KIRAN BHANWARLAL JOGANI, Mumbai V. ITO-5(3)(3), Mumbai

ITA 2441/MUM/2022

AI Insights

The case involves Kiran Bhanwarlal Jogani, who appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which had confirmed the additions made by the Assessing Officer under sections 68 and 69C of the Income Tax Act, 1961. The additions were made on the grounds that the long-term capital gains claimed by the assessee were from non-genuine transactions in penny stocks. The Tribunal examined the evidence provided by the assessee, including the purchase and sale documents of shares, and found them to be genuine. The Tribunal also noted that the Assessing Officer had not conducted a proper investigation and had relied on the report of the Investigation Wing without any independent verification.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300187 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-12-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 21-09-2022
• Other Referred Cases: Suresh M. Jain HUF & others Vs ITO, Shashikant B. Mhatre vs. Income Tax Officer, Shyam R. Pawar vs. Income Tax Officer, Ziauddin A Siddique vs. Income Tax Officer, Amiya Gopal Dutta vs. Income Tax Officer, Krishna Devi & Others vs. Income Tax Officer, M/s. Kesoram Cotton Mills Ltd. vs. Gangadhar and Ors., New India Assurance Co. Ltd. vs. Nusli Neville Wadia and Anr., State of Uttar Pradesh vs. Saroj Kumar Sinha, Shree Shaleen Textiles Ltd. vs. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRINGING ANY POSITIVE MATERIAL
• Assessee Lawyers: RELYING UPON A PLETHORA OF JUDGMENTS OF VARIOUS
• Keywords: Unexplained cash credit; Income from undisclosed sources; Salary income; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Source of fund; Question of law; Corroborative evidences; Validity of assessment; Assessment record; Onus to prove; Penny stocks; Set aside; Capital Gains
• Section: 131; 68; 69; 69C; 143(3); 142(1); 260A; 133(6); 143(1); 250; 292BB; 143(2); 43; 48; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 2441/Mum/2022 (A.Y: 2014-15) KiranBhanwarlalJogani, 1101-A Wing, Pratiksha Tower,RS Nimkar Marg, Mumbai- 400008. Vs. ITO-5(3)(3), Room.no.564,5 floor, Aayakar Bhavan, M.K.Road, Mumbai-400020. ./ज आइआर ./PAN/GIR No. : ACOPJ7976N Appellant .. Respondent Appellant by : Mr.Rajkumar Singh.AR Respondent by : Mr.Richa Gulati.DR Date of Hearing 22.12.2022 Date of Pronouncement 10.01.2023 आद श / O R D E R PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of the National faceless Appeal Centre (NFAC), Delhi / CIT(A) passed u/s 143(3) and U/sec 250 of the Act. The assessee has raised the following grounds of appeal: 1. That on facts and circumstances of the case and in law assessment order assailed in the present appeal is without jurisdiction and void ab initio order in absence ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 2 - of a valid notice u/s.143(2) and also valid transfer order u/s. 127 of the Income Tax Act, 1961 being issued/passed by the respective Assessing Officer & Designated Authority in the case as required under the respective provisions of tax law prior to framing of the impugned assessment order u/s.143(3) on 29-12-2016, therefore same may be quashed. 2. That on facts and circumstances of the case and in law the Id. A.O. has erred in denying the exemption claim made u/s 10(38) and in making the addition u/s 68 at Rs.31,22,986/- by treating the entire sale proceeds of listed long-term equity shares subjected to STT, sold on recognized stock exchange after holding the same for more than one year, as unexplained cash credit without properly appreciating the facts of the case, law and supporting documentary evidences in respect of sale and purchase of the LTCG shares furnished on assessment record. 3. That the alleged denial of exemption claim made u/s 10(38) and alleged addition made u/s 68 at Rs.31,22,986/- is wrong on facts and bad in law since the copy of information and documents received from Investigation Directorate, Kolkata have been relied upon by the Id. A.O. without verification and adjudication thereof and assessee appellant has not been provided with such material thus denying the opportunity of cross examination and or rebuttal of the same in gross violation of principal of natural justice. ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 3 - 4. In view of appeal grounds no. 2 & 3 denial by both the lower tax authorities of exemption of LTCG claim u/s.10(38) of the Act may be restored as claimed in the ITR filed and their action of taxing the entire sale proceeds of long -term listed equity shares u/s.68 of the Act may be set aside. 5. That the impugned disallowance u/s 69C at Rs.93,690/- estimating the 2% commission payment to alleged entry providers on gross sale proceeds of LTCG shares of Rs.31,22,986/- only on assumption basis without backing of any shred of evidence of such payment by the appellant being wrong on facts and bad in law therefore same may be deleted. That the appeal grounds are independent grounds and without prejudice to each other. That appellant craves the leave to amend, alter, substitute and or to raise new or additional grounds of appeal at the time of hearing. 2. The brief facts of the case are that the assessee is engaged in business and has income from business, capital gains and income from other sources. The assessee has filed the return of income for the A.Y 2014-15 on 14-03.2016 disclosing a total income of Rs.3,39,920/-and the return of income was processed u/s 143(1) of the Act. Subsequently the case was selected for scrutiny and notice u/s 143(2) and 142(1) ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 4 - of the Act are issued. In compliance to the notice the Ld. AR of the assessee appeared from time to time and furnished the details. On perusal of the financial statements, the Assessing Officer (AO) found that the assessee has earned long term capital gains on sale of shares of M/s Shree Shaleen Textiles Ltd Rs. 31,22,986/- in the F.Y.2013-14 and claimed exemption u/s 10(38) of the Act. The AO has called for the information and the details of transactions referred at Para 4.2 of the assessment order. The contentions of the assessee are that 500 equity shares of Rs.10/- paid up were purchased on 29.02.2012 for Rs.10,000/-.Subsequently, the company has issued the bonus shares in the ratio of 1:19 and the share holding has increased to 10,000shares. Further on 07.03.2013 the company has split these shares @Rs.2/- each paid up and the aggregate 50,000 shares are allotted to the asssesee. The assessee has sold the above 50,000 shares in the F.Y 2013-14 for aggregating value of Rs. 31,22,986/- and after claiming deduction of the cost of acquisition, the Long Capital gains of Rs. 31,22,986/- was claimed exempted u/s 10(38) of the ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 5 - Act. The AO was not satisfied with the explanations and relied on the information of the Investigation Wing and the shares prices have been rigged and dealt extensively on the circumstantial evidences and finally the AO is of the opinion that the transactions are not genuine and made addition u/s 68 of the Act of Rs. 31,22,986/- and further the AO has estimated the commission @ 3% u/sec69C of the Act which works out to Rs. 93,690/- and assessed the total income of Rs.35,76,600/- and passed the order u/s 143(3) of the Act dated 29.12.2016. 3.Aggrieved by the order, the assessee has filed an appeal before the CIT(A) challenging the validity of assessment on the jurisdictional issue and merits of the case. Whereas the CIT(A) considered the grounds of appeal, submissions and findings AO and has confirmed the action of the Assessing Officer and dismissed the asssessee appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Hon’ble Tribunal. ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 6 - 4. At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in dismissing the ground of appeal on the validity of assessment and further CIT(A) erred in not considering facts that the assessee has substantiated the purchase of equity shares, bank transactions, bonus shares and share split in the demat account. The Ld.AR submitted that the shares are sold through SEBI registered stock broker on the BSE and was subject to payment of STT on the sale transactions and substantiated the transactions with the evidences of copy of share certificates in respect of purchases, bank transactions details, contract notes and other vital details in the factual paper book and judicial decisions and prayed for allowing the assessee appeal. Contra, theLd.DR supported the order of the CIT(A) and submitted that the transactions are not genuine. 5. Heard the rival submissions and perused the material on record. The Ld,AR submitted that the CIT(A) has erred in dismissing the grounds of appeal pertaining to validity of assesseement and addition u/sec68 & 69C of the Act. The Ld.AR submitted that the assessee has furnished the information with ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 7 - evidences of the allotment letters, purchase price, financial statements, and summary of shares sold in F.Y 2013-14, Ledger account, copies of bank statements, copy of contract notes for sale of impugned shares, demat account statement, copy of physical shares certificates evidencing the transfer of shares in the name of assessee etc. The Ld.AR submissions on the validity of assesseement and the addition U/sec68 &69C of the Act as under: 1. In the above appeal filed by assessee following stated 5 numbers of appeal grounds have been raised: i) In 1st appeal ground raised assessee is contesting the validity of assessment order passed without issue of any own notice u/s.143(2) by Id. AO who framed the assessment order. ii) In 2nd appeal ground raised in the present appeal assessee is contesting the addition U/s.68 of Rs.31,22,986/- made by Id. AO and upheld by Id. CIT(Appeals), representing the entire sale proceeds of 50,000 shares of alleged penny scrip named Shree Shaleen Textiles Ltd. (short name Shrasha Tex Ltd.) sold during the year by disallowing tax exempt LTCG earned and claimed u/s.10(38) of the Act. iii) In 3rd appeal ground raised appellant is contesting the alleged additions made denying the exempt LTCG claim by Id. AO and confirmed by Id. Appellate Commissioner without providing the assessee material and information used adverse to him and also without allowing cross examination of the person whose ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 8 - statement recorded by Investigation Wing, Kolkata relied upon though in none of the such statements or in any information assessee has been named as beneficiary of any arranged/ fabricated transaction of the impugned penny scrip. iv) 4th appeal ground raised is supplemental ground in respect of both 2nd & 3rd appeal grounds. v) 5th and last appeal ground raised & contest in the above appeal is in respect of assumed 3% commission estimated on the disputed share transaction amount and added by Id. AO at Rs.93,690/- u/s.69C of the Act which has been upheld by 1st Appellate Authority. Evidences in support of impugned share transaction filed in assessment and appeal proceedings: Factual Paper Book filed before hon'ble Tribunal consists the documentary evidences establishes the genuineness of impugned tax exempt LTCG claim beyond any reasonable doubt that appellant assessee. Documents enclosed in the Paper Book in support of exempt LTCG claim of Rs. 31,22,986/- arose on online sale of alleged scrip listed on recognized stock exchange of BSE sold through SEBI registered stock broker at prevailing quoted trade rate on sale date duly subjected to collection of STT, after holding for the period of more than 12 months (long-term capital asset) stands filed on assessment and appeal record. These evidences filed on assessment and appeal records includes copy of physical share certificates evidencing the transfer endorsement of impugned shares in the name of assessee, source of acquisition of alleged scrip taken place in earlier years and duly accepted in order passed u/s.143(3), evidence of issue of bonus shares and split taken place, his D'mat statements reflecting the credit and debit on respective purchase and sale transaction, ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 9 - contract notes of SEBI registered stock broker evidencing the STT payment and bank statements of assessee evidencing and highlighting the receipt of sale proceeds through normal banking channels under T+2 settlement and also purchase of the said shares being duly accounted for and disclosed in the ITR filed u/s.139 for A.Y.2012-13, i.e. in the year of purchase of F.Y.2011-12 and accepted by Department in the order passed u/s143(3) for this year and also in A.Y.2013-14 u/s.143(3). Reason given by Id. AO for disallowing the impugned transaction: i) It is apparently evident from the assessment order that except summoning the assessee in the assessment proceeding the Id. AO has not carried out any own independent inquiry or investigation in respect of disputed transaction. Also, in the statement of assessee recorded by Id. AO u/s.131 of the Act, assessee has confirmed the subject share transaction being genuine transaction supported by requisite documentary evidences and there is nothing in the said statement which even remotely can be termed as adverse to or against the assessee. ii) Further it is also evident from the impugned assessment order that to make the impugned addition Id. AO has relied solely on the report of Kolkata Investigation Wing and weak financial of impugned company not supported by huge rise in its quoted rates on BSE but without finding any fault of any kind in the respective supporting evidences furnished or bringing any contrary evidence or material on assessment record. ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 10 - iii) Though trading of shares of impugned company were suspended by BSE on 01.01.2015 as a surveillance measure but till date no adverse order or any report indicting the appellant assessee for price rigging in the said scrip has been passed either by BSE or SEBI. It is worthwhile to record that suspension of trading of any scrip merely on suspicion does not tantamount to conclusive indictment of price rigging. Reason given by Id. CIT(Appeal) for confirming the impugned addition: i) On perusal of impugned appeal order it is evident that Id. CIT(Appeal) has confirmed the impugned addition solely on the basis of findings given by Id. AO but without giving any own finding or indicating any fault in the supporting evidences furnished in respect of the impugned transaction. ii) Ld. CIT (Appeal) in his appellate order has also relied and referred order passed by SEBI under in the case of third parties holding the said parties guilty of alleged price rigging by them in the above scrip. iii) Ld. CIT(Appeal) to confirm the impugned addition has heavily relied on the judgment of hon'ble High Court of Calcutta rendered in the case of Swati Bajaj & Others which in the present appeal does not have binding precedent in view of contrary judgments of hon'ble jurisdictional High Court of Bombay rendered in the case Shyam R. Pawar reported at (2015) 229 TAXMAN 0256 (Bombay) and in the case Ziauddin A Siddique in an order dated 4th March, 2022 passed in Income Tax Appeal No. 2012 of 2017. ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 11 - 2. Arguments on validity of impugned assessment order: In respect of 1st Appeal ground raised in the above appeal challenging the validity of impugned assessment order passed, our argument is under: i) Vide page No.93 of Factual Paper-Book No.1, Return of Income for the above assessment year was filed by assessee on 14/03/2016 declaring Total Income at Rs.3,59,920/-. Though as per CBDT Instruction No. 1/2011 (F. No. 187/12/2010- IT(A-1), Dated 31-01-2011, assessee being a non-corporate assessee residing in Metro City of Mumbai and having declared total income of only Rs.3,59,920/- in ITR filed, being less than Rs.20 lacs, thus his pecuniary jurisdiction was vested with ITO 5(3)(3), Mumbai, however vide page No.5 and also page no.96 of Factual Paper-Book No.1, notice u/s.143(2) dated 28/07/2016 selecting his case for complete scrutiny was wrongly issued by Asstt. C.I.T. Circle-5(3)(1), Mumbai, who in view of CBDT Instruction No.1/2011 dated 31-01- 2011 was not having pecuniary jurisdiction over the case of assessee. Complete sequence of assessment proceeding undertaken for the impugned assessment year in the case of assessee is as under: On perusal of abovementioned documents and also 1st page of impugned assessment order your honor will appreciate that it is established on record beyond any doubt that no notice u/s.143(2) in this case was ever issued by Id. ITO 5(3)(3), Mumbai who was holding the pecuniary jurisdiction over the case of assessee prior to passing of the impugned assessment order by him assailed in the present appeal. In view of the same impugned assessment order passed by Id. ITO 5(3)(3), Mumbai on the basis of notice u/s.143(2) issued by ACIT Circle-5(3)(1), Mumbai who was not holding pecuniary ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 12 - jurisdiction over the case of assessee but without issuing any own such notice u/s.143(2), which is sine qua non and a condition precedent to assume a lawful and valid jurisdiction for passing the assessment order under section 143(3) of the Act therefore impugned assessment order is invalid and void ab initio order and without jurisdiction. ii) Appeal ground duly raised before Id. CIT (Appeal) challenging the validity of assessment order in absence of any own notice u/s.143(2) being issued by Id. AO before passing of impugned assessment order, vide para 5.1 (page no.7) of the appellate order dated 25/07/2022, has been dismissed by Id. FAA relying on the judgement of hon'ble High Court of Madhya Pradesh in the case of Forlic Realty (P.) Ltd. vs. PCIT [2019] 101 taxmann.com 311 (Madhya Pradesh). However, while relying on the above referred judgement Id. FAA has failed to appreciate that facts in that case being entirely different and distinguishable to the facts involved in the present case therefore ratio of the above judgement cannot be applied to the case of appellant. Your honor will appreciate that in the case of Forlic Realty having its registered office in Mumbai Maharashtra State and Branch Office in Indore, Madhya Pradesh was filing its return regularly since its incorporation in Indore and assessed as such and that assessee never raised the issue of jurisdiction before it was issued notice u/s.143(2) for A.Y.2011-12 and application filed by it before Chief Commissioner of Income Tax from Indore, Madhya Pradesh State for transfer of its case to Mumbai, Maharashtra State was rejected. Thus, the issue to decide before hon'ble High Court in this case was whether order passed by Chief Commissioner of Income Tax, Indore rejecting the application for transfer its case from Indore, Madhya ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 13 - Pradesh State to Mumbai, Maharashtra State just to buy time to get limitation period of assessment expired was justified or not, whereas in the present case of assessee is whether assessment order passed u/s.143(3) by ITO 5(3)(3), Mumbai without issuing any own notice u/s.143(2) within the period prescribed in that section and on the basis of such notice issued by ACIT Circle- 5(3)(1), Mumbai who was not holding pecuniary jurisdiction over the case of assessee in view of CBDT Instruction No.1/2011 dated 31-01-2011 is a valid assessment order in the eye of law or is a null and invalid order without jurisdiction. Copy of judgement in the abovementioned case of Forlic Realty is enclosed with this brief submission for ready reference of your honor. The above referred legal ground raised in the present appeal before your honor stands decided by hon'ble ITAT, Kolkata in series of judgements consistently holding that in the facts & circumstances as involved in the present case of assessee, assessment orders passed are invalid orders, null and without jurisdiction. Gist of few of the relevant ITAT orders are as Under: (1) Shri Sukumar Ch. Sahoo (ITA NO. 2073/Kol/2016, A.Y. 2012-13 order dated 27/09/2017): In this case ITR filed by Shri Sukumar Ch. Sahoo, a resident of Haldia, West Bengal (Being a Mofussil Area as CBDT Instruction) for A.Y.2012- 13 declaring total income of Rs.50,28,040/- was selected for scrutiny assessment and notice u/s.143(2) dated 06/09/2013 issued by ITO, Ward-1, Haldia was duly served. However, ITO, Ward-1, Haldia noted that since returned income declared by assessee was more than Rs.15 lacs thus his case was transferred to ACIT, Circle- ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 14 - 27, Haldia on 24/09/2014 and immediately ACIT issued notice u/s.142(1) on the same day. While quashing the impugned assessment order passed by ACIT, Circle-27, Haldia the hon'ble Tribunal in para 6 of its order has held as under: "6. We note that the CBDT Instruction is dated 31.01.2011 and the assessee has filed the return of income on 29.03.2013 declaring total income of Rs.50,28,040/-. As per the CBDT Instruction the monetary limits in respect to an assessee who is an individual which falls under the category of 'non corporate returns' the ITO's increased monetary limit was upto Rs.15 lacs; and if the returned income is above Rs.15 lacs it was the AC/DC. So, since the returned income by assessee an individual is above Rs.15 lakh, then the jurisdiction to assess the assessee lies only by AC/DC and not ITO. So, therefore, only the AC/DC had the jurisdiction to assess the assessee. It is settled law that serving of notice u/s. 143 (2) of the Act is a sine qua non for an assessment to be made u/s. 143(3) of the Act. In this case, notice u/s. 143 (2) of the Act was issued on 06.09.2013 by ITO, Ward-1, Haldia when he did not have the pecuniary jurisdiction to assume jurisdiction and issue notice. Admittedly, when the ITO realized that he did not had the pecuniary jurisdiction to issue notice he duly transferred the file to the ACIT, Circle-27, Haldia on 24.09. 2014 when the ACIT issued statutory notice which was beyond the time limit prescribed for issuance of notice u/s. 143(2) of the Act. We note that the ACIT by assuming the jurisdiction after the time prescribed for issuance of notice u/s. 143(2) of the Act notice became qoarum non judice after the limitation prescribed by the statute was crossed by him. Therefore, the issuance of notice by the ACIT, Circle-27, Haldia after the limitation period for ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 15 - issuance of statutory notice u/s. 143(2) of the Act has set in, goes to the root of the case and makes the notice bad in the eyes of law and consequential assessment order passed u/s. 143(3) of the Act is not valid in the eyes of law and, therefore, is null and void in the eyes of law. Therefore, the legal issue raised by the assessee is allowed. Since we have quashed the assessment and the appeal of assessee is allowed on the legal issue, the other grounds raised by the assessee need not to be adjudicated because it is only academic. Therefore, the additional ground raised by the assessee is allowed (2) Sr Krishnendu Chowdhary (ITA No.1153/Kol/2015, A.Y.2010-11 order dated 11/11/2016): In this case ITR filed by Sr. Krishnendu Chowdhary for A.Y.2010- 11 declaring therein income of Rs.12,65,830/- was selected for scrutiny assessment and notice u/s.143(2) was issued by ACIT Circle, Haldia on 14/09/2011 and he also notice u/s.142(1) dated 03/07/2012, however being income declared less than Rs.15 lacs (Haldia being Mofussil Area) therefore case of assessee was later transferred to ITO Ward-1, Haldia who passed the assessment order u/s.143(3) but without issuing any own notice u/s.143(2) within the period stipulated in that section. While quashing the assessment order after duly considering section 124(3) and also section 127(3) of the Act the hon'ble Tribunal in para 8.1 on page 11 of the order held as under: "8.1 In view of the above we set aside the orders of the revenue authorities by quashing the order of the assessment framed u/s.143(3) of the Act since the issue of notice u/s.143(2) of the Act was not done by the ITO as specified in CBDT Instruction No.1/2011 dated 31.01.2011. As the assessment proceedings u/s.143(3) of ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 16 - the Act have been held as invalid, therefore in our considered view the other issues raised by the assessee do not require any adjudication. Hence the grounds raised by the assessee is allowed." (3) The above referred decision of hon'ble Kolkata Tribunal in many appeals having similar and exactly identical facts as in case of your appellant has consistently been concurred with in many following mentioned subsequent judgements rendered as recent as on 16/11/2022: (i) Amiya Gopal Dutta: (ITA No.126/Kol/2022, A.Y.2016- 17 order dated 16.11.2022 (ii) Hirak Sarkar: (ITA No. 850/Kol/2019,), A.Y 2011-12 order dated 12.08.2021 (iii) Sanat Kumar Sahana: (ITA No.2202/Kol/2015, order dated 29/05/2020) iv. Hillman Hosiery Mills Pvt. Ltd.: (ITA No.2634/Kol/2019, order dated 12/01/2021) v. Soma Roy: (ITA No.462/Kol/2019, A.Y.2015-16 order dated 08th January, 2020. (v) (4) Here it is also important to record that section 292BB of the Act will not come to rescue the revenue as notice u/s.143(2) by non-jurisdictional Assessing Officer amounts to no notice u/s.143(2) and it is only manner of service or defects in notice u/s.143(2) which is being cured by section 292BB of the Act. In this regard please refer to detailed elaboration made in the hon'ble Tribunal's order in the case Amiya Gopal Dutta, a copy of which order already stands furnished to hon'ble Bench in the course of hearing taken place in the present appeal on 22/02/2022. In view of the facts of the case and abovementioned judgments of hon'ble ITAT, Kolkata legal ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 17 - ground raised by assessee appellant may kindly be allowed. 3. Arguments On Merits of Impugned Addition made u/s.68 & 69C of the Act: i) Rebuttal of findings of Id. AO & CIT(Appeal) in respect of huge rise in quoted rate of alleged Scrip On BSE: With reference to huge rise in quoted rate of alleged shares not supported by financial of the company, we would like to record that as per judgement of jurisdictional High Court of Bombay and also High Court of Delhi on only this sole allegation without bringing any adverse and contrary material on record no addition in respect of alleged penny stock transaction can legally be made in the cases where such transaction has taken place online, STT is duly paid and transaction is reflected in d'mate statement of assessee and also sale proceeds have been received through normal banking channels. Also, in this case no independent inquiry of own has been carried out either by Id. AO or by Id. CIT (Appeal) and there are not even a single adverse comments or findings or even any whisper or indication about the supporting purchase and sale evidences of the impugned transaction furnished on assessment/appeal records nor such documents have been held as bogus or sham by either of lower Income Tax Authorities in respective impugned assessment/appeal orders. ii. Your honor will appreciate that in none of evidences furnished in support of purchase & sale transaction of impugned scrip any defect or doubt has been raised by the lower tax authorities and such documents have not been rejected either by Id. AO or Id. CIT(Appeal). Further it is also undisputed facts that assessee has not been involved or held as such in price rigging of the impugned ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 18 - scrip by any concerned authority/board or stock exchange. Also, revenue has no evidence of any nature whatsoever with it which even remotely can indicate that any cash exchange in the impugned transaction has taken place and more particularly when any securities transaction is executed on the platform of stock exchange being as per mechanism devised by SEBI for such transaction neither buyer of securities or his stock broker nor seller of securities or his broker can come to know that who is buying or who is selling. Further it is also undisputed facts in the case that assessee is neither directly nor indirectly connected or related to any alleged person, stock-broker, cartel, operator or management of company of alleged scrip. It is also apparently evident from the impugned orders that no investigation either from stock exchange or from concerned broker of assessee or even purchaser or seller of assessee. It is also undisputed facts that stock broker of assessee Sharekhan Ltd. through him appellant has sold the impugned scrip has never been implicated by any law enforcement agency for any manipulation in scrip of SSTL. iii) In the course of hearing taken place in the above appeal on 22/02/2022 before your honor while arguing the matter the Id. Departmental Representative in support of impugned addition made has relied and furnished two no. of adjudication orders passed under the Securities and Exchange Board of India Act, 1992 by SEBI in the case of M/s.Shyam Rathi HUF, order dated March 8, 2019 and another combined order dated June 24, 2019 passed in the case of Mr. Jayeshkumar Narottamdas Gandhi, Ms. Bharati Jayesh Gandhi & Mr. Deval Jayesh Gandhi. SEBI order furnished by Id. DR in the case of M/s. Shyam Rathi HUF relates to banning of him for two years denying him to access or make any dealings on stock ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 19 - exchanges holding him guilty for adopting unfair and prohibited practices in dealing of shares of Shri Shaleen Textiles Ltd. (in short "SSTL). In Appeal filed by Shyam Rathi HUF before The Securities Appellate Tribunal, Mumbai (in short SAT) the above referred adjudication order dated 08th March, 2019 passed by SEBI, has been quashed by hon'ble SAT by an order dated 04/03/2021 (copy enclosed). Similarly Appeals filed by of Mr. Jayeshkumar Narottamdas Gandhi, Ms. Bharati Jayesh Gandhi & Mr. Deval Jayesh Gandhi before The Securities Appellate Tribunal, Mumbai (in short SAT) banning them access the securities market for two years in the orders passed by SEBI, have also been quashed by hon'ble SAT by an combined order dated 21/02/2020 (copy enclosed) and in view of the same penalties imposed on them in the adjudication order 24th June 2019 have automatically been vacated/cancelled. In view of the above stated facts and position your honor will appreciate that above referred order of SEBI does not support the case of revenue in anymanner and more particularly when no similar allegation or any inquiry has beencarried out by SEBI or any Authority in the case of your appellant. iv. Vide Compilation of judgements Part-1 filed before hon'ble Tribunal, in the case of Mrs. Pratibha S. Mhatre by an order dated 11/06/2021 passed by hon'ble jurisdictional ITAT "C" Bench Mumbai in ITA No.695/Mum/2018 (Page No.13 to Page No.21) and in case of Suresh S. Jain HUF & Others (Compilation of judgements Part-2 Page No.121 to page no.152) similar addition made u/s.68 & 69C on exactly identical facts in these cases as in the case of present appellant in respect of very same scrip, Shree Shaleen Textiles Ltd. has been deleted by co- ordinate Mumbai Bench of hon'ble Tribunal. ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 20 - V. Vide Compilation of judgements Part-1 filed before hon'ble Tribunal, in the case of Smt. Krishna Devi & Others by an order dated 15/01/2021 passed the hon'ble High Court of Delhi in ITA 125/2020, 130/2020 & 131/2020 (Page No.3 to Page No.12) in para12 onwards the hon'ble High Court has held that no addition can be made merely on the basis of weak financial of alleged scrip not justifying the phenomenal rise in its quoted rate and on another basis of report of Investigation Wings and without further corroboration of allegation and bringing any contrary cogent material on record. vi) In a very recent case of Ziauddin A Siddique by an order dated 4th March, 2022 the hon'ble jurisdictional High Court of Bombay in Income Tax Appeal No. 2012 of 2017 (Compilation of judgements Part-2 Page No.153 to 155) in which case purchase of shares had also taken place in off market deal (please refer to question of law raised by revenue and cited in the judgement) has held that no addition can be made merely on the basis of weak financial of alleged scrip not justifying the phenomenal rise in its quoted rate and on another basis of report of Investigation Wings where transaction has taken place through stock exchange, payments have been made through banking channels and even Security Transaction Tax("STT") has also been paid. The hon'ble Court has further held that the Assessing Officer also has not criticized the documentation involving the sale and purchase of shares and Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of alleged penny scrip. vii) In another judgement rendered by hon'ble jurisdictional High Court of Bombay: in the case of Shyam ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 21 - R. Pawar reported at (2015) 229 TAXMAN 0256 (Bombay) has held that no addition in respect of alleged penny scrip can legally be justified merely on the basis of allegation without bringing any contrary adverse material on record. With reference to heavy reliance placed by Ld. CIT(Appeal) to confirm the impugned addition on judgment of hon'ble High Court of Calcutta rendered in the case of Swati Bajaj & Others we have to record that the said judgement in the present appeal does not have binding precedent in view of contrary judgments of hon'ble jurisdictional High Court of Bombay rendered in the case Shyam R. Pawar reported at (2015) 229 TAXMAN 0256 (Bombay) and also in the case of Ziauddin A Siddique in an order dated 4th March, 2022 passed in Income Tax Appeal No. 2012 of 2017. Your honor will appreciate that if there are two contrary judgements of different High Courts then as per settled judicial position it is judgement of jurisdictional High Court which is required to be followed as law laid down by Jurisdictional High Court is binding upon all the subordinate courts and tribunal situated in that state. ix) In support of our arguments urging to delete the impugned addition made in the hands of assessee we would like to invite the attention of your honors to number of other judgements including above referred binding judgements of jurisdictional High Court of Bombay and ITAT, Mumbai enclosed in the legal paper book (Compilation of Judgements Part-1 and Compilation of Judgements Part-2) filed before hon'ble Tribunal. In view of the above stated facts of the case and judgements of hon'ble Courts and Co-ordinate Benches of Mumbai & other Tribunals referred and relied upon appellant humbly prays that alleged addition made u/s ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 22 - 68 and also disallowance made u/s 69C on the only basis of report of Kolkata Investigation Wing but without bringing any shred of any contrary evidence on record that too without rejecting or doubting the supporting evidences of impugned transaction furnished on record being legally and factually incorrect therefore same may kindly be deleted. 6. Whereas the facts and circumstances of the present case are similar and identical and pertains to A.Y.2014-15 in respect of sale of Shares of M/s Shree Shaleen Textile limited dealt by the Coordinate Bench of the Honble Tribunal in Suresh M .Jain HUF & others Vs ITO in ITA.No.6614/M/2019, ITANo6617/M/2019 & ITA.NO.315/M/2020 for A.Y.2014-15 order dated21-09-2022 has granted relief and observed at page 10 Para11 to 14 of the order read as under: 11.Considered the rival submissions and material placed on record, we found that the facts in the present case and the facts in M/s. Pratibha S. Mhatre in ITA.No. 695/Mum/2018 dated 11.06.2021 are factually identical and the scrip dealt by these assessee’s are also on M/s. Shree ShaleenTextiles Limited and we observe that the assessee has purchased these scrips and the transactions were all routed through proper banking channel and in Registered Stock Exchange. We also observed ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 23 - that the Assessing Officer has merely relied on the report from investigation wing and just because assessee has declared some profit and claimed deduction u/s. 10(38) of the Act he proceeded to make the additions. Since the facts in the present case are identical to the case of Mrs. Pratibha S. Mhatre v. ITO (supra) and in Mrs. Pratibha S. Mhatrecase the Coordinate Bench has relied in the case of Shashikant B. Mhatre v. Income Tax Officer in ITA.No. 694/Mum/2018 dated 29.05.2019, in the above case the Coordinate Bench has decided as under: - “7.2. We find that the ld AR pleaded that in an online platform, there would be no nexus between the purchasers and the seller and the delivery of shares and payments would be made through their respective stock brokers. Hence the ld AO ought to have summoned the assessee’s brokers to examine the authenticity of the sale of shares of SRK Industries Ltd and the amount received on sale of shares. We find that the ld AR also placed evidences on record to prove that the said company SRK Industries Ltd is still listed in the stock exchange and shares of this company are being traded and SEBI had not passed any adverse order against the said company either suspending the trading of the scrip or banning the scrip. Moreover, the ld AR also placed on record the letter dated 14.2.2019 addressed by SRK Industries Ltd to Bombay Stock Exchange informing the outcome of the Board Meeting held on 14.2.2019 approving the unaudited standalone financial results of SRK Industries Ltd for the quarter ended 31 st December 2018 in the format prescribed by SEBI listing norms and the stock exchange. From the said quarterly financials, we find that SRK Industries Ltd revenue from operations for the quarter ended Dec 2018 was Rs 30.61 crores which clearly shows that it is an operational company and not merely a company having no value as alleged by the revenue before us to make it fall under the category of ‘penny stock’. Moreover, the status of this company M/s SRK Industries Ltd in the website of Ministry of Corporate Affairs as on 26.2.2019 is still shown under the category of ‘Active’. In the said status report of website of ministry of corporate affairs, ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 24 - we find that the fixed assets and current assets of SRK Industries Ltd were subjected to some charge or encumbrance with certain loan creditors and the said charge on assets were also duly cleared by SRK Industries Ltd subsequently. This is evident from the status report mentioned therein as ‘closed’. These facts go to prove beyond doubt that SRK Industries Ltd is an operational company even as on 26.2.2019. 7.3. We find that the ld AO sought to identify the alleged purchasers of shares from the assessee and issued notices u/s 133(6) of the Act to all of them. All the notices sent through speed post returned unserved. Based on this, adverse inference was drawn by the ld AO on the assessee. We find that the ld AR had already submitted that in an online platform of trading of shares in the open market through a registered stock broker, it is not possible for the assessee to even know the name and address of the purchasers when the assessee sells the shares in the open market. In any case, merely because the alleged purchasers list given by the ld AO in his assessment order had not responded to notice u/s 133(6) of the Act, no adverse inference could be drawn on the assessee for the default committed by those alleged purchasers. The ld AO could have very well resorted to issuance of summons u/s 131 of the Act to those alleged purchasers and / or take necessary action on them in the manner known to law for non-compliance from their side. We hold that the assessee need not discharge her onus of bringing on record the alleged purchasers especially when the shares were sold in the open market in an online platform. Accordingly, the assessee need not prove the identity, creditworthiness of those alleged purchasers of shares and the genuineness of transactions within the meaning of section 68 of the Act. The assessee has received the sale proceeds of shares from her broker M/s Sharekhan Limited. The assessee had shown the credit in the name of M/s Sharekhan Limited in her books. Hence the assessee had duly discharged her onus by furnishing the entire sale details made through the registered stock broker M/s Sharekhan Limited. We find that the ld AO had not even bothered to make any enquiry with M/s Sharekhan Limited to understand these facts. Hence no fault could be attributed on the assessee in this regard. We find that none of the purchase and sale ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 25 - details with supporting evidences were found to be deficient in any manner whatsoever either by the ld AO or by the ld CITA. 7.4. We find that the assessee was duly examined on oath u/s 131 of the Act during the course of assessment proceedings on 29.11.2016 which fact is also mentioned in Page 26 of the Assessment Order. In the said statement, the assessee in reply to Question No. 9 had categorically stated that she had been making investments in capital market and equity shares through broker M/s Sharekhan Limited and through relatives and friends. The assessee had also categorically replied in response to Question No. 13 that the investment in shares of SRK Industries Ltd (Transcend Commerce Ltd prior to merger) was made based on the advice of her friend Shri ShivajiraoJondhale. The assessee in reply to Question No. 17 had also stated that she did not make any enquiry about the financial condition of the shares of SRK Industries Ltd but she was told by Shri ShivajiraoJondhale that the value of the shares would get appreciated. This was the sole basis of the assessee making the investment in shares of Transcend Commerce Ltd (Later merged with SRK Industries Ltd) which cannot be doubted at all. In our considered opinion, it cannot be said that all the investment decisions of the assessee would be prudent and would be done only after analyzing the entire fundamentals and financials of the investee company. It is in everybody’s knowledge, that an investor would try to take calculated risks by investing his money on an unknown scrip based on certain information from friends, relatives, or in some stock market related websites and take a chance. Since the scrip purchased by the assessee was showing considerable growth from the time of purchase, the assessee being a gullible investor continued to hold it for a period of 14 months and later sold it in open market in online platform at prevailing market prices. 7.5. We find that the ld AO had observed that the assessee had traded only in the shares of SRK Industries Ltd. This is factually incorrect statement of the ld AO. Moreover, the ld AO had during the course of examination of the assessee on oath u/s 131 of the Act had even posed a question vide Question No. 24 that assessee had purchased very few shares of well reputed companies during the year like Indus Ind Bank, Crompton Greaves, Larsen and ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 26 - Toubro etc. We find that the ld AO in para 13.4 of his order had observed that on examination of Shri ShivajiraoJondhale on oath u/s 131 of the Act, it was noticed that he had also invested in the shares of SRK Industries Ltd only based on an advice of his friend. Based on this, the ld AO had concluded that the whole basis of purchase of this share is a pre-knowledge of rigging of price and subsequently taking accommodation entry for Long term capital gains. We find from the demat statements for the period 1.4.2012 to 31.3.2013 and 1.4.2013 to 31.3.2014, the assessee had dealt in various reputed scrips and had duly dematted the same and all these transactions are duly reflected in the demat statements issued by the depository participant. 7.6. We find that the ld DR made general submissions with regard to the investigations carried out by Kolkata Income Tax Department after identifying 84 scrips to be penny stocks and the modus operandi adopted by those scrips with the connivance of various entry operators, brokers and stock exchange. We find that the ld DR was not specifically able to controvert the documentary evidences filed by the assessee for purchase and sale of shares and various other documents referred to in the Paper Book. The ld DR also filed written submissions wherein he had reiterated the findings of the ld AO. 7.7. We find that the co-ordinate bench of Kolkata Tribunal in ITA No.661/Kol/ 2018 in Shreyans Chopra vs ACIT dated 25.7.2018 on similar set of facts and circumstances had held as follows:- “IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA (Before Sri J. Sudhakar Reddy, Accountant Member) ITA No. 661/Kol/2018 Assessment Year: 2014-15 Shri Shreyans Chopra ............................................................. Appellant 3A, Mangoe Lane Kolkata – 700 001 ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 27 - [PAN : AAAFZ 1337 P] Assistant Commissioner of Income Tax, Circle-36, Kolkata.......Respondent Appearances by: Shri Miraj D. Shah A/R, appeared on behalf of the assessee. Shri Satyajit Mandal, Addl. CIT, D/R. appearing on behalf of the Revenue. Date of concluding the hearing : June 28th, 2018 Date of pronouncing the order : July 25th, 2018 ORDER Per J. Sudhakar Reddy, AM :- This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)-10, Kolkata, (hereinafter the ‘Ld. CIT(A)’), dt. 15/02/2018, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’), relating to Assessment Year 2014-15. 2. The assessee is an individual and derives income from business, professional capital gains and other sources. The facts of the case and the issues involved in this appeal are brought out by the Assessing Officer at paragraphs 3 & 4 of the assessment order, which is extracted for ready reference:- “3. Brief facts of the case: The assessee has filed his/her return showing income from salary of Rs.84,000/- & income from other sources of Rs.6,12,677/-. However, in its computation of income the assessee has computed LTCG of Rs.5,50,159/- and claimed exemption u/s 10(38) of the I. T. Act. Therefore, all of a sudden earning of such huge exempted income from LTCG requires for examination in detail. Return data analysis of past years shows the following picture:- Assessment Income Short Term Income from Gross Total Total Exempt ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 28 - Year from salary Capital Gain other Source Income Income LTCG 2012-13 0 0 8,63,168 8,63,168 7,43,168 NIL 2013-14 2,40,000 0 3,98,213 6,38,213 5,36,940 NIL 2014-15 0 4,80,227 6,12,677 11,76,904 10,61,900 5,50,158 4. Main issues involved: The main reason for selection of scrutiny of this case was to examine the earning of suspicious capital gain from transaction in penny stock (input given by Investigation wing). In course of scrutiny, it is seen that assessee had shown income from Long Term Capital Gains from sale of shares of M/s SRK Industries Ltd. to the tune of Rs.5,50,158/- on sales of shares for Rs.5,57,658/-. This Long Term Capital gain was claimed exempt from Income tax. The assessee had declared following calculation regarding income from long term capital gain on sale of shares exempt from taxation u/s 10(38): Name of Company Sale price Purchase price Exempt u/s 10(38) SRK Industries Ltd. 5,57,658 7,500 5,50,158 Shares were purchased off market @7,500/- but their value increased later in pursuant to order dated 21/12/2013 of Bombay High Court and order dated 21/02/2013 of Madras High Court vide letter no. SRK/SA/elec/ 000771/2013 dated 20.05.2013 In course of the assessment, the assessee was asked to furnish the details of such share transactions. 3. The Assessing Officer in his detailed order discussed the modus operandi as well as the other evidences available with him and, thereafter, at para 6 & 7, concluded as follows:- “6. Thus in view of the elaborate discussion made above, I hereby hold the amount of Rs.5,57,658/- introduced/credited by the assessee out of these purported share sale receipts during the Financial Year 2013-14 (AY 2014-15) in his capital account as his income being unexplained cash credit u/s 68 of the Income Tax Act (taxable at the rate of 30% as provided u/s 115BBE). Therefore, an amount of Rs.5,57,658/- is added back with the ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 29 - total income of the assessee u/s 68 of the I.T. Act as unexplained cash credit during the relevant year. [Addition: Rs.5,57,658/-] 7. Under the circumstances, Rs.5,50,158/- is treated as bogus and also a sum of Rs.27,508/- being 5% of Rs.5,50,158/- is added as undisclosed expenditure within the meaning of section 69C of the Income-tax Act, 1961. [Addition of Rs.27,508/-]” 4. On appeal, the ld. First Appellate Authority, has classified these transactions as ‘suspicious’ and confirmed the order of the Assessing Officer. 5. Aggrieved, the assessee is in appeal before us. 6. I have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, I hold as follows:- 6.1. Recently, the Kolkata ‘C’ Bench of the Tribunal in the case of NavneetAgarwal,-vsITO, Ward-35(3), Kolkata; I.T.A. No. 2281/Kol/2017; Assessment Year: 2014-15, while dealing with identical issue of sale of shares decided the issue in favour of the assessee by relying upon a plethora of judgments of various Courts. It held as follows:- “12. The assessing officer as well as the Ld. CIT(A) have rejected these evidences filed by the assessee by referring to “Modus Operandi” of persons for earning long term capital gains which his exempt from income tax. All these observations are general in nature and are applied across the board to all the 60,000 or more assessees who fall in this category. Specific evidences produced by the assessee are not controverted by the revenue authorities. No evidence collected from third parties is confronted to the assesses. No opportunity of cross-examination of persons, on whose statements the revenue relies to make the addition, is ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 30 - provided to the assessee. The addition is made based on a report from the investigation wing. 13. The issue for consideration before us is whether, in such cases, the legal evidence produced by the assessee has to guide our decision in the matter or the general observations based on statements, probabilities, human behavior and discovery of the modus operandi adopted in earning alleged bogus LTCG and STCG, that have surfaced during investigations, should guide the authorities in arriving at a conclusion as to whether the claim in genuine or not. An alleged scam might have taken place on LTCG etc. But it has to be established in each case, by the party alleging so, that this assessee in quesiton was part of this scam. The chain of events and the live link of the assesee’s action giving her involvement in the scam should be established. The allegation imply that cash was paid by the assessee and in return the assessee received LTCG, which is income exempt from income tax, by way of cheque through Banking channels. This allegation that cash had changed hands, has to be proved with evidence, by the revenue. Evidence gathered by the Director Investigation’s office by way of statements recorded etc. has to also be brought on record in each case, when such a statement, evidence etc. is relied upon by the revenue to make any additions. Opportunity of cross examination has to be provided to the assesee, if the AO relies on any statements or third party as evidence to make an addition. If any material or evidence is sought to be relied upon by the AO, he has to confront the assessee with such material. The claim of the assessee cannot be rejected based on mere conjectures unverified by evidence under the pretentious garb of preponderance of human probabilities and theory of human behavior by the department. 14. It is well settled that evidence collected from third parties cannot be used against an assessee unless this evidence is put before him and he is given an opportunity to controvert the evidence. In this case, the AO relies only on a report as the basis for the addition. The evidence based on which the DDIT report is ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 31 - prepared is not brought on record by the AO nor is it put before the assessee. The submission of the assessee that she is just an investor and as she received some tips and she chose to invest based on these market tips and had taken a calculated risk and had gained in the process and that she is not party to the scam etc., has to be controverted by the revenue with evidence. When a person claims that she has done these transactions in a bona fide and genuine manner and was benefitted, one cannot reject this submission based on surmises and conjectures. As the report of investigation wing suggests, there are more than 60,000 beneficiaries of LTCG. Each case has to be assessed based on legal principles of legal import laid down by the Courts of law. 15. In our view modus operandi, generalisation, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee. Unless specific evidence is brought on record to controvert the validity and correctness of the documentary evidences produced, the same cannot be rejected by the assessee. The Hon'ble Supreme Court in the case of Omar Salav Mohamed Sait reported in (1959) 37 ITR 151 (S C) had held that no addition can be made on the basis of surmises, suspicion and conjectures. In the case of CIT(Central), Kolkata vs. Daulat Ram Rawatmull reported in 87 ITR 349, the Hon'ble Supreme Court held that, the onus to prove that the apparent is not the real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences, which would directly prove the fact of bogusness or establish circumstance unerringly and reasonably raising an interference to that effect. The Hon'ble Supreme Court in the case of Umacharan Shah & Bros. Vs. CIT 37 ITR 271 held that suspicion however strong, cannot take the place of evidence. 16. We find that the assessing officer as well as the Ld. CIT(A) has been guided by the report of the investigation wing prepared with respect to bogus capital gains transactions. However we do not find that, the assessing officer as well as the Ld. CIT(A), have brought out any part of the investigation wing report in which the ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 32 - assessee has been investigated and /or found to be a part of any arrangement for the purpose of generating bogus long term capital gains. Nothing has been brought on record to show that the persons investigated , including entry operators or stock brokers, have named that the assessee was in collusion with them. In absence of such finding how is it possible to link their wrong doings with the assessee. In fact the investigation wing is a separate department which has not been assigned assessment work and has been delegated the work of only making investigation. The Act has vested widest powers on this wing. It is the duty of the investigation wing to conduct proper and detailed inquiry in any matter where there is allegation of tax evasion and after making proper inquiry and collecting proper evidences the matter should be sent to the assessment wing to assess the income as per law. We find no such action executed by investigation wing against the assessee. In absence of any finding specifically against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated. In this case, in our view, the Assessing Officer at best could have considered the investigation report as a starting point of investigation. The report only informed the assessing officer that some persons may have misused the script for the purpose of collusive transaction. The Assessing Officer was duty bound to make inquiry from all concerned parties relating to the transaction and then to collect evidences that the transaction entered into by the assessee was also a collusive transaction. We, however, find that the Assessing Officer has not brought on record any evidence to prove that the transactions entered by the assessee which are otherwise supported by proper third party documents are collusive transactions. 17. The Hon’ble Supreme Court way back in the case of Lalchand Bhagat Ambica Ram vs. CIT [1959] 37 ITR 288 (SC) held that assessment could not be based on background of ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 33 - suspicion and in absence of any evidence to support the same. The Hon’ble Court held: “Adverting to the various probabilities which weighed with the Income-tax Officer we may observe that the notoriety for smuggling food grains and other commodities to Bengal by country boats acquired by Sahibgunj and the notoriety achieved by Dhulian as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as every arhatdar and grain merchant who might have been indulging in smuggling operations, without an iota of evidence in that behalf. The cancellation of the food grain licence at Nawgachia and the prosecution of the appellant under the Defence of India Rules was also of no consequence inasmuch as the appellant was acquitted of the offence with which it had been charged and its licence also was restored. The mere possibility of the appellant earning considerable amounts in the year under consideration was a pure conjecture on the part of the Income-tax Officer and the fact that the appellant indulged in speculation (in Kalai account) could not legitimately lead to the inference that the profit in a single transaction or in a chain of transactions could exceed the amounts, involved in the high denomination notes,---this also was a pure conjecture or surmise on the part of the Income-tax Officer. As regards the disclosed volume of business in the year under consideration in the head office and in branches the Income-tax Officer indulged in speculation when he talked of the possibility of the appellant earning a considerable sum as against which it showed a net loss of about Rs. 45,000. The Income-tax Officer indicated the probable source or sources from which the appellant could have earned a large amount in the sum of Rs. 2,91,000 but the conclusion which he arrived at in regard to the appellant having earned this large amount during the year and which according to him represented the secreted profits of the appellant in its business was the result of pure conjectures and surmises on his part and had no foundation in fact and was not proved against ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 34 - the appellant on the record of the proceedings. If the conclusion of the Income-tax Officer was thus either perverse or vitiated by suspicions, conjectures or surmises, the finding of the Tribunal was equally perverse or vitiated if the Tribunal took count of all these probabilities and without any rhyme or reason and merely by a rule of thumb, as it were, came to the conclusion that the possession of 150 high denomination notes of Rs. 1,000 each was satisfactorily explained by the appellant but not that of the balance of 141 high denomination notes of Rs. 1,000 each”. The observations of the Hon’ble Apex Court are equally applicable to the case of the assessee. In our view the assessing officer having failed to bring on record any material to prove that the transaction of the assessee was a collusive transaction could not have rejected the evidences submitted by the assessee. In fact in this case nothing has been found against the assessee with aid of any direct evidences or material against the assessee despite the matter being investigated by various wings of the Income Tax Department hence in our view under these circumstances nothing can be implicated against the assessee. 18. We now consider the various propositions of law laid down by the Courts of law. That cross-examination is one part of the principles of natural justice has been laid down in the following judgments: a) AyaaubkhanNoorkhanPathan vs. The State of Maharashtra and Ors. “23. A Constitution Bench of this Court in State of M.P. v. ChintamanSadashivaVaishampayan AIR 1961 SC 1623, held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party. Not providing the said opportunity to cross-examine ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 35 - witnesses, would violate the principles of natural justice. (See also: Union of India v. T.R. Varma, AIR 1957 SC 882; Meenglas Tea Estate v. Workmen, AIR 1963 SC 1719; M/s. Kesoram Cotton Mills Ltd. v. Gangadhar and Ors. ,AIR 1964 SC 708; New India Assurance Co. Ltd. v. Nusli Neville Wadia and Anr. AIR 2008 SC 876; Rachpal Singh and Ors. v. Gurmit Singh and Ors.AIR 2009 SC 2448; Biecco Lawrie and Anr. v. State of West Bengal and Anr. AIR 2010 SC 142; and State of Uttar Pradesh v. Saroj Kumar Sinha AIR 2010 SC 3131). 24. In Lakshman Exports Ltd. v. Collector of Central Excise (2005) 10 SCC 634, this Court, while dealing with a case under the Central Excise Act, 1944, considered a similar issue i.e. permission with respect to the cross-examination of a witness. In the said case, the Assessee had specifically asked to be allowed to cross-examine the representatives of the firms concern, to establish that the goods in question had been accounted for in their books of accounts, and that excise duty had been paid. The Court held that such a request could not be turned down, as the denial of the right to cross-examine, would amount to a denial of the right to be heard i.e. audialterampartem. 28. The meaning of providing a reasonable opportunity to show cause against an action proposed to be taken by the government, is that the government servant is afforded a reasonable opportunity to defend himself against the charges, on the basis of which an inquiry is held. The government servant should be given an opportunity to deny his guilt and establish his innocence. He can do so only when he is told what the charges against him are. He can therefore, do so by cross-examining the witnesses produced against him. The object of supplying statements is that, the government servant will be able to refer to the previous statements of the witnesses proposed to be examined against him. Unless the said statements are provided to the government servant, he will not be able to conduct an effective and useful cross-examination. ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 36 - 29. In Rajiv Arora v. Union of India and Ors. AIR 2009 SC 1100, this Court held: Effective cross-examination could have been done as regards the correctness or otherwise of the report, if the contents of them were proved. The principles analogous to the provisions of the Indian Evidence Act as also the principles of natural justice demand that the maker of the report should be examined, save and except in cases where the facts are admitted or the witnesses are not available for cross-examination or similar situation. The High Court in its impugned judgment proceeded to consider the issue on a technical plea, namely, no prejudice has been caused to the Appellant by such non-examination. If the basic principles of law have not been complied with or there has been a gross violation of the principles of natural justice, the High Court should have exercised its jurisdiction of judicial review. 30. The aforesaid discussion makes it evident that, not only should the opportunity of cross-examination be made available, but it should be one of effective crossexamination, so as to meet the requirement of the principles of natural justice. In the absence of such an opportunity, it cannot be held that the matter has been decided in accordance with law, as cross-examination is an integral part and parcel of the principles of natural justice.” b) Andaman Timber Industries vs. Commissioner of C. Ex., Kolkata-II wherein it was held that: “4. We have heard Mr. Kavin Gulati, learned senior counsel appearing for the Assessee, and Mr. K. Radhakrishnan, learned senior counsel who appeared for the Revenue. 5. According to us, not allowing the Assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the Assessee was adversely affected. It ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 37 - is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the Assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the Assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the Assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the Appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the Appellant wanted to cross-examine those dealers and what extraction the Appellant wanted from them. 6. As mentioned above, the Appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject 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 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 38 - appeal on merits giving its reasons for accepting or rejecting the submissions. 7. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice.” 19. On similar facts where the revenue has alleged that the assessee has declared bogus LTCG, it was held as follows: a) The CALCUTTA HIGH COURT in the case of BLB CABLES & CONDUCTORS [ITA No. 78 of 2017] dated 19.06.2018. The High Court held vide Para 4.1: “............we find that all the transactions through the broker were duly recorded in the books of the assessee. The broker has also declared in its books of accounts and offered for taxation. In our view to hold a transaction as bogus, there has to be some concrete evidence where the transactions cannot be proved with the supportive evidence. Here in the case the transactions of the commodity exchanged have not only been explained but also substantiated from the confirmation of the party. Both the parties are confirming the transactions which have been duly supported with the books of accounts and bank transactions. The ld. AR has also submitted the board resolution for the trading of commodity transaction. The broker was expelled from the commodity exchange cannot be the criteria to hold the transaction as bogus. In view of above, we reverse the order of the lower authorities and allow the common grounds of assessee’s appeal.” [quoted verbatim] This is essentially a finding of the Tribunal on fact. No material has been shown to us who would negate the Tribunal’s finding that off market transactions are not prohibited. As regards veracity of the transactions, the Tribunal has come to its ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 39 - conclusion on analysis of relevant materials. That being the position, Tribunal having analyzed the set of facts in coming to its finding, we do not think there is any scope of interference with the order of the Tribunal in exercise of our jurisdiction under Section 260A of the Income Tax Act, 1961. No substantial question of law is involved in this appeal. The appeal and the stay petition, accordingly, shall stand dismissed.” b) The JAIPUR ITAT in the case of VIVEK AGARWAL [ITA No. 292/JP/2017] order dated 06.04.2018 held as under vide Page 9 Para 3: “We hold that the addition made by the AO is merely based on suspicion and surmises without any cogent material to controvert the evidence filed by the assessee in support of the claim. Further, the AO has also failed to establish that the assessee has brought back his unaccounted income in the shape of long term capital gain. Hence we delete the addition made by the AO on this account.” c) The Hon’ble Punjab and Haryana High Court in the case of PREM PAL GANDHI [ITA95-2017 (O&M)] dated 18.01.2018 at vide Page 3 Para 4 held as under: “..... The Assessing Officer in both the cases added the appreciation to the assessee’s’ income on the suspicion that these were fictitious transactions and that the appreciation actually represented the assessee’s’ income from undisclosed sources. In ITA-18-2017 also the CIT (Appeals) and the Tribunal held that the Assessing Officer had not produced any evidence whatsoever in support of the suspicion. On the other hand, although the appreciation is very high, the shares were traded on the National Stock Exchange and the payments and receipts were routed through the bank. There was no evidence to indicate for instance that this was a closely held company and that the trading on the National Stock Exchange was manipulated in any manner.” ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 40 - The Court also held the following vide Page 3 Para 5 the following: “Question (iv) has been dealt with in detail by the CIT (Appeals) and the Tribunal. Firstly, the documents on which the Assessing Officer relied upon in the appeal were not put to the assessee during the assessment proceedings. The CIT (Appeals) nevertheless considered them in detail and found that there was no co-relation between the amounts sought to be added and the entries in those documents. This was on an appreciation of facts. There is nothing to indicate that the same was perverse or irrational. Accordingly, no question of law arises.” d) The BENCH “D” OF KOLKATA ITAT in the case of GAUTAM PINCHA [ITA No.569/Kol/2017] order dated 15.11.2017 held as under vide Page 12 Para 8.1: “In the light of the documents stated i.e. (I to xiv) in Para 6(supra) we find that there is absolutely no adverse material to implicate 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 therefore 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 the assessee/brokers got involved in price rigging/manipulation of shares must therefore also fail. At the cost of repetition, we note that the assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions relevant to the purchase and sale of shares 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 ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 41 - justified in rejecting the claim of the assessee that income from LTCG is exempted u/s 10(38) of the Act.” Further in Page 15 Para 8.5 of the judgment, it held: “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 arrive at our conclusion. The ld. DR could not bring to our notice any case laws to support the impugned decision of the ld. CIT (A)/AO. In the aforesaid facts and circumstances of the case, we hold that the ld. CIT (A) was not justified in upholding the addition of sale proceeds of the shares as undisclosed income of the assessee u/s 68 of the Act. We, therefore, direct the AO to delete the addition.” e) The BENCH “D” OF KOLKATA ITAT in the case of KIRAN KOTHARI HUF [ITA No. 443/Kol/2017] order dated 15.11.2017 held vide Para 9.3 held as under: “........ We find that there is absolutely no adverse material to implicate the assessee to the entire gamut of unfounded/unwarranted allegations leveled by the AO against the assessee, which in our considered opinion has no legs to stand and therefore has to fall. We take note that the ld. DR could not controvert the facts which are supported with material evidences furnished by the assessee which are on record and could only rely on the orders of the AO/CIT(A). We note that the allegations that the assesse/brokers got involved in price rigging/manipulation of shares must therefore consequently fail. At the cost of repetition, we note that the assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions relevant to the purchase and sale of shares resulting in long term capital gain. Neither these evidences were found by the AO nor by the ld. CIT(A) to be false or fictitious or bogus. ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 42 - The facts of the case and the evidence in support of the evidence clearly support the claim of the assessee that the transactions of the assessee were genuine and the authorities below was not justified in rejecting the claim of the assessee exempted u/s 10(38) of the Act on the basis of suspicion, surmises and conjectures. It is to be kept in mind that suspicion how so ever strong, cannot partake the character of legal evidence. It further held as follows: “We note that the ld. AR cited plethora of the case laws to bolster his claim which are not being repeated again since it has already been incorporated in the submissions of the ld. AR (supra) and have been duly considered to arrive at our conclusion. The ld. DR could not bring to our notice any case laws to support the impugned decision of the ld. CIT(A)/AO. In the aforesaid facts and circumstances of the case, we hold that the ld. CIT(A) was not justified in upholding the addition of sale proceeds of the shares as undisclosed income of the assessee u/s 68 of the Act. We therefore direct the AO to delete the addition.” f) The BENCH “A” OF KOLKATA ITAT in the case of SHALEEN KHEMANI [ITA No. 1945/Kol/2014] order dated 18.10.2017 held as under vide Page 24 Para 9.3: “We therefore hold that there is absolutely no adverse material to implicate the assessee to the entire gamut of unwarranted allegations 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 arguments of the ld AR with contrary material evidences on record and merely relied on the orders of the ld AO. We find that the allegation that the assessee and / or Brokers getting involved in price rigging of SOICL shares fails. It is also a matter of record that the assessee furnished all evidences in the form of bills, contract notes, demat statements and the bank accounts to prove the genuineness of the transactions relating to purchase and sale of shares resulting ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 43 - in LTCG. These evidences were neither found by the ld AO to be false or fabricated. The facts of the case and the evidences in support of the assessee’s case clearly support the claim of the assessee that the transactions of the assessee were bonafide and genuine and therefore the ld AO was not justified in rejecting the assessee’s claim of exemption under section 10(38) of the Act.” g) The BENCH “H” OF MUMBAI ITAT in the case of ARVIND KUMAR JAIN HUF [ITA No.4682/Mum/2014] order dated 18.09.2017 held as under vide Page 6 Para 8: “......We found that as far as initiation of investigation of broker is concerned, the assessee is no way concerned with the activity of the broker. Detailed finding has been recorded by CIT (A) to the effect that assessee has made investment in shares which was purchased on the floor of stock exchange and not from M/s BasantPeriwal and Co. Against purchases payment has been made by account payee cheque, delivery of shares were taken, contract of sale was also complete as per the Contract Act, therefore, the assessee is not concerned with any way of the broker. Nowhere the AO has alleged that the transaction by the assessee with these particular broker or share was bogus, merely because the investigation was done by SEBI against broker or his activity, assessee cannot be said to have entered into ingenuine transaction, insofar as assessee is not concerned with the activity of the broker and have no control over the same. We found that M/s BasantPeriwal and Co. never stated any of the authority that transactions in M/s RamkrishnaFincap Pvt. Ltd. On the floor of the stock exchange are ingenuine or mere accommodation entries. The CIT (A) after relying on the various decision of the coordinate bench, wherein on similar facts and circumstances, issue was decided in favour of the assessee, came to the conclusion that transaction entered by the assessee was genuine. Detailed finding recorded by CIT (A) at para 3 to 5 has not been controverted by the department by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the findings of CIT (A).” ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 44 - h) The Hon’ble Punjab and Haryana High Court in the case of VIVEK MEHTA [ITA No. 894 OF 2010] order dated 14.11.2011 vide Page 2 Para 3 held as under: “On the basis of the documents produced by the assessee in appeal, the Commissioner of Income Tax (Appeal) recorded a finding of fact that there was a genuine transaction of purchase of shares by the assessee on 16.3.2001 and sale thereof on 21.3.2002. The transactions of sale and purchase were as per the valuation prevalent in the Stocks Exchange. Such finding of fact has been recorded on the basis of evidence produced on record. The Tribunal has affirmed such finding. Such finding of fact is sought to be disputed in the present appeal. We do not find that the finding of fact recorded by the Commissioner of Income Tax in appeal, gives give rise to any question(s) of law as sought to be raised in the present appeal. Hence, the present appeal is dismissed.” i) The Hon’ble Jurisdictional Calcutta High Court in the case of CIT vs. Bhagwati Prasad Agarwal in I.T.A. No. 22/Kol/2009 dated 29.04.2009 at para 2 held as follows: “The tribunal found that the chain of transaction entered into by the assessee have been proved, accounted for, documented and supported by evidence. The assessee produced before the Commissioner of Income Tax(Appeal) the contract notes, details of his Demat account and, also, produced documents showing that all payments were received by the assessee through bank.” j) The Hon’ble Supreme Court in the case of PCIT vs. TejuRohitkumar Kapadia order dated 04.05.2018 upheld the following proposition of law laid down by the Hon’ble Gujrat High Court as under: “It can thus be seen that the appellate authority as well as the Tribunal came to concurrent conclusion that the purchases already made by the assessee from Raj Impex were duly ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 45 - supported by bills and payments were made by Account Payee cheque. Raj Impacts also confirmed the transactions. There was no evidence to show that the amount was recycled back to the assessee. Particularly, when it was found that the assessee the trader had also shown sales out of purchases made from Raj Impex which were also accepted by the Revenue, no question of law arises.” 20. Applying the proposition of law laid down in the above judgments to the facts of this case we are bound to consider and rely on the evidence produced by the assessee in support of its claim and base our decision on such evidence and not on suspicion or preponderance of probabilities. No material was brought on record by the AO to controvert the evidence furnished by the assessee. Under these circumstances, we accept the evidence filed by the assessee and allow the claim that the income in question is Long Term Capital Gain from sale of shares and hence exempt from income tax.” The scrips in question were the subject matter of adjudication before this Tribunal. The Kolkata Bench of the ITAT in a number of decisions have, on similar facts and circumstances of the case, decided the issue in favour of the assessee. We list some of these decisions:- • Shri Gautam Kumar Pincha vs. ITO, ITA No. 569/Kol/2017, dt. 15/11/2017 • ITO vs. Shri Shaleenkhemani, ITA No. 1945/Kol/2014, dt. 18/10/2017 • Mahendra Kumar Baid vs. ACIT, Circle-35; ITA No. 1237/Kol/2017; order dt. 18/08/2017 • Kiran Kothari HUF vs. ITO, ITA No. 443/kol/2017, order dt. 15/11/2017 The Hon’ble Jurisdictional High Court had in the following cases, upheld the claim of the assessee:- ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 46 - • CIT vs. ShreyashiGanguli (ITA No. 196 of 2012) (Cal HC) 2012 (9) TMI 1113 • CIT vs. Rungta Properties Private Limited (ITA No. 105 of 2016) (Cal HC)dt. 08/05/2017 • CIT vs. Bhagwati Prasad Agarwal (2009 TMI-34738 (Cal HC) in ITA No. 22 of 2009 dated 29.04.2009 6.2. Consistent with the view taken therein, as the facts and circumstances of this case are same as the facts and circumstances of the cases of Navneet Agarwal (supra), we delete the addition made u/s 68 of the Act, on account of sale of shares in the case of both the assessees. The consequential addition u/s 69C is also deleted. Accordingly both the appeals of the assessee are allowed. 7. In the result, appeal of the assessee is allowed. Kolkata, the 25th day of July, 2018. Sd/- [J. Sudhakar Reddy] Accountant Member Dated : 25.07.2018” 7.8. It would be pertinent to address the case law relied upon by the ld DR before us on the decision of Hon’ble Bombay High Court (Nagpur Bench) in the case of Sanjay Bimalchand Jain vs Pr.CIT (Nagpur) reported in (2018) 89 taxmann.com 196 (Bombay) dated 10.4.2017 on the impugned issue. From the facts of Sanjay Bimalchand Jain supra, we find that (i) in that case, the broker company through which the shares were sold did not respond to AO’s letter regarding the names and address and bank account of the person who purchased the shares sold by the assessee ; (ii) Moreover, at the time of acquisition of shares of both the companies by the assessee, the payments were made in cash ; (iii) The address of both the companies were interestingly the same ; (iv) The authorized signatory of ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 47 - both the companies were also the same person ; (v) The purchase of shares of both the companies was done by that assessee through broker, GSSL and the address of the said broker was incidentally the address of the two companies. Based on these crucial facts, the Hon’ble Bombay High Court rendered the decision in favour of the revenue. None of these factors were present in the facts of the assessee before us. Hence it could be safely concluded that the decision of Hon’ble Bombay High Court supra is factually distinguishable. 7.9. We find that the Hon’ble Jurisdictional High Court in the case of CIT vs MukeshRatilalMarolia in ITA No. 456 of 2007 dated 7.9.2011 had held as under:- 5. On further appeal, the ITAT by the impugned order allowed the claim of the assessee by recording that the purchase of shares during the year 1999-2000 and 2000-2001 were duly recorded in the books maintained by the Assessee. The ITAT has recorded a finding that the source of funds for acquisition of the shares was the agricultural income which was duly offered and assessed to tax in those Assessment Years. The Assessee has produced certificates from the aforesaid four companies to the effect that the shares were in- fact transferred to the name of the Assessee. In these circumstances, the decision of the ITAT in holding that the Assessee had purchased shares out of the funds duly disclosed by the Assessee cannot be faulted. ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 48 - 6. Similarly, the sale of the said shaers for Rs 1,41,08,484/- through two Brokers namely, M/s Richmond Securities Pvt Ltd and M/s Scorpio Management Consultants Pvt Ltd cannot be disputed, because the fact that the Assessee has received the said amount is not in dispute. It is neither the case of the Revenue that the shares in question are still lying with the Assesse nor it is the case of the Revenue that the amounts received by the Assessee on sale of the shares is more than what is declared by the Assessee. Though there is some discrepancy in the statement of the Director of M/s Richmand Securities Pvt Ltd regarding the sale transaction, the Tribunal relying on the statement of the employee of M/s Richmand Securities Pvt Ltd held that the sale transaction was genuine. 7. In these circumstances, the decision of the ITAT in holding that the purchase and sale of shares are genuine and therefore, the Assessing Officer was not justified in holding that the amount of Rs 1,41,08,484/- represented unexplained investment under section 69 of the Income Tax Act, 1961 cannot be faulted. 8. In the result, we see no merit in this Appeal and the same is dismissed with no order as to costs. 7.10. In view of the aforesaid findings in the facts and circumstances of the case and respectfully following the various ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 49 - judicial precedents relied upon hereinabove, we hold that the ld CITA was not justified in upholding the action of the ld AO in bringing the long term capital gains on sale of shares of SRK Industries Ltd in the sum of Rs 2,26,36,372/- as unexplained income of the assessee treating the same as just an accommodation entry. The ld AO is directed to grant exemption u/s 10(38) of the Act in the sum of Rs 2,26,36,372/- to the assessee. Accordingly, the ground raised by the assessee is allowed. 8. Both the parties before us agreed that the facts in ITA No. 694/Mum/2018 in the case of Shri Shashikant B Mhatre (HUF) are identical to that of Smt GeetaKhare supra except with variance in figures and name of the scrip that was dealt with. Both the parties before us stated that identical reasoning was given by both the lower authorities for denying the claim of exemption u/s 10(38) of the Act to the assessee. The decision rendered in the case of Smt GeetaKhare would apply with equal force for this assessee also and accordingly, the ground raised by the assessee in ITA No. 694/Mum/2018 is allowed.” 12. Respectfully following the above said decision, we are inclined to allow the ground raised by the assessee. 13. Coming to the appeals in the case of Heena Suresh Jain in ITA No.6617/MUM/2019 (A.Y. 2014-15) and RameshkumarMohanlal Jain in ITA.No. 315/MUM/2020 (A.Y. 2014- 15), since facts in these appeal are mutatis mutandis to the case of Suresh M. Jain HUF for the A.Y. 2014-15, therefore the decision taken in Suresh M. Jain HUF for the A.Y. 2014-15 is applicable ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 50 - mutatis mutandis to these appeals also. Accordingly, the grounds raised by the assessees are allowed. 14. In the result, appeals filed by the assessees are allowed. 7. Considering the facts and the ratio of the decision of the coordinate Bench of the Honble Tribunal and fallow respectfully the judicial precedence. Accordingly, set aside the order of the CIT(A) and direct the Assesssing Officer to delete the additions. 8. Since, the appeal is decided in favour of the asssessee, hence the grounds of appeal with respect to validity of assessment proceedings raised by the assessee becomes academic and are left open. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 10. 01.2023. Sd/- (PAVAN KUMAR GADALE) JUDICIAL MEMBER Mumbai, Dated 10.01.2023 KRK, PS ITA No. 2441/Mum/2022 Kiran Bhanwarlal Jogani, Mumbai. - 51 - /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent. 3. आ र आ / The CIT(A) 4. आ र आ ( ) / Concerned CIT 5. "#$ % & &' , आ र ) र*, हमद द / DR, ITAT, Mumbai 6. % -. / 0 / Guard file. ान ु सार/ BY ORDER, " & //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai