Sangita Khemka , Kolkata V. ITO, Ward - 45(2) , Kolkata

ITA 2661/KOL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8243 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 24-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Capital asset converted into stock in trade; Income from undisclosed sources; Share purchase agreement; Transactions in derivatives; Earning of tax free income; Question of law; Accommodation entries; Sham transactions; Penny stocks; TDS; Set aside
• Section: 234B; 205; 131; 68

Judgement Text

1 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 2661/KOL/2018 ASSESSMENT YEAR: 2014-15 SANGITA KHEMKA (PAN: AFNPK5390R) VS. INCOME-TAX OFFICER, WD-45(2), KOLKATA APPLICANT RESPONDENT DATE OF HEARING 13.06.2019 DATE OF PRONOUNCEMENT 17.07.2019 FOR THE APPLICANT SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT SHRI SANKAR HALDER, JCIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-13, KOLKATA DATED 04.09.2018 FOR AY 2014-15. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF ASSESS EE IS AS TO WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTI FIED IN UPHOLDING THE ADDITION MADE BY THE AO U/S 68 OF THE ACT IN RESPECT OF SALE PROCEED S OF SHARES OF M/S KAILASH AUTO FINANCE LIMITED (KAFL) TREATING THE SAME AS INCOME FROM UND ISCLOSED SOURCES AFTER REJECTING THE ASSESSEES CLAIM OF LONG TERM CAPITAL GAINS (LTCG) ON SALE OF THOSE SHARES U/S. 10(38) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT). 3. THE BRIEF FACTS AS HAS BEEN RECORDED BY THE AO I N THE ASSESSMENT ORDER ARE THAT THE ASSESSEE CLAIMED LONG TERM CAPITAL GAINS FROM SALE OF SHARES OF M/S. KAFL TO THE TUNE OF RS.73,69,727/- AS EXEMPT FROM INCOME TAX. THE AO NO TED THAT THE ASSESSEE HAD ACQUIRED 2,00,000 SHARES OF M/S. PANCHSHUL MARKETING LTD. A T A FACE VALUE OF RS. 1 EACH FOR A TOTAL CONSIDERATION OF RS. RS.2,00,000/-, WHICH COMPANY L ATER GOT AMALGAMATED WITH M/S. KAFL BY VIRTUE OF AN ORDER OF HONBLE ALLAHABAD HIGH COU RT AND IN PURSUANCE TO SUCH AMALGAMATION, THE ASSESSEE WAS ALLOTTED 2,00,000 SH ARES OF M/S. KAFL OF THE FACE VALUE OF 2 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 RS. 1 EACH. THE SAID SHARES WERE LATER SOLD ON BOMB AY STOCK EXCHANGE [BSE] THROUGH A BROKER NAMED M/S. KOTAK SECURITIES ON DIFFERENT DAT ES FALLING WITHIN THE PREVIOUS YEAR 2013-14 CORRESPONDING TO THE ASST YEAR 2014-15 AT A PRICE OF RS.75,69,727/-., WHICH ACCORDING TO ASSESSEE, RESULTED IN LONG TERM CAPITA L GAINS AND SO THE ASSESSEE CLAIMED EXEMPTION U/S 10(38) OF THE ACT OF RS.73,69,727/-. 4. HOWEVER, THE AO DID NOT AGREE WITH THE ASSESSEE S CLAIM OF LTCG AND EXEMPTION THEREOF CLAIMED BY THE ASSESSEE. ACCORDING TO AO, IT IS UNBELIEVABLE THAT THE ASSESSEE CAN MAKE SUCH A HUGE GAIN IN A SPAN OF 18 MONTHS OF HOL DING THESE SCRIPS. ACCORDING TO AO, THUS, A DEEPER STUDY WAS NEEDED TO ASCERTAIN WHETHE R THE TRANSACTIONS WERE GENUINE INVESTMENT TRANSACTIONS OR SHAM/COLOURABLE DEVICE ONLY TO CONVERT THE UNACCOUNTED CASH INTO TAX EXEMPT INCOME. IN SHORT, ACCORDING TO AO, IT WAS TO BE ASCERTAINED WHETHER THE APPARENT WAS REAL. THEREAFTER, THE AO TOOK NOTE OF THE FINANCIALS OF THE COMPANY AND OBSERVED THAT THERE IS NOTHING WORTHWHILE TO MENTIO N ON THE FRONT OF ASSETS AND NET WORTH OF THE COMPANY AS WELL, TO CONCLUDE THAT IT COULD COMM AND SUCH HIGH PREMIUMS. ACCORDING TO AO, THE COMPANY MERELY FORWARDED THE SHARE CAPITAL RECEIVED THROUGH PREFERENTIAL PLACEMENT OF SHARES TOWARDS LOAN AND ADVANCES. IT WAS ALSO FOUND THAT DURING THE PERIOD OF ASTRONOMICAL RISE OF SHARES PRICE OF THE SCRIP THER E WAS NO CORPORATE ANNOUNCEMENT OR BIG ORDER OR ANY SUCH NEWS OR ANY EXTRAORDINARY SITUAT ION WHICH COULD RESULT INTO SUCH FRENZY IN THE STEEP RISE OF SCRIP PRICE. ACCORDING TO AO, TH E PRICE OF SCRIP IN THE SECONDARY MARKET MAINLY DEPENDS UPON THE EPS, THE BUSINESS HEALTH OF A COMPANY OR SOME NEW DEVELOPMENT IN THE COMPANY WHICH PROMISES BRIGHT FUTURE FOR THE SHAREHOLDERS. ACCORDING TO AO, IN THIS CASE NO SUCH FACTORS ARE PRESENT. ACCORDING TO AO, THE PRICE MOVEMENT OF THE SCRIP IN THE SPAN OF 18 MONTHS RAISED DOUBTS IN HIS MIND AND THA T PROFIT EARNED BY THE ASSESSEE WERE BEYOND HUMAN PROBABILITIES. THE AO NOTICED THAT THE PROBABLE REASONS WERE WITH A VIEW TO PROVIDE LARGE AMOUNT OF LTCG IN THE HANDS OF BENEFI CIARIES AFTER AMALGAMATING THE SAID COMPANY WITH KAFL. THE AO CONCLUDED THAT M/S. PANCH SHUL MARKETING LTD. (M/S. PML) WAS INCORPORATED WITH A DUBIOUS PLAN AND PREMEDITAT ED ARRANGEMENT AND ARTIFICE TO INCREASE NUMBER OF SHARES THEREIN THROUGH SHAM AND NON GENUI NE TRANSACTIONS OF ITS SHARES WHICH RESULTED IN FETCHING EXORBITANT AND UNREALISTIC CON SIDERATIONS BY THE SCHEME OF 3 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 AMALGAMATION. THE AO REFERRED TO THE STATEMENT OF S HRI SUNIL DOKANIA RECORDED U/S 131 OF THE ACT BY THE INVESTIGATION WING ON 12.06.2015, WH EREIN, SHRI DOKANIA HAS EXPLAINED THE MODUS OPERANDI OF PROVIDING OF LTCG IN THE SCRIP OF KAFL. HE STATED THAT BY WAY OF AMALGAMATION OF M/S. PML WITH KAFL, THE BENEFICIARI ES OF LTCG GOT HIGHER NUMBER OF SHARES OF KAFL AS AGAINST SHARES OF M/S. PML. MR. D OKANIA, IN THE AFORESAID STATEMENT, STATED BEFORE THE INVESTIGATION WING THAT HE HAD GO T EQUAL AMOUNT OF CASH FROM THE BENEFICIARIES, DEPOSITED THE SAME TO VARIOUS UNDISC LOSED PROPRIETORSHIP CONCERNS, AND FINALLY TRANSFERRED THE SAME TO BOGUS/SHELL COMPANIES, BY L AYERING THROUGH VARIOUS ACCOUNTS, WHICH HAD ULTIMATELY PURCHASED THE SHARES SOLD BY THE BEN EFICIARIES. THE AO HAS ALSO RELIED UPON STATEMENT OF SHRI SUNIL DOKANIA RECORDED U/S 131 BY THE INVESTIGATION WING, IN THE CASE OF RASHMI GROUP OF KOLKATA ; STATEMENT OF SHRI DIPAN JESINGBHAI PATEL RECORDED ON 20.5.2015; STATEMENT OF SOME BENEFICIARIES WHO HA D CORROBORATED THE MODUS OPERANDI AS REVEALED BY SHRI DOKANIA. THE AFORESAID STATEMENTS WERE REFERRED TO IN THE ASSESSMENT ORDER TO COME TO A CONCLUSION THAT THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF THE TRANSACTIONS IN SHARES OF KAFL WHICH RESULTED IN BO GUS CLAIM OF EXEMPT LTCG. 5. THE AO, ON THE BASIS OF MOVEMENT OF PRICE OF KAF L QUOTED IN BOMBAY STOCK EXCHANGE DURING THE PERIOD OF SEPTEMBER, 2013 TO JA NUARY, 2014 (THE PERIOD OF SALE OF SHARES OF KAFL BY THE ASSESSEE), FOUND THAT THE PRI CE OF SHARES HAD INCREASED BY 267%. THE AO CONCLUDED THAT WHILE SENSEX SHOWED ALMOST NO PRO GRESS, PRICE OF SHARES OF KAFL MOVED PHENOMENALLY. THE AO ALSO REFERRED TO THE FI NANCIALS OF KAFL DURING THE FINANCIAL YEARS 2011-12 TO 2015-16 AND CONCLUDED THAT EARNING S PER SHARE (EPS) DURING THAT PERIOD WAS EITHER NIL OR NEGATIVE BUT THE VALUE OF SHARES WAS HIGHLY INFLATED. THE AO OBSERVED THAT THE PRICES OF SHARES OF KAFL WERE RIGGED BY THE ENT ITIES CONNECTED TO KAFL. 6. THE AO REFERRED TO THREE SEPARATE ORDERS PASSED BY SEBI DATED 29 TH MARCH, 2016, 15 TH JUNE, 2016 AND 31 ST OCTOBER, 2016 IN SUPPORT OF HIS ADVERSE CONCLUSION S DRAWN AGAINST THE ASSESSEE THAT SEVERAL ENTITIES RELATED/CONNECTE D TO KAFL RIGGED THE PRICES BY 230% DURING THE PERIOD OF JANUARY, 2013 TO JUNE, 2013 (P ATCH-1), CREATED ARTIFICIAL DEMAND AND THEREAFTER PROVIDED EXIT TO THE BENEFICIARIES DURIN G THE PERIOD OF JULY 2013 TO NOVEMBER, 4 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 2014 (PATCH-2). THE SAID ORDERS PASSED BY SEBI CONT AINED LIST OF RELATED/CONNECTED PARTIES OF KAFL AND ALSO THE LIST OF BENEFICIARIES. SOME OF THESE WERE RESTRAINED FROM ACCESSING THE SECURITIES MARKET AND BUYING, SELLING OR DEALING IN SECURITIES. THE AO CONCLUDED THAT THE IN DEPTH ANALYSIS DONE BY SEBI IN THE THREE ORDERS IS DIRECT EVIDENCE AGAINST THE ASSESSEE TO HOLD THAT THE PRICES OF KAFL WERE MANIPULATED AND A RTIFICIALLY HIKED TO CREATE NON-GENUINE LTCG IN THE TRANSACTIONS OF KAFL. THE AO FURTHER C ONCLUDED THAT CONFESSIONS GIVEN ON OATH BY THE PROMOTERS/BROKERS/OPERATORS ARE THE CIR CUMSTANTIAL EVIDENCE AGAINST THE ASSESSEE THAT THE LTCG WAS ARRANGED ONE. THE AO WAS OF THE O PINION THAT THE SEBI REPORTS AND STATEMENTS, STRENGTHENS THE SUSPICIONS OVER THE GEN UINENESS OF THE BUYERS OF SHARES AND FURTHER SUSPECTED THAT THE UNACCOUNTED CASH OF THE ASSESSEE WAS LAYERED INTO THE BANK ACCOUNT OF THE EXIT PROVIDERS. 7. THE AO RELYING ON THE VARIOUS DECISIONS VIZ. HER SH WIN CHADDHA V. DCIT [ITA NOS.3088 TO 3098 & 3104/DEL/2005], SUMATI DAYAL V. CIT 214 ITR 801 (SC), DURGA PRASAD MORE V. CIT, MCDOWELL & CO. V. CTO, CIT V. P. MOHAN KALA] OBSERVED THAT TAX LIABILITIES CAN BE ASSESSED BY REVENUE AUTHORITIES ON CONSIDERA TION OF MATERIAL AVAILABLE ON RECORD, SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT, PREPONDER ANCE OF PROBABILITIES AND NATURE OF INCRIMINATING INFORMATION/EVIDENCE AVAILABLE ON REC ORD. THE AO ULTIMATELY CONCLUDED THAT IN SUCH CLANDESTINE OPERATIONS AND TRANSACTIONS, IT IS IMPOSSIBLE TO HAVE DIRECT EVIDENCE OR DEMONSTRATIVE PROOF OF EVERY MOVE. 8. THE AO CONCLUDED THAT THE ASSESSEES TRANSACTION S RESULTING IN LTCG ON SALE OF SHARES OF KAFL WERE BOGUS AND THAT THE ASSESSEE PLO UGHED BACK HIS UNACCOUNTED MONEY IN THE BOOKS OF ACCOUNTS WHICH IS ASSESSABLE UNDER SEC TION 68 OF THE ACT. 9. ON FIRST APPEAL, THE LD. CIT(A) DISMISSED THE GR OUNDS RAISED BY THE ASSESSEE AGAINST HIS CLAIM OF EXEMPTION U/S 10(38) OF THE ACT AND HE ALSO CONFIRMED THE ADDITIONS MADE BY THE AO UNDER SECTION 68 OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR THAT THIS TRIBUNAL IN THE FOLLOWING CASES HAVE DECIDED THAT THE SCRIPS OF M/S KAFL WERE NOT BOGUS AND HELD THAT THE LTCG CLAIM OF THE ASSESSEE NEED TO BE ALLOWED: I) MANISH KUMAR BAID VS. ACIT, ITA NOS. 1236& 1237/ KOL/2017 DATED 18.08.2017 II) RUKMINI DEVI MANPRIA VS. DCIT, ITA NO.1724/KOL/ 2017 DATED 24.10.2018 III) JAGMOHAN AGARWAL VS. ACIT, ITA NO.604/KOL/2018 DATED 05.09.2018. 11. PER CONTRA THE LD. DR FOR THE REVENUE VEHEMEN TLY OPPOSED THE CONTENTIONS OF THE ASSESSEE AND TOOK US THROUGH THE AOS ORDER AND LD. CIT(A) ORDER AND SUBMITTED THAT SCRIPS OF M/S. KAFL WAS ARTIFICIALLY RIGGED TO PROVIDE LTC G TO THE ASSESSEE WHICH CANNOT BE ALLOWED AND SUPPORTED THE IMPUGNED ORDER AND RELIED ON THE ORDER OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BINOD CHAND JAIN IN TAX APPEAL NO.18 OF 2017 AND SO HE DOES NOT WANT US TO INTERFERE WITH THE IMPUGNED ORDER . LD. DR FURTHER SUBMITTED THAT IN THIS CASE NO DOCUMENT APPARENTLY BEING FURNISHED TO AO TO SHOW T HE DATE OF TRANSFER OF SUCH SHARE CERTIFICATE IN THE NAME OF THE ASSESSEE. THIS COMPA NY HAS BEEN MERGED WITH THE LISTED COMPANY M/S. KAFL AND ASSESSEE STARTED SELLING OF S UCH SHARES FROM 24.07.2013. WITHOUT PROVING THE DATE OF TRANSFER OF SHARE AT THE POINT OF PURCHASE ASSESSEE CANNOT CLAIM HOLDING SUCH SHARE FOR MORE THAN 12 MONTHS TO CLAIM SUCH GA IN AS LONG TERM CAPITAL GAIN. HE ALSO ARGUED THAT THIS QUESTION NEEDS TO BE DECIDED WHETH ER PURCHASE OF SHARES OF AN OBSCURE COMPANY M/S. PML OFF-MARKET FROM AN UNKNOWN ENTITY WAS AN INVESTMENT DECISION AT ALL OR NOT. HE ALSO STATED THAT IT IS RELEVANT TO MENTION THAT, ONE OF THE PROMOTER AND ENTRY OPERATOR OF KAILASH AUTO AND CAREFUL PROJECTS , SRI SUNIL DU KANIA, A CA, IN HIS STATEMENT GIVEN BEFORE THE DDIT (INV.) OF INCOME TAX U/S 131(1) OF THE ACT ON 12.06.2015 ADMITTED THAT THESE ARE PAPER COMPANIES HAVING NO REAL BUSINESS A ND BOTH ARE CONTROLLED BY ENTRY OPERATORS. DIRECTORS ARE ONLY DUMMY PERSONS THERE. IN VIEW OF SUCH FACT IT IS VERY CLEAR THAT THE SUBMISSION OF THE ASSESSES REGARDING THE REASON FOR PURCHASE OF SHARE OF THAT WAS NOT AN INVESTMENT DECISION BUT A MOVE TO GET AN ENTRY FOR LTCG INCOME. THE LD. DR ALSO SUBMITTED THAT THERE IS REPORT OF SEBI CONFIRMING T HAT KAILASH AUTO STOCK WAS GROSSLY MANIPULATED ON THE STOCK EXCHANGE PLATFORM TO GENER ATE BOGUS CAPITAL GAIN INCOME FOR 6 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 BENEFICIARIES TO EVADE PAYMENT OF TAX. THUS, ACCORD ING TO LD. DR, IT IS EVIDENT THAT ASSESSEE'S PURCHASE OF THAT SOCK WAS NOT AN INVESTM ENT DECISION BUT ONLY AN ENTRY POINT TO COME TO THE LISTED COMPANY KAILAS AUTO IN ORDER TO GENERATE BOGUS LTCG INCOME , AND THUS, ASSESSEE WAS A PART OF SUCH SCHEME OF THINGS AS ITS BENEFICIARY. HE ALSO STATED THAT ON THE ISSUE OF DEMANDING CROSS-EXAMINATION OF THE DIR ECTOR THE COMPANY AND OTHER PERSON WHO ADMITTED THE ISSUE OF PROVIDING ENTRY, IT IS TO SUB MIT THAT THOSE STATEMENT / ADMISSION ARE SUBORDINATE MATERIAL USED ONLY TO SUPPORT THE MAIN ISSUE AND NO WAY A DIRECT EVIDENCE. IN THE INSTANT CASE THE ADMISSION OF THE THIRD PARTY B EFORE THE INVESTIGATION WING CAN ONLY BE CONSIDERED AS CIRCUMSTANTIAL EVIDENCE AND NOT A DIR ECT EVIDENCE. IN SUPPORT OF HIS SUBMISSION HE REFERRED TO THE FOLLOWING CASE LAWS: I) GTC INDUSTRIES LTD. VS. ACIT (1998) 65 ITD 380 (BOM ), II) SANJAY BIMALCHAND JAIN VS. CIT-1, NAGPUR (THREE ME MBERS NAGPUR BENCH DECISION), III) SMT. M. K. RAJESHWARI VS. ITO, WARD-3, RAICHUR, ITA T SMC-C BENCH, BANGALORE, IV) USHA CHANDRESH SHAH VS. ITO (ITA NO. 6858/MUM/2011) , V) ITA NOS. 1413 TO 1420/CHNY/2018 DATED 06.12.2018, VI) MC. DOWELL & CO. LTD. VS. CTO (1983) 154 ITR 148, VII)HARSH WIN CHADDHA VS. DCIT (ITA NO. 3088 TO 303 8 & 3107/DEL/2005, VIII)SUMATI DAYAL VS. CIT 214 ITR 801, IX) M/S. DURGA PRASAD MORE 82 ITR 540 12. HE ALSO SUBMITTED THE ALTERNATE GROUND FOR ADDI TION THAT PURCHASE OF THIS STOCK WAS NOT AN INVESTMENT DECISION BUT AN ADVENTURE IN THE NATURE OF TRADE. HE LASTLY SUBMITTED BEFORE THE BENCH THAT ASSESSEES DEALING WITH THIS STOCK MAY BE CONSIDERED AS AN ADVENTURE IN THE NATURE OF TRADE AND SO, PROFIT DERIVES FROM SUCH ACTIVITY MAY KINDLY BE CONSIDERED AS INCOME FROM BUSINESS OR OTHER SOURCES. 13. WE NOTE THAT SIMILAR ISSUE AROSE IN MANISH KUMA R BAID, (SUPRA) WHEREIN, THE TRIBUNAL ALLOWED THE CLAIM OF ASSESSEE IN RESPECT O F LTCG FROM SALE OF SCRIPS OF M/S. KAFL HAS HELD AS UNDER: 6. WE HAVE HEARD BOTH THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND LOT OF FORCE IN THE ARGUMENTS OF TH E LD AR THAT THE LD AO WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT, AND PREPONDERANCE OF PROBABILITY WIT HOUT BRINGING ON RECORD ANY LEGAL EVIDENCE AGAINST THE ASSESSEE. WE RELY ON THE JUDGE MENT OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF GTC INDUSTRIES LTD. (SUPRA) FOR THIS PROPOSITION. THE VARIOUS FACETS 7 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 OF THE ARGUMENTS OF THE LD AR SUPRA, WITH REGARD TO IMPLEADING THE ASSESSEE FOR DRAWING ADVERSE INFERENCES WHICH REMAIN UNPROVED BASED ON T HE EVIDENCES AVAILABLE ON RECORD, ARE NOT REITERATED FOR THE SAKE OF BREVITY. THE PRINCIP LES LAID DOWN IN VARIOUS CASE LAWS RELIED UPON BY THE LD AR ARE ALSO NOT REITERATED FOR THE S AKE OF BREVITY. WE FIND THAT THE AMALGAMATION OF CPAL WITH KAFL HAS BEEN APPROVED B Y THE ORDER OF HONBLE HIGH COURT. THE LD AO OUGHT NOT TO HAVE QUESTIONED THE VALIDITY OF THE AMALGAMATION SCHEME APPROVED BY THE HONBLE HIGH COURT IN MAY 2013 MERELY BASED ON A STATEMENT GIVEN BY A THIRD PARTY WHICH HAS NOT BEEN SUBJECT TO CROSS EXAMINATION. MOROEVER, IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE AND / OR THE STOCK BROKER ASHITA STOCK BROKING LTD NAME IS NEITHER MENTIONED IN THE SAID STATEMENT AS A PERSON WHO HAD ALLEGEDLY DE ALT WITH SUSPICIOUS TRANSACTIONS NOR THEY HAD BEEN THE BENEFICIARIES OF THE TRANSACTIONS OF S HARES OF KAFL. HENCE WE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGATIONS LEVELED BY THE LD AO AGAINS T 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 AR GUMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON T HE ORDERS OF THE LOWER AUTHORITIES APART FROM PLACING THE COPY OF SEBIS INTERIM ORDER SUPRA . WE FIND THAT THE SEBIS ORDERS RELIED ON BY THE LD AO AND REFERRED TO HIM AS DIRECT EVIDE NCE AGAINST THE ASSESSEE DID NOT CONTAIN THE NAME OF THE ASSESSEE AND/OR THE NAME OF ASHIKA STOCK BROKING LTD. THROUGH WHOM THE ASSESSEE SOLD THE SHARES OF KAFL AS A BENEFICIARY T O THE ALLEGED ACCOMMODATION ENTRIES PROVIDED BY THE RELATED ENTITIES / PROMOTERS / BROK ERS / ENTRY OPERATORS. IN THE INSTANT CASE, THE SHARES OF CPAL WERE PURCHASED BY THE ASSESSEE W AY BACK ON 20.12.2011 AND PURSUANT TO MERGER OF CPAL WITH KAFL, THE ASSESSEE WAS ALLOTTED EQUAL NUMBER OF SHARES IN KAFL, WHICH WAS SOLD BY THE ASSESSEE BY EXITING AT THE MO ST OPPORTUNE MOMENT BY MAKING GOOD PROFITS IN RODER TO HAVE A GOOD RETURN ON HIS INVES TMENT. WE FIND THAT THE ASSESSEE AND / OR THE BROKER ASHITA STOCK BROKING LTD WAS NOT THE PRI MARY ALLOTTEES OF SHARES EITHER IN CPAL OR IN KAFL AS COULD BE EVIDENT FROM THE SEBIS ORDE R. WE FIND THAT THE SEBI ORDER DID MENTION THE LIST OF 246 BENEFICIARIES OF PERSONS TR ADING IN SHARES OF KAFL, WHEREIN, THE ASSESSEE AND / OR ASHITA STOCK BROKING LTDS NAME I S NOT REFLECTED AT ALL. HENCE THE ALLEGATION THAT THE ASSESSEE AND / OR ASHITA STOCK BROKING LTD GETTING INVOLVED IN PRICE RIGGING OF KAFL SHARES FAILS. WE ALSO FIND THAT EV EN THE SEBIS ORDER HEAVILY RELIED UPON BY THE LD AO CLEARLY STATES THAT THE COMPANY KAFL H AD PERFORMED VERY WELL DURING THE YEAR UNDER APPEAL AND THE P/E RATIO HAD INCREASED SUBSTA NTIALLY. THUS WE HOLD THAT THE SAID ORDERS OF SEBI IS NO EVIDENCE AGAINST THE ASSESSEE, MUCH LESS TO SPEAK OF DIRECT EVIDENCE. THE ENQUIRY BY THE INVESTIGATION WING AND/OR THE ST ATEMENTS OF SEVERAL PERSONS RECORDED BY THE INVESTIGATION WING IN CONNECTION WITH THE ALLEG ED BOGUS TRANSACTIONS IN THE SHARES OF KAFL ALSO DID NOT IMPLICATE THE ASSESSEE AND/OR HIS BROKER. 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 T RANSACTIONS RELATING TO PURCHASE AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE N EITHER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACT IONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THEREFORE THE LD AO WAS NOT JUSTIFIED I N REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. WE ALSO FIND THAT THE VARIOUS CASE LAWS OF HONBLE JURISDICTIONAL HIGH COURT RELIED UPON BY TH E LD AR AND FINDINGS GIVEN THEREON WOULD APPLY TO THE FACTS OF THE INSTANT CASE. THE LD DR WAS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFECT. HENCE WE HOLD THAT THE LD A O WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF KAFL AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE ACCORDINGLY HOLD THAT THE REFRAMED QUESTION NO. 1 R AISED HEREINABOVE IS DECIDED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. 8 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 14. COMING BACK TO THE FACTS OF THE INSTANT CASE BE FORE US, WE NOTE THAT THE ASSESSEE HAD PURCHASED 2,00,000 EQUITY SHARES OF M/S. PML ON 12 .07.2011 FROM M/S. BRIJDHARA MERCANTILE P. LTD. WHICH WAS REFLECTED THROUGH BANK STATEMENT AVAILABLE AT PAPER BOOK PAGES 3 TO 5. THE ASSESSEE HAD MADE PAYMENT FOR PUR CHASE OF ABOVE SHARES THROUGH SAVINGS BANK A/C. NO. 172010100115186 VIDE CHEQUE DATED 07. 07.2011 DRAWN ON AXIS BANK, ACCOUNT (PAGE 3 PB). THE SHARES WERE PURCHASED FRO M M/S. BRIJDHARA MERCANTILE PRIVATE LIMITED, OFF MARKET. LATER M/S. PML WAS AMALGAMATE D WITH M/S. KAILASH AUTO FINANCE LIMITED BY AN ORDER DATED 21.05.2013 U/S. 391, 394 OF THE COMPANIES ACT, 1956 OF HONBLE ALLAHABAD HIGH COURT. BY VIRTUE OF THIS AMALGAMATI ON, THE ASSESSEE WAS ALLOTTED 2,00,000 EQUITY SHARES OF M/S. KAILASH AUTO FINANCE LIMITED IN LIEU OF 2,00,000 EQUITY SHARES OF M/S. PML, AS PER ORDER OF THE HONBLE HIGH COURT (ALLOTM ENT OF SHARES ON MERGER IS AVAILABLE AT PAGE 37 TO 45 OF PAPER BOOK). IN VIEW OF THIS ORDE R, SHARES OF M/S. PML GOT EXTINGUISHED AND SHARES OF M/S. KAILASH AUTO FINANCE LIMITED WER E ALLOTTED AND WERE CREDITED TO ASSESSEES ACCOUNT. COPY OF THEIR SHARE BILL DATED 12.07.2011 IS SEEN PLACED IN THE PAPER BOOK PAGE 2. WE NOTE THAT SHARES OF M/S. KAILASH AU TO FINANCE WERE LISTED AT BSE. 15 WE NOTE THAT THE ASSESSEE HAD FILED THE FOLLOWIN G DOCUMENTS TO SUPPORT HIS CLAIM OF LT CG ON SALE OF SHARES OF M/S. KAFL. 1. COPY OF PURCHASE BILL DATED 12.07.2011 REFLECTIN G THE PURCHASE OF SHARES OF M/S. PML THROUGH M/S. BRIJDHARA MERCANTILE PVT. LTD. (PAPER BOOK PAG E 2). 2. COPY OF BANK STATEMENT REFLECTING THE DEBIT TRANSAC TION OF THE AMOUNT OF RS.2,00,000/- PAID TO M/S. BRIJDHARA MERCANTILE PVT. LTD. FOR THE PURCHASE OF SHARES VIA RTGS ON 07 .07.2011. (PAPER BOOK PAGE 4). 3. COPY OF ALLOTMENT OF SHARES ON MERGER (DEMAT) AVAIL ABLE AT PAGES 37 45 OF PAPER BOOK. 4 COPY OF CONTRACT NOTE FOR SALE OF 2,00,000 SHAR ES SOLD ON VARIOUS DATES ON BSE THROUGH BROKER KOTA K SECURITIES AVAILABLE AT PAGES 46-53 OF THE PAPER BO OK 5 COPY OF BANK STATEMENT REFLECTING THE SALE RECE IPT AVAILABLE PAGE PAPER BOOK PAGES 54 O 58. 6. COPY OF THE ORDER APPROVING THE SCHEME OF AMALGA MATION PASSED BY THE HONBLE ALLAHABAD HIGH COURT IN RELATION TO THE MERGER OF KAILASH AUTO FIN ANCE LTD. AND M/S. PML. 7. COPY OF DEMAT STATEMENT WITH KOTAK SECURITIES L TD. SHOWING CREDIT OF 200000 SHARES OF M/S. PML. 8. COPY OF ASSESSEES DEMAT ACCOUNT NO. 13439871 WI TH KOTAK SECURITIES LTD. SHOWING RECEIPT OF 200000 SHARES OF KAFL ON 22.07.2013. 9 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 9. MERGER ORDER PASSED BY ALLAHABAD HIGH COURT IN C OMPANY PETITION NO. 11 OF 2013 (PAPER BOOK PAGES 6 TO 36). 16. THUS WE FIND FROM THE PERUSAL OF THE DOCUMENTS THAT THE ASSESSEE HAD PURCHASED 200000 SHARES OF M/S. PML ON 12.07.2011 WHICH IS EV IDENT FROM PAPER BOOK PAGE 2. WE ALSO FIND THAT PAYMENT OF THE PURCHASE OF SHARES WA S THROUGH CHEQUE WHICH IS EVIDENT FROM BANK STATEMENT AVAILABLE AT PAPER BOOK PAGE 3 TO 5. THEREAFTER THE SAID M/S. PML MERGED WITH M/S. KAFL BY VIRTUE OF THE ORDER OF HONBLE AL LAHABAD HIGH COURT AND THE ASSESSEE WAS ALLOTTED 2,00,000 EQUITY SHARES OF M/S. KAILASH AUTO FINANCE LIMITED IN LIEU OF 2,00,000 EQUITY SHARES OF M/S. PML. AFTER HOLDING THE SHARES OF M/S. PML FOR MORE THAN 18 MONTHS THE ASSESSEE HAD SOLD THE 200000 SHARES O F M/S. KAFL ON VARIOUS DATES IN THE YEAR 2013 ON BSE THROUGH BROKER M/S. KOTAK SECURITI ES LTD. WHICH IS EVIDENT FROM PAPER BOOK PAGES 46 TO 53. WE ALSO FIND THAT THE ASSESSE E HAD PURCHASED THE SHARES THROUGH BANKING CHANNEL AND SALE CONSIDERATION WAS RECEIVED BY A/C PAYEE CHEQUE, WHICH FACTS ARE DULY REFLECTED IN BANK STATEMENT WHICH IS PLACED AT PAPER BOOK PAGE 1 2. OUR ATTENTION WAS ALSO DRAWN TO THE CONTRACT NOTES OF SEBI REGD. BROKER M/S. KOTAK SECURITIES LTD. FOR SALE OF EQUITY SHARES OF M/S. KAFL WHICH IS FOUND P LACED AT PAPER BOOK PAGES 46-53. THUS, WE FIND THAT THE ASSESSEE GOT THE SHARES OF M/S. KA FL DEMATERIALIZED THE SAME AND AFTER HOLDING IT FOR MORE THAN 18 MONTHS HAD SOLD IT THRO UGH DIFFERENT TRANSACTIONS IN THE SEBI RECOGNIZED BOMBAY STOCK EXCHANGE AND THE PURCHASE A ND SALE CONSIDERATION WERE THROUGH BANK ACCOUNTS. THUS ASSESSEE HAS PRODUCED THE DOCUM ENTS TO SUBSTANTIATE THE CLAIM OF LTCG ON SALE OF SCRIPS OF M/S. KAFL AND HAVING SATI SFIED THE CONDITION PRECEDENT AS PRESCRIBED U/S. 10(38) OF THE ACT HAS RIGHTLY CLAIM ED THE EXEMPTION OF TAX ON THE LTCG. 17. THUS, WE NOTE THAT SHARES OF M/S. KAFL WERE SOL D BY ASSESSEE THROUGH RECOGNIZED BROKER IN A RECOGNIZED BOMBAY STOCK EXCHANGE. THE D ETAILS OF SUCH SALE AND CONTRACT NOTE HAVE BEEN SUBMITTED BEFORE AO/LD. CIT(A). WE TAKE N OTE THAT WHEN THE TRANSACTIONS HAPPENED IN THE STOCK EXCHANGE, THE SELLER WHO SEL LS HIS SHARES ON THE STOCK EXCHANGE DOES NOT KNOW WHO PURCHASES SHARES. ACCORDING TO OUR KN OWLEDGE, THE SHARES ARE SOLD AND BOUGHT IN AN ELECTRONIC MODE ON THE COMPUTERS BY TH E BROKERS AND THERE IS ALSO NO DIRECT CONTACT AT ANY LEVEL EVEN BETWEEN THE BROKERS. WE NOTE THAT AS AND WHEN ANY SHARES ARE 10 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 OFFERED FOR SALE IN THE STOCK EXCHANGE PLATFORM, AN Y ONE OF THE THOUSANDS OF BROKERS REGISTERED WITH THE STOCK EXCHANGE IS AT LIBERTY TO PURCHASE IT. AS FAR AS OUR UNDERSTANDING, THE SELLING BROKER DOES NOT EVEN KNOW WHO THE PURCH ASING BROKER IS. THIS IS HOW THE SEBI KEEPS A STRICT CONTROL OVER THE TRANSACTIONS TAKING PLACE IN RECOGNIZED STOCK EXCHANGES. UNLESS THERE IS A EVIDENCE TO SHOW THAT THERE IS A BREACH IN THE AFORESAID PROCESS WHICH FACT HAS BEEN UNEARTHED BY METICULOUS INVESTIGATION, WE ARE OF THE OPINION THAT THE UNSCRUPULOUS ACTIONS OF FEW PLAYERS EXPLOITING THE LOOPHOLES OF THE STOCK EXCHANGE CANNOT BE THE BASIS TO PAINT THE ENTIRE SALE/PURCHASE OF A SCRIP LIKE THAT OF M/S. KAFL AS BOGUS WITHOUT BRINGING OUT ADVERSE MATERIAL SPECIFICALLY AGAINST THE ASSES SEE. 18. THE FACT OF HOLDING THE SHARES OF M/S. KAFL IN THE D-MAT ACCOUNT CANNOT BE DISPUTED. FURTHER, THE ASSESSING OFFICER HAS NOT EV EN DISPUTED THE EXISTENCE OF THE D-MAT ACCOUNT AND SHARES CREDITED IN THE D-MAT ACCOUNT OF THE ASSESSEE. THEREFORE, ONCE, THE HOLDING OF SHARES IS D-MAT ACCOUNT CANNOT BE DISPUT ED THEN THE TRANSACTION CANNOT BE HELD AS BOGUS. THE AO HAS NOT DISPUTED THE SALE OF SHARES F ROM THE D-MAT ACCOUNT OF THE ASSESSEE AND THE SALE CONSIDERATION WAS DIRECTLY CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE, THEREFORE, ONCE THE ASSESSEE PRODUCED ALL RELEVANT EVIDENCE TO SUBSTANTIATE THE TRANSACTION OF PURCHASE, DEMATERIALIZATION AND SALE OF SHARES THEN , IN THE ABSENCE OF ANY CONTRARY MATERIAL BROUGHT ON RECORD THE SAME CANNOT BE HELD AS BOGUS TRANSACTION MERELY ON THE BASIS OF STATEMENT OF SHRI SUNIL DOKANI, AND FEW OTHERS REC ORDED BY THE INVESTIGATION WING, KOLKATA WHEREIN THERE IS A GENERAL STATEMENT OF PRO VIDING BOGUS LONG TERM CAPITAL GAIN TRANSACTION TO THE CLIENTS WITHOUT STATING ANYTHING ABOUT THE TRANSACTION OF ALLOTMENT OF SHARES BY THE COMPANY TO THE ASSESSEE. 19. THE ASSESSEE HAS REQUESTED THE CROSS EXAMINATI ON OF SHRI SUNIL DOKANI, WHICH WAS NOT PROVIDED TO THE ASSESSEE BY THE AO. THUS, IN VI EW OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CCE VS. ANDAMANTIMBER INDUSTRIES 127 DTR 241(SC) THE ASSESSMENT BASED ON STATEMENT WITHOUT GIVING AN OPPORTUNITY TO ASSESSEE TO CROSS EXAMINE THE MAKER OF THE ADVERSE STATEMENTS RELIED ON BY THE AO, IS NOT SUSTAINABLE IN LAW. WE FIND THAT THE STATEMENT CANNOT BE USED BY THE AO WITHOUT GIVING A N OPPORTUNITY TO CROSS EXAMINATION OF SHRI SUNIL DOKANI, AND OTHERS. THEREFORE, THE STATE MENT OF THIRD PARTY CANNOT BE SOLE BASIS OF 11 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 THE ASSESSMENT WITHOUT GIVEN AN OPPORTUNITY OF CROS S EXAMINATION AND CONSEQUENTLY IT IS A SERIOUS FLAW WHICH RENDERS THE ORDER A NULLITY. THE MUMBAI SPECIAL OF THE TRIBUNAL IN CASE OF GTC INDUSTRIES VS. ACIT (SUPRA) HAD THE OCCASION TO CONSIDER THE ADDITION MADE BY THE AO ON THE BASIS OF SUSPICION AND SURMISES AND OBSER VED IN PAR 46 AS UNDER:- 46. IN SITUATIONS LIKE THIS CASE, ONE MAY FALL INT O REALM OF 'PREPONDERANCE OF PROBABILITY' WHERE THERE ARE MANY PROBABLE FACTORS, SOME IN FAVO UR OF THE ASSESSEE AND SOME MAY GO AGAINST THE ASSESSEE. BUT THE PROBABLE FACTORS HAVE TO BE WEIGHED ON MATERIAL FACTS SO COLLECTED. HERE IN THIS CASE THE MATERIAL FACTS STR ONGLY INDICATE A PROBABILITY THAT THE WHOLESALE BUYERS HAD COLLECTED THE PREMIUM MONEY FO R SPENDING IT ON ADVERTISEMENT AND OTHER EXPENSES AND IT WAS THEIR LIABILITY AS PER THEIR MU TUAL UNDERSTANDING WITH THE ASEESSEE. ANOTHER VERY STRONG PROBABLE FACTOR IS THAT THE ENT IRE SCHEME OF 'TWIN BRANDING' AND COLLECTION OF PREMIUM WAS SO DESIGNED THAT ASSESSEE COMPANY NE ED NOT INCUR ADVERTISEMENT EXPENSES AND THE RESPONSIBILITY FOR SALES PROMOTION AND ADVE RTISEMENT LIES WHOLLY UPON WHOLESALE BUYERS WHO WILL BORNE OUT THESE EXPENSES FROM ALLEG ED COLLECTION OF PREMIUM. THE PROBABLE FACTORS COULD HAVE GONE AGAINST THE ASSESSEE ONLY I F THERE WOULD HAVE BEEN SOME EVIDENCE FOUND FROM SEVERAL SEARCHES EITHER CONDUCTED BY DRI OR BY THE DEPARTMENT THAT ASSESSEE- COMPANY WAS BENEFICIARY OF ANY SUCH ACCOUNTS. AT LE AST SOMETHING WOULD HAVE BEEN UNEARTHED FROM SUCH GLOBAL LEVEL INVESTIGATION BY T WO CENTRAL GOVERNMENT AUTHORITIES. IN CASE OF CERTAIN DONATIONS GIVEN TO A CHURCH, ORIGINATING THROUGH THESE BENAMI BANK ACCOUNTS ON THE BEHEST OF ONE OF THE EMPLOYEES OF THE ASSESSEE COMPANY, DOES NOT IMPLICATE THAT GTC AS A CORPORATE ENTITY WAS HAVING THE CONTROL OF THESE BA NK ACCOUNTS COMPLETELY. WITHOUT GOING INTO THE AUTHENTICITY AND VERACITY OF THE STATEMENTS OF THE WITNESSES SMT. NIRMALA SUNDARAM, WE ARE OF THE OPINION THAT THIS ONE INCIDENT OF DONATI ON THROUGH BANK ACCOUNTS AT THE DIRECTION OF ONE OF THE EMPLOYEE OF THE COMPANY DOES NOT IMPLICA TE THAT THE ENTIRE PREMIUM COLLECTED ALL THROUGHOUT THE COUNTRY AND DEPOSITED IN BENAMI BANK ACCOUNTS ACTUALLY BELONGS TO THE ASSESSEE-COMPANY OR THE ASSESSEE-COMPANY HAD DIRECT CONTROL ON THESE BANK ACCOUNTS. ULTIMATELY, THE ENTIRE CASE OF THE REVENUE HINGES U PON THE PRESUMPTION THAT ASSESSEE IS BOUND TO HAVE SOME LARGE SHARE IN SO-CALLED SECRET MONEY IN THE FORM OF PREMIUM AND ITS CIRCULATION. HOWEVER, THIS PRESUMPTION OR SUSPICION HOW STRONG I T MAY APPEAR TO BE TRUE, BUT NEEDS TO BE CORROBORATED BY SOME EVIDENCE TO ESTABLISH A LINK T HAT GTC ACTUALLY HAD SOME KIND OF A SHARE IN SUCH SECRET MONEY. IT IS QUITE A TRITE LAW THAT SUSPICION HOWSOEVER STRONG MAY BE BUT CANNOT BE THE BASIS OF ADDITION EXCEPT FOR SOME MATERIAL E VIDENCE ON RECORD. THE THEORY OF 'PREPONDERANCE OF PROBABILITY' IS APPLIED TO WEIGH THE EVIDENCES OF EITHER SIDE AND DRAW A CONCLUSION IN FAVOUR OF A PARTY WHICH HAS MORE FAVO URABLE FACTORS IN HIS SIDE. THE CONCLUSIONS HAVE TO BE DRAWN ON THE BASIS OF CERTAIN ADMITTED F ACTS AND MATERIALS AND NOT ON THE BASIS OF PRESUMPTION OF FACTS THAT MIGHT GO AGAINST ASSESSEE . ONCE NOTHING HAS BEEN PROVED AGAINST THE ASSESSEE WITH AID OF ANY DIRECT MATERIAL ESPECIALLY WHEN VARIOUS ROUNDS OF INVESTIGATION HAVE BEEN CARRIED OUT, THEN NOTHING CAN BE IMPLICATED AG AINST THE ASSESSEE.' 20. SINCE, WHEN THE ASSESSING OFFICER HAS NOT BROU GHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PAID OVER AND ABOVE THE PURCH ASE CONSIDERATION AS CLAIMED AND EVIDENT FROM THE BANK ACCOUNT THEN, IN THE ABSENCE OF ANY E VIDENCE IT CANNOT BE HELD THAT THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED MONEY B Y WAY OF BOGUS LONG TERM CAPITAL GAIN. THE HON'BLE RAJASTHAN HIGH COURT DATED 11-09- 2017IN CASE OF CIT VS. SMT. POOJA 12 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 AGRAWAL [ ITA NO 385/2011 ] HAS UPHELD THE FINDING OF THE TRIBUNAL ON THIS ISSUE IN PARA 12 AS UNDER:- '12. HOWEVER, COUNSEL FOR THE RESPONDENT HAS TAKEN US TO THE ORDER OF CIT(A) AND ALSO TO THE ORDER OF TRIBUNAL AND CONTENDED THAT IN VIEW OF THE FINDING REACHED, WHICH WAS DONE THROUGH STOCK EXCHANGE AND TAKING INTO CONSIDERATION THE RE VENUE TRANSACTIONS, THE ADDITION MADE WAS DELETED BY THE TRIBUNAL OBSERVING AS UNDER :- 'CONTENTION OF THE AR IS CONSIDERED. ONE OF THE MAI N REASONS FOR NOT ACCEPTING THE GENUINENESS OF THE TRANSACTIONS DECLARED BY THE APP ELLANT THAT AT THE TIME OF SURVEY THE APPELLANT IN HIS STATEMENT DENIED HAVING MADE ANY T RANSACTIONS IN SHARES. HOWEVER, SUBSEQUENTLY THE FACTS CAME ON RECORD THAT THE APPE LLANT HAD TRANSACTED NOT ONLY IN THE SHARES WHICH ARE DISPUTED BUT SHARES OF VARIOUS OTHER COMPANIES LIKE SATYAM COMPUTERS, HCL, IPC L, BPCL AND TATA TEA ETC. REGARDING THE TRANSACTION S IN QUESTION VARIOUS DETAILS LIKE COPY OF CONTRACT NOTE REGARDING PURCHASE AND SALE OF SHARES OF LIMTEX AND KONARK COMMERCE & IND. LTD., A SSESSEE'S ACCOUNT WITH P.K. AGARWAL & CO. SHARE BROKER, COMPANY'S MASTER DETAIL S FROM REGISTRAR OF COMPANIES, KOLKATA WERE FILED. COPY OF DEPOSITORY A/C OR DEMAT ACCOUNT WITH ALANKR IT ASSIGNMENT LTD., A SUBSIDIARY OF NSDL WAS ALSO FILED WHICH SHOWS THAT THE TRANSAC TIONS WERE MADE THROUGH DEMAT A/C. WHEN THE RELEVANT DOCUMENTS ARE AVAILABLE THE FACT OF TRANSACTIONS ENTERED INTO CANNOT BE DENIED SIMPLY ON THE GROUND THAT IN HIS S TATEMENT THE APPELLANT DENIED HAVING MADE ANY TRANSACTIONS IN SHARES. THE PAYMENT S AND RECEIPTS ARE MADE THROUGH A/C PAYEE CHEQUES AND THE TRANSACTIONS ARE ROUTED T HROUGH KOLKATA STOCK EXCHANGE. THERE IS NO EVIDENCE THAT THE CASH HAS GONE BACK IN APPELLANTS'S ACCOUNT. PRIMA FACIE THE TRANSACTION WHICH ARE SUPPORTED BY DOCUMENTS AP PEAR TO BE GENUINE TRANSACTIONS. THE AO HAS DISCUSSED MODUS OPERANDI IN SOME SHAM TR ANSACTIONS WHICH WERE DETECTED IN THE SEARCH CASE OF B.C. PUROHIT GROUP. THE AO HAS ALSO STATED IN THE ASSESSMENT ORDER ITSELF WHILE DISCUSSING THE MODUS OPERANDI THAT ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN WERE PURCHASED AS LONG TERM CAPITAL GAIN EITHER WAS EXEMPTED FROM TAX OR WAS TAXABLE AT A LOWER RATE. A S THE APPELLANT'S CASE IS OF SHORT TERM CAPITAL GAIN, IT DOES NOT EXACTLY FALL UNDER T HAT CATEGORY OF ACCOMMODATION TRANSACTIONS. FURTHER AS PER THE REPORT OF DCIT, CE NTRAL CIRCLE-3 SH. P.K. AGARWAL WAS FOUND TO BE AN ENTRY PROVIDER AS STATED BY SH. PAWAN PUROHIT OF B.C. PURIHIT AND CO. GROUP. THE AR MADE SUBMISSION BEFORE THE AO THA T THE FACT WAS NOT CORRECT AS IN THE STATEMENT OF SH. PAWAN PUROHIT THERE IS NO MENT ION OF SH. P. K. AGARWAL. IT WAS ALSO SUBMITTED THAT THERE WAS NO MENTION OF SH. P. K. AGARWAL IN THE ORDER OF SETTLEMENT COMMISSION IN THE CASE OF SH. SUSHIL KUM AR PUROHIT. COPY OF THE ORDER OF SETTLEMENT COMMISSION WAS SUBMITTED. THE AO HAS FAI LED TO COUNTER THE OBJECTIONS RAISED BY THE APPELLANT DURING THE ASSESSMENT PROCE EDINGS. SIMPLY MENTIONING THAT THESE FINDINGS ARE IN THE APPRAISAL REPORT AND APPR AISAL REPORT IS MADE BY THE INVESTING WING AFTER CONSIDERING ALL THE MATERIAL F ACTS AVAILABLE ON RECORD DOES NOT HELP MUCH. THE AO HAS FAILED TO PROVE THROUGH ANY I NDEPENDENT INQUIRY OR RELYING ON SOME MATERIAL THAT THE TRANSACTIONS MADE BY THE APP ELLANT THROUGH SHARE BROKER P.K. AGARWAL WERE NON-GENUINE OR THERE WAS ANY ADVERSE M ENTION ABOUT THE TRANSACTION IN QUESTION IN STATEMENT OF SH. PAWAN PUROHIT. SIMPLY BECAUSE IN THE SHAM TRANSACTIONS BANK A/C WERE OPENED WITH HDFC BANK AND THE APPELLA NT HAS ALSO RECEIVED SHORT TERM CAPITAL GAIN IN HIS ACCOUNT WITH HDFC BANK DOE S NOT ESTABLISH THAT THE TRANSACTION MADE BY THE APPELLANT WERE NON GENUINE. CONSIDERING ALL THESE FACTS THE SHARE TRANSACTIONS MADE THROUGH SHRI P.K. AGARWAL C ANNOT BE HELD AS NON-GENUINE. CONSEQUENTLY DENYING THE CLAIM OF SHORT TERM CAPITA L GAIN (6 OF 6) [ ITA-385/2011] 13 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 MADE BY THE APPELLANT BEFORE THE AO IS NOT APPROVED . THE AO IS THEREFORE, DIRECTED TO ACCEPT CLAIM OF SHORT TERM CAPITAL GAIN AS SHOWN BY THE APPELLANT.' IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AO IS BASED O N MERE SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO SHOW THAT THE ASSESS EE HAS BROUGHT BACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITA L GAIN. ON THE OTHER HAND, THE ASSESSEE HAS BROUGHT ALL THE RELEVANT MATERIAL TO S UBSTANTIATE ITS CLAIM THAT TRANSACTIONS OF THE PURCHASE AND SALE OF SHARES ARE GENUINE. EVE N OTHERWISE THE HOLDING OF THE SHARES BY THE ASSESSEE AT THE TIME OF ALLOTMENT SUB SEQUENT TO THE AMALGAMATION/MERGER IS NOT IN DOUBT, THEREFORE, THE TRANSACTION CANNOT BE HELD AS BOGUS. ACCORDINGLY WE DELETE THE ADDITION MADE BY THE AO ON THIS ACCOUNT. ' 21. WE NOTE THAT THE SALE OF SHARES OF M/S. KAFL WH ICH WAS DEMATERLIZED IN DEMAT ACCOUNT HAS TAKEN PLACE THROUGH RECOGNIZED STOCK EX CHANGE AND ASSESSEE RECEIVED MONEY THROUGH BANKING CHANNEL. SO, ASSESSEE HAS EXPLAINED THE NATURE AND SOURCE OF THE MONEY WITH SUPPORTING DOCUMENTS AND THUS HAS DISCHARGED T HE ONUS CASTED UPON HIM BY PRODUCING THE RELEVANT DOCUMENTS MENTIONED IN PARA 15 (SUPRA) , ACCORDINGLY, THE QUESTION OF TREATING THE SAID GAIN AS UNEXPLAINED CASH CREDIT UNDER SECT ION 68 OF THE ACT CANNOT ARISE UNLESS THE AO IS ABLE TO FIND FAULT/INFIRMITY WITH THE SAME. W E NOTE THAT THE SOURCE OF THE RECEIPT OF THE AMOUNT HAS BEEN EXPLAINED AND THE TRANSACTION IN RE SPECT OF WHICH THE SAID AMOUNT HAS BEEN RECEIVED BY ASSESSEE HAS NOT BEEN CANCELLED BY THE STOCK EXCHANGE/SEBI. SO, IT IS DIFFICULT TO COUNTENANCE THE ACTION OF AO/LD. CIT(A) IN THE AFOR ESAID FACTS AND CIRCUMSTANCES EXPLAINED ABOVE. 22. EVEN ASSUMING THAT THE BROKERS MAY HAVE DONE SO ME MANIPULATION THEN ALSO THE ASSESSEE CANNOT BE HELD LIABLE FOR THE ILLEGAL ACTI ON OF THE BROKERS WHEN THE ENTIRE TRANSACTIONS HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS DULY RECORDED IN THE DEMAT ACCOUNTS WITH A GOVERNMENT DEPOSITORY AND TRADED ON THE STOCK EXCHANGE UNLESS SPECIFIC EVIDENCE EMERGES THAT THE ASSESSEE WAS IN HAND IN G LOVES WITH THE BROKER FOR COMMITTING THE UNSCRUPULOUS ACTIVITY TO LAUNDER HIS OWN MONEY IN T HE GUISE OF LTCG IS BROUGHT ON RECORD BY THE AO. 23. THERE IS ALSO NOTHING ON RECORD WHICH COULD SUG GEST THAT THE ASSESSEE GAVE HIS OWN CASH AND GOT CHEQUE FROM THE ALLEGED BROKERS/BUYERS . THE ASSESSMENT IS BASED UPON SOME 14 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 THIRD PARTIES STATEMENTS RECORDED BEHIND THE BACK O F THE ASSESSEE AND THE ASSESSEE HAS NOT BEEN ALLOWED TO CROSS EXAMINE THOSE PERSONS, SO TH E STATEMENTS EVEN IF ADVERSE AGAINST THE ASSESSEE CANNOT BE RELIED UPON BY THE AO TO DRAW AD VERSE INFERENCE AGAINST THE ASSESSEE IN THE LIGHT OF THE DOCUMENTS TO SUBSTANTIATE THE CLAI M OF LTCG, WHICH HAS NOT BEEN FOUND FAULT WITH BY THE AO. 24. LET US LOOK AT CERTAIN JUDICIAL DECISIONS ON SI MILAR FACTS:- 25. THE CASE OF THE ASSESSEES IS SIMILAR TO THE DE CISION OF HONBLE BOMBAY HIGH COURT, NAGPUR BENCH IN CIT VS. SMT. JAMNADEVI AGRAWAL & OR S. DATED 23RD SEPTEMBER, 2010 REPORTED IN (2010) 328 ITR 656 WHEREIN IT WAS HELD THAT: 'THE FACT THAT THE ASSESSEES IN THE GROUP HAVE PURC HASED AND SOLD SHARES OF SIMILAR COMPANIES THROUGH THE SAME BROKER CANNOT BE A GROUN D TO HOLD THAT THE TRANSACTIONS ARE SHAM AND BOGUS, ESPECIALLY WHEN DOCUMENTARY ITA NOS. 93 TO 99/RPR/2014 & C.O. NOS. 12 TO 18/RPR/2014 . A.Y. 2004-05 10 PRODUCED TO ESTABLISH THE GENUINENESS OF THE CLAIM. FROM THE DOCUMENTS PRODUCED, IT IS SEEN THAT THE SHARES IN Q UESTION WERE IN FACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY H AS CONFIRMED TO HAVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEES. SIMILARLY, THE S ALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRODUCING DOCUMENTARY EVIDENCE. IT IS TRUE THAT SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS. HOWEVER, THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET RA TES PREVAILING ON THE RESPECTIVE DATES AS IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEES. THEREFORE, THE FACT THAT SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHAM TRANSACTIONS. THE STATEMENT OF THE BROKER P TH AT THE TRANSACTIONS WITH THE H GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCIN G DOCUMENTARY EVIDENCE TO THE EFFECT THAT THE SHARES SOLD BY THE ASSESSEES WERE IN CONSO NANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EVIDENCE, THE TRIBUNAL HAS ARRIVE D AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT ON RECORD TO SHOW THAT THE FINDINGS RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE DOCUMENTARY EVIDENCE ON RECORD. THE TRIBUNAL HAS FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE,BANK A CCOUNTS OF SOME OF THE BUYERS OF SHARES CANNOT BE LINKED TO THE ASSESSEES. MOREOVER, YN THE LIGHT OF THE DOCUMENTARY EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE A SSESSEES WERE IN CONFORMITY WITH THE MARKET PRICE, THE TRIBUNAL RECORDED A FINDING OF FA CT THAT THE CASH CREDITS IN THE BUYERS' BANK ACCOUNTS CANNOT BE ATTRIBUTED TO THE ASSESSEES. NO FAULT CAN BE FOUND WITH THE ABOVE FINDING RECORDED BY THE TRIBUNAL. THEREFORE, THE DECISION O F THE TRIBUNAL IS BASED ON FINDING OF FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDE R OF THE TRIBUNAL.ASSTT. CIT VS. KAMAL KUMAR S. AGRAWAL (INDL.) & ORS. (2010) 41 DTR (NAG) (TRIB) 105: (2010) 133 TTJ (NAG) 818 AFFIRMED; SUMATI DAYAL VS. CIT (1995) 125 CTR (SC) 124: (1995) 80 TAXMAN 89 (SC) DISTINGUISHED. 12. THE HON'BLE HIGH COURT OF RAJASTHAN IN CIT VS. SMT. PUSHPA MALPANI - REPORTED IN (2011) 242 CTR (RAJ.) 559; (2011) 49 DTR 312 DISMIS SED THE APPEAL OF DEPARTMENT OBSERVING 'WHETHER OR NOT THERE WAS SALE OF SHARES AND RECEIP T OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSENTIALLY A QUESTION OF FACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT AT THE TIME O F TRANSACTIONS, THE BROKER IN QUESTION WAS NOT 15 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 BANNED BY SEBI AND THAT ASSESSEE HAD PRODUCED COPIE S OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICATE, APPLICATION FOR TRANSFER OF SHAR E CERTIFICATE TO DEMAT ACCOUNT ALONG WITH COPIES OF HOLDING STATEMENT IN DEMAT ACCOUNT, BALAN CE SHEET AS ON 31ST MARCH, 2003, SALE BILL, BANK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS, OF CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. ON 23RD JULY, 2003. THEREFORE, 'TH E PRESE/ITDPPEAL DOES NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. 26. THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF ANUPAM KAPOOR 299 ITR 0179 HAS HELD AS UNDER:- THE TRIBUNAL ON THE BASIS OF THE MATERIAL ON RECOR D, HELD THAT PURCHASE CONTRACT NOTE, CONTRACT NOTE FOR SATES, DISTINCTIVE NUMBERS OF SHA RES PURCHASED AND SOLD, COPY OF SHARE CERTIFICATES AND THE QUOTATION OF SHARES ON THE DAT E OF PURCHASE AND SALE WERE SUFFICIENT MATERIAL TO SHOW THAT THE TRANSACTION WAS NOT BOGUS BUT A GENUINE TRANSACTION. THE PURCHASE OF SHARES WAS MADE ON 28TH APRIL, 1993 I.E.. ASST. YR. 1993-94 AND THAT ASSESSMENT WAS ACCEPTED BY THE DEPARTMENT AND THERE WAS NO CHALLEN GE TO THE PURCHASE OF SHARES IN THAT YEAR. IT WAS ALSO PLACED BEFORE THE RELEVANT AO AS WELL A S BEFORE THE TRIBUNAL THAT THE SALE PROCEEDS HAVE BEEN ACCOUNTED FOR IN THE ACCOUNTS OF THE ASSE SSEE AND WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE TRIBUNAL WAS RIGHT IN REJECTING T HE APPEAL OF THE REVENUE BY HOLDING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPAN Y. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CO NTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTE D AND THE TRANSACTION TOOK PLACE THROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHICH COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITIER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUCH PRESUMP TION COULD BE DRAWN BY THE AO MERELY ON SURMISES AND CONJECTURES. IN THE ABSENCE OF ANY COG ENT MATERIAL IN THIS REGARD, HAVING BEEN PLACED ON RECORD, THE AO COULD NOT HAVE REOPENED TH E ASSESSMENT. THE ASSESSEE HAD MADE AN INVESTMENT IN A COMPANY, EVIDENCE WHEREOF WAS WITH THE AO. --THEREFORE, THE AO COULD NOT HAVE ADDED INCOME, WHICH WAS RIGHTLY DELETED BY THE CIT(A) AS WELL AS THE TRIBUNAL. IT IS SETTLED LAW THAT SUSPICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. CONSEQUENTLY, NO QUESTION OF LAW, MUCH LESS A SUBST ANTIAL QUESTION OF LAW, ARISES FOR ADJUDICATION. C. VASANTLAL & CO. VS. CIT (1962) 45 ITR 206 (SC), M.O. THOMAKUTTY VS. CIT (.1958) 34 ITR 501 (KER)) AND MUKAND SINGH VS. SALE S TAX TRIBUNAL (1998) 107 STC 300 (PUNJAB) RELIED ON; UMACHARAN SHAW &BROS. VS. CIT ( 1959) 37 ITR 271 (SC) APPLIED; JASPAL SINGH VS. CIT (2006) 205 CTR (P & H) 624 DISTINGUIS HED 27. THE CO-ORDINATE BENCH OF AHMEDABAD IN ITA NOS. 501 & 502/AHD/2016 HAD THE OCCASION TO CONSIDER A SIMILAR ISSUE WHICH WAS WHER EIN THE ASSESSMENT WAS FRAMED ON THE STRENGTH OF THE STATEMENT OF A BROKER. THE RELEVANT PART READS AS UNDER:- 14. THE ENTIRE ASSESSMENT IS BASED UPON THE STATEMENT O F SHRI MUKESH CHOKSI. IT IS AN UNDISPUTED FACT THAT NEITHER A COPY OF THE STATEMEN T WAS SUPPLIED TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN BY THE A SSESSING OFFICER/CIT(A). THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES IN CIVIL APPEAL NO. 4228 OF 2006 WAS SEIZED WITH THE FOLLOWING ACTION OF THE TRIBUNA L :- 6. THE PLEA OF NO CROSS EXAMINATION GRANTED TO THE VARIOUS DEALERS WOULD NOT HELP THE APPELLANT CASE SINCE THE EXAMINATION OF THE DEA LERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE POSSESSION OF TH E APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PRICES REMAIN STATIC. SI NCE WE ARE NOT UPHOLDING AND 16 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 APPLYING THE EX FACTORY PRICES, AS WE FIND THEM CON TRAVENED AND NOT NORMAL PRICE AS ENVISAGED UNDER SECTION 4(1), WE FIND NO REASON TO DISTURB THE COMMISSIONERS ORDERS. 15. THE HONBLE APEX COURT HELD AS UNDER :- ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND T HAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAI D TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AF ORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE T RIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EXFACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL T O HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOS E DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR T ESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS EXAMINATIO N. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAIN TAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETH ER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS ME NTIONED IN THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFO RE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUB JECT MATTER OF THE CROSS- EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE . WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REM ITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL O N MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF TH E TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTM ENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESA ID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE. WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. 16. ON THE STRENGTH OF THE AFOREMENTIONED DECISIO N OF THE HONBLE SUPREME COURT, THE ASSESSMENT ORDER HAS TO BE QUASHED . 17. EVEN ON FACTS OF THE CASE, THE ORDERS OF THE AU THORITIES BELOW CANNOT BE ACCEPTED. THERE IS NO DENYING THAT CONSIDERATION WAS PAID WHEN THE SHA RES WERE PURCHASED. THE SHARES WERE 17 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 THEREAFTER SENT TO THE COMPANY FOR THE TRANSFER OF NAME. THE COMPANY TRANSFERRED THE SHARES IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECOR D WHICH COULD SUGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THER E IS ALSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE NEVER WITH THE ASSESSEE. ON THE CON TRARY, THE SHARES WERE THEREAFTER TRANSFERRED TO DEMAT ACCOUNT. THE DEMAT ACCOUNT WAS IN THE NAME OF THE ASSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF TH E SHARES WERE OF SOME FICTITIOUS COMPANY WHICH WAS NOT LISTED IN THE BOMBAY STOCK EXCHANGE/N ATIONAL STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFERRED TO DEMAT ACCOUNT. SHRI MUKESH CHOKSI MAY HAVE BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT THE TRANSACTIONS WERE GENUINE AND THER EFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN. 18. IN THE LIGHT OF THE DECISIONS OF THE HONBLE S UPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND CONSIDERING THE FACTS IN TOT ALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PRESUMPTION AND SURMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT EVIDENCES ON RECORD RELATING TO THE SALE/PUR CHASE TRANSACTIONS IN SHARES SUPPORTED BY BROKERS CONTRACT NOTES, CONFIRMATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE DEMAT ACCOUNT. 19. ACCORDINGLY, WE DIRECT THE A.O. TO TREAT THE GA INS ARISING OUT OF THE SALE OF SHARES UNDER THE HEAD CAPITAL GAINS- SHORT TERM OR LONG TERM AS THE CASE MAY BE. THE OTHER GRIEVANCE OF THE ASSESSEE BECOMES INFRUCTUOUS. 28. THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SU PPORT OF THE CLAIM OF THE ASSESSEE THAT IT EARNED LTCG ON TRANSACTIONS OF HIS INVESTMENT IN SH ARES. THE PURCHASE OF SHARES HAD BEEN ACCEPTED BY THE AO IN THE YEAR OF ITS ACQUISITION AND THEREAFTER UNTIL THE SAME WERE SOLD. THE OFF MARKET TRANSACTION FOR PURCHASE OF SHARES I S NOT ILLEGAL AS WAS HELD BY THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF D OLARRAI HEMANI VS. ITO IN ITA NO. 19/KOL/2014 DATED 2.12.2016 AND THE DECISION BY HONBLE CALCUTTA HIGH COURT IN PCIT VS. BLB CABLES & CONDUCTORS PVT. LTD. IN ITAT NO. 78 OF 2017 DATED 19.06.2018 WHEREIN ALL THE TRANSACTIONS TOOK PLACE OFF MARKET AND THE LOSS ON COMMODITY EXCHANGE WAS ALLOWED IN FAVOUR OF ASSESSEE. THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE CHEQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE OF SHARES AN D THE SALE OF SHARES WERE ALSO REFLECTED IN DEMAT ACCOUNT STATEMENTS. THE SALE OF SHARES SUFFER ED STT, BROKERAGE ETC. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE HELD THAT T HE TRANSACTIONS WERE BOGUS. THE FOLLOWING JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT :- (I) THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME VS M/S. BLB CABLES AND CONDUCTORS ; ITAT NO.78 OF 2017, GA NO.747 OF 2017; DT. 19 JUNE, 2018, HAD UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS FOLLOWS:- 18 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 '4. WE HAVE HEARD BOTH THE SIDE AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE LD. AR SUBMITTED TWO PAPERS BOOKS. FIRST BOOK IS RUNNING I N PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US THE LD. AR S UBMITTED THAT THE ORDER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH THE BROKER WAS EXPELLED. THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF BOTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBMITTE D THE IT RETURN, LEDGER COPY, LETTER TO AO LAND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM W HICH IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTRACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REGISTERS WERE ALSO SUBMITTED IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. THE BOARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIONS IN COMMODITY WA S PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER HAND THE LD. DR RELIED IN THE ORDER OF THE LOWER AUTHORITIES. 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD SUCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME LOSS WAS ALSO CONFIRMED B Y THE LD. CIT(A). HOWEVER WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY R ECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS A ND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME C ONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. II) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDENCES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINI ON OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGH T HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY FAILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAI LING PRICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTI ATED. III)CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITE D [2013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RE CORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE O F PROOF. IT WAS FURTHER HELD THAT IN ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANSACTIONS OF BUYING OR SELLING OF SHARES WERE CO LOURABLE TRANSACTIONS OR WERE RESORTED TO WITH ULTERIOR MOTIVE. 19 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 IV) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CA L HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BR OKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMIS SED. V) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE DECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHE RE THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN A LLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOC K ON THE BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT TH E AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUN AL HELD THAT THE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. TH E APPEAL FILED BY THE REVENUE WAS DISMISSED. VI) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM ED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. VII) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE AO, BASED ON THE I NFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUM ENTED AND SUPPORTED BY EVIDENCE. IT 20 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTR ACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIV ED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARIL Y DISMISSED BY HIGH COURT. 29. WE NOTE THAT SINCE THE PURCHASE AND SALE TRA NSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND BANK ST ATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTED BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BASIS OF SOME REPORT S OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTI ES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAI D JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLOWING CASES:- (I) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (II) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (IV) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (V) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VI) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (VII) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (IX) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (X) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XI) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XII) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XIII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XIV) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XVI) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) 21 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 (XVII) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XVIII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XIX) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 30. THE LD AR ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRAN SACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADE SH [1977] 1 SCC 816 (SC) . IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNE R ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARG ED BY ADDUCING EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BE NAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WH ICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT H AS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAI MED BY THE ASSESSEE ON LTCG ON ALLEGED PENNY SOCKS. (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 31. MOREOVER IT WAS SUBMITTED BEFORE US BY LD AR TH AT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SUBMITTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFFECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HIS BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN CSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SU PPORT OF THIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO W AS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSE SS THE SALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) 22 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 (II) ACIT VS. AMITA AGARWAL & OTHERS - ITA NOS. 247/(KO L)/ OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 32. WE NOTE THAT THE LD. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMALCHAND JAIN IN TAX APPEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIN D THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PUR CHASES WERE MADE BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WA S INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOW N AS CAPITAL GAINS WHICH WAS NOT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTU RE IN NATURE OF TRADE. THUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UPON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARNED ON SALE OF SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT . 33. IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF T HE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BEN CH OF THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG ON SALE OF SHARES OF M/S KAFL. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, SET ASIDE THE ORDER OF LD. CIT( A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND DELETE THE CONSEQUENTIAL ADDITION. 34. THE NEXT GROUND OF APPEAL OF ASSESSEE IN RESPE CT OF CONFIRMING THE INTEREST U/S. 234A, 234B AND 234C OF THE ACT IS CONSEQUENTIAL IN NATURE . 35. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 17TH JULY , 2019. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 17TH JULY, 2019 JD.(SR.P.S.) 23 ITA NO. 2661/KOL/2018 SANGITA KHEMKA, AY- 2014-1 5 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SMT. SANGITA KHEMKA, 22/25, MANOHAR PUKUR ROAD, KOKATA- 700 029. . 2 RESPONDENT ITO, WARD-45(2), KOLKATA 3. 4. CIT(A)-13, KOLKATA (SENT THROUGH E-MAIL) CIT-, , KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR