Chandra Prakash Jhunjhunwala, Kolkata V. D.C.I.T., Central Circle - 3(4), Kolkata , Kolkata

ITA 2351/KOL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5855 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-06-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 20-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Income from undisclosed sources; Opportunity of cross examination; Transactions in derivatives; Retrospective amendment; Question of law; Fair market value; Accommodation entries; Scheme of amalgamation; Assessment record; Penny stocks; Set aside
• Section: 43B; 143(3); 50C; 142(1); 205; 68; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.2351/KOL/2017 ( / ASSESSMENT YEAR:2014-15) CHANDRA PRAKASH JHUNJHUNWALA 22/S, NALINI RANJAN AVENUE, BLOCK-A, NEW ALIPORE, KOLKATA- 700053 VS. DCIT, CC-3(4), KOLKATA ./ ./PAN/GIR NO.: ACKPJ 1855 A (ASSESSEE) .. (REVENUE) ASSESSEEBY : SHRI MANOJKATARUKA, ADVOCATE RESPONDENT BY : SHRI ROBIN CHOWDHURY, ADDL. CIT SR. DR / DATE OF HEARING : 18/06/2019 /DATE OF PRONOUNCEMENT : 09 /08/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERT AINING TO ASSESSMENT YEAR 2014-15, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-21, KOLKATA, WHICH IN TURN ARISES OUT OF A N ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 30/12/2016. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE ACTION OF THE LD. CIT(A) TO CONFIRM THE ADDITION MADE BY THE A.O. OF RS. 12,01,950/- U/S 50C OF THE ACT IS UNJUSTIFIED AND BAD IN LAW. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE ACTION OF THE LD. CIT(A) TO CONFIRM THE ADDITION MADE BY THE A.O. OF RS. 31,46,527/- ON ACCOUNT OF LOSS INCURRED IN SHARE TRADING BY HOLDIN G IT TO BE BOGUS AND PRE- ARRANGED IS CONTRARY TO THE MATERIAL EVIDENCES ON RECORD AND THE ADDITION IS BAD IN LAW. CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 2 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE ACTION OF THE LD. CIT(A) TO UPHOLD THE ACTION OF THE A.O. IN MAKING A DDITION OF RS. 31,46,527/- BY DISALLOWING THE LOSS ON SHARES, IS B ASED ON SUSPICION AND PRESUMPTION WITHOUT ANY EVIDENCE AND THEREFORE THE ADDITION IS BAD IN LAW. 4. THAT THE ORDER OF THE LD. CIT(A) CONFIRMING THE ORDER OF THE A.O. IS UNJUST, ARBITRARY, EXCESSIVE AND ILLEGAL. 5. THAT THE ABOVE GROUNDS OF APPEAL WILL BE ARGUED IN DETAIL AT THE TIME OF HEARING AND THE ASSESSEE CRAVES LEAVE TO SUBMIT ADD ITIONAL GROUND OF APPEAL IF ANY AND/OR AMEND, VARY, MODIFY, ALTER THE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 3. GROUND NO. 1 RAISED BY THE ASSESSEE RELATES TO ADDITION MADE BY THE ASSESSING OFFICER OF RS. 12,01,950/- U/S 50C OF THE ACT. 4. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. NIL AND CLAIMED CURRE NT YEAR LOSS OF RS. 1,19,46,383/-. THE ASSESSEES CASE HAS BEEN SELECTE D FOR SCRUTINY THROUGH CASS. NOTICE U/S 143(2) WAS ISSUED ON 22.04.2016 ALONG W ITH QUESTIONNAIRES AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON PERUSAL OF THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE FOR THE YEAR ENDED 31.03.2014 ALONG WITH ITS COMPUTATION OF INCOME FOR THE A.Y. 2014-15, IT WAS NOTICED BY ASSESSING OFFICER THAT, THE ASSESSEE HAD DECLARED LONG TERM CAPITAL G AIN OF RS. 1,22,63,576/- AGAINST SALE OF PROPERTY AT PRETORIA STREET, KOLKATA ON 14 .12.2013. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE WAS ASKED TO FU RNISH THE DETAILS OF PROPERTY SOLD ALONG WITH COPY OF SALE DEED AND OTHER RELEVAN T SUPPORTING DOCUMENTS REGARDING THE INDEXATION COST CLAIMED WHILE COMPUTI NG LONG TERM CAPITAL GAIN. THE A.R. OF THE ASSESSEE THROUGH HIS LETTER DATED 21.04 .2016 SUBMITTED THE COPY OF SALE DEED OF THE SAID PROPERTY. ONGOING THROUGH, THE DET AILS SUBMITTED BY THE ASSESSEE, IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD SOLD A PROPERTY ON 14.12.2013 TO M/S SRISHTI PROPERTIES (PARTNERSHIP FIRM), FOR A T OTAL SALE CONSIDERATION OF RS. 3,15,00,000/-. THE ASSESSEE STATED THAT DIVIDED AND DEMARCATED PORTION MEASURING ABOUT 3300 SQ. FT. SUPER BUILT UP AREA CONSISTING O F 2952 SQ. FT. COVERED SUPER BUILT UP AREA AND 348 SQ. FT OPEN TERRACE ON THE 4 TH FLOOR OF THE BUILDING BUILT AND CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 3 33 3 CONSTRUCTED ON LAND MEASURING ABOUT 2 BIGHAS AND 2 COTTAHS TOGETHER WITH STRUCTURES STANDING THEREON SITUATED AT MUNICIPAL PREMISES NO. 7B, HARENDRA KUMAR SARANI (FORMERLY PRETORIA STREET), P.S. SHAKE SPEARE SARANI, KOLKATA-700071 ALONG WITH ONE NO. COVERED CAR PARKING SPACE BEARIN G NO. 1 ON GROUND FLOOR. FURTHER IT WAS FOUND THAT THE MARKET VALUE OF THE S AID PROPERTY AS PER STAMP DUTY AUTHORITY IS RS. 3,27,01,950/-. 5. THE ASSESSING OFFICER NOTICED THAT IN LIGHT OF T HE ABOVE FINDINGS, THE ISSUE OF SALE OF PROPERTY BY THE ASSESSEE ATTRACTS THE PROVI SION OF SECTION 50C OF THE ACT AS THE SALE CONSIDERATION RECEIVED AS A RESULT OF THE TRANSFER OF A CAPITAL ASSET IS LESS THAN THE MARKET VALUE AS PER STAMP DUTY VALUATION. THE ASSESSEE WAS ASKED IN COURSE OF HEARING TO EXPL AIN AS TO WHY THE PROVISIONS OF SECTION 50C OF THE ACT SHOULD NOT BE INVOKED IN CAS E OF THE ASSESSEE REGARDING THE SALE PROPERTY AT PRETORIA STREET, KOLKATA AND WHY T HE FULL VALUE OF CONSIDERATION RECEIVED AS A RESULT OF THE SAID TRANSFER SHOULD NO T BE TAKEN AT RS. 3,27,01,950/- (MARKET VALUE AS PER STAMP DUTY AUTHORITY) IN PLACE OF RS. 3,15,00,000/- (SALE CONSIDERATION RECEIVED AS PER THE ASSESSEE). IN RESPONSE, THE ASSESSEE FURNISHED HIS SUBMISSION DATED 20.06.2016. RELEVANT EXTRACT OF THE SAID REPLY IS FURNISHED AS UNDER: THE ASSESSEE HAS SOLD PROPERTY DURING THE YEAR V IDE CONVEYANCE DATED 14 TH DECEMBER, 2013 FOR A CONSIDERATION OF RS. 3,15,00, 000/- AS AGAINST THE MARKET VALUE OF THE PROPERTY AT RS. 3,27,01,950/- AND IT H AS BEEN ASKED TO EXPLAIN AS TO WHY THE PROVISION OF SECTION 50C SHALL NOT APPLY. T HE ASSESSEE IS OBJECTING THE VALUE OF THE PROPERTY FOR VALUATION AT THE MARKET R ATE AT RS. 3,27,01,950/- FOR VARIOUS REASONS AND THEREFORE THE SAME MAY BE REFER RED TO THE DVO FOR FRESH VALUATION. THE SUBMISSION OF THE ASSESSEE HAD BEEN PERUSED BY ASSESSING OFFICER AND ACCORDINGLY A REFERENCE HAD BEEN MADE ON 5.12.2016 TO THE DVO FOR DETERMINATION OF FAIR MARKET VALUE OF THE SAID PROP ERTY U/S 55A READ WITH SECTION 50C(2) OF THE ACT. BUT NO REPORT HAD BEEN RECEIVED FROM THE DVO WITHIN THE TIME SOUGHT FOR. HENCE THE PROVISION OF SECTION 50C OF T HE ACT IS BEING INVOKED IN CASE OF THE ASSESSEE AND THE VALUE AS PER STAMP DUTY AU THORITY IS BEING ADOPTED AS THE FULL VALUE OF CONSIDERATION RECEIVED FOR THE PURP OSE OF COMPUTATION LONG TERM CAPITAL GAIN. HENCE, IN THE CASE OF THE ASSESSEE, T HE MARKET VALUE OF RS. CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 4 44 4 3,27,01,950/- (AS PER STAMP DUTY VALUATION) WAS CON CERNED AS THE FULL VALUE OF CONSIDERATION RECEIVED AS A RESULT OF THE TRANSFER / SALE OF PROPERTY BY THE ASSESSEE. SO, AN AMOUNT OF RS. 12,01,950/- (DIFFERENCE OF RS. 3,27,01,950/- - RS. 3,15,00,000/-) WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY INVOKING SECTION 50C OF THE ACT. 6. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED T HE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD . CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LD. DR HAS PRIMARILY REITERATED THE STAND TA KEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE OTHER HAND THE L D. COUNSEL HAS RELIED ON THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD.FIRST OF ALL, IT IS WORTHWHILE TO GO THROUGH THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT 1961, WHICH IS GIVEN BELOW TO TH E EXTENT APPLICABLE FOR OUR DISCUSSION: SECTION 50C:SPECIAL PROVISION FOR FULL VALUE OF CO NSIDERATION IN CERTAIN CASES. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING A S A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE, BY ANY AUTHORITY OF A ST ATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATION AUTHORI TY) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O ADOPTED OR ASSESSED OR ASSESSABLE SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AM OUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITA L ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALU ATION AUTHORITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTIN G FULL VALUE OF CONSIDERATION FOR SUCH TRANSFER: PROVIDEDFURTHER THAT THE FIRST PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION, OR A PART THEREOF, HAS BEEN RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CL EARING SYSTEM THROUGH A BANK ACCOUNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR TRANSFER . CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 5 55 5 THE FOLLOWING PROVISO SHALL BE INS. BY FINANCE ACT, 2018 (W.E.F. 1-4-2019): PROVIDED ALSO THAT WHERE THE VALUE ADOPTED OR ASSESSED OR ASSESS ABLE BY THE STAMP VALUATION AUTHORITY DOES NOT EXCEED ONE HUNDRED AND FIVE PER CENT OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER, T HE CONSIDERATION SO RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION. THIS AMENDMENT, (BY WAY OF INSERTION OF THIRD PROVI SO IN SECTION 50C OF THE ACT), WAS EXPLAINED, IN THE MEMORANDUM EXPLAINING THE PRO VISIONS OF FINANCE BILL 2018, AS FOLLOWS: AT PRESENTWHILE TAXING INCOME FROM CAPITAL GAINS ( SECTION 50C), BUSINESS PROFITS (SECTION 43CA) AND OTHER SOURCES (SECTION 56) ARISI NG OUT OF TRANSACTIONS IN IMMOVABLE PROPERTY, THE SALE CONSIDERATION OR STAMP DUTY VALUE, WHICHEVER IS HIGHER IS ADOPTED. THE DIFFERENCE IS TAXED AS INCOM E BOTH IN THE HANDS OF THE PURCHASER AND THE SELLER. IT HAS BEEN POINTED OUT THAT THIS VARIATION CAN OCCUR IN RESPECT OF SIMILAR PROPERTIES IN THE SAME AREA BECA USE OF A VARIETY OF FACTORS, INCLUDING SHAPE OF THE PLOT OR LOCATION. IN ORDER T O MINIMIZE HARDSHIP IN CASE OF GENUINE TRANSACTIONS IN THE REAL ESTATE SECTOR, IT IS PROPOSED TO PROVIDE THAT NO ADJUSTMENTS SHALL BE MADE IN A CASE WHERE THE VARIA TION BETWEEN STAMP DUTY VALUE AND THE SALE CONSIDERATION IS NOT MORE THAT F IVE PER CENT OF THE SALE CONSIDERATION. THESE AMENDMENTS WILL TAKE EFFECT F ROM 1 ST APRIL, 2019, AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YE AR 2019-20 AND THE SUBSEQUENT ASSESSMENT YEARS. WE NOTE THAT THE FUNDAMENTAL PURPOSE OF INTRODUCING SECTION 50C WAS TO COUNTER SUPPRESSION OF SALE CONSIDERATION ON SALE OF IMMOVA BLE PROPERTIES, AND THIS SECTION WAS INTRODUCED IN THE LIGHT OF WIDESPREAD BELIEF TH AT SALE TRANSACTIONS OF LAND AND BUILDING ARE OFTEN UNDERVALUED RESULTING IN LEAKAGE OF LEGITIMATE TAX REVENUES. WE NOTE THAT THE VARIATION BETWEEN STAMP DUTY VALUE AND THE SALE CONSIDERATION ARISES BECAUSE OF MANY FACTORS, SOME OF THEM ARE GIVEN BEL OW: (I).LOCATION OF PROPERTY. (II).NEAR BY PUBLIC AMENITIES. (III).FORCED SALE (IV). SIZE OF LAND AND BUILDING (V). NEARBY PUBLIC HIGHWAY/RAIL FACILITIES (VI). SHAPE OF THE PLOT OR LOCATION CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 6 66 6 WE NOTE THATDIFFERENCE BETWEEN THE VALUE AS PER SAL E DEED AND THE VALUE AS PER STAMP DUTY VALUATION, ARISES AS A RESULT OF MANY FA CTORS, SOME OF THEM WE HAVE EXPLAINED ABOVE.WE NOTE THAT STAMP DUTY VALUE AND T HE SALE CONSIDERATION, THAT IS, THESE TWO VALUES REPRESENT THE VALUES AT TWO DIFFER ENT POINTS OF TIME. IN A SITUATION IN WHICH THERE IS SIGNIFICANT DIFFERENCE BETWEEN TH E POINT OF TIME WHEN AGREEMENT TO SELL IS EXECUTED AND WHEN THE SALE DEED IS EXECU TED, THEREFORE, SHOULD IDEALLY BE BETWEEN THE SALE CONSIDERATION AS PER REGISTERED SA LE DEED, WHICH IS FIXED BY WAY OF THE AGREEMENT TO SELL, VIS--VIS THE STAMP DUTY VALUATION AS AT THE POINT OF TIME WHEN AGREEMENT TO SELL, WHEREBY SALE CONSIDERATION WAS IN FACT FIXED, BECAUSE, IF AT ALL ANY SUPPRESSION OF SALE CONSIDERATION SHOULD BE ASSUMED, IT SHOULD BE ON THE BASIS OF STAMP DUTY VALUATION AS AT THE POINT OF TI ME WHEN THE SALE CONSIDERATION WAS FIXED. SECTION 50C MAKES A SPECIAL PROVISION FO R DETERMINING THE FULL VALUE OF CONSIDERATION IN CASES OF TRANSFER OF IMMOVABLE PRO PERTY. IT PROVIDES THAT WHERE THE CONSIDERATION DECLARED TO BE RECEIVED OR ACCRUI NG AS A RESULT OF THE TRANSFER OF LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE AD OPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (I.E. 'STAMP VA LUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION, AND CAPITAL GAINS SHALL BE COMPUTED ON THE BASIS OF SUCH CONSIDERATION UNDER SECTION 48 OF THE INCOME-TAX ACT. 9. WE NOTE THAT AT PRESENT WHILE TAXING INCOME FROM CAPITAL GAINS (SECTION 50C ), BUSINESS PROFITS (SECTION 43CA) AND OTHER SOURCES ( SECTION 56) ARISING OUT OF TRANSACTIONS IN IMMOVABLE PROPERTY, THE SALE CONSID ERATION OR STAMP DUTY VALUE, WHICHEVER IS HIGHER IS ADOPTED. THE DIFFERENCE IS T AXED AS INCOME BOTH IN THE HANDS OF THE PURCHASER AND THE SELLER. IT HAS BEEN POINTED OUT THAT THIS VARIATION CAN OCCUR IN RESPECT OF SIMILAR PROPERTIES IN THE S AME AREA BECAUSE OF A VARIETY OF FACTORS, INCLUDING SHAPE OF THE PLOT OR LOCATION. I N ORDER TO MINIMIZE HARDSHIP IN CASE OF GENUINE TRANSACTIONS IN THE REAL ESTATE SEC TOR, IT WAS PROPOSED BY THE FINANCE ACT 2018, THAT NO ADJUSTMENTS SHALL BE MADE IN A CASE WHERE THE VARIATION BETWEEN STAMP DUTY VALUE AND THE SALE CONSIDERATIO N IS NOT MORE THAT FIVE PER CENT OF THE SALE CONSIDERATION. THESE AMENDMENTS WILL T AKE EFFECT FROM 1 ST APRIL, 2019, CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 7 77 7 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASS ESSMENT YEAR 2019-20 AND SUBSEQUENT YEARS.WHILE THE GOVERNMENT HAS THUS RECO GNIZED THE GENUINE AND INTENDED HARDSHIP IN THE CASES IN WHICH THERE IS MI NOR VARIATION BETWEEN STAMP DUTY VALUE AND THE SALE CONSIDERATION. THAT IS WHY, THE FINANCE ACT 2018 INTRODUCED WELCOME AMENDMENTS TO THE STATUE TO TAKE THE REMEDIAL MEASURES. HOWEVER, WE NOTE THAT THIS BRINGS NO RELIEF TO THE ASSESSEE AS THE AMENDMENT IS INTRODUCED ONLY WITH PROSPECTIVE EFFECT FROM 1ST AP RIL 2019. THERE CANNOT BE ANY DISPUTE THAT THIS AMENDMENT IN THE SCHEME OF SECTIO N 50C HAS BEEN MADE TO REMOVE AN INCONGRUITY, RESULTING IN UNDUE HARDSHIP TO THE ASSESSEE, AS IS EVIDENT FROM THE OBSERVATION OF MEMORANDUM EXPLAINING THE P ROVISIONS OF FINANCE BILL 2018, AS NOTED ABOVE IN PARA NO. 8 OF THIS ORDER. T HE INCONGRUITY IN THE STATUTE WAS GLARING AND UNDUE HARDSHIP NOT IN DISPUTE. ONCE IT IS NOT IN DISPUTE THAT A STATUTORY AMENDMENT IS BEING MADE TO REMOVE AN UNDUE HARDSHIP TO THE ASSESSEE OR TO REMOVE AN APPARENT INCONGRUITY, SUCH AN AMENDMENT H AS TO BE TREATED AS EFFECTIVE FROM THE DATE ON WHICH THE LAW, CONTAINING SUCH AN UNDUE HARDSHIP OR INCONGRUITY, WAS INTRODUCED. IN SUPPORT OF THIS PROPOSITION, WE FIND SUPPORT FROM HON'BLE DELHI HIGH COURT'S JUDGMENT IN THE CASE OF CIT V. ANSAL LANDMARK TOWNSHIP (P.) LTD. [2015] 377 ITR 635/234 TAXMAN 825/61 TAXMANN.COM 45 , 10.WE NOTE THAT N OW THE LEGISLATURE HAS BEEN COMPASSIONATE ENOUGH T O CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE THE UNI NTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STAT E SO SPECIFICALLY. HENCE THE INSERTION OF THIRD PROVISO TO SECTION 50C MUST BE G IVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME WHEN THE RELATED LEGAL PROVISION WAS INTRODUCED, AS THIS AMENDMENT IS PROCEDURAL ONE TO COMPUTE THE VALUE OF PROPERTY. AT THE COST OF REPETITION, WE AGAIN REPRODUCE THE THIRD PROVISO TO SECTION 50C AS FOLLOWS: THE FOLLOWING PROVISO SHALL BE INS. BY FINANCE ACT, 2018 (W.E.F. 1-4-2019): PROVIDED ALSO THAT WHERE THE VALUE ADOPTED OR ASSESSED OR ASSESS ABLE BY THE STAMP VALUATION AUTHORITY DOES NOT EXCEED ONE HUNDRED AND FIVE PER CENT OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER, T HE CONSIDERATION SO RECEIVED OR ACCRUING CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 8 88 8 AS A RESULT OF THE TRANSFER SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION. WE NOTE THAT THIS THIRD PROVISO RELATES TO DETERMIN ATION OF VALUE OF PROPERTY THEREFORE IT CANNOT BE A SUBSTANTIVE AMENDMENT. NOR MALLY SUBSTANTIVE AMENDMENTS IN LAW IN APPLICABLE PROSPECTIVE. IN VIE W OF THESE DISCUSSIONS, AS ALSO FOR THE DETAILED REASONS SET OUT EARLIER, IT IS A P ROCEDURAL AMENDMENT IN LAW TO HELP THE ASSESSEE TO DETERMINE THE VALUE OR TO COMPUTE T HE VALUE OF PROPERTY HENCE THIS AMENDMENT IS NOT TO PUNISH THE ASSESSEE JUST BECAUS E THERE IS MINOR VARIATION BETWEEN STAMP DUTY VALUE AND THE SALE CONSIDERATION . WE NOTE THAT THE STATUTE SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LE GAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STAT E SO SPECIFICALLY, FOR THAT WE RELY ON THE JUDGMENT OF THE HON`BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD 185 TAXMAN 416 (SC) WHEREIN IT WAS HELD AS FOLLOWS: 8. ON READING THE ABOVE PROVISIONS, IT BECOMES CLEAR THAT THE ASSESSEE(S)-EMPLOYER(S) WOULD BE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBU TION STANDS CREDITED ON OR BEFORE THE DUE DATE GIVEN IN THE PROVIDENT FUND ACT. HOWEVER, THE SECOND PROVISO ONCE AGAIN CREATED FURTHER DIFFICULTIES. IN MANY OF THE COMPAN IES, FINANCIAL YEAR ENDED ON 31ST MARCH, WHICH DID NOT COINCIDE WITH THE ACCOUNTING P ERIOD OF R.P.F.C. FOR EXAMPLE, IN MANY CASES, THE TIME TO MAKE CONTRIBUTION TO R.P.F. C. ENDED AFTER DUE DATE FOR FILING OF RETURNS. THEREFORE, THE INDUSTRY ONCE AGAIN MADE RE PRESENTATION TO THE MINISTRY OF FINANCE AND, TAKING COGNIZANCE OF THIS DIFFICULTY, THE PARLIAMENT INSERTED ONE MORE AMENDMENT VIDE FINANCE ACT, 2003, WHICH, AS STATED ABOVE, CAME INTO FORCE WITH EFFECT FROM 1-4-2004. IN OTHER WORDS, AFTER 1-4-2004, TWO CHANGES WERE MADE, NAMELY, DELETION OF THE SECOND PROVISO AND FURTHER AMENDMENT IN THE FIRST PROVISO, QUOTED ABOVE. BY THE FINANCE ACT, 2003, THE AMENDMENT MADE IN THE FIRST PROVISO EQUATED IN TERMS OF THE BENEFIT OF DEDUCTION OF TAX, DUTY, CESS AND FEE ON THE ONE HAND WITH CONTRIBUTIONS TO EMPLOYEES' PROVIDENT FUND, SUPERANNUATION FUND AND OTHER WELFARE FUNDS ON THE OTHER. HOWEVER, THE FINANCE ACT, 2003, BRINGING ABOUT THIS UNIFORMITY CAME INTO FORCE WITH EFFECT FROM 1-4-2004. THEREFORE, THE ARGUMENT OF TH E ASSESSEE(S) IS THAT THE FINANCE ACT, 2003, WAS CURATIVE IN NATURE, IT WAS NOT AMENDATORY AND, THEREFORE, IT APPLIED RETROSPECTIVELY FROM 1-4-1988, WHEREAS THE ARGUMENT OF THE DEPARTMENT WAS THAT FINANCE ACT, 2003, WAS AMENDATORY AND IT APPLIED PR OSPECTIVELY, PARTICULARLY WHEN THE PARLIAMENT HAD EXPRESSLY MADE THE FINANCE ACT, 2003 , APPLICABLE ONLY WITH EFFECT FROM 1- 4-2004. IT WAS ALSO ARGUED ON BEHALF OF THE DEPARTM ENT THAT EVEN BETWEEN 1-4-1988 AND 1-4-2004, PARLIAMENT HAD MAINTAINED A CLEAR DICHOTO MY BETWEEN PAYMENT OF TAX, DUTY, CESS OR FEE ON ONE HAND AND PAYMENT OF CONTRIBUTION S TO THE WELFARE FUNDS ON THE OTHER. ACCORDING TO THE DEPARTMENT, THAT DICHOTOMY CONTINU ED UP TO 1-4-2004, HENCE, LOOKING TO THIS ASPECT, THE PARLIAMENT CONSCIOUSLY KEPT THAT D ICHOTOMY ALIVE UP TO 1-4-2004, BY MAKING FINANCE ACT, 2003, COME INTO FORCE ONLY WITH EFFECT FROM 1-4-2004. HENCE, CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 9 99 9 ACCORDING TO THE DEPARTMENT, FINANCE ACT, 2003 SHOU LD BE READ AS AMENDATORY AND NOT AS CURATIVE [RETROSPECTIVE] WITH EFFECT FROM 1-4-19 88. 9. WE FIND NO MERIT IN THESE CIVIL APPEALS FILED BY T HE DEPARTMENT FOR THE FOLLOWING REASONS: FIRSTLY, AS STATED ABOVE, SECTION 43B [MAI N SECTION], WHICH STOOD INSERTED BY FINANCE ACT, 1983, WITH EFFECT FROM 1-4-1984, EXPRE SSLY COMMENCES WITH A NON OBSTANTE CLAUSE, THE UNDERLYING OBJECT BEING TO DISALLOW DED UCTIONS CLAIMED MERELY BY MAKING A BOOK ENTRY BASED ON MERCANTILE SYSTEM OF ACCOUNTING . AT THE SAME TIME, SECTION 43B [MAIN SECTION] MADE IT MANDATORY FOR THE DEPARTMENT TO GRANT DEDUCTION IN COMPUTING THE INCOME UNDER SECTION 28 IN THE YEAR IN WHICH TA X, DUTY, CESS, ETC., IS ACTUALLY PAID. HOWEVER, PARLIAMENT TOOK COGNIZANCE OF THE FACT THA T ACCOUNTING YEAR OF A COMPANY DID NOT ALWAYS TALLY WITH THE DUE DATES UNDER THE PROVI DENT FUND ACT, MUNICIPAL CORPORATION ACT [OCTROI] AND OTHER TAX LAWS. THEREFORE, BY WAY OF FIRST PROVISO, AN INCENTIVE/RELAXATION WAS SOUGHT TO BE GIVEN IN RESP ECT OF TAX, DUTY, CESS OR FEE BY EXPLICITLY STATING THAT IF SUCH TAX, DUTY, CESS OR FEE IS PAID BEFORE THE DATE OF FILING OF THE RETURN UNDER THE INCOME-TAX ACT [DUE DATE], THE ASS ESSEE(S) THEN WOULD BE ENTITLED TO DEDUCTION. HOWEVER, THIS RELAXATION/INCENTIVE WAS R ESTRICTED ONLY TO TAX, DUTY, CESS AND FEE. IT DID NOT APPLY TO CONTRIBUTIONS TO LABOUR WE LFARE FUNDS. THE REASON APPEARS TO BE THAT THE EMPLOYER(S) SHOULD NOT SIT ON THE COLLECTE D CONTRIBUTIONS AND DEPRIVE THE WORKMEN OF THE RIGHTFUL BENEFITS UNDER SOCIAL WELFA RE LEGISLATIONS BY DELAYING PAYMENT OF CONTRIBUTIONS TO THE WELFARE FUNDS. HOWEVER, AS STA TED ABOVE, THE SECOND PROVISO RESULTED IN IMPLEMENTATION PROBLEMS, WHICH HAVE BEEN MENTION ED HEREINABOVE, AND WHICH RESULTED IN THE ENACTMENT OF FINANCE ACT, 2003, DEL ETING THE SECOND PROVISO AND BRINGING ABOUT UNIFORMITY IN THE FIRST PROVISO BY EQUATING T AX, DUTY, CESS AND FEE WITH CONTRIBUTIONS TO WELFARE FUNDS. ONCE THIS UNIFORMITY IS BROUGHT A BOUT IN THE FIRST PROVISO, THEN, IN OUR VIEW, THE FINANCE ACT, 2003, WHICH IS MADE APPLICAB LE BY THE PARLIAMENT ONLY WITH EFFECT FROM 1-4-2004, WOULD BECOME CURATIVE IN NATURE, HEN CE, IT WOULD APPLY RETROSPECTIVELY WITH EFFECT FROM 1-4-1988. SECONDLY, IT MAY BE NOTE D THAT, IN THE CASE OF ALLIED MOTORS (P.) LTD. V. CIT [1997] 224 ITR 677(SC) , THE SCHEME OF SECTION 43B OF THE ACT CAME TO BE EXAMINED. IN THAT CASE, THE QUESTION WHICH AROSE FO R DETERMINATION WAS, WHETHER SALES TAX COLLECTED BY THE ASSESSEE AND PAID AFTER THE END OF THE RELEVANT PREVIOUS YEAR BUT WITHIN THE TIME ALLOWED UNDER THE RELEVANT SALES TAX LAW S HOULD BE DISALLOWED UNDER SECTION 43B OF THE ACT WHILE COMPUTING THE BUSINESS INCOME OF THE PREVIOUS YEAR? THAT WAS A CASE WHICH RELATED TO ASSESSMENT YEAR 1984-85. THE RELEVANT ACCOUNTING PERIOD ENDED ON 30-6-1983. THE INCOME-TAX OFFICER DISALLOWED THE DE DUCTION CLAIMED BY THE ASSESSEE WHICH WAS ON ACCOUNT OF SALES TAX COLLECTED BY THE ASSESSEE FOR THE LAST QUARTER OF THE RELEVANT ACCOUNTING YEAR. THE DEDUCTION WAS DISALLO WED UNDER SECTION 43B WHICH, AS STATED ABOVE, WAS INSERTED WITH EFFECT FROM 1-4-198 4. IT IS ALSO RELEVANT TO NOTE THAT THE FIRST PROVISO WHICH CAME INTO FORCE WITH EFFECT FRO M 1-4-1988 WAS NOT ON THE STATUTE BOOK WHEN THE ASSESSMENTS WERE MADE IN THE CASE OF ALLIE D MOTORS (P.) LTD. (SUPRA). HOWEVER, THE ASSESSEE CONTENDED THAT EVEN THOUGH THE FIRST P ROVISO CAME TO BE INSERTED WITH EFFECT FROM 1-4-1988, IT WAS ENTITLED TO THE BENEFIT OF TH AT PROVISO BECAUSE IT OPERATED RETROSPECTIVELY FROM 1-4-1984, WHEN SECTION 43B STO OD INSERTED. THIS IS HOW THE QUESTION OF RETROSPECTIVITY AROSE IN ALLIED MOTORS (P.) LTD. 'S CASE (SUPRA). THIS COURT, IN ALLIED MOTORS (P.) LTD.'S CASE (SUPRA) HELD THAT, WHEN A P ROVISO IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE, A PR OVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION AND WHICH PROVISO IS REQUIR ED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETATION, IT COULD B E READ RETROSPECTIVE IN OPERATION, PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHO LE. ACCORDINGLY, THIS COURT, IN ALLIED MOTORS (P.) LTD.'S CASE (SUPRA), HELD THAT THE FIRS T PROVISO WAS CURATIVE IN NATURE, HENCE, RETROSPECTIVE IN OPERATION WITH EFFECT FROM 1-4-198 8. IT IS IMPORTANT TO NOTE ONCE AGAIN THAT, BY FINANCE ACT, 2003, NOT ONLY THE SECOND PRO VISO IS DELETED BUT EVEN THE FIRST CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 PROVISO IS SOUGHT TO BE AMENDED BY BRINGING ABOUT A N UNIFORMITY IN TAX, DUTY, CESS AND FEE ON THE ONE HAND VIS-A-VIS CONTRIBUTIONS TO WELF ARE FUNDS OF EMPLOYEE(S) ON THE OTHER. THIS IS ONE MORE REASON WHY WE HOLD THAT THE FINANC E ACT, 2003, IS RETROSPECTIVE IN OPERATION. MOREOVER, THE JUDGMENT IN ALLIED MOTORS (P.) LTD.'S CASE (SUPRA) IS DELIVERED BY A BENCH OF THREE LEARNED JUDGES, WHICH IS BINDIN G ON US. ACCORDINGLY, WE HOLD THAT FINANCE ACT, 2003, WILL OPERATE RETROSPECTIVELY WIT H EFFECT FROM 1-4-1988 [WHEN THE FIRST PROVISO STOOD INSERTED]. LASTLY, WE MAY POINT OUT T HE HARDSHIP AND THE INVIDIOUS DISCRIMINATION WHICH WOULD BE CAUSED TO THE ASSESSE E(S) IF THE CONTENTION OF THE DEPARTMENT IS TO BE ACCEPTED THAT FINANCE ACT, 2003 , TO THE ABOVE EXTENT, OPERATED PROSPECTIVELY. TAKE AN EXAMPLE - IN THE PRESENT CAS E, THE RESPONDENTS HAVE DEPOSITED THE CONTRIBUTIONS WITH THE R.P.F.C. AFTER 31ST MARCH [E ND OF ACCOUNTING YEAR] BUT BEFORE FILING OF THE RETURNS UNDER THE INCOME-TAX ACT AND THE DATE OF PAYMENT FALLS AFTER THE DUE DATE UNDER THE EMPLOYEES' PROVIDENT FUND ACT, THEY WILL BE DENIED DEDUCTION FOR ALL TIMES. IN VIEW OF THE SECOND PROVISO, WHICH STOOD O N THE STATUTE BOOK AT THE RELEVANT TIME, EACH OF SUCH ASSESSEE(S) WOULD NOT BE ENTITLED TO D EDUCTION UNDER SECTION 43B OF THE ACT FOR ALL TIMES. THEY WOULD LOSE THE BENEFIT OF DEDUC TION EVEN IN THE YEAR OF ACCOUNT IN WHICH THEY PAY THE CONTRIBUTIONS TO THE WELFARE FUN DS, WHEREAS A DEFAULTER, WHO FAILS TO PAY THE CONTRIBUTION TO THE WELFARE FUND RIGHT UP T O 1-4-2004, AND WHO PAYS THE CONTRIBUTION AFTER 1-4-2004, WOULD GET THE BENEFIT OF DEDUCTION UNDER SECTION 43B OF THE ACT. IN OUR VIEW, THEREFORE, FINANCE ACT, 2003, TO THE EXTENT INDICATED ABOVE, SHOULD BE READ AS RETROSPECTIVE. IT WOULD, THEREFORE, OPERATE FROM 1-4-1988, WHEN THE FIRST PROVISO WAS INTRODUCED. IT IS TRUE THAT THE PARLIAMENT HAS EXPLICITLY STATED THAT FINANCE ACT, 2003, WILL OPERATE WITH EFFECT FROM 1-4-2004. HOWEVER, TH E MATTER BEFORE US INVOLVES THE PRINCIPLE OF CONSTRUCTION TO BE PLACED ON THE PROVI SIONS OF FINANCE ACT, 2003. 10. BEFORE CONCLUDING, WE EXTRACT HEREINBELOW THE RELE VANT OBSERVATIONS OF THIS COURT IN THE CASE OF CIT V. J.H. GOTLA [1985] 156 ITR 323 , WHICH READS AS UNDER: '...WE SHOULD FIND OUT THE INTENTION FROM THE LANGU AGE USED BY THE LEGISLATURE AND IF STRICT LITERAL CONSTRUCTION LEADS TO AN ABSURD RESU LT, I.E., A RESULT NOT INTENDED TO BE SUBSERVED BY THE OBJECT OF THE LEGISLATION FOUND IN THE MANNER INDICATED BEFORE, THEN IF ANOTHER CONSTRUCTION IS POSSIBLE APART FROM STRI CT LITERAL CONSTRUCTION, THEN THAT CONSTRUCTION SHOULD BE PREFERRED TO THE STRICT LITE RAL CONSTRUCTION. THOUGH EQUITY AND TAXATION ARE OFTEN STRANGERS, ATTEMPTS SHOULD BE MA DE THAT THESE DO NOT REMAIN ALWAYS SO AND IF A CONSTRUCTION RESULTS IN EQUITY R ATHER THAN IN INJUSTICE, THEN SUCH CONSTRUCTION SHOULD BE PREFERRED TO THE LITERAL CON STRUCTION....' (P. 339) FOR THE AFORE-STATED REASONS, WE HOLD THAT FINANCE ACT, 2003, TO THE EXTENT INDICATED ABOVE, IS CURATIVE IN NATURE, HENCE, IT IS RETROSPE CTIVE AND IT WOULD OPERATE WITH EFFECT FROM 1-4-1988 [WHEN THE FIRST PROVISO CAME TO BE IN SERTED]. FOR THE ABOVE REASONS, WE FIND NO MERIT IN THIS BATCH OF CIVIL APPEALS FILED BY THE DEPARTMENT WHICH ARE HEREBY DISMISSED WITH NO ORDER AS TO COSTS. 11. SIMILARLY, THE HON`BLE SUPREME COURT IN THE CASE OF ALLIED MOTERS (P) LTD, 91 TAXMAN 205 (SC) HELD AS FOLLOWS: A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED C ONSEQUENCES AND TO MAKE THE PROVISION WORKABLE, A PROVISO WHICH SUPPLIES AN OBV IOUS OMISSION IN THE SECTION AND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SE CTION A REASONABLE INTERPRETATION, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATIO N SO THAT A REASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTION AS A WHOLE. CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 ACCORDINGLY, THE SALES-TAX COLLECTED BY THE ASSESSE E COLLECTED IN THE LAST QUARTER OF THE RELEVANT PREVIOUS YEAR AND PAID AFTER THE END OF TH E PREVIOUS YEAR BUT WITHIN THE TIME ALLOWED UNDER THE RELEVANT SALES-TAX LAW COULD NOT BE DISALLOWED UNDER SECTION 43B, WHILE COMPUTING THE BUSINESS INCOME OF THE SAID PRE VIOUS YEAR. 12. WE NOTE THAT THE COORDINATE BENCH OF ITAT MUMBA I, IN THE CASE OF M/S JOHN FLOWER ( INDIA) PVT. LTD, IN ITA NO.7545/MUM/2014, FOR A.Y. 2010-11, ORDER DATED 25.01.2017 HELD THAT IF THE DIFFERENCE BETWEE N THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY AND DECLARED BY THE ASSES SEE IS LESS THAN 10%, THE SAME SHOULD BE IGNORED AND NO ADJUSTMENTS SHALL BE MADE. ACCORDINGLY, WE HOLD THAT THE INSERTION OF THIRD PR OVISO (NOTED ABOVE) TO SECTION 50C OF THE ACT IS DECLARATORY AND CURATIVE IN NATUR E. THAT IS, THE THIRD PROVISOTO SECTION 50C OF THE ACT RELATES TO COMPUTATION OF VA LUE OF PROPERTY AS EXPLAINED BY US ABOVE, HENCE IT IS NOT A SUBSTANTIVE AMENDMENT, IT IS ONLY A PROCEDURAL AMENDMENT THEREFORE THE COORDINATE BENCHES OF THE I TAT USED TO IGNORE THE VARIATION UP TO 10%, THEREFORE, THE SAID AMENDMENT SHOULD BE RETROSPECTIVE.QUITE CLEARLY THEREFORE, EVEN WHEN THE STATUTE DOES NOT S PECIFICALLY STATE SO, SUCH AMENDMENTS, IN THE LIGHT OF THE DETAILED DISCUSSION S ABOVE, CAN ONLY BE TREATED AS RETROSPECTIVE AND EFFECTIVE FROM THE DATE RELATED S TATUTORY PROVISIONS WAS INTRODUCED. VIEWED THUS, THE THIRD PROVISO TO SECTI ON50C SHOULD BE TREATED AS CURATIVE IN NATURE AND WITH RETROSPECTIVE EFFECT FR OM 1ST APRIL 2003, I.E. THE DATE EFFECTIVE FROM WHICH SECTION 50C WAS INTRODUCED. WE NOTE THAT FINANCE ACT, 2018, W.E.F. 01.04.2019 P ROVIDED THAT NO ADJUSTMENTS SHALL BE MADE IN A CASE WHERE THE VARIATION BETWEEN STAMP DUTY VALUE AND THE SALE CONSIDERATION IS NOT MORE THAN 5% OF THE SALE CONSI DERATION. IN THE ASSESSEES CASE UNDER CONSIDERATION, THE STAMP DUTY VALUATION IS RS . 3,27,01,950/- AND SALE CONSIDERATION IS RS. 3,15,00,000/-. THE DIFFERENCE OF RS. 12,01,950/- IS NOT MORE THAN 5% OF THE SALE CONSIDERATION. THAT IS, IT IS A T 3.81% [12,01,950 / 3,15,00,000 X 100] OF SALE CONSIDERATION, THEREFORE, WE DELETE TH E ADDITION OF RS. 12,01,950/-. CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 12 22 2 13. GROUND NO. 2 RAISED BY THE ASSESSEE RELATES TO ADDITION MADE BY THE ASSESSING OFFICER OF RS. 31,46,527/- ON ACCOUNT OF LOSS INCUR RED IN SHARE TRADING BY HOLDING IT TO BE BOGUS. 14. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, ON PERUSAL OF THE PROFIT & LOSS A/C OF THE ASSESSEE FOR THE YEAR ENDED 31.03.2014 ALONG WITH THE COMPUTATION OF INCOME FOR THE RELE VANT A.Y. 2014-15, IT WAS FOUND THAT THE ASSESSEE HAD CLAIMED A SHORT TERM CA PITAL LOSS OF RS. 58,27,745/-. THE ASSESSEE WAS ASKED TO FURNISH A DETAILED CHART OF THE SAME ALONG WITH SUPPORTING DOCUMENTS. ON PERUSAL OF THE DETAILS FUR NISHED BY THE ASSESSEE, IT WAS FOUND THAT, THE ASSESSEE HAS ALSO INCURRED LOSS ON SALE OF TWO STOCK VIZ. SHREE SHALEEN TEXTILE LTD. AND LUMINAIRE TECHNOLOGIES LTD . WHICH WERE PENNY STOCKS. A DETAILED CHART OF THE STCL ARISING FROM THE SALE OF THE SAID TWO SCRIPS IS FURNISHED AS UNDER: FROM THE ABOVE CHART, IT TRANSPIRES THAT THE ASSESS EE HAS PURCHASED THE ABOVE SCRIPS AT A VERY HIGH RATE AND HAS SOLD OUT THE SAME AT A VERY LOW PRICE WITHIN A SHORT SPAN OF APPROXIMATELY TWO MONTHS THEREBY INCURRING A HUG E LOSS (SHORT TERM CAPITAL LOSS) OF RS. 31,46,527/-. BUT SINCE THE TWO SCRIPS ARE PENNY STOCKS WHICH HAS BEEN FURTHER SUPPORTED BY THE THIN VOLUME OF TRADE AND B ELL SHAPED MOVEMENT OF ITS PRICE. FURTHER, THE BOMBAY STOCK EXCHANGE THROUGH I TS NOTICE DATED 01.01.2015 HAS SUSPENDED TRADING IN THE SCRIP VIZ. SHREE SHALE EN TEXTILE LTD. W.E.F 07.01.2015 CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 13 33 3 AS PER DIRECTION RECEIVED FROM SEBI. FROM THE ABOVE THE DISCUSSION, AN INFERENCE COULD BE DRAWN THAT, THE LOSS SAID TO BE INCURRED BY THE ASSESSEE THROUGH SALE OF THE ABOVE TWO SCRIPS IS NOTHING BUT A MAKE BELIEVE TRANSACTION WHICH SERVES NO COMMERCIAL PURPOSE AND IS A PRE-ARRANGED TRANSACTI ON TO BOOK LOSS FOR SETTING OFF WITH TAXABLE PROFIT OF THE ASSESSEE. HENCE, THE SAM E WAS TREATED AS A FISCAL NULLITY AND THE STCL (U/S 111A) OF RS. 31,46,527/- WAS BEIN G DISALLOWED. 15. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONF IRMED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF TH E LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 16. THE LD. DR HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE OTHER HAND THE L D. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE SUBMISSIONS MADE BEFORE THE AUTHORITI ES BELOW. 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE INCURRED SHORT TERM CAPIT AL LOSS OF RS.31,46,527/- ON PURCHASE AND SALE OF SHARES OF LUMINAIRE TECHNOLOGI ES LTD. AND SHREE SHALEEN TEXTILES LIMITED. IN RESPECT OF THE ABOVE SCRIPS, D URING THE COURSE OFHEARINGS, THE ASSESSEE HAD SUBMITTED FOLLOWING DETAILS AND EVIDEN CES, WHICH ARE AS FOLLOWS: (A) BROKERS LEDGER ACCOUNT (PB 58) (B) CONTRACT NOTES FOR BOTH PURCHASE AND SALE OF TH E SHARES. (PB 72 TO 78) (C) DMAT HOLDING STATEMENT (79 TO 82) (D) COPY OF THE BANK STATEMENT FOR SALE PROCEEDS (P B 83 TO 84) (E) COPY OF THE LEDGER ACCOUNT OF STOCK BROKER BALJ IT SECURITIES PVT. LTD(PB58). (F). COPY OF THE BANK STATEMENT WHEREIN THE SALE P ROCEEDS OF SHARES LUMINAIRE TECHNOLOGIES LIMITED SHARES AND SHREE SHALEEN TEXTI LES LIMITED SHARES WERE RECEIVED AND CREDITED TO THE ACCOUNT. (G) COPY OF INCOME TAX RETURN (PB 10) (H). COPY OF BALANCE SHEET AND PROFIT AND LOSS ACCO UNT (PB 11 TO 29) CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 14 44 4 BASED ON SIMILAR DOCUMENTS AND EVIDENCES AND BASED ON THE IDENTICAL FACTS AND CIRCUMSTANCES NARRATED ABOVE, WE NOTE THAT THE CO-O RDINATE BENCH OF ITAT KOLKATA IN THE CASE OF SANJIB KUMAR PATWARI(HUF) IN I.T.A. NO.205/KOL/2018 FOR A.Y. 2014-15, HAS DELETED THE ADDITION. THE DET AILED FINDINGS OF THE COORDINATE BENCH IS GIVEN BELOW: 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE IS A REGULAR INVESTOR IN SHARES AND HAS BEEN INVESTING IN SHARES SINCE PAST SEVERAL YEARS. THE SAID FACT IS E VIDENT FROM THE DETAILS GIVEN BELOW: THUS, FROM THE ABOVE TABLE, IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE IS A REGULAR INVESTOR IN SHARES AND IS HAVING A SUBSTANTIAL AMOU NT OF INVESTMENTS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD THE IMPUGNED THREE SCRIPS AND EARNED CAPITAL GAINS ON THE SAME WHICH IS CLAIMED Y EAR AFTER YEAR CONSISTENTLY. THE DETAILS OF LONG TERM CAPITAL GAIN EARNED BY THE ASS ESSEE IS GIVEN BELOW: WE NOTE THAT THE ASSESSEE CLAIMED EXEMPTION OF LTCG OF RS.7,12,89,467/- U/S 10(38) OF THE ACT, SINCE THE SHARES PURCHASED AND SOLD WER E LISTED SHARES AND WERE PURCHASED AND SOLD THROUGH STOCK BROKER IN STOCK EX CHANGE AND STT WAS DEDUCTED AT THE TIME OF SALE. THE DETAILS OF PURCHASE AND SA LES TRANSACTION MADE BY THE ASSESSEE IS GIVEN BELOW: CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 15 55 5 THEREFORE, THE DETAILS OF LTCG OF RS. 7,12,89,467/- EARNED DURING THE FINANCIAL YEAR ON ACCOUNT OF SALE OF SHARES THROUGH A REGISTERED S TOCK BROKER IN A RECOGNIZED STOCK EXCHANGE AND CLAIMED AS EXEMPT U/S 10(38) OF THE AC T IS AS UNDER: CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 16 66 6 CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 17 77 7 WE NOTE THAT THE AO IN HIS ORDER HAS DISCUSSED ABOU T THE INTERIM ORDER OF SEBI, WHERE SEBI HAS RESTRAINED SOME PERSONS INCLUDING AS SESEE FROM ACCESSING THE SECURITIES MARKET. HOWEVER, SEBI IN ITS FINAL ORDER DID NOT GIVE ADVERSE COMMENT.THE SAME WAS REVOKED BY SEB1, VIDE ITS FINA L ORDER, SEB1/WTM/MPB/EFD-DRA- 1/31/2017 DATED 21.09.2017, ( PAGE NOS. 69-84). ASSESSEE'S NAME IS AT S.N. 154 (AT PAGE NO. 80) REA D WITH PARA 7 OF PAGE NO. 83. THE AO HAS MADE SOME OTHER GENERAL ALLEGATIONS INCLUDIN G THE STATEMENT OF AN ALLEGED ENTRY OPERATOR SRI SUNIL DOKANIA AT PAGE NO. 22 OF THE ASSESSMENT ORDER. HOWEVER, NO COPY OF SUCH STATEMENT WAS GIVEN TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS EXAMINATION OF THE PARTY WAS ALLOWED TO THE ASSESSE E. FURTHER, THE AO DID NOT BROUGHT ANY CORROBORATIVE EVIDENCE ON RECORD TO SUB STANTIATE THE CONTENTS OF THE STATEMENT RELIED ON.WE NOTE THAT NOT ALLOWING THE A SSESSEE TO CROSS EXAMINE THE WITNESS BY THE ADJUDICATING AUTHORITY THOUGH THE ST ATEMENTS OF THOSE WITNESS WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS F LAW WHICH MAKES THE ORDER NULLITY. WE NOTE THAT SAME VIEW EXPRESSED BY THE HO N`BLE CALCUTTA HIGH COURT IN THE CASE OF EASTERN COMMERCIAL ENTERPRISES 210 ITR 103 (CAL), WHEREIN IT WAS HELD THAT IT IS A TRITE LAW THAT CROSS EXAMINATION IS THE SIN E QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAI NST THE PARTY UNLESS THE PARTY IS PUT ON NOTICE OF THE CASE MADE OUT AGAINST HIM. THE REFORE, THE ADDITION MADE BY THE ASSESSING OFFICER BASED ON THESTATEMENT OF AN ALLEG ED ENTRY OPERATOR SRI SUNIL DOKANIAIS NOT SUSTAINABLE IN LAW, AS THE ASSESSING OFFICER DID NOT PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE ST ATEMENT OF SRI SUNIL DOKANIA. 13. NOW, COMING TO THE MERITS OF THE ASSESSEE`S CAS E, WE NOTE THAT LD COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US PAPER BOOK WHICH CONTA IN THE DOCUMENTS AND EVIDENCES IN SUPPORT OF THE PURCHASE AND SALE OF SHARES ON WH ICH THE LONG TERM CAPITAL GAIN(LTCG) AROSE TO THE ASSESSEE. THESE ALL DOCUMEN TS AND EVIDENCES WERE AVAILABLE BEFORE THE LD CIT(A) AS WELL AS BEFORE TH E LD AO. THE ASSESSEE SUBMITTED BEFORE US FOLLOWING DOCUMENTS AND EVIDENCES IN RESP ECT OF KAILASH AUTO FINANCE LTD. (1) KAILASH AUTO FINANCE LTD. I) COPY OF PURCHASE BILL DATED 12.02.2012, REFLECTI NG THE PURCHASE OF 3,20,000 SHARES OF CAREFUL PROJECTS ADVISORY LTD. FROM TRUMP TRADER S PVT. LTD. (PAPER BOOK PAGE NO. 4) CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 18 88 8 II) COPY OF PURCHASE BILL DATED 09.10.2012 REFLECTI NG THE PURCHASE OF 9,00,000 SHARES OF CAREFUL PROJECTS ADVISORY LTD. FROM TRUMP TRADER S PVT. LTD. (PAPER BOOK PAGE NO. 5) III) COPY OF BANK STATEMENT REFLECTING THE DEBIT TR ANSACTION OF THE AMOUNT OF RS. 3,20,000/- PAID FOR THE PURCHASE OF SHARES BY CHEQU E NO. 729958 ON 10.02.2012 (PAPER BOOK PAGE NO. 9) IV) COPY OF BANK STATEMENT REFLECTING THE DEBIT TRA NSACTION OF THE AMOUNT OF RS. 9,00,000/- PAID FOR THE PURCHASE OF SHARES BY CHEQU E NO. 037633 ON 09.10.2012 (PAPER BOOK PAGE NO. 8) V) COPY OF STATEMENT OF DEMAT ACCOUNT EVIDENCING TH E DEBIT OF SHARES OF KAILASH AUTO FINANCE LTD. ON 07.04.2014, 09.04.2014, 10,04, 2014, 11.04.2014, 15.04.2014, 16.04.2014 AND SO ON; (PAPER BOOK PAGE NO. 64- 65) VI) COPY OF ORDER APPROVING THE SCHEME OF AMALGAMAT ION PASSED BY THE HON'BLE HIGH COURT IN RELATION TO MERGER OF KAILASH AUTO FI NANCE LTD. AND CAREFUL PROJECTS ADVISORY LTD. AND PANCHSHUL MARKETING LTD. (PAPER B OOK PAGE NO. 85-115). VII) COPY OF CONTRACT NOTES EVIDENCING THE SALE OF SHARES OF KAILASH AUTO FINANCE LTD. VIII) COPY OF BANK STATEMENT REFLECTING THE TRANSAC TIONS OF SALE OF SHARES OF KAILASH AUTO FINANCE LTD. (PAPER BOOK PAGE NO. 59-61) IX) SEB1 BY ITS INTERIM ORDER DATED 29.03.2016 REST RAINED 246 ENTITIES FROM ACCESSING THE SECURITIES MARKET AND FROM DEALING AN D BUYING & SELLING IN SECURITIES, DIRECTLY OR INDIRECTLY IN ANY MANNER WHATSOEVER TIL L ANY FURTHER DIRECTIONS (PAGE NO. 69) AND INCLUDED KAILASH AUTO FINANCE LTD. AND ASSE SSEE AT SERIAL NO. 1 AND SERIAL NO. 156 (PAGE NOS. 70 & 74 RESPECTIVELY) . X) THE SAME WAS REVOKED BY SEB1 VIDE ITS ORDER SEB1 /WTM/MPB/EFD-DRA- 1/31/2017 DATED 21.09.2017 (PAGE NOS. 69-84). ASSES SEE'S NAME IS AT S.N. 154 (AT PAGE NO. 80) READ WITH PARA 7 OF PAGE NO. 83. (2) LIFELINE DRUG & PHARMA LTD. I) COPY OF ALLOTMENT ADVICE DATED 05.10.2012 REFLEC TING THE PURCHASE OF 20,000 SHARES OF LIFELINE DRUGS & PHARMA LTD. (PAPER BOOK PAGE NO. 6) (LATER, 20,000 SHARES OF RS. 10 EACH WERE SPLIT TO 2,00,000 SHARES OF RS. 1 EACH) II) COPY OF BANK STATEMENT REFLECTING THE DEBIT TRA NSACTION OF THE AMOUNT OF RS. 12,00,000/- PAID FOR THE PURCHASE OF SHARES,BY CHEQ UE NO. 037632 ON 01.10.2012 (PAPER BOOK PAGE NO. 8) III) COPY OF STATEMENT OF DEMAT ACCOUNT EVIDENCING THE DEBIT OF SHARES OF LIFELINE DRUGS & PHARMA LTD. ON 01.07.2014, 08.07.2014, 11.0 7.2014, 15.07.2014, 21.07.2014 AND SO ON; (PAPER BOOK PAGE NO. 66-67) IV) COPY OF CONTRACT NOTES EVIDENCING THE SALE OF S HARES OF LIFELINE DRUGS & PHARMA LTD.; CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 19 99 9 V) COPY OF BANK STATEMENT REFLECTING THE TRANSACTIO NS OF SALE OF SHARES OF LIFELINE DRUGS & PHARMA LTD. (PAPER BOOK PAGE NO. 59-61) (3) EINS EDUTCEHLTD. (NOW APLAYA CREATIONS LTD.) I)COPY OF PURCHASE BILL DATED 10.08.2013, REFLECTIN G THE PURCHASE OF 50,000 SHARES OF EINS EDUTECH LTD. FROM NEPTUNE FINANCIAL ADVISORY P VT. LTD. (PAPER BOOK PAGE NO.7); II) COPY OF BANK STATEMENT REFLECTING THE DEBIT TRA NSACTION OF THE AMOUNT OF RS. 8,00,000/- PAID FOR THE PURCHASE OF SHARES BY CHEQU E NO. 37644 ON 01.08.2013 (PAPER BOOK PAGE NO. 10) III) COPY OF STATEMENT OF DEMAT ACCOUNT EVIDENCING THE DEBIT OF SHARES OF EINS EDUTECH LTD. ON 01.12.2014, 02.12.2014, 06.12.2014, 11.12.2014 AND SO ON; (PAPER BOOK PAGE NO. 63) IV) COPY OF CONTRACT NOTES EVIDENCING THE SALE OF S HARES OF E1NS EDUTECH LTD.; V).COPY OF BANK STATEMENT REFLECTING THE TRANSACTIO NS OF SALE OF SHARES OF EINS EDUTECH LTD. (PAPER BOOK PAGE NO. 59-61) . THEREFORE, BY SUBMITTING THESE PLETHORA DOCUMENTS A ND EVIDENCES, THE LD COUNSEL FOR THE ASSESSEE CLAIMED THAT LONG TERM CAPITAL GAIN (L TCG) EARNED IN RESPECT OF THE SCRIPS, NAMELY: KAILASH AUTO FINANCE LTD., LIFELINE DRUG & PHARMA L TD, AND EINSEDUTCEH LTD. (NOW APLAYA CREATIONS LTD.) ARE GENUINE. WE AL SO NOTE THAT THE SECURITIES EXCHANGE BOARD OF INDIA (SEBI) ALSO DECLARED THESE SCRIPS AN D SHARES AS GENUINE AND THE INTERIM ORDER PASSED BY THE SEBI WAS REVOKED BY SEB1 ITSELF, VIDE ITS ORDER SEB1/WTM/MPB/EFD-DRA- 1/31/2017 DATED 21.09.2017 (P AGE NOS. 69-84). ASSESSEE'S NAME IS AT S.N. 154 (AT PAGE NO. 80) REA D WITH PARA 7 OF PAGE NO. 83. HENCE, WE NOTE THAT SINCE THESE SHARES/SCRIPS WERE TRADED ON THE PLATFORM OF RECOGNIZED STOCK EXCHANGE AND THE SECURITIES EXCHANGE BOARD OF INDIA (SEBI) DID N OT GIVE ANY ADVERSE REPORT THEREFORE, LONG TERM CAPITAL GAIN ARISE OR EARNED B Y THE ASSESSEE SHOULD BE GENUINE AND IT SHOULD NOT BE BOG US BY ANY STRETCH OF IMAGINATION. MOREOVER, THE ASSESSING OFFICER DID NOT DOUBT ON TH E DOCUMENTS AND EVIDENCES AS NOTED BY US ABOVE. THE ASSESSING OFFICER MAINLY MAD E ADDITION BASED ON SUSPICION, AND PROBABILITY. AS WE HAVE NOTED THAT IN THE COURS E OF ASSESSMENT PROCEEDINGS, ALL THE RELEVANT DETAILS AND DOCUMENTS REQUISITIONED BY THE LD. ASSESSING OFFICER IN NOTICE U/S 142(1) WAS FILED BEFORE HIM. THE ASSESSE E HAS SUBMITTED THE DETAILS OF LTCG, COPY OF CONTRACT NOTES, BANK STATEMENTS, ALLO TMENT ADVISE, COPY OF BILLS, DEMAT ACCOUNT AND OTHER NECESSARY DETAILS BEFORE AO AND THE AO FAILED TO BRING ANY COGENT EVIDENCE ON RECORD TO SHOW THAT THESE DO CUMENTS AND EVIDENCES WERE FALSE AND UNTRUE. 14. WE WOULD LIKE TO MENTION SOME IMPORTANT SALIENT FEATURES OF THE LTCG TRANSACTION ENTERED INTO BY THE ASSESSEE, WHICH IS GIVEN BELOW: (I) THE ASSESSEE IS A REGULAR INVESTOR IN SHARES AN D SECURITIES AS EVIDENT FROM PAST ASSESSMENT RECORDS. (II) THE SHARES WERE PURCHASED AND SOLD THROUGH A R EGISTERED BROKER NAMED ' EUREKA STOCK & SHARE BROKING SERVICES LTD .' IN THE STOCK EXCHANGE. (III) THE SHARES WERE PURCHASED AND SOLD BASED ON T HE PREVAILING MARKET CONDITION. CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 20 00 0 (IV) THE PURCHASE AND SALE OF SHARES ARE SUPPORTED BY CONTRACT NOTES. THE PAYMENTS WERE RECEIVED THROUGH PROPER BANKING CHANNEL. (V) THE PURCHASE AND SALE TRANSACTIONS WERE SUBJECT ED TO SECURITY TRANSACTION TAX, SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. (VI) THE SHARE PURCHASE AND SALE TRANSACTIONS ARE R EFLECTED IN THE D-MAT ACCOUNT. (VII) THE PURCHASE OF SHARES (INVESTMENTS) WAS NOT DISPUTED IN EARLIER YEAR, WHERE ASSESSMENT IS COMPLETED U/S. 143(3) OF THE INCOME T AX ACT. (VIII) THESE FACTS ARE VERIFIABLE FROM THE REGULAR BOOKS OF ACCOUNTS. (IX) THE TRANSACTIONS CAN ALSO BE VERIFIED FROM THE STOCK EXCHANGE. (X) THE SEBI HAS CLEARED THESE SHARES AND SCRIPS FR OM THE ALLEGATION OF MARKET RIGGING. HENCE, THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. 15. NOW COMING TO THE ALLEGATIONS MADE BY THE ASSES SING OFFICER FOR MAKING THE ADDITION. THE ASSESSING OFFICER ALLEGED IN THE ASS ESSMENT ORDER THAT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING, K OLKATA, THE CLAIM OF LTCG U/S 10(38) BY THE ASSESSEE IS BOGUS. IN THE ASSESSMENT ORDER, THE LD. ASSESSING OFFICER HAS MENTIONED THE STORY THAT THE LIST OF 84 SCRIPS IDENTIFIED BY THE INVESTIGATION WING WHERE PRICE RIGGING HAVE BEEN FOUND WHICH INCLUDES THE NAME OF THE SCRIPS IN WHICH THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER ALLEGED THAT THE TRANSACTIONS WERE PRE-ARRANGED TO BOOK SUCH GAI N IN THE HANDS OF THE PRE-FIXED BENEFICIARIES. THE ABOVE ALLEGATIONS ARE GENERALIZE D AND NOT SPECIFIC TO THE CASE OF THE ASSESSEE. THE ASSESSEE WAS ASKED TO SHOW CAUSE, VIDE LETTER DATED 14.12.2017, AS TO WHY THE LONG TERM CAPITAL GAIN BOOKED BY WAY OF TRANSACTION IN THE AFORESAID SCRIPS WOULD NOT BE CONSIDERED BOGUS, AND CONSEQUEN TLY, BE ADDED TO HIS TOTAL INCOME. THE ASSESSEE DULY REPLIED TO THE SHOW CAUSE NOTICE VIDE HIS LETTER DATED 22.12.2017 THEREBY GIVING ALL THE DETAILS AND REASO NS AS REQUIRED BY THE AO TO PROVE THAT THE LTCG INCURRED BY THE ASSESSEE ON SALE OF A BOVE MENTIONED SHARES ARE GENUINE AND CANNOT BE CONSIDERED AS BOGUS. HOWEVER, THE LD. AO DID NOT CONSIDER THE SUBMISSION OF THE ASSESSEE AND MADE THE ADDITIO N OF LTCG IN THE HANDS OF THE ASSESSEE TREATING THE SAME TO BE UNEXPLAINED. WE NO TE THAT IT APPEARS FROM THE SHOW CAUSE NOTICE THAT THE LD. AO HAS RELIED ON THE FOLL OWING INFORMATION FOR ARRIVING AT SUCH CONCLUSION: (A) INFORMATION RECEIVED FROM THE OFFICE OF DIT(INV ), KOL REGARDING ENTRY OF BOGUS LTCG. (B) STATEMENT GIVEN BY SRI SUNIL DOKANIA, AN ALLEGE D ENTRY OPERATOR WHO WAS INVOLVED IN PRICE RIGGING AND PROVIDING BOGUS LTCG THROUGH PENNY STOCKS. SO FAR FIRST ALLEGATION OF AO IS CONCERNED, WE NOTE THAT THE ASSESSEE HAS PURCHASED THE SHARES FROM THE RECOGNIZED STOCK EXCHANGE THROU GH HIS BROKER I.E. EUREKA STOCK & SHARE BROKING SERVICES LTD. ON VARIOUS DATES. THE ASSESSEE SUBMITTED CONTRACT NOTES. THIS TRANSACTION IS NOT THROUGH ANY PREFEREN TIAL ALLOTMENT OR OFFLINE SALE. ALL THE TRANSACTIONS ARE MADE THROUGH PROPER BANKING CH ANNELS. THE SHARES WERE SOLD THROUGH REGISTERED SHARE BROKER, M/S EUREKA STOCK & SHARE BROKING SERVICES LTD. IN CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 21 11 1 THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED ALL THE DETAILS AND DOCUMENTS THAT WERE NECESSARY FOR ALLOWING THE CLAI M OF THE ASSESSEE. IN THE ASSESSMENT ORDER U/S. 143(3), LD. AO HAS STATED THA T THERE WAS INFLOW OF SOME INFORMATION FROM THE INVESTIGATION WING ALLEGING TH AT THE ASSESSEE WAS INVOLVED IN SELLING OF SO CALLED ' PENNY STOCK '. IN THIS REGARD IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS FOLLOWS: I) THE ASSESSEE IS A REGULAR INVESTOR IN SHARES AND SECURITIES AS EVIDENT FROM PAST ASSESSMENT RECORDS. II) THE SHARES WERE PURCHASED AND SOLD THROUGH A RE GISTERED BROKER NAMED 'EUREKA STOCK & SHARE BROKING SERVICES LTD.' IN THE STOCK E XCHANGE. III) THE SHARES WERE PURCHASED AND SOLD BASED ON TH E PREVAILING MARKET CONDITION. IV) THE PURCHASE AND SALE OF SHARES ARE SUPPORTED B Y CONTRACT NOTES. THE PAYMENTS WERE RECEIVED THROUGH PROPER BANKING CHANNEL. V) THE PURCHASE AND SALE TRANSACTIONS WERE SUBJECTE D TO SECURITY TRANSACTION TAX, SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. VI) THE SHARE PURCHASE AND SALE TRANSACTIONS ARE RE FLECTED IN THE D-MAT ACCOUNT. VII) THE PURCHASE OF SHARES (INVESTMENTS) WAS NOT D ISPUTED IN EARLIER YEAR, WHERE ASSESSMENT IS COMPLETED U/S. 143(3) OF THE INCOME T AX ACT. VIII) THESE FACTS ARE VERIFIABLE FROM THE REGULAR B OOKS OF ACCOUNTS. IX) THE TRANSACTIONS CAN ALSO BE VERIFIED FROM THE STOCK EXCHANGE. X) THE INTERIM ORDER OF SEBI ABOUT WHICH THE AO HAS DISCUSSED IN HIS ORDER, HAS BEEN REVERSED BY THE FINAL ORDER OF SEBI DATED 21.0 9.2017,WHERE THE SEBI HAS CLEARED THE ASSESSEE FROM THE ALLEGATION OF MARKET RIGGING. THEREFORE, SO FAR FIRST ALLEGATION OF THE ASSESSING OFFICER IS CONCERNED, THE ASSESSEE HAS PROVED BEYOND ANY DOUBT THAT ASSESSEE IS A REGU LAR INVESTOR IN SHARES AND SECURITIES. THE SHARES WERE PURCHASED AND SOLD THRO UGH A REGISTERED BROKER NAMED 'EUREKA STOCK & SHARE BROKING SERVICES LTD.' IN THE STOCK EXCHANGE. THE SHARES WERE PURCHASED AND SOLD BASED ON THE PREVAILING MAR KET CONDITION. THE PAYMENTS WERE RECEIVED THROUGH PROPER BANKING CHANNEL. THE P URCHASE AND SALE TRANSACTIONS WERE SUBJECTED TO SECURITY TRANSACTION TAX, SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. THE SHARE PURCHASE AND SALE TRANSACTIO NS ARE REFLECTED IN THE D-MAT ACCOUNT. THE PURCHASE OF SHARES (INVESTMENTS) WAS N OT DISPUTED IN EARLIER YEAR, WHERE ASSESSMENT IS COMPLETED U/S. 143(3) OF THE IN COME TAX ACT. THESE FACTS ARE VERIFIABLE FROM THE REGULAR BOOKS OF ACCOUNTS. THE TRANSACTIONS CAN ALSO BE VERIFIED FROM THE STOCK EXCHANGE. THEREFORE, WE DO NOT AGRE E WITH THE ASSESSING OFFICER AND HENCE THE ADDITION MADE BY ASSESSING OFFICER NEEDS TO BE DELETED. SO FAR SECOND ALLEGATION OF THE ASSESSING OFFICER I S CONCERNED, WE NOTE THATASSESSING OFFICER HAS RELIED ON THE STATEMENT GIVEN BY SRI SU NIL DOKANIA, AN ALLEGED ENTRY OPERATOR. WE NOTE THAT THE AO HAS MADE GENERAL ALLE GATIONS ABOUT THE ALLEGED ENTRY OPERATOR, SRI SUNIL DOKANIA, VIDE PAGE NO. 22 OF T HE ASSESSMENT ORDER. WE NOTE THAT NO COPY OF SUCH STATEMENT WAS GIVEN TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS EXAMINATION OF THE PARTY WAS ALLOWED TO THE ASSESSE E. FURTHER, THE AO DID NOT CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 22 22 2 BROUGHT ANY CORROBORATIVE EVIDENCE ON RECORD TO SUB STANTIATE THE CONTENTS OF THE STATEMENT RELIED ON. WE NOTE THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESS BY THE ADJUDICATING AUTHORITY THOUGH THE ST ATEMENTS OF THOSE WITNESS WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS F LAW WHICH MAKES THE ORDER NULLITY. WE NOTE THAT SAME VIEW EXPRESSED BY THE HO N`BLE CALCUTTA HIGH COURT IN THE CASE OF EASTERN COMMERCIAL ENTERPRISES 210 ITR 103 (CAL), WHEREIN IT WAS HELD THAT IT IS A TRITE LAW THAT CROSS EXAMINATION IS THE SIN E QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAI NST THE PARTY UNLESS THE PARTY IS PUT ON NOTICE OF THE CASE MADE OUT AGAINST HIM. WE NOTE THAT THE FACT THAT NEITHER THE STATEMENT RE LIED ON BYTHE AUTHORITIES BELOW WERE PROVIDED TO THE ASSESSEE NOR ANY CROSS EXAMIN ATION WAS ALLOWED TO PROVE THE VERACITY OF THE STATEMENT. WE NOTE THAT THE FACT TH AT IN THE STATEMENT OF THIRD PARTY, THE NAME OF THE ASSESSEE WAS NOT IMPLICATED. EVEN O THERWISE, ACCORDING TO LEARNED COUNSEL, NO ADVERSE INFERENCE COULD BE DRAWN AGAINS T THE ASSESSEE ON THE BASIS OF UNTESTED STATEMENTS WITHOUT ALLOWING OPPORTUNITY OF CROSS-EXAMINATION. FOR THAT WE RELY ON THE FOLLOWING JUDGEMENTS IN SUPPORT OF THE AFORESAID VIEW:- (I) ANDMAN TIMBER INDUSTRIES VS. CCE [2015] 62 TA XMANN.COM 3 (SC) (II) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2 009 (AGRA ITAT) (III) ACIT VS. AMITA AGARWAL & OTHERS ITA NO. 247 /(KOL) OF 2011 (KOL ITAT) (IV) ITO VS. BIJAYAGANGULY- ITA NOS. 624 & 625/KOL /2011 (KOL ITAT) (V) GANESHMULLBIJAY SINGH BAID HUF VS. DCIT ITA N OS. 544/KOL/2013 (KOLKATA ITAT) (VI) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22 -26/KOL/2011 (KOL-ITAT) (VII) MALTI GHANSHYAMBHAI PATADIA VS. ITO - ITA NO .3400/AHD/2015AHMEDABAD ITAT) (VIII) PRATIK SURYAKANT SHAH VS. ITO [2017] 77 TA XMANN.COM 260 (AHMEDABAD ITAT) THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFIC ER BASED ON THESTATEMENT OF AN ALLEGED ENTRY OPERATOR SRI SUNIL DOKANIAIS NOT SUST AINABLE IN LAW, AS THE ASSESSING OFFICER DID NOT PROVIDE AN OPPORTUNITY TO THE ASSES SEE TO CROSS EXAMINE THE STATEMENT OF SRI SUNIL DOKANIA. COUPLED WITH THIS, THE CBDTS CIRCULAR DATED 10.03.2003 ITSELF MADE IT CLEAR THAT SUCH ADMISSIONS OR STATEMENTS WI THOUT ANYTANGIBLE EVIDENCE FOUND DURING SEARCH CARRY NO SIGNIFICANCE. 16. WE NOTE THAT SECURITIES EXCHANGE BOARD OF INDIA (SEBI) IS AN AUTHORITY WHICH REGULATES THE LISTED COMPANIES. THE SEBI CONTROLS L ISTED COMPANIES AND MAKES RULES AND REGULATIONS AND THE LISTED COMPANIES ARE SUPPOS ED TO FOLLOW THE RULES, REGULATIONS AND DIRECTIONS GIVEN BY SEBI. WE NOTE T HAT SEB1 BY ITS INTERIM ORDER DATED 29.03.2016 RESTRAINED 246 ENTITIES FROM ACCES SING THE SECURITIES MARKET AND FROM DEALING AND BUYING & SELLING IN SECURITIES, DI RECTLY OR INDIRECTLY IN ANY MANNER WHATSOEVER TILL ANY FURTHER DIRECTIONS (PAGE NO. 69 ) AND INCLUDED KAILASH AUTO FINANCE LTD. AND ASSESSEE AT SERIAL NO. 1 AND SERIA L NO. 156 (PAGE NOS. 70 & 74 RESPECTIVELY) . CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 23 33 3 HOWEVER, THE SAME WAS REVOKED BY SEB1 VIDE ITS ORDE R SEB1/WTM/MPB/EFD- DRA- 1/31/2017 DATED 21.09.2017 (PAGE NOS. 69-84). ASSESSEE'S NAME IS AT S.N. 154 (AT PAGE NO. 80) READ WITH PARA 7 OF PAGE NO. 83. W E NOTE THAT THE SEBI BY ITS ORDER BEARING REFERENCE NO. SEBI/WTM/MPB/EFD- DRA-I/31/20 17, DATED 21.03.2017, HAS HELD AS UNDER: 6.CONSIDERING THE FACT THAT THERE ARE NO ADVERSE F INDINGS AGAINST THE AFOREMENTIONED 244 ENTITIES WITH RESPECT TO THEIR ROLE IN THE MANIPULA TION OF THE SCRIP OF KAILASH AUTO, I AM OF THE CONSIDERED VIEW THAT THE DIRECTIONS ISSUED AGAINST THEM VIDE INTERIM ORDER DATED MARCH 29, 2016 AND CONFIRMATORY ORDERS DATED JUNE 15, 2016, S EPTEMBER 30, 2016, OCTOBER 21, 2016, OCTOBER 27, 2016 AND JULY 13, 2017 ARE LIABLE TO BE REVOKED. IN VIEW OF THE FOREGOING, IN EXERCISE OF THE POWER S CONFERRED UPON US UNDER SECTION 19 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 199 2 READ WITH SECTIONS 11, 11(4) AND 11B OF THE SEBI ACT, HEREBY REVOKE THE INTERIM ORDER DA TED MARCH 29, 2016 AND CONFIRMATORY ORDERS DATED JUNE 15, 2016, SEPTEMBER 30,2016, OCTO BER 21,2016, OCTOBER 27,2016 AND JULY 13, 2017 QUA AFORESAID 244 ENTITIES (PARAGRAPH 5 ABOVE) WITH IMMEDIATE EFFECT. THE REVOCATION OF THE DIRECTIONS ISSUED VIDE THE A BOVE MENTIONED ORDERS (AT PARAGRAPH 7) IS ONLY IN RESPECT OF THE ENTITIES MENTIONED AT PARAGR APH 5 OF THIS ORDER IN THE MATTER OF KAILASH AUTO. AS REGARDS REMAINING ENTITIES IN THE SCRIP OF KAILASH AUTO, VIOLATIONS UNDER SEBI ACT, PFUTP REGULATIONS, ETC., WERE OBSERVED AND SEBI SHA LL CONTINUE ITS PROCEEDINGS AGAINST THEM. HENCE, THE DIRECTIONS ISSUED VIDE CONFIRMATOR Y ORDER DATED JUNE 15, 2016 AGAINST THE REMAINING 2 ENTITIES SHALL CONTINUE. THIS REVOCATIO N ORDER IS WITHOUT PREJUDICE TO ANY OTHER ACTION SEBI MAY INITIATE AS PER LAW.' WE NOTE THAT IN THE ABOVE ORDER OF THE SEBI, THE NA ME OF THE ASSESSEE IS ALSO MENTIONED IN THE SERIAL NO. 154. THEREFORE, THE SEB I ITSELF HAS FREED THE ASSESSEE FROM MARKET RIGGING ALLEGATION AND THUS THE ASSESSE E IS PROVED TO BE A BONA-FIDE INVESTOR NOT INVOLVED IN ANY MALICIOUS ACTIVITIES.H ENCE, CONSIDERING THE ABOVE, IT IS ABUNDANTLY CLEAR THAT NO DOUBT CAN BE ARISEN ABOUT THE SHARES BEING PENNY STOCK. 17. WE NOTE THAT THE ASSESSEE HAD NEVER ENTERED INT O ANY TRANSACTION WITH SRI SUNIL DOKANIA AGAINST WHOM INVESTIGATION WING HAD ALLEGED LY MADE INQUIRY. WE ALSO NOTE THAT IN THE EXTRACTS OF THE STATEMENT OF SRI SUNIL DOKANIA GIVEN IN THE SHOW CAUSE NOTICE, IT IS NOWHERE MENTIONED THAT THE ALLEGED PE RSON HAS PROVIDED ANY ENTRY TO THE ASSESSEE DIRECTLY. THE STATEMENT TALKS ABOUT THE EN TRIES PROVIDED BY HIM TO PREFERENTIAL ALLOTTEES AND THE MODUS OPERANDI ADOPT ED BY HIM FOR PROVIDING THE BOGUS LTCG. THE ASSESSEE BEING A GENUINE INVESTOR W AS UNAWARE OF THE FACT THAT ANY SUCH ACTIVITY WAS UNDERTAKEN IN THE SCRIPS PURC HASED BY HIM. HE WAS NOWHERE, ASSOCIATED WITH THE PERSON ALLEGED TO PROVIDE THE E NTRIES AS ALLEGED BY THE AO. WE ALSO NOTE THAT SEBI HAS GIVEN A CLEAN CHIT TO THE C OMPANY AND HAS FREED IT FROM THE ALLEGATION OF MARKET RIGGING. THEREFORE, THE ALLEGA TION OF THE AO ITSELF BECOMES INFRUCTUOUS.FURTHER, THE ASSESSEE HAD ALSO REQUESTE D FOR AN OPPORTUNITY TO CROSS EXAMINE SRI SUNIL DOKANIA, WHOSE STATEMENT HAS BEEN RELIED ON BY THE AO FOR MAKING THE ADDITION. HOWEVER, THE LD. AO DID NOT PR OVIDE ANY OPPORTUNITY FOR CROSS EXAMINE THE SO-CALLED OPERATORS. IT IS WELL ESTABLI SHED LAW THAT NO ADVERSE VIEW CAN BE TAKEN AGAINST AN ASSESSEE ON THE BASIS OF STATEM ENT RECORDED BY DEPARTMENT OF ANY PERSON WITHOUT PROVIDING COPY OF THE STATEMENT TO THE ASSESSEE AND ALSO WITHOUT PROVIDING OPPORTUNITY FOR CROSS EXAMINATION OF THE SAID PERSON. 18. WE NOTE THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. LA VANYA LAND PVT. LTD. [2017] 83TAXMANN.COM 161 (BOM) HELD THAT THERE WAS NO EVIDENCE WHATSOEVER TOALLEGE THAT MONEY CHANGED HANDS BETWEE N THE ASSESSEE AND THE BROKER CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 24 44 4 OR ANY OTHER PERSON INCLUDING THE ALLEGED EXIT PROV IDER WHATSOEVER TO CONVERT UNACCOUNTED MONEY FOR GETTING BENEFIT OF LTCG AS AL LEGED. IN THE SAID CASE, THEHONBLE HIGH COURT AT PARA 21 HELD THAT IN ABSEN CE OF ANY MATERIAL TO SHOW THATHUGE CASH WAS TRANSFERRED FROM ONE SIDE TO ANOT HER, ADDITION CANNOT BE SUSTAINED. 19. WE NOTE THAT ALL THE OBSERVATIONS, CONCLUSIONS AND FINDINGS OF THE LOWER AUTHORITIES ARE BASED ON SUSPICION, SURMISES AND RU MOR. IT IS TRITE LAW THAT THE SUSPICION HOWSOEVER STRONG CANNOT PARTAKE THE CHARA CTER OF LEGAL EVIDENCE. REFERENCE WAS MADE TO THE JUDGEMENT OF HONBLE SUPR EME COURT IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT (1959) 37ITR 288 (SC, UMACHARAN SHAW 37 ITR 271 AND OMAR SALAY MOHAMED SAIT 37ITR 151. WE N OTE THAT THE ENTIRE CASE OF THE REVENUE IS BASED UPON THE PRESUMPTION THAT THE ASSESSEE HAS PLOUGHED BACK HIS OWN UNACCOUNTED MONEY IN THE FORM OF BOGUS LTCG. HO WEVER, THIS PRESUMPTION OR SUSPICION HOWSOEVER STRONG IT MAY APPEAR TO BE, BUT NEEDS TO BE CORROBORATED BY SOME EVIDENCE TO ESTABLISH A LINK THAT THE ASSESSEE HAD BROUGHT BACK HIS UNACCOUNTED INCOME IN THEFORM OF LTCG. 20. WE NOTE THAT SINCE THE PURCHASE AND SALE TRA NSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENT S AND BANK STATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE AC CEPTED BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPL Y ON THE BASIS OF SOME REPORTS OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AN D/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, T HE LDCOUNSEL, 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) GANESHMULLBIJAY 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 ) 21. THE LDCOUNSEL ALSO BROUGHT TO OUR NOTICE THAT O NCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMEN T OF HONBLE SUPREME COURT IN CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 25 55 5 THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADESH [1977] 1 SCC 816 (SC). IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE ASSESSEE O WNER IS NOT THE REAL OWNER ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE B URDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND RE ASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE F OLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAIMED BY THE ASSE SSEE ON LTCG ON ALLEGED PENNY SOCKS. (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITA NO. 32/AGR/2007 (A GRA ITAT) 22. MOREOVER IT WAS SUBMITTED BEFORE US BY LD COUNS EL THAT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON T HE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SU BMITTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFFECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HI S BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN BSE/CSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SUPPORT OF THIS CONTENTION WHEREIN UND ER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO A LLOW 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/(KOL )/ 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) 23. WE NOTE THAT THE LD. D.R. FOR THE REVENUE HAD H EAVILY RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIM ALCHAND JAIN IN TAX APPEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UP ON BY THE LD. D.R, WE FIND THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN H AND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MADE BY THE ASSESSEE IN CASH FOR ACQ UISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DON E 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 AS SESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTURE IN NATURE OF T RADE. THUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UPON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARNED ON SALE OF SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT . 24. WE NOTE THAT W HEN THE TRANSACTIONS WERE AS PER NORMS PRESCRIBED BY SEBI AND CONCERNED STOCK EXCHANGE AND SUFFERED STT, BROKERAG E, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBM ITTED BY ASSESSEE. THE LD AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST T HAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. THE ASSESSEE PRODUCED TH E CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL P AYMENTS WERE RECEIVED BY THE CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 26 66 6 ASSESSEE THROUGH BANKS. IN THESE CIRCUMSTANCES, THE LONG TERM CAPITAL GAIN (LTCG) EARNED BY THE ASSESSEE SHOULD NOT BE TREATED AS BOG US, AS HELD BY THE JURISDICTIONAL HON`BLE CALCUTTA HIGH COURT IN VARIOUS CASES, AS ME NTIONED BELOW: (I) . CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CA L- HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJE CTED TO SEBIS ACTION. HOWEVER, THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT , BROKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSAC TIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMIS SED. (II) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 105 OF 2016] (CAL- HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIR MED THE DECISION OF THIS TRIBUNAL, WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASS ESSEE WHERE THE LD AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEEIN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE LD AO DISALLOWE D THE LOSS ON TRADING OF PENNY STOCK ON THE BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE LD AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT THE LD AOS CONCLU SIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED BY TH E REVENUE WAS DISMISSED. (III) CIT V. ANDAMAN TIMBERS INDUSTRIES LTD [ITA NO . 721OF 2008] (CAL-HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM EDTHE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEEWASALLOWED SINCE THE LD AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. (IV) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34 738 (CAL- 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 LD AO, BASED ON THE INFORMATION 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 WA S FOUND THAT THE CLAIM OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO F OUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND P RODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANK S. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED BY HIGH COURT. (V).THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF ALPINE INVESTMENTS ITA 620 OF 2008, DATED 26 TH AUGUST 2008, HELD AS FOLLOWS: IT APPEARS THAT THE SHARE LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCKBROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE PAYMENTS MADE T O THE STOCKBROKER AND ALL THE PAYMENTS RECEIVED FROM STOCKBROKER THROUGH ACCOUNT PAYEE INSTRUMENTS, WHICH WERE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME THE TRIBUNAL CAME TO THE CONCLUS ION AND ALLOWED THE APPEAL CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 27 77 7 FILED BY THE ASSESSEE. IN DOING SO, THE TRIBUNAL HE LD THAT THE TRANSACTION FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCES COULD NOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER, IT WAS HELD THAT THE TRANSAC TIONS OF SHARE ARE GENUINE. THEREFORE, WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS ANY SUBSTANTIAL QUESTION OF LAW INVOLVED IN THIS MATTER . HENCE, THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. (VI) THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME VS M/S. BLB CABLES AND CONDUCTORS ; ITAT NO.78 OF 2017, GA NO.747 OF 2017; DT. 19 JUNE, 2018, HAD UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS FOLLOWS:- '4. WE HAVE HEARD BOTH THE SIDE AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE LD. AR SUBMITTED TWO PAPERS BOOKS. FIRST BOOK IS RUNNING IN PAGES NO . 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US THE LD. AR SUBMITTED THAT THE OR DER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH T HE BROKER WAS EXPELLED. THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF B OTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBMITTED THE IT RETURN, LEDGER COPY, LETTER TO AO AND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM WHICH IS PLACED AT P AGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTRACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REGISTERS WERE ALSO SUBMITTE D IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. THE BOARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIONS IN COMMODITY WAS PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER H AND, THE LD. DR RELIED IN THE ORDER OF THE LOWER AUTHORITIES. 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD SUCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME LOSS WAS ALSO CONFIRMED BY THE LD. CIT(A). HOWEVER, WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME CONCRETE EVIDENCE WHERE THE TRANSACTIONS CA NNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. (VII).M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 2012] (CAL- HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDEN CES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGH T HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY FAILED TO SUBSTANTIAT E THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING PRICE AND T HEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. (VIII)CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMI TED [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 RE CORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE O F PROOF. IT WAS FURTHER HELD 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 CO LOURABLE TRANSACTIONS OR WERE RESORTED TO WITH ULTERIOR MOTIVE. WE NOTE THAT ABOVE MENTIONED JUDGMENTS OF HON`BLE C ALCUTTA HIGH COURT, BY AND LARGE HELD THAT WHERE THE WHOLE TRANSACTIONS WERE S UPPORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCKBROKER OF STOCK EXCHANGE AND ALL THE PAYMENTS MADE TO THE STOCKBROKER AND ALL THE PAYMEN TS RECEIVED ROM STOCKBROKER THROUGH ACCOUNT PAYEE CHEQUES, THEN IN THESE FACTS AND CIRCUMSTANCES ADDITION MADE CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 28 88 8 BY ASSESSING OFFICER ON ACCOUNT OF BOGUS LONG TERM CAPITAL GAIN SHOULD BE DELETED. WE NOTE THAT UNLESS AND UNTIL THE ORDER OF JURISDIC TIONAL HON`BLE HIGH COURT IS REVERSED BY HON`BLE SUPREME COURT, THE SAME HAS TO BE GIVEN DUE EFFECT. JUDICIAL DISCIPLINE DEMANDS THAT ONCE AN ORDER HAS BEEN PASS ED IN THE ASSESSEES OWN CASE, BY THE JURISDICTIONAL HIGH COURT, THE TRIBUNAL IS D UTY BOUND TO ACT IN ACCORDANCE WITH THE SAME. WE NOTE THAT IN THE CASE OF UNION OF INDIA V. RAGHUBIR SINGH (1989) 178 ITR 548 (SC), THE SUPREME COURT HELD THAT THE DOCTRINE OF BINDING PRECEDENT HAS MER IT OF PROMOTING CERTAINTY AND CONSISTENCY IN JUDICIAL DEC ISIONS. AS PER THE DOCTRINE OF PRECEDENT, ALL LOWER COURTS, TRIBUNALS AND AUTHORIT IES EXERCISING JUDICIAL OR QUASI- JUDICIAL FUNCTIONS ARE BOUND BY THE DECISIONS OF TH E HIGH COURT WITHIN WHOSE TERRITORIAL JURISDICTION THESE COURTS, TRIBUNALS &A UTHORITIES FUNCTIONS. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE JURISDICTIONAL, HON`BLE HIGH COURT OF CALCUTTA, ON SIMILAR AND IDENTICAL FACTS, THE ADDITION MADE BY ASSESSING OFFICER SHOULD BE DELETED. 25. WE NOTE THAT W HEN THE TRANSACTIONS WERE AS PER NORMS PRESCRIBED BY SEBI AND CONCERNED STOCK EXCHANGE AND SUFFERED STT, BROKERAG E, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBM ITTED BY ASSESSEE. THE LD AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST T HAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. THE ASSESSEE PRODUCED TH E CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL P AYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. IN THESE CIRCUMSTANCES, THE LONG TERM CAPITAL GAIN (LTCG) EARNED BY THE ASSESSEE SHOULD NOT BE TREATED AS BOG US, AS HELD BY THE COORDINATE BENCHES OF ITAT KOLKATA, IN THE FOLLOWING CASES: (I). MR. SANJIV SHROFF, I.T.A. NO. 1197/KOL/2018, ASSESSMENT YEAR: 2014-15, ORDER DATED, 02.01.2019 28. WE NOTE THAT SINCE THE PURCHASE AND SALE TR ANSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENT S AND BANK STATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTE D BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BASIS O F SOME REPORTS OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAI D JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLOWING CASES:- (XX) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (XXI) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (XXII) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (XXIII) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (XXIV) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (XXV) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (XXVI) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (XXVII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (XXVIII) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (XXIX) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XXX) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XXXI) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 29 99 9 (XXXII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XXXIII) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XXXIV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XXXV) GANESHMULLBIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XXXVI) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XXXVII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XXXVIII) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 29. THE LD AR ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SU PREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADESH [1977] 1 SCC 816 (SC). IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A P ARTICULAR TRANSACTION IS BENAMI AND THE ASSESSEE OWNER IS NOT THE REAL OWNER ALWAYS RESTS O N THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EV IDENCE 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 HON BLE APEX COURT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUS PICION BECAUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAIMED BY THE ASSE SSEE ON LTCG ON ALLEGED PENNY SOCKS. (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (IV) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 30. MOREOVER, IT WAS SUBMITTED BEFORE US BY LD AR T HAT 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 EFFECT 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 SU PPORT OF THIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO W AS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSE SS THE SALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (V) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 (AGRA ITAT) (VI) ACIT VS.AMITA AGARWAL & OTHERS - ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (VII) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (VIII) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 31. WE NOTE THAT THE LD. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMALCHAND JAIN IN TAX AP PEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIND THAT T HE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MADE BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WA S INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOW N AS CAPITAL GAINS WHICH WAS 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 ADVENTU RE IN NATURE OF TRADE. THUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UPON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARNED ON SALE OF SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT . 32.IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG ON SALE OF SHARES OF M/S KAFL. WE, THEREFORE, RESPECTFULLY CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 3 33 30 00 0 FOLLOWING THE SAME, AND SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND DELETE THE CONSEQUEN TIAL ADDITION. (II) JAGMOHAN AGARWAL VS. ACIT, ITA NO.604/KOL/2018 , ORDER DATED 05.09.2018. 35.IN THE LIGHT OF THE DOCUMENTS STATED IN PARA 30 AT PAGE14(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICAT E THE ASSESSEE 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 THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS WHIC H ARE SUPPORTED WITH MATERIAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RE CORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT THE ALLEGATIO NS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MU ST THEREFORE CONSEQUENTLY FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE H AD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PUR CHASE 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 BOGUS NOR T HE AO HAD ISSUED ANY NOTICE TO THE BROKERS FOR CONFIRMATION. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE EXEMPTED U/S 10(38) OF THE AC T ON THE BASIS OF SUSPICION, SURMISES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRONG, CANNOT PARTAKE THE CHARACTER OF LEGAL EVIDENCE. IN THE AFORESAID FACTS AND CIRCUMSTANCE, FOR ALLOWING THE APPEAL WE RELY ON TH E DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INV ESTMENTS IN ITA NO.620 OF 2008 DATED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOW S : IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCK BROKE R OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECEIVED FROM THE SHARE BROKER THROUGH A CCOUNT PAYEE WHICH ARE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESSEE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANSACTIONS CANNOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER IT WAS HELD THAT THE TRANSACTIONS OF THE SH ARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS NO SUBSTA NTIAL QUESTION OF LAW HELD IN THIS MATTER. HENCE TH E APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. 36. WE NOTE THAT THE LD. AR CITED PLETHORA OF THE C ASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALR EADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DUL Y CONSIDERED TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTIC E ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFOR ESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTI FIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME O F THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. (III).NAVNEET AGARWAL, ITA NO.2281/KOL/ 2017, ORDER DATED 05.09.2018 THE ASSESSEE IN THIS CASE HAD STATED THAT THE ASSE SSEE WAS ALLOTTED OF 50000 EQUITY SHARES OF SCITIL. THE PAYMENT FOR THE ALLOTMENT OF SHARES WAS MADE THROUGH AN ACCOUNT PAYEE CHEQUE (COPY OF THE BANK STATEMENT EVIDENCING THE S OURCE OF MONEY). ANNUAL RETURN NO. 20B WAS FILED WITH REGISTRAR OF COMPANIES BY SCITIL SHO WING THE ASSESSEE'S NAME AS SHAREHOLDER. THE ASSESSEE LODGED THE SAID SHARES WI TH THE DEPOSITORY ESSBSL WITH A DEMAT REQUEST. THE SAID SHARES WERE DEMATERIALIZED AND CO PY OF DEMAT REQUEST SLIP ALONG WITH THE CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 3 33 31 11 1 TRANSACTION STATEMENT IS PLACED ON RECORD. LATER ON , THE HIGH COURT APPROVED THE SCHEME OF AMALGAMATION OF SCITIL WITH CSL. IN ACCORDANCE WITH THE SAID SCHEME OF AMALGAMATION, THE ASSESSEE WAS ALLOTTED 50000 EQUITY SHARES OF CS L. THE DEMAT SHARES ARE REFLECTED IN THE TRANSACTION STATEMENT OF THE PERIOD FROM 1-11-2011 TO 31-12-2013. THE ASSESSEE SOLD 50000 SHARES THROUGH HER BROKER SKP WHICH WAS A SEBI REGI STERED BROKER AND EARNED A LONG TERM CAPITAL GAIN. COPY OF FORM NO. 10DB ISSUED BY THE BROKER, IN SUPPORT OF CHARGING OF S.T.T. IN RESPECT OF THE TRANSACTIONS APPEARING IN THE LEDGER IS PLACED ON RECORD. THE HOLDING PERIOD OF THE SAID SCRIP IS MORE THAN ONE YEAR (ABO VE 500 DAYS) THROUGH IN ORDER TO GET THE BENEFIT OF CLAIM OF LONG TERM CAPITAL GAIN THE HOLD ING PERIOD IS REQUIRED TO BE 365 DAYS THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER ( APPEALS) HAVE REJECTED THESE EVIDENCES FILED BY THE ASSESSEE BY REFERRING TO 'MODUS OPERAN DI' OF PERSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH IS EXEMPT FROM INCOME TAX. ALL THESE OBSERVATIONS OF INVESTIGATION WING WERE GENERAL IN NATURE AND WERE APPLIED ACROSS THE BOARD TO ALL THE 60,000 OR MORE ASSESSEES WHO FALL IN THIS CATEGORY. SPECIFIC EVIDE NCES PRODUCED BY THE ASSESSEE WERE NOT CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVIDENC E COLLECTED FROM THIRD PARTIES WAS CONFRONTED TO THE ASSESSEES. NO OPPORTUNITY OF CROS S-EXAMINATION OF PERSONS, ON WHOSE STATEMENTS THE REVENUE RELIED TO MAKE THE ADDITION, WAS PROVIDED TO THE ASSESSEE. THE ADDITION IS MADE BASED ON A REPORT FROM THE INVESTI GATION WING. THE ISSUE FOR CONSIDERATION IS WHETHER, IN SUCH CAS ES, THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUIDE DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILITIES, HUMAN BEHAVIOUR AND DISC OVERY OF THE MODUS OPERANDI ADOPTED IN EARNING ALLEGED BOGUS LTCG AND STCG, THAT HAVE SURF ACED DURING INVESTIGATIONS, SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCLUSION A S TO WHETHER THE CLAIM IS GENUINE OR NOT. AN ALLEGED SCAM MIGHT HAVE TAKEN PLACE ON LTCG ETC. BUT IT HAS TO BE ESTABLISHED IN EACH CASE, BY THE PARTY ALLEGING SO, THAT THIS ASSESSEE IN QUESTION WAS PART OF THIS SCAM. THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESSEE'S ACTIO N GIVING HER INVOLVEMENT IN THE SCAM SHOULD BE ESTABLISHED. THE ALLEGATION IMPLY THAT CASH WAS PAID BY THE ASSESSEE AND IN RETURN THE ASSESSEE RECEIVED LTCG, WHICH IS INCOME EXEMPT FROM INCOME TAX, BY WAY OF CHEQUE THROUGH BANKING CHANNELS. THIS ALLEGATION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVENUE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIGATION'S OFFICE BY WAY OF STATEMENTS RECORDED ETC. HAS TO ALSO BE BROU GHT ON RECORD IN EACH CASE, WHEN SUCH A STATEMENT, EVIDENCE ETC. IS RELIED UPON BY THE REVE NUE TO MAKE ANY ADDITIONS. OPPORTUNITY OF CROSS EXAMINATION HAS TO BE PROVIDED TO THE ASSESSE E, IF THE ASSESSING OFFICER RELIES ON ANY STATEMENTS OR THIRD PARTY AS EVIDENCE TO MAKE AN AD DITION. IF ANY MATERIAL OR EVIDENCE WAS SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER, HE HAS TO CONFRONT THE ASSESSEE WITH SUCH MATERIAL. THE CLAIM OF THE ASSESSEE CANNOT BE REJEC TED BASED ON MERE CONJECTURES UNVERIFIED BY EVIDENCE UNDER THE PRETENTIOUS GARB OF PREPONDER ANCE OF HUMAN PROBABILITIES AND THEORY OF HUMAN BEHAVIOUR BY THE DEPARTMENT. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THI RD PARTIES CANNOT BE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PUT BEFORE HIM AND HE IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CASE, THE ASSESSING OFFICER R ELIED ONLY ON A REPORT AS THE BASIS FOR THE ADDITION. THE EVIDENCE BASED ON WHICH THE DDIT REPO RT WAS PREPARED IS NOT BROUGHT ON RECORD BY THE ASSESSING OFFICER NOR IS IT PUT BEFOR E THE ASSESSEE. THE SUBMISSION OF THE ASSESSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RE CEIVED SOME TIPS AND SHE CHOSE TO INVEST BASED ON THESE MARKET TIPS AND HAD TAKEN A CALCULAT ED RISK AND HAD GAINED IN THE PROCESS AND THAT SHE IS NOT PARTY TO THE SCAM ETC., HAS TO BE CONTROVERTED BY THE REVENUE WITH EVIDENCE. WHEN A PERSON CLAIMS THAT SHE HAS DONE TH ESE TRANSACTIONS IN A BONA FIDE AND GENUINE MANNER AND WAS BENEFITTED, ONE CANNOT REJEC T THIS SUBMISSION BASED ON SURMISES AND CONJECTURES. AS THE REPORT OF INVESTIGATION WIN G SUGGESTS, THERE ARE MORE THAN 60,000 BENEFICIARIES OF LTCG. EACH CASE HAS TO BE ASSESSED BASED ON LEGAL PRINCIPLES OF LEGAL IMPORT LAID DOWN BY THE COURTS OF LAW JUST THE MODUS OPERANDI, GENERALISATION, PREPONDERA NCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTING THE CLAIM OF THE ASSES SEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CONTROVERT THE VALIDITY AND CORRECTNESS O F THE DOCUMENTARY EVIDENCES PRODUCED, CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 3 33 32 22 2 THE SAME CANNOT BE REJECTED BY THE ASSESSEE. THE BU RDEN OF PROVING A TRANSACTION TO BE BOGUS HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEG AL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNE RRINGLY AND REASONABLY RAISING AN INTERFERENCE TO THAT EFFECT. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER ( APPEALS) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER, THE ASSESSING OFFICER AS WELL AS THE COMMI SSIONER (APPEALS), HAVE BROUGHT OUT ANY PART OF THE INVESTIGATION WING REPORT IN WHICH THE ASSESSEE HAS BEEN INVESTIGATED AND /OR FOUND TO BE A PART OF ANY ARRANGEMENT FOR THE PURPO SE OF GENERATING BOGUS LONG TERM CAPITAL GAINS. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW T HAT THE PERSONS INVESTIGATED, INCLUDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT T HE ASSESSEE WAS IN COLLUSION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LI NK THEIR WRONG DOINGS WITH THE ASSESSEE. IN FACT, THE INVESTIGATION WING IS A SEPARATE DEPARTME NT WHICH HAS NOT BEEN ASSIGNED ASSESSMENT WORK AND HAS BEEN DELEGATED THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VESTED WIDEST POWERS ON THIS WING. IT IS THE DUTY O F THE INVESTIGATION WING TO CONDUCT PROPER AND DETAILED INQUIRY IN ANY MATTER WHERE THERE IS A LLEGATION OF TAX EVASION AND AFTER MAKING PROPER INQUIRY AND COLLECTING PROPER EVIDENCES THE MATTER SHOULD BE SENT TO THE ASSESSMENT WING TO ASSESS THE INCOME AS PER LAW. NO SUCH ACTIO N EXECUTED BY INVESTIGATION WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALL Y AGAINST THE ASSESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUIL TY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CASE, THE ASSESSING O FFICER AT BEST COULD HAVE CONSIDERED THE INVESTIGATION REPORT AS A STARTING POINT OF INVESTI GATION. THE REPORT ONLY INFORMED THE ASSESSING OFFICER THAT SOME PERSONS MAY HAVE MISUSE D THE SCRIPT FOR THE PURPOSE OF COLLUSIVE TRANSACTION. THE ASSESSING OFFICER WAS DUTY BOUND T O MAKE INQUIRY FROM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION AND THEN TO COL LECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTI ON. HOWEVER, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT THE TR ANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHERWISE SUPPORTED BY PROPER THIRD PARTY DOCUM ENTS ARE COLLUSIVE TRANSACTIONS. THE ASSESSING OFFICER HAVING FAILED TO BRING ON REC ORD ANY MATERIAL TO PROVE THAT THE TRANSACTION OF THE ASSESSEE WAS A COLLUSIVE TRANSAC TION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN FACT, IN THIS CASE NO THING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT EVIDENCES OR MATERIAL AGAINS T THE ASSESSEE DESPITE THE MATTER BEING INVESTIGATED BY VARIOUS WINGS OF THE INCOME TAX DEP ARTMENT HENCE UNDER THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE ONE IS BOUND TO CONSIDER AND RELY ON THE EVIDENCE P RODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM AND BASE DECISION ON SUCH EVIDENCE AND NOT ON SUSPICION OR PREPONDERANCE OF PROBABILITIES NO MATERIAL WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO CONTROVERT THE EVIDENCE FURNISHED BY THE ASSESSEE. UNDER THESE CIR CUMSTANCES, THE EVIDENCE FILED BY THE ASSESSEE IS ACCEPTED AND THE CLAIM THAT THE INCOME IN QUESTION IS A BONA FIDE LONG TERM CAPITAL GAIN ARISING FROM THE SALE OF SHARES IS ALL OWED AND HENCE EXEMPT FROM INCOME TAX. [PARA 20] 26. TO CONCLUDE, WE NOTE THAT SEBI HAS GIVEN A CLE AN CHIT TO THE COMPANY AND HAS FREED IT FROM THE ALLEGATION OF MARKET RIGGING. THE REFORE, THE ALLEGATION OF THE AO ITSELF BECOMES INFRUCTUOUS. FURTHER, THE ASSESSEE H AD ALSO REQUESTED FOR AN OPPORTUNITY TO CROSS EXAMINE SRI SUNIL DOKANIA, WHO SE STATEMENT HAS BEEN RELIED ON BY THE AO FOR MAKING THE ADDITION. HOWEVER, THE LD. AO DID NOT PROVIDE ANY OPPORTUNITY FOR CROSS EXAMINE, THE SO-CALLED OPERAT ORS. IT IS WELL ESTABLISHED LAW THAT NO ADVERSE VIEW CAN BE TAKEN AGAINST AN ASSESS EE, ON THE BASIS OF STATEMENT RECORDED BY DEPARTMENT OF ANY PERSON WITHOUT PROVID ING COPY OF THE STATEMENT TO THE ASSESSEE AND ALSO WITHOUT PROVIDING OPPORTUNITY FOR CROSS EXAMINATION OF THE SAID PERSON. WE NOTE THAT THE ASSESSEE HAD NEVER ENTERED INTO ANY TRANSACTION WITH SRI CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 3 33 33 33 3 SUNIL DOKANIA, AGAINST WHOM INVESTIGATION WING HAD ALLEGEDLY MADE INQUIRY. WE ALSO NOTE THAT IN THE EXTRACTS OF THE STATEMENT OF SRI SUNIL DOKANIA GIVEN IN THE SHOW CAUSE NOTICE, IT IS NOWHERE MENTIONED THAT THE ALLE GED PERSON HAS PROVIDED ANY ENTRY TO THE ASSESSEE DIRECTLY. WE NOTE THAT THE LD COUNSEL HAS PROVED THAT ASSESSE E IS A REGULAR INVESTOR IN SHARES AND SECURITIES. THE SHARES WERE PURCHASED AND SOLD THROUGH A REGISTERED BROKER NAMED 'EUREKA STOCK & SHARE BROKING SERVICES LTD.' IN THE STOCK EXCHANGE. THE SHARES WERE PURCHASED AND SOLD BASED ON THE PREVAIL ING MARKET CONDITION. THE PAYMENTS WERE RECEIVED THROUGH PROPER BANKING CHANN EL. THE PURCHASE AND SALE TRANSACTIONS WERE SUBJECTED TO SECURITY TRANSACTION TAX (STT), SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. THE SHARE PURCHA SE AND SALE TRANSACTIONS ARE REFLECTED IN THE DMAT ACCOUNT. THE PURCHASE OF SHAR ES (INVESTMENTS) WAS NOT DISPUTED IN EARLIER YEAR, WHERE ASSESSMENT IS COMPL ETED U/S. 143(3) OF THE INCOME TAX ACT. THESE FACTS ARE VERIFIABLE FROM THE REGUL AR BOOKS OF ACCOUNTS. THE TRANSACTIONS CAN ALSO BE VERIFIED FROM THE STOCK EX CHANGE.IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE IDEN TICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BENCHES OF THIS TRIBUNAL HA S DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG. THE ASSESSEE`S CASE IS A LSO COVERED BY THE VARIOUS JUDGMENTS OF JURISDICTIONAL HIGH COURT OF CALCUTTA, AS NOTED (SUPRA). WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, SET ASIDE THE ORDE R OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND HEN CE WE DELETE THE ADDITION OF RS.7,12,89,467/-. 27. THE NEXT ISSUE IN ITA NO.205/KOL/2018, FOR A.Y. 2014-15 IS IN RELATION TO CONFIRMING THE ADDITION OF RS.57,02,785/- AS UNEXPL AINED EXPENDITURE TOWARDS COMMISSION CHARGES OF SALE OF SUCH SHARES BY THE OP ERATOR. WE HAVE ALREADY HELD THAT THE TRANSACTIONS RELATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODATION ENTRIES AS ALLEGED BY THE AO. CONSEQUENTLY, THE ADD ITION OF RS.57,02,785/- IS HEREBY DIRECTED TO BE DELETED. WE ACCORDINGLY HOLD THAT T HE ISSUE IS ALLOWED IN FAVOUR OF THE ASSESSEE. 28. SAME ABOVE DETAILED REASONING TO BE FOLLOWED IN ALL REMAINING APPEALS, BEING, ITA NO. 2268 & 2269/KOL/2018, CASE OF FORMER ASSESS EE AND IN CASE OF LATTER ASSESSEES IN ITA NO.205/KOL/2018, FOR A.Y. 2014-15 , AS IT TRANSPIRES THAT THERE ARE COMMON AND IDENTICAL ISSUES ARE INVOLVED IN THESE T WO ASSESSEES RELATING TO THE SAME GROUP. WE FURTHER NOTE THAT THE RELEVANT SCRIPS IN ISSUE WERE KAILASH AUTO FINANCE LTD, LIFELINE DRUGS & PHARMA LTD, AND ENIS EDUTECH, IN ITA 2270/KOL/2018, SAME AS IS THE LEAD CASE.WE NOTE THAT IN SANJIB KUMAR PATWARI (HUF), IN ITA 205/KOL/2018, THE RELEVANT SCRIPS WERE, KAILASH AUT O FINANCE LTD, LIFELINE DRUGS & PHARMA LTD, WHICH ARE EXACTLY IDENTICAL& COMMON AND SCRIPS OF M/S NCL RESEARCH &FINANCIAL SERVICES AND ESSAR INDIA LIMITE D WERE ALSO COVERED BY THE IDENTICAL FACTS AND ISSUES BY OUR THIS ORDER AND OT HER ORDERS OF THE COORDINATE BENCHES. WE ADOPT THE PRECEDING DETAILED REASONING MUTATIS MUTANDIS TO DELETE ALL THE CORRESPONDING LONG TERM CAPITAL GAIN(LTCG) ADDI TION HEREINABOVE. 18. WE NOTE THAT BASED ON IDENTICAL FACTS AND CIRCU MSTANCES, NARRATED ABOVE, THE ASSESSEE`S CASE IS COVERED BY THE JUDGMENT OF CO-OR DINATE BENCH OF ITAT KOLKATA IN THE CASE OF SANJIB KUMAR PATWARI(HUF) IN I.T.A . NO.205/KOL/2018 FOR A.Y. CHANDRA PRAKASH JHUNJHUNWALA ITA NO.2351/KOL/2017 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 3 33 34 44 4 2014-15 (SUPRA). LD DR FOR THE REVENUE HAS FAILED T O CONTROVERT THE FINDINGS OF THE COORDINATE BENCH (SUPRA) THEREFORE, RESPECTFULL Y FOLLOWING THE JUDGMENT OF THE CO-ORDINATE BENCH OF ITAT, KOLKATA (SUPRA), WE DELE TED THE ADDITION OF RS.31,46,527/-. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 09.08.2019 SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 09/08/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. CHANDRA PRAKASH JHUNJHUNWALA 2. DCIT, CC-3(4), KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES