Kaushalya Sunder Panjabi, Pune V. Assistant Commissioner of Income-tax, Circle - 10, Pune

ITA 2698/PUN/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5732 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 17-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWLI
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Unexplained cash credit; Unexplained investment; Capital asset; Business income; Income from undisclosed sources; Search and seizure; Share purchase agreement; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Source of fund; Question of law; Corroborative evidences; Accommodation entries; Block assessment; Retraction; Sham transactions; Penny stocks; Set aside; Capital Gains
• Section: 271(1)(c); 143(3); 133A; 153A; 68; 69

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE . , BEFORE SHRI D. KARUNAKARA RAO , AM SL. NO. ITA NO. A.Y. NAME OF THE APPELLANT RESPO NDENT 1 . ITA NO. 2676 / PUN /201 7 2002 - 03 RAMCHAND UDHARAM PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTAN T S, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AHLPP3774A ACIT, CIRCLE - 10 , PUNE 2. ITA NO. 2677 / PUN /201 7 200 3 - 0 4 RAMCHAND UDHARAM PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AHLPP3774A ACIT, CIRCLE - 10 , PUNE 3. ITA NO.2678/PUN/2017 200 2 - 0 3 NARESH RAM PANJABI, C/O SHAH KH ANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AHHPP4310L ACIT, CIRCLE - 10 , PUNE 4. ITA NO.2679/PUN/2017 200 3 - 0 4 NARESH RAM PANJABI, C/O SHAH KHANDELWAL AND JAIN, ACIT, CIRCLE - 10 , PUNE C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AHHPP4310L PUNE 5. ITA NO.2680/PUN/2017 200 5 - 0 6 NARESH RAM PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLE SLEY ROAD, NEAR RTO, PUNE. PAN NO. AHHPP4310L ACIT, CIRCLE - 10 , PUNE 6. ITA NO.2681/PUN/2017 200 2 - 0 3 RAJKUMAR RAM PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. ABKP P6644A ACIT, CIRCLE - 10 , PUNE 7. ITA NO.2682/PUN/2017 200 3 - 0 4 RAJKUMAR RAM PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. ABKPP6644A ACIT, CIRCLE - 10 , PUNE 8. ITA N O.2683/PUN/2017 200 5 - 0 6 RAJKUMAR RAM PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. ABKPP6644A ACIT, CIRCLE - 10 , PUNE - 2 - 9. ITA NO.268 4 /PUN/2017 200 2 - 0 3 JAIWANTI RAMCHA ND PANJABI , C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. ACIT, CIRCLE - 10 , PUNE WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AFQPP5842 J 10. ITA NO.2685/PUN/2017 200 3 - 0 4 JAIWANTI RAMCHAND PANJABI, C/O SHAH KHANDELWAL A ND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AFQPP5842J ACIT, CIRCLE - 10 , PUNE 11. ITA NO.2686/PUN/2017 200 2 - 0 3 JEETENDRA SUNDERDAS PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. ACIT, CIRCLE - 10 , PUNE WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AHUPP3805H 12. ITA NO.2687/PUN/2017 200 3 - 0 4 JEETENDRA SUNDERDAS PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO .84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AHUPP3805H ACIT, CIRCLE - 10 , PUNE 13. ITA NO.2688/PUN/2017 200 5 - 0 6 JEETENDRA SUNDERDAS PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. ACIT, CIRCLE - 10 , PUNE WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AHUPP3805H 14. ITA NO.2689/PUN/2017 200 2 - 0 3 JEETENDRA SUNDERDAS U. PANJABI, LEGAL HEIR TO LATE SHRI SUNDER U. PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY R OAD, NEAR RTO, PUNE. PAN NO. AAZPP3797N ACIT, CIRCLE - 10 , PUNE 15. ITA NO.26 90 /PUN/2017 200 3 - 0 4 JEETENDRA SUNDERDAS U. PANJABI, LEGAL HEIR TO LATE SHRI SUNDER U. PANJABI, ACIT, CIRCLE - 10 , PUNE PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AAZPP3797N 16. ITA NO.2691/PUN/2017 200 2 - 0 3 RADHA MOTI PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. ADDPP6246M ACIT, CIRCLE - 10 , PUNE 17. ITA NO.2692/PUN/2017 200 3 - 0 4 RADHA MOTI PANJABI, ACIT, CIRCLE - 10 , 17. ITA NO.2692/PUN/2017 200 3 - 0 4 RADHA MOTI PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. ADDPP6246M ACIT, CIRCLE - 10 , PUNE - 3 - 1 8. ITA NO.2693/PUN/2017 200 2 - 0 3 GOVIND UDHARAM PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. ACIT, CIRCLE - 10 , PUNE WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AARPP2117N 19. ITA NO.2694/PUN/2017 200 3 - 0 4 GOVI ND UDHARAM PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. AARPP2117N ACIT, CIRCLE - 10 , PUNE 20. ITA NO.2695/PUN/2017 200 2 - 0 3 USHA GOVIND PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. ACIT, CIRCLE - 10 , PUNE WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. ABKPP6646C 21. ITA NO.2696/PUN/2017 200 3 - 0 4 USHA GOVIND PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN NO. ABKPP6646C ACIT, CIRCLE - 10 , PUNE 22. ITA NO.2697/PUN/2017 200 2 - 0 3 KAUSHALYA SUNDER PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, ACIT, CIRCLE - 10 , PUNE LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELL ESLEY ROAD, NEAR RTO, PUNE. PAN NO. AHLPP3774A 23. ITA NO.2698/PUN/2017 200 3 - 0 4 KAUSHALYA SUNDER PANJABI, C/O SHAH KHANDELWAL AND JAIN, CHARTERED ACCOUNTANTS, LEVEL - 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE. PAN N O. AHLPP3774A ACIT, CIRCLE - 10 , PUNE / APPELLANT BY : SHRI NILESH KHANDELWAL / RESPONDENT BY : SHRI RAJESH GAWLI / DATE OF HEARING : 31 . 10 .2018 / DATE OF PRONOUNCEMENT: 30 . 11 .201 8 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE 23 APPEALS UNDER CONSIDERATION FILED BY THE DIFFERENT ASSESSEES FOR MANY ASSESSMENT YEARS AS MENTIONED ABOVE. THE CORE ISSUE RAISED IN THE GROUNDS ARE IDENTICAL IN ALL THE ABOVE - MENTION ED 23 APPEALS - 4 - FILED BY THE RESPECTIVE ASSESSEES . ALL THESE 23 ASSESSEES BELONG TO ONE FAMILY ONLY . THE ISSUE RELATES TO PEN NY STOCK AND THE CORRECTNESS OF CLAIM OF EXEMPTION U/S 10(38) OF THE ACT IN RESPECT OF ALLEGED LONG TERM CAPITAL GAINS CLAIMED BY T HE ASSESSEE INVOLVING PURCHASE AND SALE OF THE PENNY STOCK. CONSIDERING THE COMMON ISSUES, FACTS AND COMMON ARGUMENTS OF THE ASSESSEE S COUNSEL ETC. ALL THESE APPEALS ARE BEING ADJUDICATED TOGETHER VIDE THIS COMPOSITE ORDER. FOR THE SAKE OF COMPLETENESS OF FACTS AND OTHER ISSUES , THE CASE OF RAMCHAND UDHARAM PANJABI IN ITA NO.2676/PUN/2017 FOR THE ASSESSMENT YEAR 2002 - 03 TAKEN AS THE LEAD CASE. 2 . GIVING BACKGROUND FACTS OF GROUP OF CASES, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS THE SECOND ROUND OF PROCEEDINGS BEFORE THE TRIBUNAL. FIRST ROUND OF THE PROCEEDINGS BEFORE AO/CIT(A)/ITAT FIRST ROUND OF THE PROCEEDINGS BEFORE AO/CIT(A)/ITAT 2.1 ASSESSEES CLAIMED EXEMPTION U/S 10(38) OF THE ACT IN RESPECT OF THE LTCG EARNED ON THE TRANSACTION OF PURCHASE AND SALE OF THE SHARES. ASSESSING OFFI CER AND CIT(A) DENIED THE CLAIM AND TREATED THE SAID INCOME AS UNDISCLOSED INCOME OF THE ASSESSEE. IN THE FIRST ROUND ON THAT ISSUE, T HE TRIBUNAL PASSED A COMBINED ORDER DATED 31.10.2012 IN THE SAME GROUP OF CASES VIDE ITA NO.659/PN/2011 IN CASE OF MOTI U . PUNJABI AND 24 OTHERS AND REMANDED THE ISSUE RAISED IN ALL THE APPEALS OF THE ASSESSEES TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS . THE CASE OF RAMCHANDRA U. PUNJABI IN ITA NO.669/PUN/2011 LISTED AT SL. NO. 15 OF THE SAID ORDER OF THE TRIBUNAL. WHILE PASSING THE SAID ORDER, THE TRIBUNAL ANALYZED AND CONSIDERED THE FACTS OF THE ASSESSEES CASES, ISSUES, ARGUMENTS OF THE LD. COUNSELS AND ALSO PERUSED VARIOUS RELEVANT DECISIONS OF THE TRIBUNAL AS WELL AS JUDGEMENTS OF THE HONBLE HIGH COU RTS . THE ISSUES RAISED IN ALL THE APPEALS WERE RESTORED TO THE FILE OF THE ASSESSING OFFICER AND ISSUED THE - 5 - DIRECTIONS/OBSERVATIONS. FOR WANT OF FACTS AND F OR THE SAKE OF COMPLETENESS, THE RELEVANT PARAGRAPHS STARTING FROM PARA 2 TO 45 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) ARE EXTRACTED HERE UNDER : - 2. FACTS OF THE CASE, IN BRIEF, ARE THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE ASSESSEES GROUP OF CASES ON 17 - 03 - 2006. THE NAME OF THE ASSESSEE WAS IN THE WARRANT OF AUTHORISATION U/S.132 DATED 14 - 03 - 2006. AFTER THE CENTRALISATION OF THE CASE, NOTICE U/S.153A WAS ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE TO THE SAME IT WAS STATED BY THE ASSESSEE THAT THE RETURNS FILED EARLIER MAY BE TREATED AS RETURNS FILED IN RESPONSE TO NOTICE U/S .153A. THE AO ISSUED STATUTORY NOTICE U/S.143(2)/147 TO THE ASSESSEE AND THE ASSESSEE FILED THE DETAILS FROM TIME TO TIME. AFTER EXAMINING THE EVIDENCES CONTAINED IN THE SEIZED MATERIALS AND ON THE BASIS OF SUBMISSIONS FILED FROM TIME TO TIME THE AO OBSE RVED THAT THE ASSESSEE GROUP CLAIMED LONG TERM CAPITAL GAINS ON ACCOUNT OF PURCHASES AND SALE OF SHARES OF SILICON VALLEY TECHNOLOGIES LTD., DATABASE FINANCE LTD. MEDIA MATRIX LTD, BAFFIN ENGINEERING PROJECT LTD., AND HAVEMORE FINANCE LTD. THE AO NOTED TH AT SRI MOTI UDHARAM PANJABI IS THE KEY PERSON WHO TAKES ALL INVESTMENT RELATED AND FINANCIAL DECISIONS IN RESPECT OF HIMSELF AND ALL THE FAMILY MEMBERS. IN RESPONSE TO QUERY RAISED BY THE AO IT WAS SUBMITTED BY SRI MOTI UDHARAM PANJABI THAT HE INVESTS FOR HIMSELF AND FOR ALL THE FAMILY MEMBERS AND THAT THE ACTIONS TAKEN BY HIM ARE WITHIN THE KNOWLEDGE AND CONSENT OF RESPECTIVE FAMILY CONCERNS AND PERSONS. THE AO THEREFORE CAME TO THE CONCLUSION THAT THE STATEMENT MADE BY SRI MOTI UDHARAM PANJABI IS BINDIN G ON ALL OTHER FAMILY MEMBERS WHICH HAS ALSO BEEN CONFIRMED BY VARIOUS FAMILY MEMBERS ON VARIOUS OCCASIONS AND IN THE STATEMENT RECORDED ON OATH FROM THEM. 3. THE AO NOTED THAT DURING THE COURSE OF SEARCH OPERATIONS CERTAIN EVIDENCES WERE SEIZED/IMPOUNDED WHICH GO TO SHOW THAT THE LONG TERM CAPITAL GAINS BOOKED FOR VARIOUS ASST. YEARS ARE NOT GENUINE AND THE SAME ARE BASED ON FICTITIOUS DOCUMENTS CREATED. EVIDENCES GATHERED FROM STOCK EXCHANGES AND BROKERS ARE ALSO IN LINE WITH THE EVIDENCES EMANATING FROM THE MATERIAL SEIZED/IMPOUNDED. SINCE THE ASSESSEE GROUP AS A WHOLE HAS SYSTEMATICALLY CREATED DOCUMENTS/CORRESPONDENCES IN ORDER TO GIVE COLOUR OF GENUINE LONG TERM CAPITAL CREATED DOCUMENTS/CORRESPONDENCES IN ORDER TO GIVE COLOUR OF GENUINE LONG TERM CAPITAL GAINS TO OTHERWISE FAKE TRANSACTIONS INVOLVING PURCHASE AND SALE OF VARIOUS SHARES , AND SINCE THE EVIDENCES FOUND ARE INTER RELATED AND THROW LIGHT ON THE MODUS OPERANDI ADOPTED, THE AO COVERING THE OVERALL SCHEME OF THINGS DISCUSSED THOROUGHLY THE MODUS OPERANDI ADOPTED BY THE ASSESSEE FOR PURCHASE AND SALE OF THE SHARES AND CAME TO TH E CONCLUSION THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN WHICH IS BENEFICIAL TO HIM SINCE THERE WAS NIL TAX OR TAX @10% ON LONG TERM CAPITAL GAIN. 4. THE AO NOTED THAT THE ASSESSEE HAS PURCHASED 15000 SHARES OF SILICON VALLEY TECHNOLOGIES LTD. @ RS.58.65 PER SHARE AND SOLD THESE @ RS.330/ - PER SHARE. THE SHARES HAVE BEEN PURCHASED FROM BARKHA INVESTMENTS WHICH WAS LOCATED AT PATNA. THE ASSESSEE COULD NOT GIVE ANY REASONS FOR PURCHASING SHARES AT PATNA WHICH HAS MAGADH STOCK EXCHANGE AND WHERE T HE ASSESSEE HAD NO LINKS. SRIMOTI U. PANJABI COULD NOT PROVIDE ANY DETAILS REGARDING CONTACT PERSONS IN M/S.BARKHA INVESTMENTS THROUGH WHOM THE TRANSACTION WAS DONE OR HOW CONTACT WITH THE BROKER WAS ESTABLISHED. ENQUIRIES REVEALED THAT NO TRADING TOOK P LACE AT THE MAGADH STOCK EXCHANGE PATNA (THROUGH WHICH SALE OF SHARES IS CLAIMED TO HAVE BEEN MADE) AFTER 17 - 02 - 2004 AS IT WAS SUSPENDED BY SEBI VIDE A NOTIFICATION ISSUED ON THAT DAY. AS SUCH IT WAS NOT EVEN A RECOGNISED STOCK EXCHANGE AS REQUIRED FOR CL AIMING EXEMPTION U/S.10(38). THE AO NOTED THAT SHARES ARE CLAIMED TO HAVE BEEN SOLD @ RS.330/ - PER SHARE WHEREAS SHARES OF THE COMPANY WERE TRADING AT AN AVERAGE RATE OF RS.87/ - PER SHARE ON BSE/NSE. MOREOVER, TRADING IN THE SHARE WAS VERY THIN, INDICATIN G LOW DEMAND FOR THE SHARE (ONLY 110 SHARES TRADED ON THE DATE WHEN THE ASSESSEE CLAIMS TO HAVE MADE THE SALE). WHEN CONFRONTED WITH THESE FACTS, THE ASSESSEE CHANGED HIS STAND AND CAME OUT WITH THE STORY THAT THE SALE WAS OFF - MARKET. THE AO NOTED THAT M/S. SILICON VALLEY TECHNOLOGY LTD. FITS THE PROFILE OF A TYPICAL PENNY STOCK. THE COMPANY HAD NO STANDING IN THE MARKET. 5. SIMILARLY IN THE CASE OF DATABASE FINANCE LTD. HE OBSERVED THAT THE SHARES WERE PURCHASED @ 10.10 TO 12.10 PER SHARE FROM DHYAN STOCK BROKING PVT. LTD./MOHIT SECURITIES. HE OBSERVED THAT THE SHARES HAVE BEEN PURCHASED IN CASH AND SHARES WERE TRANSFERRED ON 06 - 05 - 2002, 10 - 05 - 2002, 03 - 07 - 2002 AND 05 - 07 - 2002 TO D - MAT ACCOUNT JUST DEW DAYS BEFORE THE SALE. HE NOTED THAT M/S. DHYAN S TOCK BROKING PVT. LTD. THROUGH THEIR LETTER DATED 17 TH MARCH, 2006 CONFIRMED THAT NEITHER THEY NOR THEIR SUB BROKER M/S. MOHIT SECURITIES HAVE TRADED IN THE SHARES OF M/S. DATABASE FINANCE LTD. DURING FY 2001 - 02 & 2002 - 03. HE NOTED THAT IN THE CASE OF SOM E OF THE FAMILY MEMBERS THE SHARES WERE SOLD PRIOR TO THE DEMATERIALISATION. THE AO NOTED THAT DURING THE SURVEY ACTION AT M/S. RAMA BUILDERS AND DEVELOPERS THE STATEMENT OF THE ASSESSEE WAS RECORDED WHEREIN HE HAD OFFERED INCOME OF - 6 - RS.1,57,31,579/ - BEING INCOME EARNED FROM TRANSACTIONS IN DATABASE FINANCIAL SHARES AS ADDITIONAL INCOME IN THE HANDS OF RESPECTIVE FAMILY MEMBERS. HOWEVER, THE ASSESSEE HAS NOT DECLARED ANY SUCH INCOME WHILE FILING THE RETURN OF INCOME. THE AO NOTED THAT THE CASE OF THE ASSE SSEE FALLS WITHIN THE CATEGORY OF DENIAL OF DECLARATION MADE EARLIER AND IS NOT A CASE OF RETRACTION. THE AO ACCORDINGLY DISBELIEVED THE LONG TERM CAPITAL GAIN ON ACCOUNT OF SALE OF SHARES OF DATABASE FINANCE LTD. 6. IN THE CASE OF HAVEMORE CO. LTD. THE AO NOTED THAT SHARES OF THIS COMPANY HAVE BEEN PURCHASED FROM VIJAY BHAGWANDAS CO. HE OBSERVED THAT FLOPPIES AND CDS SEIZED DURING SEARCH ON THE PANJABI GROUP PROVIDED CLEAR EVIDENCE OF FABRICATION OF RECORDS TO GIVE THE COLOUR OF GENUINENESS TO THE TRAN SACTION IN RESPECT OF THESE SHARES. THE BROKER THROUGH WHOM PURCHASE IS CLAIMED TO HAVE BEEN MADE NAMELY, M/S. VIJAY BHAGWANDAS & CO. WAS DECLARED A DEFAULTER AND WAS BANNED FROM DOING ANY SHARE TRANSACTION AT BSE. AS IN OTHER CASES, DISTINCTIVE NUMBERS, SHARE CERTIFICATE NUMBERS OF THE SHARES PURCHASED, DATE OF TAKING DELIVERY, ETC. WERE NOT PROVIDED BY THE ASSESSEE AND NO CORRELATION BETWEEN SHARES CLAIMED TO HAVE BEEN PURCHASED AND SOLD COULD BE ESTABLISHED BY THE ASSESSEE. M/S. HAVEMORE FINANCE LTD. FITS THE PROFILE OF A TYPICAL PENNY STOCK. IT HAS NO STANDING IN THE MARKET. THE AO ACCORDINGLY DISBELIEVED THE TRANSACTIONS AS GENUINE. 7. IN THE CASE OF MEDIA MATRIX LTD. THE AO NOTED THAT THE ASSESSEE GROUP HAS PURCHASED 9600 SHARES OF MEDIA MATRIX LTD. FROM MOHIT SECURITIES IN JULY 2001 @ RS.59.11 TO RS.60.51 PER SHARE. THESE SHARES HAVE BEEN STEADILY SOLD @ 47.50 TO 57.50 PER SHARE AFTER ONE SHARE HAS BEEN SPLIT INTO TEN SHARES. HE OBSERVED FROM THE BROKERS NOTE PRODUCED BY THE ASSESSEE THAT TRA NSACTION HAS BEEN ENTERED THROUGH NATIONAL STOCK EXCHANGE. HOWEVER, NO PROOF OF PURCHASE OF SHARES WAS GIVEN. THE ASSESSEE PRODUCED LEDGER OF SUBHA FINANCIAL SERVICES PVT. LTD. ACCORDING TO WHICH THE ENTIRE PAYMENT WAS MADE BY CASH AND PHYSICAL DELIVERY WAS TAKEN. HE OBSERVED THAT THE SHARES WERE SOLD THROUGH DHYAN STOCK BROKING PVT. LTD. AND MOHIT SECURITIES WHO HAVE CATEGORICALLY STATED THAT THEY HAVE NOT DONE ANY PURCHASE AND SALE VIDE THEIR LETTER DATED 17 - 03 - 2006. 8. SIMILARLY HE NOTED THAT THE ASSES SEE GROUP HAS PURCHASED SHARES OF BAFFIN ENGINEERING PVT. LTD. THROUGH SUBHA FINANCIAL SERVICE PVT. LTD. @ RS.14.05 TO RS.15.05 PER SHARE. THIS TRANSACTION WAS ENTERED ON NATIONAL STOCK EXCHANGE THROUGH BROKER SUBHA FINANCIAL SERVICE PVT. LTD AND THIS WAS CONFIRMED BY THE ASSESSEE IN RESPONSE TO THE QUERY NO.105 AND 106. HOWEVER, THE ASSESSEE WAS UNABLE TO TELL THE NAMES OF THE FAMILY MEMBERS NO.105 AND 106. HOWEVER, THE ASSESSEE WAS UNABLE TO TELL THE NAMES OF THE FAMILY MEMBERS WHO WERE REGISTERED WITH THE BROKER. THE SHARES WERE STEADILY PURCHASED ONLINE AS STATED IN RESPONSE TO QUESTION NO.103. THE AO OBSERVED THAT THE ASSESSEE AT FIRST CLAIMED THAT THE SHARES WERE SOLD THROUGH THE STOCK EXCHANGE. HOWEVER, NSE VIDE LETTER DATED 07 - 11 - 2007 SQUARELY DENIED THAT M/S. SUBHA FINANCIAL PVT. LTD. WAS AFFILIATED TO THEM. LETTER FROM NSE ALSO M ENTIONED THAT NO SCRIP IN THE NAME OF M/S. BAFIN ENGINEERING PROJECTS LTD. WAS LISTED ON THAT STOCK EXCHANGE. THE ASSESSEE THEREAFTER CHANGED HIS STAND AND CLAIMED THAT THE SHARES WERE SOLD THROUGH M/S.MOHIT SECURITIES BY MEANS OF AN OFF - LINE TRANSACTION. SINCE THE TRANSACTION (IF ANY) WAS OFF - MARKET, THE AO WAS OF THE OPINION THAT EXEMPTION UNDER SECTION 10(38) IS NOT AVAILABLE. THE SHARES WERE CLAIMED TO HAVE BEEN SOLD AT RS.212.65 TO RS.280.50 WHEREAS, AT THE STOCK EXCHANGE, THEY WERE TRADING FOR RS. 18.82 TO RS.19.02 ON THAT DAY. THEREFORE THE AO CONCLUDED THAT THE ASSESSEE WAS NOT ABLE TO PROVE THE GENUINENESS EITHER OF PURCHASE OR SALE IN THIS CASE. HE NOTED THAT M/S. BAFFIN ENGINEERING PROJECTS LTD. FITS THE PROFILE OF A TYPICAL PENNY STOCK AND IT HAD NO STANDING IN THE MARKET. THE AO ACCORDINGLY DISBELIEVED THE TRANSACTION. 9. THE AO WROTE LETTERS TO VARIOUS BROKERS AND THE STOCK EXCHANGES. FROM THE REPLY RECEIVED FROM THOSE BROKERS AS WELL AS STOCK EXCHANGES HE OBSERVED THAT THERE COULD NOT HAVE BEEN ANY PURCHASE OF SHARES FROM SUBHA FINANCIAL SERVICE PVT. LTD. BECAUSE IT IS NOT REGISTERED WITH THE STOCK EXCHANGE. SIMILARLY BAFFIN ENGINEERING PVT. LTD. AND BAFNA ENGINEERING PROJECTS LTD. ARE NOT LISTED IN THE NATIONAL STOCK EXCHANGE, THEREF ORE, THE PURCHASES ARE BOGUS. AS FAR AS MOHIT SECURITIES IS CONCERNED THE AO NOTED THAT THE MODUS OPERANDI IS SAME AS IN THE CASE OF DATABASE FINANCE LTD. 10. FROM THE VARIOUS EVIDENCES GATHERED BY THE AO INCLUDING THE SEIZED MATERIAL, STATEMENT OF BROKER S DENYING THE TRANSACTIONS, REPLY RECEIVED FROM MAGADH STOCK EXCHANGE, BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCHANGE HE CAME TO THE CONCLUSION THAT THE ASSESSEE GROUP BOOKED BOGUS LONG TERM CAPITAL GAINS AND INTRODUCED UNACCOUNTED INCOME INTO THE BOOKS /BANK ACCOUNTS IN THE GUISE OF LONG TERM CAPITAL GAINS. FURTHER THE ASSESSEE GROUP HAD ADMITTED ADDITIONAL INCOME AT THE TIME OF SEARCH AND THE SAME WAS IN LINE WITH THE EVIDENCES WHICH GO AGAINST THE CASE OF THE ASSESSEE. THE SUBSEQUENT DENIAL/RETRACTIO N ACCORDING TO THE AO WAS NOT SUBSTANTIATED BY ANY CORROBORATIVE EVIDENCE AND REASONABLE EXPLANATION. IN VIEW OF THE ABOVE HE HELD THAT THE TRANSACTIONS INVOLVING PURCHASE AND SALE OF SHARES ARE SHAM AND THE LONG TERM CAPITAL GAINS REFLECTED IN THE RETURN S ARE NOT GENUINE. HE THEREFORE WAS OF THE OPINION THAT THE ENTIRE SALE PROCEEDS RECEIVED ON ACCOUNT OF SAID SALE TRANSACTIONS HAS TO BE TREATED AS UNDISCLOSED INCOME. HE FURTHER OBSERVED THAT THE - 7 - EVIDENCES GATHERED CLEARLY SHOW THAT THE BOGUS CONTRACT N OTES/BILLS WERE ISSUED BY THE BROKERS AND THE ACCOMMODATION ENTRIES PROVIDED FOR THE PURPOSE OF BENEFITTING THE ASSESSEE BY BOOKING LONG TERM CAPITAL GAINS. THIS ACCORDING TO THE AO OBVIOUSLY COMES AT A PRICE TO THE ASSESSEE AND NO BROKER IN THE MARKET WO ULD DO SUCH A THING BY ALSO RISKING THE LICENCE FREE OF COST. ACCORDING TO THE AO, THE MARKET RATE FOR THE ACCOMMODATION IS 6% OF THE SALE PROCEEDS RECEIVED TOWARDS THE COST OF ACCOMMODATION ENTRIES/BOGUS DOCUMENTS. HE OBSERVED THAT FOR THE IMPUGNED AS SESSMENT YEAR THE ASSESSEE HAD SHOWN THE LONG TERM CAPITAL GAIN OF RS.40,08,011/ - WHEREAS THE SALE PROCEEDS CREDITED IN THE BOOKS/BANK ACCOUNTS AMOUNT TO RS.43,24,036/ - . HE THEREFORE MADE ADDITION OF RS.43,24,036/ - AS UNDISCLOSED INCOME AND MADE FURTHER A DDITION OF RS.2,59,442/ - BEING COMMISSION @6%. ACCORDINGLY, THE AO MADE ADDITION OF RS. 45,83,478/ - ON ACCOUNT OF FICTITIOUS SALE OF SHARES AND FICTITIOUS CAPITAL GAIN INCLUDING BROKERAGE AND COMMISSION @6% THEREON. 11. IN APPEAL THE ASSESSEE STRONGLY CHA LLENGED THE ORDER OF THE CIT(A). IT WAS SUBMITTED THAT THE AO RELIED ON IRRELEVANT INFORMATIONS WHILE FINALISING THE ISSUE OF CAPITAL GAINS. IT WAS SUBMITTED THAT THE ASSESSEE HAD RECEIVED PHYSICAL DELIVERY OF SHARES, SHARES WERE DEMATERIALISED AND THEY WERE ACTUALLY TRANSFERRED FROM THE ACCOUNT OF THE ASSESSEE TO THE ACCOUNT OF THE BROKER. THE COMPANIES ISSUED LETTERS TO THE ASSESSEE CONFIRMING THE OWNERSHIP OF THE SHARES WHICH WERE FOUND BY THE DEPARTMENT DURING THE COURSE OF SEARCH PROCEEDINGS AND NO DEFECTS WERE POINTED OUT BY THE AO IN THE ENTIRE PURCHASE AND SALE OF SHARES. THE ASSESSEE ALSO FILED DETAILED EXPLANATION IN RESPECT OF INDIVIDUAL SHARES. VARIOUS DETAILS WERE FURNISHED BEFORE THE CIT(A). 12. ON THE BASIS OF THE DETAILS FURNISHED BY THE ASSESSEE THE LEARNED CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. THE AO IN HIS REMAND REPORT STATED THAT THE TRANSACTIONS IN RESPECT OF SALE AND PURCHASE OF SHARES WERE INGENUINE DUE TO NON - AVAILABILITY OF THE FOLLOWING IMPORTANT DOCUMENTS : (A) TH E DISTINCTIVE NUMBERS AND CERTIFICATE NUMBERS OF SHARES THAT WERE PURCHASED; (B) THE DATE(S) OF TAKING DELIVERY OF IDENTIFIABLE SHARES FROM ASSESSEES SHARE BROKER; (C) DELIVERY OF TRANSFER DEEDS DULY SIGNED BY REGISTERED SHARE HOLDER IN RESPECT OF SHARES THAT WERE TAKEN DELIVERY OF FROM THE SHARE BROKER; AND (D) IDENTIFICATION OF/RELATIONSHIP WITH SHARES GIVEN FOR D - MAT WITH THOSE (D) IDENTIFICATION OF/RELATIONSHIP WITH SHARES GIVEN FOR D - MAT WITH THOSE PURCHASED AND ULTIMATELY SOLD IN D - MAT FORM. 13. THE LEARNED CIT(A) GAVE A COPY OF THE REMAND REPORT TO THE ASSESSEE FOR HIS COMMENTS. IN THE COMMENTS THE ASSESSEE STATED THAT THE AO HAS NOT DEALT WITH THE VARIOUS ISSUES RAISED BY HIM WHICH INCLUDE NON GRANTING OF OPPORTUNITY TO CROSS EXAMINE THE EVIDENCES GATHERED AND RELIED UPON BY THE AO. RELYING ON VARIOUS DECISIONS IT WAS SUBMITTED THAT IN ABSENCE OF CROSS EXAMINATION, THE EVIDENCES RELIED ON BY THE AO WHILE FRAMING THE ASSESSMENT ORDER DO NOT CARRY ANY EVIDENTIARY VALUE. IT WAS SUBMITTED THAT THE AO HAD TAKEN SOME NEW PLEA IN THE REMAND PROCEEDINGS. IT WAS SUBMITTED THAT THE REMAND PROCEEDINGS SHOULD NOT BE USED BY THE AO TO IMPROVE OR TO ENLARGE THE ASSESSMENT ORDER. THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MUNDADA GROUP OF CASES WAS RELIED UPON BY THE ASSESSEE WHEREIN THE ISSUE OF PENNY STOCK HAS BE EN DEALT WITH. 14. THE CIT(A) GAVE OPPORTUNITY TO THE AO AS PER HIS REQUEST TO APPEAR PERSONALLY BEFORE HIM. THE AO STATED THAT THE COMPANIES WHOSE SHARES HAVE BEEN TRADED BY THE ASSESSEE DID NOT HAVE ANY TURNOVER IN THE RELEVANT PERIOD. THE EXPENSES CLA IMED WERE VERY MEAGRE. NO RESERVES WERE THERE. THEREFORE, THE MARKET VALUE OF THE SHARES SHOULD HAVE BEEN VERY NOMINAL AT THE TIME OF SALE. 15. IN RESPONSE TO THE ABOVE SUBMISSION OF THE AO BEFORE THE CIT(A) AS PER HIS LETTER DATED 08 - 02 - 2011 IT WAS SUBM ITTED BY THE ASSESSEE THAT FROM THE DATA FURNISHED BY THE AO IT IS OBVIOUS THAT THE COMPANIES IN WHICH THE ASSESSEE HAS INVESTED EXISTS AND THESE COMPANIES ARE TRADED IN THE STOCK EXCHANGE. IT WAS SUBMITTED THAT THE AO HAS NOT BROUGHT ON RECORD A SINGLE F ACT TO SHOW THAT THE TRANSACTIONS WITH THE BROKERS, PURCHASE OF SHARES, HOLDING THE SAME IN D - MAT ACCOUNT, SELLING OF SHARES, RECEIPT OF MONEY ETC. ARE BOGUS. THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF JAYAPRAKASH P. SURANA WAS RELIED U PON AND IT WAS SUBMITTED THAT THE INCOME HAS TO BE TREATED AS INCOME FROM CAPITAL GAIN AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES. 16. HOWEVER, THE LEARNED CIT(A) WAS NOT FULLY SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. AS FAR AS THE ALLEGATION OF THE ASSESSEE THAT HE WAS NOT GIVEN A COPY OF THE EVIDENCE GATHERED BY THE DEPARTMENT ON WHICH RELIANCE HAS BEEN PLACED AND THEREFORE IT IS AGAINST THE RULES OF NATURAL JUSTICE, THE LEARNED CIT(A) NOTED THAT THE ASSESSEE HAS NOT GIVEN SPECIFIC DETAILS OF THE EVIDENCE WHICH WAS USED AGAINST HIM AND A COPY OF WHICH WAS NOT GIVEN TO HIM. HE NOTED THAT THE VARIOUS EVIDENCES USED BY THE AO ARE THE SEIZED/IMPOUNDED - 8 - DOCUMENTS, INFORMATION GATHERED FROM STOCK EXCHANGES AND BROKERS AND THE STATEMENTS O F THE KEY PERSONS OF THE GROUP SRI MOTI UDHARAM PANJABI AND OTHER FAMILY MEMBERS. COPIES OF THESE EVIDENCES WERE AVAILABLE WITH THE ASSESSEE. THEREFORE, THE ALLEGATION OF THE ASSESSEE THAT EVIDENCES UTILISED AGAINST HIM WERE NOT GIVEN IS NOT CORRECT. 17. SO FAR AS THE ADDITION MADE IN RESPECT OF THE TRANSACTIONS OF VARIOUS SHARES THE LEARNED CIT(A) DISCUSSED THE ISSUE COMPANY WISE AND HELD THAT THE LONG TERM CAPITAL GAINS SHOWN BY THE VARIOUS FAMILY MEMBERS IN RESPECT OF SHARES OF SILICON VALLEY TECHNOLOG IES LTD., DATABASE FINANCE LTD., BAFFIN ENGINEERING PROJECTS AND HAVEMORE CO. LTD. ARE NOT GENUINE. HE NOTED THAT THE ASSESSEE DURING THE COURSE OF SURVEY HAD CATEGORICALLY STATED THAT TRANSACTIONS RELATING TO DATABASE FINANCE LTD. ARE BOGUS AND THEREFORE CAME OUT WITH THE DECLARATION OF UNDISCLOSED INCOME OF RS.1,57,31,579 ON ACCOUNT OF LONG TERM CAPITAL GAINS RELATING TO SHARES OF DATABASE FINANCE LTD. HOWEVER, HE HAD RETRACTED FROM SUCH STATEMENT. RELYING ON A COUPLE OF DECISIONS HE HELD THAT THE CONT ENTION OF THE ASSESSEE REGARDING THE GENUINENESS OF SHARES OF DATABASE FINANCE LTD. CANNOT BE ACCEPTED. THE SALE PROCEEDS CREDITED IN THE BOOKS/BANK ACCOUNT REPRESENTS UNDISCLOSED INCOME OF THESE PERSONS. THE AO HAS CORRECTLY TREATED THE SALE PROCEEDS ON ACCOUNT OF ALLEGED SALES OF SHARES AS UNDISCLOSED INCOME OF THE RESPECTIVE PERSONS. HE ACCORDINGLY UPHELD THE ACTION OF THE AO IN TREATING THE SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. HOWEVER, HE HELD THAT THE TRAN SACTION OF SHARES OF MEDIA MATRIX LTD. HAS TO BE TREATED AS SHORT TERM CAPITAL GAIN. 18. THE LEARNED CIT(A) ALSO UPHELD THE ACTION OF THE AO IN MAKING THE ADDITION, I.E.6% OF SALE PROCEEDS ON ACCOUNT OF COMMISSION FOR GIVING ACCOMMODATION ENTRIES AND FOR D OING BOGUS TRANSACTIONS/DOCUMENTATION ETC. OTHER THAN THE TRANSACTIONS RELATING TO THE SHARES OF MEDIA MATRIX LTD. WHICH ACCORDING TO HIM WAS GENUINE. 19. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUND S : 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS OF LAW, IT BE HELD THAT, ADDITION OF RS.45,83,478/ - MADE AND ASSESSING THE SAME UNDER THE HEAD INCOME FROM OTHER SOURCES ON ACCOUNT OF ALLEGED FICTITIOUS SALES OF SHARES AND FI CTITIOUS CAPITAL GAIN INCLUSIVE OF BROKERAGE AND COMMISSION AT 6% IS UNWARRANTED, UNJUSTIFIED AND CONTRARY TO THE FACTS PREVAILING IN THE CASE AND PROVISIONS OF LAW. IT FURTHER BE HELD THAT ADDITION MADE BY THE AO IN VIOLATION OF PROVISIONS OF LAW. IT FURTHER BE HELD THAT ADDITION MADE BY THE AO IN VIOLATION OF RULES OF NATURAL JUSTICE IS NOT TENABLE IN LAW. THE ADDITION MADE BY THE AO IN THIS RESPECT BE DELETED. IT FURTHER BE HELD THAT THE INCOME IS NOT ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AS IS HELD BY THE AO, THE INCOME IS ASSESSABLE UNDER THE HEAD CAPITAL GAIN AS IS DECLARED BY THE APPELLANT. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 2. WITHOUT PREJUDICE TO GROUND NO. 1 AND IN THE ALTERNATIVE ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CAUSE AND AS PER PROVISIONS OF LAW, IT BE HELD THAT, COMMI SSION AT 6% CONSIDERED BY THE AO AND CONFIRMED BY THE IST APPELLATE AUTHORITY IS IMPROPER, IMAGINARY AND ERRONEOUS AND IS BASED ON NO EVIDENCE. THE AMOUNT OF SO CALLED COMMISSION CONSIDERED BY THE AO & CONFIRMED BY THE IST APPELLATE AUTHORITY FOR THE PURP OSE OF COMPUTING THE INCOME BE DELETED. JUST AND PROPER RELIEF BE GRANTED TO THE APPELLANT IN THIS RESPECT. 20. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE AO AND THE CIT(A). HE SUBMITTED THAT ALL THE PAPERS RELATING TO PURCHASE AND SALE OF SHARES, SHARE CERTIFICATES ETC. WERE SEIZED BY THE DEPARTMENT AND DOCUMENTS IN RESPECT OF EACH AND EVERY TRANSACTION OF THE ASSESSEE GROUP IS IN THE SEIZED RECORD. HE SUBMITTED THAT THE SHARES WERE PURCHASED THROUGH BROKER S, SHARE CERTIFICATES WERE RECEIVED, SHARE CERTIFICATES BEARING THE SAME DISTINCTIVE NUMBERS WERE LATER SOLD FOR WHICH CAPITAL GAINS WERE EARNED. HE SUBMITTED THAT ALL THE SHARES PURCHASED WHETHER BY PAYMENT OF CONSIDERATION IN CASH OR CHEQUE HAVE BEEN TR ANSFERRED IN THE NAME OF THE ASSESSEE PRIOR TO MORE THAN ONE YEAR FROM THE DATE OF SALE WHICH IS EVIDENT FROM THE LETTERS OF THE COMPANY, SHARE TRANSFER DEEDS, SHARE CERTIFICATE ETC. 21. REFERRING TO THE PURCHASE OF SHARES OF DATABASE FINANCE LTD. BY THE A SSESSEE SRI GOVIND UDHARAM PANJABI AS A SAMPLE CASE THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO REVERSE OF PAGE 1 OF PAPER BOOK AND SUBMITTED THAT VIDE BILL NO.A01057915, DATED 28 - 04 - 2001 SRI GOVIND UDHARAM PANJABI HAS PURCHASED 700 SHARES OF DATABASE FINANCE LTD. REFERRING TO PAGE 2 OF THE PAPER BOOK THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO STATEMENT OF ACCOUNTS OF MOHIT SECURITIES ACCORDING TO WHICH THEY HAVE PURCHASED 700 SHARES OF DATABASE FINANCE LTD. FOR GOVIND UDHARAM PANJABI AS PER THE IR INVOICE DATED 27 - 04 - 2001 AND CONFIRMATION NO. A0105452. REFERRING TO REVERSE OF PAGE 2 HE SUBMITTED THAT MOHIT SECURITIES HAVE ISSUED MONEY RECEIPT FOR RS.9,687/ - PAID BY CASH ON ACCOUNT OF SHARE PURCHASE. REFERRING TO PAGE NOS. 6 AND 7 OF THE PAPER B OOK THE LEARNED COUNSEL FOR THE - 9 - ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE SHARE TRANSFER APPLICATION DATED 10 - 04 - 2001. REFERRING TO PAGE NO. 5 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE LETTER ISSUED BY DATABASE FINANCE LTD. TO SRI GOVIND UDHARAM PANJABI ON 07 - 05 - 2001 TRANSFERRING THE SHARES IN NAME OF GOVIND UDHARAM PANJABI. REFERRING TO PAGE NOS.8 TO 14 OF THE PAPER BOOK HE SUBMITTED THAT THE PHYSICAL SHARE CERTIFICATES ALLOTTED TO ONE MUKTHA NAGAR WERE SUBSEQUENTLY TRANSFERRED IN THE NAME OF GOVIND UDHARAM PANJABI WHICH CAN BE VERIFIED FROM THE REVERSE OF THE RESPECTIVE SHARE CERTIFICATES. REFERRING TO PAGE NO. 4 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE LETTER ISSUED BY DATABASE FINANCE LTD. TO SRI GOVIND UDHAR AM PANJABI REQUESTING HIM TO OPEN A D - MAT ACCOUNT FOR DEMATERIALISATION OF THE SHARES. REFERRING TO REVERSE OF PAGE NO.15 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE LETTER FROM DATABASE FINANCE LTD. APPROVING SPLITTING OF SHARES AND TRANS FER TO D - MAT ACCOUNT. REFERRING TO PAGE NO.15 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE ACKNOWLEDGEMENT ISSUED BY COSMOS COOPERATIVE BANK LTD. PUNE DATED 28 - 06 - 2002 ACKNOWLEDGING THE RECEIPT OF 7000 SHARES OF DATABASE FINANCE LTD. FOR DE MATERIALISATION BY GOVIND UDHARAM PANJABI. REFERRING TO REVERSE OF PAGE NO.18 HE DREW THE ATTENTION OF THE BENCH TO THE TRANSACTION STATEMENT OF COSMOS COOPERATIVE BANK LTD. SHOWING DEMATERIALISATION OF SHARES AND ITS SUBSEQUENT SALE FROM THERE ON 03 - 07 - 2 002. REFERRING TO PAGE NO.22 TO 36 OF THE PAPER BOOK THE LEARNED COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE INCOME TAX ACKNOWLEDGEMENT RECEIPT FOR ASST. YEAR 2002 - 03, COMPUTATION STATEMENT, COMPUTATION OF CAPITAL GAIN, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET ETC. FOR THE YEAR ENDING 31 - 02 - 2002. REFERRING TO PAGE NOS.45 TO 46 HE DREW THE ATTENTION OF THE BENCH TO THE WEALTH TAX RETURN FILED BY GOVIND UDHARAM PANJABI. REFERRING TO PAGE NOS. 16 AND 17 OF THE PAPER BOOK HE DREW THE ATT ENTION OF THE BENCH TO SALE BILL AND CONFIRMATION MEMO OF M/S. PRINCE SECURITIES FOR SALE OF SHARES. REFERRING TO REVERSE OF PAGE NO.17 HE DREW THE ATTENTION OF THE BENCH TO THE CHEQUE FOR RS.5,88,700/ - DATED 04 - 07 - 2002 RECEIVED TOWARDS SALE OF SHARES. R EFERRING TO PAGE NO.18 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE LEDGER ACCOUNT OF GOVIND UDHARAM PANJABI IN THE BOOKS OF M/S. PRINCE SECURITIES. REFERRING TO PAGE NO.19 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE LEDGER ACCOUNT OF INVESTMENT IN SHARES AS APPEARING IN THE BOOKS OF THE ASSESSEE. REFERRING TO PAGE NO. 20 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE LEDGER ACCOUNT OF M/S. PRINCE SECURITIES IN THE BOOKS OF THE ASSESSEE. REFERRING TO PAGE NOS. 37 AND 38 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO REFERRING TO PAGE NOS. 37 AND 38 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE WEALTH TAX ASSESSMENT ORDER FOR ASST. YEAR 2003 - 04. REFERRING TO PAGE NO.30 OF THE PAPER BOOK HE SUBMITTED THAT THE INVESTMENT IN SHARES FOR FINANCIAL YEAR 2001 - 02 ARE APPEARING IN THE REGULAR BOOKS. HE SUBMITTED THAT THE REGULAR RETURNS OF THE ASSESSEE HAVE BEEN FILED BEFORE DUE DATES AND THE INVESTMENT HAS BEEN DULY REFLECTED IN THE REGULAR BOOKS OF ACCOUNT. REFERRING TO REVERSE OF PAGE NO. 15 OF THE PAPER BOOK HE SUBMITTED THAT THE SAME SHOWS THE SPLIT OF SHARES AND ISSUE OF NEW SHARES DIRECTLY INTO THE D - MAT ACCOUNT. THE FACT THAT THE SHARES HAVE BEEN TRANSFERRED TO THE D - MAT ACCOUNT CAN BE VERIFIED FROM THE CLIENT ID WHICH IS THE SAME IN THE SAID LETTER AND THE ACKNOWLEDGEMENT OF DEPOSIT OF SHARES IN D - MAT ACCOUNT. 22. REFERRING TO PAGE NO. 32 OF THE PAPER BOOK - I HE DREW THE ATTENTION OF THE BENCH TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SMT.SUREKHA BHAWATIPRASAD MUNDADA AND OTHER RELATED CASES VIDE CONSOL IDATED ORDER DATED 16 - 06 - 2010 AND SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE INCOME FROM PURCHASE AND SALE OF SHARES HAS TO BE TREATED AS CAPITAL GAIN AS AGAINST BUSINESS INCOME TREATED BY THE AO. HOWEVER, IN THE SAID DECISION IT WAS HELD THAT THE DATE OF TRANSFER OF SHARES TO THE D - MAT ACCOUNT OF THE ASSESSEE WAS TO BE CONSIDERED AS THE DATE FOR COUNTING THE PERIOD OF HOLDING OF THE SHARES. IT HAS FURTHER BEEN HELD THAT WHEN THE ASSESSEE RECEIVE D SALE CONSIDERATION AND THE SAME HAS ENTERED THE BANK ACCOUNT OF THE ASSESSEE AND THE SAME IS RECEIVED INCIDENTAL TO THE INVESTMENT IN SHARES WHICH ARE CAPITAL ASSETS, THEREFORE, INCOME, IF ANY, GENERATED OUT OF THE SAME HAS TO BE TREATED AS CAPITAL GAINS , MAY BE LONG TERM OR SHORT TERM AND CERTAINLY NOT INCOME FROM OTHER SOURCES. 23. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SMT. SUNANDA JAYPRAKASH SURANA VIDE ITA NO. 1310/PN/2008 ORDER DATED 20 - 08 - 2010 HE SUBMITTED THAT THE TRIBUNAL FOLLOWING THE DECISION IN THE CASE OF MUNDADA GROUP HAS HELD THAT INCOME EARNED OUT OF SUCH PENNY STOCK HAS TO BE TAXED UNDER THE HEAD INCOME FROM CAPITAL GAINS IN VIEW OF THE FACT THAT IMPUGNED PENNY STOCK/SHARES ARE FINALLY FOUND CREDITED IN THE D - MAT ACCOUNT OF THE ASSESSEE. 23.1 REFERRING TO THE DECISION OF ITAT AGRA BENCH (THIRD MEMBER) IN THE CASE OF ITO VS. SMT. BIBI RANI BANSAL REPORTED IN 133 TTJ 394 (AGRA) (THIRD MEMBER) HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HEL D THAT ASSESSEE HAVING SUBMITTED COPIES OF CONTRACT NOTES, BILLS, SHARE CERTIFICATES ALONG WITH DETAILS OF DEMAND DRAFT ISSUED FROM THE ACCOUNT OF THE BROKER TO SUBSTANTIATE THE SALE OF SHARES MADE BY HER AND THE AO HAVING FAILED TO ESTABLISH THAT THE ASSE SSEE HAD INTRODUCED HER OWN UNACCOUNTED MONEY IN THE SHAPE OF SALE - 10 - PROCEEDS OF SHARES, THE TRANSACTION OF SALE OF SHARES CANNOT BE TREATED AS NON - GENUINE FOR THE REASON THAT THE BROKER MADE CONTRADICTORY STATEMENT AND THE ASSESSEE WAS NOT ALLOWED TO CROSS EXAMINATION AND, THEREFORE, THE SALE CONSIDERATION DECLARED BY THE ASSESSEE IS ASSESSABLE AS CAPITAL GAIN AND NOT AS INCOME FROM UNDISCLOSED SOURCES. 24. HE SUBMITTED THAT SIMILAR VIEW HAS BEEN HELD BY ITAT AGRA BENCH (THIRD MEMBER) IN THE CASE OF BAIJ NATH AGARWAL VS. ACIT REPORTED IN 133 TTJ 129 (AGRA) (TM). REFERRING TO THE DECISION OF THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE OF DALPAT SINGH CHOUDHARY VS. ACIT REPORTED IN 143 TTJ 500 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD T HAT WHERE THE ASSESSEE HAS PURCHASED SHARES MORE THAN ONE YEAR BEFORE THE DATE OF SALE AND PURCHASE WAS ACCEPTED AS GENUINE THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF SALE PROCEEDS OF SUCH SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE MERELY ON THE BASE OF STATEMENT OF THE BROKER THAT HE WAS ISSUING ACCOMMODATION ENTRIES. 25. HE ALSO REFERRED TO THE FOLLOWING DECISIONS : 1. PRASHANT PRALHAD ASHEKAR VS. ITO VIDE ITA NO.881/PN/2010 FOR A.Y 2003 - 04 ORDER DATED 28 - 03 - 2012. 2. MUKESH R. MAROLIA VS. ACIT RE PORTED IN 6 SOT 247 (ITAT MUMBAI). 3. ACCHYALAL SHAW VS. ITO REPORTED IN 121 TTJ 695. (ITAT KOLKATA) 4. ACIT VS. J.R. SOLVENT INDUSTRIES (P) LTD.REPORTED IN 24 DTR (CHD.) (TRIB) 387. 5. NISRAJ REAL ESTATE & EXPORT (P) LTD. VS. ACIT REPORTED IN 31 DTR (J P) (TRIB) 456. 6. DCIT VS. SMT. HANSA CHOUDHARY REPORTED IN 143 TTJ 76 (JD) (UO) HE SUBMITTED THAT THE ENTIRE TRANSACTION OF PURCHASE AND SALE OF SHARES HAVE BEEN MADE THROUGH THE D - MAT ACCOUNT. TRANSACTIONS HAVE BEEN MOSTLY MADE IN CHEQUES, SALES AND PURCHASE ARE THROUGH DIFFERENT BROKERS, THERE IS NO DOUBT ABOUT THE DELIVERY OF SHARES SINCE PURCHASE ARE THROUGH DIFFERENT BROKERS, THERE IS NO DOUBT ABOUT THE DELIVERY OF SHARES SINCE LETTERS HAVE BEEN RECEIVED FROM THE COMPANY, THE INVESTMENT OF SHARES ARE REFLECTED IN THE BALANCE SHEET OF RESPECTIVE YEARS, THEREFORE, THE GAIN FROM SUCH SALE OF SHARES HAS TO BE TREATED AS CAPITAL GAIN. 26. AS REGARDS THE ALLEGATION OF THE LEARNED CIT(A) THAT THE ASSESSEE HAD ADMITTED DURING THE SURVEY OPERATION THAT THE TRANSACTIONS IN SHARES OF DATABASE FINANCE LTD. ARE NOT GENUINE FOR WHICH HE HAD DECLARED AN AMOUNT OF RS.1,57,31,579/ - AS ADDITIONAL INCOME BUT WHILE FILING THE RETURN THE ASSESSEE DID NOT HONOUR SUCH DECLARATION, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DECLARATION WAS MADE IN A SURVEY PROCEEDING AND NOT DURING A SEARCH PROCEEDING . THE ASSESSEE HAD RETRACTED BY NOT DISCLOSING SUCH INCOME IN THE RETURNS FILED. HE SUBMITTED THAT AT THE TIME OF SEARCH/SURVEY ALL PAPERS RELATING TO THE PURCHASE AND SALE OF SHARES WERE FOUND AND THE ASSESSEE DID NOT PRODUCE A SINGLE PIECE OF ADDITIONA L EVIDENCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE SUBMITTED THAT IT IS NOT A CASE WHERE THE ASSESSEE CREATED ANY NEW EVIDENCE. HE SUBMITTED THAT THE REVENUE AUTHORITIES WENT BLINDLY ON THE BASIS OF THE DECLARATION MADE BY THE ASSESSEE DURING THE COURSE OF SURVEY. 27. REFERRING TO THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS AND SONS VS. CIT REPORTED IN 263 ITR 101 HE SUBMITTED THAT STATEMENT ELICITED DURING THE SURVEY OPERATION HAS NO EVIDENTIARY VALUE. REFERRING T O THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. S. KHADER KHAN SON REPORTED IN 300 ITR 157 HE SUBMITTED THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON W HO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THAT THE ASSESSEE SHOULD BE GIVEN PROPER OPPORTUNITY TO SHOW THAT THE BOOKS OF ACCOUNT DID NOT CORRECTLY DISCLOSE THE CORRECT STATE OF FACTS. REFERRING TO THE SAID DECISION HE SUBMITTED THAT THERE IS WIDE DIFFERENCE BETWEEN PROVISIONS OF SECTION 133A AND SECTION 132(4). ACCORDING TO LEARNED COUNSEL FOR THE ASSESSEE SECTION 132(4) ENABLES THE AUTHORISED OFFICER TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION CAN ALSO BE USED IN EVIDENCE UNDER THE ACT. HOWEVER, A STATEMENT RECORDED U/S.133A HAS GOT NO EVIDENTIARY VALUE FOR THE REASON THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENTIARY VALUE AS CONTEMPL ATED UNDER THE LAW. HE SUBMITTED THAT THE MATERIAL OR INFORMATION FOUND IN THE COURSE OF SURVEY PROCEEDING COULD NOT BE A BASIS FOR MAKING ANY ADDITION IN THE BLOCK ASSESSMENT. REFERRING TO THE SAID DECISION HE SUBMITTED THAT THE MATERIALS COLLECTED AND THE STATEMENT RECORDED DURING THE SURVEY U/S.133A ARE NOT CONCLUSIVE PIECE OF EVIDENCE BY ITSELF. - 11 - REFERRING TO THE CBDT INSTRUCTION DATED 10 - 03 - 2003 HE DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING : INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WH ERE ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH AND SEIZURE AND SURVEY OPERATIONS. SUCH CONFESSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETRACTED BY THE CONCERNED ASSESSEE S WHILE FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, ON CONFESSIONS DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION O F EVIDENCE OF INCOME WHICH LEADS TO INFORMATION IN WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE THE INCOME - TAX DEPARTMENT. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. FURTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS ALSO, THE ASSESSING OFFICERS SHOULD RELY UPON THE EVIDENCES/MATERIALS GATHERED DURING THE COURSE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT ORDERS. 28. REFERRING TO THE DECISION OF HONBLE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. BHOGILAL MULCHAND REPORTED IN 96 ITD 344 HE SUBMITT ED THAT EVEN STATEMENT GIVEN U/S.132(4) IS NOT CONCLUSIVE AND A PERSON GIVING STATEMENT CAN RETRACT THE SAME UNDER CERTAIN CIRCUMSTANCES. REFERRING TO THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF MAYANK PODDAR (HUF) VS. WEALTH TAX OFFICER RE PORTED IN 262 ITR 633 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD AS UNDER : 'THUS, UNLESS THE DEFINITION OF 'NET WEALTH' R/W THE DEFINITION OF 'ASSET' AS PROVIDED IN S. 2(M) AND S. 2(EA), RESPECTIVELY, INCLUDES A BUILDING LET OU T TO A TENANT USED FOR COMMERCIAL PURPOSES, THE SAME CANNOT BE SUBJECTED TO WEALTH - TAX. EVEN IF THE ASSESSEE HAD INCLUDED THE SAME IN HIS RETURN, THAT WOULD NOT PRECLUDE THE ASSESSEE FROM C1AIMINQ THE BENEFIT OF LAW. THERE CANNOT BE ANY ESTOPPEL AQAINST ST ATUTE. A PROPERTY, WHICH IS NOT OTHERWISE TAXABLE, CANNOT BECOME TAXABLE BECAUSE OF MISUNDERSTANDING OR WRONG UNDERSTANDING OF LAW BY THE ASSESSEE OR BECAUSE OF HIS ADMISSION OR ON HIS MISAPPREHENSION. IF IN LAW AN ITEM IS NOT TAXABLE, NO AMOUNT OF ADMISSION OR ON HIS MISAPPREHENSION. IF IN LAW AN ITEM IS NOT TAXABLE, NO AMOUNT OF ADMISSI ON OR MISAPPREHENSION CAN MAKE IT TAXABLE. THE TAXABILITY OR THE AUTHORITY TO IMPOSE TAX IS INDEPENDENT OF ADMISSION. NEITHER THERE CAN BE ANY WAIVER OF THE RIGHT BY THE ASSESSEE. THE DEPARTMENT CANNOT RELY UPON ANY SUCH ADMISSION OR MISAPPREHENSION IF IT IS NOT OTHERWISE TAXABLE.' 29. REFERRING TO THE DECISION OF HONBLE CHATTISGARH HIGH COURT IN THE CASE OF ITO VS. VIJAYA KUMAR KESAR REPORTED IN 327 ITR 497 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT CONFESSION MADE BY TH E ASSESSEE DURING SURVEY PROCEEDING IS NOT CONCLUSIVE AND IT IS OPEN TO THE ASSESSEE TO ESTABLISH BY FILING COGENT EVIDENCE THAT THE SAME WAS NOT TRUE AND CORRECT. REFERRING TO THE SAID DECISION HE SUBMITTED THAT RETRACTION MADE DURING THE ASSESSMENT PROC EEDING WAS ACCEPTED. THEREFORE, MUCH IMPORTANCE SHOULD NOT BE GIVEN TO THE STATEMENT OF THE ASSESSEE MADE DURING THE COURSE OF SURVEY WHICH HAS SUBSEQUENTLY BEEN RETRACTED BY NOT DISCLOSING THE SAME IN THE INCOME TAX RETURN FILED. 30. AS REGARDS THE REPOR T OF THE AO DURING REMAND PROCEEDINGS THAT DISTINCTIVE NUMBERS OF SHARES THAT WERE PURCHASED WERE NOT AVAILABLE AND IDENTIFICATION/RELATIONSHIP WITH SHARES GIVEN FOR D - MAT WITH THOSE PURCHASED AND ULTIMATELY SOLD IN THE D - MAT FORM WERE ALSO NOT AVAILABLE H E SUBMITTED THAT WHERE THE SHARES WERE RECEIVED IN CONSOLIDATED FORM, THOSE WERE SPLITTED SUBSEQUENTLY AND THEN TRANSFERRED TO THE D - MAT ACCOUNT WHICH WERE SUBSEQUENTLY SOLD. THIS ASPECT WAS NOT PROPERLY VERIFIED BY THE REVENUE AUTHORITIES. HE SUBMITTED THAT GIVEN AN OPPORTUNITY THE ASSESSEE IS IN A POSITION TO SATISFY THE AO THAT THE CONSOLIDATED SHARE CERTIFICATES OBTAINED AT THE TIME OF PURCHASE WERE SUBSEQUENTLY SPLITTED AND THE SAME SHARES CONTAINING THE SAME DISTINCTIVE NUMBERS WERE TRANSFERRED TO THE D - MAT ACCOUNT WHICH WERE SUBSEQUENTLY SOLD. 31. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. JAMNADEVI AGRAWAL REPORTED IN 328 ITR 656 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT THE FACT THAT SOME OF THE TRANSACTIONS WERE OFF - MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHAM TRANSACTIONS. REFERRING TO THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. AJAY SHANTILAL LALWANI & NEELESH SHANTILAL LALWANI R EPORTED IN 145 TTJ 511 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT MERELY BECAUSE THERE IS SUBSTANTIAL DELAY IN TRANSFERRING THE SHARES FROM THE DATE OF PURCHASE TO THE D - MAT ACCOUNT AND THE TRANSACTIONS NOT BEING ROUTED THROUGH STOCK EXCHANGE, THE AO WAS NOT JUSTIFIED IN DOUBTING THE DECLARED DATE OF PURCHASE - 12 - OF THE SHARES IGNORING THE EVIDENCES AVAILABLE WITH THE ASSESSEE IN HIS FAVOUR. THE EXEMPTION U/S.10(38) WAS ACCORDINGLY ALLOWED. 32. HE ALSO RELIED ON THE DECISION OF THE NAGP UR BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. KAMAL KUMAR S. AGRAWAL (INDL.) & OTHERS REPORTED IN 133 TTJ 818, THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. MRS. RASILA N. GADA VIDE ITA NO. 1773/M/2010 ORDER DATED 08 - 08 - 2012 F OR ASST. YEAR 2006 - 07 AND OTHER CONNECTED APPEALS, THE DECISION OF THE HONBLE JHARKHAND HIGH COURT IN THE CASE OF CIT VS. ARUN KUMAR AGRAWAL(HUF) IN TAX APPEAL NO. 04/2011 AND OTHER CONNECTED APPEALS AND THE DECISION OF THE AMRITSAR SMC BENCH IN THE CASE OF ACIT VS. ANOOP KUMAR REPORTED IN 94 TTJ 299. 33. THE LEARNED DR ON THE OTHER HAND STRONGLY SUPPORTED THE ORDERS OF THE AO AND THE CIT(A). HE SUBMITTED THAT ASSESSEE WAS UNABLE TO FURNISH DISTINCTIVE NUMBERS OF SHARES CLAIMED TO HAVE BEEN PURCHASED. TH ERE WAS NO PROOF OF DATE OF DELIVERY. THE ASSESSEE FAILED TO FURNISH PROOF OF TAKING DELIVERY OF SHARES DULY IDENTIFIED BY THEIR DISTINCTIVE NUMBERS. ASSESSEE FAILED TO PRODUCE TRANSFER DEEDS DULY SIGNED BY THE REGISTERED SHAREHOLDER OF THE SHARES TAKEN DELIVERY OF FROM THE SHARE BROKER. ASSESSEE FAILED TO PROVIDE SHARE CERTIFICATE NUMBERS. THE SHARES GIVEN FOR D - MAT COULD NOT BE RELATED TO THE SPECIFIC SHARES WHICH WERE PURCHASED AND TAKEN DELIVERY OF BY THE ASSESSEE. THE LEGAL RELEVANCE OF DISTINCTIVE NUMBERS, SHARE CERTIFICATE NUMBERS, THE SHARE TRANSFER FORMS, SHARE D - MAT REQUEST FORMS ETC. HAVE BEEN DISCUSSED IN DETAIL AND BROUGHT OUT VERY CLEARLY BY THE AO AND CONSTITUTE A PART OF THE CIT(A)S ORDER (PAGES 20 - 25). HE SUBMITTED THAT IT IS THE LEGAL REQUIREMENT FOR EACH SHARE TO HAVE A DISTINCTIVE NUMBER FOR IDENTIFICATION. SHARE TRANSACTIONS TAKE PLACE IN SPECIFIC SHARES, (DULY IDENTIFIED BY THEIR DISTINCTIVE NUMBERS) AND NOT ON THE BASIS MERELY OF TOTAL NUMBER OF SHARES BOUGHT OR SOLD). ALMOST AL L THE SHARES SOLD WERE DEMATTED JUST PRIOR TO SALE. IN ONE CASE, NAMELY, RADHA M. PANJABI, TRANSFER TO D - MAT ACCOUNT AND SALE ARE CLAIMED TO HAVE TAKEN PLACE ON THE SAME DAY (06 - 05 - 02). IN YET ANOTHER CASE, NAMELY KAUSHALYA S. PANJABI, SHARES ARE CLAIMED TO HAVE BEEN DEMATTED ON 06 - 05 - 02 BUT SALE WAS MADE ON 30 - 04 - 02, 02 - 05 - 02, AND 03 - 05 - 02, I.E. PRIOR TO BEING DEMATERIALISED, WHICH WAS NOT POSSIBLE UNDER THE RULES. SRI MOTI U. PANJABI, WHO, AS PER HIS OWN STATEMENT AS WELL AS THE STATEMENT OF OTHER FAMI LY MEMBERS, WAS TAKING ALL THE INVESTMENT DECISIONS, WHEN CONFRONTED WITH THE LETTER OF DHYAN STOCK BROKING PVT. LTD. AND OTHER EVIDENCE, ADMITTED AN AMOUNT OF RS.1,57,31,579/ - AS ADDITIONAL INCOME ON THIS COUNT OTHER EVIDENCE, ADMITTED AN AMOUNT OF RS.1,57,31,579/ - AS ADDITIONAL INCOME ON THIS COUNT IN HIS STATEMENT RECORDED WHEN SURVEY PROCEE DINGS WERE STILL ON. M/S. DATABASE FINANCE LTD. HAS NO STANDING IN THE MARKET. THERE WAS NO TURNOVER. EXPENSES CLAIMED WERE VERY MEAGRE. THERE WERE NO RESERVES, NO DIVIDEND DECLARED. IT WAS A TRUE PENNY STOCK AND FITTED THE PROFILE OF STOCKS THAT CAME TO ADVERSE NOTICE OF SEBI IN THE PENNY STOCKS SCAM. 34. THE LEARNED DR SUBMITTED THAT THERE IS NO DISPUTE TO THE FACT THAT MOST OF THE SHARES SOLD WERE HELD IN D - MAT ACCOUNT PRIOR TO SALE AND MONEY WAS RECEIVED BY CHEQUE. THE REVENUE IS NOT DOUBTING THE SALE OF THE SHARES. THE DISPUTE IS ONLY REGARDING THE PURCHASE OF SHARES WHICH ARE SUSPICIOUS AND DOUBTFUL. HE SUBMITTED THAT SOME OF THE BROKERS HAVE DENIED TO HAVE MADE ANY TRANSACTION FOR THE ASSESSEE AND THE SHARES DO NOT BEAR THE DISTINCTIVE NUMBERS . UNDER THESE CIRCUMSTANCES AND IN VIEW OF THE DETAILED DISCUSSION BY THE AO AND CIT(A) THE ORDER OF THE CIT(A) HAS TO BE UPHELD. 35. THE LEARNED DR FILED THE FOLLOWING CHART GIVING SCRIP - WISE DETAILS WHICH ARE AS UNDER : SUMMARY OF FINDINGS REGARDING P ENNY STOCK TRANSACTIONS OF SHRI MOTI U. PANJABI SL. NO. NAME OF COMPANY STATED TO HAVE BEEN PURCHASED FROM REMARKS 1. DATABASE FINANCE LTD. DHYAN STOCKBROKING PVT. LTD./MOHIT SECURITIES CLAIMED TO HAVE BEEN PURCHASED IN CASH. M/S. DHYAN STOCKBROKING PVT. LTD. THROUGH THEIR LETTER DATED 17 TH MARCH, 2006 CONFIRMED THAT NEITHER THEY, NOR THEIR SUB BROKER, M/S. MOHIT SECURITIES, TRADED IN THE SHARES OF M/S. DATABASE FINANCE LTD. DURING FY 2001 - 02 & 2002 - 03. ASSESSEE WAS UNABLE TO FURNISH DISTINCTIVE N UMBERS OF SHARES CLAIMED TO HAVE BEEN PURCHASED. THERE WAS NO PROOF OF DATE OF DELIVERY. THE ASSESSEE FAILED TO FURNISH PROOF OF TAKING DELIVERY OF SHARES DULY IDENTIFIED BY THEIR DISTINCTIVE NUMBERS. - 13 - ASSESSEE FAILED TO PRODUCE TRANSFER DEEDS DULY SIGNED BY THE REGISTERED SHAREHOLDER OF THE SHARES TAKEN DELIVERY OF FROM THE SHAREBROKER ASSESSEE FAILED TO PROVIDE SHARE CERTIFICATE NUMBERS THE SHARES GIVEN FOR D - MAT COULD NOT BE RELATED TO THE SPECIFIC SHARES WHICH WERE PURCHASED AND TAKEN DE LIVERY OF BY THE ASSESSEE THE LEGAL RELEVANCE OF DISTINCTIVE NUMBERS, SHARE CERTIFICATE NUMBERS, THE SHARE TRANSFER FORMS, SHARE D - MAT REQUEST FORMS ETC. HAVE BEEN DISCUSSED IN DETAIL AND BROUGHT OUT VERY CLEARLY BY THE AO AND CONSTITUTE A PART OF THE CIT(A)S ORDER (PAGES 20 - 25). IT IS THE LEGAL REQUIREMENT FOR EACH SHARE TO HAVE A DISTINCTIVE NUMBER FOR IDENTIFICATION. SHARE TRANSACTIONS TAKE PLACE IN SPECIFIC SHARES, (DULY IDENTIFIED BY THEIR DISTINCTIVE NUMBERS) AND NOT ON THE BASIS MERELY OF TOTA L NUMBER OF SHARES BOUGHT OR SOLD). ALMOST ALL THE SHARES SOLD WERE DEMATTED JUST PRIOR TO SALE. IN ONE CASE, NAMELY, RADHA M. PANJABI, TRANSFER TO D - MAT ACCOUNT AND SALE ARE CLAIMED TO HAVE TAKEN PLACE ON THE SAME DAY (06 - 05 - 02). IN YET ANOTHER CASE , NAMELY KAUSHALYA S. PANJABI, SHARES ARE CLAIMED TO HAVE BEEN DEMATTED ON 06 - 05 - 02 BUT SALE WAS MADE ON 30 - 04 - 02, 02 - 05 - 02, AND 03 - 05 - 02, I.E. PRIOR TO BEING DEMATERIALISED, WHICH WAS NOT POSSIBLE UNDER THE RULES. SRI MOTI U. PANJABI, WHO, AS PER HIS OWN SRI MOTI U. PANJABI, WHO, AS PER HIS OWN STATEMENT AS WELL AS THE STATEMENT OF OTHER FAMILY MEMBERS, WAS TAKING ALL THE INVESTMENT DECISIONS, WHEN CONFRONTED WITH THE LETTER OF DHYAN STOCKBROKING PVT. LTD. AND OTHER EVIDENCE, ADMITTED AN AMOUNT OF RS.1,57,31,579/ - AS ADDITIONAL INCOME ON THIS COUNT IN HIS STATEMENT RECORDED WHEN SEARCH/SURVEY PROCEEDINGS WERE STILL ON M/S. DATABASE FINANCE LTD. HAS NO STANDING IN THE MARKET. THERE WAS NO TURNOVER. EXPENSES CLAIMED WERE VERY MEAGRE. THERE WERE NO RESERVES, NO DIVIDEND DECLARED. IT WAS A TRUE PENNY STOCK AND FITTED THE PROFILE OF STOCKS THAT CAME TO ADVERSE NOTICE OF SEBI IN THE PENNY STOCKS SCAM. 2 SILICON VALLEY TECHNOLOGY LTD. BARKHA INVESTMENTS, PATNA NO REASONS GIVEN FOR PURCHASING SHARES THROUGH AN UNKNOWN BROKER LOCATED IN FAR AWA Y PATNA WHERE THE ASSESSEE HAD NO LINKS. SRI MOTI U. PANJABI COULD NOT PROVIDE ANY DETAILS REGARDING CONTACT PERSONS IN M/S. BARKHA INVESTMENTS THROUGH WHOM THE TRANSACTION WAS DONE OR HOW CONTACT WITH THE BROKER WAS ESTABLISHED. ENQUIRIES REVEALED TH AT NO TRADING TOOK PLACE AT THE MAGADH STOCK EXCHANGE PATNA (THROUGH WHICH SALE OF SHARES IS CLAIMED TO HAVE BEEN MADE) AFTER 7 - 02 - 2004 AS IT WAS SUSPENDED BY SEBI VIDE A NOTIFICATION ISSUED ON THAT DAY. AS SUCH IT WAS NOT EVEN A RECOGNISED STOCK EXCHANGE AS REQUIRED FOR CLAIMING EXEMPTION U/S.10(38). - 14 - SHARES ARE CLAIMED TO HAVE BEEN SOLD @ RS.230/ - PER SHARE WHEREAS SHARES OF THE COMPANY WERE TRADING AT AN AVERAGE RATE OF RS.87/ - PER SHARE ON BSE/NSE. MOREOVER, TRADING IN THE SHARE WAS VERY THIN, IN DICATING LOW DEMAND FOR THE SHARE (ONLY 110 SHARES TRADING ON THE DATE WHEN THE ASSESSEE CLAIMS TO HAVE MADE THE SALE). WHEN CONFIRMED WITH THESE FACTS, THE APPELLANT CHANGED HIS STAND AND CAME OUT WITH THE STORY THAT THE SALE WAS NOT OFF - MARKET. M/S. SILICON VALLEY TECHNOLOGY LTD. FITS THE PROFILE OF A TYPICAL PENNY STOCK. THE COMPANY HAD NO STANDING IN THE MARKET. 3 HAVEMORE FINANCE LTD. VIJAY BHAGWANDAS & CO. FLOPPIES AND CDS SEIZED DURING SEARCH ON THE PANJABI GROUP PROVIDED CLEAR EVIDENCE OF FABRICATION OF RECORDS TO GIVE THE COLOUR OF GENUINENESS TO THE TRANSACTION IN RESPECT OF THESE CHARGES. THE CDS SHOW THAT THE ASSESSEE THEMSELVES CREATED THE ENTIRE CORRESPONDENCE (INCLUDING THE CONTRACT NOTE) BETWEEN THE BROKER AND THEMSELVES. A DE TAILED ANALYSIS ON THE CONTENTS OF THE CDS IS AVAILABLE ON PAGES 49 - 52 OF CIT(A)S ORDER. THE BROKER THROUGH WHOM PURCHASE IS CLAIMED TO HAVE BEEN MADE NAMELY, M/S. VIJAY BHAGWANDAS & CO. WAS DECLARED A DEFAULTER AND WAS BANNED FROM DOING ANY SHARE TRA NSACTION AT BSE. AS IN OTHER CASES, DISTINCTIVE NUMBERS, SHARE CERTIFICATE NUMBERS OF THE SHARES PURCHASED, DATE OF TAKING DELIVERY, ETC. WERE NOT PROVIDED DATE OF TAKING DELIVERY, ETC. WERE NOT PROVIDED BY THE ASSESSEE AND NO CORRELATION BETWEEN SHARES CLAIMED TO HAVE BEEN PURCHASED AND SOLD COULD NE ESTABLISHED BY THE ASSESSEE M/S. HAVEMORE FINANCE LTD. FITS THE PROFILE OF A TYPICAL PENNY STOCK. IT HAS NO STANDING IN THE MARKET. 4 BAFFIN ENGINEERING PROJECTS LTD. SUBHA FINANCIAL PVT. LTD., (MEMBER NSE) THE ASSESSEE AT FIRST CLAIMED THAT THE SHARES WERE SOLD THROUGH THE STOCK EXCHANGE. HOWEVER, NSE VIDE LETTER DATED 07 - 11 - 2007, DENIED M/S. SUBHA FINANCIAL PVT. LTD. WAS AFFILIATED TO THEM. LATER FROM NSE ALSO MENTIONED THAT NO SCRIP IN THE NAME OF M/S. BAFIN ENGINEERING PROJECTS LTD. WAS LIS TED ON THAT EXCHANGE THE ASSESSEE THEREAFTER CHANGED HIS STAND AND CLAIMED THAT THE SHARES WERE SOLD THROUGH M/S. MOHIT SECURITIES BY MEANS OF AN OFF - LINE TRANSACTION SINCE THE TRANSACTION (IF ANY) WAS OFF - MARKET, EXEMPTION UNDER SECTION 10(38) IS NOT AVAILABLE. THE SHARES WERE CLAIMED TO HAVE BEEN SOLD AT RS.212.65 TO RS.280.50 WHEREAS, AT THE STOCK EXCHANGE, THEY WERE TRADING FOR RS.18.82 TO RS.19.02 ON THAT DAY IN THE RESULT, THE ASSESSEE WAS NOT ABLE TO PROVE THE GENUINENESS EITHER OF PU RCHASE OR SALE IN THIS CASE M/S. BAFFIN ENGINEERING PROJECTS LTD. FITS THE PROFILE OF A TYPICAL PENNY STOCK. IT HAD NO STANDING IN THE MARKET 5 MEDIA MATRIX LTD. MOHIT SECURITIES BROKERS NOTE PRODUCED. NO PROOF OF PURCHASE OF SHARES PROVIDED. - 15 - PAYMENT WAS MADE IN CASH AS PER LEDGER ACCOUNT PRODUCED BY ASSESSEE M/S. MEDIA MATRIX LTD. FITS THE PROFILE OF A TYPICAL PENNY STOCK. IT HAD NO STANDING IN THE MARKET. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD. 36. THE LEARN ED DR ALSO DISTINGUISHED THE VARIOUS DECISIONS RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE AND FILED THE FOLLOWING CHART : 1. MUKESH R. MAROLLA VS. ACIT,ITAT MUMBAI F BENCH, ORDER DATED 15 - 12 - 2005, (2006) 6 SOT 247 (MUMBAI) THE CASE IS DISTINGUISHA BLE FROM CASES OF THE PANJABI GROUP. IN THAT CASE, THERE WAS A CLEAR FINDING OF FACT THAT EVERY TRANSACTION HAD BEEN ACCOUNTED, DOCUMENTED AND SUPPORTED. EVEN EVIDENCES COLLECTED FROM THE THIRD PARTIES CONCERNED WERE IN THE ASSESSEES FAVOUR. IN THE PRE SENT CASE, MANY OF THE TRANSACTIONS ARE IN CASH, IN MANY CASES THIRD PARTIES INCLUDING STOCK EXCHANGES AND STOCK BROKERS HAVE MADE STATEMENTS WHICH GO AGAINST THE ASSESSEE AS BROUGHT OUT CLEARLY BY THE AO AND THE CIT(A). 2. ACCHYALAL SHAW VS. ITO, ITAT KOL KATA B BENCH ORDER DATED 16 - 01 - 2009, (2009) 121 TTJ (KOL) 695; (2009) 19 DTR 177 IN THIS CASE, IT IS THE SALE AND NOT PURCHASE WHICH WAS OFF - MARKET. THE ISSUE BEFORE THE TRIBUNAL WAS WHETHER SALE TRANSACTION WAS GENUINE. THE STOCK BROKERS HAD CONFIRMED THE SALE BY THE ASSESSEE. 3. ACIT VS. J.R. SOLVENT INDUSTRIES (P) LTD., ITAT CHANDIGARH B BENCH ,ORDER DATED 31 - 10 - 2008 (2009) 24 DTR (CHD) 387 THIS CASE TOO IS DISTINGUISHABLE. THE PURCHASE TRANSACTIONS AS PER CONTRACT NOTES WERE DULY SUPPORTED BY BAN K PASS BOOKS WHICH REFLECTED PAYMENTS MADE FOR PURCHASE OF SHARES. THEY WERE ALSO FOUND DULY REFLECTED IN INVESTMENT ACCOUNT OF THE ASSESSEE. 4. NISRAJ REAL ESTATE & EXPORT (P) PTD. VS. ACIT.ITAT JAIPUR A BENCH ,ORDER DATED 15 - 05 - 2009 (2009) 32 DTR (JP) 456 ,ORDER DATED 15 - 05 - 2009 (2009) 32 DTR (JP) 456 AO RELIED ON THE FACT THAT SUMMONS ISSUED BY HIM WERE RETURNED UNSERVED. BUT SINCE SALES HAD BEEN PROVED, IT WAS HELD THAT SURELY PURCHASES MUST HAVE BEEN MADE. EVEN SO, ITAT DOUBTED THE NATURE OF THE PURCHASES AND SUSTAINED INVOKING OF SECTION 145( 3) FOR MAKING BEST JUDGMENT ASSESSMENT. 5. DCIT VS. SMT. HANSA CHOUDHARY, ITAT JODHPUR BENCH,ORDER DATED 15 - 12 - 2011 (2012) 143 TTJ (JD) (UO) 76 WHOLLY DISTINGUISHABLE. THE PURCHASE OF SHARES WERE NOT DOUBTED BY AO BUT ACCEPTED. SALE CONSIDERATION TOO WAS ROUTED THROUGH BANKING CHANNELS. HENCE IT WAS HELD THAT SALE CONSIDERATION COULD NOT BE CALLED ASSESSEES OWN MONEY. 6. DALPAT SINGH CHOUDHARY VS. ACIT, ITAT JODHPUR BENCH, 30 - 11 - 2011, (2012) 143 TTJ (JD) 500 : (2012) 65 DTR 148 DISTINGUISHABLE (I) P URCHASE WAS NOT OF DOUBTFUL NATURE (II) SHARES WERE DULY REFLECTED IN BALANCE SHEET OF THE ASSESSEE 7. BAIJNATH AGARWAL VS. ACIT, ITAT AGRA (THIRD MEMBER), ORDER DATED 13 - 04 - 2010, (2010) 133 TTJ (AGRA) (TM) 129 : (2010) 40 SOT 475: (2010) 43 DTR 149 DIS TINGUISHABLE. ALLOTMENT OF SHARES TO THE ASSESSEE HAD BEEN DULY PROVED, AND THERE WAS NO DISPUTE REGARDING THE PURCHASE OF THE SHARES IN AN EARLIER YEAR. 8. SMT. SUNANDA JAYAPRAKASH SURANA VS. ITO, ITAT PUNE BENCH A BENCH (A.Y. 2005 - 06) ORDER DATED 20 - 0 8 - 2010 IN THIS CASE INFACT THE ITAT HAS DOUBTED THE VERACITY OF CONTRACT NOTES AND THE GROUND RAISED BY ASSESSEE WAS DISMISSED. 9. JAYAPRAKASH P. SURANA VS. ITO, ITAT PUNE B BENCH (A.Y. 2005 - 06 & 2006 - 07) ORDER DATED 30 - 11 - 2010. FOLLOWED BY PRECEDENT O F SUNANDA J. SURANA. HELD TO BE ONLY SHORT TERM CAPITAL GAIN AND NOT ENTITLED TO EXEMPTION UNDER SECTION 10(38). THIS WAS ON THE GROUND THAT ATLEAST THE SALES COULD NOT BE DOUBTED. 10. A. PRASHANT PRALHAD ASHTEKAR VS. ITO, ITAT PUNE A BENCH (A.Y. 2003 - 04) B. PRALHAD BABURAO ASHTEKAR VS. ITO, ITAT PUNE A BENCH (A.Y. 2003 - 04) ORDER DATED 28 - 03 - 2012 - 16 - DISTINGUISHABLE. IN HIS RETURN OF INCOME UNDER SECTION 153A ASSESSEE CLAIMED INCOME TO BE SHORT TERM CAPITAL GAIN (AND NOT LONG TERM CAPITAL GAIN WHICH IS E XEMPT UNDER SECTION 10(38). IN PRESENT CASE, ASSESSEE IS CLAIMING LONG TERM CAPITAL GAIN. THE ISSUE WAS WHETHER THE DIFFERENCE IN TAX BETWEEN LONG TERM CAPITAL GAIN (PER ORIGINAL RETURN OF INCOME) AND SHORT TERM CAPITAL GAIN PER 153A RETURN WAS CONCEALME NT SINCE IT WAS ONLY AFTER SEARCH/SURVEY THAT ASSESSEE CAME OUT WITH ADDITIONAL INCOME. THE CASE IS RELEVANT ONLY ON THE POINT OF CONCEALMENT. NOTABLY, THE A.Y. IN QUESTION WAS A.Y. 2003 - 04 AND THE ITAT FOUND THAT SHARES IN QUESTION WERE DULY SHOWN IN BA LANCE SHEET AS ON 01 - 04 - 2002. 11. ITO VS. SMT. BIBI RANI BANSAL, ITAT AGRA (THIRD MEMBER), ORDER DATED 13 - 04 - 2010 (2010) 133 TTJ (AGRA(TM) 394 : (2011) 44 SOT 500 : (2010) 43 DTR 279 WHOLLY DISTINGUISHABLE. PURCHASE OF SHARES WAS NOT IN DISPUTE AS THE COM PANY HAD DIRECTLY CONFIRMED THE SAME. 12. CIT VS. ARUN KUMAR AGRAWAL (HUF) VIDE TAX APPEAL NO.04/2011 ORDER DT. 13 - 07 - 2012 HIGH COURT OF JHARKHAND AT RANCHI. THE CASE IS WHOLLY DISTINGUISHABLE ON FACTS. IN THAT CASE THERE WAS A CLEAR FINDING BY THE CIT( A) THAT THE PURCHASE OF SHARES WERE SHOWN BY THE ASSESSEES IN THEIR BALANCE SHEET FOR THE LAST FIVE YEARS AND THE GENUINENESS OF THE BOOKS OF ACCOUNT HAD NEVER BEEN QUESTIONED. MOREOVER, THE PAYMENT FOR PURCHASE HAD BEEN MADE THROUGH BANK, WHICH WAS ALSO VERIFIED FROM THE BANK STATEMENT. 13. ACIT VS. ANOOP KUMAR 94 TTJ 299 (ITAT AMRITSAR SMC BENCH) ORDER DATED 28 - 12 - 2004 THE CASE IS ENTIRELY DISTINGUISHABLE. THE ISSUE BEFORE THE AMRITSAR BENCH IN THAT CASE WAS THE EFFECT OF RETRACTION OF A STATEMENT MADE UNDER 132(4). NO INCRIMINATING MATERIAL WAS FOUND TO JUSTIFY THE ADDITIONS MADE. IT WAS HELD BY THE ITAT THAT THE DISCLOSURE WAS BALD AND HAD NO LEGS TO STAND ON. IN THE PRESENT CASE THERE ARE A NUMBER OF FACTS AND CIRCUMSTANCES SUPPORTING THE AOS CON CLUSION. BESIDES, EVEN AS REGARDS THE EFFECT OF RETRACTION, THE MORE RECENT DECISION OF THE AHMEDABAD BENCH IN KANTILAL C. SHAH 14 TAXMANN.COM 108 (AHD) IS AGAINST THE ASSESSEE. 14. ACIT VS. KAMAL KUMAR S. AGRAWAL AND OTHERS 133 TTJ 818 (ITAT NAGPUR BENCH ) ORDER DATED 24 - 07 - 2009 BENCH ) ORDER DATED 24 - 07 - 2009 THIS CASE TOO IS ENTIRELY DISTINGUISHABLE ON FACTS. THE ASSESSEE HAD DISCLOSED ALL THE SHARE TRANSACTIONS IN THE RETURNS FOR RELEVANT YEARS IN THE NORMAL COURSE AND THE DEPARTMENT HAD ACCEPTED THE SAME. ALL THE PURCHASE TRANSACTI ONS WERE NOT OFF - MARKET TRANSACTIONS. THE PURCHASES HAD ALSO BEEN MADE AT PREVAILING MARKET RATE QUOTED BY RECOGNISED STOCK EXCHANGE. NONE OF THESE FACTS EXIST IN THE PRESENT CASE. 15. ITO VS. MRS. RASILA N GADA VIDE ITA NO.1173/MUM/2010 ORDER DATED 08 - 0 8 - 2012 (ITAT MUMBAI) THE CASE IS WHOLLY DISTINGUISHABLE ON FACTS. THERE WAS A CLEAR FINDING OF FACT THAT THE ASSESSEE HAD PURCHASED THE SHARES AT MARKET RATE, FOR WHICH A CONFIRMATION FROM BOMBAY STOCK EXCHANGE WAS ALSO AVAILABLE. THE INVESTMENT IN SHARE S HAD ALSO BEEN SHOWN IN THE BALANCE SHEET IN THE EARLIER YEAR. MOREOVER, THE AO HIMSELF HAD VERIFIED THE TRANSACTION AND HAD NOT CHALLENGED THE PURCHASE OF SHARES. HE, HOWEVER, HELD THAT THE LTCG CLAIMED WAS NOT GENUINE SINCE THE BROKER HAD NOT PAID SEC URITY TRANSACTION TAX AND BECAUSE THE SHARES WERE HELD JOINTLY IN THE ACCOUNT OF THE BROKER EVEN THOUGH THE PAYMENT HAD BEEN MADE. IN ALL THESE ASPECTS, THERE IS ABSOLUTELY NO PARALLEL BETWEEN THE SAID CASE AND THE CASES OF THE PANJABI GROUP. 36.1 THE LE ARNED COUNSEL FOR THE ASSESSEE IN HIS REJOINDER SUBMITTED THAT THE ALLEGATION OF THE LEARNED DR THAT CERTAIN SHARES WERE DEMATERIALISED SUBSEQUENT TO SALE IS NOT CORRECT. HE SUBMITTED THAT THE ASSESSEE HAD LODGED THE SHARES FOR DEMATERIALISATION PRIOR TO SALE. HOWEVER, SINCE IT TAKES SOME TIME CERTAIN SHARES WERE DEMATERIALISED LATER ON. REFERRING TO REVERSE OF PAGE 18 OF THE PAPER BOOK HE SUBMITTED THAT IN THE CASE OF SHARES OF DATABASE FINANCE IT IS MENTIONED IN THE D - MAT STATEMENT PENDING DEMAT. TH EREFORE, THE ASSESSEE HAD PRESENTED THE SHARES FOR DEMATERIALISATION MUCH EARLIER TO THE DATE OF SALE WHICH CAN BE VERIFIED FROM THE D - MAT STATEMENT ITSELF. HE SUBMITTED THAT IN VIEW OF THE VARIOUS DECISIONS CITED AND FACTS NARRATED, THE LONG TERM CAPITAL GAIN/SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE HAS TO BE ALLOWED. 37. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO DISALLOWED THE LONG TERM CAPITAL GAIN DISCLOSED BY THE ASSESSEE ON THE GROUND THAT THE EVIDENCES SEIZED/IMPOUNDED DURING THE COURSE OF SEARCH/SURVEY SHOW THAT THE LONG TERM CAPITAL GAINS BOOKED BY VARIOUS MEMBERS OF THE GROUP FOR DIFFERENT ASST. YEARS ARE NOT GENUINE AND THE SAME ARE BASED ON - 17 - FICTITIOUS DOCUMENTS CREATED. ACCORDING TO THE AO THE ASSESSEE GROUP WAS BOOKING BOGUS LONG TERM CAPITAL GAINS AND INTRODUCED UNACCOUNTED INCOME INTO THE B OOKS/BANK ACCOUNT IN THE GUISE OF LONG TERM CAPITAL GAINS WHICH IS ALSO AS PER THE EVIDENCES GATHERED FROM THE SEIZED MATERIAL, STATEMENT OF BROKERS DENYING TRANSACTIONS, REPLY RECEIVED FROM VARIOUS STOCK EXCHANGES ETC. IT IS ALSO THE CASE OF THE AO THAT THE ASSESSEE GROUP HAD ADMITTED ADDITIONAL INCOME AT THE TIME OF SEARCH/SURVEY AND SUCH ADMISSION WAS IN LINE WITH THE EVIDENCES WHICH GO AGAINST THE ASSESSEE. THE AO APART FROM TREATING THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS BOGUS TREATE D THE SAME AS INCOME FROM OTHER SOURCES AND MADE FURTHER ADDITION OF 6% OF THE AMOUNT CREDITED IN THE BOOKS AS COMMISSION EXPENSES FOR SUCH ACCOMMODATION. 38. WE FIND IN APPEAL THE LEARNED CIT(A) ALSO UPHELD THE ACTION OF THE AO. IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT ALL THE SHARE TRANSACTIONS ARE GENUINE, THE SALES HAVE NOT BEEN DOUBTED BY THE REVENUE AND THEY HAVE ONLY DOUBTED THE PURCHASE OF THE SHARES. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE ALL THE SHARES WERE ROUTED THROUGH THE D - MAT ACCOUNT. THE PAPERS RELATING TO PURCHASE AND SALE OF SHARES, SHARE CERTIFICATES WERE SEIZED BY THE DEPARTMENT AND DOCUMENTS IN RESPECT OF EACH AND EVERY SHARE TRANSACTION OF THE ASSESSEE GROUP IS IN THE SEIZED RECORD. IT IS THE A RGUMENT OF LEARNED COUNSEL FOR THE ASSESSEE THAT THE SHARES WERE PURCHASED, SHARE CERTIFICATES WERE RECEIVED, THE SHARE CERTIFICATES BEARING THE SAME DISTINCTIVE NUMBERS WERE LATER SOLD FOR WHICH CAPITAL GAINS WERE DECLARED. 39. WE FIND THE LEARNED DR AT THE TIME OF HEARING BEFORE US FAIRLY ADMITTED THAT MOST OF THE SHARES THAT HAVE BEEN SOLD ARE FROM THE D - MAT ACCOUNT AND THE ISSUE IS RELATING TO THE GENUINENESS OF PURCHASE AND DATE OF PURCHASE OF THESE SHARES. IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT CONSOLIDATED SHARE CERTIFICATES WERE OBTAINED AT THE TIME OF PURCHASE WHICH WERE SPLITTED INTO SMALLER DENOMINATION AND THE SAME DISTINCTIVE NUMBERS APPEARING IN THE SPLITTED SHARES WERE SOLD AFTER DEMATERIALISATION. IT IS ALSO THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT OFF - MARKET TRANSACTIONS HAVE BEEN HELD TO BE GENUINE BY VARIOUS COURTS. 40. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF AJAY SHANTILAL LALWANI & NEELESH SHANTILAL LALWANI (SUPRA) HAS HELD AS UNDER : 8. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT SOME MATERIAL FACTS ARE 8. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT SOME MATERIAL FACTS ARE UNDISPUTED THAT (I) SHARES PURCHASED WERE TRANSFERRED INTO D - MAT A/C. MAINTAINED BY THE ASSESSEE WITH HDFC BANK AND THE SHARES WERE SOLD ON THE DATES MENTIONED IN THE TABL E REPRODUCED HEREINABOVE. THE ONLY DISPUTE IS REGARDING THE DATE AND MODE OF ACQUISITION OF THOSE SHARES IN QUESTION. THE ASSESSEE WAS NOT ABLE TO PROVE TO THE SATISFACTION OF THE AUTHORITIES BELOW THAT THE SAID SHARES WERE ACTUALLY PURCHASED ON VARIOUS DA TES DURING THE F.Y. 2004 - 05. THE ASSESSEE HAS TRIED TO MEET OUT OBJECTIONS RAISED BY THE A.O IN THIS REGARD. THE A.O NOTED THAT THE SHARES WERE CREDITED IN D - MAT A/C. ON 12.4.2005, AFTER LAPSE OF MORE THAN 20 TO 24 MONTHS FROM THE DATE OF PURCHASE CONTRACT NOTE I.E. 4.4.2003 AND 25.11.2005. THE SUBMISSION OF THE ASSESSEE IN THIS REGARD REMAINED THAT THE ASSESSEE HAD PURCHASED THE SHARES OUTSIDE STOCK EXCHANGE DIRECTLY FROM THE BROKER IN PHYSICAL FORM. THE ASSESSEE WAS HAVING NO D - MAT A/C. WHEN THE SHARES WE RE PURCHASED. D - MAT A/C. WAS OPENED ON 30TH NOVEMBER 2004 IN THE F.Y. 2004 - 05. THE DATE OF PURCHASE OF SHARES IS 25.11.2003 AND NOT 25.11.2005. THE SAID DATE FALLS IN THE A.Y. 2006 - 07. IT WAS EXPLAINED THAT SHARES WERE KEPT IN THE PHYSICAL FORM TILL THE SH ARES WERE HELD BY THE ASSESSEE. WHEN THE ASSESSEE HAD DECIDED TO SELL THE SHARES, HE HAD SENT THE SHARES TO D.P. (STOCK HOLDING CORPORATION OF INDIA LTD.) FOR DEMATERIALIZATION. ASSESSEE HAD SUBMITTED A COPY OF D - MAT A/C. STATEMENT RECEIVED FROM THE D.P IN HIS FIRST SUBMISSION DATED 19.6.2008. THE D - MAT A/C. STATEMENTS REVEALED THAT THE SHARES D - MAT REQUEST WAS RECEIVED BY THE D.P. FROM THE ASSESSEE , AND AFTER SOME DAYS, D - MAT WAS CONFIRMED BY THE D.P. IT PROVES THAT THE SHARES WERE IN THE POSSESSION OF TH E ASSESSEE BEFORE DEMATERIALIZATION, EXPLAINED THE ASSESSEE. THE FACT THAT INVESTMENT IN PURCHASE OF SHARES DISCLOSED IN THE PRECEDING YEAR'S RETURN IS VERY WELL ACCEPTED BY THE DEPARTMENT. THE ASSESSEE ALL ALONG DISPLAYED THE CHARACTERISTICS OF AN INVESTO R AND THERE WAS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAD EVER INDULGED IN ANY MANIPULATION IN THE MARKET. IT WAS SUBMITTED THAT WHILE COMPARING THE DATE OF PURCHASE OF SHARES IN PHYSICAL FORM OF THE ASSESSEE IN THE GIVEN DATA WITH THE DATE OF CRE DIT IN D - MAT A/C., THE A.O ERRED IN TOTALLY IGNORING THE FACT THAT AT THE TIME OF PURCHASE OF AFORESAID COMPANIES SHARES, ASSESSEE WAS NOT HAVING D - MAT A/C. AND HENCE SHARES WERE PURCHASED IN PHYSICAL FORM WHICH WERE TRANSFERRED INTO D - MAT A/C. OPENED SUBS EQUENTLY. IT WAS SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, COPIES OF SHARE CERTIFICATES HELD BY THE ASSESSEE IN PHYSICAL FORM WERE ALSO PROVIDED TO THE A.O, WHICH CONTAINED COMPLETE RELEVANT DETAILS SUCH AS ADDRESS - 18 - OF LATEST OFFICE OF THE COMPANY, SIGNATURE OF THE AUTHORIZED SIGNATORY ALONG WITH TWO DIRECTORS' SIGNATURES, VALUE OF SHARES WITH PAID UP AMOUNT OF SHARES PURCHASED IN EACH COMPANY, DATE OF ISSUE OF CERTIFICATE, SERIAL NO., REGISTERED FOLIO, NUMBER OF SHARES WITH THEIR DISTINCTIVE NOS., D ATE OF TRANSFER OF SHARES IN THE NAME OF ASSESSEE (REFLECTED ON THE BACK SIDE OF THE CERTIFICATE) AND ALSO COPIES OF CONTRACT NOTE ALONG WITH BILLS ISSUED BY SHARE BROKER S.B. BHUTRA & CO. 9. IT WAS FURTHER SUBMITTED THAT DATE OF ALLEGED NON - EXECUTION OF 7 0 SCRIPTS OF 23.11.2008 RELIED UPON BY THE A.O IN THE ASSESSMENT ORDER, FALLS IN A.Y. 2009 - 10. SIMILARLY, THE A.O HAD NOT BEEN VIGILANT TO MENTION CORRECT NAME OF THE COMPANY IN THE ASSESSMENT ORDER. THE NAME OF THE COMPANY IS SHIV OM INVESTMENTS AND CONSU LTANCY LTD. AND NOT SHIV COMMUNICATIONS AS MENTIONED IN THE ASSESSMENT ORDER. THE A.O HAS THUS PROCEEDED ON THE BASIS NOT ONLY MISLEADING BUT INCORRECT FACTS. 10. REGARDING DENIAL OF STOCK EXCHANGE THAT S.B. BUTHRA & CO., HAD NOT EXECUTED ANY TRADE ON 2.4. 2003 IN OASIS CINE COMMUNICATION LTD. AND ALSO ON 23.11.2008 (CORRECT DATE IS 25.11.2003) IN SHIV OM COMMUNICATIONS IN ONLINE TRADING SYSTEMS OF THE EXCHANGE, THE SUBMISSION OF THE ASSESSEE REMAINED THAT THE WORDS USED 'ONLINE TRADING SYSTEM OF THE EXCHANG E' ARE VERY IMPORTANT AS THE ASSESSEE HAS ALSO STATED THE SAME CLEARLY TO THE A.O IN HIS STATEMENT THAT THE TRANSACTION IS NOT DONE BY HIM IN THE ONLINE SYSTEM OF THE EXCHANGE, BUT THE SHARES WERE PURCHASED OUTSIDE THE MARKET THROUGH THE BROKER. IT WAS SUB MITTED THAT THE A.O HAD ASKED THE COMPANY TO CONFIRM THE SHARE TRANSACTIONS. IN CASE OF SHIV OM INVESTMENTS AND CONSULTANCY LTD, THE COMPANY VIDE ITS LETTER DATED 29.11.2008 ADDRESSED TO THE COMPANY HAD CONFIRMED IN BLACK AND WHITE THAT THE SAID SHARES HAV E BEEN TRANSFERRED ON THE GIVEN DATE. IT WAS SUBMITTED THAT IT IS FOR THE ASSESSEE TO HOLD THE SHARES IN PHYSICAL FORM OR DEMATERIALIZED FORM. THE ASSESSEE COULD NOT BE PENALIZED EITHER FOR NOT OPENING D - MAT A/C. WHEN HE HAD PURCHASED SHARES IN THE PHYSICA L FORM. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT DURING THE INSPECTION OF RECORDS ALLOWED BY A.O. (AFTER COMPLETION OF ASSESSMENT AND FOR THE PURPOSE OF PREPARATION OF FIRST APPEAL), IT WAS NOTICED THAT THE BROKER M/S. S.B. BUTHRA & CO. IN THEIR LETTE R DT. 10.11.2008 IT WAS NOTICED THAT THE BROKER M/S. S.B. BUTHRA & CO. IN THEIR LETTE R DT. 10.11.2008 HAD INFORMED THE A.O THAT THEY HAD TRANSACTIONS WITH SHRI AJAY LALWANI DURING F.Y. 2003 - 04 AS PER LEDGER ACCOUNT FURNISHED WITH THE SAID LETTER. FROM THE COPY OF THE LEDGER A/C. EXTRACT RECEIVED FROM THE SAID BROKER, IT WOULD BE SEEN THAT THE NAMES OF BOTH THE COMPANIES THAT RELEVANT DETAILS I.E. QUANTITIES OF SHARES AND THE AMOUNT OF PURCHASES ARE DULY REFLECTED. IT WAS SUBMITTED THAT THE ASSESSEE IS ASSESSED TO TAX SINCE A.Y. 1991 - 92 HAVING SUBSTANTIAL INCOME OUT OF WHICH, HE HAD PURCHASE D SHARES; THE CONTRACT NOTE AND BILL ISSUED BY THE BROKER IS FULL AND COMPLETE SUPPORTING EVIDENCE FOR PURCHASE OF SHARES. 11. IN CASE OF OASIS CINE COMMUNICATIONS LTD., IT WAS SUBMITTED THAT SHARES WERE PURCHASED ON 4.4.2003, BUT GOT TRANSFERRED IN THE NA ME OF ASSESSEE ON 23.4.2004. THE DELAY WAS DUE TO SOME PROCEDURE UNDERGONE AS THE SHARE CERTIFICATES WERE RECEIVED AFTER TRANSFER IN THE NAME OF ASSESSEE BEARING ISSUE DATE OF 16.3.2004. IT WAS SUBMITTED THAT THE SHARES PURCHASED ARE RECORDED IN THE BOOKS OF ACCOUNT AND SHOWN IN THE BALANCE SHEET AS ON 31ST MARCH 2004. THE COPY OF THE BALANCE SHEET WAS SUBMITTED ALONG WITH THE RETURN OF INCOME FOR THE A.Y. 2004 - 05. ALSO, THE ASSESSEE HAD RECEIVED THE CONTRACT NOTES AND BROKER'S BILL IN THE SAID YEAR ONLY WI THOUT ANY DELAY. THE D.P'S DATA ALSO SHOWS THAT THE ASSESSEE HAD SENT THE SHARES IN PHYSICAL FORM BY SUBMITTING THE ORIGINAL SHARE CERTIFICATE TO THE D.P FOR DEMATERIALIZATION. 12. FROM ABOVE DISCUSSION, WE FIND THAT THE ASSESSEE HAD ADDRESSED THE DOUBTS R AISED ON THE DECLARED DATES OF PURCHASES OF ABOVE SHARES. THE LD. D.R. HAS NOT BEEN ABLE TO REBUT THE ABOVE EXPLANATION OF THE ASSESSEE BEFORE US. ADMITTEDLY, IN THE PRESENT CASE BEFORE US; THE ASSESSEE HAD PURCHASED THE SHARES OUTSIDE STOCK EXCHANGE DIREC TLY FROM THE BROKER IN PHYSICAL FORM THOUGH D - MAT A/C WAS OPENED ON BELATED DATE WITH THIS EXPLANATION THAT AT THE TIME OF PURCHASE OF SHARES, HE WAS NOT HAVING D - MAT A/C. AND ON OPENING OF D - MAT A/C., THE SHARES WERE TRANSFERRED TO THE SAME. BEFORE THE A. O COPIES OF THE SHARE CERTIFICATES HELD BY ASSESSEE IN PHYSICAL FORM WERE PROVIDED WHICH CONTAINED COMPLETE RELEVANT DETAILS SUCH AS ADDRESS OF REGISTERED OFFICE OF THE COMPANY, SIGNATURES OF THE AUTHORIZED SIGNATORY ALONG WITH 2 DIRECTORS' SIGNATURE, VALU E OF SHARES WITH PAID UP AMOUNT OF SHARES PURCHASED IN EACH COMPANY, DATE OF ISSUE OF CERTIFICATE, CERTIFICATE NO., REGISTERED - 19 - FOLIO, NUMBER OF SHARES WITH THEIR DISTINCTIVE NUMBERS, DATE OF TRANSFER OF SHARES IN THE NAME OF ASSESSEE AND ALSO COPIES OF CON TRACT NOTES ALONG WITH BILLS ISSUED BY SHARE BROKER S.B. BUTHRA & COMPANY. THE ASSESSEE ALSO FURNISHED RETURNS OF INCOME ALONG WITH BALANCE SHEET FOR THE A.YS. 2004 - 05 AND 2005 - 06 DURING WHICH PERIOD, ASSESSEE CLAIMED TO HAVE PURCHASED THOSE SHARES IN QUES TION, COPY OF CONTRACT NOTES ISSUED BY THE BROKER AND CONFIRMATIONS GIVEN BY SHIV OM INVESTMENTS AND CONSULTANCY LTD. AND BY BROKER. WE ARE THUS OF THE VIEW THAT MERELY BECAUSE THERE WAS SUBSTANTIAL DELAY IN TRANSFERRING THE SHARES INTO D - MAT A/C. FROM THE DATE OF PURCHASE AND THE TRANSACTIONS NOT ROUTED THROUGH CALCUTTA STOCK EXCHANGE , THE A.O WAS NOT JUSTIFIED IN DOUBTING THE DECLARED DATE OF PURCHASE OF THE SHARES IGNORING THE ABOVE EVIDENCES. IN THE CASE OF CIT VS. SMT. JAMNADEVI AGRAWAL & ORS., ITA NO . 40 OF 2010 (BOMBAY HIGH COURT - NAGPUR BENCH), COPY SUPPLIED, THE PROPERTY BROKER HAD STATED THE SHARE TRANSACTIONS AS SHAM AND BOGUS. HOWEVER, THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEE WERE IN CONFORMITY WITH THE MARKET SALES PR EVAILING ON THE RESPECTIVE DATES, THE RELATED COMPANY HAD CONFIRMED TO HAVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEE, SALE OF THE SHARES TO THE RESPECTIVE BUYERS WAS ALSO SUPPORTED BY THE DOCUMENTS, THE HON'BLE HIGH COURT HAS BEEN PLEASED TO UPHOLD THE FINDING OF THE TRIBUNAL THAT TRANSACTIONS WERE GENUINE. LIKEWISE IN THE CASE OF ACIT VS. KAMAL KUMAR S. AGRAWAL (IND.) & ORS (SUPRA) THAT NAGPUR BENCH OF THE TRIBUNAL HAS ALSO HELD THAT THE FACT THAT THERE WERE DIFFERENCE IN THE INFORMATION AS PER CON TRACT NOTES AND THAT RECEIVED FROM THE STOCK EXCHANGE IS NOT MATERIAL AS ADMITTEDLY SOME OFF MARKET TRANSACTIONS WERE NOT REPORTED TO THE STOCK EXCHANGE, THEREFORE SUCH TRANSACTIONS CANNOT BE TREATED AS SHAM MERELY ON ACCOUNT OF SOME DISCREPANCIES AND THE SALE PROCEEDS OF SHARES CANNOT BE TAXED UNDER SECTION 68 OF THE ACT. SIMILARLY, THE KOLKATA BENCH VS. ITO (SUPRA) HAS HELD THAT IN OFF MARKET TRANSACTIONS I N SHARES, ANY ENQUIRY FROM THE STOCK EXCHANGE WILL NOT YIELD RESULT IN FAVOUR OF REVENUE, REVENUE H AS TO SEE WHETHER THE SALE HAS BEEN EFFECTED OR NOT AS PER THE ACCEPTANCE AND ADMISSION OF THE RESPECTIVE STOCK BROKER. UNDER THESE CIRCUMSTANCES, WE SET ASIDE THE FIRST APPELLATE ORDER TO THIS EXTENT THAT SHARES IN QUESTION WERE NOT PURCHASED ON THE DECLA RED DATES AND DIRECT THE A.O TO ALLOW THE CLAIMED EXEMPTION U/S. 10(38) OF THE ACT ON THE LONG TERM CAPITAL GAIN SHOWN BY THE ASSESSEE ON THOSE SHARES. THE GROUNDS OF THE APPEALS PREFERRED BY THE SHOWN BY THE ASSESSEE ON THOSE SHARES. THE GROUNDS OF THE APPEALS PREFERRED BY THE ASSESSEE AGAINST THE DENIAL OF THE DEEMED EXEMPTION U/S. 10( 38) OF THE ACT ON LONG TERM CAPITAL GAIN ON SALE OF THE ABOVE SHARES ARE THUS ALLOWED. 13. LIKEWISE IN VIEW OF OUR DISCUSSION, WE DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER WHEREBY THE LD CIT(A) HAS RIGHTLY ACCEPTED THE COST OF PURCHASE/ACQUISITION OF SHARES AS STATED BY THE ASSESSEE. THE SAME IS UPHELD. THE GROUNDS OF THE APPEALS PREFERRED BY THE REVENUE ARE THUS REJECTED. CONSEQUENTLY, APPEALS PREFERRED BY THE REVENUE ARE DISMISSED AND THOSE PREFERRED BY THE ASSESSEE ARE ALLOWED. 41. WE FIND THE HONBLE JHARKHAND HIGH COURT IN THE CASE OF CIT VS. ARUN KUMAR AGRAWAL (HUF) (SUPRA) HAS HELD AS UNDER : 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE PARTIES AND WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED ASSESSING OFFICER WAS MUCH INFLUENCED BY THE ENQIURY REPORT WHICH MAY HAS BEEN BROUGHT ON RECORD BY THE EFFORTS OF THE ASSESSING OFFICER AND THAT ENQUIRY REPORT WAS PREPARED BY THE SEBI AND FROM THE OBSERVATIONS MADE BY THE ASSESSING OFFICER HIMSELF, IT IS CLEAR THAT AFTER GETTING THAT ENQUIRY REPORT, THE SEBI PRIMA FACIE FOUND INVOLVEMENT OF SOME OF THE SHARE BROKERS IN UNFAIR TRADE PRACTICES. EVEN IN A CASE WHERE THE SHARE BROKER WAS FOUND INVOLVED IN UNFAIR TRADE PRACTICE AND WAS INVOLVED IN LOWERING AND RISING OF THE SH ARE PRICE, AND ANY PERSON, WHO HIMSELF IS NOT INVOLVED IN THAT TYPE OF TRANSACTION, IF PURCHASED THE SHARE FROM THAT BROKER INNOCENTLY AND BONAFIDELY AND IF HE SHOW HIS BONAFIDE IN TRANSACTION BY SHOWING RELEVANT MATERIAL, FACTS AND CIRCUMSTANCES AND DOCUM ENTS, THEN MERELY ON THE BASIS OF THE REASON THAT SHARE BROKER WAS INVOLVED IN DEALING IN THE SHARE OF A PARTICULAR COMPANY IN COLLUSION WITH OTHERS OR IN THE MANNER OF UNFAIR TRADE PRACTICES AGAINST THE NORMS OF S.E.B.I AND STOCK EXCHANGE, THEN MERELY BEC AUSE OF THAT FACT A PERSON WHO BONAFIDELY ENTERED INTO SHARE TRANSACTION OF THAT COMPANY THROUGH SUCH BROKER THEN ONLY BY MERE ASSUMPTION SUCH TRANSACTIONS CANNOT BE HELD TO BE A SHAME TRANSACTION. FACT OF TINTED BROKER MAY BE RELEVANT FOR SUSPICION BUT IT ALONE NECESSARILY DOES LEAD TO CONCLUSION OF ALL TRANSACTION OF THAT BROKER AS TINTED. IN SUCH CIRCUMSTANCES, FURTHER ENQUIRY IS NEEDED AND THAT IS FOR INDIVIDUAL CASE. SUCH FURTHER ENQUIRY WAS NOT CONDUCTED IN THAT CASE. - 20 - 11. AT THIS JUNCTURE, IT WOULD B E RELEVANT TO MENTION HERE THAT IT IS NOT DISPUTED BY THE REVENUE BEFORE US THAT THE SHARES OF THESE ASSESSEES WERE ALREADY SHOWN IN THE EARLIER BALANCE SHEET SUBMITTED BY THE ASSESSEES, AND THEREFORE, IN THAT SITUATION, HOW THE REVENUE CONDEMNED THE TRANS ACTION EVEN ON THE GROUND OF STEEP RISE IN THE SHARES. IF WITHIN A PERIOD OF ONE YEAR, THE SHARE PRICE HAS RISEN FROM RS.5 TO 55 AND FROM 9 TO 160 AND ONE PERSON WAS HOLDING THE SHARES MUCH PRIOR TO THAT START OF RISE OF THE SHARE, THEN HOW IT CAN BE INFER RED THAT SUCH PERSON ENTERED INTO SHAM TRANSACTION FEW YEARS AGO AND PREPARED FOR GETTING THE BENEFIT AFTER FEW YEARS WHEN THE SHARE WILL START RISING STEEPLY. IN PRESENT CASE EVEN THERE WAS NO REASON FOR SUCH SUSPICION WHEN THE SHARES WERE PURCHASED YEARS BEFORE THE UNUSUAL FLUCTUATION IN THE SHARE PRICE. HERE IN THIS CASE, WE HAVE GIVEN EXAMPLE OF ONE OF THE TAX APPEAL WHEREIN THE SHARES WERE PURCHASED IN THE YEAR 2004 AND WERE SOLD IN THE YEAR 2006, WHICH IS SAID TO BE ONE OF THE CASE WHEREIN THE GAP IN THE PURCHASE AND SALE OF THE SHARES WAS NARROWEST. IN OTHER CASES AS WE HAVE NOTICED FROM THE VARIOUS ORDERS OF THE C.I.T(APPEALS) THAT, THE SHARES OF SOME OF THE COMPANIES WERE PURCHASED BY THE ASSESSEES EVEN FIVE YEARS AGO FROM THE TIME OF SALE AND THOSE PURCHASERS WERE ALREADY DISCLOSED IN THE BALANCE SHEET OF THE ASSESSEE, THEN FROM ANY ANGLE, IT IS PROVED THAT THE ASSESSEES HAD HELD THE SHARES MUCH PRIOR TO 12 MONTHS OF THE SALE OF THE SHARES. 12. HENCE, THESE APPEALS ARE DISMISSED. 42. WE FIND THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT.JAMNADEVI AGRAWAL & OTHERS REPORTED IN 328 ITR 656 HAS HELD AS UNDER : 10. THE SOLE CONTENTION RAISED BY THE REVENUE IN THESE APPEALS IS THAT THE ENTIRE LONG - TERM CAPITAL GAINS CLAIMED BY THE ASSESSEE RE PRESENTS UNDISCLOSED INCOME OF THE ASSESSEE BECAUSE : (A) MOST OF THE SALES OF THE SHARES EFFECTED BY THE GROUP ARE OF THE SAME COMPANIES AND THROUGH THE SAME BROKERS LOCATED AT CALCUTTA, (B) PRADEEP KUMAR DAGA, THE PRINCIPAL BROKER HAS CONFIRMED THAT T HE TRANSACTIONS WITH THE HALDIRAM GROUP ARE SHAM AND EXPLAINED THE MODUS OPERANDI AS FOLLOWS : OPERANDI AS FOLLOWS : 'PARTY A WANTS TO CLAIM LONG - TERM CAPITAL GAIN AND APPROACHES ME THROUGH A PERSON 'X'. MR. X APPROACHES ME WITH TWO NAMES, I.E. THE BUYER (A) AND THE SELLER (B ). MR. A BUYS THE SHARE OF THE COMPANY HELD BY THE SELLER B AT RS. 3 THROUGH MY TERMINAL. AFTER 365 DAYS OR ONE YEAR WHEN THE SHARE OF THE COMPANY HAS REACHED HIGH OF RS. 100, MR. X APPROACHES ME THROUGH MR. A WITH THE NAME OF A FRESH PURCHASER MR. C, WHO IS WILLING TO BUY THE SHARE OF MR. A AT RS. 100. MR. A (WHO WAS PREVIOUSLY THE PURCHASER AND WANTS TO AVAIL LTCG NOW) BECOMES THE SELLER AND SELLS HIS SHARES AT RS. 100 TO MR. C THROUGH MY TERMINAL. MR. C GIVES ME A CHEQUE OF RS. 100 FOR THE SHARES BOUGHT FROM MR. A AND SUBSEQUENTLY I PAY THE SALE PROCEEDS IN CHEQUE/DD TO MR. A AFTER DEDUCTING MY BROKERAGE. SUBSEQUENTLY, MR. A ON RECEIPT OF THE SALE PROCEEDS BY CHEQUES/DD PAYS MR. X, THE SAME PROCEEDS BY CHEQUES/DD PAYS MR. X THE SAME AMOUNT BY CASH (NO. 2 ACCOUNT), I.E. RS. 100 AND MR. X PAYS THE SAME TO MR. C. IN THIS WAY, MR. A CONVERTS THE BLACK MONEY INTO WHITE AND AVAILS LONG - TERM CAPITAL GAIN.' (C) THE SALE TRANSACTIONS WERE OFF - MARKET TRANSACTIONS AND THE CALCUTTA STOCK EXCHANGE BY ITS LETTER DT. 2 6TH MAY, 2005 HAS CONFIRMED THAT QUITE A FEW OF THE TRANSACTIONS CARRIED OUT BY SHRI PRADEEP KUMAR DAGA WERE NOT BORNE ON THE RECORDS OF THE EXCHANGE AND THAT THE DETAILS NOTED ON SOME OF THE OTHER CONTRACT NOTES DID NOT MATCH. (D) THERE WERE UNEXPLAINED CASH CREDITS IN SOME OF THE BUYERS' BANK ACCOUNTS PRIOR TO ISSUANCE OF CHEQUES TO THE ASSESSEES. 11. WE SEE NO MERIT IN THE ABOVE CONTENTIONS. THE FACT THAT THE ASSESSEES IN THE GROUP HAVE PURCHASED AND SOLD SHARES OF SIMILAR COMPANIES THROUGH THE SAME BR OKER CANNOT BE A GROUND TO HOLD THAT THE TRANSACTIONS ARE SHAM AND BOGUS, ESPECIALLY WHEN DOCUMENTARY EVIDENCE WAS PRODUCED TO ESTABLISH THE GENUINENESS OF THE CLAIM. - 21 - 12. FROM THE DOCUMENTS PRODUCED BEFORE US, WHICH WERE ALSO IN POSSESSION OF THE AO, IT I S SEEN THAT THE SHARES IN QUESTION WERE INFACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY HAS CONFIRMED TO HAVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEES. SIMILARLY, THE SALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ES TABLISHED 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 RATES PREVAILING ON THE RES PECTIVE 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. 13. THE STATEMENT OF PRADEEP KUMAR DA GA THAT THE TRANSACTIONS WITH THE HALDIRAM GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCING DOCUMENTARY EVIDENCE TO THE EFFECT THAT THE SHARES SOLD BY THE ASSESSEES WERE IN CONSONANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EV IDENCE, THE TRIBUNAL HAS ARRIVED AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT TO OUR NOTICE THAT THE FINDINGS RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE DOCUMENTARY EVIDENCE ON RECORD. 14. THE TRIBUNAL HAS FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE BANK ACCOUNTS OF SOME OF THE BUYERS OF SHARES CANNOT BE LINKED TO THE ASSESSEES. MOREOVER, IN THE LIGHT OF THE DOCUMENTARY EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE ASSESSEES WERE IN CONFORMITY 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 ABOVE FINDING RECORDED BY THE TRIBUNAL. 15. RELIANCE PLACED BY THE COUNSEL FOR THE REVENUE ON THE DECISION OF THE APEX COURT IN THE CASE OF SUMATI DAYAL (SUPRA) IS WHOLLY MISPLACED. IN THAT CASE, THE ASSESSEE THEREIN HAD CLAIMED INCOME FROM HORSE RACES AND THE FINDING OF FACT RECORDED WAS THAT THE ASSESSEE THEREIN HAD NOT PARTICIPATED IN RACES, BUT PURCHASED RECORDED WAS THAT THE ASSESSEE THEREIN HAD NOT PARTICIPATED IN RACES, BUT PURCHASED WINNING TICKETS AFTER THE RACE WITH THE UNACCOUNTED MONEY. IN THE PRESENT CASE, THE DOCUMENTARY EVIDENCE CLEARLY SHOWS THAT THE TRANSACTIONS WERE AT THE RATE PREVAILING IN THE STOCK MARKET AND THERE WAS NO QUES TION OF INTRODUCING UNACCOUNTED MONEY BY THE ASSESSEES. THUS, THE DECISION RELIED UPON BY THE COUNSEL FOR THE REVENUE IS WHOLLY DISTINGUISHABLE ON FACTS. 16. FOR ALL THE AFORESAID REASONS, WE HOLD THAT THE DECISION OF THE TRIBUNAL IS BASED ON FINDING OF FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL. ACCORDINGLY, ALL THESE APPEALS ARE DISMISSED. NO ORDER AS TO COSTS. 43. WE FIND IN THE INSTANT CASE SALE OF SHARES FROM THE D - MAT ACCOUNT HAS NOT BEEN PROVED TO BE FALSE . THE D ISPUTE IS ONLY REGARDING THE PURCHASE OF THE SHARES . SINCE THE ASSESSEE WAS NOT ABLE TO SATISFY THE REVENUE AUTHORITIES WITH THE DISTINCTIVE NUMBERS OF THE ORIGINAL SHARES WHICH WERE SUBSEQUENTLY DEMATERIALISED AND SOLD , THE LOWER AUTHORITIES HAD DOUBTED THE GENUINENESS OF THE TRANSACTIONS. IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT HE IS IN A POSITION TO DEMONSTRATE BEFORE THE AO THAT THE CONSOLIDATED SHARE CERTIFICATES RECEIVED ON PURCHASE OF THE SHARES IN PHYSICAL FORM WERE SUBSE QUENTLY SPLITTED INTO SMALLER DENOMINATION AND THE SPLITTED SHARES WERE SENT FOR DEMATERIALISATION AND THE SHARES BEARING THE SAME DISTINCTIVE NUMBERS WERE LATER SOLD. IN OTHER WORDS, THE DISTINCTIVE NUMBER OF THE SHARES SOLD AND THE SHARES PURCHASED ARE THE SAME. THEREFORE, WE, IN THE INTEREST OF JUSTICE, DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION THAT THE ASSESSEE HAS INFACT SENT THE CONSOLIDATED SHARE CERTIFICATES TO THE RESPECTIVE COMPANIES FOR SPLITTING AND THE DISTINCTIVE NUMBERS OF SUCH SPLITTED SHARE CERTIFICATES WHICH HAS GONE TO THE D - MAT ACCOUNT AND SUBSEQUENTLY SOLD ARE SAME. WE ACCORDINGLY RESTORE THE ISSUE TO THE FILE OF THE AO FOR DECIDING THE ISSUE AFRESH IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 44. SINCE WE RESTORE THE ISSUE TO THE FILE OF THE AO, THEREFORE, THE ISSUE OF COMMISSION IS ALSO RESTORED TO THE FILE OF THE AO . IN CASE THE ASSESSEE IS ABLE TO PROVE THAT THE DISTINCTIVE NUMBERS IN THE SPLITTED SHARES FROM THE CONSOLIDATED SHARE CERTIFICATES ARE THE SAME WHICH HAVE SUBSEQUENTLY BEEN DEMATERIALISED AND LATER SOLD THEN THE LONG TERM CAPITAL GAIN - 22 - DECLARED BY THE ASSESSEE HAS TO BE ALLOWED AS GENUINE . IN OTHER WORDS, THE CHARGING OF COMMISSION AS ACCOMMODATION ENTR Y WILL NOT SURVIVE. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 45. THE GROUNDS IN THE REMAINING APPEALS ARE IDENTICAL TO THE GROUNDS IN ITA NO. 659/PN/2011. WE HAVE ALREADY DECIDED THE ISSUE AND THE MATTER HAS BE EN RESTORED TO THE FILE OF THE AO WITH CERTAIN DIRECTIONS. FOLLOWING THE SAME RATIO, WE RESTORE ALL THE APPEALS TO THE FILE OF THE AO FOR DECIDING THE ISSUE AFRESH IN THE LIGHT OF OUR OBSERVATIONS IN ITA NO.659/PN/2011. 3. THUS, VIDE PARA 43 45 ABOVE EXTRACTED, IN THE FIRST ROUND OF THE PROCEEDINGS, THE TRIBUNAL CATEGORICALLY HELD THAT THERE IS NO DISPUTE ON THE SALE TRANSACTIONS WHICH YIELD THE IMPUGNED LTCGS. THE DISPUTE IS ONLY WITH REGARD TO THE PURCHASE TRANSACTIONS OF THE SHARES. ON THESE PURCH ASE TRANSACTIONS ALSO, THE TRIBUNAL CATEGORICALLY HELD THAT THE ONUS IS ON THE ASSESSING OFFICER TO PROVE THE SAID TRANSACTIONS ARE NOT GENUINE. THE TRIBUNAL HIGHLIGHTED THE ASSESSING OFFICERS DOUBTING ATTITUDE AND HELD THE SAME IS UNSUSTAINABLE IN LAW. THE TRIBUNAL ALSO APPROVED THE NEED FOR FIXING OF THE NEXUS OF SHARES PURCHASED, SHARES SPIT UP, SHARES DEMATERIALIZED, SHARES SOLD EVENTUALLY QUA THE DISTINCTIVE NUMBERS ETC. THE DEMATERIALIZED, SHARES SOLD EVENTUALLY QUA THE DISTINCTIVE NUMBERS ETC. THE TRIBUNAL WHILE RESTORING ALSO HELD IN PARA 44 THAT THE CLAIM OF LTCG HAS T O BE GENUINE AS THE ASSESSEE IS IN A POSITION TO ESTABLISH THE SAID NEXUS. THE ASSESSEE WAS IN A POSITION TO ESTABLISH THE SAID NEXUS IF MATTER IS RESTORED. EVENTUALLY AND THEREFORE, ISSUES WERE RESTORED BY THE TRIBUNAL IN THOSE BUNCH OF CASES. THIS DEC ISION OF THE TRIBUNAL WAS SUBJECT MATTER OF SCRUTINY BY THE HONBLE HIGH COURT TOO. FIRST ROUND OF THE PROCEEDINGS - BEFORE HONBLE MUMBAI HIGH COURT 4 . THUS, THE TRIBUNAL ALMOST HELD THAT THE CLAIM OF LTCGS IS GENUINE. AGGRIEVED WITH THE AFORESAID ORD ER OF THE TRIBUNAL, THE REVENUE FILED AN APPEAL BEFORE THE HONBLE BOMBAY HIGH COURT VIDE INCOME TAX APPEAL NO.1486 OF 2013, DATED 08.04.2015 IN THE CASE OF JAYNA ENTERPRISES PVT. LTD., WHO WAS ALSO APPELLANT BEFORE THE TRIBUNAL IN ITA NO.644/PN/2011. - 23 - THE HONBLE HIGH COURT APPROVED THE ORDER OF THE TRIBUNAL RESTORING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE RELEVANT PARAGRAPHS FROM THE JUDGEMENT OF THE HONBLE HIGH COURT ARE EXTRACTED HEREUNDER : - IN PARAS 44 AND 45 OF THE IMPUGNED ORDER, T HE TRIBUNAL HAS DIRECTED AS UNDER : - 44. SINCE WE RESTORE THE ISSUE TO THE FILE OF THE AO, THEREFORE, THE ISSUE OF COMMISSION IS ALSO RESTORED TO THE FILE OF THE AO. IN CASE THE ASSESSEE IS ABLE TO PROVE THAT THE DISTINCTIVE NUMBERS IN THE SPLITTED SHARES FROM THE CONSOLIDATED SHARE CERTIFICATES ARE THE SAME WHICH HAVE SUBSEQUENTLY BEEN DEMATERIALISED AND LATER SOLD THEN THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE HAS TO BE ALLOWED AS GENUINE . IN OTHER WORDS, THE CHARGING OF COMMISSION AS ACCOMMOD ATION ENTRY WILL NOT SURVIVE . THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 45. THE GROUNDS IN THE REMAINING APPEALS ARE IDENTICAL TO THE GROUNDS IN ITA NO. 659/PN/2011. WE HAVE ALREADY DECIDED THE ISSUE AND THE MAT TER HAS BEEN RESTORED TO THE FILE OF THE AO WITH CERTAIN DIRECTIONS. FOLLOWING THE SAME RATIO, WE RESTORE ALL THE APPEALS TO THE FILE OF THE AO FOR DECIDING THE ISSUE AFRESH IN THE LIGHT OF OUR OBSERVATIONS IN ITA NO.659/PN/2011. 2] WE ARE REALLY SURPRIS ED AS TO HOW THE REVENUE CAN CHALLENGE SUCH AN ORDER OF THE TRIBUNAL RENDERED ON 31 ST OCTOBER, 2012 WHERE IT DOES NOT RAISE ANY SUBSTANTIAL QUESTIONS OF LAW. 3] WHEN WE WERE ABOUT TO PASS AN ORDER, OUR ATTENTION WAS INVITED TO A DIVISION BENCH ORDER OF THI S COURT PASSED ON 15 TH MARCH, 2013 IN INCOME TAX APPEAL (L) NO.416 OF 2013 ON SIMILAR QUESTIONS BUT IN CASE OF A DIFFERENT ASSESSEE, NOT ADMITTED BY THIS COURT AND THE APPEAL OF THE REVENUE WAS DISMISSED. 4] FOLLOWING THAT VIEW AND EVEN OTHERWISE FINDING T HAT THE DIRECTIONS REPRODUCED DO NOT RAISE ANY SUBSTANTIAL QUESTIONS OF LAW, WE PROCEED TO DISMISS THE APPEAL . 5] WE PROCEED TO DISMISS NOT ONLY THE PRESENT APPEAL BUT THE FOLLOWING APPEALS : - 5] WE PROCEED TO DISMISS NOT ONLY THE PRESENT APPEAL BUT THE FOLLOWING APPEALS : - INCOME TAX APPEAL NOS.1569/2013, 1589/2013, 1591/2013, 1617/201 3, 1432/2013, 1504/2013, 1584/2013 AND 483/2014. 6] AS BOTH SIDES CONCEDE THAT SIMILAR QUESTIONS ARE RAISED BY THE REVENUE IN THOSE APPEALS, THEY WERE BEING NOT ADMITTED AND THE APPEAL OF THE REVENUE HAVING BEEN DISMISSED. THE PARTIES CONCEDED THAT ALL TH ESE APPEALS MAY BE LISTED ON TODAYS BOARD FOR ADMISSION AND DISMISSED BY THIS COMMON ORDER. THEY ARE, ACCORDINGLY, DISMISSED. 5 . FROM THE ABOVE, IT IS EVIDENT THAT THE HONBLE JURISDICTIONAL HIGH COURT DID NOT ADMIT THE APPEALS OF THE REVENUE. THE PAR A 44 AND 45 OF THE ORDER OF THE TRIBUNAL WERE EXTRACTED IN THE JUDGEMENT WHILE DISMISSING THE APPEAL OF THE REVENUE . IN EFFECT, SPECIFIC FINDING S /DIRECTIONS OF THE TRIBUNAL STAND AFFIRMED BY THE HONBLE HIGH COURT IN THE SAID JUDGEMENT DATED 08.04.2015. HONBLE HIG H COURT ALSO EXPRESSED THAT THE SURPRISE AT THE ORDER OF THE TRIBUNAL IS CHALLENGED BY THE REVENUE INSTEAD OF COMPLYING WITH THE DIRECTIONS OF THE TRIBUNAL. FURTHER, T HE CIT(A) WAS NOT FAIR IN NOT APPRECIATING THE SAID JUDGEMENT OF HONBLE HIGH COURT. LD. AR SUMMONED UP BY SUMMONING THAT WHILE ASSESSING OFFICER FAILED TO COMPLY WITH THE ORDER OF THE JURISDICTIONAL TRIBUNAL AND THE CIT(A) WAS NOT OBJECTED TO THE JUDGEMENT OF THE HIGH COURT. - 24 - 6 . BRINGING MY ATTENTION TO THE CONTENTS OF PARA 43 O F THE ORDER OF THE TRIBUNAL (SUPRA), LD. COUNSEL FOR THE ASSESSEE INFORMED THAT THE SATISFACTION OF THE ASSESSING OFFICER QUA THE CONSOLIDATED/SPECIFIC SHARE CERTIFICATES AND DISTINCTIVE NUMBERS OF SUCH SPLITTED SHARE CERTIFICATES AS APPEARED IN THE D - MAT ACCOUNT , IS THE AREA OF INVESTIGATION BY THE ASSESSING OFFICER IN THE SECOND ROUND. REFERRING TO PARA 44 OF THE TRIBUNAL, LD. AR SUBMITTED THAT THE TRIBUNAL ALMOST HELD THAT THE CLAIM OF THE LTCG OF THE ASSESSEE IS GENUINE. HOWEVER, THE ASSESSING OFFICER DID NOT G I VE EFFECT TO THE SAID DIRECTION OF THE TRIBUNAL IN ITS SPIRIT . THE LD. COUNSEL INFORMED THAT THE ENTIRE ASSESSMENT PROCEEDINGS WERE MADE OPEN AND THE ADDITIONS WERE REPEATED IN THE ORDER OF THE ASSESSING OFFICER IN ALL THE SE CASES INCLUDING THE CASE OF RAMCHAND UDHARAM PANJABI AND IT IS ONE OF THE 23 APPELLANT/ASSESSEE BEFORE ME. FURTHER, T HE CIT(A) CONFIRMED THE SAME. SECOND ROUND OF PROCEEDINGS BEFORE THE AO/CIT(A) SECOND ROUND OF PROCEEDINGS BEFORE THE AO/CIT(A) 7 . IN THE ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 254 OF THE ACT BEFORE T HE ASSESSING OFFICER, ASSESSEE ATTENDED TO THE SAID PROCEEDINGS AND MADE VARIOUS SUBMISSIONS. ASSESSEE HIGHLIGHTED THE REQUIREMENT OF ASSESSING OFFICER TO COMPLY WITH THE DIRECTIONS OF THE TRIBUNAL AND MENTIONED THE TRIBUNALS FINDING ON THE GENUINE OF TH E CLAIM OF THE CAPITAL GAIN ON THE GIVEN FACTS OF THESE BUNCH OF CASES. 8 . IN THE ASSESSMENT ORDER, ASSESSING OFFICER NARRATED THE BACKGROUND FACTS AND DEVELOPMENTS HELD DURING THE FIRST ROUND OF THE ASSESSMENT PROCEEDINGS, DISCUSSED THE FACTS OF EACH OF THE PENNY STOCKS (PARA 1 TO 10). ASSESSING OFFICER ALSO MENTIONED ABOUT THEIR DECISION TO FILE APPEAL BEFORE HONBLE HIGH COURT WITH THE GROUNDS EXTRACTED IN PARA 11 OF THE ORDER OF THE ASSESSING OFFICER. IN THE SAID GROUNDS, THE GENUINENESS OF THE LTCG IS THE CORE ISSUE AND CORRECTNESS OF THE DECISION OF THE TRIBUNAL IN RESTORING TO - 25 - THE FILE OF THE ASSESSING OFFICER. THE PENDENCY OF THESE APPEALS BEFORE HONBLE HIGH COURT ON THE SAID ISSUE WERE ALSO MENTIONED IN PARA 13 OF THE ASSESSING OFFICERS ORDER OF THE ASSESSMENT DATED 27.03.2014. EVENTUALLY, WITHOUT COMPLYING WITH THE DIRECTIONS OF THE TRIBUNAL (VIDE PARA 43 & 44 OF THE ORDER OF THE TRIBUNAL), ASSESSING OFFICER REPEATED THE ADDITIONS IN THE ASSESSMENT ORDER DATED 27.03.2014. THE OPERATIONAL PAR A 13 TO 15 OF THE ASSESSMENT ORDER IS EXTRACTED AS FOLLOWS : - 13. THE ABOVE APPEALS ARE YET TO BE DECIDED BY THE HONBLE BOMBAY HIGH COURT BUT THERE IS EVERY POSSIBILITY THAT THE HONBLE COURT MAY DECIDE THESE CASES BY FOLLOWING ITS PRECEDING JUDGEMENT AL READY PASSED BY IT IN ONE OF THE CASE OF ASSESSEE GROUP AS DISCUSSED ABOVE. FROM THE VERDICT OF HONBLE HIGH COURT GIVEN IN THE CASE OF SHRI MOTI U. PANJABI, IT IS ASCERTAINED THAT THE HONBLE HIGH COURT HAS CLEARLY NOTED THAT THE TRIBUNAL HAS RESTORED TH E ISSUE TO THE ASSESSING OFFICER FOR FRESH DECISION AFTER CONSIDERING THE EVIDENCE PLACED BEFORE HIM. THUS, THE ABOVE MENTIONED OBSERVATION MADE BY THE HONBLE HIGH COURT, BEING A SUPERIOR JUDICIAL AUTHORITY SHOULD PREVAIL OVER THE DECISIONS OF THE HONBL E TRIBUNAL GIVEN IN THE GROUP CASES. THEREFORE, IT IS BINDING UPON THE AO TO FOLLOW THE VIEWS TAKEN BY THE HONBLE BOMBAY HIGH COURT AND AS SU CH, AO IS REQUIRED TO TAKE FRESH DECISION ON THE BASIS OF FACTS AND EVIDENCES PLACED BEFORE HIM RATHER THAN TO MA KE LIMITED ENQUIRIES AS CONTEND IN THE ORDER OF HONBLE ITAT, PUNE. 14. THEREFORE, TAKING INTO CONSIDERATION ALL THE ABOVE FACTS, THE CASE OF ASSESSEE I.E. RAMCHAND U. PANJABI HAS BEEN EXAMINED. DURING THE COURSE OF ASSESSEE I.E. RAMCHAND U. PANJABI HAS BEEN EXAMINED. DURING THE COURSE OF PRESENT PROCEEDINGS, ONCE AGAIN THE ASS ESSEE HAS FAILED TO DISCHARGE HIS ONUS LIES ON HIM AND HAS NOT ABLE TO FURNISH ANY FRESH EVIDENCE REGARDING GENUINENESS OF TRANSACTIONS WITH RESPECT TO PURCHASE/SALES OF SHARES. HE HAS ONLY TRIED TO ESTABLISH THAT SINCE THE SHARE TRANSACTIONS WERE MADE TH ROUGH D - MAT ACCOUNT, HENCE, THE SAME ARE GENUINE. DURING THE COURSE OF PRESENT PROCEEDINGS, IT IS NOTED THAT THE TRANSACTIONS FROM WHICH THE LONG TERM CAPITAL GAIN CLAIMED TO HAVE BEEN AROSE BY THE ASSESSEE DURING A.Y. 2002 - 03 ARE ON ACCOUNT OF PURCHASE A ND SALE OF SHARES BOTH MADE IN PHYSICAL FORM. HERE, THE DEMATERIALIZATION PROCESS HAD NOT COME INTO PICTURE. THE ENTIRE TRANSACTIONS WERE DONE IN OFF LINE MODE, NOT THROUGH RECOGNIZED STOCK EXCHANGE. AND HENCE, UNDER THE GIVEN CIRCUMSTANCES, EXEMPTION U NDER SECTION 10(38) OF THE ACT IS NOT AVAILABLE IN THE CASE OF ASSESSEE. 15. IN VIEW OF THE FACTS AND CIRCUMSTANCES AS DISCUSSED IN FOREGOING PARAGRAPHS, I AM INCLINED TO DRAW AN ULTIMATE CONCLUSION THAT IN FACT, UNACCOUNTED MONEY HAS BEEN INTRODUCED BY TH E ASSESSEE INTO HIS BOOKS OF ACCOUNT IN THE GUISE OF FAKE SHARE TRANSACTIONS. DIRECT AS WELL AS DOCUMENTARY EVIDENCES ARE AVAILABLE IN THE CASE, WHICH CLEARLY SHOW THAT THE ENTIRE TRANSACTIONS RELATED TO PURCHASE AS WELL AS SALES OF SHARES AS BOGUS. ACCO RDINGLY, THE ENTIRE AMOUNT OF SALE PROCEEDS SHOWN IN THE BOOKS OF ASSESSEE FOR A.Y. 2002 - 03 WHICH IS RS.16,34,395/ - AGAINST WHICH THE BOGUS LONG TERM CAPITAL GAIN HAS BEEN CLAIMED TO THE TUNE OF RS.15,09,095/ - IS, THEREFORE, TREATED AS UNDISCLOSED INCOME O F THE ASSESSEE. THE COMPONENT OF COMMISSION @ 6% (BEING THE MARKET RATE PREVAILED DURING THE YEAR UNDER CONSIDERATION) ON TOTAL SALE CONSIDERATION CALCULATED AT RS.98,063/ - IS FURTHER ADDED TO THE TOTAL INCOME PRESUMING THE SAME EXPENSES INCURRED ON ACCOU NT OF PROCURING BOGUS/ACCOMMODATION ENTRIES FROM THE BROKER. BEING SATISFIED WITH THE FACTS THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULARS OF HIS INCOME AND ALSO HAS FAILED TO DISCLOSE INCOME TO THE EXTENT OF AGGREGATE OF THE ABOVE TWO AMOUNTS FOR THE YEAR UNDER CONSIDERATION, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IS BEING INITIATED SEPARATELY IN THE CASE. - 26 - 9 . SAME IS THE APPROACH IN REST OF THE CASES OF THE GROUP UNDER CONSIDERATION. BEFORE THE CIT(A) : 10 . DURING THE P ROCEEDINGS, ASSESSEE APPEARED AND FILED WRITTEN SUBMISSIONS [PARA 6.1.1 OF THE ORDER OF THE CIT(A)] WHICH CONTAINS THE EXPLANATION OF ASSESSEE WITH RESPECT TO THE DETAILS OF DISTINCTIVE NUMBERS QUA THE PURCHASE TRANSACTION AND THE SALE OF SHARES AFTER SPIT TING (REF. EG. 6.1.1). THE CIT(A) AGAIN DISCUSSED EACH OF THE PENNY STOCK UNDER CONSIDERATION AND DISMISSED THE ASSESSEES APPEAL ON MERITS. 11 . ON THE SPECIFIC GROUND NO.3 OR THE ASSESSING OFFICERS EXCEEDING HIS JURISDICTION IN NOT FOLLOWING THE DIRE CTION OF THE TRIBUNAL IN FIRST ROUND, CIT(A) DISMISSED THIS GROUND NO.3 TOO HOLDING THE FOLLOWING : - CIT(A) DISMISSED THIS GROUND NO.3 TOO HOLDING THE FOLLOWING : - 7.1.1 THE ASSESSMENT ORDER DOES NOT SPECIFY THIS FACT OF VERIFICATION OF THE DISTINCTIVE NUMBERS OF SHARES AS DIRECTED BY THE ITAT. DURING THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT HAD FILED XEROX COPIES OF SHARE CERTIFICATE OF MEDIA MATRIX PVT. LTD. STANDING IN THE NAMES OF THE MEMBERS OF THE GROUP, THE COPIES OF THE SHARE CERTIFICATES OF DATA BASE FINANCE LTD. HELD IN THE NAME OF THIRD PARTIES (NO EVIDENCE THAT THESE WERE THE CERTIFICATES SEND FOR TRANSFER IN THE NAMES OF THE MEMBERS IN THE GROUP), AN ALLEGED LETTER OF DBL OF ALLOTTING THE CONSOLIDATED SHARE CERTIFICATE (NO COPY OF THIS CONSOLIDATED CERTIFICATE FILED), A LETTER DTD. 11/3/2014 FROM DEPOSITARY PARTICIPANT M/S COSMOS CO - OP. BANK MENTIONING THE DISTINCTIVE NUMBERS OF THE SHARES SUBMITTED FOR DE - MATERIALIZATION BY THE VARIOUS MEMBERS OF THE FAMILY (IN INCLUDES ONLY THE SHARES OF DFL AND MMWL). AS REGARDS THE SHARES OF OTHER COMPANIES, T HERE IS NO MENTION OF THE SAME IN THIS LETTER OF THE COSMOS BANK. THE APPELLANT HAS ALSO NOT FILED ANY PARTICULARS WITH REGARD TO THE SHARES OF THE BAFIN ENGG. PVT. LTD. HAVEMORE FINANCE LTD. AND SILICON VALLEY TECHNOLOGY LTD. EVEN DURING THE COURSE OF AP PEAL PROCEEDINGS. IT MAY BE MENTIONED HERE THAT ONCE THE SHARES HAVE DE - MATED, THERE IS NO DISTINCTIVE NUMBER MENTIONED IN THE DE - MAT ACCOUNT. SO THE DIRECTION OF THE ITAT TO VERIFY THE SAME IS POSSIBLE ONLY TO MATCH THE DISTINCTIVE NUMBERS OF THE SHARES SUBMITTED FOR DE - MATERIALIZATION WITH THAT OF THE DISTINCTIVE NUMBERS OF THE PURCHASE SHARES . IT IS TO BE MENTIONED HERE THAT THE APPELLANT HAD NOT FILED ANY EVIDENCE OF THE SHARE CERTIFICATES PURCHASED BY HIM HAVE BEEN SUBMITTED FOR TRANSFER IN HIS NAME . THE EVIDENCE FILED IS IN RESPECT OF SOME OF THE SHARES CERTIFICATES BEING HELD IN THE NAME OF THIRD PARTIES AND THESE CERTIFICATES HAVE BEEN TRANSFERRED IN THE NAME OF THE APPELLANT IS NOT EVIDENCED. THE APPARENT LETTER OF THE COMPANY OF BFL ALSO DOES NOT INDICATE THE DISTINCTIVE NUMBERS OF THE SHARES SUBMITTED FOR SPLITTING AND CONSOLIDATION. IN THE ABSENCE OF THIS, IT IS NOT POSSIBLE TO VERIFY THE DIRECTIONS OF THE ITAT. HOWEVER, THE AO HAD HELD THAT THE MANDATE OF THE SET ASIDE ASSESSMENT HAS BEEN ENLARGED IN VIEW OF THE HIGH COURT DECISION RENDERED ON APPEAL BY THE DEPARTMENT AGAINST THE ITAT DECISION. THE AO HAD - 27 - DISCUSSED THIS ISSUE IN DETAILED IN THIS ORDER. SO THERE IS MERIT IN THE AOS ORDER FOR HOLDING THAT THE SCOPE OF THE SET ASIDE ORDER HA S CHANGED IN VIEW OF THE INTERPRETATION GIVEN IN THE HIGH COURT JUDGMENT. IN VIEW OF THIS, THE GROUND OF THE APPELLANT IS DISMISSED. 8. IN THE RESULT, THE APPEAL IS DISMISSED. 12 . THIS ORDER OF THE CIT(A) DATED 30.08.2017 DOES NOT INDICATE THE NEED FOR CONSIDERATION OF THE EXISTING BINDING JUDGEME NT OF JURISDICTIONAL HIGH COURT IN SOME OF THE CASES UNDER CONSIDERATION. OTHERWISE, T HE SAID JUDGEMENT IS CATEGORICAL IN NOT ADMITTING THE QUESTION OF LAW RAISED BY THE REVENUE ON THE GENUINENESS OF THE CLAIM OF LTCG AND ITS EXEMPTION U/S 10(38) OF THE ACT. HE ALSO UPHELD THE FINDING OF THE TRIBUNAL IN RESTORING THE ISSUES TO THE FILE OF THE ASSESSING OFFICER. THEN, IT IS A FACT THAT BOTH ASSESSING OFFICER AS WELL AS CIT(A) DID NOT APPLY THEIR MIND TO THE ORD ER OF THE TRIBUNAL (FIRST ROUND) AND JUDGEMENT OF HIGH COURT (SUPRA). BEFORE THE TRIBUNAL IN SECOND ROUND 13 . AGGRIEVED WITH THE SAID DECISION OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE ME RAISING THE FOLLOWING GROUNDS : - 1. ON FACTS AND CIRCUMST ANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT FURTHER BE HELD THAT THE LD. AO TRAVELLED BEYOND HIS JURISDICTION AGAINST THE SPECIFIC DIRECTIONS OF THE HONBLE ITAT, PUNE. IT FURTHER BE HELD THAT THE ORDER PASSED BY THE LD. AO A GAINST THE DIRECTIONS OF THE ITAT IS PERVERSE. THE ORDER PASSED BY THE LD. AO AND UPHELD BY HONBLE CIT(A) IS IN CONTRAVENTION TO THE SPECIFIC DIRECTIONS OF THE ITAT AND IS NOT AS PER THE RULES OF JUDICIAL DISCIPLINE AND THE SAME NEEDS TO BE SET ASIDE ON THIS SCORE. THE DISALLOWANCE / ADDITION MADE BY THE LD. AO BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 2. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, ADDITI ON MADE BY LD. AO AND UPHELD BY HONBLE COMMISSIONER OF INCOME TAX (APPEALS) 6, PUNE (CIT(A)) TREATING THE EXEMPT LONG TERM CAPITAL GAIN ON SALE OF SHARES AS ACCOMMODATION ENTRY AMOUNTING TO RS.16,34,395/ - AND AMOUNT OF RS.98,063/ - ON ACCOUNT OF IMPUGN ED COMMISSION IS IMPROPER, CONTRARY TO THE PROVISIONS OF SCHEME OF THE ACT AND FACTS PREVAILING IN THE CASE. IT FURTHER BE HELD THAT APPELLANT IS ELIGIBLE TO CLAIM EXEMPTION OF LONG TERM CAPITAL GAIN ON SALE OF SHARES AND THE ADDITION OF IMPUGNED COMMISSI ON IS NOT SUSTAINABLE. THE DISALLOWANCE / ADDITION MADE BY THE AO BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 3. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS AND SCHEME OF THE ACT, IT BE HELD TH AT THE HONBLE CIT(A) FAILED TO APPRECIATE THE FACTS OF THE CASE WHILE PASSING THE ORDER. IT BE HELD THAT THE ORDER PASSED BY THE HONBLE CIT(A) IS BAD IN LAW. JUST AND PROPER RELIEF BE GRANTED TO THE APPELLANT IN THIS RESPECT. - 28 - 4. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY, RECTIFY, DELETE, RAISE ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 14 . BEFORE ME, LD. AR EXPLAINED THAT HE REPRESENTS ALL THE BUNCH OF 23 APPEALS UNDER CONSIDERATION. HE EXPLAINED THE AFORESAID FACTS OF THE CASE AND SUBMITTED THAT THE APPEALS UNDER CONSIDERATION NEED TO BE DECIDED WITHOUT SENDING BACK THE APPEALS TO THE FILE OF THE ASSESSING OFFICER AGAIN. HE ALREADY ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE ALONGWITH THE DIRECTIONS OF THE TRIBUNAL. THE DATA N EEDED FOR VERIFYING THE ISSUE LINKED TO THE DISTINCTIVE NUMBERS, WAS ALSO EXAMINED BY ASSESSING OFFICER/CIT(A). THE CIT(A) ALTHOUGH ATTENDED TO THIS ISSUE AS SEEN IN PARA 7.1.1 EXTRACTED ABOVE, HE WENT TANGENT TO THE MODE OF THE ASSESSING OFFICER. IN TH IS REGARD, LD. AR SUBMITTED THAT ON SIMILAR ISSUE THE OTHER CASES OF THE PANJABI GROUP ARE ADJUDICATED IN FAVOUR OF THE ASSESSEE VIDE MOTI U. PANJABI, ITA NO.626/PN/2011 DATED 10.10.2014 FOR ASSESSMENT YEAR 2003 - 04 (PARA 19). THE FACT THAT THE APPEAL FOR ASSESSMENT YEAR 2002 - 03 WAS 04 (PARA 19). THE FACT THAT THE APPEAL FOR ASSESSMENT YEAR 2002 - 03 WAS DECIDED TO FOLLOW THE FACTS OF APPEAL FOR ASSESSMENT YEAR 2003 - 04 WAS ALSO INFORMED (ITA NO.1679/PUN/2015 DATED 02.11.2018). LD. AR ALSO FILED SERIES OF DECISION OF THE TRIBUNAL IN SUPPORT OF THE CLAIM OF EXPENDITURE U/S 10(38) OF THE ACT IN RESPECT OF LTCG . 15 . FURTHER, LD. AR FILED WRITTEN SUBMISSION CONSIDERING THE FACTS AND ISSUES ARISING OUT OF APPEAL IN CASE OF RAJKUMAR RAM PUNJABI LISTED AT SL. NO.7 ON THE TILE PAGE. SL. NO.17 RELATES TO THIS CASE IN THE ORDER ON THE FIRST ROUND. FOR THE SAKE OF COMPLETENESS OF THE ORDER, THE PORTION RELATING TO THE SUBMISSION IS EXTRACTED IN THE FOLLOWING PARAGRAPHS : - 3.1. PARA 43 OF THE ITAT ORDER WHICH RESTORED THE ISSUE TO THE FILE OF THE AO IS RELEVANT IN THIS CASE. IN THE S AID PARA HON'BLE ITAT HAS CONCLUDED THAT 'THE SALE OF SHARES FROM THE DEMAT ACCOUNT HAS NOT BEEN PROVED TO BE FALSE. THE DISPUTE IS ONLY REGARDING THE PURCHASE OF THE SHARES. SINCE THE ASSESSEE WAS NOT ABLE TO SATISFY THE REVENUE AUTHORITIES WITH THE DISTI NCTIVE NUMBER OF THE ORIGINAL SHARES WHICH WERE SUBSEQUENTLY DEMATERIALISED AND SOLD, THE LOWER AUTHORITIES HAD DOUBTED THE GENUINENESS OF THE TRANSACTIONS. LD COUNSEL FOR THE ASSESSEE IS IN A POSITION TO DEMONSTRATE BEFORE THE AO THAT THE CONSOLIDATED SHA RE CERTIFICATES RECEIVED ON PURCHASE OF THE SHARES IN PHYSICAL FORM WERE SUBSEQUENTLY SPLITTED INTO SMALLER DENOMINATION AND THE SP L ITTED - 29 - SHARES WERE SENT FOR DEMATERIALISATION AND THE SHARES BEARING THE SAME DISTINCTIVE NUMBERS WERE LATER SOLD. IN OTHER W ORDS THE DISTINCTIVE NUMBERS WERE LATER SOLD. IN OTHER WORDS, THE DISTINCTIVE NUMBER OF THE SHARES SOLD AND THE SHARES PURCHASED ARE THE SAME. THEREFORE WE DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION THAT THE ASSESSEE HAS INFACT SENT THE CONSOLIDATED SHARE CERTIFICATES TO THE RESPECTIVE COMPANIES FOR SPLITTING AND THE DISTINCTIVE NUMBERS OF SUCH SPLITTED SHARE CERTIFICATES WHICH HAS GONE TO THE DEMAT ACCOUNT AND SUBSEQUENTLY SOLD ARE THE SAME.' ON APPARENT READING OF THIS PARA IT TRANSPIRES THAT THE HON'BLE ITAT HAS ACCEPTED THAT THE SHARE TRANSACTIONS ARE GENUINE. THE CRUX OF THE MATTER IS THAT THE HON'BLE ITAT HAD RESTORED THE ISSUE TO THE FILE OF THE AO FOR THE LIMITED VERIFICATION OF MATCHING THE DISTINCTIVE NUMBER OF SHARES PURCHASED AND SOLD ARE ONE AND THE SAME AND THE PERIOD OF HOLDING THE SHARES FROM THE DATE OF PURCHASE IN PHYSICAL FORM TO THE DATE OF SALE OF SHARES IN DEMAT FORM IS MORE THAN A YEAR. 3.2. HOWEVER, THE LD AO TRAVELLED BEYOND HIS JURISDICTION IN ASSESSING THE APPELLANT AGAIN HOLDING THAT THE TRANSACTION ENTERED INTO BY THE APPELLANT IS BOGUS. WHEREAS, THE HON'BLE ITAT HAS ALREADY STATED THAT THE TRANSACTION IS GE NUINE AND WHAT NEEDS TO BE ONLY CHECKED IS WHETHER THE SHARES SOLD AND THOSE PURCHASED ARE SAME. 3.3. THE CASE OF THE APPELLANT IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE PUNE ITAT IN CASE OF SHRI MOTI PANJABI (ITA NO. 626/PN/2011) FOR AY 2003 - 04. THE HON'BLE PUNE ITAT DELETED THE ADDITION MADE FOR AY 2003 - 04 ON THE BASIS OF THE THIRD PARTY EVIDENCES IN THE FORM OF DEMATERIALISATION REQUEST FORM OF COSMOS CO - OP BANK LTD AND LETTER FROM INVESTEE - COMPANY CONFIRMING SPLIT/CONSOLIDATION OF SHARES HELD IN PHYSICAL FORM. 3.4. APPELLANT SUBMITTED ALL THE DOCUMENTS, INCLUDING THE THIRD PARTY EVIDENCES TO PROVE THAT THE APPELLANT HAS PURCHASED THE SHARES IN PHYSICAL FORM, THEN THE SHARES GOT SPLIT/CONSOLIDATED , THEN GOT DEMATERIALISED AND SUBSEQUENTLY SOLD IN THE YEAR IN WHICH IT HAS BEEN DEMATERIALISED AND SUBSEQUENTLY SOLD IN THE YEAR IN WHICH IT HAS BEEN ASSESSED BY THE AO. THE DOCUMENTS PROVIDED BY THE APPELLANT ARE NOT DISPUTED BY THE LD AO AT ANY STAGE OF PROCEEDINGS. IN SUCH A SITUATION, THE TRANSACTIONS ENTERED INTO BY THE APPELLANT SHOULD NOT BE TREATED AS BOGUS, RELY ING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN CASE OF CIT VS SHYAM R PAWAR 54 TAXMANN.COM 108 (BOM) PB PG 1 TO 5. FURTHER PERIOD OF HOLDING SHOULD BE RECKONED FROM THE DATE OF PURCHASE OF SHARES AND NOT FROM DMAT OF SHARES. FOR THIS PROPOSITION W E PLACE OUR RELIANCE ON THE DECISION OF SHRI JAFFERALI K RATTONSEY VS DCIT (ITA 5068/MUM/2009)(ITAT MUMBAI) PB PG 6 TO 20 AND ALSO IN CASE OF SHRI MOTI PANJABI ( AY 2003 - 04) IN ITA NO.626/PN/2011. 3.5. THE CASE OF APPELLANT IS ALSO SIMILAR TO THE CASE O F ITO VS RAM KRISHNA GHOSH 142 ITD 544 (ITAT KOLKATA) PB PG 21 - 23 WHEREIN IT HAS BEEN HELD THAT ONCE THE AO HAS ACCEPTED THE TRANSACTION AS GENUINE, IT CANNOT BE OPEN TO HIM TO ALTER THE DATE OF PURCHASES AND ONCE THIS DATE REMAINS UNCHALLENGED, THERE IS N O BASIS FOR HEARING THE CAPITAL GAINS AS SHORT TERM CAPITAL GAINS. IN THE CASE OF APPELLANT AS WELL, THE HON'BLE ITAT AS WELL AS AO (AS STATED BY HIM IN HIS WRITTEN SUBMISSIONS IN PARA 34 OF THE FIRST ITAT ORDER WHICH RESTORED THE MATTER BACK AND IN HIS MI SCELLANEOUS APPLICATION MADE BEFORE THE HON'BLE ITAT) HAS ACCEPTED THE FACT THAT THE TRANSACTIONS OF SALE ARE GENUINE. THEREFORE, THE CASE OF DEPARTMENT NOW STATING THAT THE TRANSACTIONS ARE NOT GENUINE AND TAXED U/S 68 OF THE ACT IS WRONG. 4. WITHOUT PREJ UDICE SUBMISSIONS (RELEVANT TO GROUND NO.2 & 3 OF THE APPEAL FORM): 4.1. THE LD AO HAS RELIED UPON THE REPLIES RECEIVED FROM THE STOCK EXCHANGE STATING THAT NO TRANSACTIONS WERE CARRIED OUT BY THE APPELLANT GROUP ON THE STOCK EXCHANGE. FURTHER, THE AO HAS STATED THAT EVEN THE BROKER HAS DENIED ANY TRADING OF THE ABOVE SCRIP IN THE NAME OF APPELLANT GROUP PERSONS. APPELLANT DID ASK FOR CROSS EXAMINATION OF THE ABOVE STATEMENTS/ EVIDENCES WHICH HAS NOT BEEN PROVIDED BY THE LD AO AT ANY STAGE OF THE PROCEEDIN GS. FAILURE TO DO SO VITIATES THE ASSESSMENT PROCEEDINGS. FOR THIS PROPOSITION WE PLACE OUR RELIANCE ON THE FOLLOWING DECISION: SUNIL PRAKASH VS ACIT (ITAT MUMBAI) ITA 6494/MUM/2014 PB PG 24 - 30. - 30 - 4.2. WE FURTHER RELY ON THE CASE OF NAVNEET AGARWAL, LEGAL HEIR OF LATE KIRAN AGARWAL VS ITO (ITA 2281/KOL/2017) (ITAT KOLKATA) PB PG 31 - 57 WHEREIN IT HAS BEEN HELD THAT THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESSEE'S ACTION GIVING HIS INVOLVEMENT IN THE BOGUS TRANSACTIONS SHOULD BE ESTABLISHED. THE ALLEGA TION BY THE DEPARTMENT IMPLY THAT CASH WAS PAID BY THE ASSESSEE AND IN RETURN THE ASSESSEE RECEIVED LTCG, WHICH IS INCOME EXEMPT FROM TAX, BY WAY OF CHEQUE THROUGH BANKING CHANNELS. THIS ALLEGATION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENC E, BY THE REVENUE. OPPORTUNITY OF CROSS EXAMINATION OF THE STATEMENTS RELIED UPON BY THE REVENUE SHOULD BE PROVIDED TO THE ASSESSEE. IF ANY MATERIAL OR EVIDENCE IS SOUGHT TO BE RELIED UPON BY THE AO, HE HAS TO CONFRONT THE ASSESSEE WITH SUCH MATERIAL. IN T HE ABSENCE OF THE ALL THE ABOVE ACTIONS, THE ACT OF THE AO IN TREATING THE LTCG AS BOGUS TRANSACTION CANNOT BE HELD AS VALID. 4.3. WE ALSO PLACE RELIANCE ON THE JUDGMENT OF ARUN KUMAR VS ACIT ITA NO.457/DEL/2018 (ITAT DELHI) PB PG 58 - 96 WHEREIN THE COURT HELD THAT IT CANNOT BE INFERRED THAT THE ASSESSEE HAS MANIPULATED THE SHARE PRICE MERELY BECAUSE IT MOVED UP SHARPLY. THE AO HAS TO PRODUCE MATERIAL / EVIDENCE TO SHOW THAT THE ASSESSEE/ BROKERS DID PRICE RIGGING / MANIPULATION OF SHARES. THE AO MUST ALSO SHOW THAT THE RELEVANT EVIDENCE PRODUCED BY THE ASSESSEE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT, BANK ACCOUNT, ETC. TO PROVE THE GENUINENESS OF THE TRANSACTIONS ARE FALSE OR FICTITIOUS OR BOGUS. 1 6 . FROM THE ABOVE WRITTEN SUBMISSIONS, THE CASE OF THE AR IS THAT THE ISSUE UNDER CONSIDERATION CONSTITUTES A COVERED CASE BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI MOTI PUNJABI (SUPRA) WHERE THE TRIBUNAL DELETED THE ADDITIONS ON THE STRENGTH OF SERIES OF THE ORD ERS OF THE TRIBUNAL ON ONE SIDE AND THE BINDING JUDGMENT IN THE CASE OF SHYAM R. PAWAR (SUPRA) ON THE OTHER. IN THE SAID WRITTEN SUBMISSION, THE SUMMARY OF FACTS ARE GIVEN IN PARA 1.1 TO 1.15 BY THE ASSESSEE. 1 7 . ON FOLLOWING THE WRITTEN SUBMISSIONS O F THE ASSESSEE (SUPRA), I FIND THAT THE ASSESSING OFFICER FAILED TO DISCHARGE THE ONUS BY WAY OF COLLECTING ANY INCRIMINATING EVIDENCE AGAINST THE ASSESSEE TO PROVE THE NON - GENUINENESS OF THE PURCHASE TRANSACTION OF SHARES. ACCORDING TO ASSESSING OFFICER, I FIND THAT THERE IS NO CASE FOR REVENUE AS THE ISSUE STANDS COVERED BOTH ON FACTS AND IN LAW. 1 8 . PER CONTRA, LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDERS OF THE ASSESSING OFFICER/CIT(A). LD. DR HAS NOTHING TO STATE WHEN A QUERY RELATING TO NON - COMPLIANCE TO THE DIRECTIONS OF THE TRIBUNAL IN THE FIRST ROUND IS RAISED BY ME . LD. DR ALSO FILED WRITTEN SUBMISSIONS DATED - 31 - 31.10.2018. IT MERELY NARRATES THE AFORESAID EVENTS . T HE STAND OF THE REVENUE IS SUMMONED UP IN PARA 9 AND 10 OF THE WRITTEN SUB MISSION BY THE REVENUE . FOR THE SAKE OF COMPLETENESS, THE SAID PARAGRAPHS ARE EXTRACTED AS UNDER : - 9 . THE ABOVE APPEALS ARE YET TO BE DECIDED BY THE HONBLE BOMBAY HIGH COURT BUT THERE IS EVERY POSSIBILITY THAT THE HONBLE COURT MAY DECIDE THESE CASES B Y FOLLOWING ITS PRECEDING JUDGMENT ALREADY PASSED BY IT IN ONE OF THE CASE OF ASSESSEE GROUP AS DISCUSSED ABOVE. FROM THE VERDICT OF HONBLE HIGH COURT GIVEN IN THE CASE OF SHRI MOTI U. PANJABI, IT IS ASCERTAINED THAT THE HONBLE HIGH COURT HAS CLEARLY NO TED THAT THE TRIBUNAL HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER FOR FRESH DECISION AFTER CONSIDERING THE EVIDENCE PLACED BEFORE HIM. THUS, THE ABOVE MENTIONED OBSERVATION MADE BY THE HONBLE HIGH COURT, BEING A SUPERIOR JUDICIAL AUTHORITY SHOULD PRE VAIL OVER THE DECISIONS OF THE HONBLE TRIBUNAL GIVEN IN THE GROUP CASES. THEREFORE, IT IS BINDING UPON THE AO TO FOLLOW THE VIEWS TAKEN BY THE HONBLE BOMBAY HIGH COURT AND AS SUCH, AO IS REQUIRED TO TAKE FRESH DECISION ON THE BASIS OF FACTS AND EVIDENCE S PLACED BEFORE HIM RATHER THAN TO MAKE LIMITED ENQUIRES AS CONTENDED IN THE ORDER OF HONBLE ITAT, PUNE. 10. THEREFORE, TAKING INTO CONSIDERATION ALL THE ABOVE FACTS, THE ASSESSEE GROUP WERE FAILED TO DISCHARGE THEIR ONUS LIES ON THEM AND HAVE NOT BEEN AB LE TO FURNISH ANY FRESH EVIDENCE REGARDING GENUINENESS OF TRANSACTIONS WITH RESPECT TO PURCHASE/SALES OF SHARES, HENCE THE AO CORRECTLY PASSED ORDER U/S 143(3) R.W.S. 254 IN ALL THE CASES BY MAKING ADDITION OF THE ENTIRE AMOUNT OF SALES PROCEEDS SHOWN IN T HE BOOKS OF ASSESSEES FOR RESPECTIVE AYS AND ALSO ADDED THE COMPONENT OF COMMISSION @ 6% (BEING THE MARKET RATE PREVAILED DURING THE YEAR UNDER CONSIDERATION) ON TOTAL SALE CONSIDERATION. CONSIDERING THIS FACTUAL POSITION, IT IS REQUESTED THAT THE ADDITIO N MADE BY THE AO IN THESE THIS FACTUAL POSITION, IT IS REQUESTED THAT THE ADDITIO N MADE BY THE AO IN THESE GROUP CASES MAY KINDLY BE UPHELD. 19 . LEGAL PROPOSITIONS : FURTHER, I ALSO PERUSED THE RATIOS OF VARIOUS DECISIONS PLACED BEFORE ME. I FIND THEM RELEVANT TO EXTRACT THE SETTLED LEGAL PROPOSITION ON THIS ISSUE . FOR THE SAKE OF COMPLETENESS, THE CONCLUSION/RATIO/HELD PORTION OF ALL THE BINDING CITATIONS ARE EXTRACTED AS FOLLOWS : - 1. CIT VS. SHYAM R. PAWAR, 54 TAXMANN.COM 108 (BOM) CONCLUSION : WHERE DMAT ACCOUNT AND CONTRACT NOTE SHOWED DETAILS OF SHARE TRANSACTION, AND ASSESSING OFFICER HAD NOT PROVED SAID TRANSACTION AS BOGUS, CAPITAL GAIN EARNED ON SAID TRANSACTION COULD NOT BE TREATED AS UNACCOUNTED INCOME UNDER SECTION 68. 2. SHRI JAFFERALI K RATTONSEY VS. DCIT (ITA NO.5068/MUM/2009) FINDING : 9.6 IN VIEW OF THE ABOVE JUDIC IAL DECISIONS THE STATEMENT OF MR. MUKESH CHOKSI CANNOT BE A DECIDING FACTOR FOR REJECTING THE GENUINENESS OF THE PURCHASE OF SHARES BY THE ASSESSEE ESPECIALLY WHEN ALL OTHER SUPPORTING EVIDENCES FILED BY THE ASSESEE WERE NEITHER PROVED TO BE FALSE OR UNTR UE. WE FURTHER FIND MERIT IN THE - 32 - SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSE E THAT THE DEMATERIALIZATION OF SHARES FROM PHYSICAL HOLDING IS A LENGTHY PROCESS AND TAKES CONSIDERABLE TIME. THEREFORE, WHEN THERE IS NO DISPUTE TO THE DEMATERIALIZATION OF SHA RES BEFORE THE DATE OF SALE, THEREFORE, THE SHARES WERE PURCHASED MUCH PRIOR TO THE DATE OF SALE. 9.7 THE CBDT CIRCULAR NO. 704 DTD. 28.4.1995 STATES THAT IT IS THE DATE OF BROKER'S NOTE THAT SHOULD BE TREATED AS THE DATE OF TRANSFER IN CASES OF SALE TRANS ACTIONS OF SECURITIES PROVIDED SUCH TRANSACTIONS ARE FOLLOWED UP BY DELIVERY OF SHARES AND ALSO THE TRANSFER DEEDS. SIMILARLY, IN RESPECT OF THE PURCHASERS OF THE SECURITIES, THE HOLDING PERIOD SHALL BE RECKONED FROM THE DATE OF THE BROKER'S NOTE FOR PURCH ASE ON BEHALF OF THE INVESTORS. THE CBDT CIRCULAR NO. 768 DTD. 24.6.1998 WAS ISSUED TO CLARIFY THE DETERMINATION OF DATE OF TRANSFER AND THE PERIOD OF HOLDING OF SECURITIES HELD IN DEMAT FORM. IT HAS BEEN STATED THERE IN THAT EARLIER CIRCULAR NO. 704 ISSUE D BY THE CBDT RELATING TO THE 'DATE OF TRANSFER' AND 'PERIOD OF HOLDING' DOES NOT CHANGE EVEN WHEN SECURITIES ARE HELD IN THE DEMATERIALIZED FORM. THEREFORE IN VIEW OF THE ABOVE TWO CIRCULARS OF CBDT IT IS CLEAR THAT IN CASE OF SECURITIES THE 'DATE OF PURC HASE' HAS TO BE TAKEN FROM THE BROKER'S NOTE/CONTRACT NOTE AND THE PERIOD OF HOLDING IS ALSO TO BE RECKONED FROM THE 'DATE OF PURCHASE' AND NOT FROM THE 'DATE OF DEMATERIALIZATION'. SINCE THE HOLDING PERIOD OF THE SHARES AS PER THE BROKER'S NOTE AND ITS SU BSEQUENT SALE AFTER DEMATERIALIZATION IS MORE THAN 12 MONTHS, THEREFORE, THE SHARES BECOME LONG TERM CAPITAL ASSET AND THE ASSESSEE'S CLAIM OF LONG TERM CAPITAL GAIN IS CORRECT. IN THIS VIEW OF THE MATTER WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE A.O. TO ACCEPT THE LONG TERM CAPITAL GAIN CIT(A) AND DIRECT THE A.O. TO ACCEPT THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE . WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 3. ITO VS. RAM KRISHNA GHOSH, 142 ITD 544 CONCLUSION : MERELY BECAUSE SHARES PURCHASED BY ASSESSEE WERE TRANSFERRED TO HIS DEMAT ACCOUNT ON A LATER DATE, DATE OF TRANSFER TO DEMAT ACCOUNT COULD NOT BE TAKEN AS DATE OF PURCHASE. 4. SUNIL PRAKASH VS. ACIT (ITA NO.6494/MUM/2014) FINDING : WE HAVE PERUSED THE CASE LAWS RELIED UPON BY THE AR. IN T HE CASE OF MUKESH R MAROLIA (SUPRA) HON'BLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: ' .... ON FURTHER APPEAL, THE ITAT BY THE IMPUGNED ORDER ALLOWED THE CLAIM OF THE ASSESSEE BY RECORDING THAT THE PURCHASE OF SHARES DURING THE YEAR 1999 - 2000 AND 2000 - 2001 WERE DULY RECORDED IN THE BOOKS MAINTAINED BY THE ASSESSEE. THE ITAT HAS RECORDED A FINDING THAT THE SOURCE OF FUNDS FOR ACQUISITION OF THE SHARES WAS THE AGRICULTURAL INCOME WHICH WAS DULY OFFERED AND ASSESSED TO TAX IN THOSE ASSESSMENT YEARS. THE A SSESSEE HAS PRODUCED CERTIFICATES FROM THE AFORESAID FOUR COMPANIES TO THE EFFECT THAT THE SHARES WERE IN - FACT TRANSFERRED TO THE NAME OF THE ASSESSEE. IN THESE CIRCUMSTANCES, THE DECISION OF THE ITAT IN HOLDING THAT THE ASSESSEE HAD PURCHASED SHARES OUT O F THE FUNDS DULY DISCLOSED BY THE ASSESSEE CANNOT BE FAULTED. SIMILARLY, THE SALE OF THE SAID SHARES FOR RS.1,41,08,484/ - THROUGH TWO BROKERS NAMELY, M/S RICHMOND SECURITIES PVT. LTD. AND M/S. SCORPIO MANAGEMENT - 33 - CONSULTANTS PVT. LTD. CANNOT BE DISPUTED, BE CAUSE THE FACT THAT THE ASSESSEE HAS RECEIVED THE SAID AMOUNT IS NOT IN DISPUTE. IT IS NEITHER THE CASE OF THE REVENUE THAT THE SHARES IN QUESTION ARE STILL LYING WITH THE ASSESSEE NOR IT IS THE CASE OF THE REVENUE THAT THE AMOUNTS RECEIVED BY THE ASSESSEE ON SALE OF THE SHARES IS MORE THAN WHAT IS DECLARED BY THE ASSESSEE. THOUGH THERE IS SOME DISCREPANCY IN THE STATEMENT OF THE DIRECTOR OF M/S. RICHMAND SECURITIES PVT. LTD. REGARDING THE SALE TRANSACTION, THE TRIBUNAL RELYING ON THE STATEMENT OF THE EMPLO YEE OF M/S. RICHMAND SECURITIES PVT. LTD. HELD THAT THE SALE TRANSACTION WAS GENUINE. IN THESE CIRCUMSTANCES, THE DECISION OF THE ITAT IN HOLDING THAT THE PURCHASE AND SALE OF SHARES ARE GENUINE AND THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOL DING THAT THE AMOUNT OF RS.1,41,08,484/ - REPRESENTED UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE INCOME TAX ACT, 1961 CANNOT BE FAULTED.' WE ARE OF THE OPINION THAT THE FACTS OF THE CASE OF MUKESH R MAR OLIA ARE SIMILAR TO THE FACTS OF THE CASES UNDER CONSIDERATION. RESPECTFULLY FOLLOWING THE ORDERS OF THE HON'BLE HIGH COURT AND THE COORDINATING BENCHES OF THE TRIBUNAL WE HOLD THAT PURCHASE AND SALE OF SHARES BY THE ASSESSEE WAS A GENUINE TRANSACTION, AND HENCE, ADDITION MADE BY THE AO CANNOT BE ENDORSED . UPHOLDING THE ORDERS OF THE FAA , WE DISMISS THE APPEALS FILED BY THE AO. ' FACTS OF THE PRESENT CASE ARE BEING IDENTICAL TO THE ABOVE CASE AND ALSO IN VIEW OF OUR OBSERVATIONS MADE ABOVE, THE IMPUGNED ADDITIONS IN THIS CASE ARE NOT CALLED FOR AND THE SAME ARE ACCORDINGLY ORDERED TO BE DELETED. ' CONSIDERING THE ABOVE AND REVERSING THE ORDER OF THE FAA, WE CONSIDERING THE ABOVE AND REVERSING THE ORDER OF THE FAA, WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE, AS HIS ORDER CANNOT BE ENDORSED LE GALLY OR FACTUALLY. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. 5. NAVNEET AGARWAL, LEGAL HEIR OF LATE KIRAN AGARWAL VS. ITO (ITA NO.2281/KOL/2017) FINDING : 10. ....... . ............. 20. APPLYING THE PROPOSITION OF LAW AS LAID DOWN IN T HE ABOVE - MENTIONED JUDGEMENTS TO THE FACTS OF THIS CASE WE ARE BOUND TO CONSIDER AND RELY ON THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM AND BASE OUR DECISION ON SUCH EVIDENCE AND NOT ON SUSPICION OR PREPONDERANCE OF PROBABILITIES. NO MA TERIAL WAS BROUGHT ON RECORD BY THE AO TO CONTROVERT THE EVIDENCE FURNISHED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, WE ACCEPT THE EVIDENCE FILED BY THE ASSESSEE AND ALLOW THE CLAIM THAT THE INCOME IN QUESTION IS A BONA FIDE LONG TERM CAPITAL GAIN ARIS ING FROM THE SALE OF SHARES AND HENCE EXEMPT FROM INCOME TAX. 21. UNDER THESE CIRCUMSTANCES AND IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE CONTENTIONS OF THE ASSESSEE AND DELETE THE ADDITION IN QUESTION. - 34 - 6. ARUN KUMAR VS. ACIT (ITA NO.457/DEL/2018) F INDING : 7. ........... . ......... 8. IN VIEW OF AFORESAID JUDGMENTS/ORDERS PASSED BY THE HONBLE HIGH COURTS AS WELL AS THE TRIBUNAL, I HAVE NO HESITATION TO HOLD THAT NEITHER AO NOR CIT - A HAS BEEN ABLE TO CONTROVERT ASSESSEES COPIOUS EVIDENCES FILED IN PRESENT CASE WHICH CLEARLY SUPPORTS THE CASE OF ASSESSEE QUA LTCG CLAIMED AS EXEMPT U/S 10(38) OF THE ACT ON SALE OF SHARES OF M/S KAPPAC PHARMA LIMITED AND SO ISSUE FRAMED BY ME ABOVE NEEDS TO BE ANSWERED IN FAVOR OF APPELLANT /ASSESSEE. SO ADDITION M ADE ON A/C OF LTCG /S 68 READ WITH SECTION 115BEE IS DELETED . SO GROUNDS RELATING TO ADDITION U/S 68 ARE ALLOWED. DECISION OF THE TRIBUNAL IN THIS SECOND ROUND 20 . I EXAMINED THE GROUND NO.1 RELATING TO THE NON - COMPLIANCE TO THE DIRECTIONS OF THE TRI BUNAL IN THE FIRST ROUND. IN THIS REGARD, I PERUSED THE DIRECTIONS OF THE TRI BUNAL IN THE FIRST ROUND. IN THIS REGARD, I PERUSED THE SAID ORDER OF THE ASSESSING OFFICER IN THE SECOND ROUND VIDE HIS ORDER DATED 27.03.2014 AND FIND THE ASSESSING OFFICER MERELY REPEATED THE ADDITIONS WITHOUT HAVING ANY REGARD FOR THE SAID DIRECTIONS OF THE TRIBUNAL. EVEN THE CIT(A) IS NOT BOTHERED TO APPRECIATE THE RATIO OF THE JUDGEMENT IN THIS VERY CASE FROM THE JURISDICTIONAL HIGH COURT (SUPRA) WHEN UPHELD THE GENUINENESS OF THE CLAIM OR TRANSACTIONS IN PRINCIPLE . I HAVE ALREADY EXTRACTED THE REL EVANT PARAGRAPHS FROM THE JUDGEMENT IN THIS ORDER ABOVE. IT IS THE FINDING OF THE HONBLE HIGH COURT THAT THE PURCHASE TRANSACTIONS /THE CLAIM OF EXEMPT LTCG CONSTITUTES GENUINE ONE THE NEXUS OF DISTINCTIVE NUMBERS OF SHARES PURCHASED AND SHARES SOLD IS ES TABLISHED . OTHERWISE, ASSESSING OFFICER DID NOT FIND ANY DISCREPANCY QUA THE DISTINCTIVE NUMBERS OF THE SHARES PURCHASED AND SOLD IN BOTH THE ROUNDS BEFORE HIM. NO ADVERSE FINDING IN THIS REGARD IS ON THE RECORDS AND OF COURSE, ASSESSING OFFICERS ORDER IS SILENT IN THIS REGARD. ON THE CONTRARY, THE CIT(A) EXAMINED THIS ISSUE RELATING TO THE TRIBUNALS DIRECTIONS AND - 35 - HOWEVER, DISMISSED THE APPEAL OF THE ASSESSEE GIVING SOME OTHER UNCONNECTED REASONING. I N MY VIEW, THE CIT(A) ALSO HAS WRONGLY ASSUMED JUR ISDICTION BY TRAVEL LING BEYOND THE DIRECTION OF THE TRIBUNAL. FROM THIS POINT OF VIEW, I FIND IT IS A CLEAR CASE OF NON - COMPLIANCE OF ASSESSING OFFICER /CIT(A) TO THE DIRECTION OF THE TRIBUNAL. DRS REQUEST FOR GRANT OF ONE MORE ROUND I.E. THIRD ROUND BEF ORE THE ASSESSING OFFICER IS NOT CORRECT. ACCORDINGLY, RESISTING THE REQUIREMENT OF REMANDING ONE MORE TIME , THE GROUND NO.2 ALLOWED IN FAVOUR OF THE ASSESSEE. 2 1 . FURTHER, ON MERITS TOO, I PERUSED THE ORDER OF THE TRIBUNAL IN THE CASE OF MOTI U. PUNJAB I (SUPRA) FOR THE ASSESSMENT YEAR 2002 - 03 AND FIND THE CONTENTS OF PARA 19 IS RELEVANT FOR EXTRACTION HEREUNDER : - 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THIS ASPECT. THE ONLY POINT THAT IS BEING ADDRESSED BY US IS THE PERIOD FOR WHICH, ASSESSEE HAS HELD THE SHARES OF MEDIA MATRIX PRIOR TO ITS SALE. AS PER THE CIT(A), THE PERIOD IS TO BE COUNTED FROM THE DATE OF D - MAT OF SUCH SHARES BY THE ASSESSEE. PERTINENTLY, THE CLAIM OF THE ASSESSEE WAS THAT SUCH SHARES WERE PURCHASED PERTINENTLY, THE CLAIM OF THE ASSESSEE WAS THAT SUCH SHARES WERE PURCHASED BY HIM BY WAY OF PHYS ICAL DELIVERY IN THE MONTH OF JULY, 2001 AND THEREFORE, THE PERIOD OF HOLDING SHOULD START FROM JULY, 2001. THE CIT(A) CONSIDERED THE DATE OF D - MAT OF THE SHARES AS THE STARTING POINT OF THE PERIOD OF HOLDING BECAUSE ACCORDING TO HIM, THE SHARES PURPORTED TO HAVE BEEN PURCHASED IN PHYSICAL FORM COULD NOT CORRELATED BY THE ASSESSEE WITH THE SHARES PUT IN D - MAT ACCOUNT. IN OUR CONSIDERED OPINION, THE DOCUMENTS OF THE DEPOSITORY I.E. COSMOS CO - OPERATIVE BANK LTD. FURNISHED BY THE ASSESSEE SUPPORTS HIS ASSERT ION THAT THE SHARES PUT INTO THE D - MAT ACCOUNT BEAR THE SAME DISTINCTIVE NUMBERS AS WERE CANVASSED TO HAVE BEEN PURCHASED IN PHYSICAL FORM. NOTABLY, DISTINCTIVE NUMBER OF SHARES IS CONFIRMED BY THE INVESTEE COMPANY VIDE ITS COMMUNICATION DATED 04.08.2001, A COPY OF WHICH IS PLACED AT PAGE 6 OF THE PAPER BOOK. NOTABLY, THE AFORESAID DOCUMENT IS A THIRD PARTY EVIDENCE AND WAS FOUND IN THE COURSE OF SEARCH WITH ASSESSEE, AN ASSERTION WHICH IS NOT BEEN NEGATED BY THE REVENUE BEFORE US . THEREFORE, THE AFORESA ID EVIDENCE CANNOT BE SIMPLY BRUSHED ASIDE WITHOUT THERE BEING ANY MATERIAL TO DISCARD IT . IN THIS CONTEXT, FROM PERUSAL OF ASSESSMENT ORDER, WE FIND THAT THERE IS NOTHING TO SUGGEST THAT THE SAID CONFIRMATION BY THE INVESTEE COMPANY HAS BEEN FOUND TO BE SUFFERING FROM ANY INFIRMITY. 2 2 . FROM THE ABOVE, IT IS EVIDENT IN THIS CASE ALSO THAT THERE IS NO DISCREPANCY RECORDED BY THE ASSESSING OFFICER IN THE MATTER OF NEXUS OF DISTINCTIVE NUMBER S OF THE SHARES PURCHASED AND SOLD IN CONSOLIDATION, LATER SPLIT UP AND SUBSEQUENT SALE OF THE SAME. SAME IS THE FACT UNDISPUTED BY REVENUE BEFORE ME IN THIS SECOND ROUND OF THE PROCEEDINGS. THE CLAIM OF EXEMPTION OF LTCG IN THE CASE OF MOTI U. PUNJABI (SUPRA) - 36 - STAND ALLOWED ON THE FACTS SIMILAR TO THAT OF THE PRESENT SET OF 23 APPEALS OF THE ASSESSEES. 2 3 . THE DIRECTION OF THE TRIBUNAL IN ALL THE SE 23 APPEALS UNDER CONSIDERATION GIVE N IN THE FIRST ROUND OF THE PROCEEDINGS BEFORE THE TRIBUNAL , ARE IDENTICAL . ACCORDINGLY, THE ASSESSING OFFICER IS UNDER OBLIGATION TO TR EAT THE TRANSACTIONS GENUINE AFTER VERIFYING THE NEXUS OF DISTINCTIVE NUMBERS OF SHARES PURCHASED AND SHARES SOLD . OTHERWISE, THE ISSUE OF GENUINENESS WAS ALREADY DECIDED BY THE HONBLE HIGH COURT OF BOMBAY AND THE TRIBUNAL HOLDING THE TRANSACTION AS GENU INE. THE HONBLE HIGH COURT DID NOT ADMIT THE APPEAL OF THE REVENUE ON THE ABOVE DECISION AS WELL AS DECISION OF REMANDING THE ISSUE TO THE FILE OF ASSESSING OFFICER. IGNORING THE SAID DECISION OF THE TRIBUNAL, THE ASSESSING OFFICER PROCEEDED TO REPEAT T HE ADDITION WHICH IS ABSOLUTELY UNACCEPTABLE AND UNSUSTAINABLE IN LAW. THE CIT(A) ALSO FAILED TO APPRECIATE THE SAID RATIO OF THE BOMBAY IN LAW. THE CIT(A) ALSO FAILED TO APPRECIATE THE SAID RATIO OF THE BOMBAY HIGH COURT JUDGEMENT IN THE SAME CASE ALTHOUGH HE MADE REFERENCE TO THE ISSUE RELATING TO THE DISTINCTIVE NUMBERS OF S HARES BY EXCEEDING JURISDICTION. AS STATED EARLIER, T HE CIT(A) CONFIRMED THE ADDITION OF THE ASSESSING OFFICER IN THE SECOND ROUND FOR SOME OTHER REASONS RELATING TO THE EVIDENCE WHICH SHOULD NOT HAVE BEEN DONE BY THE CIT(A) IN VIEW OF EXISTENCE OF THE JU RISDICTIONAL HIGH COURT JUDGEMENT. FURTHER, I ALSO NARRATED THE FACT ABOUT THE DECISION OF THE TRIBUNAL REGARDING THE GENUINENESS OF PURCHASE AND SALE OF CAPITAL GAIN IN THE CASE OF MOTI U. PANJABI (SUPRA) FOR THE ASSESSMENT YEAR 2003 - 04. SIMILAR ISSUE R ELEVANT FOR ASSESSMENT YEAR 2002 - 03 STANDS REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR APPLYING THE SAID DECISION IN OWN CASE RELEVANT FOR THE ASSESSMENT YEAR 2003 - 04. THUS, THE CORE ISSUES NOW STAND DECIDED BY THE TRIBUNAL IN THE CASE MOTI U. PANJA BI (SUPRA). RELEVANT PORTION OF THE SAID ORDER ARE EXTRACTED IN ABOVE PARA GRAPHS OF THIS ORDER. AS I HAVE UPHELD THE GENUINENESS OF THE CLAIM OF LTCG, THE ISSUE RAISED RELATING TO THE CLAIM OF - 37 - COMMISSION HAS TO BE ALLOWED IN FAVOUR OF THE ASSESSEE. THE GROUNDS RAISED BY THE ASSESSEE I.E. RAMCHAND UDHARAM PANJABI ARE ALLOWED. 2 4 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. REST OF THE 22 A PPEALS REG. 25. THERE ARE 23 APPEALS UNDER CONSIDERATION AND THE DETAILS ARE ALREADY TABULATED IN THE C AUSE TITLE OF THIS ORDER. THE ISSUES AND FACTS RELATING TO THE APPEAL OF SHRI RAMCHAND UDHARAM PANJABI (ITA NO.2676/PUN/2017) WERE CONSIDERED AND THE APPEAL IS NOW ALLOWED IN FAVOUR OF THE ASSESSEE RELYING ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF M OTI U. PANJABI (SUPRA). THE APPEAL OF THIS ASSESSEE FOR THE ASSESSMENT YEAR 2003 - 04 WAS DECIDED BY THIS BENCH AND THE APPEAL FOR ASSESSMENT YEAR 2002 - 03 WAS ALSO ALLOWED FOR STATISTICAL PURPOSES TO FOLLOW THE DECISION OF THE TRIBUNAL IN ALSO ALLOWED FOR STATISTICAL PURPOSES TO FOLLOW THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 20 03 - 04. THUS, I HAVE HELD ON FACTS AND ALSO IN VIEW OF THE LEGAL PROPOSITION DISCUSSED IN DETAILED IN THE PRECEDING PARAGRAPHS OF THIS ORDER. I HAVE HELD THAT THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES AND CONSEQUENTIAL PROFITS EARNED OUT OF THE SALE TRANSACTIONS HAVE COME TO ARISE LONG TERM CAPITAL GAINS ARE HELD TO BE GENUINE. UPHOLDING THE ASSESSEES CLAIM U/S 10(38) OF THE ACT, I RELY HEAVILY ON THE JURISDICTIONAL HIGH COURT JUDGEMENT IN THE CASE OF JAYANA ENTERPRISES PVT. LTD. (SUPRA), WHICH IS ALSO A PART OF THE GROUP. THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF JAYANA ENTERPRISES PVT. LTD. (SUPRA) IS IN SYNC WITH THE JURISDICTIONAL TRIBUNAL IN CASE OF MOTI. U. PUNJABI FOR THE ASSESSMENT YEAR 2003 - 04. 2 6. ON PERUSAL OF THE ORDERS OF T HE ASSESSING OFFICER AND THE CIT(A) IN THESE 22 APPEALS, I FIND THE FACTS ARE IDENTICAL, THE ALLEGED PENNY SCRIPS OVERLAPS AND THE TRANSACTIONS ARE IDENTICAL . T HEREFORE, THE ABOVE RATIO OF - 38 - JUDGEMENTS HAVE APPLICATION TO THE FACTS OF THESE BUNCH OF APPEALS . THEREFORE, IN MY OPINION, THE ISSUE RAISE D IN THE GROUNDS BY TH IS GROUP OF 22 APPEALS STANDS COVERED AND THE SAME IS ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEES IN THESE APPEALS ARE ALLOWED. 27 . IN THE RESULT, A LL THE 22 APPEALS ARE ALLOWED. 28 . RESULTANTLY, ALL THE 23 APPEALS OF THE RESPECTIVE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED ON THIS 30 TH D AY OF NOVEMBER , 2018 . SD/ - ( D. KARUNAKARA RAO ) / ACCOUNTANT MEMBER / PUNE ; DATED : 30 TH NOVEMBER , 2018 . SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESP ONDENT; 3. THE CIT(A) - 6 , PUNE ; 4. THE PR. CIT - 5 , PUNE; 5. , , - / DR SMC , ITAT, PUNE; 6. / GUARD FILE . // TRUE COPY // / BY ORDER, //T RUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE