Mool Chand Jagwayan , Kolkata V. ITO, Ward - 22(4) , Kolkata

ITA 2381/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2763 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-03-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 16-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RABIN CHOUDHURY
• Keywords: Unexplained cash credit; Share purchase agreement; Opportunity of cross examination; Transactions in derivatives; Question of law; Cost of acquisition; Third party statement; Accommodation entries; Sham transactions; Penny stocks; Set aside; Capital Gains; Bogus
• Section: 68; 143(3); 142(1); 205; 250; 201; 143(2); 72; 13; 22; 20

Judgement Text

1 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 , C(SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL C(SMC) BENCH : KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 2381/KOL/2018 ASSESSMENT YEAR: 2015-16 MOOL CHAND JAGWAYAN (PAN: ABHPJ2637E) VS. INCOME-TAX OFFICER, WD-22(4), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 19.03.2019 DATE OF PRONOUNCEMENT 07.06.2019 FOR THE APPELLANT SHRI SUBASH AGARWAL, ADVOCATE FOR THE RESPONDENT SHRI RABIN CHOUDHURY, ADDL. CIT , SR. DR ORDER THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) - 6, KOLKATA DATED 16.10.2018 FOR AY 2015-16. 2. IN THIS CASE THE ASSESSEE HAS RAISED AS MANY AS SEVEN GROUNDS OF APPEAL BUT THE SOLE ISSUE INVOLVED IN THIS APPEAL OF ASSESSEE RELATES T O CONFIRMATION OF THE ADDITION/DISALLOWANCE BY LD. CIT(A) ON ACCOUNT OF LONG TERM CAPITAL GAIN OF RS.21,96,793/- CLAIMED BY THE ASSESSEE AS EXEMPT U/S. 10(38) OF THE INCOME-TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FROM GROSS SALE CONSIDERATION OF 5000 SHARES OF M/S. CCL INTERNATIONAL LTD.. 3. BRIEFLY STATED FACTS AS OBSERVED BY THE AO ARE T HAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 23.09.2015 FOR AY 2015-16 ELECTRONICALLY DECLARING TOTAL INCOME OF RS.9,90,050/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. ACCORDINGLY, NOTICE U/S. 143(2) OF THE ACT DATED 29.07.2006 AND SUBSEQUENTLY NOTICE U/S. 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE DATED 11.01.2017 WERE ISSUED AND SERVED UPON THE ASSESSEE FIXING THE DATE OF HEARING ON 18.01.017. IN RESPONSE THE SAID NOTICES, ASSESSEE HIMSELF APPEARED FROM TIME TO TIME AND NECESSARY DOCUMENTS AND EXPLANATIO NS WERE FILED. ON PERUSAL OF THE SAID 2 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 SUBMISSIONS OF THE ASSESSEE, THE AO FOUND THAT THE ASSESSEE HAD PURCHASED SCRIP OF M/S. CCL INTERNATIONAL LTD. OF 5000 SHARES. THESE SHAR ES WERE SOLD DURING THE FY 2014-15 RELEVANT TO AY 2015-16 AND ASSESSEE CLAIMED EXEMPTI ON ON ACCOUNT OF LTCG U/S. 10(38) OF THE ACT IN HIS RETURN FOR AY 2015-16 HAVING CAPITAL GAIN OF RS. 21.96,793/-. IT WAS BROUGHT TO THE NOTICE OF AO THAT THE ASSESSEE HAD PURCHASED 5,000 SHARES OF CCL INTERNATIONAL LTD. IN JUNE, 2013 FROM M/S. GOODSHINE COMMERCE PVT. LTD . FOR A CONSIDERATION OF RS. 2,60,000/-. THE CONSIDERATION AMOUNT OF RS.2,60,000 /- WAS PAID BY ASSESSEE TO THE SELLER OF THE SAID SHARES BY ACCOUNT PAYEE CHEQUE NO. 547147 DRAWN ON INDUSIND BANK ACCOUNT NO. 200004739924. THE AFORESAID 5,000 SHARES OF CCL INT ERNATIONAL LTD. WERE RECEIVED IN DERNATERIALIZED FORM TO THE ASSESSEE'S DEMAT ACCOUN T (CLIENT ID 10017878) MAINTAINED BY ASSESSEE WITH VEDIKA SECURITIES LTD, A DEPOSITORY P ARTICIPANT REGISTERED WITH NSDL (DPID NO IN301493). THE ASSESSEE SOLD ALL THOSE 5,000 SHA RES OF M/S. CCL INTERNATIONAL LTD. DURING THE PREVIOUS YEAR 2014-15 THROUGH M/S. VARD HAMAN CAPITAL PVT. LTD., A REGISTERED SHARE & STOCK BROKER. THE ASSESSEE EARNED LTCG OF R S. 21,96,793/- ON SALE OF AFORESAID SHARES BEING THE AGGREGATE VALUE OF GROSS SALE CONS IDERATION RS. 24,56,793/- MINUS RS. 2,60,000/- BEING COST OF ACQUISITION OF SUCH SHARES . THE SAID AMOUNT OF LTCG WAS CLAIMED AS EXEMPTION UNDER SECTION 10(38) OF THE ACT. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE PRODUCED AND FURNISHED THE EVIDENCES R ELATING TO PURCHASE OF 5,000 SHARES OF M/S. CCL INTERNATIONAL LTD. FOR RS.2,60,000. THE RE LEVANT EXTRACT OF BANK ACCOUNT STATEMENT WAS SUBMITTED TO SHOW THAT THE SAID AMOUN T WAS PAID BY ACCOUNT PAYEE CHEQUE. THE ASSESSEE ALSO PRODUCED AND FILED THE COPY OF TH E DEMAT ACCOUNT TO SHOW THAT THE SAID 5,000 SHARES OF M/S. CCL INTERNATIONAL LTD. WERE CR EDITED IN ASSESSEE'S DEMAT ACCOUNT. THE SAID 5,000 SHARES WERE SOLD THROUGH VARDHAMAN CAPIT AL PVT LTD, A REGISTERED SHARE AND STOCK BROKER. THE ASSESSEE ALSO PRODUCED AND FILED THE COPIES OF CONTRACT NOTE IN SUPPORT OF SALE OF 5,000 SHARES AS AFORESAID AND ALSO SUBMITTE D RELEVANT EXTRACT OF HIS BANK ACCOUNT STATEMENT TO SHOW THAT THE SALE CONSIDERATION WAS C REDITED TO HIS BANK ACCOUNT. IT WAS ALSO SHOWN THAT THE SALES OF THOSE SHARES ARE REFLECTED IN THE DEMAT STATEMENT OF THE ASSESSEE. THE PERIOD OF HOLDING OF SUCH SHARES BEING MORE THA N 12 MONTHS WAS ALSO BROUGHT TO THE NOTICE OF AO BY THE ASSESSEE FROM THE AFORESAID DOC UMENTARY EVIDENCES. 3 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 4. ON PERUSAL OF THE SUBMISSION OF THE ASSESSEE, TH E AO FOUND THAT THE ASSESSEE HAD PURCHASED SCRIP OF M/S . CCL INTERNATIONAL LTD. OF 5,000 UNITS. THESE WERE SOLD DURING THE F.Y. 2014-15 HAVING CAPITAL GAIN OF RS.21,96,793/-. THE ASSESSEE HAS TAKEN THIS AMOUNT AS EXEMPT LONG TERM CAPITAL GAIN IN HIS RETURN FOR THE A.Y. 2015-16 U/S. 10(38) OF THE ACT. ACCORDING TO AO, REGARDING THIS KIND OF HUGE CAPITA L GAIN AND CLAIMING EXEMPTION U/S.10(38) OF THE ACT AN INVESTIGATION WAS CONDUCTE D ON A NUMBER OF PENNY STOCK COMPANIES BY THE DIRECTORATE OF INVESTIGATION WING, KOLKATA. AND AS PER THE REPORT SUBMITTED BY THE WING IT WAS DISCOVERED THAT TOTAL 84 PENNY STOCK CO MPANIES WERE IDENTIFIED TO BE INDULGED IN GIVING BENEFICIARIES LTCG ETC. SO NUMBER OF SEAR CH & SURVEYS WERE CONDUCTED IN THE OFFICE PREMISES OF MORE THAN 32 SHARE BROKING ENTIT IES WHICH INTURN ACCEPTED THAT THEY WERE ACTIVELY INVOLVED IN THE BOGUS LTCG/STCL SCAM. SURV EYS WERE ALSO CONDUCTED IN THE OFFICE PREMISES OF MANY ACCOMMODATION ENTRY PROVIDE RS AND THEIR STATEMENTS RECORDED. ALL HAVE ACCEPTED THEIR ROLE IN THE SCAM. BENEFICIARIES OF MORE THAN RS.38000 CRORES HAVE BEEN IDENTIFIED AND SEGREGATED DGIT(INVESTIGATION) WISE. TOTAL NUMBER OF MORE THAN 60,000 PANS OF THE BENEFICIARIES HAVE BEEN IDENTIFIED WHIC H HAVE BEEN REPORTED TO THE ASSESSMENT WING THROUGH THE DGITS. OUT OF 84 PENNY STOCK COMPA NIES WHICH HAVE BEEN USED FOR GENERATING BOGUS LTCG , THE ABOVE NAMED PENNY STOCK , I.E. M/S. CCL INTERNATIONAL LIMITED IS INCLUDED. ACCORDING TO AO, THE BASIC TRADE PATTE RN OF ALL THE 84 SCRIPS ARE SAME. A CLOSE VIEW OF ALL SUCH DATA SUGGESTED THAT THERE IS A COM MON PATTERN IN THE TRADING OF SUCH SCRIPS AND THE PATTERN IS THAT THEY REPRESENT A BELL SHAPE IN THEIR TRADING. IT MEANS FIRST, THEIR PRICES START FROM LOW RANGE, THEN IT RISES RAPIDLY, STAYS THERE FOR A WHILE AND THEN IT DECREASES MORE RAPIDLY. THUS TRADE PATTERN MAKES A BELL SHAPE. IN SUPPORT OF THE AFORESAID COMMON FEATURE, THE SHARE PRICING CHART OF M/S. CCL INTERNATIONAL L IMITED FROM JAN, 2013 TO JULY, 2017 AVAILABLE AT WEBSITE OF MONEY CONTROL ARE REPRODUCE D AT PAGE 2 OF THE ASSESSMENT ORDER. ACCORDING TO AO, APART FROM THAT FROM THE BALANCE S HEET OF THE PENNY STOCKS IT CAN BE SEEN THAT THEY HAVE NO CREDENTIALS TO SUPPORT THEIR SHAR E MOVEMENT PATTERN. FURTHER IT WAS OBSERVED BY THE AO THAT ALL THE COMPANIES HAVE NO F IXED ASSET, NO TURNOVER, NO PROFITABILITY AND THEY DID NOT PAY TAXES. SO ACCORDING TO AO, IT SHOWS THAT THESE ARE MADE ESPECIALLY FOR THE PURPOSE OF PROVIDING BOGUS LONG TERM CAPITAL GA IN OR SHORT TERM CAPITAL LOSS TO WILLING BENEFICIARIES. SO, ACCORDING TO AO, THE AB OVE THE LONG TERM CAPITAL GAIN CLAIMED TO 4 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 BE EXEMPTED U/S.10(38) OF THE ACT AMOUNTING TO RS.2 1,96,793/- IS FOUND TO BE FICTITIOUS CLAIM OF ASSESSEE AND IS NOTHING BUT ASSESSEES INC OME FROM OTHER-SOURCES BROUGHT BACK IN HIS BOOKS IN THE FORM OF EXEMPTED INCOME. SO, THE A O ISSUED SHOW CAUSE WHY NOT THE ABOVE AMOUNT OF RS. 21,96,793/- AS CLAIMED TO BE EX EMPTED SHOULD NOT BE ADDED BACK TO ASSESSEES TOTAL INCOME AND TAXED THEREON. AFTER CO NSIDERING THE REPLY OF THE ASSESSEE, THE AO OBSERVED THAT THE ASSESSEE TRIED TO PROVE THE VE RACITY OF THE SAID TRANSACTIONS BUT HE FAILED TO PROVIDE ANY REASONABLE EXPLANATION REGARD ING THE ABOVE FACTS OF SUSPICIOUS TRANSACTION OF LONG TERM CAPITAL. IN VIEW OF THE A BOVE, THE AO OBSERVED THAT THE LONG TERM CAPITAL GAIN CLAIMED TO BE EXEMPTED U/S. 10(38) OF THE ACT AMOUNTING TO RS.21,96,793/- WAS FOUND TO BE FICTITIOUS CLAIM ON ASSESSEES PART IS NOTHING BUT HIS INCOME FROM OTHER SOURCES BROUGHT BACK IN HIS BOOKS IN THE FORM OF EXEMPTED I NCOME. SO, THE ABOVE AMOUNT OF RS.21,96,793/- AS CLAIMED TO BE EXEMPTED WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE BY THE AO. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THE ACTION OF AO. AGGRIEVED, ASSESSEE I S BEFORE US. 5. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE TIME OF HEARING IT WAS BROUGHT TO O UR NOTICE BY THE LD AR THAT THE DELHI TRIBUNAL, IN THE CASE OF MUKTA GUPTA VS ITO & MOHAN LAL AGARWAL (HUF) VS ITO IN ITA NOS. 2766-2767/DEL/2018 DATED 26.11.2018 IN AY 2014 -15 WHEREIN THE ASSESSEE PLACED THE ASSESSMENT ORDERS FOR AY 2013-14 AND 2014-15 IN THE CASE OF M/S. CCL INTERNATIONAL LTD. PASSED U/S. 143(3) OF THE ACT HELD THAT THE SC RIPS OF M/S. CCL INTERNATIONAL LTD. CANNOT BE CALLED AS BOGUS AND ALLOWED THE CLAIM. SO THE LD AR WANTS US TO ALLOW THE CLAIM OF THE APPELLANT/ASSESSEE. 6. THE LD. DR FOR THE REVENUE VEHEMENTLY OPPOSED T HE CONTENTIONS OF THE ASSESSEE AND TOOK US THROUGH THE AOS ORDER AND LD. CIT(A) ORDER AND SUBMITTED THAT SCRIPS OF M/S. CCL INTERNATIONAL LTD. WAS ARTIFICIALLY RIGGED TO PROVI DE LTCG TO THE ASSESSEE WHICH CANNOT BE ALLOWED AND SUPPORTED THE IMPUGNED ORDER AND RELIED ON THE ORDER OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BINOD CHAND JAIN IN TAX APPEAL NO.18 OF 2017 AND SO HE DOES NOT WANT US TO INTERFERE WITH THE IMPUGNED ORDER . 5 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 7. I AM NOT REPEATING THE FACTS AGAIN FOR THE SAKE OF BREVITY. IN A NUTSHELL, I NOTE THAT THE ASSESSEE HAD PURCHASED SCRIP OF M/S. CCL INTERNATIO NAL LTD. OF 5000 SHARES. THESE SHARES WERE SOLD DURING THE FY 2014-15 RELEVANT TO AY 2015 -16 AND ASSESSEE CLAIMED EXEMPTION ON ACCOUNT OF LTCG U/S. 10(38) OF THE ACT IN HIS RE TURN FOR AY 2015-16 HAVING CAPITAL GAIN OF RS. 21,96,793/-. IN THE ASSESSMENT ORDER THE AO DID NOT ACCEPT THE TRANSACTION OF THE ASSESSEE AND HELD IT TO BE BOGUS AND THE ASSESSEES CLAIM FOR LTCG OF RS.21,96,793/- WAS NOT ACCEPTED. ACCORDING TO LD. AR, THE AO HAS MADE THE ADDITION ON A GENERAL REPORT OF DEPARTMENT AND IS RIDDLED WITH SUSPICION AND CONJEC TURES. IT HAS BEEN BROUGHT TO OUR NOTICE THAT THE ASSESSEE IS A CHARTERED ACCOUNTANT AND THE LD. AR DREW OUR ATTENTION TO PAGE 11 OF THE PAPER BOOK WHICH SHOWS THAT THIS WAS NOT A STAN DALONE INVESTMENT OF THE ASSESSEE. I NOTE THAT THERE ARE SEVERAL NUMBER OF INVESTMENTS M ADE BY THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. I NOTE THAT T HE ASSESSEE HAD PURCHASED 5000 NUMBERS OF SHARES OF M/S. CCL INTERNATIONAL LTD. IN 8 TH JUNE, 2013 FROM M/S GOODSHINE COMMERCE PVT. LTD. FOR A CONSIDERATION OF RS. 52 PER SHARE R S. 2,60,000/- (COPY OF THE PURCHASE BILL IS ENCLOSED IN THE PAPER BOOK AT PAGE NUMBER 13). IT IS TAKEN NOTE THAT THE PAYMENT WAS MADE THROUGH AN ACCOUNT PAYEE CHEQUE AND COPY OF MONEY R ECEIPT ALOGNWITH THE BANK STATEMENT EVIDENCING THE PAYMENT MADE TO M/S GOODSHINE COMMER CE PVT. LTD. FOR SUCH SHARE PURCHASE IS ENCLOSED IN THE PAPER BOOK AT PAGE NUMB ER 14 TO 15 . IT IS TAKEN NOTE THAT THE ASSESSEE LODGED THE SAID SHARES WITH THE DP M/S. VE DIKA SECURITIES LTD. ON 19.07.2013 (I.E. WITHIN A MONTH & 10 DAYS). THE SAID SHARES WERE SUB SEQUENTLY DEMATERIALIZED (COPY OF DEMAT STATEMENT OF ENCLOSED IN THE PAPER BOOK AT PA GE NUMBER 18).THEREAFTER IT IS NOTED THAT IN THE RELEVANT YEAR, THE ASSESSEE HAD SOLD TH E SHARES AT A CONSIDERATION OF RS. 494.70 PER SHARE RS. 24,56,793/- AND REMITTING STT THROUGH M/S . VARDHAMAN CAPITAL LTD. WHICH IS A REGISTERED BROKER AT THE BSE AND CLAIMED LONG TERM CAPITAL GAINS OF RS. 21,96,793/-(COPY OF CONTRACT NOTES IN CONNECTION WITH SALE OF SHARES ALONGWITH THE BANK STATEMENT REFLECTING THE RECEIPT OF SALE CONSIDERATION IS ENCLOSED IN TH E PAPER BOOK AT PAGE NUMBER 16 TO 17).IT IS NOTED THAT THE AO AT THE TIME OF ASSESSMENT PROC EEDINGS DESCRIBED AFTER TAKING NOTE OF THE INVESTIGATION REPORT OF INVESTIGATING WING THE MODU S OPERANDI OF BOOKING THE ALLEGED BOGUS LTCG. HOWEVER, THE AO HAS NOWHERE IN THE ASSE SSMENT ORDER REFERRED TO ANY MATERIAL WHICH CAN PROVE THE COMPLICITY OF ASSESSEE EITHER IN THE PRICE RIGGING OR IN THE 6 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 ALLEGED ACCOMMODATION ENTRY OPERATION. THE LD. CIT( A) CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT THE ENTIRE TRANSACTIONS ENTERED INT O BY THE ASSESSEE ARE BEYOND HUMAN PROBABILITY. IT IS NOTED THAT IN THE INSTANT CASE, THE ASSESSEE IS NOT CONNECTED WITH M/S. CCL INTERNATIONAL LTD. OR THEIR PROMOTERS, DIRECTORS AN D ANY OTHER PERSON WHO EXERCISES ANY CONTROL OVER M/S. CCL INTERNATIONAL LTD. OR ANY SO CALLED ENTRY OPERATOR. THERE IS NO EVIDENCE/MATERIAL TO SUGGEST THAT THE ASSESSEE HAS INDULGED IN ANY DUBIOUS ACTIVITY NOR HAS BEEN PART OF ANY MODUS OPERANDI AS STATED BY THE AO . IT IS NOTED THAT THERE IS NO MATERIAL/ EVIDENCE IN THE HANDS OF THE AO TO CONCLUDE WHAT IS APPARENT IS NOT REAL. IN THE ABSENCE OF ANY LINK BETWEEN THE ASSESSEE AND THE ALLEGED ADMIS SIONS OF THE DIRECTORS AND BROKERS, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE .IN THE ASSESSMENT ORDER AO HAD RELIED UPON THE PURPORTED STATEMENTS OF VARIOUS ALLEGED OP ERATORS ON THE BASIS OF WHICH THE AO HAD DRAWN ADVERSE INFERENCE IN THE INSTANT CASE. HO WEVER NOWHERE ANY OF THEM HAS NAMED THE ASSESSEE IN THE ALLEGED MANIPULATION. FURTHER, THE AO NEITHER PROVIDED A COPY OF THE THIRD PARTY STATEMENT WHICH SHOW THE COMPLICITY OF ASSESSEE IN ANY WRONG DOING TO CLAIM LTCG NOR GAVE ANY OPPORTUNITY TO CROSS EXAMINE THE SAID PERSONS. IT IS A WELL-SETTLED PRINCIPLE OF LAW THAT NO CREDENCE CAN BE GIVEN TO T HE STATEMENT/REPORT OF ANY PERSON TAKEN BEHIND THE BACK OF THE ASSESSEE UNLESS AN OPPORTUNI TY TO CROSS EXAMINE THE THIRD PARTY IS AFFORDED TO THE ASSESSEE. IN THIS REGARD, RELIANCE IS PLACED UPON THE FOLLOWING JUDGEMENT: (I) ANDMAN TIMBER INDUSTRIES VS CCE- [2015] 62 TAXMANN. COM 3 (SC) 8. IT IS NOTED THAT THE ASSESSEE CONDUCTED ALL THE TRANSACTIONS THROUGH A RECOGNIZED SHARE BROKER AND RECEIVED AND MADE THE PAYMENTS THROUGH A CCOUNT PAYEE CHEQUES. IT IS NOTED THAT THE GENUINE TRANSACTIONS CANNOT BE AND SHOULD NOT B E TREATED AS INGENUINE MERELY ON ARBITRARY VIEW OF SUSPICION. FOR THIS WE RELY ON TH E FOLLOWING CASES: I. CIT VS CARBO INDUSTRIES HONDINGS LTD. 244 ITR 422 ( CAL) II. CIT VS EMERALD COMMERCIAL LTD. 250 ITR 539 (CAL ) III. MUKTA GUPTA VS ITO & MOHAN LAL AGARWAL (HUF) V S ITO, ITA NOS. 2766- 2767/DEL/18, ORDER DATED 26.11.2018 [SCRIP NAME C CL INTERNATIONAL LTD. AT PAGE 1 TO 12 OF THE COMPILATION OF JUDGMENT] 7 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 9. IT WAS ALSO BROUGHT TO OUR NOTICE THAT IN A CASE DECIDED BY THE TRIBUNAL, DELHI MUKTA GUPTA VS ITO & MOHAN LAL AGARWAL (HUF) VS ITO IN IT A NOS. 2766-2767/DEL/2018 DATED 26.11.2018 IN AY 2014-15 WHEREIN THE ASSESSE E PLACED THE ASSESSMENT ORDERS FOR AY 2013-14 AND 2014-15 IN THE CASE OF M/S. CCL INTERNA TIONAL LTD. PASSED U/S. 143(3) OF THE ACT WHICH GOES ON TO SHOW THAT THE SCRIPS OF M/S. C CL INTERNATIONAL LTD. CANNOT BE CALLED AS BOGUS WHEREIN IT HAS BEEN HELD AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS WELL AS MATER REFERRED TO BE FORE US. AS DISCUSSED ABOVE, ASSESSEE HAS PURCHASED 10,000 SHARES ON 11.05.2009 @ 16.30 PER SHARE FOR TOTAL AMOUNT OF RS.1,63,000/- OUT OF WHICH RS.20,000/- WA S PAID IN CASH AND BALANCE AMOUNT OF RS.1,43,000/- THROUGH CHEQUE WHICH WAS DULY REFL ECTED IN THE STATEMENT OF AFFAIRS IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2010 -11. LATER ON, THE SAID SHARES WERE SUB-DIVIDED INTO 50,000 SHARES IN AUGUST, 2011. THE SE SHARES WERE STATED TO BE PURCHASED FROM THE DIRECT ALLOTTEE, MR. HIMANSHU PO KHARIYAL AND SUCH SHARES WERE TRANSFERRED DIRECTLY FROM DEMAT ACCOUNT OF THE SAID PERSON TO THE DEMAT ACCOUNT OF THE ASSESSEE THROUGH E-TRANSFER WITH ALLIED SERVICES PV T. LTD. OUT OF 50,000 SHARES, 20,000 SHARES WERE SOLD IN PREVIOUS YEAR AND BALANCE AMOUN T OF 30,000 SHARES HAVE BEEN SOLD IN THE RELEVANT ASSESSMENT YEAR. IT HAS NOT BEEN BR OUGHT ON RECORD THAT THE SALE OF SIMILAR SHARES IN THE EARLIER ASSESSMENT YEAR HAS B EEN DOUBTED OR NOT. IT IS NOT IN DISPUTE THAT, IN SO FAR AS PURCHASE OF SHARES THROU GH CHEQUE IS CONCERNED THE SAME WERE DULY REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE AND SHOWN IN THE EARLIER YEARS AND THE SALE CONSIDERATION IS ALSO SUPPORTED BY FOLLOWING E VIDENCES:- A) CONTRACT NOTE GIVING DATE, TIME SETTLEMENT DETAI LS ETC B) STT IS PAID ON TRANSACTION C) TRANSACTION IS THROUGH TRUSTLINE SECURITIES D) SALE IS MADE ON ONLINE MARKET OF BOMBAY STOCK EX CHANGE E) CONSIDERATION IS RECEIVED ELECTRONICALLY IN BANK THROUGH RTGS F) SHARES ARE TRANSFERRED FROM DEMAT ACCOUNT. 9. APART FROM THAT, IT IS NOT IN DISPUTE RATHER BOT H ASSESSING OFFICER AND LD. CIT (A) IN THEIR EXHAUSTIVE ORDER HAVE INCORPORATED THE PRICE MOVEMENT OF THE SAID SCRIP RIGHT FROM 06.02.2010 TO 09.12.2016 AND ON PERUSAL OF THE SAME IT IS SEEN THAT THERE HAS BEEN INCREASE AND DECREASE IN THE SHARES PRICES LIKE A N ORMAL SCRIP AND IT IS ALSO NOT IN DISPUTE THAT THE SAID SHARES WERE TRADED IN ALL THE YEARS UNDER THE STOCK EXCHANGE. BEFORE US, LEARNED COUNSEL HAS ALSO PLACED THE ASSE SSMENT ORDERS FOR THE ASSESSMENT YEAR 2013-14 AND 2014-15 IN THE CASE OF M/S. CCL IN TERNATIONAL LTD. PASSED U/S.143(3) TO SHOW THAT THIS COMPANY IS GENUINE AND REGULARLY ASSESSED TO TAX BY THE DEPARTMENT. FROM THE PERUSAL OF THE ENTIRE ASSESSMENT ORDER AND LD. CIT (A) ORDER, IT IS SEEN THAT, NOWHERE THERE IS ANY REFERENCE TO ANY MATERIAL OR I NFORMATION SO AS TO SUGGEST THAT; 8 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 FIRSTLY, ASSESSEE HAS BEEN FOUND TO BE BENEFICIAR Y OF ANY BOGUS OR ACCOMMODATION ENTRY IN ANY OF THE INVESTIGATION/SEARCHES CARRIED OUT ANYWHERE; SECONDLY, THERE IS NO MATERIAL THAT ANY ACTION HA S BEEN TAKEN BY THE SEBI AGAINST THIS COMPANY AND SUCH AN ACTION OF BLACK-LISTING THIS CO MPANY HAD ATTAINED FINALITY AND; LASTLY, IT IS ALSO MATTER OF RECORD THAT THE DEPA RTMENT IN OTHER CASES UNDER SCRUTINY PROCEEDINGS HAS ACCEPTED SIMILAR TRANSACTION OF SAL E OF SHARES OF M/S. CCL INTERNATIONAL LTD. 10. NOWHERE THE EVIDENCES FILED BY THE ASSESSEE HAS BEEN REBUTTED OR ANY INQUIRY WHATSOEVER HAS BEEN CONDUCTED BY THE ASSESSING OFFI CER OR BY THE LD. CIT(A) TO PROVE THAT ASSESSEE WAS INVOLVED IN ANY CLANDESTINE MANNE R FOR ROUTING ITS OWN UNACCOUNTED MONEY. IF THE ASSESSEE HAS FILED THE ENTIRE EVIDENC ES RELATING TO PURCHASE WHICH IS MOSTLY THROUGH CHEQUE SHOWN IN THE EARLIER YEARS AN D ALSO FILED ALL THE DETAILS OF SALE TRANSACTIONS AND THE SHARES WHICH HAVE BEEN ROUTED THROUGH DEMAT ACCOUNT AND SOLD THROUGH STOCK EXCHANGE ON A QUOTED PRICE ON THAT DA TE, THEN ONUS SHIFTS UPON THE DEPARTMENT TO PROVE THAT ALL THESE EVIDENCES ARE ON LY MAKE BELIEVE DOCUMENTS AND CERTAIN MINIMAL INQUIRY IS REQUIRED TO REBUT ALL TH ESE EVIDENCES. AS STATED ABOVE, NOWHERE IT HAS BEEN FOUND THAT ASSESSEE WAS IN ANY MANNER FOUND TO BE BENEFICIARY OF ANY ACCOMMODATION ENTRY UNDER ANY INQUIRY OR INVEST IGATION. ONCE ALL THESE TRANSACTIONS ARE DULY PROVED BY TRADING FROM STOCK EXCHANGE, THEN TO HOLD THE SALE OF SHARES AS UNEXPLAINED CREDIT OR AS UNEXPLAINED MONE Y CANNOT BE UPHELD. ACCORDINGLY, WE HOLD THAT THE MONEY CREDITED IN THE ACCOUNT OF T HE ASSESSEE IS FROM THE SALE OF SHARES AND ACCORDINGLY BENEFIT OF LONG TERM CAPITAL GAIN O N SALE OF SUCH LISTED EQUITY SHARES HAVE TO BE GIVEN. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 10. WE NOTE THAT SHARES OF M/S. CCL INTERNATIONAL L TD WERE SOLD BY ASSESSEE THROUGH RECOGNIZED BROKER IN A RECOGNIZED BOMBAY STOCK EXCH ANGE. THE DETAILS OF SUCH SALE AND CONTRACT NOTE HAVE BEEN SUBMITTED BEFORE AO/LD. CIT (A). WE TAKE NOTE THAT WHEN THE TRANSACTIONS HAPPENED IN THE STOCK EXCHANGE, THE S ELLER WHO SELLS HIS SHARES ON THE STOCK EXCHANGE DOES NOT KNOW WHO PURCHASES SHARES. ACCOR DING TO OUR KNOWLEDGE, THE SHARES ARE SOLD AND BOUGHT IN AN ELECTRONIC MODE ON THE COMPUT ERS BY THE BROKERS AND THERE IS ALSO NO DIRECT CONTACT AT ANY LEVEL EVEN BETWEEN THE BROKER S. WE NOTE THAT AS AND WHEN ANY SHARES ARE OFFERED FOR SALE IN THE STOCK EXCHANGE PLATFORM , ANY ONE OF THE THOUSANDS OF BROKERS REGISTERED WITH THE STOCK EXCHANGE IS AT LIBERTY TO PURCHASE IT. AS FAR AS OUR UNDERSTANDING, THE SELLING BROKER DOES NOT EVEN KNOW WHO THE PURCH ASING BROKER IS. THIS IS HOW THE SEBI KEEPS A STRICT CONTROL OVER THE TRANSACTIONS TAKING PLACE IN RECOGNIZED STOCK EXCHANGES. 9 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 UNLESS THERE IS A EVIDENCE TO SHOW THAT THERE IS A BREACH IN THE AFORESAID PROCESS WHICH FACT HAS BEEN UNEARTHED BY METICULOUS INVESTIGATION, WE ARE OF THE OPINION THAT THE UNSCRUPULOUS ACTIONS OF FEW PLAYERS EXPLOITING THE LOOPHOLES OF THE STOCK EXCHANGE CANNOT BE THE BASIS TO PAINT THE ENTIRE SALE/PURCHASE OF A SCRIP LIKE THAT OF M/S. CCL INTERNATIONAL LTD AS BOGUS WITHOUT BRINGING OUT ADVERSE MATERIAL SPECIFICALLY AGAINST THE ASSESSEE. 11. THE FACT OF HOLDING THE SHARES OF M/S. CCL INTE RNATIONAL LTD IN THE D-MAT ACCOUNT CANNOT BE DISPUTED. FURTHER, THE ASSESSING OFFICER HAS NOT EVEN DISPUTED THE EXISTENCE OF THE D-MAT ACCOUNT AND SHARES CREDITED IN THE D-MAT ACCO UNT OF THE ASSESSEE. THEREFORE, ONCE, THE HOLDING OF SHARES IS D-MAT ACCOUNT CANNOT BE DI SPUTED THEN THE TRANSACTION CANNOT BE HELD AS BOGUS. THE AO HAS NOT DISPUTED THE SALE OF SHARES FROM THE D-MAT ACCOUNT OF THE ASSESSEE AND THE SALE CONSIDERATION WAS DIRECTLY CR EDITED TO THE BANK ACCOUNT OF THE ASSESSEE, THEREFORE, ONCE THE ASSESSEE PRODUCED ALL RELEVANT EVIDENCE TO SUBSTANTIATE THE TRANSACTION OF PURCHASE, DEMATERIALIZATION AND SALE OF SHARES THEN , IN THE ABSENCE OF ANY CONTRARY MATERIAL BROUGHT ON RECORD THE SAME CANNOT BE HELD AS BOGUS TRANSACTION MERELY ON THE BASIS OF STATEMENT OF THIRD PARTY RECORDED BY THE INVESTIGA TION WING, KOLKATA WHEREIN THERE IS A GENERAL STATEMENT OF PROVIDING BOGUS LONG TERM CAPI TAL GAIN TRANSACTION TO THE CLIENTS WITHOUT STATING ANYTHING ABOUT THE TRANSACTION OF A LLOTMENT OF SHARES BY THE COMPANY TO THE ASSESSEE. 12. WE NOTE THAT THE SALE OF SHARES OF M/S. CCL IN TERNATIONAL LTD WHICH WAS DEMATERLIZED IN DEMAT ACCOUNT HAS TAKEN PLACE THROU GH RECOGNISED STOCK EXCHANGE AND ASSESSEE RECEIVED MONEY THROUGH BANKING CHANNEL. SO , ASSESSEE HAS EXPLAINED THE NATURE AND SOURCE OF THE MONEY WITH SUPPORTING DOCUMENTS A ND THUS HAS DISCHARGED THE ONUS CASTED UPON HIM BY PRODUCING THE RELEVANT DOCUMENTS MENTIONED IN PARA 7 (SUPRA), ACCORDINGLY, THE QUESTION OF TREATING THE SAID GAIN AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT CANNOT ARISE UNLESS THE AO IS ABLE TO FIND FAULT/INFIRMITY WITH THE SAME. WE NOTE THAT THE SOURCE OF THE RECEIPT OF THE AMOUNT H AS BEEN EXPLAINED AND THE TRANSACTION IN RESPECT OF WHICH THE SAID AMOUNT HAS BEEN RECEIVED BY ASSESSEE HAS NOT BEEN CANCELLED BY 10 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 THE STOCK EXCHANGE/SEBI. SO, IT IS DIFFICULT TO COU NTENANCE THE ACTION OF AO/LD. CIT(A) IN THE AFORESAID FACTS AND CIRCUMSTANCES EXPLAINED ABO VE. 13. EVEN ASSUMING THAT THE BROKERS MAY HAVE DONE SO ME MANIPULATION THEN ALSO THE ASSESSEE CANNOT BE HELD LIABLE FOR THE ILLEGAL ACTI ON OF THE BROKERS WHEN THE ENTIRE TRANSACTIONS HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS DULY RECORDED IN THE DEMAT ACCOUNTS WITH A GOVERNMENT DEPOSITORY AND TRADED ON THE STOCK EXCHANGE UNLESS SPECIFIC EVIDENCE EMERGES THAT THE ASSESSEE WAS IN HAND IN G LOVES WITH THE BROKER FOR COMMITTING THE UNSCRUPULOUS ACTIVITY TO LAUNDER HIS OWN MONEY IN T HE GUISE OF LTCG IS BROUGHT ON RECORD BY THE AO. 14. THERE IS ALSO NOTHING ON RECORD WHICH COULD SUG GEST THAT THE ASSESSEE GAVE HIS OWN CASH AND GOT CHEQUE FROM THE ALLEGED BROKERS/BUYERS . THE ASSESSMENT IS BASED UPON SOME THIRD PARTIES STATEMENTS RECORDED BEHIND THE BACK O F THE ASSESSEE AND THE ASSESSEE HAS NOT BEEN ALLOWED TO CROSS EXAMINE THOSE PERSONS, SO TH E STATEMENTS EVEN IF ADVERSE AGAINST THE ASSESSEE CANNOT BE RELIED UPON BY THE AO TO DRAW AD VERSE INFERENCE AGAINST THE ASSESSEE IN THE LIGHT OF THE DOCUMENTS TO SUBSTANTIATE THE CLAI M OF LTCG, WHICH HAS NOT BEEN FOUND FAULT WITH BY THE AO. 15. LET US LOOK AT CERTAIN JUDICIAL DECISIONS ON SI MILAR FACTS:- 16. THE CASE OF THE ASSESSEES IS SIMILAR TO THE DE CISION OF HONBLE BOMBAY HIGH COURT, NAGPUR BENCH IN CIT VS. SMT. JAMNADEVI AGRAWAL & OR S. DATED 23RD SEPTEMBER, 2010 REPORTED IN (2010) 328 ITR 656 WHEREIN IT WAS HELD THAT: 'THE FACT THAT THE ASSESSEES IN THE GROUP HAVE PURC HASED AND SOLD SHARES OF SIMILAR COMPANIES THROUGH THE SAME BROKER CANNOT BE A GROUN D TO HOLD THAT THE TRANSACTIONS ARE SHAM AND BOGUS, ESPECIALLY WHEN DOCUMENTARY ITA NOS. 93 TO 99/RPR/2014 & C.O. NOS. 12 TO 18/RPR/2014 . A.Y. 2004-05 10 PRODUCED TO ESTABLISH THE GENUINENESS OF THE CLAIM. FROM THE DOCUMENTS PRODUCED, IT IS SEEN THAT THE SHARES IN Q UESTION WERE IN FACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY H AS CONFIRMED TO HAVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEES. SIMILARLY, THE S ALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRODUCING DOCUMENTARY EVIDENCE. IT IS TRUE THAT SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS. HOWEVER, THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET RA TES PREVAILING ON THE RESPECTIVE DATES AS IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEES. THEREFORE, THE FACT THAT SOME OF THE 11 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 TRANSACTIONS WERE OFF-MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHAM TRANSACTIONS. THE STATEMENT OF THE BROKER P TH AT THE TRANSACTIONS WITH THE H GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCIN G DOCUMENTARY EVIDENCE TO THE EFFECT THAT THE SHARES SOLD BY THE ASSESSEES WERE IN CONSO NANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EVIDENCE, THE TRIBUNAL HAS ARRIVE D AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT ON RECORD TO SHOW THAT THE FINDINGS RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE DOCUMENTARY EVIDENCE ON RECORD. THE TRIBUNAL HAS FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE,BANK A CCOUNTS OF SOME OF THE BUYERS OF SHARES CANNOT BE LINKED TO THE ASSESSEES. MOREOVER, YN THE LIGHT OF THE DOCUMENTARY EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE A SSESSEES WERE IN CONFORMITY WITH THE MARKET PRICE, THE TRIBUNAL RECORDED A FINDING OF FA CT THAT THE CASH CREDITS IN THE BUYERS' BANK ACCOUNTS CANNOT BE ATTRIBUTED TO THE ASSESSEES. NO FAULT CAN BE FOUND WITH THE ABOVE FINDING RECORDED BY THE TRIBUNAL. THEREFORE, THE DECISION O F THE TRIBUNAL IS BASED ON FINDING OF FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDE R OF THE TRIBUNAL.ASSTT. CIT VS. KAMAL KUMAR S. AGRAWAL (INDL.) & ORS. (2010) 41 DTR (NAG) (TRIB) 105: (2010) 133 TTJ (NAG) 818 AFFIRMED; SUMATI DAYAL VS. CIT (1995) 125 CTR (SC) 124: (1995) 80 TAXMAN 89 (SC) DISTINGUISHED. 12. THE HON'BLE HIGH COURT OF RAJASTHAN IN CIT VS. SMT. PUSHPA MALPANI - REPORTED IN (2011) 242 CTR (RAJ.) 559; (2011) 49 DTR 312 DISMIS SED THE APPEAL OF DEPARTMENT OBSERVING 'WHETHER OR NOT THERE WAS SALE OF SHARES AND RECEIP T OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSENTIALLY A QUESTION OF FACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT AT THE TIME O F TRANSACTIONS, THE BROKER IN QUESTION WAS NOT BANNED BY SEBI AND THAT ASSESSEE HAD PRODUCED COPIE S OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICATE, APPLICATION FOR TRANSFER OF SHAR E CERTIFICATE TO DEMAT ACCOUNT ALONG WITH COPIES OF HOLDING STATEMENT IN DEMAT ACCOUNT, BALAN CE SHEET AS ON 31ST MARCH, 2003, SALE BILL, BANK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS, OF CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. ON 23RD JULY, 2003. THEREFORE, 'TH E PRESE/ITDPPEAL DOES NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. 17. THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF ANUPAM KAPOOR 299 ITR 0179 HAS HELD AS UNDER:- THE TRIBUNAL ON THE BASIS OF THE MATERIAL ON RECOR D, HELD THAT PURCHASE CONTRACT NOTE, CONTRACT NOTE FOR SATES, DISTINCTIVE NUMBERS OF SHA RES PURCHASED AND SOLD, COPY OF SHARE CERTIFICATES AND THE QUOTATION OF SHARES ON THE DAT E OF PURCHASE AND SALE WERE SUFFICIENT MATERIAL TO SHOW THAT THE TRANSACTION WAS NOT BOGUS BUT A GENUINE TRANSACTION. THE PURCHASE OF SHARES WAS MADE ON 28TH APRIL, 1993 I.E.. ASST. YR. 1993-94 AND THAT ASSESSMENT WAS ACCEPTED BY THE DEPARTMENT AND THERE WAS NO CHALLEN GE TO THE PURCHASE OF SHARES IN THAT YEAR. IT WAS ALSO PLACED BEFORE THE RELEVANT AO AS WELL A S BEFORE THE TRIBUNAL THAT THE SALE PROCEEDS HAVE BEEN ACCOUNTED FOR IN THE ACCOUNTS OF THE ASSE SSEE AND WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE TRIBUNAL WAS RIGHT IN REJECTING T HE APPEAL OF THE REVENUE BY HOLDING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPAN Y. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CO NTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTE D AND THE TRANSACTION TOOK PLACE THROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHICH COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITIER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUCH PRESUMP TION COULD BE DRAWN BY THE AO MERELY ON SURMISES AND CONJECTURES. IN THE ABSENCE OF ANY COG ENT MATERIAL IN THIS REGARD, HAVING BEEN PLACED ON RECORD, THE AO COULD NOT HAVE REOPENED TH E ASSESSMENT. THE ASSESSEE HAD MADE AN INVESTMENT IN A COMPANY, EVIDENCE WHEREOF WAS WITH THE AO. --THEREFORE, THE AO COULD NOT HAVE ADDED INCOME, WHICH WAS RIGHTLY DELETED BY THE CIT(A) AS WELL AS THE TRIBUNAL. IT IS 12 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 SETTLED LAW THAT SUSPICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. CONSEQUENTLY, NO QUESTION OF LAW, MUCH LESS A SUBST ANTIAL QUESTION OF LAW, ARISES FOR ADJUDICATION. C. VASANTLAL & CO. VS. CIT (1962) 45 ITR 206 (SC), M.O. THOMAKUTTY VS. CIT (.1958) 34 ITR 501 (KER)) AND MUKAND SINGH VS. SALE S TAX TRIBUNAL (1998) 107 STC 300 (PUNJAB) RELIED ON; UMACHARAN SHAW &BROS. VS. CIT ( 1959) 37 ITR 271 (SC) APPLIED; JASPAL SINGH VS. CIT (2006) 205 CTR (P & H) 624 DISTINGUIS HED 18. THE CO-ORDINATE BENCH OF AHMEDABAD IN ITA NOS. 501 & 502/AHD/2016 HAD THE OCCASION TO CONSIDER A SIMILAR ISSUE WHICH WAS WHER EIN THE ASSESSMENT WAS FRAMED ON THE STRENGTH OF THE STATEMENT OF A BROKER. THE RELEVANT PART READS AS UNDER:- 14. THE ENTIRE ASSESSMENT IS BASED UPON THE STATEMENT O F SHRI MUKESH CHOKSI. IT IS AN UNDISPUTED FACT THAT NEITHER A COPY OF THE STATEMEN T WAS SUPPLIED TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN BY THE A SSESSING OFFICER/CIT(A). THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES IN CIVIL APPEAL NO. 4228 OF 2006 WAS SEIZED WITH THE FOLLOWING ACTION OF THE TRIBUNA L :- 6. THE PLEA OF NO CROSS EXAMINATION GRANTED TO THE VARIOUS DEALERS WOULD NOT HELP THE APPELLANT CASE SINCE THE EXAMINATION OF THE DEA LERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE POSSESSION OF TH E APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PRICES REMAIN STATIC. SI NCE WE ARE NOT UPHOLDING AND APPLYING THE EX FACTORY PRICES, AS WE FIND THEM CON TRAVENED AND NOT NORMAL PRICE AS ENVISAGED UNDER SECTION 4(1), WE FIND NO REASON TO DISTURB THE COMMISSIONERS ORDERS. 15. THE HONBLE APEX COURT HELD AS UNDER :- ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND T HAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAI D TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY 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 THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AF ORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE T RIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EXFACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL T O HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOS E DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR T ESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS EXAMINATIO N. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAIN TAINED AT THE DEPOT TO DETERMINE THE 13 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETH ER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS ME NTIONED IN THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFO RE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUB JECT MATTER OF THE CROSS- EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE . WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REM ITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL O N MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF TH E TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTM ENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESA ID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE. WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. 16. ON THE STRENGTH OF THE AFOREMENTIONED DECISIO N OF THE HONBLE SUPREME COURT, THE ASSESSMENT ORDER HAS TO BE QUASHED . 17. EVEN ON FACTS OF THE CASE, THE ORDERS OF THE AU THORITIES BELOW CANNOT BE ACCEPTED. THERE IS NO DENYING THAT CONSIDERATION WAS PAID WHEN THE SHA RES WERE PURCHASED. THE SHARES WERE THEREAFTER SENT TO THE COMPANY FOR THE TRANSFER OF NAME. THE COMPANY TRANSFERRED THE SHARES IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECOR D WHICH COULD SUGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THER E IS ALSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE NEVER WITH THE ASSESSEE. ON THE CON TRARY, THE SHARES WERE THEREAFTER TRANSFERRED TO DEMAT ACCOUNT. THE DEMAT ACCOUNT WAS IN THE NAME OF THE ASSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF TH E SHARES WERE OF SOME FICTITIOUS COMPANY WHICH WAS NOT LISTED IN THE BOMBAY STOCK EXCHANGE/N ATIONAL STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFERRED TO DEMAT ACCOUNT. SHRI MUKESH CHOKSI MAY HAVE BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT THE TRANSACTIONS WERE GENUINE AND THER EFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN. 18. IN THE LIGHT OF THE DECISIONS OF THE HONBLE S UPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND CONSIDERING THE FACTS IN TOT ALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PRESUMPTION AND SURMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT EVIDENCES ON RECORD RELATING TO THE SALE/PUR CHASE TRANSACTIONS IN SHARES SUPPORTED BY BROKERS CONTRACT NOTES, CONFIRMATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE DEMAT ACCOUNT. 19. ACCORDINGLY, WE DIRECT THE A.O. TO TREAT THE GA INS ARISING OUT OF THE SALE OF SHARES UNDER THE HEAD CAPITAL GAINS- SHORT TERM OR LONG TERM AS THE CASE MAY BE. THE OTHER GRIEVANCE OF THE ASSESSEE BECOMES INFRUCTUOUS. 19. THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SU PPORT OF THE CLAIM OF THE ASSESSEE THAT IT EARNED LTCG ON TRANSACTIONS OF HIS INVESTMENT IN SH ARES. THE PURCHASE OF SHARES HAD BEEN ACCEPTED BY THE AO IN THE YEAR OF ITS ACQUISITION AND THEREAFTER UNTIL THE SAME WERE SOLD. 14 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 THE OFF MARKET TRANSACTION FOR PURCHASE OF SHARES I S NOT ILLEGAL AS WAS HELD BY THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF D OLARRAI HEMANI VS. ITO IN ITA NO. 19/KOL/2014 DATED 2.12.2016 AND THE DECISION BY HONBLE CALCUTTA HIGH COURT IN PCIT VS. BLB CABLES & CONDUCTORS PVT. LTD. IN ITAT NO. 78 OF 2017 DATED 19.06.2018 WHEREIN ALL THE TRANSACTIONS TOOK PLACE OFF MARKET AND THE LOSS ON COMMODITY EXCHANGE WAS ALLOWED IN FAVOUR OF ASSESSEE. THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE CHEQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE OF SHARES AN D THE SALE OF SHARES WERE ALSO REFLECTED IN DEMAT ACCOUNT STATEMENTS. THE SALE OF SHARES SUFFER ED STT, BROKERAGE ETC. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE HELD THAT T HE TRANSACTIONS WERE BOGUS. THE FOLLOWING JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT :- (I) THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME VS M/S. BLB CABLES AND CONDUCTORS ; ITAT NO.78 OF 2017, GA NO.747 OF 2017; DT. 19 JUNE, 2018, HAD UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS FOLLOWS:- '4. WE HAVE HEARD BOTH THE SIDE AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE LD. AR SUBMITTED TWO PAPERS BOOKS. FIRST BOOK IS RUNNING I N PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US THE LD. AR S UBMITTED THAT THE ORDER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH THE BROKER WAS EXPELLED. THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF BOTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBMITTE D THE IT RETURN, LEDGER COPY, LETTER TO AO LAND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM W HICH IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTRACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REGISTERS WERE ALSO SUBMITTED IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. THE BOARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIONS IN COMMODITY WA S PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER HAND THE LD. DR RELIED IN THE ORDER OF THE LOWER AUTHORITIES. 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD SUCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME LOSS WAS ALSO CONFIRMED B Y THE LD. CIT(A). HOWEVER WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY R ECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS A ND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME C ONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. II) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDENCES PRODUCED BY THE ASSESSEE TO SUPPORT 15 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINI ON OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGH T HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY FAILED TO SUBSTANTIATE 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 SUBSTANTI ATED. III)CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITE D [2013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RE CORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE O F PROOF. IT WAS FURTHER HELD THAT IN ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANSACTIONS OF BUYING OR SELLING OF SHARES WERE CO LOURABLE TRANSACTIONS OR WERE RESORTED TO WITH ULTERIOR MOTIVE. IV) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CA L HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BR OKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMIS SED. V) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE DECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHE RE THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN A LLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOC K ON THE BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT TH E AO DID NOT DOUBT THE GENUINENESS OF 16 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUN AL HELD THAT THE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. TH E APPEAL FILED BY THE REVENUE WAS DISMISSED. VI) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM ED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. VII) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE AO, BASED ON THE I NFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUM ENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTR ACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIV ED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARIL Y DISMISSED BY HIGH COURT. 20. WE NOTE THAT SINCE THE PURCHASE AND SALE TRA NSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND BANK ST ATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTED BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BASIS OF SOME REPORT S OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTI ES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAI D JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLOWING CASES:- (I) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (II) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) 17 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (IV) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (V) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VI) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (VII) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (IX) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (X) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XI) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XII) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XIII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XIV) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XVI) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XVII) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XVIII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XIX) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 21. THE LD AR ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRAN SACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADE SH [1977] 1 SCC 816 (SC) . IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNE R ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARG ED BY ADDUCING EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BE NAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER 18 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WH ICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT H AS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAI MED BY THE ASSESSEE ON LTCG ON ALLEGED PENNY SOCKS. (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 22. MOREOVER IT WAS SUBMITTED BEFORE US BY LD AR TH AT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SUBMITTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFFECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HIS BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN CSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SU PPORT OF THIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO W AS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSE SS THE SALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. AMITA AGARWAL & OTHERS - ITA NOS. 247/(KO L)/ OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 23. WE NOTE THAT THE LD. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMALCHAND JAIN IN TAX APPEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIN D THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PUR CHASES WERE MADE BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WA S INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOW N AS CAPITAL GAINS WHICH WAS NOT 19 ITA NO. 2381/KOL/2018 MOOL CHAND JAGWAYAN, AY 2015-16 ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTU RE IN NATURE OF TRADE. THUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UPON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARNED ON SALE OF SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT . 24. IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF T HE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BEN CH OF THE TRIBUNAL HAS DELETED THE ADDITION PARA 9 SUPRA AND ALLOWED THE CLAIM OF LTCG ON SALE OF SHARES OF M/S. CCL INTERNATIONAL LTD. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME , AND SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPIT AL AS BOGUS AND DELETE THE CONSEQUENTIAL ADDITION. RESPECTFULLY TAKING NOTE OF THE AFORESAID DECISION OF THE TRIBUNAL & DOCUMENTS FURNISHED BY ASSESSEE TAKEN NOTE BY ME AT PARA 7 (S UPRA), I ALLOW THE APPEAL OF THE ASSESSEE. 25. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JUNE, 2019 SD/- (A. T. VARKEY) JUDICIAL MEMBER DATED: 7TH JUNE, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT SHRI MOOL CHAND JAGWAYAN, C/O, M. C. JAG WAYAN & CO., 46, KALI KRISHNA TAGORE STREET, 2 ND FLOOR, KOLKATA-700 007. 2 RESPONDENT ITO, WARD-22(4), KOLKATA. 3 4 5 CIT(A)-6, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR