 11. DHANLEELA INVESTMENTS & TRADING CO. LTD. ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 24 12. SRK INDUSTRIES LTD. 13. DHENU BUILDCON INFRA LTD. ANS. M/S COMFORT SECURITIES LTD. HAS BUSINESS NEXUS WI TH THE FOLLOWING COMPANIES NAME OF THE COMPANY NATURE OF BUSINESS TRANSACTION 1. FIRST FINANCIAL SERVICES LTD. BROKERAGE AND CON SULTANCY SERVICES 2. SPLASH MEDIA AND INFRA LTD. BROKERAGE, SHARE HOL DING AND CONSU LTANCY SERVICES 3. FACT ENTERPRISES LTD BROKING AS WELL AS SHARE HOLDING 4. RUTRON INTERNATIONAL LTD. CONSULTANCY SERVICES 5. D.B. (INTERNATIONAL) STOCK CONSULTANCY SERVICE S BROKERS LTD. 6. UNISYS SOFTWARE & HOLDING BROKING SERVICES INDUSTRIES LTD. APART FROM THE ABOVE MENTIONED COMPANIES NEITHER I NOR M/S COMFORT SECURITIES LTD. HAS ANY BUSINESS NEXUS WITH THE COM PANIES MENTIONED SUPRA. Q5. DO YOU KNOW THE PROMOTERS AND DIRECTORS OF THE ABO VE SAID COMPANIES? WHETHER M/S COMFORT SECURITIES PVT. LTD. OR YOU HAVE ANY ASSOCIATION WITH THE PROMOTERS AND DIRECTORS OF THE ABOVE SAID COMPANIES OR HAVE EVER HAD ANY BUSINESS TRANSACTION S WITH THE PROMOTERS AND DIRECTORS OF THE ABOVE SAID COMPANIES . ANS. SIR, I KNOW SOME OF THE DIRECTORS OF THE FIRST FIN ANCIAL SERVICES LIMITED, SPLASH MEDIA & INFRA SERVICES LTD, RUTRON INTERNATIONAL LIMITED AND FACT ENTERPRISE LTD. REGARDING OTHER COMPANIES I AM NOT AWARE WHO ARE THE DIRECTORS OF THESE COMPANIES. THUS, IT IS CLEAR FROM THE RELEVANT PART OF STATEME NT OF SHRI ANIL AGRAWAL AS REPRODUCED BY THE AO THAT HE HAS STATED HAVING B USINESS NEXUS WITH THESE COMPANIES AND NATURE OF BUSINESS BEING CONSUL TANCY SERVICES. HENCE, HE HAS NOT STATED ANYTHING ABOUT PROVIDING B OGUS LONG TERM CAPITAL GAIN IN RESPECT OF THE EQUITY SHARES OF M/S RUTRON INTERNATIONAL LTD. A BUSINESS NEXUS WITH ANY COMPANY WILL NOT AUT OMATICALLY LEAD TO THE CONCLUSION THAT THE SHARES ALLOTTED BY THE OTHE R COMPANY IS BOGUS ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 25 TRANSACTION. AS PER QUESTION NO. 5 AND ANSWER THERE TO IT IS CLEAR THAT SHRI ANIL AGRAWAL WAS NOT THE DIRECTOR OF M/S RUTRON INT ERNATIONAL LTD. BUT HE HAS STATED TO KNOW SOME OF THE DIRECTORS OF THES E COMPANIES INCLUDING M/S RUTRON INTERNATIONAL LTD. HENCE, FROM THIS RELEVANT PART OF THE STATEMENT OF SHRI ANIL AGRAWAL IT CANNOT BE IN FERRED THAT HE HAS PROVIDED THE BOGUS LONG TERM CAPITAL GAIN FROM PURC HASE AND SHARES OF EQUITY SHARES OF M/S RUTRON INTERNATIONAL LTD. MUCH LESS THE SPECIFIC TRANSACTION OF PREFERENTIAL ISSUE ALLOTMENT OF SHAR ES BY THE COMPANY ITSELF TO THE ASSESSEE. FURTHER, THOUGH HE HAS EXPL AINED THE MODUS OPRENDI OF PROVIDING BOGUS LONG TERM CAPITAL GAIN E NTRIES IN THE EQUITY SHARES HOWEVER, WHEN THE TRANSACTION WAS NOT ROUTED THROUGH SHRI ANIL AGRAWAL AND THE SHARES WERE ALLOTTED DIRECTLY BY TH E COMPANY TO THE ASSESSEE AT PAR ON FACE VALUE THEN THE SAME CANNOT BE CONSIDERED AS A PENNY STOCK TRANSACTIONS. THE ASSESSEE HAS PRODUCED THE D-MAT ACCOUNT AND THEREFORE, AS ON 18.06.2012 THE ASSESSEE WAS HO LDING 3,50,000 EQUITY SHARES OF M/S RUTRON INTERNATIONAL LTD. IN D -MAT ACCOUNT. THIS FACT OF HOLDING THE SHARES IN THE D-MAT ACCOUNT AS ON 18 .06.2012 CANNOT BE DISPUTED. FURTHER, THE ASSESSING OFFICER HAS NOT EV EN DISPUTED THE EXISTENCE OF THE D-MAT ACCOUNT AND SHARES CREDITED IN THE D-MAT ACCOUNT OF THE ASSESSEE. THEREFORE, ONCE, THE HOLDING OF SH ARES IS D-MAT ACCOUNT CANNOT BE DISPUTED THEN THE TRANSACTION CANNOT BE H ELD AS BOGUS. THE AO HAS NOT DISPUTED THE SALE OF SHARES FROM THE D-M AT ACCOUNT OF THE ASSESSEE AND THE SALE CONSIDERATION WAS DIRECTLY CR EDITED TO THE BANK ACCOUNT OF THE ASSESSEE, THEREFORE, ONCE THE ASSESS EE PRODUCED ALL RELEVANT EVIDENCE TO SUBSTANTIATE THE TRANSACTION O F PURCHASE, DEMATERIALIZATION AND SALE OF SHARES THEN, IN THE A BSENCE OF ANY CONTRARY MATERIAL BROUGHT ON RECORD THE SAME CANNOT BE HELD AS BOGUS TRANSACTION MERELY ON THE BASIS OF STATEMENT OF ONE SHRI ANIL AGRAWAL RECORDED BY THE INVESTIGATION WING, KOLKATA WHEREIN THERE IS A GENERAL ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 26 STATEMENT OF PROVIDING BOGUS LONG TERM CAPITAL GAIN TRANSACTION TO THE CLIENTS WITHOUT STATING ANYTHING ABOUT THE TRANSACT ION OF ALLOTMENT OF SHARES BY THE COMPANY TO THE ASSESSEE. FURTHER, SHI R ANIL AGRAWAL WAS NOT A DIRECTOR OF M/S RUTRON INTERNATIONAL LTD. AS PERCEIVED BY THE AO AND THEREFORE, THE ENTIRE FINDING OF THE AO IS WITH OUT ANY CORROBORATIVE EVIDENCE OR TANGIBLE MATERIAL. 6. THE ASSESSEE HAS SPECIFICALLY DEMANDED THE CROSS EXAMINED TO SHRI ANIL AGRAWAL WHICH WAS DENIED BY THE AO AS UNDER :- (II) THE ASSESSEES PLEAS THAT EFFECTIVE OPPORTUNI TY MAY BE PROVIDED TO CROSS EXAMINATION. IN THIS REGARD, IT IS POINTED OUT THAT THE HONBLE SUPREME COURT IN THE CASE OF C.VASANTLAL & CO. V/S CIT 45 ITR 206 (SC) (3 JUDGE BENCH) HAS OBSERVED THAT THE ITO IS NOT BOUND BY ANY TECHNICA L RULES OF THE LAW OF EVIDENCE. IT IS OPEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY PRIVATE ENQUIRY. THUS, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN CASE OF CCE VS. ANDAMAN TIMBER INDUSTRIES (SUPRA) THE ASSESSMENT BA SED ON STATEMENT WITHOUT GIVING AN OPPORTUNITY IS NOT SUSTAINABLE IN LAW. WE FURTHER NOTE THAT THE ASSESSEE PRODUCED COPY OF AFFIDAVIT OF SHR I ANIL AGRAWAL WHO HAS RETRACTED HIS STATEMENT BEFORE THE INVESTIGATION WI NG, KOLKATA HOWEVER, WITHOUT GOING INTO CONTROVERSY OF THE RETRACTION OF THE STATEMENT WE FIND THAT THE STATEMENT CANNOT BE USED BY THE AO WITHOUT GIVING AN OPPORTUNITY TO CROSS EXAMINATION OF SHRI ANIL AGRAW AL. THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF PRAMOD JAIN AND O THERS VS. DCIT (SUPRA) WHOLE DEALING WITH AN IDENTICAL ISSUE AS HELD IN PA RA 6 TO 8 AS UNDER:- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE PURCHASES 800 EQUITY SHARE S M/S GRAVITY BARTER LTD. FOR A CONSIDERATION OF RS. 4 LACS THE ASSESSEE HAS PRODUCED THE PURCHASE BILL OF THE SHARES PURCHASE FROM M/S WINALL VINIMAY PVT. LTD. WHICH SHOWS THAT THE ASSESSEE PURCHASE 800 EQUITY SHARES HAVING FACE VALUE OF RS. 10/- EACH M/S GRAVITY BARTER PVT. LTD. IN ALLOTS OF 400 EACH FOR A CONSIDERATION OF RS. 2 LACS EACH TOTAL AMOUNT TO RS. 4 LACS @ RS. 500 PER SHARES. THE PURCHASE PRICE OF RS. 500 PER SHARE ITSELF SHOWS THAT IT WAS NOT A TRANSACTION OF PURCHASE OF ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 27 PENNY STOCK. THESE SHARES WERE DULY REFLECTED IN TH E BALANCE SHEET AS 31.03.2011. THE PAYMENT OF THE PURCHASE CONSIDERATI ON WAS MADE BY THE ASSESSEE VIDE CHEQUE ON 17.05.2011 WHICH IS EVIDENT FROM THE BANK ACCOUNT OF THE ASSESSEE AT PAGE 40 OF THE PAPER BOOK. IN T HE MEAN TIME THE SAID M/S GRAVITY BARTER PVT. LTD. CHANGED ITS STATUS FROM PR IVATE LIMITED TO A PUBLIC LIMITED AND FRESH CERTIFICATE WAS ISSUED BY THE REG ISTRAR OF COMPANY ON 05.02.2011 WHICH IS PLACED AT PAGE 43 OF THE PAPER BOOK. THEREFORE, THERE IS NO REASON TO DISBELIEF THE FACT OF FRESH CERTIFICAT E ISSUED BY THE REGISTRAR OF COMPANIES ON 05.02.2011 AND HENCE, THE DATE MENTION ED IN THE ORDER OF THE HONBLE KOLKATA HIGH COURT AS 18.04.2011 APPEARS TO BE TYPOGRAPHICAL MISTAKE. EVEN OTHERWISE THESE TWO DATES DO NOT HAVE ANY EFFECT ON THE GENUINENESS OF THE TRANSACTIONS OF PURCHASE OF EQUI TY SHARES BY THE ASSESSEE OF M/S GRAVITY BARTER PVT. LTD. THE ASSESSEE THOUGH PRODUCED ALL THE RELEVANT RECORDS AND EVIDENCES RIGHT FROM THE PURCHASE BILLS , CERTIFICATE ISSUED BY THE REGISTRAR ABOUT THE CHANGE OF NAME, THE COMMUNICATI ON BETWEEN THE ASSESSEE AND THE SELLER OF THE SHARES AND THEREAFTE R, THE AMALGAMATION OF M/S GRAVITY BARTER LTD. WITH M/S OASIS CINE COMMUNI CATION LTD. WHICH WAS DULY APPROVED BY THE HONBLE HIGH COURT VIDE ORDER DATED 28.8.2011. THE ASSESSEE IN THE MEAN TIME GOT THE PHYSICAL SHARE CE RTIFICATE DEMATERIALIZED INTO DEMAT ACCOUNT ON 16.02.2012. THERE IS NO REASO N TO DOUBT THE ALLOTMENT OF THE SHARES TO THE ASSESSEE AFTER AMALG AMATION TOOK PLACE BETWEEN M/S GRAVITY BARTER LTD. AND M/S OASIS CINE COMMUNICATION LTD. AND SUBSEQUENT TO AMALGAMATION THE ASSESSEE WAS ALL OTTED SHARES OF M/S OASIS CINE COMMUNICATION LTD. ON 04.02.2012. HENCE, THE ALLOTMENT OF 35,200 EQUITY SHARES OF M/S OASIS CINE COMMUNICATIO N LTD. CANNOT BE DOUBTED OR DISPUTED AS THESE SHARES WERE ISSUED POS T AMALGAMATION AND BY A LISTED COMPANY. IT IS ALSO NOT IN DISPUTE THAT TH ESE SHARES OF M/S OASIS CINE COMMUNICATION LTD. WERE ISSUED IN EXCHANGE OF THE S HARES HELD BY THE ASSESSEE OF M/S GRAVITY BARTER LTD. THEREFORE, ONCE THE SHARES ISSUED BY M/S OASIS CINE COMMUNICATION LTD. CANNOT BE DOUBTED THE N THE HOLDING OF THE SHARES OF THE M/S GRAVITY BARTER LTD. BY THE ASSESS EE CORRESPONDINGLY CANNOT BE DOUBTED BECAUSE OF THE REASONS THAT THE SHARES O F M/S OASIS CINE COMMUNICATION LTD. COULD BE ALLOTTED ONLY IN EXCHAN GE OF SHARES OF M/S GRAVITY BARTER LTD. THE HOLDING THE SHARES OF M/S G RAVITY BARTER LTD. AND THE ALLOTMENT OF SHARES M/S OASIS CINE COMMUNICATION LT D. ARE DIRECTLY INTERCONNECTED. IN THE ABSENCE OF HOLDING OF SHARES M/S GRAVITY BARTER LTD. THE SHARES OF THE M/S OASIS CINE COMMUNICATION LTD. COULD NOT BE ISSUED OR ALLOTTED TO THE ASSESSEE. THEREFORE, HOLDING OF THE SHARES BY THE ASSESSEE AT LEAST AT TIME OF AMALGAMATION TOOK PLACE AND SHARES OF THE M/S OASIS CINE COMMUNICATION LTD. ON 04.02.2012 CANNOT BE DOUBTED. MOREOVER, THESE SHARES WERE DEMATERIALIZED BY THE ASSESSEE IN THE D EMAT ACCOUNT, THEREFORE, ON THE DATE OF ALLOTMENT OF SHARE OF M/S OASIS CINE COMMUNICATION LTD THE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 28 ASSESSEE WAS HOLDING THESE SHARES AND PRIOR TO THA T THE ASSESSEE WAS HOLDING THE SHARES OF M/S GRAVITY BARTER LTD. ON EX CHANGE OF THE SAME THE SHARES OF M/S OASIS CINE COMMUNICATION LTD. WERE I SSUED TO THE ASSESSEE. THE ASSESSING OFFICER HAS DOUBTED THE GENUINENESS O F THE TRANSACTIONS HOWEVER, ONCE THE HOLDING OF SHARES OF THE ASSESSEE AT THE TIME OF THE SAME WERE ISSUED BY M/S OASIS CINE COMMUNICATION LTD. IS NOT IN DISPUTE THEN THE HOLDING OF SHARES OF M/S GRAVITY BARTER LTD. ALSO C ANNOT BE DISPUTE BECAUSE OF THE FACT THAT WITHOUT HOLDING OF THE SAME THE SH ARES OF M/S OASIS CINE COMMUNICATION LTD. COULD NOT BE ISSUED TO THE ASSES SEE. ONCE, THE SHARES WERE HELD BY THE ASSESSEE THEN, THE QUESTION OF GEN UINENESS OF THE TRANSACTION DOES NOT ARISE HOWEVER, THE PURCHASE CO NSIDERATION CAN BE DOUBTED BY THE AO IF THE SHARES WERE CLAIMED TO HAV E BEEN PURCHASED AGAINST CONSIDERATION PAID IN CASH WHICH IS NOT IN CASE OF THE ASSESSEE. THE ASSESSEE HAS PAID PURCHASE CONSIDERATION THROUGH CH EQUE AND THEREFORE, EVEN IF THE SAID CONSIDERATION IS FOUND TO BE VERY LESS IN COMPARISON TO THE SALE PRICE AT THE TIME OF SALE OF SHARES IN THE ABS ENCE OF ANY MATERIAL OR OTHER FACTS DETECTED OR BROUGHT ON RECORD BY THE AO THAT THE ASSESSEE HAS BROUGHT BACK HIS OWN UNACCOUNTED MONEY IN THE SHAPE OF LONG TERM CAPITAL GAIN AND HAS USED THE SAME AS A DEVICE TO AVOID TAX , THE PURCHASE CONSIDERATION PAID BY THE ASSESSEE CANNOT BE DOUBTE D IN THE ABSENCE OF ANY CORROBORATING EVIDENCE. THE ASSESSING OFFICER HAS N OT DISPUTED THAT THE FAIR MARKET VALUE OF THE SHARES OF M/S GRAVITY BARTER LT D. WAS MORE THAN THE PURCHASE PRICE CLAIMED BY THE ASSESSEE. IT MAY BE A CASE THAT ENSURING MERGER/AMALGAMATION OF THE SAID COMPANY WITH M/S OA SIS CINE COMMUNICATION LTD. THE ASSESSEE MIGHT HAVE ANTICIPA NT THE EXCEPTIONAL APPRECIATION IN THE SHARE PRICE DUE TO EXTRAORDINAR Y EVENT OF MERGER/ AMALGAMATION. HOWEVER, THE SAME CANNOT BE A REASON FOR DOUBTING GENUINENESS OF THE TRANSACTION IF THE MOTIVE OF PUR CHASE OF THE SHARE IS TO EARN AN EXTRAORDINARY GAIN BECAUSE OF SOME INTERNAL INFORMATION AVAILABLE TO THE ASSESSEE. 7. IN CASE OF EQUITY SHARES M/S PARIDHI PROPERTIES LTD. THE ASSESSEE PURCHASE 50,000 EQUITY SHARE ON 26.03.2011 BY PAYIN G SHARE APPLICATION MONEY OF RS. 5 LACS WHICH IS DULY REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE AS PAID ON 28.03.2011. THEREFORE, THE PAYM ENT OF SHARE APPLICATION MONEY HAS BEEN DULY ESTABLISHED BY THE ASSESSEE THR OUGH HIS BANK ACCOUNT FOR ALLOTMENT OF SHARES OF 50,000 EQUITY SHARES OF M/S PARIDHI PROPERTIES LTD. THE SHARE ALLOTTED IN PRIVATE PLACEMENT AS PER OF R S. 10/- CANNOT BE TERMED AS PENNY STOCK. THE AO DOUBTED THAT THE ENTIRE PROC ESS OF APPLICATION AND ALLOTMENT OF SHARES AS IT HAVE BEEN COMPLETED WITHI N A SHORT DURATION OF 5 DAYS, WHICH IN THE OPINION OF THE AO IS NOT POSSIBL E IN ORDINARY COURSE. HOWEVER, WHEN THE ASSESSEE HAS PRODUCED THE RECORD INCLUDING THE SHARE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 29 APPLICATION, PAYMENT OF SHARE APPLICATION MONEY, AL LOTMENT OF SHARE THEN MERELY BECAUSE OF A SHORT PERIOD OF TIME WILL NOT B E A SUFFICIENT REASON TO HOLD THAT THE TRANSACTION IS BOGUS. THE SHARES ALLO TTED TO THE ASSESSEE VIDE SHARE CERTIFICATE DATED 31.03.2011 WERE DEMATERIALI ZED ON 21.10.2011, THEREFORE, ON THE DATE OF DEMATERIALIZATION OF THE SHARES THE HOLDING OF THE SHARES OF THE ASSESSEE CANNOT BE DOUBTED AND HENCE THE ACQUISITION OF THE SHARES OF THE ASSESSEE CANNOT BE TREATED AS A BOGUS TRANSACTION. NOBODY CAN HAVE THE SHARES IN HIS OWN NAME IN DEMANT ACCOU NT WITHOUT ACQUIRING OR ALLOTMENT THROUGH DUE PROCESS HENCE, EXCEPT THE PURCHASE CONSIDERATION PAID BY THE ASSESSEE HOLDING OF SHARES CANNOT BE DO UBTED WHEN THE ASSESSEE HAS PRODUCED ALL THE RELEVANT RECORD OF ISSUING OF ALLOTMENT OF SHARES, PAYMENT OF SHARE APPLICATION MONEY THROUGH BANK, SH ARE CERTIFICATE AND DEMAT ACCOUNT SHOWING THE SHARES CREDITED IN THE DE MAT ACCOUNT OF THE ASSESSEE ON DEMATERIALIZATION. THE SAID COMPANY M/S PARIDHI PROPERTIES LTD. WAS SUBSEQUENTLY MERGED WITH M/S LUMINAIRE TECHNOLO GIES LTD. VIDE SCHEME APPROVED BY THE HONBLE BOMBAY HIGH COURT OR DER DATED 27.07.2012. HENCE, THE ASSESSEE GOT ALLOTTED THE EQ UITY SHARES OF M/S LUMINAIRE TECHNOLOGIES LTD. AS PER SWAP RATIO APPRO VED IN THE SCHEME AND CONSEQUENTLY THE ASSESSEE WAS ALLOTTED 5 LACS SHARE OF RS. 1/- EACH ON M/S LUMINAIRE TECHNOLOGIES LTD. THE EVIDENCE PRODUCED B Y THE ASSESSEE LEAVE NO SCOPE OF ANY DOUBT ABOUT THE HOLDING OF THE SHARES BY THE ASSESSEE. 8. AS REGARDS THE PURCHASE CONSIDERATION WHEN THE A SSESSEE HAS SHOWN THE SHARE APPLICATION MONEY PAID THROUGH HIS BANK A CCOUNT AND THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT APA RT FROM THE SHARE APPLICATION MONEY PAID THROUGH BANK ACCOUNT THE ASS ESSEE HAS BROUGHT HIS OWN UNACCOUNTED MONEY BACK AS LONG TERM CAPITAL GAI N. IT IS ALSO PERTINENT TO NOTE THAT THE SHARES OF M/S OASIS CINE COMMUNICA TION LTD. ARE STILL HELD BY THE ASSESSEE IN ITS DEMAT ACCOUNT TO THE EXTENT OF 17,200 SHARES AND THEREFORE, THE HOLDING OF THE SHARES BY ANY PARAMET ER OR STRETCH OF IMAGINATION CANNOT BE DOUBTED. THE AO HAS PASSED TH E ASSESSMENT YEAR BASED ON THE STATEMENT OF SHRI DEEPAK PATWARI RECOR DED BY THE INVESTIGATION WING OF KOLKATA HOWEVER, THE ASSESSEE HAS SPECIFICALLY DEMANDED THE CROSS EXAMINATION OF SHRI DEEPAK PATW ARI VIDE LETTER DATED 15.03.2016 SPECIFICALLY IN PARAS 3 AND 4 AS REPRODU CED BY THE AO AT PAGE NO. 7 OF THE ASSESSMENT ORDER AS UNDER:- 3. SINCE, THE SHARES WERE ALLOTTED BY THE COMPANY THROUGH PRIVATE PLACEMENT AFTER COMPLETING THE FORMALITIES OF ROC A ND WERE SOLD THROUGH THE RECOGNIZED BOMBAY STOCK EXCHAGE (BSE) THERE IS NO QUESTION OF KNOWING INDIVIDUAL PERSONS OR COMPANY OFFICIAL PERSONALLY I N THE WHOLE PROCESS, SO THE ASSESSEE IS NOT IN POSITION TO PRODUCE ANY ONE FOR CROSS EXAMINATION BEFORE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 30 YOUR GOOD SELF. SINCE YOUR GOOD SELF HAS GOT THE AU THORITY, WE HUMBLY REQUEST YOU TO KINDLY ISSUE THE NOTICE U/S 131 OF T HE INCOME TAX ACT 1961 TO THE CONCERNED INDIVIDUAL PERSONS OR COMPANY OFFICIA LS FOR CROSS EXAMINATION. PLEASE NOTE THAT THE ASSESSEE IS READY TO BEAR THE COST OF THEIR TRAVELLING IN THIS REGARDS. 4. AS REGARD YOUR OPPORTUNITY GIVEN TO US TO READ T HE RECORDED STATEMENT OF SHRI DEEPAK PATWARI AND TO PRODUCE HIM FROM THE CRO SS EXAMINATION BEFORE YOUR GOOD SELF, WE HAVE TO SUBMIT THAT FROM THE REA DING OF THE STATEMENTS OF SHRI DEEPAK PATWARI IT IS CLEAR THAT HE HAS NEVER T AKEN THE NAME OF THE ASSESSEE, NOR THE ASSESSEE IS AWARE OF ANY SHRI DEE PAK PATWARI NEITHER HE HAS MADE ANY TRANSACTION WITH HIM, SO IN WHAT CAPAC ITY HE CAN CALL HIM FOR CROSS EXAMINATION BEFORE YOUR GOOD SELF. SINCE YOUR GOOD SELF HAS GOT THE AUTHORITY, WE HUMBLY REQUEST YOUTO KINDLY ISSUE THE NOTICE U/S 131 OF THE INCOME TAX ACT 1961 TO HIM ALSO FOR CROSS EXAMINATI ON. WE ALSO REQUEST YOUR GOOD SELF TO KINGLY PROVIDE US THE COPY OF STATEMEN TS OF SHRI DEEPAK PATWARI ALONG WITH THE OTHER RELEVANT DOCUMENTS. PLEASE NOT E THAT THE ASSESSEE IS READY TO BEAR THE COST OF HIS TRAVELLING IN THIS RE GARD. IT IS MANIFEST FROM THE ASSESSEES REPLY TO SHOW CA USE NOTICE THAT THE ASSESSEE HAD SPECIFICALLY DEMANDED THE CROSS EXAMIN ATION OF SHRI DEEPAK PATWARI HOWEVER, THE ASSESSING OFFICER DID NOT OFFE R THE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SHRI DEEPAK PATWARI. FURT HER, THE AO ASKED THE ASSESSEE TO PRODUCE THE PRINCIPAL OFFICERS OF THE M /S GRAVITY BARTER LTD. AND M/S PARIDHI PROPERTIES LTD. HOWEVER, IN OUR VIEW IF THE ASSESSING OFFICER WANTED TO EXAMINE THE PRINCIPAL OFFICERS OF THOSE C OMPANIES HE WAS HAVING THE AUTHORITY TO SUMMON THEM AND RECORD THEIR STATE MENTS INSTEAD OF SHIFTING BURDEN ON THE ASSESSEE. IT IS NOT EXPECTED FROM THE ASSESSEE INDIVIDUAL TO PRODUCE THE PRINCIPAL OFFICERS OF THE COMPANIES RATHER THE AO OUGHT TO HAVE SUMMONED THEM IF THE EXAMINATION OF T HE OFFICERS WERE CONSIDERED AS NECESSARY BY THE AO. HENCE, IT WAS IM PROPER AND UNJUSTIFIED ON THE PART OF THE AO TO ASKED THE ASSESSEE TO PROD UCE THE PRINCIPAL OFFICERS OF THOSE COMPANIES. AS REGARDS THE NON GRANT OF OPP ORTUNITY TO CROSS EXAMINE, THE HONBLE SUPREME COURT IN CASE OF ANDAM AN TIMBER INDUSTRIES VS. CCE (SUPRA) WHILE DEALING WITH THE ISSUE HAS HE LD IN PARA 5 TO 8 AS UNDER: 5. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, AND MR. K. RADHAKRISHNAN, LEARNED SEN IOR COUNSEL WHO APPEARED FOR THE REVENUE. ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 31 6. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERI OUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLAT ION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WA S BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EV EN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANT ED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPOR TUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORD ER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONE D THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WI TH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT T HEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WA S NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLA NT WANTED TO CROSS- EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPEL LANT WANTED FROM THEM. 7. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNIT Y OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIE D UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED I N THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFO RE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COU LD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS ME NTIONED 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 THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTI NG OR REJECTING THE SUBMISSIONS. 8. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WIT H THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHO W CAUSE NOTICE. ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 32 THEREFORE, THE STATEMENT OF WITNESS CANNOT BE SOLE BASIS OF THE ASSESSMENT WITHOUT GIVEN AN OPPORTUNITY OF CROSS EXAMINATION A ND CONSEQUENTLY IT IS A SERIOUS FLAW WHICH RENDERS THE ORDER A NULLITY. THE MUMBAI SPECIAL OF THE TRIBUNAL IN CASE OF GTC INDUSTRIES VS. ACIT (SUPRA) HAD THE OCCASION TO CONSIDER THE ADDITION MADE BY THE AO ON THE BASIS OF SUSPICION AND SURMISES AND OBSERVED IN PAR 46 AS UNDER:- 46. IN SITUATIONS LIKE THIS CASE, ONE MAY FALL INTO REALM OF 'PREPONDERANCE OF PROBABILITY' WHERE THERE ARE MANY PROBABLE FACTORS, SOME IN FAVOUR OF THE ASSESSEE AND SOME MAY GO AGAINST THE ASSESSEE. BUT THE PROBABLE FACTORS HAVE TO BE WEIGHED ON MATERIAL FACTS SO COLLECTED. HERE IN THIS CASE THE MATERIAL FACTS STRONGLY INDICATE A PROBABILITY THAT THE WHOLESALE BUYERS HAD COLLECTED THE PREMIUM MONEY FOR SPENDING IT ON ADVE RTISEMENT AND OTHER EXPENSES AND IT WAS THEIR LIABILITY AS PER THEIR MU TUAL UNDERSTANDING WITH THE ASSESSEE. ANOTHER VERY STRONG PROBABLE FACTOR IS TH AT THE ENTIRE SCHEME OF 'TWIN BRANDING' AND COLLECTION OF PREMIUM WAS SO DE SIGNED THAT ASSESSEE- COMPANY NEED NOT INCUR ADVERTISEMENT EXPENSES AND T HE RESPONSIBILITY FOR SALES PROMOTION AND ADVERTISEMENT LIES WHOLLY UPON WHOLESALE BUYERS WHO WILL BORNE OUT THESE EXPENSES FROM ALLEGED COLLECTI ON OF PREMIUM. THE PROBABLE FACTORS COULD HAVE GONE AGAINST THE ASSESS EE ONLY IF THERE WOULD HAVE BEEN SOME EVIDENCE FOUND FROM SEVERAL SEARCHES EITHER CONDUCTED BY DRI OR BY THE DEPARTMENT THAT ASSESSEE-COMPANY WAS BENEFICIARY OF ANY SUCH ACCOUNTS. AT LEAST SOMETHING WOULD HAVE BEEN U NEARTHED FROM SUCH GLOBAL LEVEL INVESTIGATION BY TWO CENTRAL GOVERNMEN T AUTHORITIES. IN CASE OF CERTAIN DONATIONS GIVEN TO A CHURCH, ORIGINATING TH ROUGH THESE BENAMI BANK ACCOUNTS ON THE BEHEST OF ONE OF THE EMPLOYEES OF T HE ASSESSEE COMPANY, DOES NOT IMPLICATE THAT GTC AS A CORPORATE ENTITY W AS HAVING THE CONTROL OF THESE BANK ACCOUNTS COMPLETELY. WITHOUT GOING INTO THE AUTHENTICITY AND VERACITY OF THE STATEMENTS OF THE WITNESSES SMT. NI RMALA SUNDARAM, WE ARE OF THE OPINION THAT THIS ONE INCIDENT OF DONATION T HROUGH BANK ACCOUNTS AT THE DIRECTION OF ONE OF THE EMPLOYEE OF THE COMPANY DOES NOT IMPLICATE THAT THE ENTIRE PREMIUM COLLECTED ALL THROUGHOUT THE COU NTRY AND DEPOSITED IN BENAMI BANK ACCOUNTS ACTUALLY BELONGS TO THE ASSESS EE-COMPANY OR THE ASSESSEE-COMPANY HAD DIRECT CONTROL ON THESE BANK A CCOUNTS. ULTIMATELY, THE ENTIRE CASE OF THE REVENUE HINGES UPON THE PRES UMPTION THAT ASSESSEE IS BOUND TO HAVE SOME LARGE SHARE IN SO-CALLED SECRET MONEY IN THE FORM OF PREMIUM AND ITS CIRCULATION. HOWEVER, THIS PRESUMPT ION OR SUSPICION HOW STRONG IT MAY APPEAR TO BE TRUE, BUT NEEDS TO BE CO RROBORATED BY SOME EVIDENCE TO ESTABLISH A LINK THAT GTC ACTUALLY HAD SOME KIND OF A SHARE IN SUCH SECRET MONEY. IT IS QUITE A TRITE LAW THAT SUS PICION HOWSOEVER STRONG MAY BE BUT CANNOT BE THE BASIS OF ADDITION EXCEPT F OR SOME MATERIAL EVIDENCE ON RECORD. THE THEORY OF 'PREPONDERANCE OF PROBABILITY' IS APPLIED TO ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 33 WEIGH THE EVIDENCES OF EITHER SIDE AND DRAW A CONCL USION IN FAVOUR OF A PARTY WHICH HAS MORE FAVOURABLE FACTORS IN HIS SIDE. THE CONCLUSIONS HAVE TO BE DRAWN ON THE BASIS OF CERTAIN ADMITTED FACTS AND MA TERIALS AND NOT ON THE BASIS OF PRESUMPTION OF FACTS THAT MIGHT GO AGAINST ASSESSEE. ONCE NOTHING HAS BEEN PROVED AGAINST THE ASSESSEE WITH AID OF AN Y DIRECT MATERIAL ESPECIALLY WHEN VARIOUS ROUNDS OF INVESTIGATION HAV E BEEN CARRIED OUT, THEN NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE. THEREFORE, WHEN THE ASSESSING OFFICER HAS NOT BROUG HT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PAID OVER AND ABOVE THE PURCHASE CONSIDERATION AS CLAIMED AND EVIDENT FROM THE BANK ACCOUNT THEN, IN THE ABSENCE OF ANY EVIDENCE IT CANNOT BE HELD THAT THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED MONEY BY WAY OF BOGUS LONG TERM CAPITAL GAIN. THE HONBLE JURISDICTION HIGH COURT IN CASE OF CIT VS. SMT. POOJA AGRAWAL (SUPRA) HAS UPHELD THE FINDING OF THE TRIBUNAL ON THIS ISSU E IN PARA 12 AS UNDER:- 12. HOWEVER, COUNSEL FOR THE RESPONDENT HAS TAKEN US TO THE ORDER OF CIT(A) AND ALSO TO THE ORDER OF TRIBUNAL AND CONTENDED THA T IN VIEW OF THE FINDING REACHED, WHICH WAS DONE THROUGH STOCK EXCHANGE AND TAKING INTO CONSIDERATION THE REVENUE TRANSACTIONS, THE ADDITIO N MADE WAS DELETED BY THE TRIBUNAL OBSERVING AS UNDER:- 'CONTENTION OF THE AR IS CONSIDERED. ONE OF THE MAI N REASONS FOR NOT ACCEPTING THE GENUINENESS OF THE TRANSACTIONS DECLA RED BY THE APPELLANT THAT AT THE TIME OF SURVEY THE APPELLANT IN HIS STATEMEN T DENIED HAVING MADE ANY TRANSACTIONS IN SHARES. HOWEVER, SUBSEQUENTLY THE F ACTS CAME ON RECORD THAT THE APPELLANT HAD TRANSACTED NOT ONLY IN THE SHARES WHICH ARE DISPUTED BUT SHARES OF VARIOUS OTHER COMPANIES LIKE SATYAM COMPU TERS, HCL, IPC L, BPCL AND TATA TEA ETC. REGARDING THE TRANSACTIONS IN QUE STION VARIOUS DETAILS LIKE COPY OF CONTRACT NOTE REGARDING PURCHASE AND SALE O F SHARES OF LIMTEX AND KONARK COMMERCE & IND. LTD., ASSESSEE'S ACCOUNT WIT H P.K. AGARWAL & CO. SHARE BROKER, COMPANY'S MASTER DETAILS FROM REGISTR AR OF COMPANIES, KOLKATA WERE FILED. COPY OF DEPOSITORY A/C OR DEMAT ACCOUNT WITH ALANK RIT ASSIGNMENT LTD., A SUBSIDIARY OF NSDL WAS ALSO FILED WHICH SHOWS THAT THE TRANSACTIONS WERE MADE THROUGH DEMAT A/C. WHEN THE RELEVANT DOCUMENTS ARE AVAILABLE THE FACT OF TRANSACTIONS ENTERED INTO CANNOT BE DENIED SIMPLY ON THE GROUND THAT IN HIS STATEMENT THE APPELLANT DENIED HAVING MADE A NY TRANSACTIONS IN SHARES. THE PAYMENTS AND RECEIPTS ARE MADE THROUGH A/C PAYEE CHEQUES AND THE TRANSACTIONS ARE ROUTED THROUGH KOLKATA STOCK E XCHANGE. THERE IS NO EVIDENCE THAT THE CASH HAS GONE BACK IN APPELLANTS' S ACCOUNT. PRIMA FACIE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 34 THE TRANSACTION WHICH ARE SUPPORTED BY DOCUMENTS AP PEAR TO BE GENUINE TRANSACTIONS. THE AO HAS DISCUSSED MODUS OPERANDI I N SOME SHAM TRANSACTIONS WHICH WERE DETECTED IN THE SEARCH CASE OF B.C. PUROHIT GROUP. THE AO HAS ALSO STATED IN THE ASSESSMENT ORDER ITSE LF WHILE DISCUSSING THE MODUS OPERANDI THAT ACCOMMODATION ENTRIES OF LONG T ERM CAPITAL GAIN WERE PURCHASED AS LONG TERM CAPITAL GAIN EITHER WAS EXEM PTED FROM TAX OR WAS TAXABLE AT A LOWER RATE. AS THE APPELLANT'S CASE IS OF SHORT TERM CAPITAL GAIN, IT DOES NOT EXACTLY FALL UNDER THAT CATEGORY OF ACC OMMODATION TRANSACTIONS. FURTHER AS PER THE REPORT OF DCIT, CENTRAL CIRCLE-3 SH. P.K. AGARWAL WAS FOUND TO BE AN ENTRY PROVIDER AS STATED BY SH. PAWAN PURO HIT OF B.C. PURIHIT AND CO. GROUP. THE AR MADE SUBMISSION BEFORE THE AO THAT TH E FACT WAS NOT CORRECT AS IN THE STATEMENT OF SH. PAWAN PUROHIT THERE IS N O MENTION OF SH. P. K. AGARWAL. IT WAS ALSO SUBMITTED THAT THERE WAS NO ME NTION OF SH. P. K. AGARWAL IN THE ORDER OF SETTLEMENT COMMISSION IN TH E CASE OF SH. SUSHIL KUMAR PUROHIT. COPY OF THE ORDER OF SETTLEMENT COMM ISSION WAS SUBMITTED. THE AO HAS FAILED TO COUNTER THE OBJECTIONS RAISED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS. SIMPLY MENTIONING THAT THESE FINDINGS ARE IN THE APPRAISAL REPORT AND APPRAISAL REPORT IS MADE B Y THE INVESTING WING AFTER CONSIDERING ALL THEMATERIAL FACTS AVAILABLE O N RECORD DOES NOT HELP MUCH. THE AO HAS FAILED TO PROVE THROUGH ANY INDEPE NDENT INQUIRY OR RELYING ON SOME MATERIAL THAT THE TRANSACTIONS MADE BY THE APPELLANT THROUGH SHARE BROKER P.K. AGARWAL WERE NON-GENUINE OR THERE WAS A NY ADVERSE MENTION ABOUT THE TRANSACTION IN QUESTION IN STATEMENT OF S H. PAWAN PUROHI. SIMPLY BECAUSE IN THE SHAM TRANSACTIONS BANK A/C WERE OPEN ED WITH HDFC BANK AND THE APPELLANT HAS ALSO RECEIVED SHORT TERM CAPI TAL GAIN IN HIS ACCOUNT WITH HDFC BANK DOES NOT ESTABLISH THAT THE TRANSACT ION MADE BY THE APPELLANT WERE NON GENUINE. CONSIDERING ALL THESE F ACTS THE SHARE TRANSACTIONS MADE THROUGH SHRI P.K. AGARWAL CANNOT BE HELD AS NON-GENUINE. CONSEQUENTLY DENYING THE CLAIM OF SHORT TERM CAPITA L GAIN (6 OF 6) [ ITA- 385/2011] MADE BY THE APPELLANT BEFORE THE AO IS NO T APPROVED. THE AO IS THEREFORE, DIRECTED TO ACCEPT CLAIM OF SHORT TERM C APITAL GAIN AS SHOWN BY THE APPELLANT.' IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AO IS BASED ON MERE SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO SHOW THAT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN. ON THE OTHER HAND, THE ASSESSEE HAS BROUGHT ALL THE RELEVANT MATERIAL TO SUBSTANTIATE ITS CLAIM THAT TR ANSACTIONS OF THE PURCHASE AND SALE OF SHARES ARE GENUINE. EVEN OTHERWISE THE HOLDING OF THE SHARES BY THE ASSESSEE AT THE TIME OF ALLOTMENT SUBSEQUENT TO THE AMALGAMATION/MERGER IS NOT IN DOUBT, THEREFORE, THE TRANSACTION CANNOT BE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 35 HELD AS BOGUS. ACCORDINGLY WE DELETE THE ADDITION M ADE BY THE AO ON THIS ACCOUNT. THUS, IT IS CLEAR THAT THE TRIBUNAL IN THE SAID CAS E HAS ANALYZED AN IDENTICAL ISSUE WHEREIN THE SHARES ALLOTTED IN THE PRIVATE PL ACEMENT @ RS. 10 AT PAR OF FACE VALUE WHICH WERE DEMATERIALIZED AND THEREAFTER SOLD BY THE ASSESSEE AND ACCORDINGLY THE TRIBUNAL AFTER PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF CCE VS. ANDAMAN TIMBER IN DUSTRIES (SUPRA) AS WELL AS THE DECISION OF HONBLE JURISDICTION HIGH COURT IN CASE OF CIT VS. SMT. POOJA AGARWAL (SUPRA) AS HELD THAT WHEN THE ASSESSING OFF ICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PA ID OVER AND ABOVE PURCHASE CONSIDERATION AS CLAIMED AND EVIDENT FROM THE BANK ACCOUNT THEN, IN THE ABSENCE OF ANY EVIDENCE IT CANNOT BE HELD TH AT THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED MONEY BY WAY OF BOGU S LONG TERM CAPITAL GAIN. SIMILAR IN THE CASE IN HAND THE ASSESSEE HAS PRODUCED THE RELEVANT RECORD TO SHOW THE ALLOTMENT OF SHARES BY THE COMPA NY ON PAYMENT OF CONSIDERATION BY CHEQUE AND THEREFORE, IT IS NOT A CASE OF PAYMENT OF CONSIDERATION BY IN CASH. BUT THE TRANSACTION IS ES TABLISHED FROM THE EVIDENCE AND RECORD WHICH CANNOT BE MANIPULATED AS ALL THE ENTRIES ARE PART OF THE BANK ACCOUNT OF THE ASSESSEE AND THE ASSESSE E DEMATERIALIZED THE SHARES IN THE D-MAT ACCOUNT WHICH IS ALSO AN INDEPE NDENT MATERIAL AND EVIDENCE CANNOT BE MANIPULATED. THEREFORE, THE HOLD ING OF THE SHARES BY THE ASSESSEE CANNOT BE DOUBTED AND THE FINDING OF THE A O IS BASED MERELY ON THE SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO SHOW THAT THE ASSESSEE HAS INTRODUCTION HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN. WE FIND THAT THE LD. CIT(A) HAS ALSO REFERRED TO SEBI ENQUIRY AGAINST THE M/S ANAND RATHI SHARE AND STOCK BROKER S LTD. HOWEVER, WE NOTE THAT THE SAID ENQUIRY WAS REGARDING FINANCIAL IRREGULARITIES AND USE OF FUND BELONGING TO THE CLIENTS FOR THE PURPOSE OTHER THAN, THE PURCHASE OF SHARES ON BEHALF OF THE CLIENTS. THEREFORE, THE SUB JECT MATTER OF THE ENQUIRY ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 36 HAS NO CONNECTION WITH THE TRANSACTION OF BOGUS LON G TERM CAPITAL GAIN. THE DECISIONS REPLIED UPON THE LD. DR IN CASE OF SANJAY BIMALCHAND JAIN VS. PR. CIT (SUPRA) IS NOT APPLICABLE IN THE FACTS OF THE PRESE NT CASE AS THE SAID DECISION IS IN RESPECT PENNY STOCK PURCHASE BY THE ASSESSEE FROM A PERSONS WHO WAS FOUND TO BE INDULGED IN PROVIDING BOGUS CAPITAL GAI N ENTRIES WHEREAS IN THE CASE OF THE ASSESSEE THE SHARES WERE ALLOTTED TO TH E ASSESSEE BY THE COMPANY AT PAR OF FACE VALUE. HENCE, IN VIEW OF THE FACTS AND CIRCUMSTANCES WHEN WE HOLD THAT THE ORDER OF THE ASSESSING OFFICE R TREATING THE LONG TERM CAPITAL GAIN AS BOGUS AND CONSEQUENTIAL ADDITION MA DE TO THE TOTAL INCOME OF THE ASSESSEE IS NOT SUSTAINABLE. HENCE, WE DELET E THE ADDITION MADE BY THE AO ON THIS ACCOUNT. THEREFORE, ON ANALYZING OF THE FACTS AS WELL AS THE EVIDENCE PRODUCED BY THE ASSESSEE, WE FIND THAT THE ASSESSING OFFICER HAS NO T BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FACT DULY ESTABLISHED BY T HE SUPPORTING EVIDENCE OF PURCHASE BILLS, PAYMENT OF CONSIDERATION THROUGH BA NK, DEMATERIALIZATION OF SHARES IN THE DEMAT ACCOUNT, ALLOTMENT OF THE SHARE S AMALGAMATED NEW ENTITY IN LIEU OF THE EARLIER TWO COMPANIES OF EQUA L NUMBER OF SHARES. SALE OF SHARES FROM THE DEMAT ACCOUNT THROUGH STOCK EXCHANG E AND AT THE PREVAILING PRICE AS ON THE DATE OF SALE AND FURTHER PAYMENT OF STT ON THE TRANSACTION OF SALE HAS BEEN DULY ESTABLISHED. IN A BSENCE OF ANY CONTRARY FACT, THE MERE RELIANCE BY THE ASSESSING OFFICER ON THE REPORT OF INVESTIGATION WING, KOLKATA IS NOT SUFFICIENT TO ESTABLISH THE FA CT THAT THE TRANSACTION IS BOGUS. THE FINDING OF THE ASSESSING OFFICER IS BASE D MERELY ON THE SUSPICION AND SURMISES WITHOUT ANY TANGIBLE MATERIAL TO SHOW THAT THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED INCOME IN THE SHARE OF LONG TERM CAPITAL GAIN EVEN OTHERWISE THE RELIANCE OF THE STATEMENTS RECORDED BY THE INVESTIGATION WING, KOLKATA WHEREIN WITHOUT GIVING AN OPPORTUNITY OF CROSS EXAMINATION IS A COMPLETE VIOLATION OF PRINCIPLES O F NATURAL JUSTICE AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CCE VS AND AMAN TIMBER INDUSTRIES ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 37 (SUPRA). THE COORDINATE BENCH HAS ALSO FOLLOWED THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PO OJA AGARWAL ORDER DATED 11/09/2017 WHEREIN THE HON'BLE HIGH COURT HAS DULY CONSIDERED THE FACT THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATE RIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PAID OVER AND ABOVE THE PURCH ASE CONSIDERATION AS CLAIMED AND EVIDENT FROM THE BANK ACCOUNT. THEREFOR E, IN ABSENCE OF ANY EVIDENCE, IT CANNOT BE HELD THAT THE ASSESSEE HAS I NTRODUCED HIS OWN UNACCOUNTED MONEY BY WAY OF BOGUS LONG TERM CAPITAL GAIN. ACCORDINGLY, IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FI ND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE LD. CIT(A) QUA THIS ISSUE. HENC E, THIS GROUND OF REVENUES APPEAL IS DISMISSED. 11. WE THEREFORE FIND THAT THE SAME FACTS WERE CONS IDERED IN THE ABOVE CITED CASES REGARDING PURCHASE OF SHARES OF M/S. CA REFUL PROJECTS ADVISORY LTD WHICH WAS SUBSEQUENTLY MERGED WITH M/S. KAILASH AUTO FINANCE LTD. AND AFTER ANALYZING THE RELEVANT DOCUMENTARY EVIDEN CE WHICH INCLUDES PURCHASE BILL, PAYMENT CONSIDERATION THROUGH BANK, DEMATERIALIZATION OF SHARES, ALLOTMENT OF THE SHARES AMALGAMATED NEW ENT ITY IN LIEU OF EARLIER COMPANY, THE TRIBUNAL HAS HELD THAT IN THE ABSENCE OF ANY CONTRARY EVIDENCE IT CANNOT BE HELD THAT THE ASSESSEE HAS IN TRODUCED HIS OWN UNACCOUNTED MONEY BY WAY OF BOGUS LONG TERM CAPITAL GAIN AND RELIANCE ON THE STATEMENT RECORDED BY THE INVESTIGATION WING WITHOUT PROVIDING AN OPPORTUNITY OF CROSS EXAMINATION IS A COMPLETE VIOL ATION OF PRINCIPAL OF NATURAL JUSTICE. THE TRIBUNAL HAS ALSO FOLLOWED THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. SMT. P OOJA AGARWAL (SUPRA) ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 38 WHEREIN THE HON'BLE HIGH COURT HAS ALSO UPHELD THE FINDING OF THE LD. CIT (A) AND THIS TRIBUNAL WHEN THE ASSESSEE PRODUCED AL L THE RELEVANT DETAILS AND EVIDENCE IN SUPPORT OF THE TRANSACTION OF PURCH ASE AND SALE OF SHARES. THE RATIO AND FINDINGS OF THE AFORESAID DECISION SQ UARELY APPLIES IN THE INSTANT CASE WHERE THE ASSESSEE PRODUCED ALL THE RE LEVANT DETAILS AND EVIDENCE IN SUPPORT OF THE TRANSACTION OF PURCHASE AND SALE OF SHARES AND WHERE THE SAID STATEMENT OF A THIRD PERSON RELIED U PON BY THE AO WAS NOT PROVIDED TO THE ASSESSEE INSPITE OF SPECIFIC REQUES T AND THE ASSESSEE CAME TO KNOW OF THE CONTENTS OF THE SAID STATEMENT ONLY ON RECEIPT OF THE ASSESSMENT ORDER WHICH IS A COMPLETE VIOLATION OF P RINCIPAL OF NATURAL JUSTICE. 12. SIMILARLY, IN CASE OF ITO VS SHRI LALIT KUMAR BIYANI (SUPRA), THE COORDINATE JAIPUR BENCHES OF THE TRIBUNAL HAD AN OC CASION TO EXAMINE SIMILAR ISSUE AND TAKING INTO CONSIDERATION VARIOUS DECISIONS OF THE TRIBUNAL AS WELL AS THE DECISIONS OF HONBLE JURISD ICTIONAL HIGH COURT AND THAT OF THE HONBLE DELHI HIGH COURT IN CASE OF SUM AN PODDAR (SUPRA), IT HAS HELD AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE AO HAS DOUBTED THE TRANSAC TIONS OF PURCHASE AND SALE OF SHARES BY THE ASSESSEE OF M/S. PSIT INF RA BASED ON THE INVESTIGATION CARRIED OUT BY THE DDIT KOLKATA AND D ELHI WHEREIN CERTAIN ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 39 PERSONS WERE FOUND INDULGED IN PROVIDING ACCOMMODAT ION ENTRIES, INTER- ALIA BOGUS LONG TERM CAPITAL GAINS WHICH IS CLAIMED AS EXEMPT UNDER SECTION 10(38) OF THE IT ACT BY THE BENEFICIARIES I N ORDER TO FACILITATE THE BENEFICIARIES TO CONVERT THEIR BLACK MONEY INTO WHI TE WITHOUT PAYING INCOME-TAX. THE AO HAS NARRATED THE MODUS OPERANDI OF VARIOUS ENTRY PROVIDERS WHICH IS A GENERAL STATEMENT SO FAR AS TH E INDULGENCE OF CERTAIN PERSONS IN PROVIDING THE ACCOMMODATION ENTRY OF BOG US LONG TERM CAPITAL GAINS AS WELL AS OTHER TRANSACTIONS. HOWEVER, IN T HE SAID NARRATION OF MODUS OPERANDI THERE IS NOTHING AGAINST THE PARTICU LAR TRANSACTION OF PURCHASE AND SALE OF SHARES BY THE ASSESSEE. THE AO HAS SPECIFICALLY MENTIONED THAT DURING THE COURSE OF ENQUIRY IN CERT AIN CASES IT HAS COME TO LIGHT THAT LARGE SCALE MANIPULATION HAS BEEN DON E IN THE MARKET PRICE OF SHARES OF CERTAIN COMPANIES LISTED ON STOCK EXCH ANGE BY A GROUP OF PERSONS WORKING AS A SYNDICATE FOR THE PURPOSE OF P ROVIDING ENTRY OF TAX EXEMPT BOGUS LONG TERM CAPITAL GAINS TO LARGE NUMBE R OF BENEFICIARIES IN LIEU OF UNACCOUNTED CASH. THESE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER CANNOT CONSTITUTE ANY TANGIBLE MAT ERIAL OR EVIDENCE TO SHOW THAT THE TRANSACTION OF THE ASSESSEE IS BOGUS BEING AN ACCOMMODATION ENTRY. THE AO IN THE SHOW CAUSE NOTIC E THOUGH REFERRED VARIOUS NAMES, WHO HAS OPERATED AS ENTRY PROVIDERS/ BROKERS, HOWEVER, NEITHER ANY DOCUMENTARY REFERENCE IS MADE IN THE SH OW CAUSE NOTICE OR ANY SUCH REFERENCE IS MADE IN THE FINDING OF THE AO WHILE HOLDING THE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 40 TRANSACTION AS BOGUS BY AVAILING THE ACCOMMODATION ENTRY OF LONG TERM CAPITAL GAIN. THE AO HAS EITHER DISCUSSED THE MODU S OPERANDI OF ENTRY PROVIDERS OR THE JUDGMENTS ON THE ISSUE BUT HAS NOT MADE ANY REFERENCE OF ANY MATERIAL OR DOCUMENTARY EVIDENCE WHICH REVEA LS THAT THE ASSESSEE HAS INDULGED IN AVAILING THE ACCOMMODATION ENTRY OF BOGUS LONG TERM CAPITAL GAIN. THERE IS NO DISPUTE THAT ONCE THE A SSESSEE HAS CLAIMED THE LONG TERM CAPITAL GAIN FROM PURCHASE AND SALE OF SH ARES WHICH IS EXEMPT UNDER SECTION 10(38) OF THE ACT, THE PRIMARY ONUS I S ON THE ASSESSEE TO SUBSTANTIATE HIS CLAIM BY PRODUCING THE SUPPORTING EVIDENCE. WE FIND THAT IN THE CASE IN HAND THIS IS NOT AN ISOLATED TR ANSACTION OF PURCHASE AND SALE OF SHARES BY THE ASSESSEE OF M/S. PSIT INF RA BUT THE ASSESSEE HAS BEEN REGULARLY PURCHASING AND SELLING OF THE SH ARES AS IT IS EVIDENT FROM THE DETAILS OF PURCHASE AND SALE OF SHARES BY THE ASSESSEE. THE ASSESSEE HAS EVEN ANNEXED THE DETAILS OF THE HOLDIN G OF VARIOUS SHARES TO THE FINANCIAL STATEMENTS AS ON 31 ST MARCH, 2014 AS UNDER:- THUS AS ON 31 ST MARCH, 2014 THE ASSESSEE WAS HOLDING THE SHARES OF ABOUT 40 COMPANIES WHICH INCLUDE M/S. PSIT INFRASTR UCTURE AND SERVICES OF 6,500 SHARES. WE FIND THAT THE ASSESSEE HAS DUL Y REFLECTED ALL THESE SHARES IN THE BALANCE SHEET OF THE ASSESSEE AS ON 3 1 ST MARCH, 2014 AND THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-1 5 WAS ALSO FILED IN TIME BEFORE THE DATE OF SALE OF THE SHARES IN THE M ONTH OF DECEMBER, ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 41 2014. THUS IT IS CLEAR THAT 6,500 SHARES ACQUIRED B Y THE ASSESSEE ON 08.08.2013 WERE REFLECTED IN THE BALANCE SHEET AS O N 31 ST MARCH, 2014. WE FURTHER NOTE THAT THE ASSESSEE PRODUCED THE COPY OF PURCHASE BILL OF THESE SHARES ALONG WITH THE BANK STATEMENT SHOWING THE PURCHASE CONSIDERATION PAID BY THE ASSESSEE THROUGH CHEQUE. THE BANK ACCOUNT OF THE ASSESSEE HAS REFLECTED THE PAYMENT OF RS. 2,60, 000/- FOR PURCHASE OF SHARES. THE AO HAS NOT DISPUTED THAT SUBSEQUENTLY THERE WERE EVENTS OF AMALGAMATION OF THE COMPANY WITH M/S. PARAG SHILPA INVESTMENTS LTD. AND THEREAFTER THE SHARES WERE SPLIT FROM 1 SHARE O F RS. 10/- EACH TO 10 SHARES OF RS. 1/- EACH AND CONSEQUENTLY THE ASSESSE E WAS ALLOTTED 65,000 SHARES AS AGAINST 6,500 SHARES ORIGINALLY AC QUIRED. THE SHARES ACQUIRED BY THE ASSESSEE ARE DULY REFLECTED IN THE DEMAT ACCOUNT OF THE ASSESSEE. ONCE THE SHARES ARE DEMATERIALIZED AND C REDITED IN THE DEMAT ACCOUNT OF THE ASSESSEE, THE HOLDING OF THE SHARES BY THE ASSESSEE CANNOT BE DISPUTED. IT IS ALSO NOT IN DISPUTE THAT OUT OF 65,000 SHARES HELD IN THE DEMAT ACCOUNT OF THE ASSESSEE, ONLY 38, 300 SHARES WERE SOLD DURING THE YEAR UNDER CONSIDERATION IN 3 LOTS I.E. 1 ST LOT OF 5300 SHARES WERE SOLD ON 1 ST DECEMBER, 2014, 2 ND LOT OF 27,000 SHARES WERE SOLD ON 5 TH DECEMBER, 2014 AND 3 RD LOT OF 6000 SHARES WERE SOLD ON 19 TH MARCH, 2015. THEREFORE, THE ASSESSEE IS STILL HOLDING 26, 700 SHARES OF M/S. PSIT INFRA IN HIS DEMAT ACCOUNT. THE AO HAS TREATED THE TRANSACTION OF SALE OF 38,300 SHARES AS BOGUS BEING ACCOMMODATION ENTRY BU T HAS NOT DOUBTED ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 42 THE HOLDING OF THE SHARES BY THE ASSESSEE TO THE TU NE OF 26,700 SHARES IN THE DEMAT ACCOUNT OF THE ASSESSEE. ONCE THE ASSESSE E HAS PRODUCED ALL THE SUPPORTING EVIDENCES WHICH INCLUDE PURCHASE BIL L, BANK STATEMENT SHOWING THE PAYMENT OF PURCHASE CONSIDERATION, DEMA T ACCOUNT, HOLDING OF SHARES IN THE DEMAT ACCOUNT, SALE OF THE SHARES THROUGH STOCK EXCHANGE WHICH ARE ALSO REFLECTED IN THE DEMAT ACCO UNT OF THE ASSESSEE AND RECEIPT OF THE SALE CONSIDERATION IN THE BANK A CCOUNT OF THE ASSESSEE AS IT IS EVIDENT FROM THE BANK ACCOUNT, STATEMENT O F THE ASSESSEE, THEN IN THE ABSENCE OF ANY CONTRARY MATERIAL OR EVIDENCE BR OUGHT ON RECORD BY THE AO, THE TRANSACTION OF PURCHASE AND SALE OF THE SHARES IN QUESTION CANNOT BE HELD AS BOGUS MERELY ON THE BASIS OF THE INVESTIGATION CARRIED OUT BY THE DEPARTMENT IN SOME OTHER CASES WHERE SOM E PERSONS WERE FOUND INDULGED IN PROVIDING ACCOMMODATION ENTRY. T HE AO IN THE ENTIRE ASSESSMENT ORDER HAS NOT MADE REFERENCE TO SINGLE D OCUMENTARY EVIDENCE WHICH CAN BE SAID TO BE AN INCRIMINATING M ATERIAL AGAINST THE ASSESSEE TO SHOW THAT THE ASSESSEE HAS AVAILED ACCO MMODATION ENTRY OF BOGUS LONG TERM CAPITAL GAIN. THEREFORE, THE MERE SUSPICION CANNOT BE A GROUND FOR TREATING THE TRANSACTION AS BOGUS IN T HE ABSENCE OF ANY EVIDENCE OR MATERIAL ON RECORD. THE LD. D/R HAS RE LIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF SUMAN PODDAR VS. ITO (SUPRA) WHEREIN THE HONBLE HIGH COURT HAS CONFIRMED THE FI NDING OF THE TRIBUNAL AND FINALLY OBSERVED IN PARA 8 AS UNDER :- ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 43 8. FROM THE ABOVE EXTRACT, IT WOULD BE SEEN THAT THE CRESSANDA SOLUTIONS LTD. WAS IN FACT IDENTIFIED BY THE BOMBAY STOCK EXCHANGE AS A PENNY STOCK BEING USED F OR OBTAINING BOGUS LONG TERM CAPITAL GAIN. NO EVIDENCE OF ACTUAL SALE EXCEPT THE CONTRACT NOTES ISSUED BY THE SHARE BROKER WERE PRODUCED BY THE ASSESSEE. NO QUESTION OF LAW, THEREFORE ARISES IN THE PRESENT CASE AND THE CONSIS TENT FINDING OF FACT RETURNED AGAINST THE APPELLANT ARE BASED ON EVIDENCE ON RECORD. THUS IT IS CLEAR THAT IN THE SAID CASE THE TRIBUNAL S FINDING IS BASED ON THE FACT THAT NO EVIDENCE OF ACTUAL SALE EXCEPT THE CON TRACT NOTES ISSUED BY THE SHARE BROKER WAS PRODUCED BY THE ASSESSEE. IN THOSE FACTS, THE HONBLE HIGH COURT HAS HELD THAT NO QUESTION OF LAW ARISES IN THE SAID CASE. ON THE CONTRARY, IN THE CASE IN HAND THE ASS ESSEE PRODUCED ALL THE RELEVANT DOCUMENTARY EVIDENCE TO ESTABLISH THE GENU INENESS OF THE TRANSACTION. EVEN IF THE AO DOUBTED THE TRANSACTIO N, THEN TO ESTABLISH THAT THE TRANSACTION IS BOGUS, THE AO IS REQUIRED T O PRODUCE THE CONTRARY MATERIAL EVIDENCE SO THAT THE EVIDENCE PRODUCED BY THE ASSESSEE CAN BE CONTROVERTED. IN THE ABSENCE OF SUCH CONTRARY MATE RIAL OR EVIDENCE BROUGHT ON RECORD BY THE AO AND THE EVIDENCE PRODUC ED BY THE ASSESSEE IS OTHERWISE INDEPENDENTLY VERIFIABLE BEING THE DOC UMENTS IN THE SHAPE OF BANK STATEMENT, DEMAT ACCOUNT, BOOKS OF ACCOUNT AND BILLS FOR WHICH THE ASSESSEE HAS NO CONTROL OR SAY, THEREFORE, THE SAID EVIDENCE CANNOT BE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 44 MANIPULATED BY THE ASSESSEE. ONCE THE EVIDENCE PROD UCED BY THE ASSESSEE IS NOT PREPARED OR BEYOND THE SCOPE OF ANY MANIPULATION BY THE ASSESSEE, THEN THE ASSESSEE HAS DISCHARGED HIS ONUS TO PROVE THE TRANSACTION OF PURCHASE AND SALE OF SHARES AND CONS EQUENTIAL CAPITAL GAIN. AS WE HAVE ALREADY MENTIONED THAT THIS IS NO T AN ISOLATED TRANSACTION OF PURCHASE AND SALE OF SHARES IN SINGL E SCRIP, BUT THE ASSESSEE HAS BEEN HOLDING THE SHARES OF 40 COMPANIE S OUT OF WHICH THE AO HAS DOUBTED ONLY ONE SCRIP. THUS THE DECISION O F HONBLE DELHI HIGH COURT WILL NOT HELP THE CASE OF THE DEPARTMENT. 13. SIMILARLY, IN THE INSTANT CASE, THE ASSESSEE IS STILL HOLDING 413,500 SHARES OF M/S. KAILASH AUTO IN HIS DEMAT ACCOUNT. THE AO HAS TREATED THE TRANSACTION OF SALE OF 66,500 SHARES AS BOGUS BEING ACCOMMODATION ENTRY BUT HAS NOT DOUBTED THE HOLDING OF THE SHARES BY TH E ASSESSEE TO THE TUNE OF 4,13,500 SHARES IN THE DEMAT ACCOUNT OF THE ASSE SSEE. ONCE THE ASSESSEE HAS PRODUCED ALL THE SUPPORTING EVIDENCES WHICH INCLUDE PURCHASE BILL, BANK STATEMENT SHOWING THE PAYMENT O F PURCHASE CONSIDERATION, DEMAT ACCOUNT, HOLDING OF SHARES IN THE DEMAT ACCOUNT, SALE OF THE SHARES THROUGH STOCK EXCHANGE WHICH ARE ALSO REFLECTED IN THE DEMAT ACCOUNT OF THE ASSESSEE AND RECEIPT OF THE SA LE CONSIDERATION IN THE BANK ACCOUNT OF THE ASSESSEE AS IT IS EVIDENT F ROM THE BANK ACCOUNT, STATEMENT OF THE ASSESSEE, THEN IN THE ABSENCE OF A NY CONTRARY MATERIAL ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 45 OR EVIDENCE BROUGHT ON RECORD BY THE AO, THE TRANSA CTION OF PURCHASE AND SALE OF THE SHARES IN QUESTION CANNOT BE HELD AS BO GUS MERELY ON THE BASIS OF THE INVESTIGATION CARRIED OUT BY THE DEPAR TMENT IN SOME OTHER CASES WHERE SOME PERSONS WERE FOUND INDULGED IN PRO VIDING ACCOMMODATION ENTRY. THE AO IN THE ENTIRE ASSESSME NT ORDER HAS NOT MADE REFERENCE TO SINGLE DOCUMENTARY EVIDENCE WHICH CAN BE SAID TO BE AN INCRIMINATING MATERIAL AGAINST THE ASSESSEE TO S HOW THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRY OF BOGUS LONG TERM CAPITAL GAIN. THEREFORE, THE MERE SUSPICION CANNOT BE A GROUND FO R TREATING THE TRANSACTION AS BOGUS IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL ON RECORD. ACCORDINGLY, IN VIEW OF THE FACTS AND CIRC UMSTANCES AS DISCUSSED ABOVE, WHEN THE ASSESSEE HAS PRODUCED ALL THE RELEV ANT DOCUMENTARY EVIDENCES TO ESTABLISH THE GENUINENESS OF THE TRANS ACTION AND THERE IS NO CONTRARY EVIDENCE TO DOUBT THE CORRECTNESS OF THE E VIDENCES PRODUCED BY THE ASSESSEE THEN TREATING THE TRANSACTION OF PURCH ASE AND SALE AS SHAM BY THE AO IS NOT JUSTIFIED. THEREFORE, ALL THESE FA CTS ESTABLISHED THE GENUINENESS OF THE TRANSACTION. HENCE WE DO NOT FI ND ANY ERROR IN ASSESSEES CLAIM OF EXEMPTION OF LONG TERM CAPITAL GAINS AND THE ADDITION MADE BY THE AO UNDER SECTION 68 OF THE IT ACT BY TR EATING THE LONG TERM CAPITAL GAIN ON SALE OF SHARES AS UNEXPLAINED CASH CREDIT IS HEREBY DIRECTED TO BE DELETED. THE MATTER IS ACCORDINGLY D ECIDED IN FAVOUR OF THE ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 46 ASSESSEE AND AGAINST THE REVENUE. IN THE RESULT, T HE GROUND NO.1 IS ALLOWED. 14. GROUND NO. 2 OF THE ASSESSEES APPEAL IS REGARD ING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NOTIONA L COMMISSION EXPENSES U/S 69C OF THE ACT. 15. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED T HE RELEVANT MATERIAL ON RECORD. THIS IS A CONSEQUENTIAL ISSUE T O THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT TREATING LO NG TERM CAPITAL GAIN AS ACCOMMODATION ENTRIES FOR BOGUS CLAIM OF EXEMPT INC OME AND CONSEQUENTLY THE ASSESSING OFFICER HAS ALSO MADE AN ADDITION ON ACCOUNT OF EXPENDITURE OF RS. 47,413/- BEING UNEXPLAINED CO MMISSION EXPENSES ON SUCH TRANSACTION OF ACCOMMODATION ENTRIES. BEING A CONSEQUENTIAL ISSUE TO THE ISSUE INVOLVED IN GROUND NO. 1 OF THE APPEAL WHICH HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THIS GROUND IS D ECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ITA NO. 222/JP/2020 17. BOTH THE PARTIES FAIRLY SUBMITTED THAT THE FACT S AND CIRCUMSTANCES OF THIS CASE IS EXACTLY IDENTICAL AS IN ITA NO. 223/JP /2020 AND SIMILAR ITA 223 & 222/JP/2020_ NILESH AGARWAL HUF, JAIPUR VS ITO, JAIPUR 47 CONTENTIONS RAISED THEREIN MAY BE CONSIDERED. THER EFORE, CONSIDERING THE ADMITTED POSITION THAT THERE ARE NO CHANGES IN THE FACTS AND CIRCUMSTANCES, OUR FINDINGS AND DIRECTIONS CONTAINE D IN ITA NO. 223/JP/2020 SHALL APPLY MUTATIS MUTANDIS TO THIS AP PEAL MATTER AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/02/2021 SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09/02/2021 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- NILESH AGARWAL HUF, JAIPUR & DEEPAK KUMAR AGARWAL HUF, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-2(3), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 223 & 222/JP/2020} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR