Neeta Bothra, CHENNAI V. ITO Non Corporate Ward 9(3), CHENNAI

ITA 2508/CHNY/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6569 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 29-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURESH PERIASAMYJCIT
• Assessee Lawyers: D ANAND
• Keywords: Unexplained cash credit; Reasonable cause; Wrong claim; Corroborative evidences; Benefit of exemption; Condonation of delay; Penny stocks; Set aside
• Section: 13; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , . , % BEFORE SHRI V.DURGA RAO , JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.2507 & 2508/CHNY/2018 ( / ASSESSMENT YEARS:2012-13 & 2013-14) MRS. NEETA BOTHRA, 1/1, GENERAL PATTERS ROAD, CHENNAI- 600 002. VS THE INCOME TAX OFFICER, NON-CORPORATE WARD-9(3) CHENNAI-6. PAN: AAIPB 0445J ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. D.ANAND, ADVOCATE /RESPONDENT BY : MR.SURESH PERIASAMY,JCIT /DATE OF HEARING : 14.07.2021 /DATE OF PRONOUNCEMENT : 08.09.2021 / O R D E R PER G.MANJUNATHA, AM: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST SEPARATE, BUT IDENTICAL ORDERS OF LEARNED C IT(A)-10, CHENNAI, BOTH DATED 12.06.2018 AND PERTAINS TO ASS ESSMENT YEARS 2012-13 AND 2013-14. SINCE, FACTS ARE IDENTIC AL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, THE SE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF, BY THIS CONSOLIDATED ORDER. 2. AT THE OUTSET, LEARNED AR FOR THE ASSESSEE S UBMITTED THAT THERE IS A DELAY IN FILING APPEAL BY THE ASSESSEE F OR ASSESSMENT 2 ITA NO. 2507 & 2508/CHNY/2018 YEAR 2012-13 FOR 18 DAYS, FOR WHICH NECESSARY PETIT ION FOR CONDONATION OF DELAY EXPLAINING REASONS FOR DELAY HAS BEEN FILED. THE AR FURTHER SUBMITTED, IN FACT THERE IS NO DELAY, BUT THE DELAY OF 18 DAYS IS ON ACCOUNT WRONG DATE MENTIONED IN FORM 36, FOR RECEIPT OF ORDER FROM OFFICE OF THE CIT(A), AS PER WHICH, THE DATE TAKEN AS 12.06.2018 INSTEAD OF 16.07.2018. IF, ACTUAL DATE OF RECEIPT OF ORDER, I.E. 16.07.2018 IS CONSID ERED, THEN THERE IS NO DELAY IN FILING APPEAL. THEREFORE, DELA Y MAY BE CONDONED IN THE INTEREST OF ADVANCEMENT OF SUBSTANT IAL JUSTICE. 3. THE LEARNED DR, ON THE OTHER HAND, STRONGLY OPPO SING CONDONATION OF DELAY PETITION FILED BY THE ASSESSE E SUBMITTED THAT THE REASONS GIVEN BY THE ASSESSEE DO NOT COME WITHIN THE AMBIT OF REASONABLE AND BONA-FIDE REASONS, WHICH C AN BE CONSIDERED FOR CONDONATION OF DELAY AND HENCE, A PPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2012-13 MAY BE DISMISSED AS NOT MAINTAINABLE. 4. HAVING HEARD BOTH SIDES AND CONSIDERED THE PETIT ION FILED BY THE ASSESSEE FOR CONDONATION OF DELAY, WE ARE O F THE CONSIDERED VIEW THAT REASONS GIVEN BY THE ASSESSEE FOR NOT 3 ITA NO. 2507 & 2508/CHNY/2018 FILING THE APPEAL WITHIN THE TIME ALLOWED UNDER THE ACT COMES UNDER REASONABLE CAUSE AS PROVIDED UNDER THE ACT F OR CONDONATION OF DELAY AND HENCE, DELAY IN FILING O F APPEAL IS CONDONED AND APPEALS FILED BY THE ASSESSEE FOR ASS ESSMENT YEAR 2012-13 IS ADMITTED FOR ADJUDICATION. 5. THE ASSESSEE HAS, MORE OR LESS FILED COMMON GR OUNDS OF APPEAL FOR BOTH ASSESSMENT YEARS, THEREFORE, F OR THE SAKE OF BREVITY, GROUNDS OF APPEAL FILED IN ITA NO.2507/CHN Y/2018 FOR ASSESSMENT YEAR 2012-13 ARE REPRODUCED AS UNDER:- THE ORDER OF THE LEARNED COMMISSIONER OF INCOME (A PPEALS)- 10, IS WRONG, ILLEGAL AND OPPOSED TO FACTS OF THE I NSTANT CASE. BOTH THE ASSESSING OFFICER AND THE CIT(A) IN TOTAL NON- APPLICATION OF MIND TO THE FACTS OF THE APPELLANTS CASE ERRED IN LAW IN DISALLOWING THE CLAIM OF APPELLANT CLAIM OF RELIEF UNDER SECTION 10(38) OF THE INCOME TAX ACT. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE APPELLANT WAS INVOLVED IN MANIPULATION OF SHARES OR THAT THE TRANSACTION OF P URCHASE AND SALE OF SALE WAS BOGUS TO DISALLOW THE APPELLANTS C LAIM OF RELIEF UNDER SECTION 10(38) OF THE INCOME TAX ACT. THE LEARNED CIT(A) APPEALS ERRED IN DISALLOWING THE CLAIM OF THE APPELLANT UNDER SECTION 10(38) OF THE INCOME TAX AC T AND CONSEQUENTLY FAILED TO FOLLOW THE DICTUM LAID BY TH E SUPREME COURT IN THE CASE OF TEJUA ROHITKUMAR KAPADIA WHILE CONFIRMING THE ADDITION MADE UNDER SECTION 68. THE LEARNED ASSESSING OFFICER AND THE CIT(A) ERRED IN ASSESSING THE INCOME FROM PURCHASE AND SALE OF SHAR ES UNDER THE HEAD UN EXPLAINED CREDIT UNDER SECTION 68 AND N OT AS 4 ITA NO. 2507 & 2508/CHNY/2018 INCOME EXEMPT UNDER SECTION 10(38) OF THE INCOME TA X ACT AS CLAIMED BY THE APPELLANT DESPITE THE FACT THAT THE APPELLANT PRODUCED SALIENT EVIDENCES TO PROVE THE GENUINENESS OF THE TRANSACTION. THE SAID UNCONTROVERTED EVIDENCES ARE OVERLOOKED BOTH BY THE ASSESSING OFFICER AND CIT(A) WITHOUT AN Y RHYME OF REASON AND ORDERS PASSED IN A STEREO TYPED MANNER O N THE BASIS OF SUSPICION AND SURMISE WITHOUT APPLICATION OF MIND TO THE FACTS OF THE APPELLANTS CASE. THE LEARNED CIT(A) ERRED IN RELYING ON THE DECISION OF HONBLE MUMBAI HIGH COURT IN THE CASE OF PCIT VS SANJAY BIM AL CHAND JAM WHEREIN THE TRANSACTION WAS OFF MARKET AND PURC HASE WAS THROUGH CASH. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT IN THE CASE OF THE APPELLANT THE TRANSACTION OF PURCHA SE AND SALE OF SHARES ARE THROUGH RECOGNIZED STOCK EXCHANGE WHI CH IS FULLY SUPPORTED BY UNCONTROVERTED DOCUMENTARY EVIDENCES A ND PAYMENT OF STY WHICH ESTABLISH THE BONAFIDE OF THE APPELLANTS CLAIM. THE LEARNED CIT(A) ERRED IN LAW IN NOT FOLLOWING TH E DECISION OF THE JURISDICTION TRIBUNAL IN THE CASE OF NIRAV KUMA R MAHENDRA SAPANI AND KINNER PRAFULCHAND SAPANI . THE ORDER PA SSED BY THE LEARNED CIT(A) IS TOTALLY AGAINST JUDICIAL DISC IPLINE AND IS BAD IN LAW. THE LEARNED ASSESSING OFFICER AS WELL AS THE CIT(A) ERRED IN RELYING ON A CERTAIN PATTERN OF BOGUS CLAIM WHICH I S TOTALLY IRRELEVANT TO FACTS OF THE APPELLANTS. THE LEARNED LOWER AUTHORITIES ERRED IN RELYING ON INVESTIGATION IN TH E CASE OF THIRD PARTY WHICH HAS NO BEARING ON THE APPELLANTS TRANSA CTION TO DISALLOW THE CLAIM OF THE APPELLANT UNDER SECTION 1 0(38). THE LEARNED ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE NOT BROUGHT TO RECORD ANY EVIDENCES TO PROVE THAT THE S AID TRANSACTION THAT THE ASSESSE HAD ENTERED INTO WAS B OGUS IN NATURE, BASING THE ABOVE PURELY ON ASSUMPTIONS AND SUSPICION. THE LEARNED ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE NOT FOLLOWED THE DOCTRINE OF RES INTER ALIOS ACTA ALTER I NOCERE NON DEBET AND HAVE, WITHOUT ANY EVIDENCE TO THE SAME, H ELD A VALID TRANSACTION OF THE APPELLANT AS AN UNEXPLAINED CRED IT. 5 ITA NO. 2507 & 2508/CHNY/2018 6. BRIEF FACTS OF THE CASE AS CULLED OUT FROM ASSES SMENT ORDER FOR ASST. YEAR 2012-13 ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVES INCOME FROM BUSINESS OR PROFESS ION AND INCOME FROM OTHER SOURCE, FILED HER RETURN OF INCOM E FOR ASSESSMENT YEAR 2012-13 ON 20.12.2013 DECLARING TO TAL INCOME AT RS.1,67,390/-. THE CASE HAS BEEN SUBSEQUE NTLY REOPENED U/S.147 OF THE INCOME TAX ACT, 1961, FOR T HE REASONS RECORDED AS PER WHICH INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT ON ACCOUNT OF EXEMPTION CLAIMED U/S.10(38) OF THE INCOME TAX ACT, 1961, IN RESPECT OF LONG TERM CAPITAL GAIN DERIVED FROM SALE OF SHARES OF CERTAI N COMPANIES AND HENCE, NOTICE U/S.148 WAS SERVED ON THE ASSESSE E. THE CASE HAS BEEN TAKEN UP FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAD PURCHASED 2000 SHARES OF M/S. TUNI TEX TILE MILLS LTD. FOR FINANCIAL YEAR 2010-11 IN TWO LOTS, ONE 95 0/- SHARES @ RS.116.59 PER SHARE AND ANOTHER FOR 1050/- SHARES @ RS.122.41 PER SHARE. THE ASSESSING OFFICER FURTHER NOTICED THAT SUBSEQUENTLY THE COMPANY HAS SPLIT ITS EQUITY SHARE S HAVING FACE VALUE OF RS.10/- PER SHARE, INTO FACE VALUE OF RS. 1 PER SHARES, CONSEQUENTLY, 2000 SHARES HELD BY THE ASSES SEE 6 ITA NO. 2507 & 2508/CHNY/2018 BECAME 20,000 SHARES OF M/S. TUNI TEXTILE MILLS LI MITED. THESE SHARES WERE SUBSEQUENTLY SOLD ON 05.03.2012 IN THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2012-13 @ RS.95.5 0 PER SHARE FOR TOTAL CONSIDERATION OF RS.19,05,200/-. THE ASSESSEE HAS COMPUTED LONG TERM CAPITAL GAIN AND CLAIMED EXE MPT U/S.10 (38) OF THE ACT. 7. THE ASSESSING OFFICER EXAMINED CLAIM OF LONG TER M CAPITAL GAIN U/S.10(38) AND HAS NOT ACCEPTED EXPLANATION FU RNISHED BY THE ASSESSEE AND ACCORDING TO HIM, ASSESSEE IS ONE THE BENEFICIARY OF BOGUS LONG TERM CAPITAL GAIN DERIVE D FROM PENNY STOCKS. THE ASSESSING OFFICER HAS DISCUSSED THE ISS UE AT LENGTH IN LIGHT OF FINANCIAL STATEMENTS OF M/S. TUNI TEXTI LE MILLS LIMITED, AND OPINED THAT ALTHOUGH SHARE PRICE OF COMPANY WAS ESCALATED IN STOCK MARKET, BUT SUCH INCREASE IN SHARE PRICE W AS NOT SUPPORTED BY FINANCIALS. THEREFORE, HE OPINED THAT THE ASSESSEE IS PART OF ORGANIZED RACKET OF BOGUS LONG TERM CAPI TAL GAIN DERIVED FROM TRADING IN SHARES OF M/S. TUNI TEXTILE S LIMITED AND HENCE, ENTIRE CONSIDERATION RECEIVED FROM SALE OF S HARES HAS BEEN TREATED AS UNEXPLAINED CASH CREDIT AND ADDED B ACK U/S.68 OF THE ACT. THE ASSESSING OFFICER HAS ALSO TAKEN SU PPORT FROM 7 ITA NO. 2507 & 2508/CHNY/2018 INVESTIGATION CARRIED OUT BY DEPARTMENT IN RESPECT OF PENNY STOCK COMPANIES TO ARRIVE AT A CONCLUSION THAT M/S. TUNI TEXTILE MILLS LIMITED IS NAMED AS PENNY STOCK IN THE REPORT PREPARED BY INVESTIGATION WING OF THE DEPARTMENT. 8. THE ASSESSEE BEING AGGRIEVED BY THE ASSESSMENT O RDER PREFERRED AN APPEAL BEFORE CIT(A). BEFORE THE LEARN ED CIT(A), THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER H AS ERRED IN MAKING ADDITION TOWARDS CONSIDERATION RECEIVED FOR SALE OF SHARES U/S.68 OF THE ACT AS UNEXPLAINED CASH CREDI T, WITHOUT APPRECIATING FACT THAT THE ASSESSEE HAS PURCHASED S HARES THROUGH RECOGNIZED STOCK EXCHANGE AND FURTHER, SOLD SHARES IN RECOGNIZED STOCK EXCHANGE FOR WHICH NECESSARY EVI DENCES INCLUDING BROKER NOTE AND BANK STATEMENTS EVIDENCIN G PAYMENT AND RECEIPT OF CONSIDERATION THROUGH CHEQUE HAS BE EN FILED. THE LEARNED CIT(A), AFTER CONSIDERING RELEVANT SUBM ISSIONS OF THE ASSESSEE AND ALSO TAKEN SUPPORT FROM CERTAIN JU DICIAL PRECEDENTS HELD THAT ALTHOUGH THE ASSESSEE CLAIMS T O HAVE PURCHASED SHARES THROUGH RECOGNIZED STOCK EXCHANGE AND ALSO UTILIZED SERVICES OF BROKER M/S.KUNVARJI FINST OCK PVT.LTD. BASED AT AHMADABAD, BUT FAILED TO EXPLAIN AS TO WHY SHE HAS 8 ITA NO. 2507 & 2508/CHNY/2018 AVAILED SERVICES OF A BROKER BASED AT AHMADABAD FOR SPECIFIC TRANSACTION OF PURCHASE AND SALE OF SHARES OF M/S. TUNI TEXTILE MILLS LIMITED., EVEN THOUGH SHE IS BASED AT CHENNAI . THE LEARNED CIT(A) FURTHER NOTED THAT THE BROKER M/S.K UNVARJI FINSTOCK PVT.LTD. WAS PREVIOUSLY CHARGED BY SEBI UN DER THE PROHIBITION OF FRAUDULENT & UNFAIR TRADE PRACTICES RELATING TO SECURITIES MARKET REGULATIONS, 1995, AND WAS ALSO F OUND GUILTY OF VIOLATING REGULATORY REQUIREMENTS. HE FURTHER NO TED THAT SHARES OF M/S. TUNI TEXTILE MILLS LIMITED HAVE BEEN SPECIFICALLY NAMED AS PENNY STOCKS BY INVESTIGATION WING OF THE DEPARTMENT. THE LEARNED CIT(A) FURTHER NOTED THAT A SSESSEE IS ALSO UNABLE TO EXPLAIN HOW A COMPANY WHICH IS HAVI NG NEGLIGIBLE FINANCIAL STRENGTH HAS SPLIT ITS EQUITY SHARES IN THE RATIO OF 1 : 10 AND FURTHER, FAILED TO EXPLAIN HOW PRICE OF SHARES WAS QUOTED AT A RECORD 9400% GROWTH RATE IN A SH ORT SPAN OF TWO YEARS. THEREFORE, HE OPINED THAT MERE FURNISHI NG CERTAIN EVIDENCES, INCLUDING BROKER NOTES TO PROVE PURCHA SE AND SALE OF SHARES THROUGH ONLINE PLATFORM AND FURTHER PAYM ENT OR RECEIPT OF CONSIDERATION THROUGH PROPER BANKING CHA NNEL IS NOT SUFFICIENT TO PROVE GENUINENESS OF TRANSACTION, WHE N OTHER CIRCUMSTANTIAL EVIDENCES SHOW THAT TRANSACTION OF S HARES 9 ITA NO. 2507 & 2508/CHNY/2018 TRADING IS NOT GENUINE. THEREFORE, HE HAS REJECTED ARGUMENTS OF THE ASSESSEE AND CONFIRMED ADDITIONS MADE BY THE AS SESSING OFFICER. AGGRIEVED BY THE LEARNED CIT(A) ORDER, TH E ASSESSEE IS IN APPEAL BEFORE US. 9. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT T HE LEARNED CIT(A) HAS ERRED IN UPHOLDING ADDITIONS MAD E BY THE AO TOWARDS CONSIDERATION RECEIVED FOR SALE OF SHARE S U/S.68 OF THE INCOME TAX ACT, 1961, WITHOUT APPRECIATING FACT THAT THE ASSESSEE NEVER INVOLVED IN RIGGING SALE PRICE OF SH ARES IN THE MARKET AND ALSO THE AO HAS NOT BROUGHT ON RECORD AN Y EVIDENCE TO PROVE THAT THE ASSESSEE IS PART OF GROU P OF PEOPLE, WHO ARE INVOLVED IN RIGGING OF SHARE PRICE IN THE MARKET. THE AR FURTHER SUBMITTED THAT NO DOUBT M/S. TUNI TEXTIL E MILLS LIMITED MAY BE NAMED AS PENNY STOCK BY INVESTIGATIO N WING OF THE DEPARTMENT, BUT WHAT IS TO BE SEEN IS WHETHER T HE ASSESSEE IS PART OF THAT GROUP, WHO IS INVOLVED IN RIGGING O F SHARE PRICE AND ALSO BENEFICIARY OF ARTIFICIAL INCREASE IN SHAR E PRICE TRADING. UNLESS THE AO BROUGHT ON RECORD SOME EVIDENCES TO PROVE THAT THERE IS A DIRECT NEXUS BETWEEN INCOME DERIVED BY T HE ASSESSEE FROM SALE OF SHARES AND RIGGING OF SHARE P RICE IN THE 10 ITA NO. 2507 & 2508/CHNY/2018 MARKET, HE CANNOT TREAT GENUINE TRANSACTIONS OF PUR CHASE AND SALE OF SHARED AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. THE AR FURTHER REFERRING TO VARIOUS DECISIONS SUBMI TTED THAT VARIOUS HIGH COURTS, INCLUDING THE HONBLE DELHI HI GH COURT, HAS CONSIDERED SIMILAR ISSUE IN LIGHT OF INVESTIGA TION CARRIED OUT BY INCOME-TAX DEPARTMENT TO UNEARTH ORGANIZED RACKE T OF PENNY STOCKS COMPANIES AND AFTER CONSIDERING FACTS HELD T HAT UNLESS THE ASSESSING OFFICER PROVES THAT THERE WAS AN A GREEMENT BETWEEN THE PARTIES TO CONVERT UNACCOUNTED MONEY BY TAKING FICTITIOUS LONG TERM CAPITAL GAIN IN A PRE-PLANNED MANNER, HE CANNOT PROCEED TO MAKE ADDITIONS ENTIRELY ON UNSUP PORTED MATERIAL ON RECORD. THE AR FURTHER SUBMITTED THAT N O DOUBT, THERE ARE DIVERGENT VIEWS ON THE ISSUE, WHERE SOME HIGH COURTS HAVE HELD THAT ONCE IT IS PROVED THAT SCRIP IS A PENNY STOCK, THEN IT IS TO BE HELD THAT THE ASSESSEE IS A LSO A BENEFICIARY OF BOGUS LONG TERM CAPITAL GAIN, BUT FA CT REMAINS THAT IN ALL THOSE CASES CONSIDERED BY HONBLE HIGH COURTS AND DECIDED IN FAVOUR OF REVENUE, THE FACT WAS THAT PUR CHASE OF SHARES WAS ALWAYS OFFLINE EITHER THROUGH PRIVATE P LACEMENT OR PURCHASE IN GREY MARKET AND SALE WAS THROUGH RECOGN IZED STOCK EXCHANGE. IN THIS CASE, PURCHASE AS WELL AS SALE BO TH ARE ONLINE 11 ITA NO. 2507 & 2508/CHNY/2018 AND THE ASSESSEE HAS PAID AND RECEIVED CONSIDERATIO N THROUGH CHEQUE, THEREFORE, CASE LAWS RELIED UPON BY THE REV ENUE HAS NO APPLICATION TO THE FACTS OF PRESENT CASE. THE LEARN ED CIT(A) WITHOUT APPRECIATING FACTS HAS SIMPLY CONFIRMED ADD ITIONS AND HIS ORDER SHOULD BE SET ASIDE. 10. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT FACTS BROUGHT OUT BY THE AO AS WELL AS LD.CIT(A) CATEGORICALLY PROVES THAT SCRIP WAS TRADED IN STOCK MARKET WITH EXORBITANT INCREASE IN PRICE, EVEN THOUGH FINANCIALS OF THE COMPANY WAS NOT SUPPORTED SUCH INCREASE IN PRICE. HE FURTHER SUBMITTED THAT NO DOU BT, THE ASSESSEE HAS FILED NECESSARY EVIDENCES TO PROVE THA T SHE HAS PURCHASED AND SOLD SHARES THROUGH RECOGNIZED STOCK EXCHANGE, BUT WHAT IS TO BE SEEN IS WHETHER THE ASS ESSEE IS A REGULAR INVESTOR IN SHARES OR HAS MADE AN ISOLATED TRANSACTION OF ONE PURCHASE AND SALE IN PARTICULAR SCRIP. IN TH IS CASE, IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE WAS NEVER INTO P URCHASE AND SALE OF SHARES, BUT ENTERED INTO ONE ISOLATED T RANSACTION OF PURCHASE AND SALE OF SHARES OF A SPECIFIC COMPANY M /S. TUNI TEXTILE MILLS LTD. AND SAID COMPANY WAS NAMED AS P ENNY STOCKS, UPON CONSIDERATION OF FACTS GATHERED DURI NG THE COURSE 12 ITA NO. 2507 & 2508/CHNY/2018 OF INVESTIGATION . THEREFORE, THERE IS NO MERIT IN THE ARGUMENTS TAKEN BY THE ASSESSEE THAT LONG TERM CAPITAL GAIN D ERIVED FROM SALE OF SHARES IS GENUINE TRANSACTION. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIA L AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW ALONG WITH VARIOUS CASE LAWS CITED BY BOTH TH E SIDES. THERE IS NO DISPUTE WITH REGARD TO FACTS THAT THE A SSESSEE HAS PURCHASED SHARES OF M/S. TUNI TEXTILE MILLS LTD. TH ROUGH RECOGNIZED STOCK EXCHANGE AND PAID CONSIDERATION BY CHEQUE. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS SOL D SHARES THROUGH RECOGNIZED STOCK EXCHANGE AND RECEIVED CONS IDERATION BY CHEQUE. IN FACT, THE ASSESSING OFFICER AS WELL A S LEARNED CIT(A) WERE NEVER DISPUTED FACT THAT PURCHASE AND S ALE OF SHARES WAS ONLINE AND CONSIDERATION WAS PAID AND R ECEIVED BY CHEQUE. THE ONLY DISPUTE IS THAT THE SCRIP OF M/S.T UNI TEXTILE MILLS LTD. IS PENNY STOCK AS PER INVESTIGATION CAR RIED OUT BY THE DEPARTMENT AND FURTHER, THE ASSESSEE MAY BE BENEFIC IARY OF BOGUS LONG TERM CAPITAL GAIN DERIVED FROM PURCHASE AND SALE OF SHARES. 13 ITA NO. 2507 & 2508/CHNY/2018 12. WE HAVE GONE THROUGH REASONS GIVEN BY THE ASSES SING OFFICER TO ARRIVE AT A CONCLUSION THAT CONSIDERATIO N RECEIVED FOR SALE OF SHARES OF M/S.TUNI TEXTILE MILLS LTD. IS UN EXPLAINED CASH CREDIT AND ASSESSABLE U/S.68 OF THE INCOME TAX ACT, 1961 AND WE DO NOT OURSELVES SUBSCRIBE TO REASONS GIVEN BY T HE ASSESSING OFFICER AS WELL AS LEARNED CIT(A), BECAUS E BOTH AUTHORITIES HAD PROCEEDED PREDOMINANTLY ON THE BASI S OF ANALYSIS OF FINANCIAL STATEMENTS OF M/S.TUNI TEXTI LE MILLS LTD. WE DO NOT FIND ANYTHING TO COMMENT ON THE ANALYSIS OF FINANCIALS OF THE COMPANY BY THE ASSESSING OFFICER, BUT WE DO NOT AGREE WITH THE CONCLUSION ARRIVED AT BY THE ASS ESSING OFFICER ONLY ON THE BASIS OF ANALYSIS OF FINANCIAL STATEMENT OF THE COMPANY TO TREAT CONSIDERATION RECEIVED FOR SALE OF TRANSFER OF SHARES BY THE ASSESSEE AS UNEXPLAINED CASH CREDIT. NO DOUBT, M/S. TUNI TEXTILE MILLS LTD. MAY BE NAMED AS PENNY STOCK BY THE INCOME TAX DEPARTMENT BASED ON FACTS GATHERED DURING THE COURSE OF INVESTIGATION. IT MAY ALSO BE CORRECT THA T FINANCIALS OF THE COMPANY MAY NOT SUPPORT SUCH A HUGE RISE IN SHA RE PRICE WITHIN SHORT SPAN OF TWO YEARS. BUT, THESE TWO FACT S ALONE ARE NOT SUFFICIENT TO DRAW ADVERSE INFERENCE AGAINST TH E ASSESSEE, 14 ITA NO. 2507 & 2508/CHNY/2018 UNLESS THE AO LINKED TRANSACTIONS OF THE ASSESSEE T O ORGANIZED RACKET OF ARTIFICIAL INCREASE IN SHARE PRICE. 13. IN THIS CASE, THERE IS NO DISPUTE WITH REGARD T O FACT THAT ASSESSEE HAS FILED RELEVANT DOCUMENTS INCLUDING CON TRACT NOTE ISSUED BY STOCK BROKER, AS PER WHICH PURCHASE AND S ALE OF SHARES WERE THROUGH ONLINE. THE ASSESSEE HAS PAID CONSIDERATION FOR PURCHASE OF SHARES BY CHEQUE AND HAD RECEIVED CONSIDERATION FOR SALE OF SHARES BY CHEQUE . THE ASSESSING OFFICER HAS NOT MADE ANY ADVERSE COMMENT S ON THE EVIDENCES FILED BY THE ASSESSEE, BUT HE HAS DISBEL IEVED DOCUMENTS FILED BY THE ASSESSEE FOR SIMPLE REASON THAT BROKER WAS KEPT UNDER WATCH LIST BY THE SEBI FOR FRAUDULEN T AND UNFAIR TRADE PRACTICES RELATING TO SECURITIES MARKET REGU LATIONS, 1995. WE FIND THAT BASIS ON WHICH THE ASSESSING OFFICER H AS CONCLUDED HIS FINDING TO HOLD THE ASSESSEE IS A BEN EFICIARY OF BOGUS LONG TERM CAPITAL GAIN IS NOT SUPPORTED BY AN Y CORROBORATIVE EVIDENCES. NO DOUBT, BROKER MAY BE KE PT UNDER WATCH LIST FOR SOME FRAUDULENT ACTIVITIES, BUT WHET HER THE ASSESSEE IS PART OF THAT FRAUDULENT ACTIVITY OR NOT HAS TO BE SEEN. MOREOVER, THERE IS NO EVIDENCE ON RECORD TO S HOW THAT 15 ITA NO. 2507 & 2508/CHNY/2018 ASSESSEE WAS PART OF THE ORGANIZED RACKET OF RIGGIN G PRICE OF SHARES IN THE MARKET. THE FINDINGS OF THE ASSESSING OFFICER IS PURELY BASED ON SUSPICIOUS AND SURMISE MANNER. THER EFORE, WE ARE OF THE CONSIDERED VIEW THAT UNLESS THE ASSESSIN G OFFICER BRINGS CERTAIN EVIDENCES TO SUPPORT HIS FINDING THA T THE ASSESSEE IS ALSO INVOLVED IN RIGGING SHARE PRICE TO GET UNDUE BENEFIT OF EXEMPTION U/S.10(38) OF THE INCOME TAX A CT, 1961, THE TRANSACTIONS OF SALE AND PURCHASE OF SHARES THR OUGH RECOGNIZED STOCK EXCHANGE CANNOT BE TREATED AS UNEX PLAINED CASH CREDIT U/S.68 OF THE ACT. IN THIS CASE, THE AS SESSING OFFICER HAS PREDOMINANTLY WENT ON THE BASIS OF THEORY OF HU MAN BEHAVIOR AND PREPONDERANCE OF PROBABILITIES FOR T HE REASON THAT THE ASSESSEE WAS NEVER INVOLVED IN PURCHASE A ND SALE OF SHARES, BUT HAS DONE ISOLATED TRANSACTION OF PURCHA SE AND SALE OF A PARTICULAR COMPANY . THE SAID FINDING OF THE AO IS CONTRARY TO FACTS, BECAUSE, THE ASSESSEE WAS A REGULAR INVES TOR IN SHARES WHICH IS EVIDENT FROM DEMAT ACCOUNT FURNISHE D BEFORE US, AS PER WHICH ALONG WITH THIS SCRIPT, THE ASSESS EE HAD PURCHASED AND SOLD NUMBER OF OTHER SCRIPTS. 16 ITA NO. 2507 & 2508/CHNY/2018 14. COMING BACK TO VARIOUS CASE LAWS RELIED UPON BY THE LEARNED A.R FOR THE ASSESSEE AND LD. AO AS WELL AS LD. CIT(A). AS WE HAVE ALREADY OBSERVED, THERE ARE DIVERGENT VI EWS OF THE ISSUE BY VARIOUS HIGH COURTS AND TRIBUNAL AND SAID VIEW IS BASED FACTS OF THOSE CASE. SINCE IT IS A FACTUAL IS SUE WHICH CAN BE DECIDED ON THE BASIS OF FACTS OF EACH CASE AND E VIDENCES PLACED ON RECORD, WE DO NOT WISH TO COMMENT ON VARI OUS CASE LAWS RELIED UPON BY BOTH SIDES. 15. IN THIS VIEW OF THE MATTER AND CONSIDERING FACT S AND CIRCUMSTANCES OF THIS CASE, WE ARE OF THE CONSIDERE D VIEW THAT THE ASSESSING OFFICER AS WELL AS LEARNED CIT(A) WER E ERRED IN TREATING CONSIDERATION RECEIVED FOR SALE OF SHARES AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. HENCE, WE DIRECT THE ASSESSING OFFICER TO DELETE ADDITIONS MADE U/S.68 O F THE ACT. 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO.2508/CHNY/2018 (A.Y.2013-14): 17. THE FACTS AND ISSUE INVOLVED IN THIS APPEAL ARE IDENTICAL TO THE FACTS AND ISSUE WHICH WE HAVE ALRE ADY CONSIDERED IN ITA NO.2507/CHNY/2018 FOR THE ASSESSM ENT 17 ITA NO. 2507 & 2508/CHNY/2018 YEAR 2012-13, BUT FOR CHANGE IN SCRIP TRADED BY THE ASSESSEE. THE ASSESSING OFFICER HAS TREATED CONSIDE RATION RECEIVED FOR SALE OF SHARES AS UNEXPLAINED CASH CRE DIT U/S.68 OF THE ACT, FOR SIMILAR REASONS GIVEN FOR AS SESSMENT YEAR 2012-13. THEREFORE, WE ARE OF THE CONSIDERED V IEW THAT REASONS GIVEN BY US IN THE PRECEDING PARAGRAPH S IN ITA NO.2507/CHNY/2018 SHALL MUTATIS MUTANDIS APPLY TO THIS APPEAL AS WELL. THEREFORE, FOR SIMILAR REASONS , WE DIRECT THE ASSESSING OFFICER TO DELETE ADDITIONS MA DE TOWARDS CONSIDERATION RECEIVED FOR SALE OF SHARES U /S.68 OF THE ACT. IN THE RESULT, APPEAL FILED BY THE ASSESSE E IS ALLOWED. 18. AS A RESULT, APPEALS FILED BY THE ASSESSEE FOR BOTH ASSESSMENT YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH SEPTEMBER, 2021 SD/- SD/- ( . ) ( . ) (V.DURGA RAO ) ( G.MANJUNATHA ) $ & / JUDICIAL MEMBER & / ACCOUNTANT MEMBER $ /CHENNAI, ) /DATED 8 TH SEPTEMBER, 2021 DS +, -, /COPY TO: 1. APPELLANT 2. RESPONDENT 3. . () /CIT(A) 4. . /CIT 5. , 2 /DR 6. /GF .