Appeal Details
Counselvise Citation
[2018] 119 COUNSELVISE.COM (IT) 5364 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 25 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-10-2018
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Assessment Year
2014-2015
Appeal Filed On
21-11-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI A.T.VARKEY, JM & SHRI M.BALA GANESH, AM ] I.T.A NO. 2358/KOL/20 17 ASSESSMENT YEARS : 2014- 15 NAVNEET AGARWAL (HUF) -VS- ITO,WARD-35(2), KOL KATA [PAN: AADHN 5831 M] (APPELLANT) (RESPOND ENT) I.T.A NO. 2287/KOL/2017 ASSESSMENT YEARS : 2014- 15 BISWANATH AGARWAL & SONS (HUF) -VS- ITO,WARD-34(1 ), KOLKATA [PAN: AAEHB 2871 G] (APPELLANT) (RESPOND ENT) I.T.A NO. 2280/KOL/2017 ASSESSMENT YEARS : 2014- 15 BISWANATH AGARWAL -VS- ITO,WARD-34(1), KOLKAT A [PAN: ADCPA 8715 H] (APPELLANT) (RESPOND ENT) FOR THE APPELLANT : SHRI SUBASH AGARWAL, ADVOCATE FOR THE RESPONDENT : SHRI ROBIN CHOWDHURY , ADDL. CIT SR.DR DATE OF HEARING : 10.10.2018 DATE OF PRONOUNCEMENT : 16.10.2018 ORDER PER M.BALAGANESH, AM 1. THESE TWO APPEALS BY THE ASSESSEE AND THE APPEAL BY THE REVENUE ARISE OUT OF THE COMMON ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-18, KOLKATA [IN SHORT THE LD CIT(A)] IN APPEAL NOS. 579 & 592/CIT( A)-18/16-17/CIR-11(1)/KOL DATED 14.06.2017 AGAINST THE COMMON ORDER PASSED BY THE ACIT, CIRCLE-11, KOLKATA [ IN 2 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 2 SHORT THE LD AO] UNDER SECTION 254 / 143(3) OF T HE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 31.03.2006 FOR THE ASSESSMENT YE ARS 1996-97 & 1997-98 RESPECTIVELY. BOTH THESE APPEALS ARE TAKEN TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ONLY COMMON ISSUE TO BE DECIDED IN ALL THESE APPEALS IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITION MADE T OWARDS LONG TERM CAPITAL GAINS ON SALE OF SHARES IN THE FACTS AND CIRCUMSTANCES OF TH E CASE. THE FACTS OF SHRI BISWANATH AGARWAL IN ITA NO. 2280/KOL/2017 FOR ASST YEAR 2014 -15 AS PER THE CONSENT OF BOTH THE PARTIES BEFORE US AND THE DECISION RENDERED THE REON WOULD APPLY WITH EQUAL FORCE TO OTHER TWO ASSESSEES ALSO HEREIN IN VIEW OF IDENTICA L FACTS EXCEPT WITH VARIANCE IN FIGURES. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE ( SHRI BISWANATH AGARWAL) FILED HIS RETURN OF INCOME FOR THE ASST YEAR 2014-15 ON 27.11 .2014 DECLARING TOTAL INCOME OF RS 17,79,571/- AFTER CLAIMING EXEMPT LONG TERM CAPITAL GAINS (LTCG IN SHORT) OF RS 2,19,33,154/- ON SALE OF LISTED EQUITY SHARES OF CR ESSENDA SOLUTIONS LTD WHICH WAS ALSO SUBJECTED TO SECURITIES TRANSACTION TAX (STT) AND T RANSACTIONS ROUTED THROUGH RECOGNIZED STOCK EXCHANGE. THE ASSESEE ALSO DERIVE D EXEMPT INTEREST ON DEPOSIT FROM PUBLIC PROVIDENT FUND OF RS 2,20,497/- ; EXEMPT SHA RE OF PROFIT FROM PARTNERSHIP FIRM OF RS 1,74,00,326/- AND EXEMPT DIVIDEND ON EQUITY SHAR ES OF RS 3,60,59,771/-. THE ASSESSEE CLAIMED DEDUCTION OF RS 1,30,000/- UNDER C HAPTER VIA WHICH WAS REDUCED FROM THE GROSS TOTAL INCOME COMPRISING OF INCOME FR OM SALARY, HOUSE PROPERTY, SHORT TERM CAPITAL GAINS AND OTHER SOURCES. THE LD AO OB SERVED THAT THE ASSESSEE APPLIED FOR 50000 SHARES OF RS 10 EACH OF M/S SMART CHAMPS IT & INFRA LIMITED TOTALING TO RS 5,00,000/- DIRECTLY FROM THE COMPANY WHICH WAS ALLO TTED BY THE COMPANY TO THE ASSESSEE. THE 50000 SHARES WERE ALLOTTED TO THE AS SESSEE ON 3.12.2011. THE PAYMENT MADE BY THE ASSESSEE AT THE TIME OF APPLICATION OF SHARES WAS RS 5,00,000/- VIDE ACCOUNT PAYEE CHEQUE NO. 147556 DATED 22.11.2011 DR AWN ON CITI BANK. LATER THIS 3 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 3 COMPANY ( I.E M/S SMARTCHAMPS IT & INFRA LTD GOT ME RGED WITH CRESSANDA SOLUTIONS LTD (A LISTED COMPANY) VIDE ORDER OF MERGER APPROVE D BY HONBLE BOMBAY HIGH COURT ON 24.1.2013 WITH APPOINTED DATE AS 1.1.2012. PURS UANT TO THIS MERGER, THE ASSESSEE WAS ALLOTTED 50000 SHARES IN CRESSANDA SOLUTIONS LTD . THESE SHARES WERE DULY DEMATTED BY THE ASSESSEE WITH THE DEPOSITORY PARTICIPANT ON 7.3 .2013. LATER THESE SHARES WERE SOLD IN THE RECOGNIZED STOCK EXCHANGE ( I.E OPEN MARKET) TH ROUGH A REGISTERED SHARE BROKER ON VARIOUS DATES BETWEEN APRIL AND JUNE 2013 , RELEVAN T TO ASST YEAR 2014-15 FOR RS 2,24,33,154/- AND LTCG THEREON WAS WORKED OUT AT RS 2,19,33,154/-. THE DETAILS OF THE SAME ARE AS UNDER:- 4. THE LD AO SOUGHT TO TREAT THE SAID LTCG AS BOGU S AS ACCORDING TO HIM, THE SCRIP DID NOT JUSTIFY SUCH A HUGE INCREASE IN ITS SALE PRICE AND THAT THE INCREASE IN SHARE PRICE THEREON WAS ONLY ARTIFICIAL AND DUE TO PRICE RIGGIN G CARRIED OUT BY SOME PERSONS IN THE MARKET. HE OBSERVED THAT THE FINANCIALS OF THE SAI D COMPANY ( I.E CRESSANDA SOLUTIONS LTD ) DID NOT JUSTIFY SUCH A HUGE INCREASE IN SHARE PRICES ; THAT PRICES HAVE BEEN ARTIFICIALLY RIGGED UPWARDS BY SOME ENTRY OPERATORS ; THAT THE SCRIP WAS NOT TRADED IN HUGE VOLUMES IN THE MARKET ; AND THAT MOREOVER, TH E MANAGEMENT OF BOTH SMART CHAMPS IT & INFRA LTD AND CRESSANDA SOLUTIONS LTD R EMAINED THE SAME. HE ANALYSED THE MOVEMENT IN SHARE PRICE OF THIS SCRIP AND BASED ON THE REPORT OF THE INVESTIGATION WING, HE CONCLUDED THAT THE CONCERNED STOCK HAD BEE N CONVERTED INTO A PENNY STOCK IN THE MARKET. HE FOUND THAT THE RETURNS OBTAINED BY THE ASSESSEE , THOUGH FROM THE OPEN MARKET, APPEARS TO BE UNREALISTIC AND BEYOND HUMAN PROBABILITIES. ACCORDINGLY HE HELD 4 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 4 THAT THE SALE CONSIDERATION RECEIVED ON SALE OF SHA RES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME O F THE ASSESSEE. THE LD AO ALSO ADDED COMMISSION COMPONENT THEREON TO THE TUNE OF R S 43,866/- AS INCOME OF THE ASSESSEE IN THE ASSESSMENT. THIS ACTION WAS UPHELD BY THE LD CITA. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD AR PLACED RELIANCE ON THE PRIMARY DOCUME NTS EVIDENCING THE PURCHASE AND SALE OF EQUITY SHARES OF SMART CHAMPS IT & INFRA LT D (PRE-MERGER) AND CRESSANDA SOLUTIONS LTD (POST MERGER) . HE ARGUED THAT THE S HARES WERE SOLD BY THE ASSESSEE BASED ON THE PREVAILING MARKET PRICES IN THE STOCK EXCHAN GE IN THE OPEN MARKET ON WHICH THE ASSESSEE DOES NOT HAVE ANY CONTROL. HE ARGUED THAT THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE REVENUE TO PROVE THAT THE CONCERNED S CRIP WAS INVOLVED IN ARTIFICIAL PRICE RIGGING AT THE BEHEST AND CONNIVANCE OF ASSESSEE, H IS BROKER AND THE STOCK EXCHANGE AND SOME ENTRY OPERATORS. THE BROKER OF THE ASSESSEE W HO IS REGISTERED WITH SEBI AND MEMBER OF BSE WAS NOT FOUND FAULTY BY SEBI OR BY AN Y OTHER INVESTIGATING AGENCY. HE ARGUED THAT ASSESSEE IS AN INVESTOR OF VARIOUS PRIV ATE AND PUBLIC LIMITED COMPANIES WHICH IS EVIDENT FROM THE LIST OF INVESTMENTS HELD BY THE ASSESSEE AND THAT THE ASSESSEE HAD RECEIVED HUGE DIVIDENDS TO THE TUNE OF RS 3.60 CRORES DURING THE YEAR ITSELF ON ITS INVESTMENT IN SHARES OF VARIOUS COMPANIES, WHICH GO ES TO PROVE THAT THE ASSESSEE IS A REGULAR INVESTOR IN SHARES WITH A VIEW TO EARN CAPI TAL APPRECIATION AND NOT FOR THE PURPOSE OF RESALE. HE ARGUED THAT THE HONBLE PUNJ AB & HARYANA HIGH COURT (CHANDIGARH BENCH) IN THE CASE OF PCIT VS SH HITES H GANDHI IN ITA NO. 18 OF 2017 DATED 16.2.2017 ON THE ASPECT OF HUGE INCREASE IN S HARE SALE PRICE HAD OBSERVED IN THE SIMILAR CIRCUMSTANCES AND DECIDED IN FAVOUR OF THE ASSESSEE. HE PLACED RELIANCE ON THE CO-ORDINATE BENCH DECISION OF MUMBAI TRIBUNAL IN TH E CASE OF MUKESH R MAROLIA VS ADDITIONAL CIT REPORTED IN (2006) 6 SOT 247 (MUM.) DATED 15.12.2005 WHEREIN IT WAS HELD AS UNDER:- 10.7 THEREFORE, WE FIND THAT THE EXPLANATIONS OF THE ASS ESSEE SEEMS TO HAVE BEEN REJECTED BY THE ASSESSING AUTHORITY MORE ON THE GRO UND OF PRESUMPTION THAN ON FACTUAL 5 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 5 GROUND. THE PRESUMPTION IS SO COMPELLING THAT COMPA RATIVELY A SMALL AMOUNT OF INVESTMENT MADE BY THE ASSESSEE DURING THE PREVIOUS YEAR PERIOD RELEVANT TO THE ASSESSMENT YEARS 1999- 2000 AND 2000-01 HAVE GROWN INTO A VERY SIZABLE AMOUNT ULTIMATELY YIELDING A FABULOUS SUM OF RS. 1,41,08,4 84 WHICH WAS USED BY THE ASSESSEE FOR THE PURCHASE OF THE FLAT AT COLABA. THE SEQUENC E OF THE EVENTS AND ULTIMATE REALIZATION OF MONEY IS QUITE AMAZING. THAT ITSELF IS A PROVOCATION FOR THE ASSESSING OFFICER TO JUMP INTO A CONCLUSION THAT THE TRANSACT IONS WERE BOGUS. BUT, WHATEVER IT MAY BE, AN ASSESSMENT HAS TO BE COMPLETED ON THE BASIS OF RECORDS AND MATERIALS AVAILABLE BEFORE THE ASSESSING AUTHORITY. PERSONAL KNOWLEDGE AND EXCITEMENT ON EVENTS, SHOULD NOT LEAD THE ASSESSING OFFICER TO A STATE OF AFFAIR S WHERE SALIENT EVIDENCES ARE OVER- LOOKED. IN THE PRESENT CASE, HOWSOEVER UNBELIEVABLE IT MIGHT BE, EVERY TRANSACTION OF THE ASSESSEE HAS BEEN ACCOUNTED, DOCUMENTED AND SUPPORT ED. EVEN THE EVIDENCES COLLECTED FROM THE CONCERNED PARTIES HAVE BEEN ULTIMATELY TUR NED IN FAVOUR OF THE ASSESSEE. THEREFORE, IT IS, VERY DIFFICULT TO BRUSH ASIDE THE CONTENTIONS OF THE ASSESSEE THAT HE HAD PURCHASED SHARES AND HE HAD SOLD SHARES AND ULTIMAT ELY HE HAD PURCHASED A FLAT UTILIZING THE SALE PROCEEDS OF THOSE SHARES. THIS DECISION OF MUMBAI TRIBUNAL WAS APPROVED BY TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS MUKESH R MAROLIA IN ITA NO. 456 OF 2007 DATED 7.9.2011 WHEREIN IT WAS HELD AS UNDER:- 6. SIMILARLY, THE SALE OF THE SAID SHARES FOR RS 1, 41,08,484/- THROUGH TWO BROKERS NAMELY, M/S RICHMOND SECURITIES PVT LTD AND M/S SCO RPIO MANAGEMENT CONSULTANTS PVT LTD CANNOT BE DISPUTED, BECAUSE THE FACT THAT THE ASSESSEE HAS RECEIVED THE SAID AMOUNT IS NOT IN DISPUTE. IT IS NEITHER THE CASE OF THE REVENUE THAT THE SHARES IN QUESTION ARE STILL LYING WITH TH E ASSESSEE NOR IT IS THE CASE OF THE REVENUE THAT THE AMOUNTS RECEIVED BY THE ASSESS EE ON SALE OF THE SHARES IS MORE THAN WHAT IS DECLARED BY THE ASSESSEE. THOUGH THERE IS SOME DISCREPANCY IN THE STATEMENT OF THE DIRECTOR OF M/S RICHMOND SE CURITIES PVT LTD, REGARDING THE SALE TRANSACTION, THE TRIBUNAL RELYING ON THE S TATEMENT OF THE EMPLOYEE OF M/S RICHMOND SECURITIES PVT LTD HELD THAT THE SALE TRAN SACTION WAS GENUINE. 7. IN THESE CIRCUMSTANCES, THE DECISION OF THE ITAT IN HOLDING THAT THE PURCHASE AND SALE OF SHARES ARE GENUINE AND THEREFORE, THE A SSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE AMOUNT OF RS 1,41,08, 484/- REPRESENTED UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE INCOME TAX ACT, 1961 CANNOT BE FAULTED. 8. IN THE RESULT, WE SEE NO MERIT IN THIS APPEAL AN D THE SAME IS DISMISSED WITH NO ORDER AS TO COSTS. 6 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 6 THE LD AR ALSO PLACED ON RECORD THE EVIDENCE FOR DI SMISSAL OF SPECIAL LEAVE PETITION (SLP) OF THE REVENUE BY THE HONBLE APEX COURT IN S LP NO. 20146/2012 DATED 27.1.2014 AGAINST THE DECISION OF THE HONBLE BOMB AY HIGH COURT SUPRA. 6. THE LD DR ON THE OTHER HAND VEHEMENTLY SUPPORTE D THE REPORTS OF THE INVESTIGATION WING WHICH ARE REPRODUCED IN ASSESSMENT ORDER IN PA RT , SHARE PRICE MOVEMENTS FROM VARIOUS PERIODS FROM 1.4.2012 TO 31.3.2016 OF THE S AID SCRIP. HE ALSO PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF SANJAY BIMALCHAND JAIN L/H SHANTIDEVI BIMALCHAND JAIN VS PCIT, NAGPUR & ANOTHE R IN ITA NO. 18 / 2017 DATED 10.4.2017 WHICH WAS DECIDED IN FAVOUR OF THE REVENU E WITH REGARD TO THE ISSUE OF HUGE INCREASE IN SHARE SALE PRICES. HE ALSO PLACED RELI ANCE ON CERTAIN BOOKS AUTHORED BY MR PARAG PARIKH TITLED AS VALUE INVESTING AND BEHAVIO RIAL FINANCE ( INSIGHTS INTO INDIAN STOCK MARKET REALITIES) WHEREIN THE VARIOUS HUMAN BEHAVIOUR WITH REGARD TO THE TIME OF PURCHASE OF SCRIP AND EXIT FROM STOCK MARKETS WE RE LISTED OUT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE AS WELL AS THE LD DR. THE ONLY ISSUE TO BE DECIDED IS WHETHER THE LTCG ON SALE OF SHARES OF CR ESSANDA SOLUTIONS LTD EARNED THROUGH SALE IN RECOGNIZED STOCK EXCHANGE AND SUBJE CTED TO PAYMENT OF STT THROUGH A REGISTERED SHARE BROKER , COULD BE TREATED AS GENUI NE OR NOT. WE FIND THAT THE ASSESSEE WAS ALLOTTED THE SHARES OF M/S SMART CHAMPS IT & IN FRA LTD PURSUANT TO APPLICATION MADE BY THE ASSESSEE IN THAT REGARD TOGETHER WITH T HE CHEQUE PAYMENT OF RS 5,00,000/-. THE ASSESSEE WAS ALLOTTED 50000 SHARES BY THE SAID COMPANY DIRECTLY ON 3.12.2011 ( RELEVANT TO ASST YEAR 2012-13) AT FACE VALUE OF RS 10 EACH. THIS PURCHASE OF SHARES WERE DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ALONG WITH OTHER TRANSACTIONS. WE FIND THAT THE ASSESSEE HAD MADE TO TAL INVESTMENTS TO THE TUNE OF RS 8,49,80,332/- INCLUDING THE INVESTMENTS MADE IN THE SHARES OF CRESSENDA SOLUTIONS LTD (MERGED ENTITY) AS UNDER:- 7 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 7 BENGAL FINANCE & INVESTMENT PVT LTD - 36,01,000 BISWANATH PROPERTY PVT LTD - 1,000 BLUE HORIZON TRADING PVT LTD - 1,02,500 BUILDMAT DEVELOPERS PVT LTD - 21,54,500 CCL INTERNATIONAL LTD - 50,79,138 GLOBAL TRUST BANK LTD - 25,000 PARLINE LEASING PVT LTD - 40,000 PRAXIS SUPPLIERS PVT LTD - 4,59,094 RBA CASTINGS PVT LTD - 59,58,000 RBA EXPORTS PVT LTD - 5,87,20,600 SHREE UMA FOUNDRIES PVT LTD - 87,99,500 VALENCIA LEASING PVT LTD - 40,000 ----------------- 8,49,80,332 ----------------- 7.1. WE FIND THAT THE ASSESSEE HAD DEMATTED THE SHA RES OF SMART CHAMPS IT & INFRA LTD ON 11.2.2012 WITH M/S EUREKA STOCK & SHARE BROKING SERVICES LTD (DEPOSITORY PARTICIPANT DP IN SHORT). PURSUANT TO THE MERGER OF SMART CHAMPS IT & INFRA LTD WITH CRESSANDA SOLUTIONS LTD, THE ASSESSEE GOT 50000 SHA RES IN CRESSANDA SOLUTIONS LTD AND THE SAME WERE DEMATTED WITH THE SAME DP ON 7.3.201 3. 7.2. WE FIND THAT THE ASSESSEE HAD SOLD THESE 50000 SHARES OF CRESSANDA SOLUTIONS LTD, THROUGH THE SHARE BROKER (M/S SKP STOCK BROKING PVT LTD) WHO IS REGISTERED WITH SEBI AND MEMBER OF BOMBAY STOCK EXCHANGE, ON VARIOUS DA TES IN ASST YEAR 2014-15 AND THE SAID SALE IS EVIDENCED BY THE FOLLOWING DOCUMEN TS :- A) CONTRACT NOTES ISSUED BY THE REGISTERED SHARE BR OKER CONTAINING THE NUMBER OF SHARES SOLD, PRICE AT WHICH IT WAS SOLD, STT COLLECTED, BR OKERAGE COLLECTED, SERVICE TAX COLLECTED, TRADE TIME, DATE OF SALE, SETTLEMENT NUM BER, NET AMOUNT PAYABLE TO SELLER THROUGH THE STOCK EXCHANGE ( ENCLOSED IN PAGES 51 T O 60 OF PAPER BOOK) ; 8 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 8 B) DELIVERY INSTRUCTIONS GIVEN BY THE ASSESSEE TO T HE DEPOSITORY PARTICIPANT (DP) TOGETHER WITH THE BROKERS CONFIRMATION OF SALE OF SHARES BY THE ASSESSEE (ENCLOSED IN PAGES 61 TO 71 OF PAPER BOOK) ; C) LEDGER ACCOUNT OF THE ASSESEE AS APPEARING IN TH E BOOKS OF BROKER FOR THE PERIOD 1.4.2013 TO 31.3.2014 EVIDENCING THE SALE OF SHARES MADE AND THE PAYMENTS MADE TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUES ON VARIOUS DATES DURING THE YEAR (ENCLOSED IN PAGES 72 TO 76 OF PAPER BOOK) ; D) BANK STATEMENTS OF THE ASSESSEE FOR THE PERIOD 1 .4.2013 TO 30.6.2013 MAINTAINED WITH CITI BANK WHEREIN THE SALE PROCEEDS OF SALE OF SHAR ES ON DIFFERENT DATES WERE CREDITED (ENCLOSED IN PAGES 77 TO 82 OF PAPER BOOK) E) FORM NO. 10DB ISSUED BY THE BROKER IN SUPPORT OF CHARGING OF STT FROM THE ASSESSEE IN RESPECT OF SALE OF SHARES MADE THROUGH THE RECOGNIZED STOCK EXCHANGE (ENCLOSED IN PAGE 83 OF PAPER BOOK). F) DEMAT STATEMENT OF THE ASSESSEE IN RESPECT OF VA RIOUS SCRIPS INCLUDING THE SCRIP OF CRESSANDA SOLUTIONS LTD CONTAINING THE NUMBER OF SH ARES HELD IN EACH SCRIP AFTER EACH SALE (ENCLOSED IN PAGES 84 TO 87 OF PAPER BOOK). 7.3. WITH REGARD TO THE ARGUMENTS OF THE LD DR THAT AT THE TIME OF PURCHASE OF SHARES OF SMART CHAMPS IT & INFRA LTD BY THE ASSESSEE, THE SH ARES OF CRESSANDA SOLUTIONS LTD WERE VERY MUCH AVAILABLE IN THE STOCK MARKET AND TH E ASSESSEE COULD HAVE VERY WELL BOUGHT THE SHARES OF CRESSANDA SOLUTIONS LTD FROM T HE OPEN MARKET. HE NEED NOT HAVE RESORTED TO PURCHASING THE SHARES OF SMARTCHAMPS AN D LATER ON GET IT MERGED WITH CRESSANDA SOLUTIONS LTD. IN THIS REGARD, WE FIND F ROM THE MATERIALS AVAILABLE ON RECORD, THAT THE ASSESSEE WAS NOT THE DIRECTOR OR PROMOTER OF EITHER M/S SMARTCHAMPS IT & INFRA 9 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 9 LTD OR CRESSANDA SOLUTIONS LTD PRIOR TO THE MERGER. ASSESSEE WAS ONLY A SHAREHOLDER IN SMARTCHAMPS AND PURSUANT TO THE MERGER OF THAT COMP ANY WITH CRESSANDA, THE ASSESSEE WAS ALLOTTED SHARES IN CRESSANDA SOLUTIONS LTD, WHI CH CANNOT BE FAULTED WITH BY THE REVENUE BY MERE SURMISE AND CONJECTURE AND WITHOUT BRINGING ANY EVIDENCE ON RECORD. MOREOVER, IT IS FOR THE ASSESSEE TO CHOSE WHETHER T O BUY A PARTICULAR SCRIP AND THE DEPARTMENT CANNOT STEP INTO THE SHOES OF THE ASSESS EE IN THIS REGARD AND PARTICIPATE IN THE BUSINESS AND INVESTMENT DECISIONS OF THE ASSESSEE. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS DHANRAJGIR JI RAJA NARASINGIRJI REPORTED IN 91 ITR 544 (SC) . THE NEXT ARGUMENT OF THE LD DR THAT THE CONTRAC T NOTES AND DEMAT STATEMENTS ARE ONLY EVIDENCES TO PROVE TH AT THE TRANSACTIONS HAPPENED AND GOT RECORDED IN THE STOCK EXCHANGE AND THAT IT DOES NOT GIVE CREDENCE TO THE TRANSACTION PER SE. IN THIS REGARD, WE FIND THAT THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES HAPPEN IN THE SECONDARY MARKET BASED ON THE PREVAILING MARKET PRICES THROUGH THE REGISTERED STOCK BROKERS IN THE CONCERNED STOCK EXCHANGE. THIS IS H OW THE TRANSACTIONS HAPPEN ACROSS THE WORLD. FOR THESE EVENTS, THE DOCUMENTS ARE FUR NISHED BY THE STOCK BROKERS IN THE FORM OF CONTRACT NOTES , DELIVERY INSTRUCTIONS SUBM ITTED BY THE PARTIES FOR EFFECTING THE SALE THROUGH THE RECOGNIZED STOCK EXCHANGE AND TRAN SACTIONS OF MOVEMENT OF SHARES FROM ONE PERSON TO ANOTHER ARE RECORDED IN THE RESP ECTIVE DEMAT STATEMENTS ISSUED BY THE CONCERNED DEPOSITORY PARTICIPANT. THESE DOCUME NTS CANNOT BE DISBELIEVED AS NOT GIVING ANY CREDENCE TO THE SHARE TRANSACTIONS AS TH EY HAD HAPPENED IN THE OPEN MARKET. IN ANY CASE, IT IS FOR THE REVENUE TO BRING OUT ANY OTHER EXTRANEOUS MATERIAL TO PROVE THAT THESE DOCUMENTS ARE FABRICATED WITH THE CONNIVANCE OF ASSESSEE, REGISTERED STOCK BROKER AND RECOGNIZED STOCK EXCHANGE. IT CANNOT BE BRUSHE D ASIDE THAT THESE TRANSACTIONS IN THE OPEN MARKET HAD DULY SUFFERED STT WHICH IS ALSO REF LECTED IN THE CONTRACT NOTES ISSUED BY THE STOCK BROKER AND THE REVENUE HAD ALREADY BEE N ENRICHED BY THE STT COMPONENT. HENCE IT WOULD NOT BE PROPER FOR THE LD DR TO STATE THAT THESE DOCUMENTS CANNOT BE RELIED UPON. 10 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 10 7.4. WE FIND THAT THE HONBLE PUNJAB & HARYANA HIGH COURT (NON-JURISDICTI ONAL HIGH COURT) IN THE CASE OF PCIT (CENTRAL), LUDHIANA VS P REM PAL GANDHI IN ITA NO. 95 OF 2017 DATED 18.1.2018 HAD IN SIMILAR CIRCUMSTANCES HELD THE ISSUE IN FAV OUR OF THE ASSESSEE. WE FIND THAT THE LD DR ALSO PLACED RELI ANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SANJAY BIMALCHAND JAIN L/H SHANTIDEVI BIMALCHAND JAIN VS PCIT, NAGPUR & ANOTHER IN ITA NO. 18 / 2017 DATED 10.4.2017 WHICH IS ALSO A NON-JURISDICTIONAL HIGH COURT DECISION. IN THESE C IRCUMSTANCES, THE HONBLE APEX COURT IN THE CASE OF VEGETABLE PRODUCTS HAD HELD TH AT WHEN THERE ARE CONFLICTING VIEWS ON AN ISSUE FOR AND AGAINST THE ASSESSEE BY THE DIF FERENT NON-JURISDICTIONAL HIGH COURTS, THE CONSTRUCTION WHICH FAVOURS THE ASSESSEE SHOULD BE FOLLOWED. ACCORDINGLY, THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT SUP RA WOULD HAVE TO BE FOLLOWED IN THE INSTANT CASE BEFORE US. 7.5. WE ALSO FIND THAT THE ENTIRE ISSUE WITH REGARD TO SALE OF SHARES OF CRESSANDA SOLUTIONS LTD HAD BEEN THE SUBJECT MATTER OF ADJUDI CATION BY THIS TRIBUNAL IN THE CASE OF NAVNEET AGARWAL, L/H OF LATER KIRAN AGARWAL VS ITO IN ITA NO. 2281/KOL/2017 DATED 20.7.2018, WHEREIN IT WAS HELD AS UNDER:- 10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMI SSIONS, PERUSAL OF THE PAPERS ON RECORD AND ORDER OF THE LOWERS AUTHORITIES BELOW, A S WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS. 11. THE ASSESSEE IN THIS CASE HAS STATED THE FOLLOW ING FACTS AND PRODUCED THE FOLLOWING DOCUMENTS AS EVIDENCES: 1. THEASSESSEE HAD MADE AN APPLICATION FOR ALLOTMENT O F 50000 EQUITY SHARES OF SMART CHAMPS IT AND INFRA LTD. AND SHE WAS ALLOTT ED THE SHARE ON 3 RD DECEMBER 2011 (COPY OF APPLICATION FORM, INTIMATION OF ALLOTMENT AND SHARE CERTIFICATE PAPER BOOK AT PAGE 8 TO 10). 11 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 11 2. THE PAYMENT FOR THE ALLOTMENT OF SHARES WAS MADE TH ROUGH AN ACCOUNT PAYEE CHEQUE (COPY OF THE BANK STATEMENT EVIDENCING THE S OURCE OF MONEY AND PAYMENT MADE TO SMART CHAMPS IT & INFRA LTD. FOR SUCH SHA RESALLOTTED IS PLACED IN THE PAPER BOOK AT PAGE NO. 11). 3. ANNUAL RETURN NO. 20B WAS FILED WITH REGISTRAR OF C OMPANIES BY SMART CHAMPS IT & INFRA LTD SHOWING THE ASSESSEES NAME AS SHAR EHOLDER (COPY OF ANNUAL RETURN NO. 20B FILED WITH REGISTRAR OF COMPANIES BY SMART CHAMPS IT & INFRA LTD. IS PLACED IN THE PAPER BOOK AT PAGE NO. 12 TO 18.) 4. THEASSESSEE LODGED THE SAID SHARES WITH THE DEPOSIT ORY M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. WITH A DEMAT REQUEST ON 11 TH FEBRUARY, 2012. THE SAID SHARES WERE DEMATERIALIZED ON 31 ST MARCH, 2012 (COPY OF DEMAT REQUEST SLIP ALONG WITH THE TRANSACTION STATEMENT IS PLACED IN T HE PAPER BOOK AT PAGE NO. 19 TO 21). 5. ON 24.01.2013, THE HONBLE BOMBAY HIGH COURT APPROV ED THE SCHEME OF AMALGAMATION OF SMART CHAMPS IT AND INFRA LTD. WI TH CRESSANDA SOLUTIONS LTD. IN ACCORDANCE WITH THE SAID SCHEME OF AMALGAM ATION, THE ASSESSEE WAS ALLOTTED 50000 EQUITY SHARES OF M/S. CRESSANDA SOL UTIONS LTD. THE DEMAT SHARES ARE REFLECTED IN THE TRANSACTION STATEMENT O F THE PERIOD FROM 1 ST NOVEMBER 2011 TO 31 ST DECEMBER, 2013 (A COPY OF THE SCHEME OF AMALGAMATI ON ALONGWITH COPY OF ORDER OF THE HONBLE BOMBAY HIGH COURT AND A COPY OF THE LETTER TO THIS EFFECT SUBMITTED BY CRESSANDA SOLUTIONS LTD. TO B OMBAY STOCK EXCHANGE IS PLACED IN THE PAPER BOOK AT PAGE NO 22 TO 43.) 6. THE ASSESSEE SOLD 50000 SHARES COSTING RS. 500000/- THROUGH HER BROKER SKP STOCK BROKING PVT. LTD WHICH WAS A SEBI REGISTERED BROKER AND EARNED A LONG TERM CAPITAL GAIN OF RS. 2,18,13,072/-. (COPY OF TH E BANK STATEMENT, BROKERS CONTRACT NOTE TOGETHER WITH THE DELIVERY INSTRUCTIO NS GIVEN TO THE DP AND BROKERS CONFIRMATION IS ALSO PLACED IN THE PAPER B OOK AT PAGE NO 44 TO 65). 12 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 12 7. COPY OF FORM NO. 10DB ISSUED BY THE BROKER, IN SUPP ORT OF CHARGING OF S.T.T. IN RESPECT OF THE TRANSACTIONS APPEARING IN THE LEDGER IS PLACED IN THE PAPER BOOK AT PAGE NO. 66. 8. THE HOLDING PERIOD OF THE SAID SCRIP IS MORE THAN O NE YEAR (ABOVE 500 DAYS) THROUGH IN ORDER TO GET THE BENEFIT OF CLAIM OF LON G TERM CAPITAL GAIN THE HOLDING PERIOD IS REQUIRED TO BE 365 DAYS. 12.THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAVE REJECTED THESE EVIDENCES FILED BY THE ASSESSEE BY REFERRING TO MODUS OPERANDI OF PE RSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH HIS EXEMPT FROM INCOME TAX. AL L THESE OBSERVATIONS ARE GENERAL IN NATURE AND ARE APPLIED ACROSS THE BOARD TO ALL THE 60,000 OR MORE ASSESSEES WHO FALL IN THIS CATEGORY. SPECIFIC EVIDENCESPRODUCED BY THE AS SESSEEARE NOT CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVIDENCE COLLECTED FROM THI RD PARTIES IS CONFRONTED TO THE ASSESSES. NO OPPORTUNITY OF CROSS-EXAMINATION OF PE RSONS, ON WHOSE STATEMENTS THE REVENUE RELIES TO MAKE THE ADDITION, IS PROVIDED TO THE ASSESSEE. THE ADDITION IS MADE BASED ON A REPORT FROM THE INVESTIGATION WING. 13. THE ISSUE FOR CONSIDERATION BEFORE US IS WHETHE R, IN SUCH CASES, THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUIDE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILITIES, HU MAN BEHAVIOR AND DISCOVERY OF THE MODUS OPERANDI ADOPTED IN EARNING ALLEGED BOGUS LTC G AND STCG, THAT HAVE SURFACED DURING INVESTIGATIONS, SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCLUSION AS TO WHETHER THE CLAIM IN GENUINE OR NOT. AN ALLEGED SCA M 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 EVE NTS AND THE LIVE LINK OF THE ASSESEES ACTION GIVING HER INVOLVEMENT IN THE SCAM SHOULD BE ESTABLISHED. THE ALLEGATION IMPLY THAT CASH WAS PAID BY THE ASSESSEE AND IN RETURN TH E ASSESSEE RECEIVED LTCG, WHICH IS INCOME EXEMPT FROM INCOME TAX, BY WAY OF CHEQUE THR OUGH BANKING CHANNELS. THIS ALLEGATION THAT CASH HAD CHANGED HANDS, HAS TO BE P ROVED WITH EVIDENCE, BY THE 13 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 13 REVENUE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIG ATIONS OFFICE BY WAY OF STATEMENTS RECORDED ETC. HAS TO ALSO BE BROUGHT ON RECORD IN E ACH CASE, WHEN SUCH A STATEMENT, EVIDENCE ETC. IS RELIED UPON BY THE REVENUE TO MAK E ANY ADDITIONS. OPPORTUNITY OF CROSS EXAMINATION HAS TO BE PROVIDED TO THE ASSESEE, IF T HE AO RELIES ON ANY STATEMENTS OR THIRD PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATERIAL OR EVIDENCE IS SOUGHT TO BE RELIED UPON BY THE AO, HE HAS TO CONFRONT THE ASSES SEE WITH SUCH MATERIAL. THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED BASED ON MERE CONJE CTURES UNVERIFIED BY EVIDENCE UNDER THE PRETENTIOUS GARB OF PREPONDERANCE OF HUMAN PROB ABILITIES AND THEORY OF HUMAN BEHAVIOR BY THE DEPARTMENT. 14. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THIRD PARTIES CANNOTBE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PUT BEFORE HIM AND HE IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CASE, THE AO RELIE S ONLY ON A REPORT AS THE BASIS FOR THE ADDITION. THE EVIDENCE BASED ON WHICH THE DDIT REPO RT IS PREPARED IS NOT BROUGHT ON RECORD BY THE AO NOR IS IT PUT BEFORE THE ASSESSEE. THE SUBMISSION OF THE ASSESSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RECEIVED SOME TI PS AND SHE CHOSE TO INVEST BASED ON THESE MARKET TIPS AND HAD TAKEN A CALCULATED RISK A ND HAD GAINED IN THE PROCESS AND THAT SHE IS NOT PARTYTO THE SCAM ETC., HAS TO BE CO NTROVERTED 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 INVESTIG ATION WING 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. 15.IN OUR VIEW, JUST THE MODUS OPERANDI, GENERALIZA TION, PREPONDERANCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTIN G THE CLAIM OF THE ASSESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CONTROVER T THE VALIDITY AND CORRECTNESS OF THE DOCUMENTARY EVIDENCES PRODUCED, THE SAME CANNOT BE REJECTED BY THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF OMAR SALAV MOH AMED SAIT REPORTED IN (1959) 37 ITR 151 (S C) HAD HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF SURMISES, SUSPICION AND CONJECTURES. IN THE CASE OF CIT(CENTRAL), KOLKA TA VS. DAULAT RAM RAWATMULL 14 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 14 REPORTED IN 87 ITR 349, THE HON'BLE SUPREME COURT H ELD THAT, THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO. THE BURDEN OF PROVING A TRANSACTION TO BE BOGUS HAS TO BE STRICTLY DISCHARG ED BY ADDUCING LEGAL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNERRINGLY AND REASONABLY RAISING AN INTERFERENCE TO THAT EFFE CT. THE HON'BLE SUPREME COURT IN THE CASE OF UMACHARAN SHAH & BROS. VS. CIT 37 ITR 271 H ELD THAT SUSPICION HOWEVER STRONG, CANNOT TAKE THE PLACE OF EVIDENCE. IN THIS CONNECTION WE REFER TO THE GENERAL VIEW ON THE TOPIC OF CONVEYANCE OF IMMOVABLE PROPE RTIES. THE RATES/SALE PRICE ARE AT VARIANCE WITH THE CIRCLE RATES FIXED BY THE REGISTR ATION AUTHORITIES OF THE GOVERNMENT IN MOST CASES AND THE GENERAL IMPRESSION IS THAT CASH WOULD HAVE CHANGED HANDS. THE COURTS HAVE LAID DOWN THAT JUDICIAL NOTICE OF SUCH NOTORIOUS FACTS CANNOT BE TAKEN BASED ON GENERALIZATIONS. COURTS OF LAW ARE BOUND TO GO B Y EVIDENCE. 16. WE FIND THAT THE ASSESSING OFFICER AS WELL AS THE L D. CIT(A) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESP ECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER, WE DO NOT FIND THAT THE ASSE SSING OFFICER AS WELL AS THE LD. CIT(A), HAVE BROUGHT OUT ANY PART OF THE INVESTIGAT ION WING REPORT IN WHICH THE ASSESSEE HAS BEEN INVESTIGATED AND /OR FOUND TO BE A PART OF ANY ARRANGEMENT FOR THE PURPOSE OF GENERATING BOGUS LONG TERM CAPITAL GAINS . NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PERSONS INVESTIGATED, INCLU DING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASSESSEE WAS IN COLLUS ION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LINK THEIR WRONG DOIN GS WITH THE ASSESSEE. IN FACT, THE INVESTIGATION WING IS A SEPARATE DEPARTMENT WHICH H AS 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 OF THE I NVESTIGATION 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 EVIDENC ES THE MATTER SHOULD BE SENT TO THE ASSESSMENT WING TO ASSESS THE INCOME AS PER LAW. WE FIND NO SUCH ACTION EXECUTED BY INVESTIGATION WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALLY AGAINST THE ASSESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUILTY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATE D. IN THIS CASE, IN OUR VIEW, THE 15 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 15 ASSESSING OFFICER AT BEST COULD HAVE CONSIDERED THE INVESTIGATION REPORT AS A STARTING POINT OF INVESTIGATION. THE REPORT ONLY INFORMED TH E ASSESSING OFFICER THAT SOME PERSONS MAY HAVE MISUSED THE SCRIPT FOR THE PURPOSE OF COLL USIVE TRANSACTION. THE ASSESSING OFFICER WAS DUTY BOUND TO MAKE INQUIRY FROM ALL CON CERNED PARTIES RELATING TO THE TRANSACTION AND THEN TO COLLECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. WE, HOWE VER, FIND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THA T THE TRANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHERWISE SUPPORTED BY PROPER TH IRD PARTY DOCUMENTS ARE COLLUSIVE TRANSACTIONS. 17. THE HONBLE SUPREME COURT WAY BACK IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT [1959] 37 ITR 288 (SC) HELD THAT ASSESSMENT COULD NOT BE BASED ON BACKGROUND OF SUSPICION AND IN ABSENCE OF ANY EVIDENCE TO SUPP ORT THE SAME. THE HONBLE COURT HELD: ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGH ED WITH THE INCOME-TAX OFFICER WE MAY OBSERVE THAT THE NOTORIETY FOR SMUGGLING FOOD G RAINS AND OTHER COMMODITIES TO BENGAL BY COUNTRY BOATS ACQUIRED BY SAHIBGUNJ AND T HE NOTORIETY ACHIEVED BY DHULIAN AS A GREAT RECEIVING CENTRE FOR SUCH COMMODITIES WE RE MERELY A BACKGROUND OF SUSPICION AND THE APPELLANT COULD NOT BE TARRED WIT H THE SAME BRUSH AS EVERY ARHATDAR AND GRAIN MERCHANT WHO MIGHT HAVE BEEN INDULGING IN SMUGGLING OPERATIONS, WITHOUT AN IOTA OF EVIDENCE IN THAT BEHALF. THE CANCELLATIO N OF THE FOOD GRAIN LICENCE AT NAWGACHIA AND THE PROSECUTION OF THE APPELLANT UNDE R THE DEFENCE OF INDIA RULES WAS ALSO OF NO CONSEQUENCE INASMUCH AS THE APPELLANT WA S ACQUITTED OF THE OFFENCE WITH WHICH IT HAD BEEN CHARGED AND ITS LICENCE ALSO WAS RESTORED. THE MERE POSSIBILITY OF THE APPELLANT EARNING CONSIDERABLE AMOUNTS IN THE YEAR UNDER CONSIDERATION WAS A PURE CONJECTURE ON THE PART OF THE INCOME-TAX OFFICER AN D THE FACT THAT THE APPELLANT INDULGED IN SPECULATION (IN KALAI ACCOUNT) COULD NOT LEGITIM ATELY LEAD TO THE INFERENCE THAT THE PROFIT IN A SINGLE TRANSACTION OR IN A CHAIN OF TRA NSACTIONS COULD EXCEED THE AMOUNTS, INVOLVED IN THE HIGH DENOMINATION NOTES,---THIS ALS O WAS A PURE CONJECTURE OR SURMISE ON THE PART OF THE INCOME-TAX OFFICER. AS REGARDS T HE DISCLOSED VOLUME OF BUSINESS IN THE YEAR UNDER CONSIDERATION IN THE HEAD OFFICE AND IN BRANCHES THE INCOME-TAX OFFICER INDULGED IN SPECULATION WHEN HE TALKED OF THE POSSI BILITY OF THE APPELLANT EARNING A 16 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 16 CONSIDERABLE SUM AS AGAINST WHICH IT SHOWED A NET L OSS OF ABOUT RS. 45,000. THE INCOME-TAX OFFICER INDICATED THE PROBABLE SOURCE OR SOURCES FROM WHICH THE APPELLANT COULD HAVE EARNED A LARGE AMOUNT IN THE SUM OF RS. 2,91,000 BUT THE CONCLUSION WHICH HE ARRIVED AT IN REGARD TO THE APPELLANT HAVING EAR NED THIS LARGE AMOUNT DURING THE YEAR AND WHICH ACCORDING TO HIM REPRESENTED THE SEC RETED PROFITS OF THE APPELLANT IN ITS BUSINESS WAS THE RESULT OF PURE CONJECTURES AND SUR MISES ON HIS PART AND HAD NO FOUNDATION IN FACT AND WAS NOT PROVED AGAINST THE A PPELLANT ON THE RECORD OF THE PROCEEDINGS. IF THE CONCLUSION OF THE INCOME-TAX OF FICER WAS THUS EITHER PERVERSE OR VITIATED BY SUSPICIONS, CONJECTURES OR SURMISES, TH E FINDING OF THE TRIBUNAL WAS EQUALLY PERVERSE OR VITIATED IF THE TRIBUNAL TOOK COUNT OF ALL THESE PROBABILITIES AND WITHOUT ANY RHYME OR REASON AND MERELY BY A RULE OF THUMB, AS I T WERE, CAME TO THE CONCLUSION THAT THE POSSESSION OF 150 HIGH DENOMINATION NOTES OF RS . 1,000 EACH WAS SATISFACTORILY EXPLAINED BY THE APPELLANT BUT NOT THAT OF THE BALA NCE OF 141 HIGH DENOMINATION NOTES OF RS. 1,000 EACH. THE OBSERVATIONS OF THE HONBLE APEX COURT ARE EQUA LLY APPLICABLE TO THE CASE OF THE ASSESSEE. IN OUR VIEW, THE ASSESSING OFFICER HAVING FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE TRANSACTION OF THE ASSES SEE WAS A COLLUSIVE TRANSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE AS SESSEE. IN FACT, IN THIS CASE NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT EVIDENCES OR MATERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BEING INVESTIGATED BY VARIOUS WINGS OF THE INCOME TAX DEPARTMENT HENCE IN OUR VIEW UNDER THESE CIRCUMSTAN CES NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE. 18. WE NOW CONSIDER THE VARIOUS PROPOSITIONS OF LAW LAID DOWN BY THE COURTS OF LAW. THAT CROSS-EXAMINATION IS ONE PART OF THE PRINCIPLE S OFNATURAL JUSTICE HAS BEEN LAID DOWN IN THE FOLLOWING JUDGMENTS: A) AYAAUBKHAN NOORKHAN PATHAN VS. THE STATE OF MAHA RASHTRA AND ORS. 23. A CONSTITUTION BENCH OF THIS COURT IN STATE OF M.P. V. CHINTAMAN SADASHIVA VAISHAMPAYAN AIR 1961 SC1623, HELD THAT T HE RULES OF NATURAL JUSTICE, REQUIRE THAT A PARTY MUST BE GIVEN THE OP PORTUNITY TO ADDUCE ALL RELEVANT EVIDENCE UPON WHICH HE RELIES, AND FURTHER THAT, THE EVIDENCE OF THE OPPOSITE PARTY SHOULD BETAKEN IN HIS PRESENCE, AND THAT HE SHOULD BE GIVEN THE OPPORTUNITY OF CROSS-EXAMINING THE WITNESSES EXAMIN ED BY THAT PARTY. NOT PROVIDING THE SAID OPPORTUNITY TO CROSS-EXAMINE WIT NESSES, WOULD VIOLATE THE PRINCIPLES OF NATURAL JUSTICE. (SEE ALSO: UNION OF INDIA V. T.R. VARMA, AIR 1957 SC 882; MEENGLAS TEA ESTATE V. WORKMEN, AIR 1963 SC 1719; M/S. KESORAM COTTON MILLS LTD. V. GANGADHAR AND ORS. ,AIR 1964 S C708; NEW INDIA ASSURANCE CO. LTD. V. NUSLI NEVILLEWADIA AND ANR. A IR 2008 SC 876; RACHPAL 17 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 17 SINGH AND ORS. V. GURMIT SINGH AND ORS. AIR 2009 SC 2448;BIECCO LAWRIE AND ANR. V. STATE OF WEST BENGAL AND ANR. AIR 2010 SC 1 42; AND STATE OF UTTAR PRADESH V. SAROJ KUMAR SINHA AIR 2010 SC 3131). 24. IN LAKSHMAN EXPORTS LTD. V. COLLECTOR OF CENTRA L EXCISE (2005) 10 SCC 634, THIS COURT, WHILE DEALING WITH A CASE UNDER TH E CENTRAL EXCISE ACT, 1944,CONSIDERED A SIMILAR ISSUE I.E. PERMISSION WIT H RESPECT TO THE CROSS- EXAMINATION OF A WITNESS. IN THE SAID CASE, THE ASS ESSEE HAD SPECIFICALLY ASKED TO BE ALLOWED TO CROSS-EXAMINE THE REPRESENTATIVES OF THE FIRMS CONCERN, TO ESTABLISH THAT THE GOODS IN QUESTION HAD BEEN ACCOU NTED FOR IN THEIR BOOKS OF ACCOUNTS, AND THAT EXCISE DUTY HAD BEEN PAID. THE C OURT HELD THAT SUCH A REQUEST COULD NOT BE TURNED DOWN, AS THE DENIAL OF THE RIGHT TO CROSS-EXAMINE, WOULD AMOUNT TO A DENIAL OF THE RIGHT TO BE HEARD I .E. AUDI ALTERAM PARTEM. 28. THE MEANING OF PROVIDING A REASONABLE OPPORTUNI TY TO SHOW CAUSE AGAINST AN ACTION PROPOSED TO BE TAKEN BY THE GOVERNMENT, I S THAT THE GOVERNMENT SERVANT IS AFFORDED A REASONABLE OPPORTUNITY TO DEF END HIMSELF AGAINST THE CHARGES, ON THE BASIS OF WHICH AN INQUIRY IS HELD. THE GOVERNMENT SERVANT SHOULD BE GIVEN AN OPPORTUNITY TO DENY HIS GUILT AN D ESTABLISH HIS INNOCENCE. HE CAN DO SO ONLY WHEN HE IS TOLD WHAT THE CHARGES AGA INST HIM ARE. HE CAN THEREFORE, DO SO BY CROSS-EXAMINING THE WITNESSES P RODUCED AGAINST HIM. THE OBJECT OF SUPPLYING STATEMENTS IS THAT, THE GOVERNM ENT SERVANT WILL BE ABLE TO REFER TO THE PREVIOUS STATEMENTS OF THE WITNESSES P ROPOSED TO BE EXAMINED AGAINST HIM. UNLESS THE SAID STATEMENTS ARE PROVIDE D TO THE GOVERNMENT SERVANT, HE WILL NOT BE ABLE TO CONDUCT AN EFFECTIV E AND USEFUL CROSS- EXAMINATION. 29. IN RAJIV ARORA V. UNION OF INDIA AND ORS. AIR 2 009SC 1100, THIS COURT HELD: EFFECTIVE CROSS-EXAMINATION COULD HAVE BEEN D ONE AS REGARDS THE CORRECTNESS OR OTHERWISE OF THE REPORT, IF THE CONT ENTS OF THEM WERE PROVED. THE PRINCIPLES ANALOGOUS TO THE PROVISIONS OF THE INDIA N EVIDENCE ACT AS ALSO THE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT THE MAKER OF THE REPORT SHOULD BE EXAMINED, SAVE AND EXCEPT IN CASES WHERE THE FACTS ARE ADMITTED OR THE WITNESSES ARE NOT AVAILABLE FOR CROSS-EXAMINATION O R SIMILAR SITUATION. THE HIGH COURT IN ITS IMPUGNED JUDGMENT PROCEEDED TO CO NSIDER THE ISSUE ON A TECHNICAL PLEA, NAMELY, NO PREJUDICE HAS BEEN CAUSE D TO THE APPELLANT BY SUCH NON-EXAMINATION. IF THE BASIC PRINCIPLES OF LAW HAV E NOT BEEN COMPLIED WITH OR THERE HAS BEEN A GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE HIGH COURT SHOULD HAVE EXERCISED ITS JURISDICTION OF JUD ICIAL REVIEW. 30. THE AFORESAID DISCUSSION MAKES IT EVIDENT THAT, NOT ONLY SHOULD THE OPPORTUNITY OF CROSS-EXAMINATION BE MADE AVAILABLE, BUT IT SHOULD BE ONE OF EFFECTIVE CROSS-EXAMINATION, SO AS TO MEET THE REQU IREMENT OF THE PRINCIPLES OF NATURAL JUSTICE. IN THE ABSENCE OF SUCH AN OPPORTUN ITY, IT CANNOT BE HELD THAT THE MATTER HAS BEEN DECIDED IN ACCORDANCE WITH LAW, AS CROSS-EXAMINATION IS AN INTEGRAL PART AND PARCEL OF THE PRINCIPLES OF NATUR AL JUSTICE. B) ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF C. EX., KOLKATA-II WHEREIN IT WAS HELD THAT: 18 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 18 4. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, AND MR. K. RADHAKRISHNAN, LEARNED SENIOR COUNSEL WHO APPEARED FOR THE REVENUE. 5. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW W HICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEM ENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DIS PUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAV E BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT T HEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS N OT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WA NTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FR OM THEM. 6. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPO N THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID D EALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD B E THE SUBJECT MATTER OF CROSS- EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICA TING AUTHORITY TO PRESUPPOSE EAS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROS S-EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT T HAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APP EAL NO. 2216 OF 2000, ORDER DATED 17-3-2005[2005 (187) E.L.T. A33 (S.C.)] WAS P ASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. 7. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THETESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WIT H THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEM ENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CA USE NOTICE. 19 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 19 19. ON SIMILAR FACTS WHERE THE REVENUE HAS ALLEGED THAT THE ASSESSEE HAS DECLARED BOGUS LTCG, IT WAS HELD AS FOLLOWS: A) THE CALCUTT AHIGH COURT IN THE CASE OF BLBCABLES & CONDUCTORS [ITA NO. 78 OF2017] DATED19.06.2018. THE HIGH COURT HELD VIDE PARA 4.1: WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER H AS 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 CANNOT BE PROVED WITH THE SUPPORTIVE E VIDENCE. HERE IN THE CASE THE TRANSACTIONS OF THE COMMODITY EXCHANGED HA VE NOT ONLY BEEN EXPLAINED BUT ALSO SUBSTANTIATED FROM THE CONFIRMAT ION OF THE PARTY. BOTH THE PARTIES ARE CONFIRMING THE TRANSACTIONS WHICH H AVE BEEN DULY SUPPORTED WITH THE BOOKS OF ACCOUNTS AND BANK TRANS ACTIONS. THE LD. AR HAS ALSO SUBMITTED THE BOARD RESOLUTION FOR THE TRA DING OF COMMODITY TRANSACTION. THE BROKER WAS EXPELLED FROM THE COMMO DITY EXCHANGE CANNOT BE THE CRITERIA TO HOLD THE TRANSACTION AS B OGUS. IN VIEW OF ABOVE, WE REVERSE THE ORDER OF THE LOWER AUTHORITIES AND A LLOW THE COMMON GROUNDS OF ASSESSEES APPEAL. [QUOTED VERBATIM] THIS IS ESSENTIALLY A FINDING OF THE TRIBUNAL ON FA CT. NO MATERIAL HAS BEEN SHOWN TO US WHO WOULD NEGATE THE TRIBUNALS FINDIN G THAT OFF MARKET TRANSACTIONS ARE NOT PROHIBITED. AS REGARDS VERACIT Y OF THE TRANSACTIONS, THE TRIBUNAL HAS COME TO ITS CONCLUSION ON ANALYSIS OF RELEVANT MATERIALS. THAT BEING THE POSITION, TRIBUNAL HAVING ANALYZED T HE SET OFF ACTS IN COMING TO ITS FINDING, WE DO NOT THINK THERE IS ANY SCOPE OF INTERFERENCE WITH THE ORDER OF THE TRIBUNAL IN EXERCISE OF OUR J URISDICTION UNDER SECTION 260A OF THE INCOME TAX ACT, 1961. NO SUBSTA NTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL AND THE STAY PETITION, ACCORDINGLY, SHALL STAND DISMISSED. B) THE JAIPURITAT IN THE CASE OF VIVEK AGARWAL [ITA NO.292/JP/2017]ORDER DATED 06.04.2018 HELD AS UNDER VIDE PAGE 9 PARA 3: WE HOLD THAT THE ADDITION MADE BY THE AO IS MERELY BASED ON SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO CONTROVERT THE EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF THE CLAIM. FURTHER, THE AO H AS ALSO FAILED TO ESTABLISH THAT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNTED INCOM E IN THE SHAPE OF LONG TERM CAPITAL GAIN. HENCE WE DELETE THE ADDITION MADE BY THE AO ON THIS ACCOUNT. C)THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PREMPAL GANDHI [ITA-95-2017(O&M)] DATED18.01.2018 AT VIDE PAGE 3 P ARA 4 HELD AS UNDER: 20 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 20 .. THE ASSESSING OFFICER IN BOTH THE CASES ADDED THE APPRECIATION TO THE ASSESSEES INCOME ON THE SUSPICION THAT THESE WERE FICTITIOUS TRANSACTIONS AND THAT THE APPRECIATION ACTUALLY REPRESENTED THE ASSE SSEES INCOME FROM UNDISCLOSED SOURCES. IN ITA-18-2017 ALSO THE CIT (A PPEALS) AND THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT PRODUCED AN Y EVIDENCE WHATSOEVER IN SUPPORT OF THE SUSPICION. ON THE OTHER HAND, ALTHOU GH THE APPRECIATION IS VERY HIGH, THE SHARES WERE TRADED ON THE NATIONAL STOCK EXCHANGE AND THE PAYMENTS AND RECEIPTS WERE ROUTED THROUGH THE BANK. THERE WA S NO EVIDENCE TO INDICATE FOR INSTANCE THAT THIS WAS A CLOSELY HELD COMPANY A ND THAT THE TRADING ON THE NATIONAL STOCK EXCHANGE WAS MANIPULATED IN ANY MANN ER. THE COURT ALSO HELD THE FOLLOWING VIDE PAGE 3 PARA 5 THE FOLLOWING: QUESTION (IV) HAS BEEN DEALT WITH IN DETAIL BY THE CIT (APPEALS) AND THE TRIBUNAL. FIRSTLY, THE DOCUMENTS ON WHICH THE ASSES SING OFFICER RELIED UPON IN THE APPEAL WERE NOT PUT TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE CIT (APPEALS) NEVERTHELESS CONSIDERED THEM IN DETAI L AND FOUND THAT THERE WAS NO CO-RELATION BETWEEN THE AMOUNTS SOUGHT TO BE ADD ED AND THE ENTRIES IN THOSE DOCUMENTS. THIS WAS ON AN APPRECIATION OF FACTS. TH ERE IS NOTHING TO INDICATE THAT THE SAME WAS PERVERSE OR IRRATIONAL. ACCORDING LY, NO QUESTION OF LAW ARISES. D) THE BENCH DOF KOLKATA ITAT IN THE CASE OF GAUT AM PINCHA [ITA NO.569/KOL/2017] ORDER DATED 15.11.2017 HELD AS UND ER VIDE PAGE 12 PARA 8.1: IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I TO XI V) IN PARA 6(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICAT E THE ASSESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LE GS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CON TROVERT THE FACTS SUPPORTED WITH MATERIAL EVIDENCES WHICH ARE ON RECORD AND COU LD ONLY RELY ON THE ORDERS OF THE AO/CIT (A). WE NOTE THAT IN THE ABSENCE OF M ATERIAL/EVIDENCE THE ALLEGATIONS THAT THE ASSESSEE /BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE ALSO FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENU INENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTI NG IN LONG TERM CAPITAL GAIN. THESE EVIDENCES WERE NEITHER FOUND BY THE AO NOR BY THE LD. CIT (A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND T HE 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 THAT INCOME FROM LTCG IS EXEMPTED U/S 10(38) OF THE ACT. FURTHER IN PAGE 15 PARA 8.5 OF THE JUDGMENT, IT HEL D: 21 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 21 WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALR EADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED BY US TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRIN G TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT (A) /AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHAR ES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE, THEREFORE, DIRE CT THE AO TO DELETE THE ADDITION. E) THE BENCH D OF KOLKATA ITAT IN THE CASE OF KI RAN KOTHARI HUF [ITA NO. 443/KOL/2017] ORDER DATED 15.11.2017 HELD VIDE PARA 9.3 HELD AS UNDER: .. WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE M ATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANT ED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERE D OPINION HAS NO LEGS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS WHICH ARE SUPPORTED WITH MATERIAL EVIDENC ES FURNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDE RS OF THE AO/CIT(A). WE NOTE THAT THE ALLEGATIONS THAT THE ASSESSE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE CONSE QUENTLY FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL 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. 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 T HE ASSESSEE EXEMPTED U/S 10(38) OF THE ACT ON THE BASIS OF SUSPICION, SURMIS ES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRONG, CAN NOT PARTAKE THE CHARACTER OF LEGAL EVIDENCE. IT FURTHER HELD AS FOLLOWS: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALR EADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR N OTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHAR ES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. 22 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 22 F) THE BENCH AOF KOLKATAITAT IN THE CASE OF SHAL EEN KHEMANI [ITA NO.1945/KOL/2014]ORDER DATED 18.10.2017 HELD AS UND ER VIDE PAGE 24 PARA 9.3: WE THEREFORE HOLD THAT THERE IS ABSOLUTELY NO ADVE RSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGAT IONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINI ON, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR COULD NOT C ONTROVERT THE ARGUMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AN D MERELY RELIED ON THE ORDERS OF THE LD AO. WE FIND THAT THE ALLEGATION TH AT THE ASSESSEE AND / OR BROKERS GETTING INVOLVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE FURNISHED ALL EV IDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BANK ACCOU NTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO PURCHAS E AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEITHER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THEREFORE TH E LD AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER S ECTION 10(38) OF THE ACT. G) THE BENCH HOF MUMBAI ITAT IN THE CASE OF ARVI ND KUMAR JAIN HUF [ITA NO.4682/MUM/2014]ORDER DATED 18.09.2017 HELD A S UNDER VIDE PAGE 6 PARA 8: WE FOUND THAT AS FAR AS INITIATION OF INVESTIGAT ION OF BROKER IS CONCERNED, THE ASSESSEE IS NO WAY CONCERNED WITH THE ACTIVITY OF THE BROKER. DETAILED FINDING HAS BEEN RECORDED BY CIT (A) TO THE EFFECT THAT ASS ESSEE HAS MADE INVESTMENT IN SHARES WHICH WAS PURCHASED ON THE FLOOR OF STOCK EX CHANGE AND NOT FROM M/S BASANT PERIWAL AND CO. AGAINST PURCHASES PAYMENT HA S BEEN MADE BY ACCOUNT PAYEE CHEQUE, DELIVERY OF SHARES WERE TAKEN, CONTRA CT OF SALE WAS ALSO COMPLETE AS PER THE CONTRACT ACT, THEREFORE, THE ASSESSEE IS NOT CONCERNED WITH ANY WAY OF THE BROKER. NOWHERE THE AO HAS ALLEGED THAT THE TRA NSACTION BY THE ASSESSEE WITH THESE PARTICULAR BROKER OR SHARE WAS BOGUS, ME RELY BECAUSE THE INVESTIGATION WAS DONE BY SEBI AGAINST BROKER OR HI S ACTIVITY, ASSESSEE CANNOT BE SAID TO HAVE ENTERED INTO INGENUINE TRANSACTION, INSOFAR AS ASSESSEE IS NOT CONCERNED WITH THE ACTIVITY OF THE BROKER AND HAVE NO CONTROL OVER THE SAME. WE FOUND THAT M/S BASANT PERIWAL AND CO. NEVER STATED ANY OF THE AUTHORITY THAT TRANSACTIONS IN M/S RAMKRISHNA FINCAP PVT. LTD. ON THE FLOOR OF THE STOCK EXCHANGE ARE INGENUINE OR MERE ACCOMMODATION ENTRIE S. THE CIT (A) AFTER RELYING ON THE VARIOUS DECISION OF THE COORDINATE B ENCH, WHEREIN ON SIMILAR FACTS AND CIRCUMSTANCES, ISSUE WAS DECIDED IN FAVOUR OF T HE ASSESSEE, CAME TO THE CONCLUSION THAT TRANSACTION ENTERED BY THE ASSESSEE WAS GENUINE. DETAILED FINDING RECORDED BY CIT (A) AT PARA 3 TO 5 HAS NOT BEEN CONTROVERTED BY THE 23 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 23 DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON REC ORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF CIT (A). H)THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VIVEK MEHTA[ITA NO. 894 OF 2010] ORDER DATED 14.11.2011 VIDE PAGE 2 PARA 3 HELD AS UNDER: ON THE BASIS OF THE DOCUMENTS PRODUCED BY THE ASSE SSEE IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEAL) RECORDED A FIND ING OF FACT THAT THERE WAS A GENUINE TRANSACTION OF PURCHASE OF SHARES BY THE ASSESSEE ON 16.3.2001 AND SALE THEREOF ON 21.3.2002. THE TRANSACTIONS OF SALE AND PURCHASE WERE AS PER THE VALUATION PREVALENT IN THE STOCKS EXCHANGE. SUCH FI NDING OF FACT HAS BEEN RECORDED ON THE BASIS OF EVIDENCE PRODUCED ON RECOR D. THE TRIBUNAL HAS AFFIRMED SUCH FINDING. SUCH FINDING OF FACT IS SOUG HT TO BE DISPUTED IN THE PRESENT APPEAL. WE DO NOT FIND THAT THE FINDING OF FACT REC ORDED BY THE COMMISSIONER OF INCOME TAX IN APPEAL, GIVES GIVE RISE TO ANY QUESTI ON(S) OF LAW AS SOUGHT TO BE RAISED IN THE PRESENT APPEAL. HENCE, THE PRESENT AP PEAL IS DISMISSED. I) THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT I N THE CASE OF CIT VS. BHAGWATI PRASAD AGARWAL IN I.T.A. NO. 22/KOL/2009 DATED 29.0 4.2009 AT PARA 2 HELD AS FOLLOWS: THE TRIBUNAL FOUND THAT THE CHAIN OF TRANSACTION E NTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUP PORTED BY EVIDENCE. THE ASSESSEE PRODUCED BEFORE THE COMMISSIONER OF INCOME TAX(APPEAL) THE CONTRACT NOTES, DETAILS OF HIS DEMAT ACCOUNT AND, A LSO, PRODUCED DOCUMENTS SHOWING THAT ALL PAYMENTS WERE RECEIVED BY THE ASS ESSEE THROUGH BANK. J) THE HONBLE SUPREME COURT IN THE CASE OF PCIT VS . TEJU ROHITKUMAR KAPADIA ORDER DATED 04.05.2018 UPHELD THE FOLLOWING PROPOSITION O F LAW LAID DOWN BY THE HONBLE GUJRAT HIGH COURT AS UNDER: IT CAN THUS BE SEEN THAT THE APPELLATE AUTHORITY A S WELL AS THE TRIBUNAL CAME TO CONCURRENT CONCLUSION THAT THE PURCHASES ALREADY MA DE BY THE ASSESSEE FROM RAJ IMPEX WERE DULY SUPPORTED BY BILLS AND PAYMENTS WER E MADE BY ACCOUNT PAYEE CHEQUE. RAJ IMPACTS ALSO CONFIRMED THE TRANSACTIONS . THERE WAS NO EVIDENCE TO SHOW THAT THE AMOUNT WAS RECYCLED BACK TO THE ASSES SEE. PARTICULARLY, WHEN IT WAS FOUND THAT THE ASSESSEE THE TRADER HAD ALSO SHO WN SALES OUT OF PURCHASES MADE FROM RAJ IMPEX WHICH WERE ALSO ACCEPTED BY THE REVENUE, NO QUESTION OF LAW ARISES. 20. APPLYING THE PROPOSITION OF LAW AS LAID DOWN IN THE ABOVE-MENTIONED JUDGMENTS TO THE FACTS OF THIS CASE WE ARE BOUND TO CONSIDER AND RELY ON THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM AND BASE OUR D ECISION ON SUCH EVIDENCE AND NOT ON SUSPICION OR PREPONDERANCE OF PROBABILITIES. NO MAT ERIAL WAS BROUGHT ON RECORD BY THE 24 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 24 AO TO CONTROVERT THE EVIDENCE FURNISHED BY THE ASSE SSEE. UNDER THESE CIRCUMSTANCES, WE ACCEPT THE EVIDENCE FILED BY THE ASSESSEE AND AL LOW THE CLAIM THAT THE INCOME IN QUESTION IS A BONA FIDE LONG TERM CAPITAL GAIN ARIS ING FROM THE SALE OF SHARES AND HENCE EXEMPT FROM INCOME TAX. 21.UNDER THE CIRCUMSTANCES AND IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE CONTENTIONS OF THE ASSESSEE AND DELETE THE ADDITION IN QUESTION. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7.6. IN VIEW OF THE AFORESAID OBSERVATIONS AND RESP ECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE DIRECT THE L D AO TO DELETE THE ADDITION MADE U/S 68 OF THE ACT IN RESPECT OF SALE CONSIDERATION OF S ALE OF SHARES AND THE CORRESPONDING ADDITION TOWARDS COMMISSION INCOME. ACCORDINGLY, TH E GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED IN ALL THE APPEALS HEREIN BEFORE US. 8. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN THE COURT ON 16.10.2018 SD/- SD/- [A.T.VARKEY] [ M. BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 16.10.2018 SB, SR. PS 25 ITA NOS.2358, 2287 & 2280/KOL/2017 NAVNEET AGARWAL (HUF) AND ORS. A.YR. 2014-15 25 COPY OF THE ORDER FORWARDED TO: 1. I) SHRI NAVNEET AGARWAL (HUF) II) SHRI BISHWANATH AGARWAL & SONS (HUF) III) SHRI BISWANATH AGARWAL C/O, SUBASH AGARWAL & ASSOCIATES, SIDHA GIBSON, 1, GIBSON LANE, 2 ND FLOOR, SUITE- 213, KOLKATA-700069. 2. I) ITO, WARD-35(2), KOLKATA II) ITO, WARD-34(1),KOLKATA AAYAKAR BHAWAN,(POORVA), 110, SHANTIPALLY, KOLK ATA-700107. 3..C.I.T(A).- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S
