Appeal Details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 9724 (ITAT-RANCHI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
7 month(s) 20 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Transfer Pricing) Appeal
Pronouncement Date
05-04-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Assessment Year
2010-2011
Appeal Filed On
16-08-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH SMC RANCHI BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.131/RAN/2018 ASSESSMENT YEAR: 2013-14 RAMA SHANKAR PRASAD HOTEL PARK THE RETREAT, BIRSA CHOWK, RANCHI, PIN. 834001 [ PAN NO.AJFPP 0998 L ] / V/S . INCOME TAX OFFICER, WARD-1(3), CENTRAL REVENUE ANNEXE BUILDING, MAIN ROAD, RANCHI, PIN 0834001 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI HARI LAL PATEL, ADVOCATE /BY RESPONDENT SHRI CHANDAN DAS, JCIT-DR ITA NO.246/RAN/2018 ASSESSMENT YEAR: 2012-13 NIRMAL KUMAR AGRAWAL 5, GORAKHNATH LANE, UPPER BAZAR, RANCHI, PIN. 834001 [ PAN NO.AATPA 9129 R ] / V/S . INCOME TAX OFFICER, WARD-2(1), CENTRAL REVENUE ANNEXE BUILDING, MAIN ROAD, RANCHI, PIN 0834001 /APPELLANT .. /RESPONDENT ITA NO.247/RAN/2018 ASSESSMENT YEAR: 2012-13 NILESH CHHAWNIKA 5, GORAKHNATH LANE, UPPER BAZAR, RANCHI, PIN. 834001 [ PAN NO.AFMPC 8880 R ] / V/S . INCOME TAX OFFICER, WARD- 2(1), CENTRAL REVENUE ANNEXE BUILDING, MAIN ROAD, RANCHI, PIN 0834001 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI ADITYA SHAH, FCA & SHRI KUMAR VAIBHAV, ADVOCATE /BY RESPONDENT SHRI P.K. MONDAL, JCIT-DR PAGE 2 ITA NO.274/RAN/2018 ASSESSMENT YEAR: 2010-11 M/S SANTOSH KUMAR JAIN (HUF), BIG SHOP, GEL CHURCH COMPLEX, MAIN ROAD, RANCHI, PIN. 834001 [ PAN NO.AAIHS 7228 A ] / V/S . INCOME TAX OFFICER, WARD-3(1), /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI M.K. CHOUDHURY, ADVOCATE & SHRI MANAV PODDAR, ADVOCATE /BY RESPONDENT SHRI CHANDAN DAS, JCIT-DR ITA NO.276/RAN/2018 ASSESSMENT YEAR: 2010-11 SMT. SUNITA RUNGTA C/O DR. SUNIL RUNGTA, LAKE VIEW APARTMENT, SEVA SADAN PATH, UPPER BAZAR, RANCHI, PIN. 834001 [ PAN NO.AAVPR 6800 J ] / V/S . INCOME TAX OFFICER, WARD-3(1), /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI DEVESH PODDAR, ADVOCATE /BY RESPONDENT SHRI CHANDAN DAS, JCIT-DR ITA NO.306/RAN/2018 ASSESSMENT YEAR: 2010-11 MADHU ADUKIA VYAPAR BHAWAN, LALJI HIRJI ROAD, S.N.G. ROAD, RANCHI, PIN. 834001 [ PAN NO.AATPA 9367 P ] / V/S . INCOME TAX OFFICER, WARD-2(1), CENTRAL REVENUE BUILDING, 05, MAIN ROAD, RANCHI, PIN 0834001 /APPELLANT .. /RESPONDENT PAGE 3 /BY APPELLANT SHRI RAJIV RANJAN MITTAL, CA /BY RESPONDENT SHRI CHANDAN DAS, JCIT-DR /DATE OF HEARING 11-01-2019 /DATE OF PRONOUNCEMENT 20-02-2019 /O R D E R THIS SET OF SIX APPEALS PERTAINS TO SIX ASSESSEES FOR ASSESSMENT YEAR(S) 2013-14, 12-13 & 2010-11 AGAINST THE COMMISSIONER OF INCOME- TAX (APPEALS)-RANCHIS SEPARATE ORDERS UPHOLDING THE ASSESSING OFFICER(S) S IDENTICAL ACTION TREATING THEIR RESPECTIVFE LONG TERM CAPITAL GAINS (LTCT) / LONG T ERM CAPITAL LOSS (LTCL) APPEAL-WISE IN SERIATIM TO BE BOGUS UNEXPLAINED CAS H CREDITS U/S 68, INVOLVING PROCEEDINGS SEC. 143(3) AND R.W. 147 AS THE CASE MA Y BE OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. RELEVANT FIGURES IN ISSUE(S) DE TAILS ARE AS FOLLOWS:- SL.NO ITA NO. A.Y. LTCG/LOSS 1 131/R/18 13-14 42,96,740/- 2 246/R/18 12-13 13,54,114/- 3 247/R/18 12-13 16,35,428- 4 274/R/18 10-11 27,78,268/- 5 276/R/18 10-11 1,15,079/- 6 306/R/18 10-11 9,75,00/- HEARD ALL ASSESSEES AS WELL AS THE REVENUE REITERAT ING THEIR RESPECTIVE STANDS AGAINST AND IN SUPPORT OF THEIR IMPUGNED UNEXPLAINE D CASH CREDITS ADDITION(S). 2. THERE IS NO DISPUTE ABOUT THE BASIC IDENTICAL FA CT THAT THESE ASSESSEES HAD CLAIMED TO HAVE DERIVED THE IMPUGNED LTCG FROM TRAN SFER OF SHARES HELD IN VARIOUS SCRIPS. THEY FILED DOCUMENTARY EVIDENCE IN THE NATU RE OF BANK STATEMENTS, LEDGER ACCOUNTS, BROKERS DETAILS ALONGWITH THE NECESSARY PARTICULARS OF THE CONCERNED SCRIPTS. THE ASSESSING OFFICER(S) IN ALL CASES DECLINED TREA TED THE SAME AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT SINCE LACKING GENUINENESS / CREDITWORTHINESS. HE TOOK INTO ACCOUNT THE CONCERNED SCRIPS PERFORMANCE DURING THE RELEVANT HOLDING PERIOD, BUSINESS ACTIVITY OF THE COMPANIES, BALANCE-SHEET, PROFIT AN D LOSS ACCOUNT ETC., SCRIP PRICE PAGE 4 MOVEMENT TO CONCLUDE THAT THESE ASSESSEES HAD COLLU DED WITH ENTRY OPERATORS TO CLAIM THE IMPUGNED BOGUS LTCG AS EXEMPT. HE FURTHER CONCL UDED THAT THE DEPARTMENTS INVESTIGATION WING HAD REVEALED A CLINCHING NEXUS B ETWEEN PROMOTERS AND DIRECTORS OF THE SCRIP ENTITIES, ENTRY OPERATORS AND ASSESSEES L IKE IN THESE CASES TO BE ENGAGED IN ARTIFICIAL RIGGING OF THE SCRIP PRICES. THE CIT(A) HAS CONFIRMED THE SAME IN ALL THESE APPEAL(S). LEAD CASE APPEAL ITA NO.131/RAN/2018 CONTAINS THE FOLLOWING LOWER APPELLATE DISCUSSION:- [5.7] I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT AND HAVE PERUSED ASSESSMENT ORDER. I HAVE CHECKED THE WEBSITE OF CALCUTTA STOCK EXCHANGE AT URL HTTPS:/:// W WW.CSE- I NDIA.COM/TV/SCRIPSEARCH.PHP AND HAVE FOUND THAT THE STATUS OF THE COMPANY REMAINS SUSPENDED AS ON 08.02.2018 AS WELL. [5.8] THE ISSUE IS WHETHER THE DOCUMENTS FURNISHED BY THE APPELLANT, INCLUDING AVERMENTS MADE BY HIM, OR EVEN HIS BROKER, SATISFY THE TEST O F PREPONDERANCE OF HUMAN PROBABILITIES. IN MY VIEW IF THE APPELLANT HAS REASONABLY EXPLAINED T HE ' INTRIGUING ' FACTS AND CIRCUMSTANCES AS POINTED BY THE AO. AND ON THE STRENGTH OF WHICH THE GENUINENESS IS ASSAILED BY HIM, AND WHICH FURTHER AGREE WITH THAT OBSERVED IN THE CASE OF A PENNY STOCK COMPANY, NO CASE FOR TREATING THE TRANSACTION AS NOT GENUINE SHALL ARISE . THE ONUS U/S.68 THOUGH IS ON THE APPELLANT SO THAT HIS EXPLANATION WOULD, HOWEVER, REQUIRE BEI NG SUBSTANTIATED OR PROVED. THE CASE LAWS IN THE MATTER IS LEGION, AND TOWARD WHICH I MAY, IF ONLY FOR THE SAKE OF COMPLETENESS OF THIS ORDER, ADVERT TO THE SOME OF THE CELEBRATED DECISIO NS BY THE APEX COURT IN THE MATTER: - A. GOVINDA RAJULU MUDALIAR V . CIT [1958J 34 ITR 807 (SC); SREELEKHA BANERJEE & OTHRS. V. CIT [1963) 49 ITR 11 2 (SC); KALEKHAN MOHAMMED HANIFV. CIT [1963] 50 ITR I(SC); CIT V. DURGA PRASAD MORE [1971] 82 ITR 540 (SC); CIT V. BIJU PATNAIK [1986] 160 ITR 674 (SC): SUMATI DAYAL V. CIT [1995] 214 ITR 801 (SC); AND CIT VS. P. MOHANAKALA &OTHERS [2007] 291 ITR 278 (SC) [5.9] IT NEEDS TO BE APPRECIATED THAT WHAT IS ESSEN TIALLY UNDER CLOUD, AND BEING SERIOUSLY DOUBTED AS TO THE GENUINENESS, IS THE GAIN STATED T O ARISE ON THE TRANSACTION. IT IS THE GAIN WHICH IS ABNORMAL, I.E., BOTH QUA THE SCRIP; ITS' T RADING AND, THUS. ITS QUANTUM, AND UNEXPLAINED, BESIDES BEING TAX EXEMPT, AND WHICH IS INDEPENDENT OF ITS PURCHASE. THE PURCHASE OF SHARES OF A LITTLE KNOWN COMPANY WOULD EVEN OTHERWISE HARDLY RAISE ANY EYEBROW OR DOUBT. THE PURCHASE GETS DOUBTED EXAMINED ONLY F OR THE REASON THAT IT REPRESENTS A PART OF THE OVERALL TRANSACTION, WHICH IS CONSIDERED BY THE LD. ASSESSING OFFICER AS AN ARTIFICE. THIS IS SUBSTANTIATED BY THE STATEMENT OF SRI ASHISH KUMAR AGARWAL RECORDED U/S.131 OF THE ACT WHO WAS THE MANAGING DIRECTOR OF THE COMPANY AND WHICH HAD PROVIDED ACCOMMODATION ENTRIES TO SEVERAL PERSONS . [5.10] ONCE THE STATEMENT OF SRI ASHISH KUMAR AGARW AL RECORDED THE ACT WHO WAS THE MANAGING DIRECTOR OF THE COMPANY IS KEPT IN THE THE ABNORMAL GAIN IN THE. PRICES, PROVING THE PURCHASE WOULD BY ITSELF NOT TRANSACTION OF GAIN, W HICH STANDS IMPUGNED. THE COMPANY REPORTEDLY STANDING EITHER IN THE INDUSTRY OR IN TH E MARKET (I.E., FOR THE SERVICES IT PRESUMABLY DEALS IN BASED ON THE QUANTUM OF TRANSACTIONS REPOR TED), OR EVEN IN THE CIRCLES, I.E., FOR SHARES. THAT APART, NO. MATERIAL TO. ESTABLISH ITS BUSINESS ACTIVITY, VIZ., IT'S ANNUAL REPORTS, OR OF THE COMPANIES UNDER THE SAME MANAGEMENT/INDUSTRY, ETC., TO EXHIBIT ITS CREDENTIALS IN ANY MANNER, STANDS ADDUCED BY THE APPELLANT AT ANY STAGE OF THE PROCEEDINGS. THIS IS AMAZING BY ANY PAGE 5 STANDARD, AND WHICH HAS NOT BEEN EXPLAINED IN ANY M ANNER, I.E., ASSUMING IT TO BE NOT A CASE OF PRICE MANIPULATION, WHICH IS THE MODUS OPERANDI ADO PTED FOR REFLECTING PRICES ON THE STOCK EXCHANGE. WHO, ONE MAY ASK, ARE THE PURCHASERS OF S UCH SHARES, I.E., IN A NONDESCRIPT COMPANY AT SUCH HIGH PRICES; NO INFORMATION QUA WHI CH STANDS FURNISHED AT ANY STAGE, EVEN AS IT IS THEY WHO HAVE APPARENTLY BROUGHT. THE SHARES, SUPPLYING THE CREDIT TO THE APPELLANT, WHICH IS BEING: QUESTIONED AND EXAMINED' AS TO ITS GENUIN ENESS U/S 68 OF THE ACT. [5.11] ALL THIS DEFINITELY CASTS SERIOUS DOUBTS ON THE GENUINENESS OF THE SALE PRICE AND, THUS, THE ENSUING GAIN. THIS, IN FACT, IS A CLASSICAL FEA TURE OF A PENNY STOCK, THE PRICE ZOOMING FOR NO APPARENT, ECONOMIC OR EVEN TECHNICAL, REASONS. ONE COULD UNDERSTAND WHERE THE SAME IS IN SYMPATHY WITH THE MARKET SENTIMENT OR SOME INDUSTRY -WISE FAVOURABLE. DEVELOPMENT, EVEN AS THE SHARE OSTENSIBLY TRADES, I.E., GOING BY THE MAR KET QUOTE, AT OVER 41 TIMES ITS PRICE. [5.12] THE PRICE, DE-HORS ANY FUNDAMENTALS OR OTHER FACTORS, OF PAPER COMPANIES BEING RAKED UP ON THE EXCHANGE, SO AS TO YIELD 'GAIN', AND THEN AGAIN, EQUALLY WITHOUT BASIS, GROUNDED TO YIELD' LOSS', BOTH OF WHICH, I.E., ' GAIN ' AND ' LOSS ', FIND READY 'CUSTOMERS' OR TAKERS'. THE PURPOSE IS TO EVADE TAX OR TO YIELD SOME TAX BENEFIT. THE F EATURES ARE STRIKINGLY SAME, WITH THE IMPUGNED TRANSACTION BEARING THE SAME INCIDENTS, SO THAT ODDS ARE LOADED HEAVILY AGAINST THE GENUINENESS OF THE TRANSACTION. THE ONUS TO ESTABLI SH THE SAME, IT IS TO BE BORNE IN MIND, IS ON THE APPELLANT. [5.13] FIRSTLY, DOCUMENTARY EVIDENCES, IN THE FACE OF UNUSUAL EVENTS, AS PREVAILING IN THE INSTANT CASE, AND WITHOUT ANY CORROBORATIVE OR CIRC UMSTANTIAL EVIDENCE/S, CANNOT BE REGARDED AS CONCLUSIVE. TWO, THE PREPONDERANCE OF PROBABILIT IES ONLY DENOTES THE SIMULTANEOUS EXISTENCE OF SEVERAL ' FACTS ', EACH PROBABLE IN ITSELF, ALBEIT LOW, SO AS TO CA ST A SERIOUS DOUBT ON THE TRUTH OF THE REPORTED ' FACTS ', WHICH TOGETHER MAKE UP FOR A BIZARRE STATEMENT, LEADING TO THE INFERENCE OF COLLUSIVENESS OR A DEVICE SET UP TO CO NCEAL THE TRUTH, I.E., IN THE ABSENCE OF CREDIBLE AND INDEPENDENT EVIDENCES. FOR A SCRIP TO TRADE AT 261.20 WHICH IS MANY TIMES ITS' FACE VALUE, WITHOUT ANY FUNDAMENTAL STRENGTH OF THE OPERATIONS, ONLY IMPLIES, IF NOT PRICE MANIPULATION, TRAIL BLAZING PERFORMANCE AND/OR GREA T BUSINESS PROSPECTS (WITH OF COURSE PROVEN MANAGEMENT RECORD, SO AS TO BE ABLE TO TRANS LATE THAT INTO REALITY), WHILE EVEN AS MUCH AS THE COMPANY'S BUSINESS OR INDUSTRY OR FUTURE PRO GRAM (ALL OF WHICH WOULD BE IN PUBLIC DOMAIN), IS CONSPICUOUS BY ITS ABSENCE, I.E., EVEN YEARS AFTER THE TRANSACTION/SO THE COMPANY IS, BY ALL COUNTS, A PAPER COMPANY, AND ITS SHARE T RANSACTIONS, MANAGED. [5.14] SIMILAR FACTS EXISTED IN THE CASE OF SANJAY BIMA1CHAND JAIN L/H OF SMT. SHANTIDEVI BIMALCHAND JAIN V PR.CIT, NAGPUR ITA 18/2017 , WHEREIN, THE HON 'BLE BOMBAY HIGH COURT HAS CONFIRMED THE ORDER OF THE ITA T, NAGPUR BENCH IN THE CASE OF SANJAY BIMAJCHAND JAIN LIH OF SMT. SHANTIDEVI BIMAJCHAND JAIN V ITO, WARD- 4(2), NAGPUR ITA NO.61LNAGL2013. FACTS OF THE CASE WERE: - (I) THE ASSESSEE IS A SENIOR CITIZEN. LADY WHO HAD BEEN DERIVING INCOME FROM OTHER SOURCES MOSTLY INTEREST INCOME FROM PARTIES BOND ET C. (II) ON ADVICE OF HER INCOME TAX; COUNSEL LATE SHRI HEMANT SURJAN, ADVOCATE, SHE PURCHASED SHARES OF TWO PENNY STOCK KOLKATA BASED C OMPANIES - 8000 SHARES OF SYNCOM MARKETING PVT. LTD. (SMPL) @ 5.50 PER SHARE ON 08.08.2003 AND 4000 SHARES OF ' SKY ZOOM DISTRIBUTORS P. LTD. (SLDPL) @ ~4/- PER SHARE ON 05.08.2003. PAYMENTS WERE MADE IN CASH FOR ACQUISITION OF SHARE S OF BOTH THE COMPANIES. (III) INTERESTINGLY, ADDRESS OF BOTH THE COMPANIES WAS THE SAME I.E 8, GANESH CHANDRA AVENUE, CALCUTTA-200 013. (IV) . AUTHORIZED SIGNATORY OF BOTH THE COMPANIES WAS ALSO THE SAME PERSON. PAGE 6 (V) PURCHASE OF SHARES OF BOTH THE COMPANIES WAS DO NE THROUGH STOCK AND SECURITIES LTD., 8, GANESH CHANDRA A VENUE, CALCUTTA AGAIN, TH E ADDRESS OF THE BROKER WAS ALSO THE SAME AS THAT ADDRESS OF THE TWO COMPANIES. (VI) BOTH THE COMPANIES INTIMATED THE ASSESSEE ON 0 7.04.2004 REGARDING TRANSFER OF SHARES AND MERGER OF THE TWO COMPANIES WITH ANOTHER COMPANY NAMELY KHOOBSURAT LTD., KOLKATA AND THAT AFTER THE MERGER THE ASSESSE E RECEIVED THE SHARES OF THE NEW COMPANY IN THE RATIO OF 4 OF THE NUMBER OF SHARES O F PREVIOUS TWO COMPANIES HOLD BY THE ASSESSEE. (VII) ON 22.04.2004, THE NEW COMPANY KHOOBSURAT LIM ITED INFORMED THE ASSESSEE FOR ISSUANCE OF SHARES IN LIEU OF EARLIER SHARES AND IS SUED SHARE CERTIFICATES OF 3000 SHARES (2000 SHARES IN LIEU OF SMPL AND 1000 SHARES IN LIE U OF SZDPL) OF KHOOBSURAT LTD. (VIII) THE ASSESSEE SOLD 2200 SHARES AT AN EXORBITA NT RATE OF @ 486.55 PER SHARE ON 07.06.2005 AMOUNTING TO ~1O,70,410/- AND 800 SHARES ON 20.06.2005 @~485.65 AMOUNTING TO ~3,88,520/-. THE SHARES WERE . SOLD TH ROUGH ANOTHER BROKER NAMELY ASHISH STOCK BROKING PVT. LTD. (IX) SALE PROCEEDS OF THE FIRST SALE TRANSACTION (0 7.06.2005) AND THE SECOND SALE TRANSACTION (20.06.2005) WERE CREDITED DIRECTLY BY THE ABOVE BROKER IN THE S.B. ACCOUNT NO. 104 73 OF UNION BANK OF INDIA, GANDHIBA GH, NAGPUR OF THE ASSESSEE ON 15.06.2005 AND 07.07.2005 RESPECTIVELY. (X) IN THE WHOLE TRANSACTIONS THE ASSESSEE MADE LON G TERM CAPITAL GAIN OF ~ 13,99,648/- AND CLAIMED EXEMPTION FROM TAX U/S.1O(3 8) OF THE INCOME TAX ACT. [5.15] ON THESE FACTS, THE HON'BLE ITAT HELD THAT: - '7. IN THIS REGARD 1 MAY GAINFULLY REFER TO THE DEC ISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MAJOR METALS LTD. VS. UNION OF INDIA AND OTHERS IN WRIT PETITION NO.397 OF 2011 VIDE ORDER DATED 22ND FEBRUARY, 2012 . THE HON'BLE JURISDICTIONAL HIGH COURT IN THIS CASE HAS HELD THAT A COMPANY CAN NOT COMMAND DISPROPORTIONATE AND HUGE SHARE PREMIUM AND SUCH RECEIPT OF BOGUS SH ARE APPLICATION MONEY EVEN THOUGH THROUGH BANKING CHANNEL CAN BE HELD TO BE AS SESSEE'S UNDISCLOSED INCOME RECEIVED IN THE GARB OF UNJUSTIFIED S HARE APPLICAT ION MONEY. IN THE PRESENT CASE 1 FIND THAT THERE IS NO JUSTIFICATION WHATSOEVER THAT THE SHARES OF AN UNKNOWN COMPANY OF 5/- CAN BE SOLD WITHIN TWO YEARS TIME AT 485/- WITHOUT THERE BEING ANY REASON ON RECORD. THIS UNEXPLAINED SPURT IN THE VALUE OF UNKN OWN COMPANY SHARES IS BEYOND PREPONDERANCE OF PROBABILITY. IT HAS BEEN HELD BY H ON 'BLE APEX COURT IN THE CASE OF DURGA PRASAD MORE AND SUMATI DAYAL THAT THE TEST OF HUMAN PROBABILITIES HAVE ALSO TO BE APPLIED BY THE AUTHORITIES BELOW. IN THE CASE OF SUMATI DAYAL 214 1TR 801, IT WAS HELD THAT DURING THE YEAR 1970-71 (PERTAINING TO TH E ASSESSMENT YEAR-1971-72) BETWEEN APRIL 6, 1970, AND MARCH 20, 1971, THE APPE LLANT CLAIMS TO HAVE WON IN HORSE RACE A TOTAL AMOUNT OF 3,11,831/- ON 13 OCCASIONS OUT OF WHICH TEN WINNING S WERE FROM JACKPOTS AND THREE WERE FROM TREBLE EVENT S. SIMILARLY IN THE YEAR 1971-72, THE APPELLANT WON RACES ON TWO OCCASIONS AND BOTH T IMES THE WINNING WERE FROM A JACKPOT. THESE RECEIPTS WERE TESTED ON THE TOUCH ST ONE OF HUMAN PROBABILITY AND IT WAS FOUND THAT APPARENT WAS NOT REAL. THAT IT WAS C ONTRARY TO STATISTIC AL THEORY AND EXPERIENCE OF THE FREQUENCIES AND PROBABILITIES. TH E EXCEPTIONAL LUCK ENJOYED BY THE ASSESSEE WAS HELD TO BE BEYOND PREPONDERANCE OF PRO BABILITY. HENCE THE HON 'BLE APEX COURT HAS AFFIRMED THE VIEW THAT IT WOULD NOT BE UNREASONABLE TO INFER THAT THE APPELLANT HAD NOT REALLY PARTICIPATED IN ANY OF THE RACES EXCEPT TO THE EXTENT OF PURCHASING THE WINNING TICKETS AFTER THE EVENTS PRE SUMABLY WITH UNACCOUNTED FUNDS. PAGE 7 8. WHEN THE PRESENT CASE IS EXAMINED ON THE TOUCH S TONE OF ABOVE CASE LAW, IT IS CLEAR THAT THESE TRANSACTIONS OF THE ASSESSEE CAN BY NO S TRETCH OF IMAGINATION BE CONSIDERED AS INVESTMENT TRANSACTIONS. THEY ARE ONLY MAKE BELI EVE TRANSACTION. HENCE I DO NOT FIND ANY INFIRMITY IN THE REVENUE TAXING THE RECEIP T IN THIS REGARD. 9. THE ENTIRE AMOUNT OF THE SO CALLED RECEIPT OF SH ARE SALES COULD WELL ALSO BE TREATED AS UNEXPLAINED CREDIT U/S.68 OF THE I. T. ACT AS IT HAS ALL THE INGREDIENTS OF ATTRACTING THE RIGOURS OF THE SAID SECTION. SECTION 68 OF THE I. T ACT PROVIDES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE MAIN TAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE {HEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE AO SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE OF THAT YEAR. IN THE PRESENT CASE THE ASSESSEE'S EXPLANATION THAT THE SA ID RECEIPT IS ON ACCOUNT OF INVESTMENT IN SHARES WHEREBY SHARE OF 5/- OF UNKNOWN COMPANY HAS JUMPED TO 485/- IN NO TIME HAS BEEN TOTALLY REJECTED BY THE A UTHORITIES BELOW. THE ASSESSEE HAS NOT AT ALL BEEN ABLE TO ADDUCE COGENT EVIDENCES IN THIS REGARD. THERE IS NO ECONOMIC OR FINANCIAL JUSTIFICATION FOR THE SALE PRICE OF TH ESE SHARES. THE SO CALLED PURCHASER OF THESE SHORES HAS NOT BEEN IDENTIFIED DESPITE EFFORT S OF THE AO. THE BROKER COMPANY THROUGH WHICH SHARES WERE SOLD DID NOT RESPOND TO Q UERIES IN THIS REGARD. HENCE THE FANTASTIC SALE PRICE REALISATION IS NOT AT ALL HUMA NLY PROBABLY, AS THERE IS NO ECONOMIC OR FINANCIAL BASIS, THAT A SHARE OF LITTLE KNOWN CO MPANY WOULD JUMP FROM 5/- TO 485/-. IN THESE CIRCUMSTANCES, I DO NOT FIND ANY IN FIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW. ACCORDINGLY I AFFIRM THE SAME AN D DECIDE THE ISSUE AGAINST THE ASSESSEE. 10. IN THE RESULT, THIS APPEAL FILED BY THE ASSES SEE STANDS DISMISSED ' [5.16] THE APPELLANT CARRIED THE MATTER BEFORE THE HON'BLE BOMBAY, COURT. IN THEIR ORDER (SUPRA) THE COURT HELD: - 'ON HEARING THE LD. COUNSEL LO1' THE ASSESSEE AND O N PERUSAL OF THE ORDER OF THE INCOME TAX-AUTHORITIES, IT ORDERS IN THIS APPEAL. B Y REFERRING TO AFORESAID FACTS, WHICH ARE NARRATED IN THE EARLIER PART OF THIS ORDER, AUT HORITIES FOUND THAT THE ASSESSEE HAD MADE INVESTMENT IN TWO UNKNOWN COMPANIES OF WHICH T HE DETAILS WERE NOT KNOWN TO HER. IT WAS HELD THAT TRANSACTION OF SALE AND PURC HASE OF SHARES OF TWO PENNY STOCK COMPANIES, THE MERGER OF THE TWO COMPANIES WITH ANO THER COMPANY, VIZ. KHOOBSURAT LIMIT, DID NOT QUALIFY AN INVESTMENT AND RATHER IT WAS AN ADVENTURE IN THE NATURE TRADE. IT WAS HELD BY ALL THE AUTHORITIES THAT THE MOTIVE OF THE INVESTMENT MADE BY ASSESSEE WAS NOT TO DERIVE INCOME BUT TO EARN PROFIT. BOTH T HE BROKERS, I.E. THE BROKER THROUGH WHOM THE ASSESSEE PURCHASED THE SHARES AND THE BROK ER THROUGH WHOM THE SHARES WERE SOLD, WERE LOCATED AT KOLKATA AM THE ASSESSEE DID NOT HAVE AN INKLING AS TO WHAT WAS GOING ON IN THE WHOLE TRANSACTION EXCEPT PAYING A SUM OF 65,000/- IN CASH FOR THE PURCHASE OF SHARES OF THE TWO PENNY STOCK COMPA NIES. THE AUTHORITIES FOUND THAT THOUGH THE SHARES WERE PURCHASED BY THE ASSESSEE AT 5.50 PS. PER SHARE AND 4/- PER SHARE FROM THE TWO COMPANIES IN THE YEAR 2003, THE ASSESSEE WAS ABLE TO SELL THE SHARES JUST WITHIN A YEARS TIME AT 486.55 PS. AND , 485. 65 PS. PER SHARE. THE BROKER THROUGH WHOM THE SHARES WERE SOLD BY THE ASSESSEE D ID NOT RESPOND TO THE ASSESSING OFFICER'S LETTER SEEKING THE NAMES, ADDRESSES AND T HE BANK ACCOUNTS OF THE PERSONS THAT HAD PURCHASED THE SHARES SOLD BY THE ASSESSEE. THE AUTHORITIES HAVE RECORDED A CLEAR FINDING OF FACT THAT THE ASSESSEE HAD INDULGED IN A DUBIOUS SHARE TRANSACTION MEANT TO ACCOUNT FOR THE UNDISCLOSED INCOME IN THE GARB OF L ONG TERM CAPITAL GAIN WHILE SO OBSERVING, THE AUTHORITIES HELD THAT THE ASSESSEE H AD NOT TENDERED COGENT EVIDENCE TO EXPLAIN AS TO WHO THE SHARES IN AN UNKNOWN COMPANY WORTH 5/- HAD JUMPED TO 485/- IN NO TIME. THE INCOME TAX APPELLATE TRIBUNAL HELD THAT THE FANTASTIC SALE PRICE WAS NOT AT ALL POSSIBLE AS THERE WAS NO ECONOMIC OR FINANCIAL BASIS AS TO WHO A SHARE WORTH ~ 5/- OF A LITTLE KNOWN COMPANY WOULD JUMP FR OM 5/- TO 485/-. THE FINDINGS PAGE 8 RECORDED BY THE AUTHORITIES ARE PURE FINDINGS OF FA CTS BASED ON A PROPER APPRECIATION OF THE MATERIAL ON RECORD. WHILE RECORDING THE SAID FINDINGS, THE AUTHORITIES HAVE FOLLOWED THE TESTS LAID DOWN BY THE HON 'BLE SUPREM E COURT AND THIS COURT IN SEVERAL DECISIONS. THE FINDINGS DO NOT GIVE RISE TO ANY SUB STANTIAL QUESTION OF LAW THE JUDGEMENTS REPORTED IN (2012) 20 TAXMAN.COM 529 (BO [I1BAY;) (CIT VERSUS JAMNADEVI AGRAWAL)), (1957) 31 ITR 294 (BOMBOY) (PU RANMAL RADHAKISHAN VERSUS CIT), (1970) 77 ITR 253 (SC) (RAJA BAHADUR VERSUS C IT) AND (2015) 235 TAXMAN 1 (BOM) (CIT VERSUS SMT. DATTA M SHAH) AND RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE ON FACTS AND CANNOT BE APPLIED TO THE CASE IN HAND. SINCE NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEA L, THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. ' [5.17] A REFERENCE. MAY GAINFULLY BE MADE TO THE F OLLOWING JUDICIAL PRONOUNCEMENT OF THE HON 'BLE SUPREME COURT. IN THE CASE OF MCDOWELL & C O. LTD. V. CTO [1985] REPORTED IN 154 ITR 148, THE HONBLE SUPREME COURT HELD AND OBSERVED AS UNDER: - 'TAX PLANNING MAY BE LEGITIMATE PROVIDED IT IS WITH IN THE FRAMEWORK OF ICM. COLOURABLE DEVICES CANNOT BE PART OF LAX PLANNING A ND IT IS WRONG! TO ENCOURAGE OR ENTERTAIN THE BELIEF THAT IT IS HONOURABLE TO AVOID THE PAYMENT OF LAX BY RESORTING TO DUBIOUS METHODS. IT IS THE OBLIGATION OF EVERY CITI ZEN TO PAY THE TAXES HONESTLY WITHOUT RESORTING TO SUBTERFUGES. ' [15.18] IN THIS REGARD, .THE DECISION OF THE SUPREM E COURT IN THE CASE OF UNION OF INDIA V. GOSALIA SHIPPING P. LTD. [1978) 113 ITR 307 IS WORT H MENTIONING, WHERE THE COURT HELD THAT, IN THE CONTEXT OF DETERMINING WHETHER THE TRANSACTI ON IS A SHAM OR ILLUSORY TRANSACTION OR A DEVICE OR A RUSE, THE INCOME-TAX AUTHORITIES ARE EN TITLED TO PENETRATE THE VEIL COVERING IT AND ASCERTAINING THE TRUTH. IN THE STILL EARLIER DECISI ON OF THE SUPREME COURT IN THE CASE OF CIT V. DURGA PRASAD MORE [1971] 82 ITR 540, THE COURT OBSE RVED THAT THE TAXING AUTHORITIES ARE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DO CUMENTS PRODUCED BEFORE THEM. THEY ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THE DOCUMENTS. THE MOST IMPORTANT DECISION OF TH E SUPREME COURT IN THIS REGARD IS THE CASE OF WORKMEN OF ASSOCIATED RUBBER INDUSTRY LTD. V. AS SOCIATED RUBBER INDUSTRY LTD. [AIR .1986 SC 1], WHERE THE COURT HELD THUS (HEADNOTE) : - 'IT IS THE DUTY OF THE COURT, IN EVERY CASE WHERE I NGENUITY IS EXPENDED TO AVOID TAXING AND WELFARE IEGISLATIONS, TO GET BEHIND THE SMOKESC REEN AND DISCOVER THE TRUE STALE OF AFFAIRS. THE COURT IS NOT TO BE SATISFIED WITH FORM AND LEAVE WELL ALONE THE SUBSTANCE OF A TRANSACTION. ... AVOIDANCE OF WELFARE LEGISLAT ION IS AS COMMON AS AVOIDANCE OF TAXATION AND THE APPROACH IN CONSIDERING PROBLEMS A RISING OUT OF SUCH AVOIDANCE HAS NECESSARILY TO BE THE SAME. [15.19] IN A RECENT LANDMARK JUDGEMENT IN THE CASE OF: - SECURITIES AND EXCHANGE BOARD OF INDIA .... APPEL LAN(S) VERSUS RAKHII TRADING PRIVATE LTD. . ... RESPONDENT(S) WITH CIVIL APPEAL NOS.3174-3177 OF 2011 AND CIVIL APPEAL NO.3180 OF 2011. THE ISSUE INVOLVED IN THAT CASE WAS : - '25. THE CRUX OF THE ALLEGATIONS IN THE SHOW CAUSE NOTICES IS THAT THE, PARTIES WERE BUYING AND SELLING SECURITIES IN THE DERIVATIVES SE GMENT AT PRICE WHICH DID NOT REFLECT THE VALUE OF THE UNDERLYING IN SYNCHRONISED AN REVE RSE TRANSACTIONS. ' [5.20] THE HON'BLE SC ANALYSED THE FACTS OF THE CA SE AND FOUND THAT THE TRANSACTIONS WERE MANIPULATED. AFTER EXAMINING THE FACTS THE CASE IT HELD: - PAGE 9 'PER KURIAN J 35. HAVING REGARD TO THE FACT THAT TH E DEALINGS IN THE STOCK EXCHANGE GENUINE; IT IS AN UNFAIR TRADE PRACTICE. SECURITIES MARKET, AS THE ]956 ACT PROVIDES IN THE PREAMBLE, DOES NOT PERMIT 'UNDESIRABLE TRANSACTIONS IN SECURITIES' . THE ACT INTENDS TO PREVENT UNDESIRABLE TRANSACTIONS IN SECURITIES BY REGULATING THE BUSINE SS OF DEALING THEREIN. UNDESIRABLE TRANSACTIONS WOULD CERTAINLY INCLUDE UNFAIR PRACTIC ES IN TRADE. THE SEBI ACT, 1992 WAS ENACTED TO PROTECT THE INTEREST OF THE INVESTORS IN SECURITIES. PROTECTION OF INTEREST OF INVESTORS SHOULD NECESSARILY INCLUDE PREVENTION OF MISUSE OF THE MARKET. ORCHESTRATED TRADES ARE A MISUSE OF THE MARKET MECHANISM. IT IS PLAYING THE M ARKET AND IT AFFECTS THE MARKER INTEGRITY. 36. ORDINARILY, THE TRADING WOULD HAVE TAKEN PLACE BETWEEN ANONYMOUS PARTIES AND THE PRICE WOULD HAVE BEEN DETERMINED BY THE MARKER FORCES OF DEMAND AND SUPPLY. IN THE INSTANT CASE, THE PARTIES DID NOT STOP AT SYNCHRONISED TRADING. T HE FACTS GO BEYOND THAT. THE TRADE REVERSALS IN THIS CASE INDICATE THAT THE PARTIES DID NOT INTE ND TO TRANSFER BENEFICIAL OWNERSHIP AND THROUGH THESE ORCHESTRATED TRANSACTIONS, THE INTENT ION OF WHICH WAS NOT REGULAR TRADING, OTHER INVESTORS HAVE BEEN EXCLUDED FROM PARTICIPATING IN -46 THESE TRADES. THE FACT THAT WHEN THE TRADE WAS NOT SYNCHRONIZING, THE TRADERS PLACED IT AT UNATTRACTIVE PRICES IS ALSO A STRONG INDICATION THAT THE TRADERS INTENDED TO PLAY WITH T HE MARKET .. 37. WE ALSO FIND IT DIFFICULT TO APPRECIATE THE STAND OF SAT THAT THE RATIONALE OF C HANGE OF BENEFICIAL OWNERSHIP DOES NOT ARISE IN THE DERIVATIVES SEGMENT. NO DOUBT, AS IN THE CAS E OF TRADE IN A SCRIP IN THE CASH SEGMENT, THERE IS NO PHYSICAL DELIVERY OF THE ASSET. HOWEVER EVEN IN THE DERIVATIVE SEGMENT THERE IS A CHANGE OF RIGHTS IN A CONTRACT. IN THE INSTANT CASE , THROUGH REVERSE TRADES, THERE WAS NO GENUINE CHANGE OF RIGHTS IN THE CONTRACT. SAT HAS ERRED IN ITS UNDERSTANDING OF CHANGE IN BENEFICIAL OWNERSHIP IN REVERSE TRADES. EVEN IN DERIVATIVES, T HE OWNERSHIP OF THE RIGHT IS RESTORED TO THE FIRST PARTY WHEN THE REVERSE TRADE OCCURS. IN THIS CONTEXT, THE DISCUSSION IN KETAN PAREKH (SUPRA) ASSUMES SIGNIFICANCE: '20 .... AS ALREADY OBSERVED 'SYNCHRONISATION' OR A NEGOTIATED DEAL IPSO FACTO IS NOT ILLEGAL. A SYNCHRONISED TRAN SACTION WILL, HOWEVER, BE ILLEGAL OR VIOLATIVE OF THE REGULATIONS IF IT IS EXECUTED WITH A VIEW TO MANIPULATE THE MARKET OR IF IT RESULTS IN CIRCULAR TRADING OR IS DUBIOUS IN NATURE AND IS 47 EXECUTED WITH A VIEW TO AVOID REGULATORY DETECTION OR DOES NOT INVOLVE CHANGE OF BENEFICIAL OWNERSHIP OR IS EXECUTED TO CREATE FALSE VOLUMES RESULTING IN UPSETTING THE MARKET EQUILIBRI UM. ANY TRANSACTION EXECUTED WITH THE INTENTION TO DEFEAT THE MARKET MECHANISM WHETHER NE GOTIATED OR NOT WOULD BE ILLEGAL. WHETHER A TRANSACTION HAS BEEN EXECUTED WITH THE INTENTION TO MANIPULATE THE MARKET OR DEFEAT ITS MECHANISM WILL DEPEND UPON THE INTENTION OF THE PAR TIES WHICH COULD BE INFERRED FROM THE ATTENDING CIRCUMSTANCES BECAUSE DIRECT EVIDENCE IN SUCH CASES MAY NOT BE AVAILABLE. THE NATURE OF THE TRANSACTION EXECUTED, THE FREQUENCY W ITH WHICH SUCH TRANSACTIONS ARE UNDERTAKEN, THE VALUE OF THE TRANSACTIONS, WHETHER THEY INVOLVE CIRCULAR TRADING AND WHETHER THERE IS REAL CHANGE OF BENEFICIAL OWNERSHIP, THE CONDITIONS THEN PREVAILING IN THE MARKET ARE SOME OF THE FACTORS WHICH GO TO SHOW THE INTENTION OF THE PARTI ES. THIS LIST OF FACTORS, IN THE VERY NATURE OF THINGS, CANNOT BE EXHAUSTIVE. ANY ONE FACTOR MAY OR MAY NOT BE DECISIVE AND IT IS FROM THE CUMULATIVE EFFECT OF THESE THAT AN INFERENCE WILL H AVE TO BE DRAWN.' (EMPHASIS SUPPLIED) FROM THE FACTS BEFORE US, IT IS CLEAR THAT THE TRAD ERS IN QUESTION DID NOT INTEND TO TRANSFER BENEFICIAL OWNERSHIP AND THEREFORE THESE TRADES ARE NON GENUINE. 38. RATHER THAN ALLOWING THE MARKET FORCES TO OPERATE IN THEIR NATURAL COURSE, T HE TRADERS REPEATEDLY CARRIED OUT THE 48 IMPUGNED TRANSACTIONS WHICH DEPRIVED OTHER MARKET P LAYERS FROM FULL PARTICIPATION. THE REPEATED REVERSALS AND PREDETERMINED ARRANGEMENT TO BOOK PROFITS AND LOSSES RESPECTIVELY, MADE IT CLEAR THAT THE PARTIES WERE NOT TRADING IN THE NORMAL SENSE AND ORDINARY COURSE. RESULTANTLY, THERE HAS CLEARLY BEEN A RESTRICTION O N THE FREE AND FAIR OPERATION OF MARKET FORCES IN THE INSTANT CASE. 'PER R BHANUMATHI J 46. CONSIDERING THE REVERSAL TR ANSACTIONS, QUANTITY, PRICE AND TIME AND SALE, PARTIES BEING PERSISTENT IN NUMBER O F SUCH TRADE TRANS ACTIONS WITH HUGE PRICE VARIATIONS, . IT WILL BE TOO NAIVE TO HOLD TH AT THE TRANSACTIONS ARE THROUGH SCREEN- BASED TRADING AND HENCE ANONYMOUS. SUCH CONCLUSION WOULD BE OVER-LOOKING THE PRIOR MEETING OF MINDS INVOLVING SYNCHRONIZATION OF BUY AND SELL ORDER AND NOT NEGOTIATED DEALS AS PER THE BOARD'S CIRCULAR. THE I MPUGNED TRANSACTIONS ARE MANIPULATIVE/DECEPTIVE DEVICE TO CREATE A DESIRED L OSS AND/OR PROFIT. SUCH SYNCHRONIZED TRADING IS VIOLATIVE OF TRANSPARENT NO RMS OF TRADING IN SECURITIES. IF THE PAGE 10 FINDINGS OF SAT ARE LA BE SUSTAINED, IT WOULD HAVE SERIOUS REPERCUSSIONS UNDERMINING THE INTEGRITY OF THE MARKET AND THE IMPUGNED ORDER OF SAT IS LIABLE TO BE SET ASIDE. 017 THE ABOVE ADDITIONAL REASONINGS ALSO, I AGREE WITH THE CONCLUSION ALLOWING THE APPEAL PREFERRED BY SEBI AGAINST THE TRADERS. I ALS O AGREE WITH THE CONCLUSION DISMISSING [HE APPEAL PREFERRED BY THE SEBI AGAINST THE BROKERS. [5.21] IT IS CLEAR THAT SUCH MANIPULATIVE TRADE PRA CTICE HAVE BEEN FROWN UPON BY THE HON'BLE APEX COURT. IT HAS BEEN HELD THAT SUCH TRANSACTIONS A COLLUSIVE TRANSACTIONS ARE COLLUSIVE TRANSACTIONS AS EXEMPLIFIED BY THE FOLLOWING 'THE I MPUGNED TRANSACTIONS ARE MANIPULATIVE/DECEPTIVE DEVICE TO CREATE A DESIRE LO SS AND/OR PROFIT. SUCH SYNCHRONIZED TRADING IS VIOLATIVE OF TRANSPARENT NORMS OF TRADING IN SEC URITIES. 'IT HAS BEEN HELD THAT THE NATURE OF THE TRANSACTION EXECUTED, THE FREQUENCY WITH WHICH SUCH TRANSACTIONS ARE UNDERTAKEN, THE VALUE OF THE TRANSACTIONS, WHETHER THEY INVOLVE CIRCULAR TRADING AND WHETHER THERE IS REAL CHANGE OF BENEFICIAL OWNERSHIP, THE CONDITIONS THEN PREVAILIN G IN THE MARKET ARE SOME OF THE FACTORS WHICH GO TO SHOW THE INTENTION OF THE PARTIES. THIS LIST OF FACTORS, IN THE VERY NATURE OF THINGS, CANNOT BE EXHAUSTIVE. ANYONE FACTOR MAY OR MAY NOT BE DECISIVE AND IT IS FROM THE CUMULATIVE EFFECT OF THESE THAT AN INFERENCE WILL HAVE TO BE D RAWN. IN THE CASE OF SANJAY BIMALCHAND JAIN (SUPRA) THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT 'THE AUTHORITIES HAVE RECORDED A CLEAR FINDING OF FACT THAT THE ASSESSEE HAD INDULGED IN A DUBIOUS SHARE TRANSACTION MEANT TO ACCOUNT FOR THE UNDISCLOSED INCOME IN THE GARB OF LONG TERM CAPITAL GAIN. WHILE SO OBSERVING, THE AUTHORITIES HELD THAT THE ASSESSEE HAD NOT TENDERED COGENT EVIDENCE TO EXPLAIN AS TO HOW THE SHARES IF! AN UNKNOWN COMPANY WORTH 5/- HAD JUMPED TO 485/- IN NO TIME.' FACTS OF THE IMPUGNED CASE ARE IDENTICAL. IN THIS CASE ON THE BA SIS OF THE ENQUIRIES CONDUCTED, STATEMENT OF SRI ASHISH KUMAR AGARWAL, DIRECTOR IN THIS COMPANY, WAS RECORDED U1S.131 OF THE ACT WHEREIN HE ADMITTED THAT HE HAD INDULGED IN PROVIDI NG BOGUS ACCOMMODATION ENTRIES IN THE FORM OF SHARE CAPITAL, UNSECURED LOAN, SALE OF SHAR ES ETC. INTER ALIA, THROUGH 'JAMA-KHARCHI /SHELL COMPANIES TO VARIOUS BENEFICIARIES IN LIEU OF COMMISSION BY FORMING COMPANIES HAVING DIFFERENT ADDRESSES MAINTAINED FROM HIS OFFI CE. THE LD. ASSESSING OFFICER FURTHER NOTED THAT THUS, SHRI ASHISH KUMAR AGARWAL HAD ADMI TTED THAT HE HAD INDULGED IN MANAGING BOGUS ACCOMMODATION ENTRY IN THE CASE OF M/S. ACCES S GLOBAL LTD. I.E. THE COMPANY THROUGH WHICH THE APPELLANT HAD SHOWN EXEMPTED INCOME BY WA Y OF LONG TERM CAPITAL GAIN. CONSEQUENT UPON THE ENQUIRIES CONDUCTED THE COMPANY M/S. ACCESS GLOBAL LTD. WAS SUSPENDED FROM MAKING TRANSACTION FROM CALCUTTA STO CK EXCHANGE. ACCORDINGLY, THE ADDITION MADE BY THE LD. ASSESSING OFFICER IS CONFIRMED. 3. THIS LEADS ALL THESE ASSESSEES AGREED. I HAVE GI VEN MY THOUGHTFUL CONSIDERATION TO RIVAL CONTENTION. THERE CAN HARDLY BE ANY DISPUT E THAT ASSESSEE HAVE PLACED ON RECORD THEIR IDENTICAL PAPER BOOK(S) COMPRISING OF RELEVANT PURCHASED BILLS OF SHARES, ALLOTMENT, CERTIFIED COPIES, CONTRACT NOTES, BROKE RAGE DETAILS ETC. I PUT UP A SPECIFIC QUERY AS TO WHETHER ANY OF ENTRY OPERATORS SEARCHED OR SURVEY HAS QUOTED THESE ASSESSEES NAMES OR NOT BEFORE THE DEPARTMENTAL AUTH ORITIES. THERE IS NO SUCH MATERIAL IN THE CASE FILE INDICATING SEARCH AS STATEMENT. I FIND THAT THIS CO-ORDINATE BENCHS DECISION IN ITA NO. 1918/KOL/2018 IN SMT. SANGITA JHUNJHUNWALA VS. ITO DECIDED ON 04.01.2019 HAS DELETED SIMILAR BOGUS LTCG VIDE FOLL OWING DETAILED DISCUSSION IN PARA 3 TO 5 AS UNDER:- 3. I HAVE GIVEN MY THOUGHTFUL CONSIDERATION TO RIVA L CONTENTIONS. IDENTICAL PAPER BOOK(S) COMPRISING OF RELEVANT PURCHASE BILLS OF SHARES, AL LOTMENTS CERTIFICATES, CONTRACT NOTES, PAGE 11 BROKERAGES DETAILS LEDGER, DEMAT STATEMENT ETC., ST AND PERUSED. MR. BHATTACHERJYA VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING THAT ALL THES E ASSESSEES HAVE ACTED IN COLLUSION WITH VARIOUS ENTRY OPERATORS FOR AVAILING THE IMPUGNED L TCG ENTRIES CLAIMED TO BE EXEMPT S. 10(38)OF THE ACT. HE STRONGLY SUPPORTS BOTH THE LOW ER AUTHORITIES ACTION SERIOUSLY DOUBTING GENUINENESS OF THE IMPUGNED CAPITAL GAINS MORE PART ICULARLY AS ANALYSIZED IN ASSESSMENT ORDER AS PER SCRIP PRICE MOVEMENT IN STOCK EXCHANGE , PROFIT AND LOSS ACCOUNT, BALANCE-SHEET AND BUSINESS ACTIVITIES. MR. BHATTACHERJYAS CASE I S THAT THE IMPUGNED LTCG DERIVED FROM SALE OF CONTRACT SCRIP WHICH HAS NOT SEEN ANY PROFI TABLE BUSINESS ACTIVITY DURING THE RELEVANT HOLDING PERIOD WHICH DEFIES ALL COMMERCIAL PRUDENCE WHICH HAS BEEN RIGHTLY TREATED AS NON- GENUINE BOTH IN ASSESSMENT AS WELL AS LOWER APPELLA TE PROCEEDINGS. HE QUOTES CASE LAW OF SUMATI DAYAL VS. CIT (1995) 80 TAXMANN. 89/214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC) VARIOUS TRIBUNAL DECISI ONS AS WELL AS HON'BLE HIGH COURTS JUDGMENTS ADDING SIMILAR SUMS TO BE UNEXPLAINED CAS H CREDITS ARE ALSO CITED IN SUPPORT. 4. I FIND NO MERIT IN EITHER OF THE REVENUES ABOVE STATED SUBMISSIONS. IT EMERGES THAT THIS TRIBUNALS CO-ORDINATE BENCHS DECISION IN SANJAY M EHTA VS. ACIT ITA NO.1089/KOL/2018 DECIDED ON 28.09.2018 HAS DELETED IDENTICAL ADDITIO N OF LTCG TREATED AS UNEXPLAINED CASH CREDITS REGARDING THE VERY SCRIP AS FOLLOWS:- 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO R IVAL CONTENTIONS. CASE FILE AS WELL AS A COMPILATION OF JUDICIAL PRECEDENT STAND PERUSE D. LEARNED DEPARTMENTAL REPRESENTATIVE EMPHASIZES TIME AND AGAIN THAT THE I NSTANT ISSUE OF BOGUS LTCG HAS RIGHTLY BEEN DECIDED AGAINST THE ASSESSEE IN BOTH A SSESSMENT AS WELL AS LOWER APPELLATE PROCEEDINGS RAISED PERTAINING TO ARTIFICI AL MANIPULATION OF SHARE PRICES IN BOTH M/S UNNO INDUSTRIES LTD. & SHARP TRADING FINAN CE LTD. WE FIND NO FORCE IN REVENUES INSTANT ARGUMENT. THIS TRIBUNAL CO-ORDINA TE BENCHS DECISION IN ITA 2394/KOL/2017 PRAKASH CHAND BHUTORIA VS. ITO DECIDED ON 27.06.2018 FOR AY 2014-15 ITSELF UPHOLDS SUCH A SHARE PRICES INCREAS E TO BE GENUINE QUA THE ABOVE FORMER ENTITY AS UNDER:- 5. IN RESPONSE TO THE QUERIES RAISED BY THE ASSESSI NG OFFICER ON THE ISSUE OF THE FACT THAT THE ASSESSEE RECEIVED RS. 31,62,372/- FROM SALE OF ONCE SCRIPS I.E. UNNO INDUSTRIES LTD. THE ASSESSEE SUBMITTED THE FOLLOWING FACTS: DETAILS OF PURCHASE OF SHARE FOR LONG TERM CAPITA L GAIN F.Y.2013-14 (A.Y.2014-15): 1. I STATE THAT I HAD PURCHASED 100 EQUITY SHARES OF PINNACLE VINTRADE LTD. ON 20.01.2012 FROM UNIGLORY DEVELOPERS PVT. LTD. PINNACLE VINTRAD E LTD. WAS MERGED WITH UNNO INDUSTRIES LTD. AND THERE WAS CHANGE OF MANAGEMENT AND CONTROL OF UNNO INDUSTRIES LTD. PURSUANT TO SCHEME OF ARRANGEMENT SANCTIONED BY THE HONBLE HIGH COURT AT BOMBAY. 2. PAYMENT FOR THE PURCHASE OF AFORESAID 100 EQUITY OF PINNACLE VINTRADE LTD. WAS MADE BY ACCOUNT PAYEE TAMILNAD MERCANTILE LTD. BANK CHEQUE NO. 736027. 3. BANK STATEMENT OF TAMILNAD MERCANTILE LTD. BANK REF LECTING PAYMENT (CHEQUE NO. 736027) FOR PURCHASE OF THE SAID INVESTMENT IN EQUI TY SHARES OF PINNACLE VINTRADE LTD. IS ENCLOSED (HIGHLIGHTING THE SAID ENTRY). ANNEXURE-I. 4. THE EQUITY SHARES OF UNNO INDUSTRIES LTD. WERE ALLO TTED PURSUANT UPON MERGER OF PINNACLE VINTRADE LTD. WITH UNNO INDUSTRIES LTD. PU RSUANT TO SANCTION OF SCHEME OF ARRANGEMENT BY THE HONBLE HIGH COURT AT BOMBAY, I WAS ISSUED 91000 EQUITY SHARES OF UNNO INDUSTRIES LTD. IN LIEU OF MY SHAREHOLDING IN PINNACLE VINTRADE LTD. THE RELEVANT GIST OF THE SCHEME OF ARRANGEMENT SANCTIONED BY THE HONBLE HIGH COURT WAS COMMUNICATED BY THE COMPANY TO THE BOMBAY STOCK EXC HANGE VIDE LETTER DATED 12 TH FEBRUARY, 2013. A COPY OF THE SAID LETTER DOWNLOADE D FROM BSE WEBSITE IS ENCLOSED FOR YOUR READY REFERENCE. I ALSO ENCLOSE UNNO INDUSTRIE S LTD. LETTER DATED 12 TH FEBRUARY, 2013 AND 7 TH MARCH, 2013 COMMUNICATING THE ISSUANCE OF SHARES I N LIEU SHARES OF PINNACLE VINTRADE LTD. UPON SANCTION OF SCHEME OF ARRANGEMEN T BY THE HONBLE COURT. ANNEXURE II PAGE 12 5. AS THE EQUITY SHARES OF PINNACLE VINTRADE LTD. PURC HASED WERE NOT LISTED, HENCE NO CONTRACT NOTES WERE ISSUED. HOWEVER, COPY OF BILL I NDICATING PURCHASE OF SAID EQUITY SHARES IS ENCLOSED. ANNEXURE III 6. EQUITY SHARES OF PINNACLE VINTRADE LTD., WERE DIREC TLY PURCHASED FROM UNIGLORY DEVELOPERS PVT. LTD. 209, VIRESHWAR CHAMBERS, M.G. ROAD, NERA SHAN TALKIES VILE PARLE (E), MUMBAI, MAHARASHTRA-400057. 7. EQUITY SHARES OF PINNACLE VINTRADE LTD. WERE PURCHA SED IN PHYSICAL FORM. 8. I HAVE THREE DEMAT ACCOUNTS AS FOLLOWS- A) NAME OF DP- ASHIKA STOCK BROKING LTD. (DP ID NO. 12034500) DEMAT ACCOUNT NO. 1203450000003128 ADDRESS OF DP-TRINITY, 7 TH FLOOR, 226/1, A.J.C. BOSE ROAD, KOLKATA-700020. DP ACCOUNT OPENED ON-31.08.2004 B) NAME OF DP- GUINESS SECURITIES LTD. (DP ID NO. IN302898) DEMAT ACCOUNT NO. 10350406 ADDRESS OF DP-GUINESS HOUSE, 18, DESHPRIYA PARK ROA D, KOLKATA-700026. DP A/C OPENED ON-25.05.2013 C) NAME OF DP- TAMILNAD MERCANTILE BANK LTD. (DP ID NO. IN303069) DEMAT ACCOUNT NO. 10051996 ADDRESS OF DP-PEARL TOWERS DPS CELL, AC 16, III FLO OR, II AVENUE, ANNA NAGAR WEST, CHENNAI-600040. 9. DEMAT STATEMENTS OF M/S ASHIKA STOCK BROKING LTD. A ND GUINESS SECURITIES LTD. FOR F.Y. 2013-14 AND 2014-15 IN RESPECT OF LONG TERM CAPITAL GAINS ARE ENCLOSED. ANNEXURE IV. 10. THE EQUITY SHARES OF M/S UNNO INDUSTRIES LTD. WERE SUBMITTED FOR DEMATERIALIZATION ON 01.04.2013 AND CREDITED TO MY DEMAT A/C NO. 1203450 000003128 WITH M/S ASHIKA STOCK BROKING LTD. (DP ID NO. 12034500) ON 12.04.2013 (91 000 SHARES). DETAILS OF SALE OF SHARE FOR LONG TERM CAPITAL GAIN FINANCIAL YEAR 2013-14(A.Y.2014- 15): 1. THE EQUITY SHARES OF M/S UNNO INDUSTRIES LTD. ARE L ISTED AT BOMBAY STOCK EXCHANGE (BSE), A RECOGNIZED STOCK EXCHANGE OF INDIA SINCE L AST SO MANY YEARS AND EVEN DURING THE TIME OF SALE BY ME. THE SECURITY CODE OF THE SAID EQUITY SHARES AT BSE IS 519273 AND ISIN NO. IS INE 142N0 1023. 2. EQUITY SHARES OF UNNO INDUSTRIES LTD. WERE SOLD ON BOMBAY STOCK EXCHANGE THROUGH SEBI REGISTERED STOCK BROKER ASHIKA STOCK BROKING L TD. AND GUINESS SECURITIES LTD. WHOSE DETAILS ARE AS UNDER: A) NAME: ASHIKA STOCK BROKING LTD. ADDRESS: TRINITY, 7 TH FLOOR, 226/1, A.J.C. BOSE ROAD, KOLKATA-700020. CONTACT NO. 033 22839952. B) NAME: GUINESS SECURITIES LTD. ADDRESS: GUINESS HOUSE, 18, DESHPRIYA PARK ROAD, KO LKATA-700026 CONTACT NO. 033 30015555. 3. CONTRACT NOTES ISSUED REGARDING SALE OF EQUITY SHAR ES OF UNNO INDUSTRIES LTD. ON BOMBAY STOCK EXCHANGE BY SEBI REGISTERED BROKERS- A SHIKA STOCK BROKING LTD. AND GUINESS SECURITIES LTD. ARE ENCLOSED. ANNEXURE V. PAGE 13 4. THE RELEVANT DEMAT ACCOUNT STATEMENTS OF ASHIKA STO CK BROKING LTD. AND GUINESS SECURITIES LTD. REFLECTING THE DEBIT OF SHARES OF U NNO INDUSTRIES LTD. UPON SALE ARE ENCLOSED. (ENTRIES HIGHLIGHTED). ANNEXURE VI . 5. THE LEDGER OF THE BROKERS OF ASHIKA STOCK BROKING L TD. AND GUINESS SECURITIES LTD. FOR THE FINANCIAL YEAR 2013-14 ARE ENCLOSED. ANNEXURE VII. 6. TAMILNAD MERCANTILE LTD. BANK STATEMENT REFLECTING THE RECEIPTS OF SALE CONSIDERATION FROM THE SEBI REGISTERED STOCK BROKERS (HIGHLIGHTIN G THE SAID ENTRIES) IS ENCLOSED. ANNEXURE VIII. 7. OUT OF SALE CONSIDERATION MONEY OF RS. 3151423.00 F ROM UNNO INDUSTRIES LTD. A SUM OF RS. 3150000.00 HAS BEEN INVESTED IN EQUITY SHARE S OF GLOW DIAM DESIGNS PVT. LTD. ALL THE EVIDENCES WERE ATTACHED AS ANNEXURES AS STA TED ABOVE. 6. THE ASSESSING OFFICER IN HIS ORDER DID NOT REFER TO ANY OF THESE EVIDENCES. INSTEAD AT PARA 6 AND 7 HE CONCLUDED HELD AS FOLLOWS: 6. THE DETAILS OF PURCHASE AND SALE OF THIS PARTIC ULAR SCRIP I.E. UNNO INDUSTRIES LTD. (HEREINAFTER REFERRED AS THE SCRIP) WERE EXAM INED IN WHICH SHARES WERE SOLD IN JUNE/AUGUST, 2013 AT THE PRICE OF RS. 31,62,379/- A ND PURCHASED RS. 1,00,000/- I.E. A HUMONGOUS RISE OF OVER 3100% OVER A VERY SHORT PERI OD OF JUST 24 MONTHS. THESE FACTS DEMANDED A DEEPER STUDY OF THE PRICE MOVEMEN TS AND SHARE MARKET BEHAVIOR OF THE ENTITIES INVOLVED IN TRADE, OF THE SCRIP AS THE SHARE PRICE MOVEMENTS AND THE PROFIT EARNED BY THE BENEFICIARIES WERE BEYOND HUMAN PROBA BILITIES. THUS A DEEPER STUDY WAS NEEDED TO ASCERTAIN WHETHER THE TRANSACTIONS WE RE GENUINE INVESTMENT TRANSACTION OF SHAM ONES AND COLORABLE DEVICE ONLY TO CONVERT THE UNACCOUNTED CASH INTO TAX EXEMPT. 7. APART FROM THIS, THE DIRECTORATE OF INCOME TAX, KOLKATA VARIOUS ENQUIRIES HAVE BEEN MADE ON PROJECT BASIS, WHICH HAS RESULTED INTO THE UNEARTHING OF HUGE SYNDICATE OF ENTRY OPERATORS, SHARE BROKERS AND MONEY LENDER INV OLVED IN PROVIDING BOGUS ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL LOSS. IT HAS COME TO THE LIGHT THAT LARGE SCALE MANIPULATION HAS BEEN DONE IN MARKET PRICE OF SHOWN OF CERTAIN COMPANIES LISTED IN THE BSE BY CER TAIN BENEFICIARY IS UTILIZED TO PURCHASE SHARES OF SUCH COMPANY AT A VERY HIGH ARTI FICIALLY INFLATED MARKET PRICE. SOME OF THE LISTED COMPANIES DIRECTLY OR IN DIRECTL Y OWNED BY OPERATORS AND WHOSE SHARES PRICE HAVE BEEN APPARENTLY MANIPULATED BY TH E SYNDICATE OF OPERATORS. OUT OF THE ABOVE ENQUIRY MADE BY DIT(INV.), KOLKATA HAS ES TABLISHED THAT ONE OF THE MAIN MANIPULATED COMPANY WHICH YOU HAD AVAILED IS ALSO U NDER THIS SYNDICATE. HENCE, IT IS CRYSTAL CLEAR THAT SHARP TRADING COMPANY IS ONE OF THE MAIN MANIPULATED COMPANY (PENNY LISTED) TO CONVERT UNACCOUNTED CASH OF BENEF ICIARY THROUGH LONG TERM CAPITAL GAIN WITH CLAIM A CERTAIN PERCENTAGE OF COMMISSION. 7. THEREAFTER THE AO MADE AN ADDITION UNDER 68 OF T HE ACT. AGGRIEVED THE ASSESSEE CARRIED THE MATTER AN APPEAL. THE LD. FIRST APPELLATE AUTHORITY CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT, THE TRANSACTION IN QUESTION COMES WITH IN THE AMBIT OF SUSPICIOUS TRANSACTION AND THEREFORE, THE RULES OF SUSPICIOUS TRANSACTION WOULD APPLY TO THE CASE. HE FURTHER STATED THAT THE PAYMENTS THROUGH BANK OF PROCESSING OF TRA NSACTION THROUGH STOCK EXCHANGE AND OTHER SUCH FEATURES ARE ONLY APPARENT FEATURES AND THAT T HE REAL FEATURE ARE THE MANIPULATION AND ABNORMAL PRICE RAISE AND THE SUDDEN DIP THEREAFTER. BASED ON SURROUNDING CIRCUMSTANCES AND CIRCUMSTANTIAL EVIDENCE AND THE ORDER OF THE TRIBUN AL IN THE CASE OF BHAG CHAND CHABRA (HUF) VS. ITO, IN I.T.A. NO. 3088& 3107/2007 DATED 31.12.2010, THE ADDITION MADE BY THE AO WAS CONFIRMED. AGGRIEVED THE ASSESSEE IS IN APPE AL BEFORE US. PAGE 14 8. A PERUSAL OF THE ORDER OF THE AO DEMONSTRATES T HAT THIS ADDITION WAS MADE MERELY ON SUSPICION AND IN A ROUTINE AND MECHANICAL MANNER. THIS IS C LEAR FROM THE FACT THAT THE AO REFERS TO SOME SHARP TRADING COMPNAY AS ONE OF THE MAIN ,MANIPULATED COMPANY AND WHEREAS THE ASSESSEE SOLD SCRIPS IN UNNO INDUSTRIES LTD. THE AO REFERS TO VARIOUS ENQUIRIES MADE BY THE DIRECTORS OF INCOME TAX, KOLKATA ON P ROJECT BASIS AND THAT THIS RESULTED INTO UNEARTHING OF A HUGE SYNDICATE OF ENTRY OPERATORS A ND SHARE BROKERS AND MONEY LENDERS INVOLVED IN PROVIDING OF BOGUS ACCOMMODATION ENTRIE S. THE REPORT AS THE SO-CALLED PROJECT AND THE EVIDENCE COLLECTED BY THE DIT (INV.), KOLKATA E TC HAVE NOT BEEN BROUGHT ON RECORD. IT IS WELL SETTLED THAT ANY DOCUMENT RELIED UPON BY THE A O FOR MAKING AN ADDITION HAS TO BE SUPPLIED TO THE ASSESSEE AND AN OPPORTUNITY SHOULD BE PROVIDED TO THE ASSESSEE TO REBUT THE SAME. IN THIS CASE, GENERAL STATEMENTS HAVE BEEN MA DE BY THE AO AND THE ADDITION IS MADE BASED ON SUCH GENERALIZATIONS. THE ASSESSEE HAS NOT BEEN CONFRONTED WITH ANY OF THE EVIDENCE COLLECTED IN THE INVESTIGATION DONE BY THE DIT(INV. ), KOLKATA. EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USED AGAINST THE ASSESSEE WITHOUT GIVING A COPY OF THE SAME TO THE ASSESSEE AND THEREAFTER GIVING HIM AN OPPORTUNITY TO REBUT T HE SAME. 9. THE AO FURTHER RELIES ON THE SHOP INCREASE OF 3 1000% OF THE VALUE OF SHARES OVER THE PERIOD OF 2 YEARS. THOUGH THIS IS HIGHLY SUSPICIOUS , IT CANNOT TAKE THE PLACE OF EVIDENCE. THE HON'BLE SUPREME COURT HAS STATED THAT SUSPICION HOW EVER STRONG CANNOT BE THE BASIS FOR MAKING AN ADDITION. THE EVIDENCE PRODUCED BY THE AS SESSEE LISTED ABOVE PROVES HIS CASE AND THE AO COULD NOT CONTROVERT THE SAME BY BRINGING ON RECORD ANY EVIDENCE. THE EVIDENCE SAID TO HAVE BEEN COLLECTED BY THE DIT (INV.), KOLKATA A ND THE REPORT IS NOT PRODUCED BEFORE THIS BENCH. 10. I NOW DISCUSS THE CASE LAW ON THE SUBJECT. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT, KOLKATA-III VS. SMT. SHREYASHI GANGULI REPORTE D IN [2012] (9) TMI 1113 HELD AS FOLLOWS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE ORDER OF THE LD.. TRIBUNAL IS PERVERSE IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT UNDER SECTION 6 8 OF THE INCOME TAX ACT, 1961, BY IGNORING THE FACTS ON RECORD. THE LD. TRIBUNAL AFTER CONSIDERING THE MATERIAL AND HEARING CAME TO A FACT FINDING WHICH IS AS FOLLOWS: THE ASSESSING OFFICER HAS DOUBTED THE TRANSACTION S INCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER, THE DEMAT ACCOUNT GIVEN THE STATEMENT OF TRANSACTIONS FROM 01.04.2004 TO 31.03. 2005 I.E. RELEVANT FOR THE ASSESSMENT YEAR UNDER APPEAL (2005-06) ARE BEFORE U S. THERE CANNOT BE ANY DOUBT ABOUT THE TRANSACTION AS HAS BEEN OBSERVED BY THE ASSESSING OFFICER. THE TRANSACTIONS WERE AS PER NORMS UNDER CONTROLLED BY THE SECURITIES TRANSACTION TAX, BROKERAGE SERVICE TAX AND CESS, WH ICH WERE ALREADY PAID. THEY WERE COMPLIED WITH. ALL THE TRANSACTIONS WERE THROUGH BANK. THERE IS NO IOTA OF EVIDENCE OVER THE ABOVE TRANSACTIONS AS IT WERE THROUGH DEMAT FORMAT. HENCE, WE AGREE WITH THE GIVEN FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN ACCEPTING THE TRANSACTIONS AS GENU INE TOO. IN VIEW OF THE FACT FINDINGS WE CANNOT REAPPRECIATE , RECORDING IS SUCH, CANNOT BE SAID TO BE PERVERSE AS IT IS NOT FACT FINDING OF THE LD. TRIBUNAL ALONE. THE COMMISSIONER OF INCOME TAX CAME TO THE SAME FACT FI NDING. CONCURRENT FACT FINDING ITSELF MAKES THE STORY OF PERVERSITY, UNBEL IEVABLE. THE D BENCH OF THE KOLKATA TRIBUNAL IN THE CASE O F GAUTAM KUMAR PINCHA VS. ITO, IN I.T.A. NO. 569/KOL/2017 DATED 15.11.2017 AT PARA 19 ONWARDS HELD AS FOLLOWS: (I) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDENCES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERATED A PAGE 15 SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACT IONS SO AS TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW E XPRESSED BY THE LD AO BUT HE MISERABLY FAILED TO SUBSTANTIATE THAT. THE HIGH COU RT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING PRICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. (II) CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITED [2 013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RECORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER HELD THAT I N ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANS ACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTED TO WITH UL TERIOR MOTIVE. (III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BROKERAGE, SERVICE TAX, AND CESS. THE RE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. (IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE D ECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHERE T HE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLE GED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON THE BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT T HE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED B Y THE REVENUE WAS DISMISSED. ( V) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE D ECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WER E NOT GENUINE. (VI) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE AO, BASED ON THE INFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRA NSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WE RE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTED BY EVIDENCE . IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DE MAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARIL Y DISMISSED BY HIGH COURT. 8.4. IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I T O XIV) IN PARA 6(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASS ESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAND AND THEREFO RE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS SUPPORTED WITH MATER IAL EVIDENCES WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE T HAT IN THE ABSENCE OF MATERIAL/EVIDENCE THE ALLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE ALSO FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMA T STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PUR CHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. THESE EVIDENCES WERE NEITHER FOU ND BY THE AO NOR BY THE LD. CIT(A) TO BE PAGE 16 FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTIN G THE CLAIM OF THE ASSESSEE THAT INCOME FROM LTCG IS EXEMPTED U/S 10(38) OF THE ACT. FOR COMING TO SUCH A CONCLUSION WE RELY ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INVESTMENTS IN ITA NO.620 OF 2008 DATED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOW S : IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZE D STOCK BROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECEIVED FROM THE S HARE BROKER THROUGH ACCOUNT PAYEE WHICH ARE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESS EE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANSACTIONS CANNOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER IT WAS HELD THAT THE TRANSACTIONS OF THE SHARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT T HERE IS NO SUBSTANTIAL QUESTION OF LAW HELD IN THIS MATTER. HENCE THE APPEAL BEING ITA NO.620 OF 2 008 IS DISMISSED. 8.5. WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY BEEN INCO RPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED BY US TO ARRI VE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IM PUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE H OLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHAR ES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE, THEREFORE, DIRECT THE AO TO DELE TE THE ADDITION. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. THE A BENCH OF THE KOLKATA TRIBUNAL IN THE CASE O F ITO VS. SHALEEN KHEMANI IN I.T.A. NO. 1945/KOL/2014 DATED 18.10.2017 AT PARA 9.1. TO 9.4 HELD AS FOLLOWS: 9.1 WE FURTHER FIND THAT THE TRANSACTION OF SALE OF SHARES BY THE ASSESSEE WAS DULY BACKED BY ALL EVIDENCES INCLUDING CONTRACT NOTES, D EMAT STATEMENT, BANK ACCOUNT REFLECTING THE TRANSACTIONS, THE STOCK BROKERS HAVE CONFIRMED THE TRANSACTIONS, THE STOCK EXCHANGE HAS CONFIRMED THE TRANSACTIONS, THE SHARES HAVE BEEN SOLD ON THE ONLINE PLATFORM OF THE STOCK EXCHANGE AND EACH TRAD E OF SALE OF SHARES WERE HAVING UNIQUE TRADE NO. AND TRADE TIME. IT IS NOT THE CASE THAT THE SHARES WHICH WERE SOLD ON THE DATE MENTIONED IN THE CONTRACT NOTE WERE NOT TR ADED PRICE ON THAT PARTICULAR DATE. THE LD AO DOUBTED THE TRANSACTIONS DUE TO THE HIGH RISE IN THE STOCK PRICE BUT FOR THAT, THE ASSESSEE COULD NOT BE BLAMED AND THERE WAS NO E VIDENCE TO PROVE THAT THE ASSESSEE OR ANY ONE ON HIS BEHALF WAS MANIPULATING THE STOCK PRICES. THE STOCK EXCHANGE AND SEBI ARE THE AUTHORITIES APPOINTED BY THE GOVERNMEN T OF INDIA TO ENSURE THAT THERE IS NO STOCK RIGGING OR MANIPULATION. THE LD AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT THESE AGENCIES HAVE ALLEGED ANY STOCK MANIPULATION AGAINST THE ASSESSEE AND OR THE BROKERS AND OR THE COMPANY. IN ABSENCE O F ANY EVIDENCES IT CANNOT BE SAID THAT MERELY BECAUSE THE STOCK PRICE MOVED SHARPLY, THE ASSESSEE WAS TO BE BLAMED FOR BOGUS TRANSACTIONS. IT IS ALSO TO BE SEEN THAT IN T HIS CASE, THE SHARES WERE HELD BY THE DONORS FROM 2003 AND SOLD IN 2010 THUS THERE WAS A HOLDING PERIOD OF 7 YEARS AS PER SECTION 49 OF THE ACT AND IT CANNOT BE SAID THAT TH E ASSESSEE AND THE DONORS WERE MAKING SUCH PLANS FOR THE LAST 7 YEARS TO RIG THE S TOCK PRICE TO GENERATE BOGUS CAPITAL GAINS THAT TOO WITHOUT ANY EVIDENCES WHATSOEVER. 9.2 IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSE E AND / OR THE STOCK BROKER M/S P DIDWANIA & CO AND TOSHITH SECURITIES P LTD., BOTH R EGISTERED SHARE AND STOCK BROKERS WITH CALCUTTA STOCK EXCHANGE HAD CONFIRMED THE TRAN SACTION AND HAVE ISSUED LEGALLY VALID CONTRACT NOTES UNDER THE LAW AND SUCH CONTRAC T NOTES ARE AVAILABLE IN PAGES 41- 52 OF THE PAPER BOOK. WE FIND THAT THE HONBLE CALC UTTA HIGH COURT IN THE CASE OF PR PAGE 17 CIT VS RUNGTA PROPERTIES PRIVATE LIMITED ITAT NO 10 5 OF 2016 DATED 8 TH MAY 2017 IN A SIMILAR ISSUE DISMISSED THE APPEAL OF THE DEPARTM ENT BY MAKING THE FOLLOWING OBSERVATIONS: (11) ON THE LAST POINT, THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT BROUGHT ON RECORDS ANY MATERIAL TO SHOW THAT THE TRANSACTIO NS IN SHARES OF THE COMPANY INVOLVED WERE FALSE OR FICTITIOUS. IT IS FINDING OF THE ASSESSING OFFICER THAT THE SCRIPS OF THIS COMPANY WAS EXECUTED BY A BROKER THROUGH CROSS DEALS AND THE BROKER WAS SUSPENDED FOR SOME TIME. IT IS ASSESSEES CONTENTIO N ON THE OTHER THAT EVEN THOUGH THERE ARE ALLEGATIONS AGAINST THE BROKER, BUT FOR T HAT REASON ALONE THE ASSESSEE CANNOT BE HELD LIABLE. ON THIS POINT THE TRIBUNAL HELD AS A MATTER OF FACT THE AO DOUBTED THE INTEGRITY O F THE BROKER OR THE MANNER IN WHICH THE BROKER OPERATION AS PER THE STATEMENT OF ONE OF THE DIRECTORS OF THE BROKER FIRM AND ALSO AO OBSERVED THAT ASSESSEE HAD NOT FURNISHED ANY EXPLANATION IN RESPECT OF THE INTENTION OF SHOWING TRADING OF SHARES ONLY IN THREE PENNY STOCKS. AO RELIED THE LOSS OF RS.25,30, 396/- ONLY ON THE BASIS OF INFORMATION SUBMITTED BY THE STOCK FICTITIOUS. AO H AS ALSO NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS PLACED ON RECORD BY TH E ASSESSEE. AOS OBSERVATION AND CONCLUSION ARE MERELY BASED ON THE INFORMATION REPRESENTATIVE. THEREFORE ON SUCH BASIS NO DISALLOW ANCE CAN BE MADE AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF LD . CIT(A), WHO HAS RIGHTLY ALLOWED THE CLAIM OF ASSESSEE. THUS GROUND NO. 1 OF THE REVENUE IS DISMISSED. WE AGREE WITH THE REASONING OF THE TRIBUNAL ON THIS POINT ALSO. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. THE SU GGESTED QUESTIONS, IN OUR OPINION DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. 9.3. WE THEREFORE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGAT IONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE ARG UMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON T HE ORDERS OF THE LD AO. WE FIND THAT THE ALLEGATION THAT THE ASSESSEE AND / OR BROK ERS GETTING INVOLVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECO RD THAT THE ASSESSEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEM AT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATI NG TO PURCHASE AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEITHER FOU ND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONA FIDE AND GENUINE AND THEREFORE THE LD AO WAS N OT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. WE ALSO FIND THAT THE LD CITA RIGHTLY RELIED ON THE DECISION OF THE HONBLE HIGH COURT AT CALCUTTA IN THE CASE OF ALPINE INVESTMENTS IN ITA NO. 620 OF 2008 DATED 26 TH AUGUST 2008 WHEREIN THE HONBLE COURT HELD AS FOLLOWS: IT APPEARS THAT THE SHARE LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCKBROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE PAYMENTS MA DE TO THE STOCKBROKER AND ALL THE PAYMENTS RECEIVED FROM STOCKBROKER THRO UGH ACCOUNT PAYEE INSTRUMENTS, WHICH WERE ALSO FILED IN ACCORDANCE WI TH THE ASSESSMENT. PAGE 18 IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME THE TRIBUNAL CAME TO THE CONCLUS ION AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. IN DOING SO, THE TRIB UNAL HELD THAT THE TRANSACTION FULLY SUPPORTED BY THE DOCUMENTARY EVID ENCES COULD NOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER, I T WAS HELD THAT THE TRANSACTIONS OF SHARE ARE GENUINE. THEREFORE, WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS ANY SUBSTANTIAL QUESTI ON OF LAW INVOLVED IN THIS MATTER. HENCE, THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. 9.4. WE ALSO FIND THAT THE VARIOUS OTHER CASE LAWS OF HONBLE JURISDICTIONAL HIGH COURT AND OTHER CASE LAWS ALSO RELIED UPON BY THE L D AR AND FINDINGS GIVEN THEREON WOULD APPLY TO THE FACTS OF THE INSTANT CASE. THE LD DR WAS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFECT. HENCE WE HOLD THAT THE LD AO WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF SOICL AS U NDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT AND THEREFORE WE UPHOLD THE ORDER OF THE LD CITA AND DISMISS THE APPEAL OF THE REVENUE. ACCORDINGLY THE GROUNDS RAI SED BY THE REVENUE ARE DISMISSED. APPLYING THE PROPOSITION OF LAW LAID DOWN IN ALL TH E ABOVE REFERRED CASES, THE FACTS OF THIS CASE, I FIND FORCE IN THE SUBMISSION OF THE ASSESSE E AND THERE ARE BACKED BY EVIDENCE. I ALSO FIND THAT THE REVENUE HAS NOT BASED ITS FINDING ON IN ANY EVIDENCE. IN VIEW OF THE ABOVE DISCUSSION THE ADDITION MADE U/S 68 OF THE ACT IS H EREBY DELETED. 6. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY C ONTENDS AT THIS STAGE THAT THE DIT(INV) HAS CARRIED OUT A DETAILED INVESTIGATION IN VARIOUS ENTRY OPERATORS CASES. THEY HAVE BEEN FOUND TO HAVE RIGGED SUCH KIND SCRIPS PRICES RISE. THERE IS NOT EVEN A SINGLE MATERIAL DURING THE COURSE OF HEARING WHICH COULD SUGGEST THE ASSESSEE TO HAVE ENGAGED IN ANY KIND OF FOUL PLAY. THIS TRIBUNALS ANOTHER CO-ORDINATE BENCH DECISION IN ITA NO.2281/KOL/2017 NAVNEET AGARWAL VS. ITO DECIDED ON 20.07.2018 HAS REJECTED REVENUES ALL TH ESE ARGUMENTS AS FOLLOWS: 9. THE LD. DR ON THE OTHER HAND, RELIED ON THE ORDE R OF THE ASSESSING OFFICER AND REITERATED THE FINDINGS MADE THEREIN AND SUBMITTED THAT THE SA ME BE UPHELD. HE VEHEMENTLY ARGUED THAT MERELY BECAUSE THE ASSESSEE HAS PRODUCED ALL T HE EVIDENCES REQUIRED TO PROVE HIS CLAIM, THE SAME CANNOT BE ACCEPTED AS THESE ARE ORG ANIZED AND MANAGED TRANSACTIONS. HE TOOK THIS BENCH THROUGH THE MODUS OPERANDI MENTIONE D BY THE AO AND SUBMITTED THAT IN ALL CASES WHERE THE SHARES OF THESE COMPANIES ARE P URCHASED AND SOLD, ADDITIONS HAVE TO BE MADE, IRRESPECTIVE OF THE EVIDENCE PRODUCED AS T HERE ARE CASES WHERE MANIPULATION HAS TAKEN PLACE. HE REITERATED EACH AND EVERY OBSER VATION AND FINDING OF THE LD. AO AS WELL AS THE LD. CIT(A) AND PRAYED THAT THE SAME BE UPHELD. 10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMI SSIONS, PERUSAL OF THE PAPERS ON RECORD AND ORDER OF THE LOWERS AUTHORITIES BELOW, AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS. 11. THE ASSESSEE IN THIS CASE HAS STATED THE FOLLOW ING FACTS AND PRODUCED THE FOLLOWING DOCUMENTS AS EVIDENCES: 1. THE ASSESSEE HAD MADE AN APPLICATION FOR ALLOTMENT OF 50000 EQUITY SHARES OF SMART CHAMPS IT AND INFRA LTD. AND SHE WAS ALLOTTED THE SHARE ON 3 RD DECEMBER 2011 (COPY OF APPLICATION FORM, INTIMATION OF ALLOTMENT AND SHARE CERTIFICATE PAPER BOOK AT PAGE 8 TO 10). 2. THE PAYMENT FOR THE ALLOTMENT OF SHARES WAS MADE TH ROUGH AN ACCOUNT PAYEE CHEQUE (COPY OF THE BANK STATEMENT EVIDENCING THE SOURCE O F MONEY AND PAYMENT MADE TO SMART CHAMPS IT & INFRA LTD. FOR SUCH SHARES ALLOTTED IS PLACED IN THE PAPER BOOK AT PAGE NO. 11). 3. ANNUAL RETURN NO. 20B WAS FILED WITH REGISTRAR OF C OMPANIES BY SMART CHAMPS IT & INFRA LTD SHOWING THE ASSESSEES NAME AS SHAREHOLD ER (COPY OF ANNUAL RETURN NO. 20B FILED WITH REGISTRAR OF COMPANIES BY SMART CHAMPS IT & INFRA LTD. IS PLACED IN THE PAPER BOOK AT PAGE NO. 12 TO 18.) PAGE 19 4. THE ASSESSEE LODGED THE SAID SHARES WITH THE DEPOSI TORY M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. WITH A DEMAT REQUEST ON 11 TH FEBRUARY, 2012. THE SAID SHARES WERE DEMATERIALIZED ON 31 ST MARCH, 2012 (COPY OF DEMAT REQUEST SLIP ALONG WITH THE TRANSACTION STATEMENT IS PLACED IN THE PAPER BOOK AT PAGE NO. 1 9 TO 21). 5. ON 24.01.2013, THE HONBLE BOMBAY HIGH COURT APPROV ED THE SCHEME OF AMALGAMATION OF SMART CHAMPS IT AND INFRA LTD. WITH CRESSANDA SOLUTIONS LTD. IN ACCORDANCE WITH THE SAID SCHEME OF AMALGAMATION, THE ASSESSEE WAS A LLOTTED 50000 EQUITY SHARES OF M/S. CRESSANDA SOLUTIONS LTD. THE DEMAT SHARES ARE REFL ECTED IN THE TRANSACTION STATEMENT OF THE PERIOD FROM 1 ST NOVEMBER 2011 TO 31 ST DECEMBER, 2013 (A COPY OF THE SCHEME OF AMALGAMATION ALONGWITH COPY OF ORDER OF THE HONBLE BOMBAY HIGH COURT AND A COPY OF THE LETTER TO THIS EFFECT SUBMITTED BY CRESSANDA S OLUTIONS LTD. TO BOMBAY STOCK EXCHANGE IS PLACED IN THE PAPER BOOK AT PAGE NO 22 TO 43.) 6. THE ASSESSEE SOLD 50000 SHARES COSTING RS. 500000/- THROUGH HER BROKER SKP STOCK BROKING PVT. LTD WHICH WAS A SEBI REGISTERED BROKE R AND EARNED A LONG TERM CAPITAL GAIN OF RS. 2,18,13,072/-. (COPY OF THE BANK STATEM ENT, BROKERS CONTRACT NOTE TOGETHER WITH THE DELIVERY INSTRUCTIONS GIVEN TO THE DP AND BROKERS CONFIRMATION IS ALSO PLACED IN THE PAPER BOOK AT PAGE NO 44 TO 65). 7. COPY OF FORM NO. 10DB ISSUED BY THE BROKER, IN SUPP ORT OF CHARGING OF S.T.T. IN RESPECT OF THE TRANSACTIONS APPEARING IN THE LEDGER IS PLAC ED IN THE PAPER BOOK AT PAGE NO. 66. 8. THE HOLDING PERIOD OF THE SAID SCRIP IS MORE THAN O NE YEAR (ABOVE 500 DAYS) THROUGH IN ORDER TO GET THE BENEFIT OF CLAIM OF LONG TERM CAPI TAL GAIN THE HOLDING PERIOD IS REQUIRED TO BE 365 DAYS. 12.THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAVE REJECTED THESE EVIDENCES FILED BY THE ASSESSEE BY REFERRING TO MODUS OPERANDI OF PERSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH HIS EXEMPT FROM INCOME TAX. ALL THESE OBSERV ATIONS ARE GENERAL IN NATURE AND ARE APPLIED ACROSS THE BOARD TO ALL THE 60,000 OR MORE ASSESSEES WHO FALL IN THIS CATEGORY. SPECIFIC EVIDENCES PRODUCED BY THE ASSESSEE ARE NOT CONTROVE RTED BY THE REVENUE AUTHORITIES. NO EVIDENCE COLLECTED FROM THIRD PARTIES IS CONFRONTED TO THE ASSESSES. NO OPPORTUNITY OF CROSS- EXAMINATION OF PERSONS, ON WHOSE STATEMENTS THE REV ENUE RELIES TO MAKE THE ADDITION, IS PROVIDED TO THE ASSESSEE. THE ADDITION IS MADE BASE D ON A REPORT FROM THE INVESTIGATION WING. 13. THE ISSUE FOR CONSIDERATION BEFORE US IS WHETHE R, IN SUCH CASES, THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUIDE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILITIES, HUMAN BEHAVIOR AND DISCOVERY OF THE MODUS OPERANDI ADOPTED IN EARNING ALLEGED BOGUS LTCG AND STCG, THA T HAVE SURFACED DURING INVESTIGATIONS SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCL USION AS TO WHETHER THE CLAIM IN GENUINE OR NOT. AN ALLEGED SCAM MIGHT HAVE TAKEN PLACE ON LTCG ETC. BUT IT HAS TO BE ESTABLISHED IN EACH CASE, BY THE PARTY ALLEGING SO, THAT THIS ASSE SSEE IN QUESTION WAS PART OF THIS SCAM. THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESSEES ACTION GIVING HER INVOLVEMENT IN THE SCAM SHOULD BE ESTABLISHED. THE ALLEGATION IMPLY THAT CA SH WAS PAID BY THE ASSESSEE AND IN RETURN THE ASSESSEE RECEIVED LTCG, WHICH IS INCOME EXEMPT FROM INCOME TAX, BY WAY OF CHEQUE THROUGH BANKING CHANNELS. THIS ALLEGATION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVENUE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIGATIONS OFFICE BY WAY OF STATEMENTS RECORDED ETC. HAS TO ALSO BE BROUGHT ON RECORDING EACH CASE, WHEN SUCH A STATEMENT, EVIDENCE ETC. IS RELIED UPON BY THE REV ENUE TO MAKE ANY ADDITIONS. OPPORTUNITY OF CROSS EXAMINATION HAS TO BE PROVIDED TO THE ASSESSE E, IF THE AO RELIES ON ANY STATEMENTS OR THIRD PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATERIAL OR EVIDENCE IS SOUGHT TO BE RELIED UPON BY THE AO, HE HAS TO CONFRONT THE ASSESSEE WIT H SUCH MATERIAL. THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED BASED ON MERE CONJECTURES UNVERI FIED BY EVIDENCE UNDER THE PRETENTIOUS GARB OF PREPONDERANCE OF HUMAN PROBABILITIES AND TH EORY OF HUMAN BEHAVIOR BY THE DEPARTMENT. PAGE 20 14. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PUT BEFORE HIM AND HE IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CASE, THE AO RELIES ONLY ON A REPORT AS THE BASIS FOR THE ADDITION. THE EVIDENCE BASED ON WHICH THE DDIT REPORT IS PREPARED IS NOT BROUGHT ON RECORD BY THE AO NOR IS IT PUT BEFORE THE ASSESSEE. THE SUBMISSION OF TH E ASSESSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RECEIVED SOME TIPS AND SHE CHOSE TO INVEST BASE D ON THESE MARKET TIPS AND HAD TAKEN A CALCULATED RISK AND HAD GAINED IN THE PROCESS AND T HAT SHE IS NOT PARTY TO THE SCAM ETC., HAS TO BE CONTROVERTED BY THE REVENUE WITH EVIDENCE. WHEN A PERSON CLAIMS THAT SHE HAS DONE THESE TRANSACTIONS IN A BONA FIDE AND GENUINE MANNER AND WAS BENEFITTED, ONE CANNOT REJECT THIS SUBMISSION BASED ON SURMISES AND CONJECTURES. AS TH E REPORT OF INVESTIGATION WING SUGGESTS, THERE ARE MORE THAN 60,000 BENEFICIARIES OF LTCG. E ACH CASE HAS TO BE ASSESSED BASED ON LEGAL PRINCIPLES OF LEGAL IMPORT LAID DOWN BY THE C OURTS OF LAW. 15. IN OUR VIEW, JUST THE MODUS OPERANDI, GENERALIS ATION, PREPONDERANCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTIN G THE CLAIM OF THE ASSESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CONTROVERT THE VAL IDITY AND CORRECTNESS OF THE DOCUMENTARY EVIDENCES PRODUCED, THE SAME CANNOT BE REJECTED BY THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF OMAR SALAV MOHAMED SAIT REPORTED IN (1959) 37 ITR 151 (SC) HAD HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF SURMISES, SUSP ICION AND CONJECTURES. IN THE CASE OF CIT(CENTRAL), KOLKATA VS. DAULAT RAM RAWATMULL REPO RTED IN 87 ITR 349, THE HON'BLE SUPREME COURT HELD THAT, THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO. THE BURDEN OF PROVING A TRANSAC TION TO BE BOGUS HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNERRINGLY AND REASONABLY RA ISING AN INTERFERENCE TO THAT EFFECT. THE HON'BLE SUPREME COURT IN THE CASE OF UMACHARAN SHAH & BROS. VS. CIT 37 ITR 271 HELD THAT SUSPICION HOWEVER STRONG, CANNOT TAKE THE PLACE OF EVIDENCE. IN THIS CONNECTION WE REFER TO THE GENERAL VIEW ON THE TOPIC OF CONVEYANCE OF IMMOVABL E PROPERTIES. THE RATES/SALE PRICE ARE AT VARIANCE WITH THE CIRCLE RATES FIXED BY THE REGISTR ATION AUTHORITIES OF THE GOVERNMENT IN MOST CASES AND THE GENERAL IMPRESSION IS THAT CASH WOULD HAVE CHANGED HANDS. THE COURTS HAVE LAID DOWN THAT JUDICIAL NOTICE OF SUCH NOTORIOUS FACTS C ANNOT BE TAKEN BASED ON GENERALISATIONS. COURTS OF LAW ARE BOUND TO GO BY EVIDENCE. 16. WE FIND THAT THE ASSESSING OFFICER AS WELL AS THE L D. CIT(A) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER, WE DO NOT FIND THAT THE ASSESSING OFFICER AS WELL A S THE LD. CIT(A), HAVE BROUGHT OUT ANY PART OF THE INVESTIGATION WING REPORT IN WHICH THE ASSES SEE HAS BEEN INVESTIGATED AND /OR FOUND TO BE A PART OF ANY ARRANGEMENT FOR THE PURPOSE OF GEN ERATING BOGUS LONG TERM CAPITAL GAINS. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PERSONS INVESTIGATED, INCLUDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASS ESSEE WAS IN COLLUSION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LINK THEIR WRONG DOINGS WITH THE ASSESSEE. IN FACT, THE INVESTIGATION WING IS A SEPARATE DEPARTMENT WHI CH HAS NOT BEEN ASSIGNED ASSESSMENT WORK AND HAS BEEN DELEGATED THE WORK OF ONLY MAKING INVE STIGATION. THE ACT HAS VESTED WIDEST POWERS ON THIS WING. IT IS THE DUTY OF THE INVESTIG ATION WING TO CONDUCT PROPER AND DETAILED INQUIRY IN ANY MATTER WHERE THERE IS ALLEGATION OF TAX EVASION AND AFTER MAKING PROPER INQUIRY AND COLLECTING PROPER EVIDENCES THE MATTER SHOULD B E SENT TO THE ASSESSMENT WING TO ASSESS THE INCOME AS PER LAW. WE FIND NO SUCH ACTION EXECUTED BY INVESTIGATION WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALLY AG AINST THE ASSESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUILTY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CASE, IN OUR VIEW, THE ASSESS ING OFFICER AT BEST COULD HAVE CONSIDERED THE INVESTIGATION REPORT AS A STARTING POINT OF INVESTI GATION. THE REPORT ONLY INFORMED THE ASSESSING OFFICER THAT SOME PERSONS MAY HAVE MISUSED THE SCRI PT FOR THE PURPOSE OF COLLUSIVE TRANSACTION. THE ASSESSING OFFICER WAS DUTY BOUND T O MAKE INQUIRY FROM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION AND THEN TO COLLECT EVI DENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. WE, HOWE VER, FIND THAT THE ASSESSING OFFICER HAS PAGE 21 NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT TH E TRANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHERWISE SUPPORTED BY PROPER THIRD PARTY DOCUMENTS ARE COLLUSIVE TRANSACTIONS. 17. THE HONBLE SUPREME COURT WAY BACK IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT [1959] 37 ITR 288 (SC) HELD THAT ASSESSMENT COU LD NOT BE BASED ON BACKGROUND OF SUSPICION AND IN ABSENCE OF ANY EVIDENCE TO SUPPORT THE SAME. THE HONBLE COURT HELD: ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGH ED WITH THE INCOME-TAX OFFICER WE MAY OBSERVE THAT THE NOTORIETY FOR SMUGGLING FOOD G RAINS AND OTHER COMMODITIES TO BENGAL BY COUNTRY BOATS ACQUIRED BY SAHIBGUNJ AND T HE NOTORIETY ACHIEVED BY DHULIAN AS A GREAT RECEIVING CENTRE FOR SUCH COMMOD ITIES WERE MERELY A BACKGROUND OF SUSPICION AND THE APPELLANT COULD NOT BE TARRED WITH THE SAME BRUSH AS EVERY ARHATDAR AND GRAIN MERCHANT WHO MIGHT HAVE BEEN IND ULGING IN SMUGGLING OPERATIONS, WITHOUT AN IOTA OF EVIDENCE IN THAT BEH ALF. THE CANCELLATION OF THE FOOD GRAIN LICENCE AT NAWGACHIA AND THE PROSECUTION OF T HE APPELLANT UNDER THE DEFENCE OF INDIA RULES WAS ALSO OF NO CONSEQUENCE INASMUCH AS THE APPELLANT WAS ACQUITTED OF THE OFFENCE WITH WHICH IT HAD BEEN CHARGED AND ITS LICENCE ALSO WAS RESTORED. THE MERE POSSIBILITY OF THE APPELLANT EARNING CONSIDERA BLE AMOUNTS IN THE YEAR UNDER CONSIDERATION WAS A PURE CONJECTURE ON THE PART OF THE INCOME-TAX OFFICER AND THE FACT THAT THE APPELLANT INDULGED IN SPECULATION (IN KALAI ACCOUNT) COULD NOT LEGITIMATELY LEAD TO THE INFERENCE THAT THE PROFIT IN A SINGLE TRANSACTION OR IN A CHAIN OF TRANSACTIONS COULD EXCEED THE AMOUNTS, INVOLVED IN THE HIGH DENOMINATION NOTES,--- THIS ALSO WAS A PURE CONJECTURE OR SURMISE ON THE P ART OF THE INCOME-TAX OFFICER. AS REGARDS THE DISCLOSED VOLUME OF BUSINESS IN THE YEA R UNDER CONSIDERATION IN THE HEAD OFFICE AND IN BRANCHES THE INCOME-TAX OFFICER INDUL GED IN SPECULATION WHEN HE TALKED OF THE POSSIBILITY OF THE APPELLANT EARNING A CONSI DERABLE SUM AS AGAINST WHICH IT SHOWED A NET LOSS OF ABOUT RS. 45,000. THE INCOME-T AX OFFICER INDICATED THE PROBABLE SOURCE OR SOURCES FROM WHICH THE APPELLANT COULD HA VE EARNED A LARGE AMOUNT IN THE SUM OF RS. 2,91,000 BUT THE CONCLUSION WHICH HE ARR IVED AT IN REGARD TO THE APPELLANT HAVING EARNED THIS LARGE AMOUNT DURING THE YEAR AND WHICH ACCORDING TO HIM REPRESENTED THE SECRETED PROFITS OF THE APPELLANT I N ITS BUSINESS WAS THE RESULT OF PURE CONJECTURES AND SURMISES ON HIS PART AND HAD NO FOU NDATION IN FACT AND WAS NOT PROVED AGAINST THE APPELLANT ON THE RECORD OF THE P ROCEEDINGS. IF THE CONCLUSION OF THE INCOME-TAX OFFICER WAS THUS EITHER PERVERSE OR VITI ATED BY SUSPICIONS, CONJECTURES OR SURMISES, THE FINDING OF THE TRIBUNAL WAS EQUALLY P ERVERSE OR VITIATED IF THE TRIBUNAL TOOK COUNT OF ALL THESE PROBABILITIES AND WITHOUT A NY RHYME OR REASON AND MERELY BY A RULE OF THUMB, AS IT WERE, CAME TO THE CONCLUSION T HAT THE POSSESSION OF 150 HIGH DENOMINATION NOTES OF RS. 1,000 EACH WAS SATISFACTO RILY EXPLAINED BY THE APPELLANT BUT NOT THAT OF THE BALANCE OF 141 HIGH DENOMINATIO N NOTES OF RS.1,000 EACH. THE OBSERVATIONS OF THE HONBLE APEX COURT ARE EQUA LLY APPLICABLE TO THE CASE OF THE ASSESSEE. IN OUR VIEW, THE ASSESSING OFFICER HAVING FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE TRANSACTION OF THE ASSESSEE WAS A CO LLUSIVE TRANSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN FACT, I N THIS CASE NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT EVIDENCES OR MA TERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BEING INVESTIGATED BY VARIOUS WINGS OF THE I NCOME TAX DEPARTMENT HENCE IN OUR VIEW UNDER THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE. 18. WE NOW CONSIDER THE VARIOUS PROPOSITIONS OF LAW LAID DOWN BY THE COURTS OF LAW. THAT CROSS-EXAMINATION IS ONE PART OF THE PRINCIPLES OF NATURAL JUSTICE HAS BEEN LAID DOWN IN THE FOLLOWING JUDGMENTS: A) AYAAUBKHAN NOORKHAN PATHAN VS. THE STATE OF MAHA RASHTRA AND ORS. 23. A CONSTITUTION BENCH OF THIS COURT IN STATE OF M.P.V. CHINTAMAN SADASHIVA VAISHAMPAYAN AIR 1961 SC1623, HELD THAT THE RULES O F NATURAL JUSTICE, REQUIRE THAT A PARTY PAGE 22 MUST BE GIVEN THE OPPORTUNITY TO ADDUCE ALL RELEVAN T EVIDENCE UPON WHICH HE RELIES, AND FURTHER THAT, THE EVIDENCE OF THE OPPOSITE PARTY SH OULD BE TAKEN IN HIS PRESENCE, AND THAT HE SHOULD BE GIVEN THE OPPORTUNITY OF CROSS-EXAMINING THE WITNESSES EXAMINED BY THAT PARTY. NOT PROVIDING THE SAID OPPORTUNITY TO CROSS-EXAMINE WIT NESSES, WOULD VIOLATE THE PRINCIPLES OF NATURAL JUSTICE. (SEE ALSO: UNION OF INDIA V. T.R. VARMA, AIR 1957 SC 882; MEENGLAS TEA ESTATE V. WORKMEN, AIR 1963 SC 1719; M/S. KESORAM C OTTON MILLS LTD. V. GANGADHAR AND ORS. ,AIR 1964 SC708; NEW INDIA ASSURANCE CO. LTD. V. NUSLI NEVILLE WADIA AND ANR. AIR 2008 SC 876; RACHPAL SINGH AND ORS. V. GURMIT SINGH AND ORS. AIR 2009 SC 2448;BIECCO LAWRIE AND ANR. V. STATE OF WEST BENGAL AND ANR. AI R 2010 SC 142; AND STATE OF UTTAR PRADESH V. SAROJ KUMAR SINHA AIR 2010 SC 3131). 24. IN LAKSHMAN EXPORTS LTD. V. COLLECTOR OF CENTRA L EXCISE (2005) 10 SCC 634, THIS COURT, WHILE DEALING WITH A CASE UNDER THE CENTRAL EXCISE ACT, 1944,CONSIDERED A SIMILAR ISSUE I.E. PERMISSION WITH RESPECT TO THE CROSS-EXAMINATION OF A WITNESS. IN THE SAID CASE, THE ASSESSEE HAD SPECIFICALLY ASKED TO BE ALLOWED TO CROSS-EXAMI NE THE REPRESENTATIVES OF THE FIRMS CONCERN, TO ESTABLISH THAT THE GOODS IN QUESTION HA D BEEN ACCOUNTED FOR IN THEIR BOOKS OF ACCOUNTS, AND THAT EXCISE DUTY HAD BEEN PAID. THE C OURT HELD THAT SUCH A REQUEST COULD NOT BE TURNED DOWN, AS THE DENIAL OF THE RIGHT TO CROSS-EX AMINE, WOULD AMOUNT TO ADENIAL OF THE RIGHT TO BE HEARD I.E. AUDI ALTERAMPARTEM. 28. THE MEANING OF PROVIDING A REASONABLE OPPORTUNI TY TO SHOW CAUSE AGAINST AN ACTION PROPOSED TO BE TAKEN BY THE GOVERNMENT, IS THAT THE GOVERNMENT SERVANT IS AFFORDED A REASONABLE OPPORTUNITY TO DEFEND HIMSELF AGAINST TH E CHARGES, ON THE BASIS OF WHICH AN INQUIRY IS HELD. THE GOVERNMENT SERVANT SHOULD BE G IVEN AN OPPORTUNITY TO DENY HIS GUILT AND ESTABLISH HIS INNOCENCE. HE CAN DO SO ONLY WHEN HE IS TOLD WHAT THE CHARGES AGAINST HIM ARE. HE CAN THEREFORE, DO SO BY CROSS-EXAMINING THE WITN ESSES PRODUCED AGAINST HIM. THE OBJECT OF SUPPLYING STATEMENTS IS THAT, THE GOVERNMENT SERVAN T WILL BE ABLE TO REFER TO THE PREVIOUS STATEMENTS OF THE WITNESSES PROPOSED TO BE EXAMINED AGAINST HIM. UNLESS THE SAID STATEMENTS ARE PROVIDED TO THE GOVERNMENT SERVANT, HE WILL NOT BE ABLE TO CONDUCT AN EFFECTIVE AND USEFUL CROSS-EXAMINATION. 29. IN RAJIV ARORA V. UNION OF INDIA AND ORS. AIR 2 009SC 1100, THIS COURT HELD: EFFECTIVE CROSS-EXAMINATION COULD HAVE BEEN DONE AS REGARDS T HE CORRECTNESS OR OTHERWISE OF THE REPORT, IF THE CONTENTS OF THEM WERE PROVED. THE PR INCIPLES ANALOGOUS TO THE PROVISIONS OF THE INDIAN EVIDENCE ACT AS ALSO THE PRINCIPLES OF NATUR AL JUSTICE DEMAND THAT THE MAKER OF THE REPORT SHOULD BE EXAMINED, SAVE AND EXCEPT IN CASES WHERE THE FACTS ARE ADMITTED OR THE WITNESSES ARE NOT AVAILABLE FOR CROSS-EXAMINATION O R SIMILAR SITUATION. THE HIGH COURT IN ITS IMPUGNED JUDGMENT PROCEEDED TO CONSIDER THE ISSUE O N A TECHNICAL PLEA, NAMELY, NO PREJUDICE HAS BEEN CAUSED TO THE APPELLANT BY SUCH NON-EXAMIN ATION. IF THE BASIC PRINCIPLES OF LAW HAVE NOT BEEN COMPLIED WITH OR THERE HAS BEEN A GROSS VI OLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE HIGH COURT SHOULD HAVE EXERCISED ITS JURISDICTI ON OF JUDICIAL REVIEW. 30. THE AFORESAID DISCUSSION MAKES IT EVIDENT THAT, NOT ONLY SHOULD THE OPPORTUNITY OF CROSS- EXAMINATION BE MADE AVAILABLE, BUT IT SHOULD BE ONE OF EFFECTIVE CROSS-EXAMINATION, SO AS TO MEET THE REQUIREMENT OF THE PRINCIPLES OF NATURAL J USTICE. IN THE ABSENCE OF SUCH AN OPPORTUNITY, IT CANNOT BE HELD THAT THE MATTER HAS BEEN DECIDED IN ACCORDANCE WITH LAW, AS CROSS-EXAMINATION IS AN INTEGRAL PART AND PARCEL OF THE PRINCIPLES OF NATURAL JUSTICE. B) ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF C. EX., KOLKATA-II WHEREIN IT WAS HELD THAT: 4. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, AND MR. K.RADHAKRISHNAN, LEARNED SENIOR C OUNSEL WHO APPEARED FOR THE REVENUE. PAGE 23 5. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND T HAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAI D TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AF ORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE T RIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL T O HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOS E DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. 6. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEI R TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATIO N. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAIN TAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETH ER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS ME NTIONED IN THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFO RE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUB JECT MATTER OF THE CROSS- EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE . WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17-3-2005[2005 (187) E.L. T. A33 (S.C.)] WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DI RECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTIN G THE SUBMISSIONS. 7. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPA RTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE A FORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE NOTICE. 19. ON SIMILAR FACTS WHERE THE REVENUE HAS ALLEGED THAT THE ASSESSEE HAS DECLARED BOGUS LTCG, IT WAS HELD AS FOLLOWS: A) THE CALCUTTAHIGH COURT IN THE CASE OF BLBCABLES &CONDUCTORS[ITA NO. 78 OF2017] DATED19.06.2018. THE HIGH COURT HELD VIDE PARA 4.1: WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECL ARED IN ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSAC TION AS BOGUS, THERE HAS TO BE SOME CONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. HERE IN THE CASE THE TRANSACTIONS OF THE COMMODITY EXCHANGED HAVE NOT ONLY BEEN EXPLAINED BUT ALSO SUBSTANTIATED FROM THE CONF IRMATION OF THE PARTY. BOTH THE PARTIES ARE CONFIRMING THE TRANSACTIONS WHICH HAVE BEEN DULY SUPPORTED WITH THE BOOKS OF ACCOUNTS AND BANK TRANSACTIONS. THE LD. AR HAS ALSO SUBMITTED THE BOARD RESOLUTION FOR THE TRADING OF COMMODITY TRANSACTION . THE BROKER WAS EXPELLED FROM THE COMMODITY EXCHANGE CANNOT BE THE CRITERIA TO HO LD THE TRANSACTION AS BOGUS. IN PAGE 24 VIEW OF ABOVE, WE REVERSE THE ORDER OF THE LOWER AU THORITIES AND ALLOW THE COMMON GROUNDS OF ASSESSEES APPEAL. [QUOTED VERBATIM] THIS IS ESSENTIALLY A FINDING OF THE TRIBUNAL ON FA CT. NO MATERIAL HAS BEEN SHOWN TO US WHO WOULD NEGATE THE TRIBUNALS FINDING THAT OFF MA RKET TRANSACTIONS ARE NOT PROHIBITED. AS REGARDS VERACITY OF THE TRANSACTIONS , THE TRIBUNAL HAS COME TO ITS CONCLUSION ON ANALYSIS OF RELEVANT MATERIALS. THAT BEING THE POSITION, TRIBUNAL HAVING ANALYZED THE SET OFF ACTS IN COMING TO ITS FINDING, WE DO NOT THINK THERE IS ANY SCOPE OF INTERFERENCE WITH THE ORDER OF THE TRIBUNAL IN EXER CISE OF OUR JURISDICTION UNDER SECTION 260A OF THE INCOME TAX ACT, 1961. NO SUBSTA NTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL AND THE STAY PETITION, A CCORDINGLY, SHALL STAND DISMISSED. B) THE JAIPURITAT IN THE CASE OF VIVEKAGARWAL[ITA N O.292/JP/2017]ORDER DATED 06.04.2018 HELD AS UNDER VIDE PAGE 9 PARA 3: WE HOLD THAT THE ADDITION MADE BY THE AO IS MERELY BASED ON SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO CONTROVERT THE EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF THE CLAIM. FURTHER, THE ASSESSING OFF ICER HAS ALSO FAILED TO ESTABLISH THAT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNTED INCOM E IN THE SHAPE OF LONG TERM CAPITAL GAIN. HENCE WE DELETE THE ADDITION MADE BY THE AO ON THIS ACCOUNT. C) THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF PREMPAL GANDHI[ITA-95-2017(O&M)] DATED18.01.2018 AT VIDE PA GE 3 PARA 4 HELD AS UNDER: .. THE ASSESSING OFFICER IN BOTH THE CASES ADDED THE APPRECIATION TO THE ASSESSEES INCOME ON THE SUSPICION THAT THESE WERE FICTITIOUS TRANSACTIONS AND THAT THE APPRECIATION ACTUALLY REPRESENTED THE ASSESSEE S INCOME FROM UNDISCLOSED SOURCES. IN ITA-18-2017 ALSO THE CIT (APPEALS) AND THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT PRODUCED ANY EVIDENCE WHA TSOEVER IN SUPPORT OF THE SUSPICION. ON THE OTHER HAND, ALTHOUGH THE APPRECIA TION IS VERY HIGH, THE SHARES WERE TRADED ON THE NATIONAL STOCK EXCHANGE AND THE PAYME NTS AND RECEIPTS WERE ROUTED THROUGH THE BANK. THERE WAS NO EVIDENCE TO INDICATE FOR INSTANCE THAT THIS WAS A CLOSELY HELD COMPANY AND THAT THE TRADING ON THE NA TIONAL STOCK EXCHANGE WAS MANIPULATED IN ANY MANNER. THE COURT ALSO HELD THE FOLLOWING VIDE PAGE 3 PARA 5 THE FOLLOWING: QUESTION (IV) HAS BEEN DEALT WITH IN DETAIL BY THE CIT (APPEALS) AND THE TRIBUNAL. FIRSTLY, THE DOCUMENTS ON WHICH THE ASSESSING OFFIC ER RELIED UPON IN THE APPEAL WERE NOT PUT TO THE ASSESSEE DURING THE ASSESSMENT PROCE EDINGS. THE CIT (APPEALS) NEVERTHELESS CONSIDERED THEM IN DETAIL AND FOUND TH AT THERE WAS NO CO-RELATION BETWEEN THE AMOUNTS SOUGHT TO BE ADDED AND THE ENTR IES IN THOSE DOCUMENTS. THIS WAS ON AN APPRECIATION OF FACTS. THERE IS NOTHING TO IN DICATE THAT THE SAME WAS PERVERSE OR IRRATIONAL. ACCORDINGLY, NO QUESTION OF LAW ARIS ES. D) THE BENCH DOF KOLKATAITAT IN THE CASE OF GAUTA M PINCHA [ITA NO.569/KOL/2017]ORDER DATED 15.11.2017 HELD AS UNDE R VIDE PAGE 12 PARA 8.1: IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I TO XI V) IN PARA 6(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASSESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AS SESSING OFFICER AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LE GS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTRO VERT THE FACTS SUPPORTED WITH MATERIAL EVIDENCES WHICH ARE ON RECORD AND COULD ON LY RELY ON THE ORDERS OF THE AO/CIT (A). WE NOTE THAT IN THE ABSENCE OF MATERIAL /EVIDENCE THE ALLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANI PULATION OF SHARES MUST THEREFORE PAGE 25 ALSO FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMA T STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. THESE EVIDENCE S WERE NEITHER FOUND BY THE AO NOR BY THE LD. CIT (A) TO BE FALSE OR FICTITIOUS OR BOG US. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE A UTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE THAT INCOME FROM LTCG IS EXEMPTED U/S 10(38) OF THE ACT. FURTHER IN PAGE 15 PARA 8.5 OF THE JUDGMENT, IT HEL D: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED BY US TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE L AWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FAC TS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UP HOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITION. E) THE BENCH D OF KOLKATA ITAT IN THE CASE OF KI RAN KOTHARI HUF [ITA NO. 443/KOL/2017] ORDER DATED 15.11.2017 HELD VIDE PAR A 9.3 HELD AS UNDER: .. WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE M ATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANTED ALLEGA TIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS N O LEGS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CON TROVERT THE FACTS WHICH ARE SUPPORTED WITH MATERIAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT THE ALLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANI PULATION OF SHARES MUST THEREFORE CONSEQUENTLY FAIL. AT THE COST OF REPETITION, WE NO TE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NO TES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTION S RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. NEITHER THESE EVIDENCES WERE FOUND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICT ITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE EX EMPTED U/S 10(38) OF THE ACT ON THE BASIS OF SUSPICION, SURMISES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRONG, CANNOT PARTAKE THE CHARACTER OF LEGAL EVIDENCE. IT FURTHER HELD AS FOLLOWS: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO S UPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE A DDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. F) THE BENCH AOF KOLKATAITAT IN THE CASE OF SHAL EENKHEMANI [ITA NO.1945/KOL/2014]ORDER DATED 18.10.2017 HELD AS UND ER VIDE PAGE 24 PARA 9.3: PAGE 26 WE THEREFORE HOLD THAT THERE IS ABSOLUTELY NO ADVE RSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGAT IONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE ARG UMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON T HE ORDERS OF THE LD AO. WE FIND THAT THE ALLEGATION THAT THE ASSESSEE AND / OR BROK ERS GETTING INVOLVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECOR D THAT THE ASSESSEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEM AT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATI NG TO PURCHASE AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEITHER FOU ND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONA FIDE AND GENUINE AND THEREFORE THE LD AO WAS N OT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. G) THE BENCH H OF MUMBAI ITAT IN THE CASE OF ARV INDKUMAR JAINHUF [ITA NO.4682/MUM/2014] ORDER DATED 18.09.2017 HELD AS UN DER VIDE PAGE 6 PARA 8: WE FOUND THAT AS FAR AS INITIATION OF INVESTIGAT ION OF BROKER IS CONCERNED, THE ASSESSEE IS NO WAY CONCERNED WITH THE ACTIVITY OF T HE BROKER. DETAILED FINDING HAS BEEN RECORDED BY CIT (A) TO THE EFFECT THAT ASSESSE E HAS MADE INVESTMENT IN SHARES WHICH WAS PURCHASED ON THE FLOOR OF STOCK EXCHANGE AND NOT FROM M/S BASANT PERIWAL AND CO. AGAINST PURCHASES PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE, DELIVERY OF SHARES WERE TAKEN, CONTRACT OF SALE WAS ALSO COMPLETE AS PER THE CONTRACT ACT, THEREFORE, THE ASSESSEE IS NOT CONCER NED WITH ANY WAY OF THE BROKER. NOWHERE THE AO HAS ALLEGED THAT THE TRANSACTION BY THE ASSESSEE WITH THESE PARTICULAR BROKER OR SHARE WAS BOGUS, MERELY BECAUSE THE INVES TIGATION WAS DONE BY SEBI AGAINST BROKER OR HIS ACTIVITY, ASSESSEE CANNOT BE SAID TO HAVE ENTERED INTO INGENUINE TRANSACTION, INSOFAR AS ASSESSEE IS NOT CONCERNED W ITH THE ACTIVITY OF THE BROKER AND HAVE NO CONTROL OVER THE SAME. WE FOUND THAT M/S BA SANT PERIWAL AND CO. NEVER STATED ANY OF THE AUTHORITY THAT TRANSACTIONS IN M/ S RAMKRISHNA FINCAP PVT. LTD. ON THE FLOOR OF THE STOCK EXCHANGE ARE INGENUINE OR ME RE ACCOMMODATION ENTRIES. THE CIT (A) AFTER RELYING ON THE VARIOUS DECISION OF TH E COORDINATE BENCH, WHEREIN ON SIMILAR FACTS AND CIRCUMSTANCES, ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, CAME TO THE CONCLUSION THAT TRANSACTION ENTERED BY THE ASSE SSEE WAS GENUINE. DETAILED FINDING RECORDED BY CIT (A) AT PARA 3 TO 5 HAS NOT BEEN CON TROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDING LY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF CIT (A). H)THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VIVEK MEHTA [ITA NO. 894 OF2010] ORDER DATED 14.11.2011 VIDE PAGE 2 PARA 3 H ELD AS UNDER: ON THE BASIS OF THE DOCUMENTS PRODUCED BY THE ASSE SSEE IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEAL) RECORDED A FIND ING OF FACT THAT THERE WAS A GENUINE TRANSACTION OF PURCHASE OF SHARES BY THE AS SESSEE ON 16.3.2001 AND SALE THEREOF ON 21.3.2002. THE TRANSACTIONS OF SALE AND PURCHASE WERE AS PER THE VALUATION PREVALENT IN THE STOCKS EXCHANGE. SUCH FI NDING OF FACT HAS BEEN RECORDED ON THE BASIS OF EVIDENCE PRODUCED ON RECORD. THE TRIBU NAL HAS AFFIRMED SUCH FINDING. SUCH FINDING OF FACT IS SOUGHT TO BE DISPUTED IN TH E PRESENT APPEAL. WE DO NOT FIND THAT THE FINDING OF FACT RECORDED BY THE COMMISSIONER OF INCOME TAX IN APPEAL, GIVES GIVE RISE TO ANY QUESTION(S) OF LAW AS SOUGHT TO BE RAIS ED IN THE PRESENT APPEAL. HENCE, THE PRESENT APPEAL IS DISMISSED. I) THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT I N THE CASE OF CIT VS. BHAGWATI PRASAD AGARWAL IN I.T.A. NO. 22/KOL/2009 DATED 29.04.2009 AT PARA 2 HELD AS FOLLOWS: PAGE 27 THE TRIBUNAL FOUND THAT THE CHAIN OF TRANSACTION E NTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTE D BY EVIDENCE. THE ASSESSEE PRODUCED BEFORE THE COMMISSIONER OF INCOME TAX (APP EAL) THE CONTRACT NOTES, DETAILS OF HIS DEMAT ACCOUNT AND, ALSO, PRODUCED DO CUMENTS SHOWING THAT ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANK . J) THE HONBLE SUPREME COURT IN THE CASE OF PCIT VS . TEJU ROHIT KUMAR KAPADIA ORDER DATED 04.05.2018 UPHELD THE FOLLOWING PROPOSITION OF LAW LAID DOWN BY THE HONBLE GUJRAT HIGH COURT AS UNDER: IT CAN THUS BE SEEN THAT THE APPELLATE AUTHORITY A S WELL AS THE TRIBUNAL CAME TO CONCURRENT CONCLUSION THAT THE PURCHASES ALREADY MA DE BY THE ASSESSEE FROM RAJ IMPEX WERE DULY SUPPORTED BY BILLS AND PAYMENTS WER E MADE BY ACCOUNT PAYEE CHEQUE. RAJ IMPACTS ALSO CONFIRMED THE TRANSACTIONS . THERE WAS NO EVIDENCE TO SHOW THAT THE AMOUNT WAS RECYCLED BACK TO THE ASSESSEE. PARTICULARLY, WHEN IT WAS FOUND THAT THE ASSESSEE THE TRADER HAD ALSO SHOWN SALES O UT OF PURCHASES MADE FROM RAJ IMPEX WHICH WERE ALSO ACCEPTED BY THE REVENUE, NO Q UESTION OF LAW ARISES. 20. APPLYING THE PROPOSITION OF LAW AS LAID DOWN IN THE ABOVE-MENTIONED JUDGMENTS TO THE FACTS OF THIS CASE WE ARE BOUND TO CONSIDER AND RELY ON THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM AND BASE OU R DECISION ON SUCH EVIDENCE AND NOT ON SUSPICION OR PREPONDERANCE OF PROBABILITIES. NO MATERIAL WAS BROUGHT ON RECORD BY THE AO TO CONTROVERT THE EVIDENCE FURNISH ED 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 CAP ITAL GAINARISING FROM THE SALE OF SHARES AND HENCE EXEMPT FROM INCOME TAX. 21. UNDER THE CIRCUMSTANCES AND IN VIEW OF THE ABOV E DISCUSSION, WE UPHOLD THE CONTENTIONS OF THE ASSESSEE AND DELETE THE ADDITION IN QUESTION. 7. WE ADOPT ALL THIS REASONING MUTATIS MUTANDIS TO CONCLUDE IN THIS FACTUAL BACKDROP THAT BOTH THE LOWER AUTHORITIES HA VE ERRED IN TREATING ASSESSEES LTCG TO BE BOGUS. THE IMPUGNED ADDITION( S) OF 93,19,895/- AND 4,65,995/1- ARE DELETED. 5. COMING TO REVENUES ARGUMENTS THAT DEPARTMENT HA D SEARCHED / SURVEYED VARIOUS ENTRY OPERATORS ALLEGED TO HAVE ENGAGED IN GIVING B OGUS LTCG REGARDING VERY SCRIP, I PUT A SPECIFIC QUESTION TO MR.BHATTACHERJEE AS TO WHETHER ANY OF THE SAID ENTRY OPERATORS HAD EVER QUOTED ASSESSEES NAME OR NOT. T HE REPLIES IS RECEIVED IN NEGATIVE. COUPLED WITH THIS, THERE IS NO SUBSTANCE IN REVENUE S ARGUMENT THAT SIMILAR ADDITION(S) STAND AFFIRMED IN VARIOUS JUDICIAL PREC EDENTS (SUPRA) FOR THE REASON THAT SEC. 68 ADDITION IS A FACTUAL ISSUE REQUIRING THE T AXPAYER TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE RELEVANT SU M CREDITED. I MAKE IT CLEAR THAT ALL THESE ASSESSEES HAVE PLACED SUFFICIENT MATERIALS ON RECORD INDICATING THEM TO HAVE DERIVED THE IMPUGNED LTCG FORM SALE OF SHARES HELD IN M/S UNNO INDUSTRIES LTD. ONLY. I THEREFORE DELETE THE IMPUGNED ADDITION(S) R ESPECTIVELY. BROKERAGE COMMISSION DISALLOWANCE, IF ANY, THEREUPON SHALL AUTOMATIC STO OD AS A NECESSARY COROLLARY . 4. COUPLED WITH THIS, I FIND THAT HON'BLE JURISDICT IONAL HIGH COURTS VARIOUS DECISIONS IN PCIT VS BIB CABLES AND CONDUCTORS ITAT NO. 78 OF 2017, GA PAGE 28 NO.747/2017 DECIDED ON 19.06.2018, M/S CLASSIC GROW ERS VS. CIT ITA NO. 129/2012, CIT VS. LAKSHMANGARH ESTATE AND TRADING CO. LTD. (2 013) 40 TAXMANN. COMMISSION 439 (CAL), CIT VS. SHREYASHI GANGULI (ITA NO. 196 O F 2012 & CIT VS. REENGLA PROPERTIES ITA 105 OF 2016 (SUPRA) , HAVE ALREADY D ECLINED REVENUES VERY STAND DOUBTING GENUINENESS OF SHARE PURCHASED / SALES TRA NSACTIONS RESULTING IN LTCG AND LOSSES BASED AS MERE SUSPICIOUS CIRCUMSTANCES IN AB SENCE OF ANY EVIDENCE. 5. I ADOPT THE ABOVE DETAILED REASONING MUTATIS MU TANDIS TO DELETE THE IMPUGNED UNEXPLAINED CASH CREDITS ADDITION(S) OF 42,96,740/-, 13,54,114/-, 16,35,428/-, 27,78,286/- 1,15,079/-& 9.75 LAC; RESPECTIVELY FORMING SUBJECT-MATTER OF AL L THESE APPEAL(S). COMMISSION EXPENDITURE DISALLOWANCE(S), IF ANY, FORMING SUBJECT-MATTER OF ADJUDICATION IN THESE APPEAL(S) SHALL STAND DELETED AS A NECESSARY COROLLARY. NO OTHER ARGUMENT HAS BEEN RAISED BEFORE ME WITH RESPECT TO ANY REMAINING ISSUE DURING THE COURSE OF HEARING. 6. ALL THESE ASSESSEES APPEAL(S) ARE ALLOWED IN AB OVE TERMS. A COPY OF THIS INSTANT COMMON ORDER BE PLACED IN THE RESPECTIVE APPEAL(S). ORDER PRONOUNCED IN ACCORDANCE WITH RULE 34(4) OF T HE ITAT RULES BY PUTTING ON NOTICE BOARD ON 20/02/2019 (S.S. GODARA) JUDICIAL MEMBE R RANCHI, *DKP/SR.PS - 20/02/2019 PAGE 29 / COPY OF ORDER FORWARDED TO:- 1. / ASSESSEE-RAMA SANKAR PRASAD, HOTEL PARK THE RETREAT E, BIRSA CHOWK, RANCHI PIN 834003/N IRMAL KR. AGRAWAL, 5, GORAKHNATH LANE, UPPER BAZAR, RANCHI-83400 1/NILESH CHHAWNIKA, 5, GORAKHNATH LANE, UPPER BAZAR, RANCHI-83400 1/M/S SANTOH KR. JAIN (HUF) BIG SHOP, GEL CHURCH COMPLEX, MAI N ROAD, RANCHI-834001/SMT. SUNITA RUNGTA C/O DR. SUNIL RUNGTA, L AKE VIEW APARTMENT, SEVA SADAN PATAH, UPPER BAZAR, RANCHI-83400 1/MADHU ADUKIA VYAPAR BHAWAN, LALIJI HIRIJI RD. RANCHI-834001 2. ' /REVENUE-ITO WARD-1(3) ITO WD-2(1) CENTRAL REVENUE ANNEXURE BUILDING, MAIN ROAD. RANCHI PIN 834001/ITO WD-2(1), RANCHI/ITO WARD-3 (1),RANCHI/ITO WARD-3 (1), RANCHI/ITO WARD-2(1), CENTRAL REVENUE, BUILDING, 05, MAIN ROAD, RANCHI-834001 3. ( * / CONCERNED CIT 4. * - / CIT (A) 5. + ..( , ( / DR, ITAT, RANCHI 6. 0 / GUARD FILE. BY ORDER/ , SR. PRIVATE SECRETARY/P.S (,
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