Smt. Sumita Hinger , Kolkata V. ITO, Ward - 22(1) , Kolkata

ITA 2665/KOL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9377 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-06-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 24-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJOY MUKHERJEE
• Assessee Lawyers: P N KESHARI
• Keywords: Unexplained expenditure; Capital asset; Search and seizure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Transactions in derivatives; Earning of tax free income; Question of law; Accommodation entries; Onus to prove; Sham transactions; Penny stocks; Set aside
• Section: 153A; 205; 250; 147; 148; 132; 68

Judgement Text

1 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 , 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. 2665/KOL/2018 ASSESSMENT YEAR: 2013-14 SMT. SUMITA HINGER (PAN: AARPH 6823 M) VS. ITO, WARD 22(1), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 11.06.2019 DATE OF PRONOUNCEMENT 03.07.2019 FOR THE APPELLANT SHRI P.N. KESHARI, FCA FOR THE RESPONDENT SHRI SANJOY MUKHERJEE, ADDL. CI T, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS IS APPEAL PREFERRED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A) 6, KOLKATA DATED 30.10.2018 FOR ASSESSMENT YEAR 2013-14. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) IN CONFIRMING AOS ACTION WHEREIN THE LTCG CLAIM MADE BY THE ASSESSEE OF RS. 12,57,809/- U/S 10(38) WAS DISALLOWED ON SALE OF SHARES OF M/S. TUNI TEXTILES & MILLS LTD. (HEREIN AFTER REFERRED TO M/S. TTML.) AND ADDED RS. 14,34,300/- U /S 68 OF THE ACT. 3. AT THE OUTSET THE LD. AR SUBMITTED THAT THIS TRI BUNAL IN THE CASE OF ROHIT JALAN VS ITO IN ITA NO. 2205/KOL/2018 BY ORDER DATED 17.05.2019 UPHELD THE CLAIM OF THE ASSESSEE IN RESPECT OF THE SALE OF SCRIP OF M/S. TTML. AND ALLO WED THE CLAIM OF LTCG AS EXEMPT U/S 10(38) OF THE INCOME TAX ACT 1961( HEREIN AFTER TH E ACT). 4. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE HAS EARNED LTC GAIN RS. 12,57,809/- BY SELLING OF SHARE OF M/S. TTML. AND THE SAME HAS BEE N CLAIMED AS EXEMPT U/S 10(38) OF THE ACT. THE AO OBSERVED THAT AN INVESTIGATION WAS COND UCTED ON A NUMBER OF PENNY STOCK 2 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 COMPANIES BY THE DIRECTORATE OF INVESTIGATION, KOLK ATA AND TOTAL 84 PENNY STOCK COMPANIES WERE IDENTIFIED AND WORKED UPON. OUT OF 84 PENNY ST OCK COMPANIES WHICH HAVE BEEN USED FOR GENERATING BOGUS LTCG I.E. M/S. TTML. IS ONE OF THE SAME. ACCORDING TO AO THE BASIC TRADE PATTERN OF ALL THE 84 SCRIPTS ARE SAME. A CLO SE VIEW OF ALL SUCH DATA SUGGESTED THAT THERE IS A COMMON PATTERN IN THE TRADING OF SUCH SCRIPTS AND THE PATTERN IS THAT THEY REPRESENT A BELL SHAPE IN THEIR TRADING. IT MEANS FIRST, THEIR PRICE S START FROM LOW RANGE, THEN IT RAISES RAPIDLY, STAYS THERE FOR A WHILE AND THEN IT DECREASES MORE RAPIDLY. THUS TRADE PATTERN MAKES A BELL SHAPE. APART FROM THAT FROM THE BALANCE SHEET OF TH E PENNY STOCKS IT WILL BE FOUND THAT THEY HAVE NO ACTUAL FINANCIAL CREDENTIALS TO SUPPORT THE IR SHARE MOVEMENT PATTERN. ALMOST ALL THE COMPANIES HAVE NO FIXED ASSET, NO TURNOVER, NO PROF ITABILITY AND THEY DID NOT PAY TAXES. IT SHOWS THAT THESE ARE MADE SPECIALLY FOR THE PURPOSE OF PROVIDING BOGUS LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL LOSS TO WILLING BENEFICI ARIES. THE AO NOTES THAT 800 NUMBER OF SCRIPT OF M/S. TTML. WITH FACE VALUE OF RS. 10/- EA CH WAS PURCHASED ON 29.03.2011 FOR A TOTAL PURCHASE VALUE OF RS. 2,01,994/-. CONSEQUENTL Y, THE SHARES OF M/S. TTML. WERE SUB- DIVIDED AND 8000 SHARES OF FACE VALUE OF RS. 1/- WA S CREDITED TO THE ASSESSEES DEMAT A/C ON 09.4.2011. 7000 SHARES OF THE SAME SCRIP WERE S OLD ON 21.08.2012 WITH A TOTAL SALE VALUE OF RS. 14.34,300/-. 5. HOWEVER TAKING NOTE OF THE REPORT OF THE INVESTI GATION WING, THE AO IGNORED THE DOCUMENTS FILED BY THE ASSESSEE BEFORE HIM AND WAS PLEASED TO ADD THE ENTIRE SALE CONSIDERATION OF RS. 14,34,300/- U/S 68 OF THE ACT. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTI ON OF AO. AGGRIEVED THE ASSESSEE IS BEFORE US. 6. AFTER HEARING BOTH THE PARTIES AND AFTER CAREFUL LY GOING THROUGH THE RECORDS, WE NOTE THAT THE ASSESSEE HAS PURCHASED THE SHARES THROUGH ONLINE (NOTE THROUGH OFFLINE) OF M/S. TTMLWHICH IS SEEN PLACED FROM THE PAGE 15 OF THE PA PER BOOK. WE NOTE THAT THE ASSESSEE HAS PURCHASED THIS SCRIP THROUGH THE BROKER M/S GCM SECURITIES LTD. WHICH WAS REGISTERED WITH SEBI AND MEMBER OF THE BOMBAY STOCK EXCHANGE. THE CONTRACT NOTE DATED 29.03.2011 IS FOUND PLACED AT PAGE 15 OF PAPER BOOK WHEREIN TH E ASSESSEE HAS PURCHASED 800 SHARES @ RS. 500 PER SHARE FOR RS. 2,01,704/-. THE PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL OF INDIAN OVERSEAS BANK WHICH IS FOUND PLAC ED AT PAGE 6 OF THE PAPER BOOK. DEMAT STATEMENT A/C NO. 10005610 OF M/S LOHIA SECURITIES LTD. FOR DELIVERY OF SHARES PURCHASED 3 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 SEEN PLACED AT PAGE 17 OF THE PAPER BOOK. COPY OF T HE LETTER DATED 15.04.2011 OF M/S PURV SHARE REGISTRY (INDIA) PVT. LTD. FOR SUB-SIVISION O F 800 SHARES OF RS. 10/- EACH M/S TTML INTO 8000 SHARES OF RS. 1/-. THE SALE CONTRACT NOTE DATED 22.08.2012 OF SHARE BROKER M/S. GCM SECURITIES LTD. FOR SALE OF 7000 SHARES OF M/S. TTML IS FOUND AT PAGE 20 OF THE PAPER BOOK. BANK STATEMENT OF INDIAN OVERSEAS BANK SHOWIN G RECEIPT OF SALE PRICE IS FOUND PLACED AT PAGE 21 OF THE PAPER BOOK. TRANSACTION ST ATEMENT OF A/C NO. 10005610 OF NATIONAL DEPOSITORY LTD. DP: LOHIA SECURITIES LTD. AS PROOF FOR DELIVERY OF 7000 SHARES OF M/S TTML FOUND AT PAGE 22 OF THE PAPER BOOK. WITH T HE AFORESAID DOCUMENTS, THE ASSESSEE HAS CLAIMED TO HAVE EXEMPT INCOME OF RS. 12,57,809/ - U/S 10(38) OF THE ACT. THUS, WE NOTE THAT THE ASSESSEE HAS PURCHASED THE SHARES THROUGH ONLINE THROUGH REGISTERED BROKERS AND SOLD THE SAME ALSO IN THE BOMBAY STOCK EXCHANGE THR OUGH THE REGISTERED BROKERS AND THE SHARES WERE DULY DEMATERIALIZED AND THE PURCHASE/SA LE CONSIDERATION WAS THROUGH THE BANKING CHANNEL. WE NOTE THAT THE TRIBUNAL HAD THE OCCASION TO CONSIDER THE CLAIM OF THE ASSESSEE IN THE SAME SCRIPS (M/S. TTML) IN A SIMILA R CASE THAT OF ROHIT JALAN (SUPRA) WHEREIN THE TRIBUNAL ALLOWED THE CLAIM HOLDING THAT M/S. TTML SCRIPS ARE NOT BOGUS AND IT WAS A GENUINE SCRIP AND HAS HELD AS UNDER: 4. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THOUGH THE ASSESSEE HAS RAISED THE LEGAL ISSUE AGAINST VALIDITY OF REOPENING U/S. 147 READ WITH SEC. 148 OF THE ACT, IT IS NOTE D THAT IN THE REASSESSMENT ORDER THE ADDITION IS IN RESPECT OF THE LTCG CLAIM OF THE ASSESSEE IN RESPEC T OF SALE OF SCRIP OF M/S. TUNI TEXTILE MILLS LTD. AS EXEMPT U/S. 10(38) OF THE ACT WHICH WAS HEL D BY AO TO BE BOGUS AND THAT ACTION OF AO HAS BEEN CONFIRMED BY THE LD. CIT(A) ON APPEAL OF T HE ASSESSEE. HOWEVER, WE NOTE THAT IN A NUMBER OF CASES, THIS TRIBUNAL HAS HELD THAT THE SC RIP OF M/S. TUNI TEXTILE MILLS IS NOT BOGUS AND HAS ALLOWED THE CLAIM OF ASSESSEE IN RESPECT OF LTC G CLAIM ON THE SALE OF THIS SCRIP I.E. M/S. TUNI TEXTILE MILLS LTD. (IN SHORT M/S. TTML). WE N OTE THAT THE ISSUE IS NO LONGER RES INTEGRA AS THE TRIBUNAL IN IT(SS) A NOS. 112 & 113/KOL/2018 RA MESH CHANDRA K. SHAH VS. ACIT FOR AYS 2011-12 AND 2012-13 ORDER DATED 12.02.2019 WHER EIN THE TRIBUNAL HAS HELD THAT THE SCRIP OF M/S. TTML IS NOT A BOGUS SCRIP. WE NOTE THAT IN THIS CASE THE TRIBUNAL HAS HELD AS UNDER: 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH THE FACTS AND CIRCUMSTANCES OF THE CASE. FIRST, WE MAKE IT CLEAR THAT AS PER THE ADMIT TED FACTS ENUMERATED IN PARA 4 SUPRA, BOTH THE ASSESSMENT YEARS BEFORE US ARE UNABATED ASSESSMENTS , SINCE THESE ASSESSMENT YEARS WERE NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH ON 12.0 8.2015, SO NO ADDITION CAN BE MADE BY THE AO, WITHOUT THE AID OF INCRIMINATING MATERIALS. WI TH THAT BACKGROUND IN MIND, LET US SEE WHETHER THERE ARE ANY INCRIMINATING MATERIALS UNEAR THED AGAINST THE ASSESSEE DURING SEARCH, WHICH CAN JUSTIFY THE ADDITION MADE BY THE AO. IN T HE SAID LOOK-OUT, WE NOTE THAT THE AOS ASSERTION THAT INCRIMINATING MATERIAL I.E. CJ-2 AND CJ-13 WERE RECOVERED DURING SEARCH WHICH SHOW THAT THE ASSESSEE DEALT WITH M/S. TTML WHICH R ESULTED IN BOGUS LTCG, OUR OPINION AFTER EXAMINING CAREFULLY EACH DOCUMENTS WHICH ARE PLACED FROM PAGES 32 TO 69 ARE THAT THEY ARE NOTHING BUT BANK STATEMENT, LEDGERS, ACCOUNTS MAINT AINED BY ASSESSEE OF GCM SECURITIES[BROKER], LEDGER ACCOUNT OF BANK OF INDIA , BURRA BAZAR BRANCH, CONTRACT NOTES OF SALE, SUMMARY OF LTCG, BALANCE SHEET, INCOME TAX RETURN W HICH DOCUMENTS ACCORDING TO US, CAN 4 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 BY NO STRETCH OF IMAGINATION BE TERMED AS INCRIMINA TING MATERIAL, RATHER WE NOTE THAT THESE WERE THE VERY SAME DOCUMENTS THE ASSESSEE HAD ALREADY DI SCLOSED BEFORE SEARCH AND ON THE STRENGTH OF WHICH THE ASSESSEE, IN FACT HAD CLAIMED AUTHENTICA LLY TO HIS TRANSACTION FOR CLAIMING LTCG. SO, WE FIND THAT THERE IS NO INCRIMINATING MATERIAL UNE ARTHED AGAINST THE ASSESSEE DURING SEARCH AS MISUNDERSTOOD BY THE AO AND THE LD. CIT DR BEFORE U S. ONLY OTHER INCRIMINATING MATERIAL ACCORDING TO LD. DR BEFORE US IS THE STATEMENT OF S HRI NARENDRA PRABHUDAYAL SUREKA WHICH HAS BEEN RECORDED BY THE DEPARTMENT. THE AO HAS REPROD UCED HIS STATEMENT IN THE ASSESSMENT ORDER ITSELF. AFTER CAREFULLY GOING THROUGH THE CONTENTS OF THE STATEMENT WE NOTE THAT THIS STATEMENT WAS RECORDED BY THE DEPARTMENT BEFORE THE SEARCH I.E. ON 02.06.2015 WHEREAS SEARCH TOOK PLACE ON 12.08.2015. SO ADMITTEDLY NO INCRIMINATING STAT EMENT WAS RECORDED DURING SEARCH UNDER SECTION 132(4) OF THE ACT. AS WE NOTED THIS STATEM ENT WAS RECORDED BY THE DEPARTMENT BEFORE THE SEARCH AND THE INFERENCE THAT CAN BE DRAWN IS THAT THE SE ARCH TEAM LEADERS WOULD BE AWARE OF THE STATEMENT OF SHRI NARENDRA PRABHUDAYAL SUREKA I N RESPECT OF SHARES OF M/S. TTML, SO WHILE CONDUCTING SEARCH, THEY WOULD ENTHUSIASTICALL Y LOOK FOR SOME MATERIAL/DIARY/ELECTRONIC ENTRY/COMPUTER ENTRY/PRINT OUT TO SHOW THE MOVEMENT OF CASH FROM ASSESSEES COFFER TO THE PURCHASE OF SHARES FROM ASSESSEE (I.E. TO THE PRE-A RRANGED BUYER AT THE BOMBAY STOCK EXCHANGE WHO BOUGHT ASSESSEES SHARE OF M/S. TTML FOR ASTRON OMICAL PRICE) OR AS TO FIND OUT ANY CORRESPONDENCE/LINK/NEXUS TO ESTABLISH THE ASSESSEE S RELATIONSHIP BETWEEN SHRI NARENDRA PRABHUDAYAL SUREKA OR SHRI MANISH BAID. THOUGH DUR ING HEARING WE ASKED THE DEPARTMENT TO SHOW SOME MATERIAL LEAVE ALONG EVIDENCE TO SUGGEST ANY LINK OF ASSESSEE WITH SHRI NARENDRA PRABHUDAYAL SUREKA OR SHRI MANISH BAID, THEY COULD NOT PRODUCE BEFORE US. SO, UNDISPUTEDLY SINCE THE STATEMENT OF SHRI NARENDRA PRABUDAUAL SUR EKA HAS BEEN RECORDED BEHIND THE BACK OF ASSESSEE THAT TOO BEFORE SEARCH AND DOES NOT DIRECT LY IMPLICATE THE ASSESSEE IN ANY WRONG DOING CANNOT BE TERMED AS INCRIMINATING MATERIAL AGAINST ASSESSEE. MOREOVER, WE SHOULD HASTEN TO ADD THAT SHRI NARENDRA PRABHUDAYAL SUREKAS STATEMENT ( IN DETAIL WE WILL DISCUSS LATER) IS A GENERAL STATEMENT THAT M/S. TTML IS A PENNY STOCK. HOWEVER , WE NOTE THAT SHRI NARENDRA PRABHUDAYA SUREKA HAS ATTRIBUTED NO KNOWLEDGE ABOUT THE BENEFI CIARIES AND HAS PUT THE ENTIRE BLAME ON SHRI MANISH BAID, WHOSE STATEMENT AO HAS NOT PLACED ON R ECORD AND SO SHRI NARENDRA PRABHUDAYAL SUREKAS STATEMENT IN NO WAY ADVANCES THE CASE AGAI NST THE ASSESSEE, BECAUSE SHRI NARENDRA PRABHUDAYAL SUREKA IS IGNORANT ABOUT ANY PREFERENTI AL SHARE HOLDERS. SO WITHOUT ANY INCRIMINATING MATERIAL AGAINST THE ASSESSEE FOUND D URING SEARCH IN RESPECT TO SHARES OF M/S. TTML, NO ADDITION CAN BE MADE WITHOUT INCRIMINATING MATERIAL FOUND DURING SEARCH. SO, SINCE BOTH THE AYS BEFORE US WERE NOT PENDING BEFORE AO ON DATE OF SEARCH, SO WITHOUT INCRIMINATING MATERIALS UNEARTHED DURING SEARCH, NO ADDITION CAN BE MADE AS HELD BY HONBLE DELHI HIGH COURT IN KABUL CHAWLA (SUPRA) WHEREIN TH EIR LORDSHIPS HELD AS UNDER: SUMMARY OF LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DE CISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 1 32 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL H AVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQ UIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN S EPARATE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE D ISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE 5 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS S ECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, T HE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO O NE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATI NG MATERIAL UNEARTHED DURING THE COURSE OF PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 11. THE HON'BLE JURISDICTIONAL CALCUTTA HIGH COURT IN ITA NO. 661 OF 2008 COMMISSIONER OF INCOME TAX VS.VEERPRABHU MARKETING LTD. HAS ALSO HELD AS UNDER: WE AGREE WITH THE VIEW EXPRESSED BY THE KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS PRE-REQUISITE BEFORE POWER COULD HAVE BEEN EXERC ISED U/S 153(C) R.W SECTION 153(A). IN THE CASE BEFORE US, THE AO HAS MADE A DISALLOWANCE OF T HE EXPENDITURE, WHICH WAS HELD DISCLOSED, FOR ONE REASON OR THE OTHER, BUT SUCH DISALLOWANCES MADE BY THE AO WERE UPHELD BY THE LD.CIT(A) BUT THE LD. TRIBUNAL DELETED THESE DISALL OWANCE. WE FIND NO INFIRMITY IN THE AFORESAID ACT OF THE LD. TRIBUNAL. THE APPEAL IS, T HEREFORE, DISMISSED. 12. IN A SIMILAR CASE M/S. KURELE PAPER MILLS PVT. LTD. ADDITION WAS MADE BY THE AO (IN SEC. 153A PROCEEDINGS) WITHOUT INCRIMINATING MATERI AL UNEARTHED DURING SEARCH, THE SHARE CAPITAL RECEIVED BY THE ASSESSEE U/S. 68 OF THE AC T WAS DELETED BY THE TRIBUNAL, WHICH ORDER HAS BEEN UPHELD BY HONBLE DELHI HIGH COURT IN PR. CIT VS. KURELE PAPER MILLS PVT. LTD. (2016) 380 ITR 571 (DEL) WHICH DECISION HAS NOT BEEN DISTU RBED BY THE HONBLE SUPREME COURT (2016) 380 ITR (ST.) 69-ED AND WAS PLEASED TO DISMISS THE SLP. 13. BEFORE WE PART FOR COMPLETENESS, WE WOULD LIKE TO ANALYZE THE STATEMENT OF SHRI NARENDRA PRABHUDAYAL SUREKA WHO ACCORDING TO REVENU E HAS GIVEN INCRIMINATING OCULAR EVIDENCE AGAINST THE ASSESSEE IN-RESPECT OF SCRIPS OF M/S TTML. FROM THE STATEMENT OF SHRI NARENDRA PRABHUDAYAL SUREKA IT REVEALS THAT HE IS T HE MANAGING DIRECTOR OF M/S. TTML. HIS STATEMENT HAS BEEN RECORDED ON 02.06.2015 (BEFORE S EARCH WHICH HAPPENED ON 12.08.2015) (APPEAL PAPER PAGES 72 TO 81). FROM A PERUSAL OF T HE STATEMENT OF SHRI NARENDRA PRABHUDAYAL SUREKA WE NOTE THAT HIS COMPANY M/S. TTML WAS NOT A FLY BY NIGHT COMPANY. IT HAS A RUNNING FACTORY WHICH IS SITUATED AT B4/5, MIDC, MURBAD, TH ANE AND HE WAS THE MANAGING DIRECTOR OF THE COMPANY SINCE 06.07.1987 AND THIS COMPANY WAS L ISTED WITH THE BSE IN 1996 AND IT WAS IN THE BUSINESS OF MANUFACTURING CLOTH FROM YARN. IT I S DISCERNED THAT M/S. TTML WAS DELISTED DUE TO NON-COMPLIANCE WITH THE STATUTORY REQUIREMENT OF BSE AND THE COMPANY INCURRED LOSSES SO, HAD APPLIED WITH THE BIFR IN THE YEAR 2000 AND WAS DECLARED AS A SICK UNIT ON 16.04.2002. THEREAFTER, HE SAID THAT WHEN THE PROCEEDINGS WERE GOING ON AT BIFR, SINCE NO FINANCIAL INSTITUTION WAS FORTHCOMING TO FINANCE THE COMPANY, HE CAME INTO CONTACT WITH SHRI MANISH BAID WHO SUGGESTED HIM THE ROUTE OF PREFERENTIAL SH ARES TO RAISE CAPITAL AND HE HAS REPLIED TO QUESTION NO. 12 THAT THE LIST OF PREFERENTIAL ALLOT TEES WAS GIVEN AT ANNEXURE I (WHICH IS NOT ANNEXED BEFORE US) AND THAT HE HAS RAISED CAPITAL O F RS.7,50,00,000/- AT RS. 10/- FACE VALUE FROM 47 HUF/INDIVIDUAL ON 25.01.2010. ACCORDING TO SHRI NARENDRA PRABHUDAYAL SUREKA THESE PREFERENTIAL SHARES WERE ALLOTTED TO PEOPLE WHO WAS KNOWN ONLY TO SHRI MANISH BAID AND TO QUESTION NO. 31 HE HAS ANSWERED THAT THE AMOUNT REC EIVED AS INVESTMENT THROUGH PREFERENTIAL SHARE ALLOTMENT WAS UTILIZED FOR THE BUSINESS AFFAI RS OF THE M/S. TTML IN THE FORM OF CAPITAL INVESTMENT AND A SEPARATE BANK ACCOUNT WAS CREATED WITH THE INDIAN OVERSEAS BANK, NARIMAN POINT. THE COMPANY WAS AGAIN LISTED WITH BSE ON 1 3.03.2009. AFTER SAYING ALL THE AFORESAID 6 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 FACTS, TO A QUESTION AS TO HOW THE SHARE PRICE SHOT UP TO HIGH PRICE, SHRI NARENDRA PRABHUDAYAL SUREKA HAS STATED THAT IT IS A PENNY STOCK COMPANY AND THAT THE SHARES OF THE COMPANY HAVE BEEN USED TO PROVIDE ENTRY FOR BOGUS LTCG TO THE PREFERE NTIAL ALLOTTEES AND ON THE SAME BREATH AGAIN HAS SAID THAT THE ENTIRE SCHEME HAS BEEN MANA GED AND CONTROLLED BY SHRI MANISH BAID. FROM THE REPLY OF SHRI SUREKA, IT TRANSPIRES THAT M /S. TTML IS A RUNNING CLOTH MILL AND THERE ARE STILL EMPLOYEES WORKING IN HIS FACTORY AND ALSO HE DOES NOT KNOW PERSONALLY ABOUT THE PREFERENTIAL SHAREHOLDERS AND CONVENIENTLY HAS STAT ED THAT ONE SHRI MANISH BAID HAS BROUGHT THESE SHAREHOLDERS FROM WHOM RS. 7.50 CR. WAS COLLE CTED AND IT WAS INFUSED AS CAPITAL INTO HIS COMPANY M/S. TTML. IT IS ALSO NOTED THAT THOUGH SHR I NARENDRA PRABHUDAYAL SUREKA HAS STATED THAT HE DOES NOT KNOW ANY OF THE PREFERENTIAL ALLOT TEES, WE NOTE THAT THE AO HAS NOT MADE ANY ATTEMPT TO GET THE STATEMENT OF SHRI MANISH BAID ON BOARD, WHICH WOULD HAVE THROWN LIGHT AS TO WHETHER THE ASSESSEE HAD ANY CONTACT WITH MR. MANIS H BAID WHO IS SUPPOSED TO HAVE BEEN MAIN PLAYER, AND WOULD HAVE CLEARED THE AIR OF SUSPICION . WE NOTE THAT THE ASSESSEE HAS BEEN ALLOTTED PREFERENTIAL SHARES VIDE LETTER DATED 27.01.2010 OF RS. 2 LACS VIDE COMPANYS SHARE CERTIFICATE DATED 25.01.2010 WHICH THOUGH CASTS DOUBT, BUT IT C ANNOT BE THE SOLE BASIS FOR TERMING THE ENTIRE CLAIM OF ASSESSEE AS BOGUS OR THAT ASSESSEES MONEY WAS LAUNDERED IN THE MODUS OPERANDI AS SUGGESTED BY THE DEPARTMENT, BECAUSE AS PER HIS STA TEMENT SHRI SUREKA WHEN HE WAS FACING FINANCIAL CRISIS WENT TO SHRI MANISH BAID AND SOUGH T HIS HELP TO RAISE THE FUNDS AND BY THAT PROCESS RS 7.50 CRORES WAS COLLECTED BY ALLOTMENT OF SHARES AND THAT FUND WAS INFUSED AS CAPITAL INTO HIS COMPANY M/S TTML AND THEN M/S TTML WAS AGAIN LISTED IN BSE. THEREAFTER, THE SHARE VALUE PURCHASED BY ASSESSEE FOR RS 10/- P ER SHARE STARTED RISING, WHICH ACCORDING TO SHRI SUREKA WAS AS PER THE SCHEME AND PLAN OF SHRI BAID AND INORDER TO RIGGLE OUT OF THE QUESTION HOW THE PRICE OF SHARES OF M/S TTML SUDDENLY ROSE T O ASTRONOMICAL PRICE HAS PUT THE BLAME ON SHRI BAID. SO, IF SHRI SUREKA HAS TO BE BELIEVED, THEN IT TURNS OUT THAT HE WAS AN ACCOMPLICE ALONG WITH SHRI BAID, FOR COLLECTION OF RS 7.5 CR B Y WAY OF PREFERENTIAL SHARE ALLOTMENT, WHICH PAVED THE WAY FOR LTCG. THOUGH WE NOTE THAT SHRI SU REKA HAS CONVENIENTLY PALMED OFF THE WRONG ACTS ATTRIBUTABLE TO SHRI BAID ALONE AND THE DEPARTMENT HAS NOT SPELLED OUT WHAT ACTION HAS BEEN TAKEN AGAINST SHRI NARENDRA PRABHUDAYAL SUREK A IN THE LIGHT OF HIS OWN STATEMENT OR IT HAS BEEN EXAMINED AS TO WHETHER HIS STATEMENT IS SELF S ERVING OR NOT, COULD HAVE BEEN CLEARED ONLY IF STATEMENT OF SHRI MANISH BAID WAS RECORDED WHICH CL EARLY COULD HAVE BROUGHT OUT THE CORRECT FACTS. SO WITHOUT THE STATEMENT OF SHRI MANISH BAID WE CANNOT ATTRIBUTE ANY WRONG DOING ON THE PART OF ASSESSEE. FROM THE AFORESAID DISCUSSION WE NOTE THAT THE STATEMENT OF SHRI SUREKA DOES NOT IN ANY MANNER DIRECTLY IMPLICATE THE ASSESSEE A ND SO BASED ON THE STATEMENT OF SHRI SUREKA ALONE, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST TH E ASSESSEE. THEREFORE, WE MADE A FINDING SUPRA THAT SHRI SUREKA STATEMENT REPRODUCED IN THE ASSESSMENT ORDER AS NOT INCRIMINATING QUA THE ASSESSEE. 14. COMING TO THE MERITS OF THE CASE WE NOTE THAT T HE ASSESSEE HAS APPLIED FOR ALLOTMENT OF 2,00,000 EQUITY SHARES AT FACE VALUE @ RS. 10 EACH ON 4.01.2010 IN M/S. TTML. THE COMPANY ISSUED AND ALLOTTED 2,00,000 EQUITY SHARES ON PREFE RENTIAL BASIS ON 25.01.2010 AND INFORMED ASSESSEE ON 27.01.2010 WITH A CONDITION THAT THE SH ARES SHALL BE HELD IN FOR A LOCK IN PERIOD FOR ONE YEAR. COPIES OF APPLICATION FOR ALLOTMENT, ALLO TMENT LETTER & PHOTOCOPY OF SHARE CERTIFICATE ARE AVAILABLE IN PAPER BOOK PAGES 70 -72. THE ASSES SEE HAD PAID THE PURCHASE CONSIDERATION OF RS.20,00,000/- VIDE ACCOUNT PAYEE CHEQUE ISSUED UPO N BANK OF INDIA ON 14/01/2010, WHICH WAS CLEARED ON 15/01/2010. COPY OF BANK STATEMENT IS AV AILABLE AT PAGE ENCLOSED AT PAGE-73 OF THE PAPER BOOK. SUCH INVESTMENT OF RS.20,00,000/- MADE IN M/S. TTML WAS DULY REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31/03/2010. COP Y OF BALANCE SHEET AND P&L ACCOUNT IS SEEN PLACED AT PAGES 74-75 OF THE PAPER BOOK. THE SHARES WERE DE-MATTED WITH NSDL AND KEPT IN THE DE-MAT ACCOUNT OPENED WITH DEPOSITORY PARTIC IPATORY M/S EUREKA STOCK & SHARE BROKING SERVICES LIMITED (DPID: IN302105). COPY OF DE-MAT R EQUEST FORM IS SEEN PLACED AT PAGE 76 OF THE PAPER BOOK. THE SHARES WERE RELEASED AFTER COMP LETION OF THE LOCK-IN PERIOD I.E. AFTER 25/01/2011 AND THEREAFTER THE ASSESSEE SOLD SOME OF HIS HOLDING THROUGH THE BOMBAY STOCK EXCHANGE AT VARIOUS DATES FROM 02/02/2011 THROUGH S EBI REGISTERED BROKER (NO. INB 010793439), M/S GCM SECURITIES LIMITED (BSE CODE 6 250). IN THIS PROCESS 1,09,000 SHARES WERE SOLD TILL 30/03/2011 AGAINST CONTRACT NOTES, F OR TOTAL CONSIDERATION OF RS.2,46,83,694, WHICH 7 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 WAS INCLUSIVE OF SECURITY TRANSACTION TAX (SIT) OF RS.35,523. COPY OF CONTRACT NOTES EVIDENCING SALE OF SHARES ARE FOUND PLACED AT PAGES 77-85 OF PAPER BOOK. WE NOTE THAT THE ASSESSEE RECEIVED THE MONEY INTO HIS BANK ACCOUNT M AINTAINED WITH BANK OF INDIA WITHIN THE TIME PERIOD AS PRESCRIBED UNDER STOCK EXCHANGE REGU LATIONS AND THE COPY OF BANK STATEMENT REFLECTING RECEIPT IS AVAILABLE AT PAGES 86-91 OF P APER BOOK. WE NOTE THAT THE SHARES WERE DEBITED IN THE DE-MAT ACCOUNT IN VARIOUS DATES AS P ER THE VARIOUS DATES IN CONSONANCE WITH THE CONTRACT NOTES. COPY OF DE-MAT TRANSACTION STATEMEN T IS FOUND PLACED AT PAPER BOOK PAGE 92. SINCE ASSESSEE PURCHASED SHARES OF THIS SCRIPS OF 1 ,09,000 AT RS.10,90,000 AND SOLD THE SHARES FOR RS. 2,46,83,694, HE MADE A CAPITAL GAIN OF RS.2 ,35,93,694. COPY OF LONG TERM CAPITAL GAIN STATEMENT IS AVAILABLE AT PAGE 93 OF PAPER BOOK. S INCE THE SALE WAS MADE AFTER ONE YEAR OF HOLDING AND AFTER PAYMENT OF STT AND TRANSACTIONS T OOK PLACE IN THE FLOOR OF THE RECOGNIZED STOCK EXCHANGE (BSE), THE INCOME WAS COMPUTED BY AS SESSEE UNDER LONG TERM CAPITAL GAIN WHICH IS EXEMPTED FROM TAX U/S. 10(38) OF THE ACT. THE ASSESSEE PRODUCED ALL RELEVANT DOCUMENTS IN SUPPORT OF THE TRANSACTION INCLUDING P URCHASE BILLS, SALE CONTRACT NOTES, BANK STATEMENT AND D-MAT STATEMENT REFLECTING PURCHASE A ND SALE OF SHARES THE LTCG CLAIM OF ASSESSEE CANNOT BE BRUSHED ASIDE WITHOUT ADVERSE MA TERIAL TO SUGGEST IT AS BOGUS. WE NOTE THAT THE BALANCE 91,000 SHARES WERE CONTINUED TO BE REFL ECTED IN THE DE-MAT STATEMENT. IN THE COMPUTATION OF INCOME, INCOME UNDER VARIOUS HEADS, WERE STATED INCLUDING INCOME FROM LONG TERM CAPITAL GAIN. FURTHER THE LTCG WAS SHOWN IN TH E INCOME SIDE OF THE INCOME-EXPENDITURE A/C FOR FY 2010-11. COMPUTATION OF INCOME FOR AY 11 -12 & I & E A/C IS FOUND PLACED AT PAGE 94 OF THE PAPER BOOK. BALANCE INVESTMENT IN M/S. TT ML FOR 91,000 AT A COST OF RS.9,10,000 WAS CONTINUED TO BE REFLECTED IN THE BALANCE SHEET AS O N 31/03/2011. COPY OF BALANCE SHEET AS ON 31/03/2011 IS FOUND PLACED AT PAGE 95 OF PAPER BOOK . WE ALSO NOTE THAT THE ASSESSEE HAS SUBMITTED AN EXTRACT OF PRICE DATA OF BSE TO SUBSTA NTIATE THAT THE SHARES WERE SOLD AT PREVAILING MARKET PRICE. COPY OF THE BSE PRICE DATA DURING THE PERIOD OF SALE IS FOUND PLACED AT PAGES 96 AND 97 OF PAPER BOOK. WE NOTE THAT THE AO DID NOT FIND ANY DEFECT/ DISCREPANCY ABOUT THE DOCUMENTS WHICH WERE PRODUCED TO ESTABLISH THE GEN UINENESS OF THE SHARE TRANSACTION. BEFORE US THE LD. AR SUBMITTED THAT THE AOS SHOW CAUSE NO TICE WAS REPLIED DENYING ANY RELATION WITH THE PARTIES REFERRED IN THE INVESTIGATION REPORT. C OPY OF THE REPLY IS FOUND PLACED AT PAGES 98 TO 100 OF THE PAPER BOOK. WE NOTE THAT THE AO BASED ON THE GENERAL INVESTIGATION REPORT OF THE DEPARTMENT DISCARDED ALL THE ABOVE EVIDENCES. FURT HER THE AO TAKING NOTE OF THE PRICE RISE, HIGH VOLUME, LOW FUNDAMENTALS ETC. HELD THAT THE SHARE T RANSACTION AS BOGUS. IT WAS BROUGHT TO OUR NOTICE THAT THE AO DID NOT PROVIDE DURING THE ASSES SMENT PROCEEDINGS, ANY COPIES OF THE MATERIAL, INVESTIGATION REPORTS, STATEMENTS PURPORT EDLY RECORDED BEHIND THE BACK OF THE ASSESSEE TO CREATE A SMOKE SCREEN OF SUSPICION AND DOUBT AGA INST THE ASSESSEE. AND AO BASED ON THIRD PARTY EVIDENCE WHICH WERE NOT SUPPLIED TO THE ASSES SEE BRUSHED ASIDE THE AFORESAID DOCUMENTS WHICH SUBSTANTIATED THE LTCG AND HELD THE TRANSACTI ON TO BE BOGUS, WHICH ACCORDING TO LD. AR, IS NOT FAIR JUST AND REASONABLE AND SO WANTS THE CL AIM OF ASSESSEE ALLOWED AS DONE IN SIMILAR CASE. 15. WE NOTE THAT FOR CLAIMING EXEMPTION U/ S 10(38 ) OF ACT THREE REQUIREMENT NEEDS TO BE FULFILLED. FIRSTLY, THE SHARE PURCHASED SHOULD BE H ELD FOR MORE THAN 1 YEAR. SECONDLY THE SHARES SHOULD BE LISTED & SOLD ON RECOGNIZED STOCK EXCHANG E. THIRDLY ON THE SAID SALE, NECESSARY SECURITY TRANSACTION TAX (STT) HAS BEEN PAID. IN TH E PRESENT CASE, THE SHARES OF M/S. TTML WAS ACQUIRED BY ASSESSEE ON 25/01/2010 FROM THE COMPANY ON PREFERENTIAL BASIS. AFTER THE LOCK-IN PERIOD OF ONE YEAR, THE SHARES WERE PLACED IN THE D E-MAT ACCOUNT. SOME SHARES WERE SOLD IN BSE ON VARIOUS DATES STARTING FROM 02/02/2011 ONWAR DS AFTER PAYMENT OF ALL STATUTORY LEVIES INCLUDING STT & BROKERAGE. THUS, AFTER THE SHARES W ERE HELD FOR MORE THAN 1 YEAR, THE SAME WAS SOLD ON RECOGNIZED STOCK EXCHANGE AND NECESSARY STT PAID. HENCE THE ASSESSEE IS LEGALLY ELIGIBLE TO AVAIL THE EXEMPTION U/S. 10(38) OF THE ACT AND THE AO ONLY CAN DENY THE CLAIM ON COGENT GROUNDS WITH MATERIAL TO SUBSTANTIATE HIS CO NCLUSION THAT ASSESSEE INDULGED ALONG WITH PERSONS STATEMENT RECORDED (WHICH IS SUPPORTED BY SOME MATERIAL TO SUGGEST) THAT ASSESSEE WAS BENEFICIARY TO THE WHOLE STAGE MANAGED CLAIM OF EXE MPT GAIN. 8 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 16. AO INVOKED SECTION 68 OF THE ACT TREATING THE SHARE TRANSACTION AS SHAM AND ADDED THE LTCG OF RS.2,35,93,694 INVOKING SECTION 68 OF THE A CT. SECTION 68 OF THE INCOME TAX ACT, READS AS UNDER: WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESS ING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE A SSESSEE OF THAT PREVIOUS YEAR. 17. FROM THE ABOVE IT MAY BE SEEN THAT THE PRIMARY LIABILITY, U/S 68 OF THE ACT, IS THAT OF THE ASSESSEE IN WHOSE BOOKS THE CASH CREDIT ENTRY I S FOUND. THIS LIABILITY ARISES ONLY WHEN THE ASSESSEE FAILS TO PROVE SATISFACTORILY THE SOURCE F ROM WHERE IT RECEIVED THE AMOUNT AND THE NATURE OF THE AMOUNT SO RECEIVED THAT IS, IT HAS TO SHOW H OW THE SAID AMOUNT IS NOT AN INCOME-RECEIPT. 18. FROM THE AFORESAID DOCUMENTS DISCUSSED IN DETA IL HEREIN ABOVE AT PARA 14 (SUPRA) IT CAN BE SEEN THAT THE ASSESSEE HAD EXPLAINED THE NAT URE & SOURCE OF TRANSACTION IN DETAIL IN ORDER TO DISCHARGE ITS ONUS/PRIMARY LIABILITY. THE ASSESS EE AS WE HAD TAKEN NOTE HAS SOLD THE EQUITY SHARES OF M/S. TTML AS LONG TERM CAPITAL ASSETS AND RECEIVED PAYMENT FROM THE BOMBAY STOCK EXCHANGE THROUGH THE SEBI REGISTERED BROKER M/S GCM SECURITIES LIMITED. THE AO, WE NOTE HAS NOT SPELLED OUT SPECIFICALLY ANY DEFECTS IN THE DOCUMENTS COVERING THE TRANSACTION NEITHER IN THE SHARE ALLOTMENT LETTER FOR ACQUISITION NOR IN R ESPECT OF CONTRACT NOTES FOR SALE, BANK STATEMENT SHOWING PAYMENT FOR PURCHASE & RECEIPT FOR SALES, D E-MAT STATEMENT SHOWING MOVEMENT OF SHARES, BALANCE SHEET REFLECTING INVESTMENT & CORRE SPONDING BOOKING OF CAPITAL GAINS IN THE P&L A/C FOR CORRESPONDING SALE OF SHARES IN DIFFERE NT YEARS. IT IS TRITE THAT ONCE THE ASSESSEE HAS DISCHARGED ITS ONUS/PRIMARY LIABILITY, IT WILL BE A O'S BURDEN TO BRING ON RECORD ANY COGENT MATERIAL IN SUPPORT OF THE CONTRARY CONTENTION THAT THE TRANSACTION ENCOMPASSING THE SALE WAS SHAM. HOWEVER, IN THE BACKGROUND OF THE FACTS DISCU SSED ABOVE, THE AO FAILED TO BRING ON RECORD ANY MATERIAL TO SUBSTANTIATE THE FACT THAT T HE SHARE TRANSACTION IN QUESTION WAS BOGUS. THE STATEMENT OF SHRI NARENDRA PRABHUDAYAL SUREKA TO TH E DEPARTMENT/INVESTIGATION WING REPRODUCED IN THE ASSESSMENT ORDER MIGHT SHOW THEIR COMPLICITY IN INDULGING IN THE NEFARIOUS ACTIVITY OF PROVIDING ACCOMMODATION ENTRY FOR BENEF ICIARIES TO CLAIM LTCG ON SALE OF SHARES OF M/S. TTML, BUT THESE ARE GENERAL STATEMENTS EXPLAIN ING THE MODUS OPERANDI AND FEW NAMES BUT THE DEPARTMENT HAS NOT BROUGHT OUT ANY DIRECT STATE MENT OF THIS PERSON TO IMPLICATE THE ASSESSEE AS AN ACCOMPLICE IN THEIR PURPORTED STAGE MANAGED I LLEGAL ACTIVITY. WITHOUT WHICH WE ARE AFRAID WE CANNOT JUSTIFY THE ACTION OF AO/LD. CIT(A). IN THIS RESPECT, WE TAKE NOTE OF THE OBSERVATION MADE BY THE COORDINATE BENCH OF THIS TRIBUNAL IN TH E CASE OF NAVNEET AGARWAL VS. ITO, KOLKATA, ITA NO. 2281/KOL/2017 DATED 20.07.2018: THE HON'BLE SUPREME COURT IN THE CASE OF OMAR SALA V MOHAMED SAIT REPORTED IN (1959) 37 ITR 151 (S C) HAD HELD THAT NO ADDITION C AN BE MADE ON THE BASIS OF SURMISES, SUSPICION AND CONJECTURES. IN THE CASE OF CIT (CENT RAL), KOLKATA VS. DAULAT RAM RAWATMULL REPORTED IN 87 ITR 349, THE HON'BLE SUPREME COURT H ELD 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 DISCHARG ED BY ADDUCING LEGAL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH C IRCUMSTANCE 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. IN THIS CONNECTION WE REFER TO THE GENERAL VIEW ON THE TOPIC OF CONVEYANCE OF IMMOVABLE PROPERTIES. THE RATES/SALE PRICE ARE AT VARIANCE WI TH THE CIRCLE RATES FIXED BY THE REGISTRATION AUTHORITIES OF THE GOVERNMENT IN MOST CASES AND THE GENERAL IMPRESSION IS THAT CASH WOULD HAVE CHANGED HANDS. THE COURTS HAVE LAID DOWN THAT JUDIC IAL NOTICE OF SUCH NOTORIOUS FACTS CANNOT BE TAKEN BASED ON GENERALIZATIONS. COURTS OF LAW ARE B OUND TO GO BY EVIDENCE. 9 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 19. SECTION 68 OF THE ACT REQUIRES THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF SUCH CREDIT. ON THE ISSUE OF BURDEN OF PROOF, THE HON'BL E CALCUTTA HIGH COURT, IN THE CASE OF CIT VS. PRECISION FINANCE PVT. LTD. (1994) 208 ITR 465 (CAL ) LAID DOWN THAT THE ASSESSEE IS REQUIRED TO ESTABLISH: A) IDENTITY OF PAYER, B) GENUINENESS OF TRANSACTION AND C) CREDITWORTHINESS OF PAYER 20. AS EXPLAINED, THE TRANSACTION WAS MADE IN THE B OMBAY STOCK EXCHANGE THROUGH A SEBI REGISTERED BROKER. AS PER THE ESTABLISHED PROC ESS, ON EXECUTION OF THE ORDERED TRANSACTION, THE EXCHANGE SHALL HANDOVER THE PAYMENT TO THE BROK ER AND IN TURN THE BROKER SHALL ARRANGE FOR PAYMENT TO THE SELLER I.E. THE ASSESSEE. IN THIS CA SE, M/S GCM SECURITIES LIMITED, HAVING SEBI REGISTRATION NO.INB 010793439, BSE MEMBERSHIP NO. 6 250 HAD EXECUTED THE TRANSACTION. THUS THE IDENTITY OF THE BROKER IS ESTABLISHED FROM M/S. GCM SECURITY LTD. THE BROKER. 21. FROM THE RECORDS, THE ASSESSEE RECEIVED THE SAL E CONSIDERATION AFTER SALE OF SCRIPS OF M/S. TTML SINCE M/S. GCM SECURITIES LIMITED IS A SE BI REGISTERED BROKER HAVING MEMBERSHIP BOTH IN NSE & BSE, THERE CANNOT BE ANY Q UESTION ABOUT THE WORTHINESS OF THE SAME AS THE SAME IS COVERED UNDER THE KYC NORMS OF THE E XCHANGES. IT IS NOTED THAT THE BROKER HAD ALL ALONG COMPLIED WITH THE REQUIREMENT TO MAINTAIN THE MARGIN MONEY AS PER EXCHANGE NORMS AND SEBI HAD NEVER PUT ANY RESTRICTION ON M/S. GCM SECU RITIES LIMITED FOR CAPITAL MARKET OPERATIONS. 22. TO SUBSTANTIATE THE GENUINENESS OF THE TRANSAC TION, THE ASSESSEE HAD PLACED COMPLETE DOCUMENTS BEFORE THE AO. IN RESPECT OF ACQUISITION OF SHARES IN M/S. TTML, THE ASSESSEE SUBMITTED ALLOTMENT LETTER OF THE COMPANY & BANK ST ATEMENT SHOWING PAYMENT OF RS.20,00,000/- AS CONSIDERATION. SUCH PURCHASE WAS ALSO REFLECTED IN THE DE-MAT STATEMENT OF THE ASSESSEE AS A GENUINE HOLDER OF SHARES. FOR SALE, THE ASSESSEE PL ACED CONTRACT NOTE ISSUED BY BROKER, BANK STATEMENT SHOWING RECEIPT OF CONSIDERATION & DE-MAT STATEMENT REFLECTING THE MOVEMENT OF SHARES. IN THE BALANCE SHEET OF THE ASSESSEE, INVES TMENTS MADE IN THE SHARES OF M/S. TTML WERE REFLECTED AND IN THE PROFIT & LOSS ACCOUNT, THE LTC G AS EARNED BY THE ASSESSEE, WAS DISCLOSED. THE AO HAS NOT FOUND FAULT WITH THE GENUINENESS OF SUCH DOCUMENTS. IN FACT THE SALE TRANSACTION WAS EXECUTED THROUGH SEVERAL INDEPENDENT BODIES LIK E THE DEPOSITORY PARTICIPANT, THE BANKER, THE STOCK EXCHANGE ETC. 23. THE ASSESSEE SOLD THE SHARES ON THE BSE THROUGH HIS STOCK BROKER M/S GCM SECURITIES LIMITED. IN SUPPORT OF THE SALE OF SHARES CONTRACT NOTE IN THE PRESCRIBED FORM WAS ISSUED BY THE BROKER. THE CONTRACT NOTE INCLUDED RELEVANT INFORMA TION SUCH AS DATE AND TIME OF TRANSACTION, CONTRACT NOTE NUMBER, SETTLEMENT NUMBER, DETAILS OF SERVICE TAX PAID, DETAILS OF BROKERAGE AND DETAILS OF STT PAID. NO MATERIAL WAS BROUGHT ON REC ORD BY THE AO THAT THE INFORMATION CONTAINED IN CONTRACT NOTE WAS FALSE OR THAT THE SA LE OF SHARES ACTUALLY NEVER HAPPENED. ON THE CONTRARY THE INFORMATION SHOWS THAT THE ASSESSEE CA RRIED OUT SALE THROUGH BSE, THE SALE WAS MADE AT THE PREVAILING PRICE AT THE EXCHANGE AND TH E CONSIDERATION WAS RECEIVED THROUGH BSE VIA BANKING CHANNEL AFTER DELIVERY OF SHARES FROM T HE DE-MAT ACCOUNT. 24. AFTER DISPOSAL OF SHARES, DELIVERY OF SHARES WA S MADE THOROUGH ASSESSEE'S DE-MAT ACCOUNT WITH M/S EUREKA STOCK & SHARE BROKING SERVI CES LIMITED. THE ENTRIES IN THE DE-MAT ACCOUNT SHOWED THAT DELIVERY OF SHARES WAS RECORDED IN THE NSDL'S RECORD AND THE SHARES WERE DELIVERED TO THE DE-MAT ACCOUNT OF M/S. GCM SECURIT IES LIMITED. THESE FACTS WERE NEITHER CONTROVERTED NOR DISPROVED BY THE AO. 25. ON THE CONTRARY, WE NOTE THAT DESPITE SPECIFIC REQUEST MADE BY ASSESSEE DURING ASSESSMENT PROCEEDINGS THE AO DID NOT CONDUCT ANY I NVESTIGATION IN RELATION TO THE ALLEGED CHAIN OF TRANSACTIONS LEADING TO ULTIMATE DESTINATION OF THE CASH WHICH COULD HAVE SHED LIGHT ON THE ASSESSEE'S CONNIVANCE IF HE HAD INDULGED IN THE PRE -PLANNED SHAM TRANSACTION. FURTHER, WE NOTE 10 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 THAT THE AO NEITHER EXAMINED THE BROKER NOR THE ST OCK EXCHANGE AUTHORITY OR PROVIDE THE REFERRED REPORT OF THE INVESTIGATION WING TO THE AS SESSEE WHICH WAS RELIED HEAVILY WHILE FRAMING THE ASSESSMENT AND PREJUDICES THE MIND OF AO. SO, HE BRUSHED ASIDE ALL THE DOCUMENTS PRODUCED BY THE ASSESSEE WITHOUT ANY REASON. 26. THE AO VIEWED THAT BECAUSE OF VARIOUS ADVERSE REPORTS AS WELL AS UNNATURAL PRICE MOVEMENT, THE TRANSACTIONS MADE IN M/S. TTML WERE B OGUS, THE COORDINATE BENCH OF THIS TRIBUNAL HAD OCCASION TO DEAL WITH THE ISSUES RAISE D FOR THE SHARES OF M/S. TTML IN THE CASE OF KIRAN KOTHARI. HUF VS. ITO, ITA NO. 443/KOL/2017, W HERE THE SHARES WERE SOLD AT A HIGH PRICE. ALLOWING THE ASSESSEE'S APPEAL, THE TRIBUNAL HELD: '9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS. WE NOTE THAT IN THE PRESENT CASE, THE APPELLANT HAD PURCHASED 13500 SHARES OF M /S. TUNI TEXTILE MILLS PRIVATE LIMITED ON 06.04.2011 FROM A STOCK BROKER IN OFF-MARKET TRANSA CTIONS FROM M/S BADRI PRASAD & SONS, WHO WAS A MEMBER OF CALCUTTA STOCK EXCHANGE. THESE SHAR ES WERE HELD IN THE DEMAT ACCOUNT OF THE ASSESSEE MAINTAINED WITH M/S. C. D EQUISEARCH PVT. LTD, A MEMBER OF MUMBAI STOCK EXCHANGE AND ULTIMATELY THESE SHARES WERE SOLD THROUGH M/S. C.D EQUISEARCH AND ON SUCH SALE, SECURITY TRANSACTION TAX WAS DULY PAID. PAYMENTS WERE DULY R ECEIVED IN THE BANK ACCOUNT OF THE ASSESSEE. WE TAKE NOTE THAT THE PURCHASE OF SHARES BY OFF-MARKET TRANSACTIONS FOR PURCHASE OF SHARES IS NOT ILLEGAL AS WAS HELD BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DOLARRAI HEMANI VS ITO IN ITA NO. 19/KOL/2014 DATED 02.12.2016. THE TRANSACTIONS WERE ALL THROUGH A REGISTERED BROKER (PAGES 18 AND 19 OF THE PAPER BOOK), BACKED BY A CONTRACT NOTE (PAGE 22 OF THE PAPER BOOK) AND SHARES WERE CREDITE D IN THE DEMAT ACCOUNTS (PAGE 25 OF THE PAPER BOOK) AND DULY REFLECTED IN THE BOOKS OF ACCO UNT. IN THE LIGHT OF THESE EVIDENCES ON RECORD WE ARE OF THE OPINION THAT THE PURCHASE OF SHARES P ER-SE CANNOT BE HELD TO BE BAD. 9.2. WE FIND FORCE IN THE CONTENTIONS OF THE LD. AR THAT THE AO AND CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCE, HUMAN CONDUCT AND PREPONDERANCE OF PROBABILITY WITHOUT BR INGING ON RECORD ANY RELEVANT LEGALLY ADMISSIBLE EVIDENCE AGAINST THE ASSESSEE. FOR THE S AID PROPOSITION WE RELY ON THE JUDGMENT OF THE SPECIAL BENCH OF MUMBAI BENCH IN THE CASE OF GT C INDUSTRIES LTD. (SUPRA). THE VARIOUS FACETS OF THE CONTENTION OF THE AO, TO ROPE IN THE ASSESSEE FOR DRAWING ADVERSE INFERENCES WHICH REMAIN UNPROVED BASED ON THE EVIDENCE AVAILABLE ON RECORD ARE NOT REITERATED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOUS CASE L AWS RELIED UPON BY THE LD. AR ARE ALSO NOT REITERATED FOR THE SAKE OF BREVITY. WE FURTHER FIND THAT NEITHER THE REPORTS RELIED ON BY THE AO HAS NOT BEEN BROUGHT ON RECORD NOR IS THERE ANY REF ERENCE OF FINDING OF SUCH REPORT TO IMPUTE THE ASSESSEE IS THERE ON RECORD. THE AO HAS MERELY CARVED OUT CERTAIN FEATURES/MODUS OPERANDI OF COMPANIES INDULGING IN PRACTICES NOT SANCTIONED BY LAW AND AS MENTIONED IN SUCH REPORT. HOWEVER, WE NOTE THAT NEITHER ANY INVESTIGATION WAS CARRIED OUT AGAINST THE ASSESSEE NOR AGAINST THE BROKERS TO WHOM THE ASSESSEE DEALT WITH THE PURCHASE AND SALE OF SHARES IN QUESTION. THUS THE AO HAS FAILED TO BRING ON RECORD ANY MATER IAL CONTAINED IN THE PURPORTED REPORTS WHICH ARE HAVING SO CALLED ADVERSE IMPACT ON THE ASSESSEE. 9.3. IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I TO V) IN PAGE14(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASS ESSEE 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 THEREFO RE HAS TO FAIL. 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/LD. CIT(A). WE NOTE THAT THE ALLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION SHARES MUST THEREFORE CONSEQUENTLY FAIL. AT THE COST OF RE PETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILL S, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTION S 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. 11 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACT S 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) THE ACT ON THE BASIS OF SUSPI CION, SURMISES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOWSOEVER STRONG, CANNOT PAR TAKE THE CHARACTER OF LEGAL EVIDENCE. 27. LET US LOOK AT CERTAIN JUDICIAL DECISIONS ON SI MILAR FACTS:- 28. 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 GROUND TO HOLD THAT THE TRANSACTIONS ARE SHAM AND BOGUS, ESPECIALLY WHEN DOCUMENTARY ITA NOS. 93 TO 99/RPR/2 014 & C.O. NOS. 12 TO 18/RPR/2014 . A.Y. 2004-05 10 PRODUCED TO ESTABLISH THE GENUINENE SS OF THE CLAIM. FROM THE DOCUMENTS PRODUCED, IT IS SEEN THAT THE SHARES IN QUESTION WE RE IN FACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY HAS CONFIRMED TO H AVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEES. SIMILARLY, THE SALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRODUCING DOCUMENTARY EVIDENCE. IT IS TRUE THAT SOM E 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 RATES PREVAILING ON T HE RESPECTIVE DATES AS IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEES. THEREFORE, TH E 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 THAT THE TRANSACTIONS WIT H THE H GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCING DOCUMENTARY E VIDENCE TO THE EFFECT THAT THE SHARES SOLD BY THE ASSESSEES WERE IN CONSONANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EVIDENCE, THE TRIBUNAL HAS ARRIVED AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT ON RECORD TO SHOW THAT THE FINDI NGS RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE DOCUMENTARY EVIDENCE ON RECORD. THE TRIBUNAL HA S FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE,BANK ACCOUNTS OF SOME OF TH E BUYERS OF SHARES CANNOT BE LINKED TO THE ASSESSEES. MOREOVER, YN THE LIGHT OF THE DOCUMENTAR Y EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE ASSESSEES WERE IN CONFORM ITY WITH THE MARKET PRICE, THE TRIBUNAL RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE BUYERS' BANK ACCOUNTS CANNOT BE ATTRIBUTED TO THE ASSESSEES. NO FAULT CAN BE FOUND WITH THE AB OVE FINDING RECORDED BY THE TRIBUNAL. THEREFORE, THE DECISION OF THE TRIBUNAL IS BASED ON FINDING OF FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL.ASSTT. C IT 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 (S C) 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 DISMISSED THE APPEAL OF DEPARTMENT OBSERVING 'WHETHER OR NOT THERE WAS SALE OF SHARES AND RECEIP T OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSENTIALLY A QUESTION OF FACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT AT THE TIME O F TRANSACTIONS, THE BROKER IN QUESTION WAS NOT BANNED BY SEBI AND THAT ASSESSEE HAD PRODUCED COPIE S OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICATE, APPLICATION FOR TRANSFER OF SHAR E CERTIFICATE TO DEMAT ACCOUNT ALONG WITH COPIES OF HOLDING STATEMENT IN DEMAT ACCOUNT, BALAN CE SHEET AS ON 31ST MARCH, 2003, SALE BILL, BANK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS, OF CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. ON 23RD JULY, 2003. THEREFORE, 'TH E PRESE/ITDPPEAL DOES NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. 29. 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 SHARES PURCH ASED AND SOLD, COPY OF SHARE CERTIFICATES AND 12 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 THE QUOTATION OF SHARES ON THE DATE OF PURCHASE AND SALE WERE SUFFICIENT MATERIAL TO SHOW THAT THE TRANSACTION WAS NOT BOGUS BUT A GENUINE TRANSAC TION. THE PURCHASE OF SHARES WAS MADE ON 28TH APRIL, 1993 I.E.. ASST. YR. 1993-94 AND THAT A SSESSMENT WAS ACCEPTED BY THE DEPARTMENT AND THERE WAS NO CHALLENGE TO THE PURCHASE OF SHARES IN THAT YEAR. IT WAS ALSO PLACED BEFORE THE RELEVANT AO AS WELL AS BEFORE THE TRIBUNAL THAT THE SALE PROCEEDS HAVE BEEN ACCOUNTED FOR IN THE ACCOUNTS OF THE ASSESSEE AND WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE TRIBUNAL WAS RIGHT IN REJECTING THE APPEAL OF THE REVENUE BY HOL DING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPANY. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CONTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTED AND THE TRANSACTION TOOK PLA CE THROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHIC H COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITIER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUCH PRESUMPTION COULD BE DRAWN BY THE AO MERELY ON SURM ISES AND CONJECTURES. IN THE ABSENCE OF ANY COGENT MATERIAL IN THIS REGARD, HAVING BEEN PLA CED ON RECORD, THE AO COULD NOT HAVE REOPENED THE ASSESSMENT. THE ASSESSEE HAD MADE AN I NVESTMENT 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 SETTLE D LAW THAT SUSPICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. CONSEQUENTLY, NO QUE STION OF LAW, MUCH LESS A SUBSTANTIAL 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 MU KAND SINGH VS. SALES TAX TRIBUNAL (1998) 107 STC 300 (PUNJAB) RELIED ON; UMACHARAN SHAW &BRO S. VS. CIT (1959) 37 ITR 271 (SC) APPLIED; JASPAL SINGH VS. CIT (2006) 205 CTR (P & H ) 624 DISTINGUISHED 30. 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 DEALERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE POSSESSION OF THE APPELLANT THE MSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PRICES REMAIN STATIC. SINCE WE ARE NOT UPHOLDING AN D APPLYING THE EX FACTORY PRICES, AS WE FIND THEM CONTRAVENED 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 THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMU CH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WA S ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON T HE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORR ECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT G RANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORD ER 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 CROS S-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO 13 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 EXPLAIN AS TO WHY THEIR EXFACTORY PRICES REMAIN STA TIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED T O CROSS-EXAMINE THOSE 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 TESTIMONY F OR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS EXAMINATION. THAT APART, THE A DJUDICATING 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 D EALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUB JECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOS E AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTI ONED 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 REMITTING T HE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S 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 AFORESAID TWO WITNE SSES 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 SHARES WERE PURCHASED. THE SHARES WERE THEREAFTER SENT TO THE COMPANY FOR THE TRANSFER OF NAME. THE C OMPANY TRANSFERRED THE SHARES IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECORD WHICH COUL D SUGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THERE IS A LSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE NEVER WITH THE ASSESSEE. ON THE CONTRARY, THE SHARES WERE THEREAFTER TRANSFERRED TO DEMAT ACCOUNT. THE DEMAT ACCOUNT WAS IN THE NAME OF THE A SSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF THE SHARES WE RE OF SOME FICTITIOUS COMPANY WHICH WAS NOT LISTED IN THE BOMBAY STOCK EXCHANGE/NATIONAL STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFERRED TO DEMAT ACCOUNT. SHRI MUKESH CHOK SI 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 THEREFORE, NO ADV ERSE 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. THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE CH EQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE OF SHARES AND THE SALE OF SH ARES WERE ALSO REFLECTED IN DEMAT ACCOUNT STATEMENTS. THE SALE OF SHARES SUFFERED STT, BROKER AGE ETC. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE HELD THAT THE TRANSACTIONS W ERE BOGUS. THE FOLLOWING JUDGMENTS OF 14 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 HONBLE JURISDICTIONAL HIGH COURT:- 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 UPH ELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS FOLLOWS:- '4. WE HAVE HEARD BOTH THE SIDE AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE LD. AR SUBMITTED TWO PAPERS BOOKS. FIRST BOOK IS RUNNING I N PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US THE LD. AR SUBM ITTED 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 B OTH 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 WHIC H IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTR ACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REGIST ERS WERE ALSO SUBMITTED IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. THE B OARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIONS IN COMMODITY WAS 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 BY THE LD. CIT(A). HOWEVER 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 WH ERE 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 ASS ESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE ST AGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERA TED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTU M OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY F AILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING P RICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. 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 RECORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER HELD THAT I N ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANS ACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTED TO WITH UL TERIOR MOTIVE. IV) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CA L HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BROKERAGE, SERVICE TAX, AND CESS. THE RE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL F ILED BY THE REVENUE WAS DISMISSED. 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 WHERE T HE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO 15 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON TH E BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE AO DID NOT DOUB T THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT T HE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED BY TH E REVENUE WAS DISMISSED. 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 TRA NSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTE D BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DE MAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED BY HIGH COURT. 31. 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 EA RLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BASIS OF SOME REPORTS OF THE IN VESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAID 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) (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 ) 32. 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 16 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 AGNIHOTRI VS. THE STATE OF MADHYA PRADESH [1977] 1 SCC 816 (SC) . IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A P ARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNER ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EV IDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRC UMSTANCES UNERRINGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURT HER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISH ED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGME NTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAIMED BY THE ASSESSEE ON LTCG ON ALLEGE D 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) 33. 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 EFF ECT 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 SUPPORT OF T HIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSESS THE SALE PROCEEDS O F SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. AMITA AGARWAL & OTHERS - ITA NOS. 247/(KO L)/ OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 34. 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 AP PEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIND THAT THE F ACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MAD E BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF T HE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WAS INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOWN AS CAPITAL GAINS WHICH WAS N OT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREAT ING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTURE 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 O F SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT. 35. IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF T HE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASE OF KIRAN KOTHARI HUF (SUPRA ), WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE C LAIM OF LTCG ON SALE OF SHARES OF M/S TTML. SO WE, RESPECTFULLY FOLLOWING THE SAME, SET A SIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND DELETE THE CONSEQUENTIAL ADDITION. 36. THE NEXT ISSUE IN CONFIRMING THE ADDITION O F RS.1,17,791/- AS UNEXPLAINED EXPENDITURE TOWARDS COMMISSION CHARGES OF SALE OF SUCH SHARES B Y THE OPERATOR. WE HAVE ALREADY HELD THAT THE TRANSACTIONS RELATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODATION ENTRIES AS ALLEGED BY THE AO. CONSEQUENTLY THE ADDITION OF RS.1,17,791 /- IS HEREBY DIRECTED TO BE DELETED. WE ACCORDINGLY HOLD THAT THE ISSUE IS ALLOWED IN FAVOU R OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION CITED SUPRA, I SET ASIDE THE ORDER OF LD. CIT(A) AND ALLOW THE CLAIM OF THE ASSESSEE. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 17 ITA NO. 2665/KOL/2018 SMT. SUMITA HINGER AY 2013-14 RESPECTFULLY FOLLOWING THE DECISION CITED SUPRA, WH EREIN THE LD. DRS ARGUMENTS HAVE ALSO BEEN CONSIDERED, WE SET ASIDE THE ORDER OF LD. CIT( A) AND ALLOW THE LTCG CLAIM OF THE ASSESSEE. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JULY, 2019 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3RD JULY, 2019 BISWAJIT (SR. PS) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT SMT. SUMITA HINGER, 14, DURGA CHARAN MUK HERJEE ROAD, NARAYANI APARTMENT, KOLKATA 700 003. 2 RESPONDENT ITO, WARD 22(1), KOLKATA. 3 4 5 CIT(A) , KOLKATA. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O. ITAT, KOLKATA BENCHES