Prakash Chand Bhutoria, Kolkata V. ITO, Ward - 35(1), Kolkata , Kolkata

ITA 2394/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6603 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 29-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained cash credit; Earning of tax free income; Question of law; Accommodation entries; Penny stocks
• Section: 143(3); 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] I.T.A NO. 2394/KOL/20 17 ASSESSMENT YEAR : 2014-1 5 PRAKASH CHAND BHUTORIA -VS- ITO, WARD-35(1), KOLKATA [PAN: ADIPB 4624 L] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI MIRAJ D SHAH, AR FOR THE REVENUE : SMT. RANU BISWAS, ADDL. C IT DATE OF HEARING : 18.04.2018 DATE OF PRONOUNCEMENT : 27..06.2018 ORDER THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLKATA [ IN SHORT THE LD CITA] DATED 16.08.2017 AGAINST THE ORDER PASSED BY THE ITO, WARD-35(1), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) DATED 13.12.2016 FOR THE ASSESSMENT YEAR 2014-15. 2. THE ASSESSEE IS AN INDIVIDUAL AND HAS INCOME FRO M BUSINESS AND OTHER SOURCES. HE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 22.07.2014 DECLARING, A NET TAXABLE INCOME OF RS. 2,10,190/-. THE ASSESSEE CLAIMED EXEMPT INCOME U/S 10(38) OF THE ACT ON SALE OF SHARES OF M/S UNNO INDUSTRIES LT D. AMOUNTING TO RS. 30,60,379/-. THE AO FOR THE REASON CITED AT PARA 6 AND 7 OF HIS ORDE R TREATED THE RECEIPT OF SALE CONSIDERATION ON SALE OF SHARES AS UNACCOUNTED INCO ME AND MADE AN ADDITION U/S 68 OF 2 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 2 THE ACT. ON APPEAL, THE LD. FIRST APPELLATE AUTHORI TY CONFIRMED THE SAME. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD SHRI MIRAJ D SHAH, LD. COUNSEL FOR THE ASSESSEE AND SMT. RANU BISWAS, THE LD. ADDITIONAL CIT DR ON BEHALF OF THE REVENUE. 4. ON A CAREFUL CONSIDERATION AND FACTS AND CIRCUMS TANCES OF THE CASE, PERUSAL OF PAPERS ON RECORD, AND ORDERS OF THE LOWER AUTHORITIES BELO W AS WELL AS CASE LAW CITED I HOLD AS FOLLOWS. 5. IN RESPONSE TO THE QUERIES RAISED BY THE ASSESSI NG OFFICER ON THE ISSUE OF THE FACT THAT THE ASSESSEE RECEIVED RS. 31,62,372/- FROM SALE OF ONCE SCRIPS I.E. UNNO INDUSTRIES LTD. THE ASSESSEE SUBMITTED THE FOLLOWING FACTS: DETAILS OF PURCHASE OF SHARE FOR LONG TERM CAPIT AL GAIN F.Y.2013-14 (A.Y.2014-15): 1. I STATE THAT I HAD PURCHASED 100 EQUITY SHARES OF PINNACLE VINTRADE LTD. ON 20.01.2012 FROM UNIGLORY DEVELOPERS PVT. LTD. PINNA CLE VINTRADE LTD. WAS MERGED WITH UNNO INDUSTRIES LTD. AND THERE WAS CHANGE OF M ANAGEMENT AND CONTROL OF UNNO INDUSTRIES LTD. PURSUANT TO SCHEME OF ARRANGEM ENT SANCTIONED BY THE HONBLE HIGH COURT AT BOMBAY. 2. PAYMENT FOR THE PURCHASE OF AFORESAID 100 EQUITY OF PINNACLE VINTRADE LTD. WAS MADE BY ACCOUNT PAYEE TAMILNAD MERCANTILE LTD. BAN K CHEQUE NO. 736027. 3. BANK STATEMENT OF TAMILNAD MERCANTILE LTD. BANK REF LECTING PAYMENT (CHEQUE NO. 736027) FOR PURCHASE OF THE SAID INVESTMENT IN EQUI TY SHARES OF PINNACLE VINTRADE LTD. IS ENCLOSED (HIGHLIGHTING THE SAID ENTRY). ANNEXURE-I. 4. THE EQUITY SHARES OF UNNO INDUSTRIES LTD. WERE ALLO TTED PURSUANT UPON MERGER OF PINNACLE VINTRADE LTD. WITH UNNO INDUSTRIES LTD. PU RSUANT TO SANCTION OF SCHEME OF ARRANGEMENT BY THE HONBLE HIGH COURT AT BOMBAY, I WAS ISSUED 91000 EQUITY SHARES OF UNNO INDUSTRIES LTD. IN LIEU OF MY SHAREH OLDING IN PINNACLE VINTRADE LTD. THE RELEVANT GIST OF THE SCHEME OF ARRANGEMENT SANC TIONED BY THE HONBLE HIGH COURT WAS COMMUNICATED BY THE COMPANY TO THE BOMBAY STOCK EXCHANGE VIDE LETTER DATED 12 TH FEBRUARY, 2013. A COPY OF THE SAID LETTER DOWNLOAD ED FROM BSE WEBSITE IS ENCLOSED FOR YOUR READY REFERENCE. I ALSO ENCLOS E UNNO INDUSTRIES LTD. LETTER DATED 3 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 3 12 TH FEBRUARY, 2013 AND 7 TH MARCH, 2013 COMMUNICATING THE ISSUANCE OF SHARES I N LIEU SHARES OF PINNACLE VINTRADE LTD. UPON SANCTION OF SCHEME OF ARRANGEMENT BY THE HONBLE COURT. ANNEXURE II 5. AS THE EQUITY SHARES OF PINNACLE VINTRADE LTD. PURC HASED WERE NOT LISTED, HENCE NO CONTRACT NOTES WERE ISSUED. HOWEVER, COPY OF BILL I NDICATING PURCHASE OF SAID EQUITY SHARES IS ENCLOSED. ANNEXURE III 6. EQUITY SHARES OF PINNACLE VINTRADE LTD., WERE DIREC TLY PURCHASED FROM UNIGLORY DEVELOPERS PVT. LTD. 209, VIRESHWAR CHAMBERS, M.G. ROAD, NERA SHAN TALKIES VILE PARLE (E), MUMBAI, MAHARASHTRA-400057. 7. EQUITY SHARES OF PINNACLE VINTRADE LTD. WERE PURCHA SED IN PHYSICAL FORM. 8. I HAVE THREE DEMAT ACCOUNTS AS FOLLOWS- A) NAME OF DP- ASHIKA STOCK BROKING LTD. (DP ID NO. 12034500) DEMAT ACCOUNT NO. 1203450000003128 ADDRESS OF DP-TRINITY, 7 TH FLOOR, 226/1, A.J.C. BOSE ROAD, KOLKATA-700020. DP ACCOUNT OPENED ON-31.08.2004 B) NAME OF DP- GUINESS SECURITIES LTD. (DP ID NO. IN302898) DEMAT ACCOUNT NO. 10350406 ADDRESS OF DP-GUINESS HOUSE, 18, DESHPRIYA PARK ROA D, KOLKATA-700026. DP A/C OPENED ON-25.05.2013 C) NAME OF DP- TAMILNAD MERCANTILE BANK LTD. (DP ID NO. IN303069) DEMAT ACCOUNT NO. 10051996 ADDRESS OF DP-PEARL TOWERS DPS CELL, AC 16, III FLO OR, II AVENUE, ANNA NAGAR WEST, CHENNAI-600040. 9. DEMAT STATEMENTS OF M/S ASHIKA STOCK BROKING LTD. A ND GUINESS SECURITIES LTD. FOR F.Y. 2013-14 AND 2014-15 IN RESPECT OF LONG TERM CA PITAL GAINS ARE ENCLOSED. ANNEXURE IV. 10. THE EQUITY SHARES OF M/S UNNO INDUSTRIES LTD. WERE SUBMITTED FOR DEMATERIALIZATION ON 01.04.2013 AND CREDITED TO MY DEMAT A/C NO. 1203 450000003128 WITH M/S ASHIKA STOCK BROKING LTD. (DP ID NO. 12034500) ON 1 2.04.2013 (91000 SHARES). DETAILS OF SALE OF SHARE FOR LONG TERM CAPITAL GAIN FINANCIAL YEAR 2013- 14(A.Y.2014-15): 4 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 4 1. THE EQUITY SHARES OF M/S UNNO INDUSTRIES LTD. ARE L ISTED AT BOMBAY STOCK EXCHANGE (BSE), A RECOGNIZED STOCK EXCHANGE OF INDI A SINCE LAST SO MANY YEARS AND EVEN DURING THE TIME OF SALE BY ME. THE SECURIT Y CODE OF THE SAID EQUITY SHARES AT BSE IS 519273 AND ISIN NO. IS INE 142N010 23. 2. EQUITY SHARES OF UNNO INDUSTRIES LTD. WERE SOLD ON BOMBAY STOCK EXCHANGE THROUGH SEBI REGISTERED STOCK BROKER ASHIKA STOCK B ROKING LTD. AND GUINESS SECURITIES LTD. WHOSE DETAILS ARE AS UNDER: A) NAME: ASHIKA STOCK BROKING LTD. ADDRESS: TRINITY, 7 TH FLOOR, 226/1, A.J.C. BOSE ROAD, KOLKATA-700020. CONTACT NO. 033 22839952. B) NAME: GUINESS SECURITIES LTD. ADDRESS: GUINESS HOUSE, 18, DESHPRIYA PARK ROAD, KO LKATA-700026 CONTACT NO. 033 30015555. 3. CONTRACT NOTES ISSUED REGARDING SALE OF EQUITY SHAR ES OF UNNO INDUSTRIES LTD. ON BOMBAY STOCK EXCHANGE BY SEBI REGISTERED BROKERS- A SHIKA STOCK BROKING LTD. AND GUINESS SECURITIES LTD. ARE ENCLOSED. ANNEXURE V. 4. THE RELEVANT DEMAT ACCOUNT STATEMENTS OF ASHIKA STO CK BROKING LTD. AND GUINESS SECURITIES LTD. REFLECTING THE DEBIT OF SHA RES OF UNNO INDUSTRIES LTD. UPON SALE ARE ENCLOSED. (ENTRIES HIGHLIGHTED). ANNEXURE VI . 5. THE LEDGER OF THE BROKERS OF ASHIKA STOCK BROKING L TD. AND GUINESS SECURITIES LTD. FOR THE FINANCIAL YEAR 2013-14 ARE ENCLOSED. ANNEXURE VII. 6. TAMILNAD MERCANTILE LTD. BANK STATEMENT REFLECTING THE RECEIPTS OF SALE CONSIDERATION FROM THE SEBI REGISTERED STOCK BROKER S (HIGHLIGHTING THE SAID ENTRIES) IS ENCLOSED. ANNEXURE VIII. 7. OUT OF SALE CONSIDERATION MONEY OF RS. 3151423.00 F ROM UNNO INDUSTRIES LTD. A SUM OF RS. 3150000.00 HAS BEEN INVESTED IN EQUITY S HARES OF GLOW DIAM DESIGNS PVT. LTD. ALL THE EVIDENCES WERE ATTACHED AS ANNEXURES AS STA TED ABOVE. 6. THE ASSESSING OFFICER IN HIS ORDER DID NOT REFER TO ANY OF THESE EVIDENCES. INSTEAD AT PARA 6 AND 7 HE CONCLUDED HELD AS FOLLOWS: 5 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 5 6. THE DETAILS OF PURCHASE AND SALE OF THIS PARTIC ULAR SCRIP I.E. UNNO INDUSTRIES LTD. (HEREINAFTER REFERRED AS THE SCRIP) WERE EXAMINED I N WHICH SHARES WERE SOLD IN JUNE/AUGUST, 2013 AT THE PRICE OF RS. 31,62,379/- A ND PURCHASED RS. 1,00,000/- I.E. A HUMONGOUS RISE OF OVER 3100% OVER A VERY SHORT PERI OD OF JUST 24 MONTHS. THESE FACTS DEMANDED A DEEPER STUDY OF THE PRICE MOVEMENTS AND SHARE MARKET BEHAVIOR OF THE ENTITIES INVOLVED IN TRADE, OF THE SCRIP AS THE SHA RE PRICE MOVEMENTS AND THE PROFIT EARNED BY THE BENEFICIARIES WERE BEYOND HUMAN PROBA BILITIES. THUS A DEEPER STUDY WAS NEEDED TO ASCERTAIN WHETHER THE TRANSACTIONS WERE G ENUINE INVESTMENT TRANSACTION OF SHAM ONES AND COLORABLE DEVICE ONLY TO CONVERT THE UNACCOUNTED CASH INTO TAX EXEMPT. 7. APART FROM THIS, THE DIRECTORATE OF INCOME TAX, KOLKATA VARIOUS ENQUIRIES HAVE BEEN MADE ON PROJECT BASIS, WHICH HAS RESULTED INTO THE UNEARTHING OF HUGE SYNDICATE OF ENTRY OPERATORS, SHARE BROKERS AND MONEY LENDER INV OLVED IN PROVIDING BOGUS ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL LOSS. IT HAS COME TO THE LIGHT THAT LARGE SCALE MANIPULATION HAS BEEN DONE IN MARKET PRICE OF SHOWN OF CERTAIN COMPANIES LISTED IN THE BSE BY CERTAIN B ENEFICIARY IS UTILIZED TO PURCHASE SHARES OF SUCH COMPANY AT A VERY HIGH ARTIFICIALLY INFLATED MARKET PRICE. SOME OF THE LISTED COMPANIES DIRECTLY OR IN DIRECTLY OWNED BY O PERATORS AND WHOSE SHARES PRICE HAVE BEEN APPARENTLY MANIPULATED BY THE SYNDICATE O F OPERATORS. OUT OF THE ABOVE ENQUIRY MADE BY DIT(INV.), KOLKATA HAS ESTABLISHED THAT ONE OF THE MAIN MANIPULATED COMPANY WHICH YOU HAD AVAILED IS ALSO UNDER THIS SY NDICATE. HENCE, IT IS CRYSTAL CLEAR THAT SHARP TRADING COMPANY IS ONE OF THE MAIN MANIP ULATED COMPANY (PENNY LISTED) TO CONVERT UNACCOUNTED CASH OF BENEFICIARY THROUGH LON G TERM CAPITAL GAIN WITH CLAIM A CERTAIN PERCENTAGE OF COMMISSION. 7. THEREAFTER THE AO MADE AN ADDITION UNDER 68 OF T HE ACT. AGGRIEVED THE ASSESSEE CARRIED THE MATTER AN APPEAL. THE LD. FIRST APPELLA TE AUTHORITY CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT, THE TRANSACTION IN QUESTION COMES WITHIN THE AMBIT OF SUSPICIOUS TRANSACTION AND THEREFORE, THE RULES O F SUSPICIOUS TRANSACTION WOULD APPLY TO THE CASE. HE FURTHER STATED THAT THE PAYME NTS THROUGH BANK OF PROCESSING OF TRANSACTION THROUGH STOCK EXCHANGE AND OTHER SUCH F EATURES ARE ONLY APPARENT FEATURES AND THAT THE REAL FEATURE ARE THE MANIPULATION AND ABNORMAL PRICE RAISE AND THE SUDDEN DIP THEREAFTER. BASED ON SURROUNDING CIRCUMSTANCES AND CIRCUMSTANTIAL EVIDENCE AND THE ORDER OF THE TRIBUNAL IN THE CASE OF BHAG CHAND CH ABRA (HUF) VS. ITO, IN I.T.A. NO. 3088& 3107/2007 DATED 31.12.2010, THE ADDITION MADE BY THE AO WAS CONFIRMED. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 6 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 6 8. A PERUSAL OF THE ORDER OF THE AO DEMONSTRATES T HAT THIS ADDITION WAS MADE MERELY ON SUSPICION AND IN A ROUTINE AND MECHANICAL MANN ER. THIS IS CLEAR FROM THE FACT THAT THE AO REFERS TO SOME SHARP TRADING COMPNAY AS ON E OF THE MAIN ,MANIPULATED COMPANY AND WHEREAS THE ASSESSEE SOLD SCRIPS IN UNN O INDUSTRIES LTD. THE AO REFERS TO VARIOUS ENQUIRIES MADE BY THE DIRECTORS OF INCOME TAX , KOLKATA ON PROJECT BASIS AND THAT THIS RESULTED INTO UNEARTHING OF A HUGE SY NDICATE OF ENTRY OPERATORS AND SHARE BROKERS AND MONEY LENDERS INVOLVED IN PROVIDING OF BOGUS ACCOMMODATION ENTRIES. THE REPORT AS THE SO-CALLED PROJECT AND THE EVIDENCE C OLLECTED BY THE DIT (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 REBUT THE SAME. IN T HIS CASE, GENERAL STATEMENTS HAVE BEEN MADE BY THE AO AND THE ADDITION IS MADE BASED ON SU CH GENERALIZATIONS. THE ASSESSEE HAS NOT BEEN CONFRONTED WITH ANY OF THE EVIDENCE CO LLECTED IN THE INVESTIGATION DONE BY THE DIT(INV.), KOLKATA. EVIDENCE COLLECTED FROM TH IRD PARTIES CANNOT BE USED AGAINST THE ASSESSEE WITHOUT GIVING A COPY OF THE SAME TO THE A SSESSEE AND THEREAFTER GIVING HIM AN OPPORTUNITY TO REBUT THE SAME. 9. THE AO FURTHER RELIES ON THE SHOP INCREASE OF 31000% OF THE VALUE OF SHARES OVER THE PERIOD OF 2 YEARS. THOUGH THIS IS HIGHLY SUSPIC IOUS, IT CANNOT TAKE THE PLACE OF EVIDENCE. THE HON'BLE SUPREME COURT HAS STATED THAT SUSPICION HOWEVER STRONG CANNOT BE THE BASIS FOR MAKING AN ADDITION. THE EVIDENCE P RODUCED BY THE ASSESSEE LISTED ABOVE PROVES HIS CASE AND THE AO COULD NOT CONTROVE RT THE SAME BY BRINGING ON RECORD ANY EVIDENCE. THE EVIDENCE SAID TO HAVE BEEN COLLEC TED 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: 7 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 7 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 UNDER SECTION 6 8 OF THE INCOME TAX ACT, 1961, BY IGNORING THE FACTS ON RECORD. 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 ACC OUNT 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 CANNOT BE ANY DOUBT ABOUT THE TRANSACTION AS HAS BEEN OBSERVED BY THE ASSESSING O FFICER. THE TRANSACTIONS WERE AS PER NORMS UNDER CONTROLLED BY THE SECURITIES TRA NSACTION 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 FORMAT. HENCE , WE AGREE WITH THE GIVEN FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (APP EALS) 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. TR IBUNAL ALONE. THE COMMISSIONER OF INCOME TAX CAME TO THE SAME FACT FINDING. CONCURREN T FACT FINDING ITSELF MAKES THE STORY OF PERVERSITY, UNBELIEVABLE. 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 15.11.2017 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 EVIDENCES PROD UCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUC E THE QUANTUM OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE M ISERABLY FAILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE P REVAILING 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 T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RECORD ANY F INDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER H ELD 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 COLOURABLE TRANSACTIONS OR WERE RESORTED TO WITH UL TERIOR MOTIVE. 8 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 8 (III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CAL 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, BROKERAGE, SERVICE TAX, AND CESS. THE RE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. (IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE D ECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHERE T HE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE 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 THE AO DID NOT DOUB T THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT T HE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED BY TH E 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 AFFIRMED THE D ECISION 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 WER E NOT GENUINE. (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 INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE AO, BASED ON THE INFORM ATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECOR DED 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 TRA NSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTE D BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DE MAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED BY HIGH COUR T. 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 IMPLICATE THE ASS ESSEE 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 THEREFO RE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS SUPPORTED WITH MATER IAL EVIDENCES WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE T HAT IN THE ABSENCE OF MATERIAL/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, DEMA T 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. THESE EVIDENCES WERE NEITHER FOU ND 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 REJECTIN G THE CLAIM OF THE ASSESSEE THAT INCOME FROM 9 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 9 LTCG IS EXEMPTED U/S 10(38) OF THE ACT. FOR COMING TO SUCH A CONCLUSION WE RELY ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INVESTMENTS IN ITA NO.620 OF 2008 DATED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOW S : IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZE D STOCK BROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECEIVED FROM THE S HARE BROKER THROUGH ACCOUNT PAYEE WHICH ARE ALSO FILED IN ACCORDANCE WITH THE ASSESSM ENT. IT APPEARS FROM THE FACTS AND MATERIALS PLA CED BEFORE THE TRIBUNAL AND AFTER EXAMINING THE SAME, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESSEE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANS ACTIONS 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 ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED BY US TO A RRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT TH E 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 S HARES 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 PARA 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 NOTES, D EMAT STATEMENT, BANK ACCOUNT REFLECTING THE TRANSACTIONS, THE STOCK BROKERS 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 SA LE OF SHARES WERE HAVING UNIQUE TRADE NO. AND TRADE TIME. IT IS NOT THE CASE THAT T HE SHARES WHICH WERE SOLD ON THE DATE MENTIONED IN THE CONTRACT NOTE WERE NOT TRADED PRIC E ON THAT PARTICULAR DATE. THE LD AO DOUBTED THE TRANSACTIONS DUE TO THE HIGH RISE IN TH E STOCK PRICE 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 PRICES. THE S TOCK EXCHANGE AND SEBI ARE THE AUTHORITIES APPOINTED BY THE GOVERNMENT OF INDIA TO ENSURE THAT THERE IS NO STOCK RIGGING OR MANIPULATION. THE LD AO HAS NOT BROUGHT ANY EVID ENCE ON RECORD TO SHOW THAT THESE AGENCIES HAVE ALLEGED ANY STOCK MANIPULATION AGAINS T THE ASSESSEE AND OR THE BROKERS AND OR THE COMPANY. IN ABSENCE OF ANY EVIDENCES IT CANNOT BE SAID THAT MERELY BECAUSE THE STOCK PRICE MOVED SHARPLY, THE ASSESSEE WAS TO BE BLAMED FOR BOGUS TRANSACTIONS. IT IS ALSO TO BE SEEN THAT IN THIS CASE, THE SHARES W ERE 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 10 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 10 IT CANNOT BE SAID THAT THE ASSESSEE AND THE DONORS WERE MAKING SUCH PLANS FOR THE LAST 7 YEARS TO RIG THE STOCK PRICE TO GENERATE BOGUS CAPI TAL 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 R EGISTERED SHARE AND STOCK BROKERS WITH CALCUTTA STOCK EXCHANGE HAD CONFIRMED THE TRAN SACTION AND HAVE ISSUED LEGALLY VALID CONTRACT NOTES UNDER THE LAW AND SUCH CONTRAC T NOTES ARE AVAILABLE IN PAGES 41-52 OF THE PAPER BOOK. WE FIND THAT THE HONBLE CALCUTT A 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 DEPARTMEN T BY MAKING THE FOLLOWING OBSERVATIONS: (11) ON THE LAST POINT, THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT BROUGHT ON RECORDS ANY MATERIAL TO SHOW THAT THE TRANSACTIONS IN SHARE S 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 SUSPE NDED FOR SOME TIME. IT IS ASSESSEES CONTENTION ON THE OTHER THAT EVEN THOUGH THERE ARE ALLEGATIONS AGAINST THE BROKER, BUT FOR THAT 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 AN Y EXPLANATION IN RESPECT OF THE INTENTION OF SHOWING TRADING OF SHARES ONLY IN THRE E PENNY STOCKS. AO RELIED THE LOSS OF RS.25,30,396/- ONLY ON THE BASIS OF INFORMATION SUB MITTED BY THE STOCK FICTITIOUS. AO HAS ALSO NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS P LACED ON RECORD BY THE ASSESSEE. AOS OBSERVATION AND CONCLUSION ARE MERELY BASED ON THE INFORMATION REPRESENTATIVE. THEREFORE ON SUCH BASIS NO DISALLOWANCE CAN BE MADE AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A), WHO HAS RIGHT LY 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 SUGGESTED QU ESTIONS, 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 L EGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE ARGUME NTS 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 BROKERS G ETTING INVO2LVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECORD 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 RELATING 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 11 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 11 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 STOCKBROK ER AND ALL THE PAYMENTS RECEIVED FROM STOCKBROKER THROUGH ACCOUNT PAYEE INSTRUMENTS, WHICH WERE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME THE TRIBUNAL CAME TO THE CONCLUSION AND AL LOWED THE APPEAL FILED BY THE ASSESSEE. IN DOING SO, THE TRIBUNAL HELD THAT THE T RANSACTION FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCES COULD NOT BE BRUSHED ASIDE 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 LD AR A ND 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 A O WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF SOICL AS UNDISCLOSED INCOME O F THE ASSESSEE U/S 68 OF THE ACT AND THEREFORE WE UPHOLD THE ORDER OF THE LD CITA AND DI SMISS THE APPEAL OF THE REVENUE. ACCORDINGLY THE GROUNDS RAISED BY THE REVENUE ARE D ISMISSED. APPLYING THE PROPOSITION OF LAW LAID DOWN IN ALL TH E ABOVE REFERRED CASES, THE FACTS OF THIS CASE, I FIND FORCE IN THE SUBMISSION OF THE AS SESSEE AND THERE ARE BACKED BY EVIDENCE. I ALSO FIND THAT THE REVENUE HAS NOT BASED ITS FIND ING ON IN ANY EVIDENCE. IN VIEW OF THE ABOVE DISCUSSION THE ADDITION MADE U/S 68 OF THE AC T IS HEREBY DELETED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 27.06.2018 SD/- [ J.SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED : 27.06.2018 SB, SR. PS 12 ITA NO.2394/KOL/2017 PRAKASH CHAND BHUTORIA A.YR .2014-15 12 COPY OF THE ORDER FORWARDED TO: 1. PRAKASH CHAND BHUTORIA, C/O, D.J. SHAH & CO., KA LYAN BHAWAN, 2, ELGIN ROAD, KOLKATA- 700020. 2. ITO, WARD-35(1), 110, SHANTIPALLY, 7 TH FLOOR, E.M. BYEPASS, KOLKATA-700107. 3..C.I.T.(A)- , KOLKATA 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