KAMAL SINGH KUNDALIA, SILIGURI V. I.T.O., WARD - 1(4), SILIGURI, SILIGURI

ITA 2359/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6423 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 21-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Assessee Lawyers: DHIRAJ LAKHOTIA
• Keywords: Unexplained cash credit; Bogus Share capital; Share purchase agreement; Question of law; Penny stocks
• Section: 143(3); 68

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 2359 / KOL / 20 17 ASSESSMENT YEAR :2014-15 KAMAL SINIGH KUNDALIA C/O PRADIP LAKHOTIA, 2 ND FLOOR, METRO PLAZA, SF ROAD, SILIGURI-734005 [ PAN NO.AKUPK 1029 R ] V/S . INCOME TAX OFFICER, WARD-1(4), AAYAKAR BHAWANA, MATIGARA, SILIGURI-734010 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI DHIRAJ LAKHOTIA, AR /BY RESPONDENT SHRI ROBIN CHOUDHURY, ADDL-CIT-DR /DATE OF HEARING 07-02-2019 /DATE OF PRONOUNCEMENT 08-05-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL ARISES AGAINST THE COMMISSIO NER OF INCOME TAX (APPEALS)-SILIGURIS ORDER DATED 29.08.2017 PASSED IN CASE NO.49/CIT(A)/SLG/2016-17, INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. THE ASSESSEES DETAILED PAP ER BOOK COMPRISING OF BANK STATEMENT (FOR THE PERIOD OF 01.04.2011 TO 31.03.2012), SHARE CERTIFICATE IN THIS TAXPAYERS NAME DATED 31.12.201 1, ALLOTMENT LETTER OF 15,000 SHARES OF CRESSANDA SOLUTIONS AFTER DUE APPR OVAL OF HON'BLE BOMBAY HIGH COURT DATED 21.02.2013, SHOW-CAUSE NOTI CE, DEMAT ACCOUNT WITH THE BROKER FIRM AND CONTRACT NOTES ETC .; STANDS PERUSED. ITA NO.2359/KOL/2017 A.Y 2014-15 KAMAL SINGH KUNDALIA VS. ITO WD-1(4), SLG. PAGE 2 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE CHALLE NGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION TREATING ITS LON G TERM CAPITAL GAINS (LTCG) AMOUNTING TO 76,68,565/- ARISING FROM SALE OF SHARES AFTER PAYME NT OF SECURITY TRANSACTIONS TAX (STT); AS BOGUS UNEXPLAIN ED CASH CREDITS U/S 68 OF THE ACT. THE CIT(A)S DETAILED DISCUSSIONS TO THIS EFFECT READS AS UNDER:- PERUSAL OF FACT SHOWS THAT THE ASSESSEE IS NOT REGU LAR INVESTOR IN SHARES. THE SHARES WERE PURCHASED ON ONE SINGLE DAY OF 17.02.2014 AND WERE SOLD ON 14.03.2014. THE APPELLANT EARNED A PHENOMENAL RETURN OF 50 TIMES WI THIN A SHORT SPAN OF PERIOD WHICH IS EXTREMELY UNUSUAL./ THE PASTE RECORDS OF THE ASS ESSEE FOR THE PRECEDING YEARS SHOW THAT THE ASSESSEE HAS BEEN NOT ACTIVE IN THE S TOCK MARKET. THE SHARES IN WHICH THE ASSESSEE HAS CLAIMED TO HAVE MADE A DEAL, ARE I DENTIFIED AS PENNY SHARES BY THE INVESTIGATION WING OF THE DEPARTMENT BECAUSE RA TES OF THESE SHARES ARE NOT BASED ON BUSINESS RESULTS OF THE COMPANIES BUT SOME ARE F LUCTUATED BY INSIDERS TRADING FROM ZERO VALUE ( NEGLIGIBLE PRICE ) TO VERY HIGH PRICE AND VICE VERSA WITHOUT ANY REASON OR BASIS TO ACCOMMODATE OR GENERATE BOGUS CA PITAL GAIN OR LOSS. THERE WAS SPECIFIC INFORMATION ABOUT THE SCRIPT FOR INDULGENC E IN NON-GENUINE & BOGUS CAPITAL GAIN ENTRY FROM THE TRANSACTIONS OF PURCHASE AND SA LE OF SHARES OF M/S CRESSANDA SOLUTIONS PVT. LTD. COMPANY FROM THE ABOVE FACTS, I T WAS OBSERVED BY THE AO THAT THE SO CALLED PURCHASE OF SHARES OF CRESSANDA SOLUT IONS PVT. LTD. ARE SHAM AND BOGUS. IT IS ALSO A MATTER OF RECORD THAT NO DETAIL HAS BE EN FILED BY THE APPELLANT TO ESTABLISH HIM AS A REGULAR INVESTOR. THE IN EXORBITANT INCREA SE OF PRICE IN THE SHARE WERE ALSO NOT SUPPORTED BY THE COMPANYS NET WORTH. BASICALLY IT WAS STRUCTURED TRANSACTIONS MADE IN ORDER TO BRING UNACCOUNTED MONEY INTO THE B OOKS WITHOUT PAYING ANY TAX UNDER THE GUISE OF LONG TERM CAPITAL GAIN. THOUGH D EALING IN PENNY STOCK IS NOT ILLEGAL BUT ONCE THE TRANSACTIONS ARE STRUCTURED AN D THE SAME ARE WITH MOTIVE TO DEFRAUD THE REVENUE UNDER THE COLOR OF BOGUS TRANSA CTIONS THEN THE SAME ARE SUBJECT TO BE TREATED AS SHAM AND COLOURABLE. IN THIS CASE, IT IS PERTINENT MENTION HERE THAT THE APPELLANT PURCHASED SHARE OF SMARTSCHAMPS IT A ND INFRA LIMITED OF RS.1,50,000/- WHICH SUBSEQUENTLY GOT MERGE TO M/S C RESSENDA SOLUTION PVT. LTD. PERUSAL OF THE FACT SHOWS THAT THE STATEMENT OF SH. NARENDRA JAIN AND SH. PANKAJ AGARWAL PROVIDED TO THE APPELLANT. THE APPELLANT HA S SIMPLY RELIED ON THE AGREEMENT THAT THE DUO HAVE NOT TAKEN THE NAME OF THE APPELLA NT FOR BOGUS ENTRY. THE AFORESAID ARGUMENT OF THE APPELLANT HAS NOT GIVE IN CREDENCE AS THE APPELLANT WAS NOT REGULARLY DEALING IN SHARES AND HE HAD SHOWN VERY MEAGER INCO ME FROM HIS BUSINESS. IT IS ALSO BEYOND HUMAN PROBABILITY THAT APPELLANT HAS EARNED ONLY PROFIT IN HIS SHARE TRANSACTIONS. DEALING AND NO LOSS HAS BEEN INCURRED BY THE APPELLANT IN THE CASE OF SHARE DEALING. THE HON'BLE SUPREME COURT IN THE CAS E OF CIT V.DURGA PRASAD MORE (1971) 82 ITR 540 (SC) HAS CATEGORICALLY HELD THAT THE REVENUE IS ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES, TO FIND OUT THE REAL ITY OF THE RECITALS MADE IN THE DOCUMENTS. THE RELEVANT OBSERVATIONS AND FINDINGS O F HON'BLE SUPREME COURT, IN THE MATTER OF DISCHARGE OF ON OF PROOF AND THE RELEVANCE OF SURROUNDING CIRCUMSTANCES OF THE CASE ARE THAT THOUGH AN APPELLANTS STATEME NT MUST BE CONSIDERED REAL UNIT IT WAS SHOWN THAT THERE WERE REASONS TO BELIEVE THAT T HE APPELLANT WAS NOT THE REAL, IN CA CASE WHERE THE PARTY RELIED ON SELF-SERVING RECI TALS IN RESPECT TO THE DOCUMENTS, IT WAS FOR THE PARTY TO ESTABLISH THE TRANSFER OF THOS E RECITALS, THE TAXING AUTHORITIES WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF SUCH RECITALS. SCIENCE HAS NOT YET INVENTED ANY INSTRUME NT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR TRIBUNAL. THEREFO RE, THE COURTS AND THE TRIBUNALS ITA NO.2359/KOL/2017 A.Y 2014-15 KAMAL SINGH KUNDALIA VS. ITO WD-1(4), SLG. PAGE 3 HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITY. HUMAN MINDS MAY DIFFER AS TO THE RELIABILITY OF PIE CE OF EVIDENCE, BUT, IN THE SPHERE, THE DECISION OF THE FINAL FACT FINDING AUTHORITY IS MADE CONCLUSIVE BY LAW. THE ABOVE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT HAS BE EN REITERATED AND APPLIED BY THE HON'BLE APEX COURT IN THE CASE OF SUMATI DAYAL V C IT 214 ITR 801 (SC). PERUSAL OF FACT SHOWS THAT THE PRICE OF SHARE OF M/ S CRESAANDA SOLUTION PVT. LTD. IN 2011-12 WAS RS.10/- AND AFTER THAT IT WAS SUBSTANTI ALLY INCREASED. NOW, AS ON DATE SEPTEMBER 2017 IT HAS COME TO THE PRICE OF RS.2.71/ - PER SHARE. AS ON DATE THE CREDENCE OF CRESANDA SOLUTION LTD. IS THAT ITS FACE VALUE OF SHARE REMAINS RS.1/- AVERAGE EQUITY IS (-) 1.43 AND PE RATIO IS (-) 0.16 , WHICH SHOWS THAT THE COMPANY HAS NO NET WORTH AS SUCH. RECENTLY, THE HONOURABLE ITAT KOLKATA HAS GIVEN DECISION CO BOGUS SHARE APPLICATION MONEY ON THE BASIS OF NE T WORTH AND TREATED IT AS BOGUS AND HELD THAT IF THE NET WORTH SHARE ARE NOT UP TO THE MARK THEN THERE IS NO BASIS FOR RECEIVING SHARE OF APPLICATION MONEY. ON SIMILAR LI NE OF ACTION, THE STRUCTURED TRANSACTIONS SHARE HAVE OF APPRECIATED IMAGINARY PR ICE, BUT THE NET WORTH OF THE COMPANY IS NEGATIVE WHICH SHOWS THAT IT IS NOTHING BUT BOGUS AND SAME TRANSACTIONS PARTICULARLY WHEN THE APPELLANT HAS NEVER DEALT WIT H SHARE. IN CASE OF SH. AVTAR SINGH, SIRSA VS DEPARTMENT OF INCOME TAX ON 8 NOVEMBER, 2012 IN THE INCOME TAX APPELALTE TRIBUNAL CHANDIGARH BEN CH A CHANDIGARH ITA NO. 948/CHD/2011 ASSESSMENT YEAR: 20 08-09 HAS HELD SUCH TRANSACTIONS AS STRUCTURE AND COLORABLE. THE GIST O F THE DECISION IS REPRODUCED AS UNDER:- IT IS THE DUTY OF THE COURT IN EVERY CASE, WHERE I NGENUINITY IS EXPENDED TO AVOID TAXING AND WELFARE LEGISLATION TO GET BEHIND THE SMOKE SCREEN AND DISCOVER THE TRUE STATE OF AFFAIRS. THE COURT IS NO T TO BE SATISFIED WITH FORM AND LEAVE ALONE THE SUBSTANCE OF THE TRANSACTIONS. THIS VIEW HAS BEEN UPHELD BY THE HON'BLE SUPREME COURT, IN WORKMAN OF ASSOCIATED RUBBER INDUSTRIES LTD. (1986) 157 ITR 77 (SC) AND IN ESS ESS KAY ENGG. CO (P) LTD. V CIT (1985) 15 ITR 636 (P&H). THE HON'BLE KERALA HIGH COURT IN ONAM AGARBATI CO. V DY.CIT (2009) 310 ITR 56 (KER) HAS HELD THAT THOUGH A TAXPAYER MAY RESORT TO A DEVICE TO DIVERT THE INCOME BEFORE IT ACCRUES TO HIM, THE EFFECTIVENESS OF ADVICE DEPENDS UPON ITS GENUINENESS. THE SUBSTANCE OF THE TRANSACTIONS HAS TO BE ASSESSED BY APPLYING THE TAXING STATUTE SO AS TO ASCERTAIN WHETHER IT IS A SHAM OR MAKE-BELIEVE TRANSACTIONS OR ONE WHICH IS GENUINE. 14. LEARNED. DR PLACED RELIANCE ON THE DECISION O F THE JURISDICTIONAL HIGH COURT IN THE CASE OF SOMNATH MAINI V CIT (2008) 306 ITR 411 (P&H) AND BALBIR CHAND MAINI V CIT & ANOTHER (12012) 340 ITR 161 (P&H) AND CONTE NDED THAT THE ISSUE IN QUESTION IS COVERED BY THESE DECISIONS. WE HAVE CAR EFULLY PERUSED AND CONSIDERED THE FACTS AND THE RATIO OF THE DECISIONS OF THE JUR ISDICTIONAL HIGH COURT, IN THE CASE OF BALBIR CHAND MAINI (SUPRA) AND SOMNATH MAINI V CIT (SUPRA) AND FOUND THAAT THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY T HIS DECISION. THE RELEVANT AND OPERATIVE PART OF THE DECISION IN THE CASE OF BALB AIR CHAND MAINI (SUPRA) IS REPRODUCED HEREUNDER: THE RETURN FOR THE ASSESSMENT YEAR 1998-99,, FIELD BY THE ASSESSEE AT AN INCOME OF RS.7,93,140 WAS PROCESSED UNDER SECTION 1 43(1) OF THE INCOME-TAX ACT, 1961. SUBSEQUENTLY, IN RESPONSE TO A NOTICE UN DER SECTION 148, THE ASSESSEE AGAIN FILED AN RETURN DECLARING THE SAME I NCOME AS SHOWN IN THE RETURN FILED EARLIER. DURING THE REASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD PURCHASED 30000 SHARES OF A AT THE RATE BETWEEN RS.2.50 AND RS.3.40 PER SHARE, IN THE MONTH OF APRIL, 1997, AND OUT OF THOSE SHARES, HE SOLD 24000 SHARES THROUGH A BRO KER. THE ASSESSING OFFICER CAME TO THE OPINION THAT THE VALUE OF THE S HARES COULD NOT BE AS HIGH AS RS.55 PER SHARE AND ACCORDINGLY MADE AN ADDITION OF RS.12,47,500 TO THE ITA NO.2359/KOL/2017 A.Y 2014-15 KAMAL SINGH KUNDALIA VS. ITO WD-1(4), SLG. PAGE 4 INCOME OF THE ASSESSEE AS INCOME FROM UNDISCLOSED S OURCES. HOWEVER, HE DETERMINED A SUM OF RS.2,85,620 AS LONG-TERM CAPITA L LOSS, WHILE COMPUTING THE INCOME. THE COMMISSIONER (APPEALS) DELETED THE ADDITIONS WHEREAS THE TRIBUNAL REVERSED THE ORDER OF THE COMMISSIONER (AP PEALS) AND UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER. ON APPEAL: HELD, DISMISSING THE APPEAL, (I) THAT THE TRIBUNAL RECORDED A FINDING OF FACT THAT THE TRANSACTION OF SALE AND PURCHASE OF SHARES OF A WAS NOT A GENUINE TRANSACTION. THE ASSESSING OFFICER HAD FOUND THAT T HE SALE OF SHARES HAD NOT TAKEN PLACE THROUGH ANY STOCK EXCHANGE. ON SCRUTINY OF THE BOOKS OF ACCOUNT IF THE BROKER THE ASSESSING OFFICER FOUND THAT THER E WERE CASH DEPOSITS IN IT BANK ACCOUNT PRECEDING THE ISSUE OF CHEQUES IN THE NAME OF THE ASSESSEE FOR PURCHASE OF SHARES CLAIMED TO BE THE SALE PROCEEDS OF THE SAME SHARES RECEIVED IN ADVANCE. THE BROKER COULD NOT GIVE THE DETAILS OF THE PURCHASER OF THE SHARES. THE AO FOUND THAT IT WAS A CLOSE-CIRCUI T TRANSACTION AND CLEARLY A STRUCTURED ONE. THE AO HAD ALSO DETERMINED THE VALU E OF SHARES OF A ON THE BASIS OF THE FINANCIAL DATA COLLECTED BY HIM AND WO RKED OUT THE VALUE OF SHARES TO BE NOT MORE THAN RSW.9.37 PER SHARE BY AD OPTING TWO METHODS FOR CALCULATION OF NET ASSET VALUE. THERE WAS NO PERVER SITY OR ERROR OF LAW IN THE ORDER OF THE TRIBUNAL. IT IS ESSENTIAL ON THE PART OF THE REVENUE AUTHORIT Y TO LOOK INTO THE REAL NATURE OF TRANSACTION AND WHAT HAPPENS IN THE REAL WORD AND C ONTEXTUALIZE THE SAME TO SUCH TRANSACTIONS IN THE REAL MARKET SITUATION. IT IS PE RTINENT TO STATE HERE, THE JUDICIAL WISDOM OF HON'BLE SUPREME COURT IN CIT V ARVINDA RA JU (TN) (1979) 120 ITR 46 (SC) WHEREIN IT WAS HELD THAT ONE DAY, IN OUR WELFARE STATE GEARED TO SOCIAL JUST ICE, THIS CLEVER CONCEPT OF AVOIDANCE AS AGAINST EVASION MAY HAVE TO BE EXPOSED. IN THE PRESENT CASE, THERE IS AN OBVIOUS AND PLAIN TRA NSACTION OF TAX EVASION WHICH HAS BEEN CLOTHED WITH THE SMOKE-SCREEN OF SUBTERFUGES, BY THE ASSESSEE APPELLANTS. THE FACTS OF THE PRESENT CASE CLEARLY REVEALS THAT SUCH TRADING TRANSACTIONS OF PURCHASE AND SALE OF SHARES, HAD NOT BEEN EFFECTED, FOR COMM ERCIAL PURPOSE BUT TO CREATE ARTIFICIAL LOSS, WITH A VIEW TO REDUCING TAX LIABIL ITY. THE APPELLANT RESORTED TO READYMADE SCHEME FOR PURCHASE AND SALE OF SHARES WH ICH ULTIMATELY FOUND THEIR LAST DESTINATION, TO THE ORIGINAL SELLER I.E. THE SAID U NLISTED COMPANY. SUCH TRANSACTIONS ARE NOT GENUINE AND NATURAL TRANSACTIONS BUT PRECONCEIV ED TRANSACTIONS, DEMONSTRATING CREATION OF SUCH SHORT TERM CAPITAL LOSS. SUCH TRAN SACTIONS ARE MUTUALLY SELF-SERVING. IT IS MENTIONED THAT EARNING PROFIT IS A NATURAL IN STINCT INGRAINED IN HUMAN BEINGS, PARTICULARLY IN THE BUSINESSMAN, UNLESS, OF COURSE, EARNING OF LOSS IS ALSO A PROFITABLE PROPOSITION, AS IS DISCERNIBLE FROM THE ACT-SITUATI ON OF THE PRESENT APPEALS. THE APES RESTORED TO A PRECONCEIVED SCHEME, TO PROCURE SHORT TERM CAPITAL LOSS, FOR THE PURPOSE OF NEUTRALIZING THE SHORT TERM CAPITAL GAIN S, BY WAY OF PRICE-DIFFERENTIAL, IN THE SAID SHARE TRANSACTIONS, NOT SUPPORTED BY MARKET FA CTORS. CUMULATIVE EVENTS IN SUCH TRANSACTIONS OF SHARES REVEALS THAT THE SAME ARE DE VOID OF ANY COMMERCIAL NATURE AND FALL IN THE REALM OF NOT BEING BONA FIDE, IN CO NTENTS,. IN VIEW OF THE ABOVE LEGAL AND FACTUAL DISCUSSIONS AND JUDICIAL PRECEDENTS DIS CUSSED ABOVE, WE ARE OF THE OPINION THAT THE FINDINGS OF THE CIT(APPEALS) ARE N OT BASED ON RELEVANT, COGENT AND CREDIBLE MATERIAL OR EVIDENCE. SUCH SHARE TRANSACTI ONS WERE NOT QUOTED AND CONSEQUENTLY, WERE NOT TRADED TROUGH STOCK EXCHANGE . WHEN ALL THE FACTS AND CIRCUMSTANCES OF THE CASE ARE VIEWED IN TOTALITY, I T IS EVIDENT THAT THE ASSESSEE APES FAILED TO DISCHARGE THE ONUS, TO PROVE THE GENUINEN ESS OF THE TRANSACTIONS OF PURCHASE AND SALES OF SUCH SHARES. THE IMPUGNED TRA NSACTIONS OF SHARES ARE PRE- ORDAINED ONE, NOT FOR LEGITIMATE COMMERCIAL PURPOSE IN VIEW BUT FOR THE PURPOSE OF CREATING NON-GENUINE AND ARTIFICIAL SHORT TERM CAPI TAL LOSS, WITH A VIEW TO REDUCING VALID TAX-LIABILITY. THESE TRANSACTIONS OF SHARES W ERE NOT GOVERNED BY MARKET FACTOR AS PREVALENT AT THAT RELEVANT TIME, IN SUCH TRADE, BUT THE SAME ARE PRODUCT OF THE DESIGN AND MUTUAL UNDERSTANDING ON THE PART OF THE APPELLA NTS AND THE SAID HISSAR BASED ITA NO.2359/KOL/2017 A.Y 2014-15 KAMAL SINGH KUNDALIA VS. ITO WD-1(4), SLG. PAGE 5 UNLISTED COMPANY. LEARNED CIT(APPEALS) HAS FAILED TO BRING ANY COGENT AND CREDIBLE EVIDENCE TO DISLODGE SUCH FINDING. HAVING REGARD TO THE PECULIAR FACT-SITUATION OF THE PRESENT CASE IT IS EVIDENT THAT SUCH SHARE TRANSACT IONS WERE CLOSE CIRCUIT TRANSACTIONS AND CLEARLY STRUCTURED ONE. THEREFORE IN THE LIGHT OF JUDICIAL PRECEDENTS OF JURISDICTIONAL HIGH COURT AND HON'BLE SUPREME COURT AS DISCUSSED ABOVE, WE DO NOT FIND ANY MERIT IN THE FINDINGS OF THE CIT(APPEALS). HAVING REGARD TO THE ABOVE LEGAL AND FACTUAL DISCUSSIONS, INCLUDING JUDICIAL PRECEDE NTS DISCUSSED ABOVE, OF THE HON'BLE SUPREME COURT AND JURISDICTIONAL HIGH COURT , THE FINDINGS OF THE AO, AS RECORDED IN THE IMPUGNED ASSESSMENT ORDER, ARE REST ORED. KEEPING IN VIEW OF THE AFORESAID FACT AND DECISION AS REFERRED ABOVE, THE DECISION TAKEN BY THE AO AND KEEPING REFERENCE FROM THE DECI SION OF RATNAKAR M. PUJARI VS. ITO (ITAT MUMBAI) ITA NO.995//2012 THE ADDITION MAD E BY THE AO IS HEREBY UPHELD AND GROUND OF APPEAL IS DISMISSED . 3. BOTH THE PARTIES REITERATE THEIR RESPECTIVE STAN DS AGAINST AND IN SUPPORT OF THE IMPUGNED ADDITION ARISING FROM TREATMENT OF ASSESSEES LTCG FROM SALES OF SHARE HELD IN M/S CREASSANDA SOLUTIONS PVT . LTD. AS BOGUS UNEXPLAINED CASH CREDITS. THE REVENUE PLACES STRONG RELIANCE ON BOTH THE LOWER AUTHORITIES FINDINGS QUOTING SEARCH / SURVEY STATEMENT(S) OF THE TWO ENTRY OPERATORS, SHRI NARENDRA JAIN AND SHRI PANKAJ AGARWAL IN LIGHT OF HON'BLE APEX COURTS LANDMARK DECISIONS IN SUMATI DAYAL VS. CIT (1995) 80 TAXMANN.89/2014 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC). 4. WE FIND NO MERIT IN REVENUES INSTANT ARGUMENTS. THE FACT REMAINS THAT NEITHER THE DEPARTMENT HAD SUPPLIED COPY OF ALLEGED ENTRY OPERATOR STATEMENT NOR THERE IS ANY MATERIAL ON RECORD THAT THEY HAVE NAMED THIS TAXPAYER AS THE BENEFICIARY OF THE IMPUGNED CAPITAL GAINS DERIVED B Y RIGGING SCRIPS SHARE PRICES. BOTH THE ASSESSING OFFICER AS WELL AS CIT(A ) ARE FAIR ENOUGH IN OBSERVING THAT THE SAID TWO PERSONS HAVE NAMED THE SCRIP RATHER THAN THE ASSESSEE IN THEIR RESPECTIVE SEARCH STATEMENT. WE T HEREFORE QUOTE THIS TRIBUNALS DECISION IN PRAKASH CHAND BHUTORIA VS. ITO IN ITA NO.2394/KOL/2017 DECIDED ON 27.06.2018 DELETING IDENTICAL ADDITION FOR LACK OF ANY EVIDENCE AGAINST THE CONCERNED ASSESSEE AS F OLLOWS:- 8. A PERUSAL OF THE ORDER OF THE AO DEMONSTRATES THAT THIS ADDITION WAS MADE MERELY ON SUSPICION AND IN A ROUTINE AND MECHANICAL MANNER. THIS I S CLEAR FROM THE FACT THAT THE AO REFERS TO SOME SHARP TRA DING COMPANY AS ONE OF THE MAIN MANIPULATED COMPANY AND WHEREAS THE ASSESS EE SOLD SCRIPS IN UNNO INDUSTRIES LTD. THE AO REFERS TO VARIOUS ENQUIRIES MADE BY THE DIRECTORS OF ITA NO.2359/KOL/2017 A.Y 2014-15 KAMAL SINGH KUNDALIA VS. ITO WD-1(4), SLG. PAGE 6 INCOME TAX , KOLKATA ON PROJECT BASIS AND THAT THIS RESULTED INTO UNEARTHING OF A HUGE SYNDICATE OF ENTRY OPERATORS AND SHARE BROKE RS AND MONEY LENDERS INVOLVED IN PROVIDING OF BOGUS ACCOMMODATION ENTRIE S. THE REPORT AS THE SO- CALLED PROJECT AND THE EVIDENCE COLLECTED BY THE DI T (INV.), KOLKATA ETC HAVE NOT BEEN BROUGHT ON RECORD. IT IS WELL SETTLED THAT ANY DOCUMENT RELIED UPON BY THE AO FOR MAKING AN ADDITION HAS TO BE SUPPLIED TO THE ASSESSEE AND AN OPPORTUNITY SHOULD BE PROVIDED TO THE ASSESSEE TO R EBUT THE SAME. IN THIS CASE, GENERAL STATEMENTS HAVE BEEN MADE BY THE AO AND THE ADDITION IS MADE BASED ON SUCH GENERALIZATIONS. THE ASSESSEE HAS NOT BEEN CONFRONTED WITH ANY OF THE EVIDENCE COLLECTED IN THE INVESTIGATION DONE BY THE DIT(INV.), KOLKATA. EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USE D AGAINST THE ASSESSEE WITHOUT GIVING A COPY OF THE SAME TO THE ASSESSEE A ND THEREAFTER GIVING HIM AN OPPORTUNITY TO REBUT THE SAME. 9. THE AO FURTHER RELIES ON THE SHOP INCREASE OF 3 1000% OF THE VALUE OF SHARES OVER THE PERIOD OF 2 YEARS. THOUGH THIS IS HIGHLY S USPICIOUS, IT CANNOT TAKE THE PLACE OF EVIDENCE. THE HON'BLE SUPREME COURT HAS ST ATED THAT SUSPICION HOWEVER STRONG CANNOT BE THE BASIS FOR MAKING AN AD DITION. THE EVIDENCE PRODUCED BY THE ASSESSEE LISTED ABOVE PROVES HIS CA SE AND THE AO COULD NOT CONTROVERT THE SAME BY BRINGING ON RECORD ANY EVIDE NCE. THE EVIDENCE SAID TO HAVE BEEN COLLECTED BY THE DIT (INV.), KOLKATA AND THE REPORT IS NOT PRODUCED BEFORE THIS BENCH. 10. I NOW DISCUSS THE CASE LAW ON THE SUBJECT. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT, KOLKATA-III VS. SMT. SHREYASHI GANGULI REPORTED IN [2012] (9) TMI 1113 HELD AS FOLLOWS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE ORDER OF THE LD.. TRIBUNAL IS PERVERSE IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT UN DER SECTION 68 OF THE INCOME TAX ACT, 1961, BY IGNORING THE FACTS ON RECO RD. THE LD. TRIBUNAL AFTER CONSIDERING THE MATERIAL AND HEARING CAME TO A FACT FINDING WHICH IS AS FOLLOWS: THE ASSESSING OFFICER HAS DOUBTED THE TRANSACTION S INCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER, THE DEMAT ACCO UNT GIVEN THE STATEMENT OF TRANSACTIONS FROM 01.04.2004 TO 31.03.2005 I.E. REL EVANT FOR THE ASSESSMENT YEAR UNDER APPEAL (2005-06) ARE BEFORE US. THERE CA NNOT BE ANY DOUBT ABOUT THE TRANSACTION AS HAS BEEN OBSERVED BY THE ASSESSI NG OFFICER. THE TRANSACTIONS WERE AS PER NORMS UNDER CONTROLLED BY THE SECURITIE S TRANSACTION TAX, BROKERAGE SERVICE TAX AND CESS, WHICH WERE ALREADY PAID. THEY WERE COMPLIED WITH. ALL THE TRANSACTIONS WERE THROUGH BANK. THERE IS NO IOTA OF EVIDENCE OVER THE ABOVE TRANSACTIONS AS IT WERE THROUGH DEMAT FOR MAT. HENCE, WE AGREE WITH THE GIVEN FINDINGS OF THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) IN ACCEPTING THE TRANSACTIONS AS GENUINE TOO. IN VIEW OF THE FACT FINDINGS WE CANNOT REAPPRECIATE , RECORDING IS SUCH, CANNOT BE SAID TO BE PERVERSE AS IT IS NOT FACT FINDING OF THE LD. TRIBUNAL ALONE. THE ITA NO.2359/KOL/2017 A.Y 2014-15 KAMAL SINGH KUNDALIA VS. ITO WD-1(4), SLG. PAGE 7 COMMISSIONER OF INCOME TAX CAME TO THE SAME FACT FI NDING. CONCURRENT FACT FINDING ITSELF MAKES THE STORY OF PERVERSITY, UNBEL IEVABLE. THE D BENCH OF THE KOLKATA TRIBUNAL IN THE CASE O F GAUTAM KUMAR PINCHA VS. ITO, IN I.T.A. NO. 569/KOL/2017 DATED 15.11.201 7 AT PARA 19 ONWARDS HELD AS FOLLOWS: (I) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDEN CES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRAN SACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERA TED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO A S TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN TH E VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY FAILED TO SUBSTANTIAT E THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAI LING PRICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. (II) CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITED [2 013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT ON THE BASIS OF A SUSPICION HOWSOEV ER STRONG IT IS NOT POSSIBLE TO RECORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER HELD THAT IN ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIB LE, TO HOLD THAT THE TRANSACTIONS OF BUYING OR SELLING OF SHARES WERE CO LOURABLE TRANSACTIONS OR WERE RESORTED TO WITH ULTERIOR MOTI VE. (III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012 ] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSES SING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT , BROKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRA NSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE W AS DISMISSED. (IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 105 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM ED THE DECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE A PPEAL OF THE ASSESSEE WHERE THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSES SEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON TH E BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT TH E AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSES SEE. THE TRIBUNAL HELD THAT THE AOS CONCLUSIONS ARE MERELY BASED ON THE I NFORMATION RECEIVED BY HIM. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. (V) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIR MED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSE SSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGES T THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. ITA NO.2359/KOL/2017 A.Y 2014-15 KAMAL SINGH KUNDALIA VS. ITO WD-1(4), SLG. PAGE 8 (VI) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCOME FROM LONG TERM CAPITAL GAINS. HOWEVER, TH E AO, BASED ON THE INFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXC HANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFOR E HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUM ENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODU CED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SH OWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FA CTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED BY HIGH COURT. 8.4. IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I T O XIV) 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 LEGS TO STAND AND THE REFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS SUPPORTED WITH MATERIAL EVIDENCES WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT IN THE ABSENCE OF MATERIAL/EVIDENCE THE ALLEGATIONS THAT T HE 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 RELEVAN T EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF S HARES RESULTING 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 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 THAT INCOME FROM LTCG IS EXEMPTED U/S 10(38) OF THE ACT. FOR COMING TO SUCH A CONCLUSION WE RELY ON THE DECISION OF THE HONBLE C ALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INVESTMENTS IN ITA NO.620 OF 2008 DAT ED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOWS : 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 BROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECE IVED FROM THE SHARE BROKER THROUGH ACCOUNT PAYEE WHICH ARE ALSO FILED IN ACCOR DANCE 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 TH E TRANSACTIONS OF THE SHARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS NO SUBSTANTIAL QUESTION OF LAW HELD IN THIS MATTER. HE NCE THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. 8.5. 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 DUL Y CONSIDERED BY US 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 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 ITA NO.2359/KOL/2017 A.Y 2014-15 KAMAL SINGH KUNDALIA VS. ITO WD-1(4), SLG. PAGE 9 PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITION. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. THE A BENCH OF THE KOLKATA TRIBUNAL IN THE CASE O F ITO VS. SHALEEN KHEMANI IN I.T.A. NO. 1945/KOL/2014 DATED 18.10.2017 AT PAR A 9.1. TO 9.4 HELD AS FOLLOWS: 9.1 WE FURTHER FIND THAT THE TRANSACTION OF SALE OF SHARES BY THE ASSESSEE WAS DULY BACKED BY ALL EVIDENCES INCLUDING CONTRACT NOT ES, DEMAT STATEMENT, BANK ACCOUNT REFLECTING THE TRANSACTIONS, THE STOCK BROK ERS HAVE CONFIRMED THE TRANSACTIONS, THE STOCK EXCHANGE HAS CONFIRMED THE TRANSACTIONS, THE SHARES HAVE BEEN SOLD ON THE ONLINE PLATFORM OF THE STOCK EXCHANGE AND EACH TRADE OF SALE OF SHARES WERE HAVING UNIQUE TRADE NO. AND TRA DE TIME. IT IS NOT THE CASE THAT THE SHARES WHICH WERE SOLD ON THE DATE MENTION ED IN THE CONTRACT NOTE WERE NOT TRADED PRICE ON THAT PARTICULAR DATE. THE LD AO DOUBTED THE TRANSACTIONS DUE TO THE HIGH RISE IN THE STOCK PRIC E BUT FOR THAT, THE ASSESSEE COULD NOT BE BLAMED AND THERE WAS NO EVIDENCE TO PR OVE THAT THE ASSESSEE OR ANY ONE ON HIS BEHALF WAS MANIPULATING THE STOCK PR ICES. THE STOCK EXCHANGE AND SEBI ARE THE AUTHORITIES APPOINTED BY THE GOVER NMENT OF INDIA TO ENSURE THAT THERE IS NO STOCK RIGGING OR MANIPULATION. THE LD AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT THESE AGENCIES HAVE ALLEGED ANY STOCK MANIPULATION AGAINST THE ASSESSEE AND OR THE BROKER S AND OR THE COMPANY. IN ABSENCE OF ANY EVIDENCES IT CANNOT BE SAID THAT MER ELY BECAUSE THE STOCK PRICE MOVED SHARPLY, THE ASSESSEE WAS TO BE BLAMED FOR BO GUS TRANSACTIONS. IT IS ALSO TO BE SEEN THAT IN THIS CASE, THE SHARES WERE HELD BY THE DONORS FROM 2003 AND SOLD IN 2010 THUS THERE WAS A HOLDING PERIOD OF 7 Y EARS AS PER SECTION 49 OF THE ACT AND IT CANNOT BE SAID THAT THE ASSESSEE AND THE DONORS WERE MAKING SUCH PLANS FOR THE LAST 7 YEARS TO RIG THE STOCK PRICE T O GENERATE BOGUS CAPITAL GAINS THAT TOO WITHOUT ANY EVIDENCES WHATSOEVER. 9.2 IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSE E AND / OR THE STOCK BROKER M/S P DIDWANIA & CO AND TOSHITH SECURITIES P LTD., BOTH REGISTERED SHARE AND STOCK BROKERS WITH CALCUTTA STOCK EXCHANGE HAD CONF IRMED THE TRANSACTION AND HAVE ISSUED LEGALLY VALID CONTRACT NOTES UNDER THE LAW AND SUCH CONTRACT NOTES ARE AVAILABLE IN PAGES 41-52 OF THE PAPER BOOK. WE FIND THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PR CIT VS RUNGTA PROPERTIES PRIVATE LIMITED ITAT NO 105 OF 2016 DATED 8 TH MAY 2017 IN A SIMILAR ISSUE DISMISSED THE APPEAL OF THE DEPARTMENT BY MAKING THE FOLLOWIN G OBSERVATIONS: (11) ON THE LAST POINT, THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT BROUGHT ON RECORDS ANY MATERIAL TO SHOW THAT THE TRANSACTIO NS IN SHARES OF THE COMPANY INVOLVED WERE FALSE OR FICTITIOUS. IT IS FINDING OF THE ASSESSING OFFICER THAT THE SCRIPS OF THIS COMPANY WAS EXECUTED BY A BROKER THROUGH CROSS DEALS AND THE BROKER WAS SUSPENDED FOR SOME TIME. IT IS ASSESSEES CONTENTIO N ON THE OTHER THAT EVEN THOUGH THERE ARE ALLEGATIONS AGAINST THE BROKER, BUT FOR T HAT REASON ALONE THE ASSESSEE CANNOT BE HELD LIABLE. ON THIS POINT THE TRIBUNAL HELD AS A MATTER OF FACT THE AO DOUBTED THE INTEGRITY O F THE BROKER OR THE MANNER IN WHICH THE BROKER OPERATION AS PER THE STATEMENT OF ONE OF THE DIRECTORS OF THE BROKER FIRM AND ALSO AO OBSERVED THAT ASSESSEE HAD NOT FURNISHED ANY EXPLANATION IN RESPECT OF THE INTENTION OF SHOWING TRADING OF SHARES ONLY IN ITA NO.2359/KOL/2017 A.Y 2014-15 KAMAL SINGH KUNDALIA VS. ITO WD-1(4), SLG. PAGE 10 THREE PENNY STOCKS. AO RELIED THE LOSS OF RS.25,30, 396/- ONLY ON THE BASIS OF INFORMATION SUBMITTED BY THE STOCK FICTITIOUS. AO H AS ALSO NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS PLACED ON RECORD BY TH E ASSESSEE. AOS OBSERVATION AND CONCLUSION ARE MERELY BASED ON THE INFORMATION REPRESENTATIVE. THEREFORE ON SUCH BASIS NO DISALLOW ANCE CAN BE MADE AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF LD . CIT(A), WHO HAS RIGHTLY ALLOWED THE CLAIM OF ASSESSEE. THUS GROUND NO. 1 OF THE REVENUE IS DISMISSED. WE AGREE WITH THE REASONING OF THE TRIBUNAL ON THIS POINT ALSO. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. THE SU GGESTED QUESTIONS, IN OUR OPINION DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. 9.3. WE THEREFORE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE 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 OPINION, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE ARG UMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON T HE ORDERS OF THE LD AO. WE FIND THAT THE ALLEGATION THAT THE ASSESSEE AND / OR BROK ERS GETTING INVO2LVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECO RD THAT THE ASSESSEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEM AT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATI NG TO PURCHASE AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEITHER FOU ND 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 THE LD AO WAS NO T JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. WE ALSO FIND THAT THE LD CITA RIGHTLY RELIED ON THE DECISION OF THE HONBLE HIGH COURT AT CALCUTTA IN THE CASE OF ALPINE INVESTMENTS IN ITA NO. 620 OF 2008 DATED 26 TH AUGUST 2008 WHEREIN THE HONBLE COURT 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 RECOGNIZE D STOCKBROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE PAYMENTS MADE TO THE STO CKBROKER AND ALL THE PAYMENTS RECEIVED FROM STOCKBROKER THROUGH ACCOUNT PAYEE INS TRUMENTS, 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 FILED BY THE ASSESSEE. IN DOING SO, THE TRIBUNAL HELD THA T THE TRANSACTION FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCES COULD NOT BE BRUSHED ASID E ON SUSPICION AND SURMISES. HOWEVER, IT WAS HELD THAT THE TRANSACTIONS 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 IT A NO.620 OF 2008 IS DISMISSED. 9.4. WE ALSO FIND THAT THE VARIOUS OTHER CASE LAWS OF HONBLE JURISDICTIONAL HIGH COURT AND OTHER CASE LAWS ALSO RELIED UPON BY THE L D AR AND FINDINGS GIVEN THEREON WOULD APPLY TO THE FACTS OF THE INSTANT CASE. THE LD DR WAS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFECT. HENCE WE HOLD THAT THE LD AO WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF SOICL AS U NDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT AND THEREFORE WE UPHOLD THE ORDER OF THE LD CITA AND DISMISS THE APPEAL OF THE REVENUE. ACCORDINGLY THE GROUNDS RAI SED BY THE REVENUE ARE DISMISSED . ITA NO.2359/KOL/2017 A.Y 2014-15 KAMAL SINGH KUNDALIA VS. ITO WD-1(4), SLG. PAGE 11 5. THE REVENUE VEHEMENTLY CONTENDS THAT THIS TRIBUN ALS VARIOUS CO- ORDINATE BENCHS DECISIONS AS WELL AS HON'BLE BOMBA Y HIGH COURT HAVE RECENTLY ADJUDICATED THE VERY ISSUE OF BOGUS CAPITA L GAINS AGAINST THE TAXPAYER BASED ON CIRCUMSTANTIAL EVIDENCE. HON'BLE JURISDICT IONAL HIGH COURTS JUDGMENT (SUPRA) TAKEN INTO CONSIDERATION IN LEARNED CO-ORDI NATE BENCHS ORDER HEREINABOVE HAS HELD AS THE CONTRARY THAT ANY ADDIT ION OF THIS NATURE NOT BASED ON EVIDENCE IS NOT SUSTAINABLE. WE THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION BY FOLLOWIN G ABOVE DETAILED REASONING MUTATIS MUTANDIS . 6. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 08/ 05/2019 SD/- SD/- ( %) (' %) (DR.A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 08 / 05 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-KAMAL SINGH KUNDALIA, C/O PRADIP LAKHOTI A, 2 ND FL, METERO PLAZA, S.F. ROAD, SILI GURI- DIST. DARJEELING-734005 2. /RESPONDENT-ITO WARD-1(4), AAYAKAR BHAWAN, MATIGARA SILIGURI-734010 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ 3,