NITASHA GUPTA, GURGAON V. ITO, WARD- 3(1), GURGAON

ITA 2826/DEL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2914 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 23-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S ANANT
• Keywords: Unexplained cash credit; Rejection of books of accounts; Invalid notice; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Question of law; Accommodation entries; Scheme of amalgamation; Onus to prove; Sham transactions; Penny stocks
• Section: 69C; 143(3); 37(1); 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 457/DEL/2018 ASSESSMENT YEAR: 2014-15 ARUN KUMAR, C/O KAPIL GOEL, ADV. F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: AEZPG8292D) VS. ACIT, CIRCLE-1, NOIDA (APPELLANT) (RESPONDENT) ITA NO. 2825/DEL/2018 ASSESSMENT YEAR: 2014-15 MANOJ KUMAR, C/OKAPIL GOEL, ADV. F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: AEZPG8292D) VS. ITO, WARD 2(4), GURGAON (APPELLANT) (RESPONDENT) ITA NO. 2826/DEL/2018 ASSESSMENT YEAR: 2014-15 NITASHA GUPTA, C/O KAPIL GOEL, ADV. F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: AQKPG1453B) VS. ITO, WARD 3(1), GURGAON (APPELLANT) (RESPONDENT) ASSESSEE BY SH. K APIL GOEL, ADVOCATE DEPARTMENT BY SH. B.S. ANANT, SR. DR. 2 ORDER THE AFORESAID ASSESSEES HAVE FILED THE APPEALS AG AINST RESPECTIVE ORDERS PASSED BY LD. CIT(A) CONFIRMING THE ORDERS O F ASSESSING OFFICER WHEREIN FOLLOWING ADDITIONS WERE MADE AGAINST SALE OF SHARES OF M/S KAPPAC PHARMA LIMITED TREATED AS UNEXPLAINED CASH C REDIT U/S 68 OF THE ACT READ WITH SECTION 115BBE OF THE ACT. THIS WAS C LAIMED AS EXEMPT BY ASSESSEES U/S 10(38) OF THE INCOME TAX ACT, 1961. NAME OF THE CASE ITA NO. ADDITION (RS) NITASHA GUPTA 2826/DEL/2018 RS 28,66,148 MANOJ KUMAR GUPTA 2825/DEL/2018 RS. 21,41,792 ARUN KUMAR 457/DEL/2018 RS 21,23,850 2. SINCE FACTS INVOLVED IN THESE APPEALS ARE SAME A ND IDENTICAL, HENCE, THE APPEALS WERE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS ARE BEING CONSOLIDATED AND DISPOSED O F BY THIS COMMON ORDER. FOR SAKE OF REFERENCE AND FACILITY, FACTS IN CASE OF NITASHA GUPTA VS. ITO, WARD 3(1) GURGAON IN ITA 2826/DEL/2018 (AY 2 014-15) ARE TAKEN UP TO ADJUDICATE THE PRINCIPAL ISSUE OF ALLOWABILIT Y OF EXEMPTION U/S 10(38) OF THE ACT VIS. A VIS. UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ONLY GROUNDS OF APPEAL RAISED BY ASSESSEE I.E IN THE CAS E OF NITASHA GUPTA CASE IN ITA 2826/DELHI/2018 (AY 2014-2015) (SUPRA) ARE REPRODUCED HEREUNDER:- 1. THAT ORDER PASSED BY LD AO DATED 26/12/2016 AND FU RTHER ORDER PASSED BY LD CIT A DATED 23/03/2018 ARE BAD IN LAW IN AS MUCH AS NOTICE U/S 143(2) ON BASIS OF CASS IS NOT IN ACCORD ANCE WITH JURISDICTIONAL CONDITIONS STIPULATED UNDER THE ACT. 1.1 THAT ORDER PASSED BY LD AO DATED 26/12/2016 AND FU RTHER ORDER PASSED BY LD CIT A DATED 23/03/2018 ARE BAD I N LAW IN AS MUCH AS ASSESSMENT IS FRAMED ON BASIS OF INVALID NOTICE U/S 143(2) DATED 30.09.2015 WHICH IS APPARENTLY NOT SER VED ON 3 SAME DAY BY SPEED POST BEFORE TIME BARRING DATE AS STIPULATED UNDER THE ACT. 1.2 THAT ORDER PASSED BY LD AO DATED 26/12/2016 AND FU RTHER ORDER PASSED BY LD CIT A DATED 23/03/2018 ARE BAD I N LAW IN AS MUCH AS ASSESSMENT IS FRAMED ON BASIS OF INVALID NOTICE U/S 143(2) DATED 30.09.2015 WHERE THERE IS NO FORMAL TR ANSFER U/S 127 ORDER FROM ITO WARD 37(1) NEW DELHI TO ITO WARD 3(1) GURGAON. 2. THAT ORDER PASSED BY LD AO DATED 26/12/2016 AND FU RTHER ORDER PASSED BY LD CIT A DATED 23/03/2018 ARE BAD IN LAW IN AS MUCH AS ADDITION OF RS 28,66,148 IS MADE VIOLATING PRINCIP LES OF NATURAL JUSTICE AND ON BASIS OF VAGUE SHOW CAUSE NOTICE WHI CH WAS CHALLENGED AND REPUDIATED BEFORE LD AO FOR NOT OFF ERING CROSS EXAMINATION OF REVENUES WITNESS AT PLACE OF ASSESS MENT WHERE BACK MATERIAL REFERRED IS USED AGAINST THE ASSESSEE. 2.1 THAT ORDER PASSED BY LD AO DATED 26/12/2016 AN D FURTHER ORDER PASSED BY LD CIT A DATED 23/03/2018 ARE BAD I N LAW IN AS MUCH AS ADDITION OF RS 28,66,148 IS MADE ON BASIS OF STATEMENTS OF NIKHIL JAIN AND ANIL KUMAR KHEMKA (ASSESSMENT ORDER PAGES 7 TO9, PARA 5.2, PAGE 13 PARA 5.7) WHERE AS ASSESSEE WAS O NLY CONFRONTED WITH STATEMENT OF NIKHIL JAIN ONLY WHICH IS PROVEN FROM SHOW CAUSE NOTICE REPRODUCED IN IMPUGNED ASST ORDER AT PAGE 10 &11 PARA 5.3 & PARA 5.6 PAGES 12&13 WHICH MAKES THE ENTIRE ORDER A NULLITY; 2.2 THAT ORDER PASSED BY LD AO DATED 26/12/2016 AN D FURTHER ORDER PASSED BY LD CIT A DATED 23/03/2018 ARE BAD I N LAW IN AS MUCH AS ADDITION OF RS 28,66,148 IS MADE ON BASIS OF STATEMENTS OF NIKHIL JAIN AND ANIL KUMAR KHEMKA (ASSESSMENT ORDER PAGES 7 TO 9, PARA 5.2, PAGE 13 PARA 5.7) WHICH HAVE NO EVIDENTIA RY VALUE AS : I) FIRSTLY THEY ARE RECORDED PRIMARILY DURING SURVE Y OPERATION AND U/S 133A/131 WHICH STATEMENTS ARE NOT AT PAR WITH SEARC H STATEMENTS 4 RECORDED U/S 132(4) AND CANNOT STRAIGHTWAY JUSTIFY ADVERSE INFERENCE EVEN AGAINST THE STATEMENT GIVING PERSON ; II) SECONDLY THESE STATEMENTS ARE NOT EQUIVALENT TO MATERIAL MUCH LESS INCRIMINATING MATERIAL IN EYES OF LAW AND TH EY ARE NOT CORROBORATED BY ANY IOTA OF INDEPENDENT MATERIAL; III) THIRDLY, THESE STATEMENTS CANNOT BIND ASSESSEE WHO WAS NOT SUBJECT MATTER OF ANY PARALLEL SURVEY OPERATION ETC ; IV) FOURTHLY THESE STATEMENTS ARE PRE-EXISTING AS W ERE RECORDED BY INVESTIGATION WING AND NO WHERE INDEPENDENTLY RE-E XAMINED BY LD AO; V) FIFTHLY, THESE STATEMENTS ARE NOT PUT TO ACID TE ST OF CROSS- EXAMINATION ; VI) SIXTHLY, STATEMENTS RECORDED ON 02/06/2015 AND 30.03.2015 ARE AFTER EXPIRY OF EXTANT FINANCIAL YEAR 2013-2014 WHI CH CANNOT BE EXTRA-POLATED ; VII) SEVENTHLY HOW THESE STATEMENTS ARE PROCURED AN D RECD BY LD AO IN PRESENT CASE IS NOT DISCERNIBLE ; VIII) EIGHTHLY ASSESSEE NEVER MADE THE TRANSACTION THROUGH PERSONS WHOSE STATEMENTS ARE RECORDED AND RELIED (ALSO DEN IED CATEGORICALLY BEFORE LD AO IN REPLY DATED 28/11/2016); IX) LASTLY IT IS NO BODYS CASE THAT THESE GENERAL STATEMENTS TALK ABOUT ASSESSEES PARTICULAR TRANSACTION ; 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN MA KING ADDITION OF RS 28,66,148 WITHOUT APPRECIATING THAT BURDEN TO P ROVE THAT TRANSACTION IS BOGUS/SHAM HAS REMAINED UN-DISCHARGE D FROM SIDE OF REVENUE. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, BOTH LD CIT-A AND LD AO ERRED IN MAKING SUBJECT ADD ITIONS WITHOUT APPRECIATING THAT THE MODUS OPERANDI RELIED EXTENSI VELY IN IMPUGNED ORDERS IS NEVER CO-RELATED EVEN REMOTELY TO THE FAC TS OF THE PRESENT 5 CASE AS THERE IS NO IOTA OF EVIDENCE BROUGHT ON REC ORD WHICH CAN DISPLAY THAT ASSESSEE HEREIN HAS INDUCTED CERTAIN C ASH AT THE TIME OF SALE TO CERTAIN INDENTIFIED BROKER/MIDDLEMAN/SYNDIC ATE MEMBER WHO HAS IN TURN INTRODUCED CERTAIN IDENTIFIED ARTIFICIA L PAPER COMPANY FOR ALLEGED PARKING OF SAID CASH TO BUY THE SHARES SOLD BY THE ASSESSEE WHICH THEORETICAL TRAIL HAS REMAINED INCHOATE COMPL ETELY NULLIFYING THE ENTIRE BASIS OF THE ADDITION. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD AO ERRED IN MAKING SUBJECT ADDITIONS WITHOUT APPREC IATING THAT LAW GIVES DISCRETION TO THE ASSESSING OFFICER IN APPLYI NG DEEMING FICTIONS U/S 68 ETC WHICH DISCRETION HAS NOT BEEN JUDICIOUSL Y EXERCISED IN FACTS ARE PRESENT CASE AS ASSESSEE HAS NO ECONOMIC CAPACITY AND SOURCE TO GENERATE GIVEN AMOUNT OF UNACCOUNTED INCO ME. FURTHER LAW REQUIRES THAT ADDITIONS UNDER SAID DEEMING FICT ION CANNOT BE MADE SANS INCRIMINATING MATERIAL BROUGHT ON RECORD WHICH IS COMPLETELY LACKING IN PRESENT CASE. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN MA KING ADDITION OF RS 28,66,148 /- WITHOUT APPRECIATING THAT BASIS OF FINDINGS OF THE LOWER AUTHORITIES IS SUSPICION AND HUMAN PROBABI LITIES ONLY WHICH IS NEVER CONVERTED TO RELIABLE AND TRUSTWORTHY MATE RIAL AND ENTIRE ASSESSMENT ORDER IS PASSED ON SOLE BASIS OF BORROW ED SATISFACTION AND WITHOUT ANY INDEPENDENT APPLICATION OF MIND (LI KE A RUBBER STAMP ORDER). 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN MA KING ADDITION OF RS 28,66,148 /- WITHOUT APPRECIATING THAT NO OPPOR TUNITY IS GIVEN TO THE ASSESSEE TO BE CONFRONTED WITH BACK MATERIAL RE LIED EXTENSIVELY IN IMPUGNED ORDERS LIKE INVESTIGATION WING REPORT E TC AND NO OPPORTUNITY TO CROSS EXAMINE THE REVENUES WITNESS WAS GIVEN DESPITE SPECIFIC WRITTEN REQUEST IN THIS REGARD MAD E TO LD AO/CIT-A. 6 8. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN MA KING ADDITION OF RS 28,66,148 /- WITHOUT APPRECIATING THAT SECTION 68 AND SECTION 115BBE ARE NOT APPLICABLE TO SALE OF SHARES AS MENT IONED IN IMPUGNED ASSESSMENT ORDER. 9. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN MA KING ADDITION OF RS 28,66,148 WITHOUT APPRECIATING THAT IN IDENTICA L FACTS IN VARIOUS ORDERS RELIEF HAS BEEN GRANTED TO ASSESSEE ACCEPTIN G LTCG (LONG TERM CAPITAL GAINS) AS GENUINE. 10. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN MAKING ADDITION OF RS 28,66,148 WITHOUT APPRECIATING SPIR IT OF LAW CONTAINED IN SECTION 10(38) AND SECTION 43(5)(D) WH ERE STATUTORY STATUS IS PROVIDED TO EVIDENCES GENERATED FROM STOC K EXCHANGE SYSTEM TREATING THE SAME TO BE IMPECCABLE AND ONLY FROM FINANCE ACT 2017 WITH PROSPECTIVE EFFECTIVE FROM AY 2018-20 19, AMENDMENT IS MADE IN SECTION 10(38), PRIOR TO WHICH SUCH GAIN S WOULD REMAIN EXEMPT. 11. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN APPLYING SECTION 115BBE WHICH IS OUT RIGHTLY BAD IN LAW. 12. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN NOT DECIDING THE GROUND OF ADDITION OF RS 34,406 ON A/C OF 26AS MISMATCH AND RS 95,000 ON A/C OF HRA DEDUCTION U/S 10(13A). 3. SIMILAR GROUNDS ARE TAKEN IN OTHER TWO APPEALS, EXCEPT THE DIFFERENCE IN FIGURE. BEFORE ME , THE LD AR SHRI K APIL GOEL, ADVOCATE HAS ONLY PRESSED FOR ARGUMENTS GROUND NO 3 TO 6 AND 12 AND ACCORDINGLY THE SAME ARE ONLY TAKEN UP FOR ADJUDICATION IN THIS ORD ER. PAPER BOOK AND COMMON WRITTEN SUBMISSIONS AND PAPER BOOK CONTAININ G PAGES 1 T 104 ARE FILED/PLACED BEFORE ME ON RECORDS. 7 4. BRIEF FACTS OF THE CASE ARE THAT THE AO IN ASS ESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) DATED 26.12.2016 HAS DISCUSSED IN DETAIL THE GENERAL CONC EPT OF PENNY STOCK ETC AND CERTAIN PRIOR INVESTIGATION CONDUCTED BY INVEST IGATION WING WHICH HAS FORMED MAIN BASIS TO REJECT THE EXEMPTION U/S 10(38 ) OF THE ACT AS CLAIMED BY ASSESSEE AND INVOKE SECTION 68 AGAINST L ONG TERM CAPITAL GAINS EARNED BY ASSESSEE ON SALE OF SHARES OF COMPANY M/S KAPPAC PHARMA LIMITED. THE AO IN SAID ORDER FROM PARA 4 TO 6.2 HA S DISCUSSED SPECIFIC FACTS OF INSTANT CASE AS TO LONG TERM CAPITAL GAINS EARNED BY ASSESSEE, STATEMENTS RECORDED BY INVESTIGATION WING KOLKATA F ROM VARIOUS PERSONS, SHOW CAUSE NOTICE ISSUED TO ASSESSEE AND ITS REPLY BY ASSESSEE AND FINAL VIEWS OF AO ON THE SAME ARE SUMMED UP AT PARA 6.1 A ND PARA 6.2 OF ASSESSMENT ORDER WHEREIN AO HAS INVOKED SECTION 6 8 OF THE ACT TO TAX THE FULL AMOUNT RECD. ON SALE OF SHARES AS ALLEGED UNEXPLAINED CASH CREDIT AS ALLEGED INCOME EARNED FROM UNDISCLOSED SOURCES W HERE AO HAS CONCLUDED THE SAME AT PARA 13 OF HIS ORDER, WHICH V IEW OF AO IS FURTHER CONFIRMED AND SUSTAINED BY LD. FIRST APPELLATE AUTH ORITY (LD CIT-A) IN IMPUGNED ORDER DATED 23/03/2018. LD CIT-A IN IMPUG NED ORDER FROM PARA 4.7 TO 5 OF HIS ORDER HAS DEALT WITH THE SUBJE CT ISSUE, WHERE FINDINGS OF AO ARE SUMMED UP BY LD CIT-A IN HIS ORDER AT PA RA 4.11 OF HIS ORDER AND PRIMARY CONCLUSION OF LD CIT-A IS GIVEN AT PARA 4.12 TO 4.16 OF HIS ORDER. THIS IS NOW ASSAILED BY ASSESSEE IN PRESENT SET OF APPEALS FILED. IF VIEWS OF BOTH AO AND LD CIT-A ARE SUMMARIZED THEN CRUX OF THE SAME IS ASTRONOMICAL LONG TERM CAPITAL GAINS EARNED BY ASSE SSEE DEFIES COMMON SENSE AND IS AGAINST THE PRINCIPLE OF HUMAN PROBABI LITY AND SURROUNDING CIRCUMSTANCES WHICH ACCORDING TO AO AND LD CIT-A IN BACKGROUND OF INVESTIGATION CONDUCTED BY INVESTIGATION WING KOLKA TA CASTS HEAVY AND SERIOUS DOUBTS ON GENUINENESS OF LONG TERM CAPITAL GAINS EARNED BY ASSESSEE. ACCORDING TO AO AND LD CIT-A THE LONG TER M CAPITAL GAINS EARNED BY ASSESSEE IS IN NATURE OF AN ACCOMMODATION ENTRY AND PRE- ARRANGED AFFAIR AND SO BOTH THE LOWER AUTHORITIES H AVE CONCURRENTLY HELD AGAINST THE ASSESSEE TO HOLD THAT TRANSACTION IN QU ESTION ARE NOT GENUINE. 8 5. AT THE TIME OF HEARING MR. KAPIL GOEL, ADVOCATE /LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUE INVOLVED IN THESE A PPEALS HAVE ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE PLETH ORA OF DECISIONS AND PRODUCED THE COPIES THEREOF PASSED BY THE HONBLE SUPREME COURT & HONBLE HIGH COURTS AND ITAT WHEREIN, SIMILAR VIE WS OF LOWER AUTHORITIES ON BASIS OF PROBABILITIES AND STATED INVESTIGATION WING INFORMATION, HAVE BEEN CONSISTENTLY OVERRULED AND EXEMPTION CLAIMED U/S 10(38) OF THE ACT HAS BEEN RESTORED ONCE BASIC DOCUMENTS RELATING TO TRANSACTION ARE PUT IN PLACE AND SAME REMAINED THOROUGHLY UNDOUBTED BY ANY DIRECT ENQUIRY ON PART OF AO/LD CIT-A. LD. COUNSEL FOR THE ASSESSEE A LSO FILED THE WRITTEN SUBMISSIONS AND PLEADED THAT SIMILAR VIEW MAY BE AP PLIED HERE ALSO ON BASIS OF PRINCIPLE OF UNIFORMITY AND CONSISTENCY AN D ADDITIONS MADE U/S 68 MAY PLEASE BE DELETED. 6. ON THE OTHER HAND, LD DR HAS STRONGLY RELIED ON THE ORDERS OF LOWER AUTHORITIES AND VEHEMENTLY PRAYED FOR CONFIRMING TH E ADDITIONS MADE, BUT COULD NOT PRODUCE ANY CONTRARY ORDER PASSED BY THE HONBLE HIGH COURTS AS WELL AS TRIBUNAL ON THE ISSUE IN DISPUTE. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEES COU NSEL ALONGWITH THE VARIOUS ORDERS OF THE HONBLE HIGH COURT AND THE T RIBUNAL. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PARAGRAPHS OF THE FINDING S OF THE HONBLE HIGH COURTS AS WELL AS TRIBUNAL ON THE ISSUE IN DISPUTE ARE REPRODUCED AS UNDER:- 1. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF PREM PAL GANDHI [ITA- 95-2017 (O&M)] DATED 18.01.2018 (401 I TR 253) AT VIDE PAGE 3 PARA 4 HELD AS UNDER: .. THE ASSESSING OFFICER IN BOTH THE CASES ADDED THE APPRECIATION TO THE ASSESSEES INCOME ON THE SUSPICION THAT THE SE WERE FICTITIOUS TRANSACTIONS AND THAT THE APPRECIATION ACTUALLY REP RESENTED THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. IN ITA -18-2017 ALSO 9 THE CIT (APPEALS) AND THE TRIBUNAL HELD THAT THE AS SESSING OFFICER HAD NOT PRODUCED ANY EVIDENCE WHATSOEVER IN SUPPORT OF THE SUSPICION. ON THE OTHER HAND, ALTHOUGH THE APPRECIA TION IS VERY HIGH, THE SHARES WERE TRADED ON THE NATIONAL STOCK EXCHAN GE AND THE PAYMENTS AND RECEIPTS WERE ROUTED THROUGH THE BANK. THERE WAS NO EVIDENCE TO INDICATE FOR INSTANCE THAT THIS WAS A C LOSELY HELD COMPANY AND THAT THE TRADING ON THE NATIONAL STOCK EXCHANGE WAS MANIPULATED IN ANY MANNER. THE COURT ALSO HELD THE FOLLOWING VIDE PAGE 3 PARA 5 THE FOLLOWING: QUESTION (IV) HAS BEE N DEALT WITH IN DETAIL BY THE CIT (APPEALS) AND THE TRIBUNAL. FIRST LY, THE DOCUMENTS ON WHICH THE ASSESSING OFFICER RELIED UPON IN THE A PPEAL WERE NOT PUT TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDIN GS. THE CIT (APPEALS) NEVERTHELESS CONSIDERED THEM IN DETAIL AN D FOUND THAT THERE WAS NO CO-RELATION BETWEEN THE AMOUNTS SOUGHT TO BE ADDED AND THE ENTRIES IN THOSE DOCUMENTS. THIS WAS ON AN APPRECIATION OF FACTS. THERE IS NOTHING TO INDICATE THAT THE SAME W AS PERVERSE OR IRRATIONAL. ACCORDINGLY, NO QUESTION OF LAW ARISES. 2. IN SIMILAR CASE, THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL CIT VS RUNGTA PROPERTIES IN ITA NO.105 OF 2016 DATED 08 MAY, 2017 WHEREIN IT WAS HELD THAT ON THE LAST POINT, THE TRIBUNAL HELD THAT THE AO HAD NOT BROUGHT RELEVANT MATERIAL TO SHOW THAT THE TRANSACTIONS IN SHARES OF THE COMPANY INVOLVED WERE FALSE OR FICTITIOUS. IT IS THE FINDING OF THE AO THAT THE SCRIPTS OF THIS COMPANY WAS EXECUTED BY A BROKE R AND THE BROKER WAS SUSPENDED FOR SOME TIME. IT IS THE ASSESSEES C ONTENTION THAT EVEN THOUGH THERE ARE ALLEGATIONS AGAINST THE BROKE R, AND FOR THAT REASON THE ASSESSEE CANNOT BE HELD LIABLE ON THIS P OINT, THE TRIBUNAL HELD THAT AS A MATTER OF FACT THE AO DOUBTED THE INTEGRITY O F THE BROKER AND THE BROKER FIRM AND ALSO AO OBSERVED THAT THE ASSES SEE HAD NOT FURNISHED ANY EXPLANATION IN RESPECT OF ANY DISCUSS ION OF TRADING OF 10 SHARES. THE AO RELIED THE LOSS OF RS.25,30,396/- ON LY ON THE BASIS OF INFORMATION SUBMITTED BY STOCK AS FICTITIOUS. THE A O HAS ALSO NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS PLACED BY THE ASSESSEE ON RECORD. THE AOS OBSERVATION AND CONCLUSION ARE MERELY BASED ON INFORMATION. THEREFORE ON SUCH BASI S, NO DISALLOWANCE CAN BE MADE AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY ALLOWED TH E CLAIM OF THE ASSESSEE. THIS GROUND NO.1 OF THE REVENUE IS DISMIS SED. WE AGREE WITH THE REASONING OF THE TRIBUNAL ON THIS POINT AL SO. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. TH E SUGGESTED QUESTION, IN OUR OPINION DO NOT RAISE ANY SUBSTANTI AL QUESTION OF LAW. 3. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INVESTMENTS IN ITA NO.620 OF 2008 DATED 26TH AUGUST , 2008 WHEREIN THE HIGH COURT HELD AS FOLLOWS : IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CAR RIED OUT THROUGH RECOGNIZED STOCK BROKER OF THE CALCUTTA STOCK EXCHA NGE AND ALL THE BILLS WERE RECEIVED FROM THE SHARE BROKER THROUGH A CCOUNT PAYEE WHICH ARE ALSO FILED IN ACCORDANCE WITH THE ASSESSM ENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESSEE. 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. THEREFO RE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS NO S UBSTANTIAL QUESTION OF LAW HELD IN THIS MATTER. HENCE THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. 11 4. HONBLE RAJASTHAN HIGH COURT IN CASE OF POOJA AGGAR WAL DBIT APPEAL NO. 385/2011 DATED 11.09.2017 (WHICH IS MENTIONED B ELOW: 12. HOWEVER, COUNSEL FOR THE RESPONDENT HAS TAKE N US TO THE ORDER OF CIT(A) AND ALSO TO THE ORDER OF TRIBUN AL AND CONTENDED THAT IN VIEW OF THE FINDING REACHED, WHICH WAS DONE THROUGH STOCK EXCHANGE AND TAKING INTO CONSIDERATION THE RE VENUE TRANSACTIONS, THE ADDITION MADE WAS DELETED BY THE TRIBUNAL OBSERVING AS UNDER:- 'CONTENTION OF THE AR IS CONSIDERED. ONE OF THE MAI N REASONS FOR NOT ACCEPTING THE GENUINENESS OF THE TRANSACTIO NS DECLARED BY THE APPELLANT THAT AT THE TIME OF SURVEY THE APP ELLANT IN HIS STATEMENT DENIED HAVING MADE ANY TRANSACTIONS IN SH ARES. HOWEVER, SUBSEQUENTLY THE FACTS CAME ON RECORD THAT THE APPELLANT HAD TRANSACTED NOT ONLY IN THE SHARES WHI CH ARE DISPUTED BUT SHARES OF VARIOUS OTHER COMPANIES LIKE SATYAM COMPUTERS, HCL, IPCL, BPCL AND TATA TEA ETC. REGARD ING THE TRANSACTIONS IN QUESTION VARIOUS DETAILS LIKE COPY OF CONTRACT NOTE REGARDING PURCHASE AND SALE OF SHARES OF LIMTE X AND KONARK COMMERCE & IND. LTD., ASSESSEE'S ACCOUNT WIT H P.K. AGARWAL & CO. SHARE BROKER, COMPANY'S MASTER DETAIL S FROM REGISTRAR OF COMPANIES, KOLKATA WERE FILED. COPY OF DEPOSITORY A/C OR DEMAT ACCOUNT WITH ALANKR IT ASSIGNMENT LTD., A SUBSIDIARY OF NSDL WAS ALSO FILE D WHICH SHOWS THAT THE TRANSACTIONS WERE MADE THROUGH DEMAT A/C. WHEN THE RELEVANT DOCUMENTS ARE AVAILABLE THE FACT OF TRANSACTIONS ENTERED INTO CANNOT BE DENIED SIMPLY O N THE GROUND THAT IN HIS STATEMENT THE APPELLANT DENIED H AVING MADE ANY TRANSACTIONS IN SHARES. THE PAYMENTS AND R ECEIPTS ARE MADE THROUGH A/C PAYEE CHEQUES AND THE TRANSACT IONS ARE ROUTED THROUGH KOLKATA STOCK EXCHANGE. 12 THERE IS NO EVIDENCE THAT THE CASH HAS GONE BACK IN APPELLANTS'S ACCOUNT. PRIMA FACIE THE TRANSACTION W HICH ARE SUPPORTED BY DOCUMENTS APPEAR TO BE GENUINE TRANSAC TIONS. THE AO HAS DISCUSSED MODUS OPERANDI IN SOME SHAM TRANSACTIONS WHICH WERE DETECTED IN THE SEARCH CASE OF B.C. PUROHIT GROUP. THE AO HAS ALSO STATED IN THE ASSESS MENT ORDER ITSELF WHILE DISCUSSING THE MODUS OPERANDI THAT ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN WER E PURCHASED AS LONG TERM CAPITAL GAIN EITHER WAS EXEM PTED FROM TAX OR WAS TAXABLE AT A LOWER RATE. AS THE APPELLAN T'S CASE IS OF SHORT TERM CAPITAL GAIN, IT DOES NOT EXACTLY FALL U NDER THAT CATEGORY OF ACCOMMODATION TRANSACTIONS. FURTHER AS PER THE REPORT OF DCIT, CENTRAL CIRCLE-3 SH. P.K. AGARWAL W AS FOUND TO BE AN ENTRY PROVIDER AS STATED BY SH. PAWAN PUROHIT OF B.C. PURIHIT AND CO. GROUP. THE AR MADE SUBMISSION BEFOR E THE AO THAT THE FACT WAS NOT CORRECT AS IN THE STATEMENT O F SH. PAWAN PUROHIT THERE IS NO MENTION OF SH. P. K. AGARWAL. I T WAS ALSO SUBMITTED THAT THERE WAS NO MENTION OF SH. P. K. AG ARWAL IN THE ORDER OF SETTLEMENT COMMISSION IN THE CASE OF S H. SUSHIL KUMAR PUROHIT. COPY OF THE ORDER OF SETTLEMENT COMM ISSION WAS SUBMITTED. THE AO HAS FAILED TO COUNTER THE OBJ ECTIONS RAISED BY THE APPELLANT DURING THE ASSESSMENT PROCE EDINGS. SIMPLY MENTIONING THAT THESE FINDINGS ARE IN THE AP PRAISAL REPORT AND APPRAISAL REPORT IS MADE BY THE INVESTIN G WING AFTER CONSIDERING ALL THE MATERIAL FACTS AVAILABLE ON RECORD DOES NOT HELP MUCH. THE AO HAS FAILED TO PROVE THROUGH A NY INDEPENDENT INQUIRY OR RELYING ON SOME MATERIAL THA T THE TRANSACTIONS MADE BY THE APPELLANT THROUGH SHARE BR OKER P.K. AGARWAL WERE NON-GENUINE OR THERE WAS ANY ADVERSE M ENTION ABOUT THE TRANSACTION IN QUESTION IN STATEMENT OF S H. PAWAN PUROHI. SIMPLY BECAUSE IN THE SHAM TRANSACTIONS BAN K A/C WERE OPENED WITH HDFC BANK AND THE APPELLANT HAS AL SO 13 RECEIVED SHORT TERM CAPITAL GAIN IN HIS ACCOUNT WIT H HDFC BANK DOES NOT ESTABLISH THAT THE TRANSACTION MADE BY THE APPELLANT WERE NON GENUINE. CONSIDERING ALL THESE FACTS THE S HARE TRANSACTIONS MADE THROUGH SHRI P.K. AGARWAL CANNOT BE HELD AS NON-GENUINE. CONSEQUENTLY DENYING THE CLAIM OF S HORT TERM CAPITAL GAIN (6 OF 6) [ ITA-385/2011] MADE BY THE A PPELLANT BEFORE THE AO IS NOT APPROVED. THE AO IS THEREFORE, DIRECTED TO ACCEPT CLAIM OF SHORT TERM CAPITAL GAIN AS SHOWN BY THE APPELLANT.' 5. THE INCOME TAX APPELLATE TRIBUNAL E, BENCH MUMBAI (SPECIAL BENCH) ITA NO.5996/MUM/1993 (ASSESSMENT YEAR: 1984-85) 46. IN SITUATIONS LIKE THIS CASE, ONE MAY FALL INTO REALM OF PREPONDERANCE OF PROBABILITY WHERE THERE ARE MANY PROBABLE FACTORS, SOME IN FAVOUR OF THE ASSESSEE AND SOME MA Y GO AGAINST THE ASSESSEE. BUT THE PROBABLE FACTORS HAVE TO BE W EIGHED ON MATERIAL FACTS SO COLLECTED. HERE IN THIS CASE THE MATERIAL FACTS STRONGLY INDICATE A PROBABILITY THAT THE WHOLESALE BUYERS HAD COLLECTED THE PREMIUM MONEY FOR SPENDING IT ON ADVE RTISEMENT AND OTHER EXPENSES AND IT WAS THEIR LIABILITY AS PER TH EIR MUTUAL UNDERSTANDING WITH THE ASEESSEE. ANOTHER VERY STRON G PROBABLE FACTOR IS THAT THE ENTIRE SCHEME OF TWIN BRANDING AND COLLECTION OF PREMIUM WAS SO DESIGNED THAT ASSESSEE COMPANY NEED NOT INCUR ADVERTISEMENT EXPENSES AND THE RESPONSIBILITY FOR S ALES PROMOTION AND ADVERTISEMENT LIES WHOLLY UPON WHOLESALE BUYERS WHO WILL BORNE OUT THESE EXPENSES FROM ALLEGED COLLECTION OF PREMI UM. THE PROBABLE FACTORS COULD HAVE GONE AGAINST THE ASSESS EE ONLY IF THERE WOULD HAVE BEEN SOME EVIDENCE FOUND FROM SEVERAL SE ARCHES EITHER CONDUCTED BY DRI OR BY THE DEPARTMENT THAT ASSESSEE COMPANY WAS BENEFICIARY OF ANY SUCH ACCOUNTS. AT LEAST SOMETHIN G WOULD HAVE M/S.GTC INDUSTRIES 164 ITD PAGE 1 14 BEEN UNEARTHED FROM SUCH GLOBAL LEVEL INVESTIGATION BY TWO CENTRAL GOVERNMENT AUTHORITIES. IN CASE OF CERTAIN DONATION S GIVEN TO A CHURCH, ORIGINATING THROUGH THESE BENAMI BANK ACCOU NTS ON THE BEHEST OF ONE OF THE EMPLOYEES OF THE ASSESSEE COMP ANY, DOES NOT IMPLICATE THAT GTC AS A CORPORATE ENTITY WAS HAVING THE CONTROL OF THESE BANK ACCOUNTS COMPLETELY. WITHOUT GOING INTO THE AUTHENTICITY AND VERACITY OF THE STATEMENTS OF THE WITNESSES SMT . NIRMALA SUNDARAM, WE ARE OF THE OPINION THAT THIS ONE INCID ENT OF DONATION THROUGH BANK ACCOUNTS AT THE DIRECTION OF ONE OF TH E EMPLOYEE OF THE COMPANY DOES NOT IMPLICATE THAT THE ENTIRE PREM IUM COLLECTED ALL THROUGHOUT THE COUNTRY AND DEPOSITED IN BENAMI BANK ACCOUNTS ACTUALLY BELONGS TO THE ASSESSEE COMPANY OR THE ASS ESSEE COMPANY HAD DIRECT CONTROL ON THESE BANK ACCOUNTS. ULTIMATE LY, THE ENTIRE CASE OF THE REVENUE HINGES UPON THE PRESUMPTION THA T ASSESSEE IS BOUND TO HAVE SOME LARGE SHARE IN SO CALLED SECRET MONEY IN THE FORM OF PREMIUM AND ITS CIRCULATION. HOWEVER, THIS PRESUMPTION OR SUSPICION HOW STRONG IT MAY APPEAR TO BE TRUE, BUT NEEDS TO BE CORROBORATED BY SOME EVIDENCE TO ESTABLISH A LINK T HAT GTC ACTUALLY HAD SOME KIND OF A SHARE IN SUCH SECRET MONEY. IT I S QUITE A TRITE LAW THAT SUSPICION HOW SO EVER STRONG MAY BE BUT CA NNOT BE THE BASIS OF ADDITION EXCEPT FOR SOME MATERIAL EVIDENCE ON RECORD. THE THEORY OF PREPONDERANCE OF PROBABILITY IS APPLIED TO WEIGH THE EVIDENCES OF EITHER SIDE AND DRAW A CONCLUSION IN F AVOUR OF A PARTY WHICH HAS MORE FAVOURABLE FACTORS IN HIS SIDE. THE CONCLUSIONS HAVE TO BE DRAWN ON THE BASIS OF CERTAIN ADMITTED FACTS AND MATERIALS AND NOT ON THE BASIS OF PRESUMPTION OF FACTS THAT MIGHT GO AGAINST ASSESSEE. ONCE NOTHING HAS BEEN PROVED AGAINST THE ASSESSEE WITH AID OF ANY DIRECT MATERIAL ESPECIALLY WHEN VARIOUS ROUNDS OF INVESTIGATION HAVE BEEN CARRIED OUT, THEN NOTHING C AN BE IMPLICATED AGAINST THE ASSESSEE. 15 7. THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KO LKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & HONBLE SHRI S.S. VISWANETHRA RAVI, JM ] I.T.A NO. 2281/KOL/2017 ASSESSMENT YEAR : 2014-15 NAVNEET AGARWAL, LEGAL HEIR OF LATE KIRAN AGARWAL [ PAN: ADGPA 9851 N ] (APPELLANT) DATE OF PRONOUNCEMENT : 20.07.2018 10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMI SSIONS, PERUSAL OF THE PAPERS ON RECORD AND ORDER OF THE LOWERS AUTHORITIE S 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 ALLOTME NT OF 50000 EQUITY SHARES OF SMART CHAMPS IT AND INFRA LTD. AND SHE WAS ALLOTTED THE SHARE ON 3RD DECEMBER 2011 (COPY OF APPLICATION FORM, INT IMATION OF ALLOTMENT AND SHARE CERTIFICATE PAPER BOOK AT PAGE 8 TO 10). 2. THE PAYMENT FOR THE ALLOTMENT OF SHARES WAS MADE THROUGH AN ACCOUNT PAYEE CHEQUE (COPY OF THE BANK STATEMENT EVIDENCING THE SOURCE OF MONEY AND PAYMENT MADE TO SMART CHAMPS IT & INFRA LTD. FOR SUCH SHARESALLOTTED IS PLACED IN THE PAPER BOOK AT PAGE NO. 11). 3. ANNUAL RETURN NO. 20B WAS FILED WITH REGISTRAR OF COMPANIES BY SMART CHAMPS IT & INFRA LTD SHOWING THE ASSESSEES NAME AS SHAREHOLDER (COPY OF ANNUAL RETURN NO. 20B FILED WITH REGISTRAR OF CO MPANIES BY SMART CHAMPS IT & INFRA LTD. IS PLACED IN THE PAPER BOOK AT PAGE NO. 12 TO 18.) 4. THE ASSESSEE LODGED THE SAID SHARES WITH THE DE POSITORY M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. WITH A DEMAT RE QUEST ON 11TH FEBRUARY, 2012. THE SAID SHARES WERE DEMATERIALIZED ON 31ST MARCH, 2012 (COPY OF DEMAT REQUEST SLIP ALONG WITH THE TRANSACT ION STATEMENT IS PLACED IN THE PAPER BOOK AT PAGE NO. 19 TO 21). 5. ON 24.01.2013, THE HONBLE BOMBAY HIGH COURT APP ROVED THE SCHEME OF AMALGAMATION OF SMART CHAMPS IT AND INFRA LTD. WITH CRESSANDA SOLUTIONS LTD. IN ACCORDANCE WITH THE SAID SCHEME OF AMALGAMATION, THE 16 ASSESSEE WAS ALLOTTED 50000 EQUITY SHARES OF M/S. CRESSANDA SOLUTIONS LTD. THE DEMAT SHARES ARE REFLECTED IN THE TRANSAC TION STATEMENT OF THE PERIOD FROM 1ST NOVEMBER 2011 TO 31ST DECEMBER, 201 3 (A COPY OF THE SCHEME OF AMALGAMATION ALONGWITH COPY OF ORDER OF T HE HONBLE BOMBAY HIGH COURT AND A COPY OF THE LETTER TO THIS EFFECT SUBMITTED BY CRESSANDA SOLUTIONS 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. 50000 0/- THROUGH HER BROKER SKP STOCK BROKING PVT. LTD WHICH WAS A SEB I REGISTERED BROKER AND EARNED A LONG TERM CAPITAL GAIN OF RS. 2,18,13, 072/-. (COPY OF THE BANK STATEMENT, BROKERS CONTRACT NOTE TOGETHER WITH THE DELIVERY INSTRUCTIONS GIVEN TO THE DP AND BROKERS CONFIRMAT ION IS ALSO PLACED IN THE PAPER BOOK AT PAGE NO 44 TO 65). 7. COPY OF FORM NO. 10DB ISSUED BY THE BROKER, IN S UPPORT OF CHARGING OF S.T.T. IN RESPECT OF THE TRANSACTIONS APPEARING IN THE LEDGER IS PLACED IN THE PAPER BOOK AT PAGE NO. 66. 8. THE HOLDING PERIOD OF THE SAID SCRIP IS MORE THA N ONE YEAR (ABOVE 500 DAYS) THROUGH IN ORDER TO GET THE BENEFIT OF CLAIM OF LONG TERM CAPITAL 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 MO DUS OPERANDI OF PERSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH H IS EXEMPT FROM INCOME TAX. ALL THESE OBSERVATIONS ARE GENERAL IN NATURE A ND ARE APPLIED ACROSS THE BOARD TO ALL THE 60,000 OR MORE ASSESSEES WHO F ALL IN THIS CATEGORY. SPECIFIC EVIDENCES PRODUCED BY THE ASSESSEEARE NOT CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVIDENCE COLLECTED FROM THI RD PARTIES IS CONFRONTED TO THE ASSESSES. NO OPPORTUNITY OF CROSS-EXAMINATIO N OF PERSONS, ON WHOSE STATEMENTS THE REVENUE RELIES TO MAKE THE ADD ITION, IS PROVIDED TO THE ASSESSEE. THE ADDITION IS MADE BASED ON A REPOR T FROM THE INVESTIGATION WING. 13. THE ISSUE FOR CONSIDERATION BEFORE US IS WHETHER, IN SUCH CASES, THE LEGAL EVIDENCE PRODUCED BY THE ASSE SSEE HAS TO GUIDE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, 17 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 CONCLUSION AS TO WHETHER THE CLAIM IN GENUINE OR NO T. AN ALLEGED SCAM MIGHT HAVE TAKEN PLACE ON LTCG ETC. BUT IT HAS TO B E ESTABLISHED IN EACH CASE, BY THE PARTY ALLEGING SO, THAT THIS ASSESSEE IN QUESTION WAS PART OF THIS SCAM. THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESEES ACTION GIVING HER INVOLVEMENT IN THE SCAM SHOULD BE ESTABL ISHED. THE ALLEGATION IMPLY THAT CASH WAS PAID BY THE ASSESSEE AND IN RET URN THE ASSESSEE RECEIVED LTCG, WHICH IS INCOME EXEMPT FROM INCOME T AX, BY WAY OF CHEQUE THROUGH BANKING CHANNELS. THIS ALLEGATION TH AT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVEN UE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIGATIONS OFFICE BY WAY OF STATEMENTS RECORDED ETC. HAS TO ALSO BE BROUGHT ON RECORD IN E ACH CASE, WHEN SUCH A STATEMENT, EVIDENCE ETC. IS RELIED UPON BY THE REVE NUE TO MAKE ANY ADDITIONS. OPPORTUNITY OF CROSS EXAMINATION HAS TO BE PROVIDED TO THE ASSESSEE, IF THE AO RELIES ON ANY STATEMENTS OR THI RD PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATERIAL OR EVIDENCE IS SO UGHT TO BE RELIED UPON BY THE AO, HE HAS TO CONFRONT THE ASSESSEE WITH SUC H MATERIAL. THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED BASED ON MERE CO NJECTURES UNVERIFIED BY EVIDENCE UNDER THE PRETENTIOUS GARB OF PREPONDER ANCE OF HUMAN PROBABILITIES AND THEORY OF HUMAN BEHAVIOR BY THE D EPARTMENT. 14. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THIRD PAR TIES CANNOTBE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PUT BEF ORE HIM AND HE IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CASE, THE AO RELIES ONLY ON A REPORT AS THE BASIS FORTHE ADDITION. THE EVIDE NCE 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 THE ASSESSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RECEIVED SOME TIPS AND SHE CHOS E TO INVEST BASED ON THESE MARKET TIPS AND HAD TAKEN A CALCULATED RISK A ND HAD GAINED IN THE PROCESS AND THAT SHE IS NOT PARTYTO THE SCAM ETC., HAS TO BE CONTROVERTED BY THE REVENUE WITH EVIDENCE. WHEN A PERSON CLAIMS THAT SHE HAS DONE 18 THESE TRANSACTIONS IN A BONA FIDE AND GENUINE MANNE R AND WAS BENEFITTED, ONE CANNOT REJECT THIS SUBMISSION BASED ON SURMISES AND CONJECTURES. AS THE REPORT OF INVESTIGATION WING SUGGESTS, THERE AR E MORE THAN 60,000 BENEFICIARIES OF LTCG. EACH CASE HAS TO BE ASSESSED BASED ON LEGAL PRINCIPLES OF LEGAL IMPORT LAID DOWN BY THE COURTS OF LAW. 15.IN OUR VIEW, JUST THE MODUS OPERANDI, GENERALISATION, PREPONDERA NCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTIN G THE CLAIM OF THE ASSESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RE CORD TO CONTROVERT THE VALIDITY AND CORRECTNESS OF THE DOCUMENTARY EVIDENC ES PRODUCED, THE SAME CANNOT BE REJECTED BY THE ASSESSEE. THE HON'BL E SUPREME COURT IN THE CASE OF OMAR SALAV MOHAMED SAIT REPORTED IN (19 59) 37 ITR 151 (S C) HAD HELD THAT NO ADDITION CAN BE MADE ON THE BAS IS OF SURMISES, SUSPICION AND CONJECTURES. IN THE CASE OF CIT(CENTR AL), KOLKATA VS. DAULAT RAM RAWATMULL REPORTED IN 87 ITR 349, THE HON'BLE S UPREME COURT HELD THAT, THE ONUS TO PROVE THAT THE APPARENT IS NOT TH E REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO. THE BURDEN OF PROVING A TRA NSACTION TO BE BOGUS HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVI DENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH C IRCUMSTANCE UNERRINGLY AND REASONABLY RAISING AN INTERFERENCE TO THAT EFFE CT. 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 TOPI C OF CONVEYANCE OF IMMOVABLE PROPERTIES. THE RATES/SALE PRICE ARE AT V ARIANCE WITH THE CIRCLE RATES FIXED BY THE REGISTRATION AUTHORITIES OF THE GOVERNMENT IN MOST CASES AND THE GENERAL IMPRESSION IS THAT CASH WOULD HAVE CHANGED HANDS. THE COURTS HAVE LAID DOWN THAT JUDICIAL NOTICE OF S UCH NOTORIOUS FACTS CANNOT BE TAKEN BASED ON GENERALISATIONS. COURTS OF LAW ARE BOUND TO GO BY EVIDENCE. 16. WE FIND THAT THE ASSESSING OFFICER AS WELL AS T HE LD. CIT(A) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREP ARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER, WE DO NO T FIND THAT THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A), HAVE B ROUGHT OUT ANY PART OF 19 THE INVESTIGATION WING REPORT IN WHICH THE ASSESSEE HAS BEEN INVESTIGATED AND /OR FOUND TO BE A PART OF ANY ARRANGEMENT FOR T HE PURPOSE OF GENERATING BOGUS LONG TERM CAPITAL GAINS. NOTHING H AS BEEN BROUGHT ON RECORD TO SHOW THAT THE PERSONS INVESTIGATED, INCLU DING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASSESSEE WAS IN COLLUSION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LI NK THEIR WRONG DOINGS WITH THE ASSESSEE. IN FACT, THE INVESTIGATION WING IS A SEPARATE DEPARTMENT WHICH HAS NOT BEEN ASSIGNED ASSESSMENT WORK AND HAS BEEN DELEGATED THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VESTED WIDEST POWERS ON THIS WING. IT IS THE DUTY OF THE INVESTIGATION W ING TO CONDUCT PROPER AND DETAILED INQUIRY IN ANY MATTER WHERE THERE IS ALLEG ATION OF TAX EVASION AND AFTER MAKING PROPER INQUIRY AND COLLECTING PROPER E VIDENCES THE MATTER SHOULD BE SENT TO THE ASSESSMENT WING TO ASSESS THE INCOME AS PER LAW. WE FIND NO SUCH ACTION EXECUTED BY INVESTIGATION WI NG AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALLY AG AINST THE ASSESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE H ELD TO BE GUILTY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATE D. IN THIS CASE, IN OUR VIEW, THE ASSESSING OFFICER AT BEST COULD HAVE CONS IDERED THE INVESTIGATION REPORT AS A STARTING POINT OF INVESTIGATION. THE RE PORT ONLY INFORMED THE ASSESSING OFFICER THAT SOME PERSONS MAY HAVE MISUSE D THE SCRIPT FOR THE PURPOSE OF COLLUSIVE TRANSACTION. THE ASSESSING OFF ICER WAS DUTY BOUND TO MAKE INQUIRY FROM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION AND THEN TO COLLECT EVIDENCES THAT THE TRANSACTION ENTE RED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. WE, HOWEVER, FIND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO P ROVE THAT THE TRANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHE RWISE SUPPORTED BY PROPER THIRD PARTY DOCUMENTS ARE COLLUSIVE TRANSACT IONS. 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 COULD NOT BE BASED ON BACKGROUND OF SUSPICION AND IN ABSE NCE OF ANY EVIDENCE TO SUPPORT THE SAME. THE HONBLE COURT HELD: 20 ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGH ED WITH THE INCOME-TAX OFFICER WE MAY OBSERVE THAT THE NOTORIETY FOR SMUGG LING FOOD GRAINS AND OTHER COMMODITIES TO BENGAL BY COUNTRY BOATS ACQUIR ED BY SAHIBGUNJ AND THE NOTORIETY ACHIEVED BY DHULIAN AS A GREAT RECEIV ING CENTRE FOR SUCH COMMODITIES WERE MERELY A BACKGROUND OF SUSPICION A ND THE APPELLANT COULD NOT BE TARRED WITH THE SAME BRUSH AS EVERY AR HARDAR AND GRAIN MERCHANT WHO MIGHT HAVE BEEN INDULGING IN SMUGGLING OPERATIONS, WITHOUT AN IOTA OF EVIDENCE IN THAT BEHALF. THE CAN CELLATION 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 I NASMUCH AS THE APPELLANT WAS ACQUITTED OF THE OFFENCE WITH WHICH I T HAD BEEN CHARGED AND ITS LICENCE ALSO WAS RESTORED. THE MERE POSSIBILITY OF THE APPELLANT EARNING CONSIDERABLE AMOUNTS IN THE YEAR UNDER CONSIDERATIO N WAS A PURE CONJECTURE ON THE PART OF THE INCOME-TAX OFFICER AN D THE FACT THAT THE APPELLANT INDULGED IN SPECULATION (IN KALAI ACCOUNT ) COULD NOT LEGITIMATELY LEAD TO THE INFERENCE THAT THE PROFIT IN A SINGLE T RANSACTION 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 PART OF THE INCOME-TAX OFFICER. AS REGARDS THE DISCLOSED VOLUME OF BUSINESS IN THE YEAR UNDER CONSIDERATION IN THE HEAD OFFICE AND IN BRANCHES THE INCOME- TAX OFFICER INDULGED IN SPECULATION WHEN HE TALKED OF THE POSSIBILITY OF THE APPELLANT EARNING A CONSIDERABLE SUM AS AGAINST WHI CH IT SHOWED A NET LOSS OF ABOUT RS. 45,000. THE INCOME-TAX OFFICER IN DICATED 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 CONCLUSIO N WHICH HE ARRIVED 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 IN ITS BUSINESS WAS E RESULT OF PURE CONJ ECTURES AND SURMISES ON HIS PART AND HAD NO FOUNDATION IN FACT AND WAS NOT PROVED AGAINST THE APPELLANT ON THE RECORD OF THE PROCEEDINGS. IF THE CONCLUSION OF THE INCOME-TAX OFFICER WAS THUS EITHER PERVERSE OR VITI ATED BY SUSPICIONS, CONJECTURES OR SURMISES, THE FINDING OF THE TRIBUNA L WAS EQUALLY PERVERSE 21 OR VITIATED IF THE TRIBUNAL TOOK COUNT OF ALL THESE PROBABILITIES AND WITHOUT ANY RHYME OR REASON AND MERELY BY A RULE OF THUMB, AS IT WERE, CAME TO THE CONCLUSION THAT THE POSSESSION OF 150 HIGH DENO MINATION NOTES OF RS. 1,000 EACH WAS SATISFACTORILY EXPLAINED BY THE APPE LLANT BUT NOT THAT OF THE BALANCE OF 141 HIGH DENOMINATION 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 OF FICER HAVING FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE TRAN SACTION OF THE ASSESSEE WAS A COLLUSIVE TRANSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN FACT, IN THIS CASE NO THING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT EVIDENC ES OR MATERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BEING INVESTIGATED BY VARIOUS WINGS OF THE INCOME TAX DEPARTMENT HENCE IN OUR VIEW UNDER THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAINST THE ASSESSSSEE. 18. WE NOW CONSIDER THE VARIOUS PROPOSITIONS OF LAW LAID DOWN BY THE COURTS OF LAW. THAT CROSS-EXAMINATION IS ONE PART O F THE PRINCIPLES OFNATURAL JUSTICE HAS BEEN LAID DOWN IN THE FOLLOWI NG JUDGMENTS: A) AYAAUBKHANNOORKHAN PATHAN VS. THE STATE OF MAHAR ASHTRA AND ORS. B) ANDAMAN TIMBER INDUSTRIES VS.COMMISSIONER OF C. EX., KOLKATA-II WHEREIN IT WAS HELD THAT: 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 INTHE CASE OF BLBCABLES &CONDUCTORS[ITA NO. 78 OF2017] DATED19.06.2018. THE HIGH COURT HELD VIDE PARA 4.1: B) THE JAIPURITAT IN THE CASEOF VIVEKAGARWAL[ITA NO.292/JP/2017]ORDER DATED 06.04.2018 HELD AS UNDER VIDE PAGE 9 PARA 3: C)THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PREMPAL GANDHI[ITA-95-2017(O&M)] DATED18.01.2018 AT VIDE PA GE 3 PARA 4 HELD AS UNDER: D) THE BENCH DOF KOLKATAITAT IN THE CASEOF GAUTAM PINCHA[ITA 22 NO.569/KOL/2017]ORDER DATED 15.11.2017 HELD AS UNDE R VIDE PAGE 12 PARA 8.1: E) THE BENCH D OF KOLKATA ITAT IN THE CASE OF KIR AN KOTHARI HUF [ITA NO. 443/KOL/2017] ORDER DATED 15.11.2017 HELD VIDE PARA 9.3 HELD AS UNDER: F) THE BENCH AOF KOLKATAITAT IN THE CASEOF SHALEE NKHEMANI[ITA NO.1945/KOL/2014]ORDER DATED 18.10.2017 HELD AS UND ER VIDE PAGE 24 PARA 9.3: G) THE BENCH HOF MUMBAIITAT IN THE CASEOF ARVINDK UMAR JAINHUF[ITA NO.4682/MUM/2014]ORDER DATED 18.09.2017 HELD AS UNDER VIDE PAGE 6 PARA 8: H)THE HONBLE PUNJAB AND HARYANA HIGH COURT INTHE C ASE OFVIVEK MEHTA[ITA NO. 894 OF2010] ORDER DATED 14.11.2011 VI DE PAGE 2 PARA 3 HELD AS UNDER: 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 29.0 4.2009 AT PARA 2 HELD AS FOLLOWS: J) THE HONBLE SUPREME COURT IN THE CASE OF PCIT VS . TEJUROHITKUMAR KAPADIA ORDER DATED 04.05.2018 UPHELD THE FOLLOWING PROPOSITION OF LAW LAID DOWN BY THE HONBLE GUJRAT HIGH COURT AS UNDER : 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 OUR 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 FURNISHED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, WE ACCEPT THE EVIDENCE FILED BY THE ASSESSEE AND ALLOW THE CLAIM THAT THE 23 INCOME IN QUESTION IS A BONA FIDE LONG TERM CAPITAL GAINA RISING FROM THE SALE OF SHARES AND HENCE EXEMPT FROM INCOME TAX. 21.UNDER THE CIRCUMSTANCES AND IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE CONTENTIONS OF THE ASSESSEE AND DELETE T HE ADDITION IN QUESTION. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 8. IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOLKATA I.T.A. NO. 604/KOL/2018 ASSESSMENT YEAR: 20 14-15 JAGMOHAN AGARWAL [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH, AM] DATE OF PRONOUNCEMENT 05.09.2018 29. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RECORDS. WE NOTE THAT IN THE PRESENT CASE, THE ASSESSEE HAD PUR CHASED 25000 SHARES OF M/S. ESSAR INDIA PRIVATE LIMITED ON 22.03.2012 F ROM A RECOGNIZED STOCK BROKER M/S. R. L. AGARWALA CAPITAL MARKET LTD. THRO UGH THE BSE. THESE SHARES WERE HELD IN THE DE-MAT ACCOUNT OF THE ASSES SEE PLACED AT PAGES 13 AND 14 OF PAPER BOOK AND ULTIMATELY THESE SHARES WERE SOLD THROUGH M/S. R. L. AGARWALA CAPITAL MARKET LTD. THROUGH THE BSE AND ON SUCH SALE, SECURITY TRANSACTION TAX WAS DULY PAID. PAYMENTS WE RE DULY RECEIVED IN THE BANK ACCOUNT OF THE ASSESSEE. THE TRANSACTIONS WERE ALL THROUGH A REGISTERED BROKER AND THROUGH BSE SINCE THE SCRIPS OF M/S. ESSAR INDIA PVT. LTD. WAS A LISTED COMPANY IN BSE BACKED BY A CONTRA CT NOTE (PAGE 2 AND 8&9 OF THE PAPER BOOK) AND SHARES WERE CREDITED IN THE DE-MAT ACCOUNTS (PAGE 13 AND 14 OF THE PAPER BOOK) AND DULY REFLECT ED IN THE BOOKS OF ACCOUNT. IN THE LIGHT OF THESE EVIDENCES ON RECORD WE ARE OF THE OPINION THAT THE PURCHASE AND SALE OF SHARES PER-SE CANNOT BE HELD TO BE BAD. 31. WE NOTE THAT THE ASSESSEE HAS PRODUCED BEFORE T HE LD. CIT(A) (I) PAPER RELATING TO THE APPLICATION FOR SHARES, (II) ALLOTMENT OF THE SHARES, (III) SHARE CERTIFICATES, (IV) PAYMENT BY CHEQUE, ( V) NECESSARY PAPERS FILED BEFORE THE REGISTRAR OF COMPANIES, (VI) THE NAME OF THE ASSESSEE HAS BEEN REFLECTED AS A SHAREHOLDER, (VII) THE PROOF OF AMALGAMATION OF THE COMPANIES WHEREIN THE SHAREHOLDING HAS CHANGED, (VI II) BANK STATEMENT, (IX) BANK CONTRACT NOTES AND DELIVERY INSTRUCTION T O THE BROKER TO PROVE THE GENUINENESS OF THE TRANSACTIONS WHICH HAS BEEN DISB ELIEVED ON THE SPECIES PLEA THAT PRODUCTION OF THESE DOCUMENTS STRENGTHENS THE SUSPICIOUS TRANSACTION OF BOGUS TRANSACTION CANNOT BE ACCEPTED AT ALL. THE LD CIT(A) OUGHT NOT TO HAVE BRUSHED ASIDE THESE DOCUMENTS WIT HOUT POINTING OUT ANY DEFECTS AND THEREFORE THE IMPUGNED ACTION OF LD CIT(A) CANNOT BE COUNTENANCED. MOREOVER THE AO HAS REFERRED IN HIS A SSESSMENT ORDER THE NAME OF M/S. KAILASH AUTO AND M/S. UNNO INDUSTRIES AND ALSO STATEMENTS 24 OF SHRI L.K. AGARWAL AND SHRI GOUTAM BOSE AND SHRI S. DOKANIA. HOWEVER THESE PERSONS STATEMENTS HAVE NEITHER BEEN REPRODUC ED IN THE ASSESSMENT ORDER NOR THE ASSESSEE GIVEN A COPY OF T HE STATEMENTS TO REBUT. SO THE ACTION OF BOTH AO AND LD CIT(A) REFER RING TO STATEMENTS WHICH WERE PURPORTEDLY RECORDED UNDER OATH BY THE I NVESTIGATION WING CANNOT BE MADE THE BASIS FOR DRAWING ADVERSE INFERE NCE AGAINST THE ASSESSEE. THUS THE ACTION OF AO TO REFER TO CERTAIN PURPORTED STATEMENTS OF THE THREE INDIVIDUALS WITHOUT ESTABLISHING ANY N EXUS WITH THE ASSESSEE CAN AT BEST MISLEAD OR CREATE SUSPICION AND REFEREN CE TO IRRELEVANT MATERIAL ITSELF MAKES THE ORDER BAD. NOT ONLY THAT THE AO HAS NOT EVEN BOTHERED TO GIVE A COPY OF THE SAME TO THE ASSESSEE AND DID NOT GIVE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THOSE PERSONS ITSELF VITIATES THE ACTION OF THE AO AND THE ORDER PASSED BY HIM IS THEREFORE FRAGILE FOR VIOLATION OF NATURAL JUSTICE AND NULL IN THE EYES O F LAW AS HELD BY THE HONBLE SUPREME COURT IN ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE IN CIVIL APPEAL NO. 4228 OF 2006 DATED 16.11.2015. THESE PURPORTED STATEMENT THOUGH THE CONTENTS OF WH ICH NEITHER WE ARE AWARE NOR THE APPELLANT ASSESSEE, CANNOT BE THE BAS IS FOR DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE IN THE LIGHT OF DOCU MENTS PRODUCED BEFORE AO/CIT(A) AND THIS TRIBUNAL. 33. WE FIND FORCE IN THE CONTENTIONS OF THE LD. AR THAT THE AO AND CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASS ESSEE ON THE BASIS OF THEORY OF SUSPICIOUS TRANSACTIONS SURROUNDING CIRCU MSTANCE, HUMAN CONDUCT AND PREPONDERANCE OF PROBABILITY WITHOUT BR INGING ON RECORD ANY RELEVANT MATERIAL OR LEGALLY ADMISSIBLE EVIDENCE AG AINST THE ASSESSEE. FOR THE SAID PROPOSITION WE RELY ON THE JUDGMENT OF THE SPECIAL BENCH OF MUMBAI BENCH IN THE CASE OF GTC INDUSTRIES LTD. (SU PRA). THE VARIOUS FACETS OF THE CONTENTION OF THE AO, TO ROPE IN THE ASSESSEE FOR DRAWING ADVERSE INFERENCES WHICH REMAIN UNPROVED BASED ON T HE EVIDENCE AVAILABLE ON RECORD ARE NOT REITERATED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOUS CASE LAWS RELIED UP ON BY THE LD. AR ARE ALSO NOT REITERATED FOR THE SAKE OF BREVITY. WE FURTHER FIND THAT NEITHER THE REPORTS RELIED ON BY THE AO HAS NOT BEEN BROUGHT ON RECORD NOR IS THERE ANY REFERENCE OF FINDING OF SUCH REPORT TO IMPUTE T HE ASSESSEE IS THERE ON RECORD. THE AO HAS MERELY CARVED OUT CERTAIN FEATUR ES/MODUS- OPERANDI OF COMPANIES INDULGING IN PRACTICES NOT SANCTIONED BY LAW AND AS MENTIONED IN SUCH REPORT. HOWEVER, WE NOTE THAT NEITHER ANY I NVESTIGATION WAS CARRIED OUT AGAINST THE ASSESSEE NOR AGAINST THE BR OKERS TO WHOM THE ASSESSEE DEALT WITH THE PURCHASE AND SALE OF SHARES IN QUESTION. THUS THE AO HAS FAILED TO BRING ON RECORD ANY MATERIAL CONTA INED IN THE PURPORTED REPORTS WHICH ARE HAVING SO CALLED ADVERSE IMPACT O N THE ASSESSEE. W E FURTHER NOTE THAT THE COMPANY UNDER SCANNER AS RECO RDED BY THE AO AT PAGE 4 OF HIS ORDER WAS HAVING SHAREHOLDER FUND AS ON 31.03.2014 OF RS.21.82 CRORES AND WAS HAVING ASSETS WORTH RS.41.5 0 CRORES AND A TURN- OVER OF RS.15.72 CRORES AND PROFIT OF RS.10 LACS. T HUS THE ALLEGATION THAT THESE COMPANIES DID NOT HAVE FINANCIAL CREDENTIALS AT THE TIME OF PURCHASE 25 OF SHARES OR SALE OF SHARES IS NOT CORRECT AND SO I S PERVERSE AND THEREFORE WE DO NOT SUBSCRIBE TO THE SAID FINDING. 36. WE NOTE THAT THE LD. AR CITED PLETHORA OF THE C ASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT H AS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPR A) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISI ON OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING 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 A DDITION. 37. COMING TO THE NEXT ADDITION OF RS.43,934/-, I.E ., 5% OF RS.11,49,425/-, AS UNDISCLOSED EXPENDITURE U/S 69C OF THE ACT IN RESPECT OF PURPORTED PAYMENTS MADE TO SHARE BROKERS/ENTRY O PERATORS. ON THIS ISSUE SINCE WE HAVE FOUND THE PURCHASE AND SALE OF SHARES ARE GENUINE NO ADDITION CAN BE MADE IN THIS REGARD, SO IT IS ORDER ED TO BE DELETED. 38. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. 9. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI I.T.AS. NO.2128/DEL/2018 ASSESSMENT YEARS: 2015-16 M/S. AMIT RASTOGI HUF DATE OF PRONOUNCEMENT: 24.10.2018 ..9. ANOTHER IMPORTANT FACT WHICH IS TO BE NOTED H ERE IS THAT PURCHASE MADE IN THE EARLIER YEAR HAS NOT BEEN DISTURBED AND ONCE THE ENTIRE TRANSACTION IS THROUGH DEMAT ACCOUNT WITH THE REPUT ED BROKER WITHOUT HAVING ANY LINK WITH ANY SUCH ENTITIES POINTED OUT BY THE LEARNED ASSESSING OFFICER THEN NO ADVERSE INFERENCE AT ALL CAN BE DRAWN AGAINST THE ASSESSEE. IF THE SALES ARE EVIDENCED THROUGH PR OPER CONTRACT NOTES BY HDFC SECURITY LTD., SOLD ON BSE AFTER PAYING STT AN D DULY CREDITED IN THE DEMAT ACCOUNT, THEN SOURCE OF THE CREDIT HAS TO BE ACCEPTED THAT IT IS FROM TRANSACTION OF SALE OF SHARES HELD FOR A LONG TERM CAPITAL GAIN. IF PURCHASE OF SHARES IS NOT DOUBTED AND THESE SHARES ARE NOT IN POSSESSION WITH THE ASSESSEE, THEN THERE CANNOT BE ANY ADVERSE INFERENCE THAT IT IS UNEXPLAINED CREDIT TO BE ADDED U/S.68 OF THE ACT. T HUS, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WE HOLD THAT THERE W AS A GENUINE TRANSACTION OF PURCHASE AND SALE OF SHARES ON WHICH ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN, AND THEREFORE, SUCH LONG TE RM CAPITAL GAIN CANNOT BE TAXED U/S.68. SINCE LONG TERM CAPITAL GAI N IS EXEMPTED U/S.10 (38), THEREFORE, NO ADDITION IS CALLED FOR. ACCORDINGLY, APPEAL OF THE ASSESSEE IS ALLOWED. 26 10. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI ITA NO.2021/DEL/2018 ASSESSMENT YEAR : 2014-15 SHOUBIT GOEL (HUF), DATE OF PRONOUNCEMENT : 25-09-2018 18. I FIND MERIT IN THE ABOVE ARGUMENT OF THE LD. C OUNSEL FOR THE ASSESSEE. IT IS AN ADMITTED FACT THAT THE SHARES WERE SOLD TH ROUGH NATIONAL STOCK EXCHANGE AND HDFC SECURITIES WAS THE BROKER, THE AM OUNTS WERE RECEIVED AFTER PAYMENT OF STT AND BROKERAGE AND THE SHARES W ERE SOLD THROUGH BANKING CHANNELS. NO CASE SPECIFIC OR TRANSACTION S PECIFIC INFORMATION WAS GIVEN BY THE PERSONS WHOSE STATEMENTS WERE RECORDED AND ARE THE BASIS OF ADDITION IN THE INSTANT CASE. 19. I FIND THE HONBLE PUNJAB & HARYANA HIGH COURT, WHICH IS THE JURISDICTIONAL HIGH COURT IN THE CASE OF THE ASSESS EE, IN THE CASE OF PREM PAL GANDHI (SUPRA) HAS OBSERVED AS UNDER :- 2. THE FOLLOWING QUESTIONS OF LAW HAVE BEEN RAISED :- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE HONBLE INCOME TAX APPELLATE TRIBUNAL HAS ERRED IN LAW IN U PHOLDING THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS. 4,11,77,474 /- MADE BY THE AO ON ACCOUNT OF SHAM SHARE TRANSACTIONS IGNORING AN IMPO RTANT ASPECT THAT THE TRANSACTION OF SHARES SHOWING THEIR PURCHASE PRICE AT RS. 11,00,000/- AND SALE CONSIDERATION AT RS. 4,23,45,295/- WITHIN A PE RIOD OF LESS THAN TWO YEARS/PURCHASES OF SHARES MADE IN CASH NOT CHEQUE T HAT TOO BEFORE SHARES GOT DEMATERIALIZED/WORTH OF THE COMPANY AT THE TIME OF PURCHASE/SALE OF SHARES NOT PROVED-ALL SUGGEST NON-GENUINENESS OF TH E SAID TRANSACTION? (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE INCOME TAX APPELLATE TRIBUNAL HAS ERRED IN LAW IN U PHOLDING THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS. 4,11,77,474 /- MADE BY THE AO ON ACCOUNT OF SHAM SHARE TRANSACTIONS, WHEREAS THE CIT (A) HIMSELF HAD HELD THAT THE ASSESSEE HAD NOT BEEN ABLE TO SUBSTANTIATE THE SOURCE OF INVESTMENT OF RS. 11,00,000/- IN THE SAID SHARES PU RCHASED DURING THE FINANCIAL YEAR 2005-06 AND THE AO WAS DIRECTED TO R EOPEN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 ON THIS IS SUE? (III) WHETHER THE HONBLE ITAT HAS ERRED IN IGNORIN G AN IMPORTANT ASPECT THAT IN SUCH CASES OF SHAM TRANSACTIONS OF SHARES S HOWING ABNORMAL HIKE IN THEIR VALUE, WHERE THE FACTS THEMSELVES SPEAK LO UD AND CLEAR, THE AO IS JUSTIFIED TO EVEN DRAW AN INFERENCE FROM THE ATTEND ANT CIRCUMSTANCES? (IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE INCOME TAX APPELLATE TRIBUNAL HAS ERRED IN LAW IN UPHOLDING THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS. 12 ,59,000/- MADE BY THE AO ON THE BASIS OF SEIZED DOCUMENT ON THE GROUNDS T HAT THE ASSESSING OFFICER HAS NOT POINTED OUT AS TO HOW THE FIGURE OF RS. 12.59 LACS HAS BEEN WORKED OUT IGNORING THE FACT THAT THE ASSESSEE HIMS ELF IN HIS REPLY TO THE 27 AO HAD TRIED TO EXPLAIN THE SOURCE OF THE RECEIPTS OF RS. 12,59,000/- INSTEAD OF CHALLENGING THE WORKING OUT OF THE SAID FIGURE BY THE AO? 3. THE FIRST THREE QUESTIONS OF LAW RAISED IN THIS APPEAL ARE COVERED AGAINST THE APPELLANT BY AN ORDER AND JUDGEMENT OF A DIVISI ON BENCH OF THIS COURT DATED 16.02.2017 IN ITA-18-2017 TITLED AS THE PR. C OMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA VS SH. HITESH GANDHI , BHATTI COLONY, CHANDIGARH ROAD, NAWANSHAHAR. 4. THE ISSUE IN SHORT IS THIS: THE ASSESSEE PURCHAS ED SHARES OF A COMPANY DURING THE ASSESSMENT YEAR 2006-2007 ATRS. 11/- AN D SOLD THE SAME IN THE ASSESSMENT YEAR 2008-2009 AT RS. 400/- PER SHA RE. IN THE ABOVE CASE, NAMELY, ITA-18-2017 ALSO THE ASSESSEE HAD PUR CHASED AND SOLD THE SHARES IN THE SAME ASSESSMENT YEARS. THE ASSESSING OFFICER IN BOTH THE CASES ADDED THE APPRECIATION TO THE ASSESSEES INCO ME ON THE SUSPICION THAT THESE WERE FICTITIOUS TRANSACTIONS AND THAT TH E APPRECIATION ACTUALLY REPRESENTED THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. IN ITA-18- 2017 ALSO THE CIT (APPEALS) AND THE TRIBUNAL HELD T HAT THE ASSESSING OFFICER HAD NOT PRODUCED ANY EVIDENCE WHATSOEVER 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 A ND THE PAYMENTS AND RECEIPTS WERE ROUTED THROUGH THE BANK. THERE WAS NO EVIDENCE TO INDICATE FOR INSTANCE THAT THIS WAS A CLOSELY HELD COMPANY A ND THAT THE TRADING ON THE NATIONAL STOCK EXCHANGE WAS MANIPULATED IN ANY MANNER. 5. IN THESE CIRCUMSTANCES, FOLLOWING THE JUDGEMENT IN ITA-18-2017, IT MUST BE HELD THAT THERE IS NO SUBSTANTIAL QUESTION OF LAW IN THE PRESENT APPEAL. 6. QUESTION (IV) HAS BEEN DEALT WITH IN DETAIL BY T HE CIT (APPEALS) AND THE TRIBUNAL. FIRSTLY, THE DOCUMENTS ON WHICH THE ASSES SING OFFICER RELIED UPON IN THE APPEAL WERE NOT PUT TO THE ASSESSEE DURING T HE ASSESSMENT PROCEEDINGS. THE CIT (APPEALS) NEVERTHELESS CONSIDE RED THEM IN DETAIL AND FOUND THAT THERE WAS NO CO-RELATION BETWEEN THE AMOUNTS SOUGHT TO BE ADDED AND THE ENTRIES IN THOSE DOCUMENTS. THIS WAS ON AN APPRECIATION OF FACTS. THERE IS NOTHING TO INDICATE THAT THE SAME WAS PERVERSE OR IRRATIONAL. ACCORDINGLY, NO QUESTION OF LAW ARISES. 7. IN THE CIRCUMSTANCES, THE APPEAL IS DISMISSED. 20. I FIND THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SMT. SHIKHA DHAWAN (SUPRA) HAS DELETED SIMILAR ADDITION BY OBSE RVING AS UNDER :- 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE PLACED SUFFICIENT DOCUMENTA RY EVIDENCES BEFORE THE AO WHICH ARE COPY OF THE SHARES CERTIFICATES WI TH TRANSFER FORM, COPY OF DEBIT NOTE ISSUED BY SHREEJI BROKING (P) LTD., C OPY OF CASH RECEIPT OF SHREEJI BROKING (P) LTD., COPY OF THE ACCOUNT STATE MENT OF THE ASSESSEE IN THE BOOKS OF THE BROKER, COPY OF LEDGER ACCOUNT OF INDUS PORTFOLIO (P) LTD., COPY OF EVIDENCE FOR PAYMENT OF SECURITIES TRANSACT ION TAX AND COPY OF THE BANK STATEMENT OF THE ASSESSEE TO SHOW THAT THE ASS ESSEE HAD ENTERED INTO GENUINE TRANSACTION OF PURCHASE OF SHARE WHICH WERE LATER ON SOLD THROUGH THE BROKER ON RECOGNIZED STOCK EXCHANGE AFT ER PAYMENT OF STT. 28 THE CLAIM OF THE ASSESSEE FOR SALE OF SHARES HAS BE EN SUPPORTED BY THE DOCUMENTARY EVIDENCES WHICH HAVE NOT BEEN REBUTTED BY THE AUTHORITIES BELOW. WHATEVER INQUIRY WAS CONDUCTED IN THE CASES OF OTHER PARTIES AND STATEMENT RECORDED OF SEVERAL PERSONS NAMELY SH. AN IL KHEMKA, SH. SANJAY VOHRA AND SH. BIDYOOT SARKAR AS REFERRED IN THE ASSESSMENT ORDER AND THE REPORT OF THE INVESTIGATION WING WERE NOT C ONFRONTED TO THE ASSESSEE AND ABOVE STATEMENTS WERE ALSO NOT SUBJECT TO CROSS- EXAMINATION ON BEHALF OF THE ASSESSEE. THEREFORE, SUCH EVIDENCES CANNOT BE READ IN EVIDENC E AGAINST THE ASSESSEE. THE ORDER OF THE SEBI WAS ALSO NOT CONFRO NTED TO THE ASSESSEE. AO DID NOT MENTION ANY SUCH FACT IN ASSESSMENT ORDE R. MORE SO IN THOSE REPORTS AND STATEMENTS, THE NAME OF THE ASSESSEE HA S NOT BEEN REFERRED TO. LD. COUNSEL FOR THE ASSESSEE, THEREFORE, RIGHTL Y CONTENDED THAT THE TWIN CONDITIONS OF SECTION 10(38) OF THE ACT HAVE BEEN S ATISFIED IN THE PAGE 24 ITA NO.3035/DEL/2018 CASE OF THE ASSESSEE. THE A SSESSEE HAS BEEN ABLE TO PROVE THAT SHE HAS ENTERED INTO THE GENUINE TRANSACTION OF PURCHASE AND SALE OF SHARES AND THE SALE CONSIDERAT ION IS RECEIVED FROM BROKER THROUGH BANKING CHANNEL. THE BROKERS HAVE NOT DENIED THE TRANSACTION WITH TH E ASSESSEE. THE ASSESSEE ROOTED THE TRANSACTION OF SALE OF SHARES T HROUGH RECOGNIZED STOCK EXCHANGE AFTER MAKING PAYMENT OF STT. IN SIMILAR CI RCUMSTANCES, ITAT SMC BENCH, DELHI IN THE CASE OF MEENU GOEL VS ITO ( SUPRA) FOLLOWING THE DECISION OF JURISDICTIONAL HON'BLE P&H HIGH COURT I N THE CASE OF PR.CIT VS PREM PAL GANDHI(SUPRA) DELETED THE SIMILAR ADDITION . THEREFORE, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER O F ITAT, DELHI BENCH IN THE CASE OF MEENU GOEL VS ITO (SUPRA) FOLLOWED BY J UDGEMENT OF JURISDICTIONAL P&H HIGH COURT WHICH IS BINDING. THE RE IS NO OTHER MATERIAL AVAILABLE ON RECORD TO REBUT THE CLAIM OF THE ASSES SEE OF EXEMPTION CLAIMED U/S 10(38) OF THE ACT. 9. KEEPING IN VIEW OF THE ABOVE DISCUSSION AND THE MATERIAL ON RECORD, IN THE LIGHT OF THE ORDER OF THE TRIBUNAL IN THE CASE OF MEENU GOEL VS ITO (SUPRA), I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.19,51,357/-. THE APPEAL OF THE ASSES SEE IS, ACCORDINGLY, ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 21. I FIND THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF PRAKASH CHAND BHUTORIA (SUPRA) HAS DEALT WITH IDENTICAL ISSUE WHE RE THE LONG TERM CAPITAL GAIN ON ACCOUNT OF SALE OF SHARES OF M/S UNNO INDUS TRIES LTD. WAS DENIED BY THE ASSESSING OFFICER ON THE BASIS OF INVESTIGAT ION WING OF KOLKATA AND THE LD. CIT(A) UPHELD THE ACTION OF THE ASSESSING O FFICER. ON FURTHER APPEAL BY THE ASSESSEE, THE TRIBUNAL DELETED THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 BY OBSERVING AS UNDER :- 8. A PERUSAL OF THE ORDER OF THE AO DEMONSTRATES T HAT THIS ADDITION WAS MADE MERELY ON 'SUSPICION' AND IN A ROUTINE AND MEC HANICAL MANNER. THIS IS CLEAR FROM THE FACT THAT THE AO REFERS TO SOME ' SHARP TRADING COMPNAY' AS ONE OF THE MAIN ,MANIPULATED COMPANY AND WHEREAS THE ASSESSEE SOLD 29 SCRIPS IN UNNO INDUSTRIES LTD. THE AO REFERS TO VAR IOUS ENQUIRIES MADE BY 'THE DIRECTORS OF INCOME TAX' , KOLKATA ON PROJECT BASIS AND THAT THIS RESULTED INTO UNEARTHING OF A HUGE SYNDICATE OF ENT RY OPERATORS AND SHARE BROKERS AND MONEY LENDERS INVOLVED IN PROVIDING OF BOGUS ACCOMMODATION ENTRIES. THE REPORT AS THE SO-CALLED PROJECT AND TH E EVIDENCE COLLECTED BY THE DIT (INV.), KOLKATA ETC HAVE NOT BEEN BROUGH T ON RECORD. IT IS WELL SETTLED THAT ANY DOCUMENT RELIED UPON BY THE AO FOR MAKING AN ADDITION HAS TO BE SUPPLIED TO THE ASSESSEE AND AN OPPORTUNI TY SHOULD BE PROVIDED TO THE ASSESSEE TO REBUT THE SAME. IN THIS CASE, GE NERAL STATEMENTS HAVE BEEN MADE BY THE AO AND THE ADDITION IS MADE BASED ON SUCH GENERALIZATIONS. THE ASSESSEE HAS NOT BEEN CONFRONT ED WITH ANY OF THE EVIDENCE COLLECTED IN THE INVESTIGATION DONE BY THE DIT(INV.), KOLKATA. EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USE D AGAINST THE ASSESSEE WITHOUT GIVING A COPY OF THE SAME TO THE ASSESSEE A ND THEREAFTER GIVING HIM AN OPPORTUNITY TO REBUT THE SAME. 9. THE AO FURTHER RELIES ON THE SHOP INCREASE OF 31 000% OF THE VALUE OF SHARES OVER THE PERIOD OF 2 YEARS. THOUGH THIS IS H IGHLY SUSPICIOUS, IT CANNOT TAKE THE PLACE OF EVIDENCE. THE HON'BLE SUPR EME COURT HAS STATED THAT SUSPICION HOWEVER STRONG CANNOT BE THE BASIS F OR MAKING AN ADDITION. THE EVIDENCE PRODUCED BY THE ASSESSEE 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 AND THE REPORT IS NOT PRODUCED BEFORE THIS BENCH. 10. I NOW DISCUSS THE CASE LAW ON THE SUBJECT. THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT, KOLKATA-III VS. SMT. SHRE YASHI GANGULI REPORTED 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 C REDIT UNDER SECTION 68 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 SEBI'S 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 BEFO RE US. THERE CANNOT BE ANY DOUBT ABOUT THE TRANSACTION AS HAS BEEN OBSE RVED BY THE ASSESSING OFFICER. THE TRANSACTIONS WERE AS PER NORMS UNDER C ONTROLLED BY THE SECURITIES TRANSACTION TAX, BROKERAGE SERVICE TAX A ND CESS, WHICH WERE ALREADY PAID. THEY WERE COMPLIED WITH. ALL THE TRAN SACTIONS WERE THROUGH BANK. THERE IS NO IOTA OF EVIDENCE OVER THE ABOVE T RANSACTIONS AS IT WERE THROUGH DEMAT FORMAT. HENCE, WE AGREE WITH THE GIVE N FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN ACCEPTING T HE TRANSACTIONS AS GENUINE 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 FINDING. CONCURRENT FACT FINDING ITSELF MAKES THE S TORY OF PERVERSITY, UNBELIEVABLE.' 30 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 O F 2012] (CAL HC) - IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDENCES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRAN SACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HON'BLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUC E THE QUANTUM OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPR ESSED BY THE LD AO BUT HE MISERABLY FAILED TO SUBSTANTIATE THAT. THE H IGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING PRICE AND THERE FORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. (II) CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMIT ED [2013] 40 TAXMANN.COM 439 (CAL) - IN THIS CASE THE HON'BLE CALCUTTA HIGH COUR T HELD THAT 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 IN ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANSACTIONS OF BU YING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTED TO WI TH ULTERIOR MOTIVE. (III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012 ] (CAL HC) - IN THIS CASE THE HON'BLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER W AS SUBJECTED TO SEBI'S ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BROKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. (IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 105 OF 2016] (CAL HC) IN THIS CASE THE HON'BLE CALCUTTA HIGH COURT AFFIRMED THE DECISION OF THIS TRIBUNAL, WHEREIN, THE TRIBUNAL ALLOWED THE AP PEAL OF THE ASSESSEE WHERE THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED 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 GENUINENES S OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT T HE AO'S CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM . THE APPEAL FILED BY THE REVENUE WAS DISMISSED. (V) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HON'BLE CALCUTTA HIGH COURT AFFIRMED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSE SSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SU GGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. (VI) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-3473 8 (CAL HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] - IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCOME FROM LONG TERM CAPITAL GAINS. H OWEVER, THE AO, 31 BASED ON THE INFORMATION RECEIVED BY HIM FROM CALCU TTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THERE AT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HON'BLE JURIS DICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WA S FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTED BY EVIDENCE. IT WAS A LSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DE MAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIV ED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE RE VENUE WAS SUMMARILY 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 T O IMPLICATE THE ASSESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNWARRANTED ALLE GATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERE D OPINION HAS NO LEGS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE TH AT THE LD. DR COULD NOT CONTROVERT THE FACTS SUPPORTED WITH MATERIAL EVIDEN CES WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/ CIT(A). WE NOTE THAT IN THE ABSENCE OF MATERIAL/EVIDENCE TH E ALLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANI PULATION 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, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE TH E GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF S HARES RESULTING IN LONG TERM CAPITAL GAIN. THESE EVIDENCES WERE NEITHER FOU ND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUP PORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING TH E 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 HO N'BLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INVESTMENTS IN IT A NO.620 OF 2008 DATED 26TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOWS : 'IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT T HROUGH RECOGNIZED STOCK BROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE B ILLS WERE RECEIVED FROM THE SHARE BROKER THROUGH ACCOUNT PAYEE WHICH ARE AL SO 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 ASSESSEE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANSACTIONS CANNOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER IT WAS HEL D THAT THE TRANSACTIONS OF THE SHARES ARE GENUINE. THEREFORE W E DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS NO SUBSTA NTIAL QUESTION OF LAW HELD IN THIS MATTER. HENCE THE APPEAL BEING ITA NO. 620 OF 2008 IS DISMISSED.' 32 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 H AS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPR A) AND HAVE BEEN DULY CONSIDERED BY US TO ARRIVE AT OUR CONCLUSION. THE L D. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DE CISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING 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. 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 18.10.201 7 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, DEMAT 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 ONLI NE PLATFORM OF THE STOCK EXCHANGE AND EACH TRADE OF SALE OF SHARES WER E HAVING UNIQUE TRADE NO. AND TRADE TIME. IT IS NOT THE CASE THAT THE SHA RES 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 EVIDENCE 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 GOVERNMENT OF INDIA TO ENSURE THAT THERE IS NO STOCK RIGGING OR MANIPULATION. THE LD AO HAS NOT BROUGHT ANY EVIDENC E ON RECORD TO SHOW THAT THESE AGENCIES HAVE ALLEGED ANY STOCK MANIPULA TION AGAINST THE ASSESSEE AND OR THE BROKERS AND OR THE COMPANY. IN ABSENCE OF ANY EVIDENCES IT CANNOT BE SAID THAT MERELY BECAUSE THE STOCK PRICE MOVED SHARPLY, THE ASSESSEE WAS TO BE BLAMED FOR BOGUS TR ANSACTIONS. IT IS ALSO TO BE SEEN THAT IN THIS CASE, THE SHARES WERE HELD BY THE DONORS FROM 2003 AND SOLD IN 2010 THUS THERE WAS A HOLDING PERI OD 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 STOCK PRICE TO GENERATE BOGUS CAPITAL GAINS THAT TOO WITHOUT AN Y EVIDENCES WHATSOEVER. 9.2 IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE AND / OR THE STOCK BROKER M/S P DIDWANIA & CO AND TOSHITH SECURITIES P LTD., BOTH REGISTERED SHARE AND STOCK BROKERS WITH CALCUTTA STOCK EXCHANGE HAD CONFIRMED THE TRANSACTION AND HAVE ISSUED LEGALLY VALID CONTRACT NOTES UNDER THE LAW AND SUCH CONTRACT NOTES ARE AVAILABLE IN PAGES 41-52 OF THE PAPER BOOK. WE FIND THAT THE HON'BLE CALCUTTA HIGH COURT IN THE CA SE OF PR CIT VS RUNGTA PROPERTIES PRIVATE LIMITED ITAT NO 105 OF 2016 DATE D 8 TH MAY 2017 IN A 33 SIMILAR ISSUE DISMISSED THE APPEAL OF THE DEPARTMEN T 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 TR ANSACTIONS IN SHARES OF THE COMPANY INVOLVED WERE FALSE OR FICTITIOUS. IT I S FINDING OF THE ASSESSING OFFICER THAT THE SCRIPS OF THIS COMPANY WAS EXECUTE D BY A BROKER THROUGH CROSS DEALS AND THE BROKER WAS SUSPENDED FOR SOME T IME. IT IS ASSESSEE'S CONTENTION ON THE OTHER THAT EVEN THOUGH THERE ARE ALLEGATIONS AGAINST THE BROKER, BUT FOR THAT REASON ALONE THE ASSESSEE CANN OT 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 STA TEMENT OF ONE OF THE DIRECTORS OF THE BROKER FIRM AND ALSO AO OBSERV ED THAT ASSESSEE HAD NOT FURNISHED ANY EXPLANATION IN RESPECT OF THE INTENTION OF SHOWING TRADING OF SHARES ONLY IN THREE PENNY STOCKS. AO RE LIED THE LOSS OF RS.25,30,396/- ONLY ON THE BASIS OF INFORMATION SUB MITTED BY THE STOCK FICTITIOUS. AO HAS ALSO NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE. AO'S OBSERVATION AND CONCLUSION ARE MERELY BASED ON THE INFORMATION REPRESENTATIVE. THEREFORE ON SUCH BASIS NO DISALLOWANCE CAN BE MADE AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A), WH O HAS RIGHTLY ALLOWED THE CLAIM OF ASSESSEE. THUS GROUND NO. 1 OF THE REV ENUE 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 ORDE R. THE SUGGESTED QUESTIONS, IN OUR OPINION DO NOT RAISE ANY SUBSTANT IAL QUESTION OF LAW. 9.3. WE THEREFORE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWAR RANTED ALLEGATIONS 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 MERE LY RELIED ON THE ORDERS OF THE LD AO. WE FIND THAT THE ALLEGATION TH AT THE ASSESSEE AND / OR BROKERS GETTING INVOLVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE FURNISHED ALL EV IDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BAN K ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO PUR CHASE AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEIT HER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AN D THE EVIDENCES IN SUPPORT OF THE ASSESSEE'S CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THEREFORE THE LD AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEE'S CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. WE ALSO FIND THAT THE LD CITA RIGHTLY RELIED ON THE DECISION OF THE HON'BLE HIGH COURT AT CALCUTTA IN THE CASE OF ALPINE INVESTMENTS IN ITA NO. 620 OF 2008 D ATED 26TH AUGUST 2008 WHEREIN THE HON'BLE COURT HELD AS FOLLOWS: 34 'IT APPEARS THAT THE SHARE LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROU GH RECOGNIZED STOCKBROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE PAYMENTS MADE TO THE STOCKBROKER AND ALL THE PAYMENTS RECEIVED FROM STOCKBROKER THROUGH ACCOUNT PAYEE INSTRUMENTS, WHICH WERE 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 CAME TO THE C ONCLUSION AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. IN DOING SO, THE TRIBUNAL 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 QU ESTION 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 HON'BLE JURISDICTIONAL HIGH COURT AND OTHER CASE LAWS ALSO RELIED UPON BY THE LD AR AND FINDINGS GIVEN THEREON WOULD APPLY TO THE FACTS OF THE INSTA NT CASE. THE LD DR WAS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFE CT. HENCE WE HOLD THAT THE LD AO WAS NOT JUSTIFIED IN ASSESSING THE SALE P ROCEEDS OF SHARES OF SOICL AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT AND THEREFORE WE UPHOLD THE ORDER OF THE LD CITA AND DI SMISS THE APPEAL OF THE REVENUE. ACCORDINGLY THE GROUNDS RAISED BY THE REVE NUE 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 SUBMISS ION OF THE ASSESSEE 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 ABOV E DISCUSSION THE ADDITION MADE U/S 68 OF THE ACT IS HEREBY DELETED. 22. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTIC AL TO THE FACTS OF THE CASES DECIDED BY THE HONBLE PUNJAB & HARYANA HIGH COURT AND THE DELHI AND KOLKATA BENCHES OF THE TRIBUNAL, THEREFORE, RE SPECTFULLY FOLLOWING THE ABOVE DECISIONS, I SET-ASIDE THE ORDER OF THE LD. C IT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE U/S 6 8 OF THE I.T. ACT. SO FAR AS THE DECISIONS RELIED ON BY LD. DR ARE CONCERNED, THEY ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE GROUNDS RAISED BY THE ASSESSEE IN THE IMPUGNED APPE AL ARE ACCORDINGLY ALLOWED. 23. THE GROUNDS RAISED BY THE ASSESSEES IN OTHER AP PEALS I.E. IN ITA NO.2022 TO 2028/DEL/2018 ARE IDENTICAL TO THE FACTS OF THE PRESENT CASE. I HAVE ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE. FOLLOWING SIMILAR REASONING, THE GROUNDS RAISED BY THE ASSESSEES IN T HE ABOVE APPEALS ARE ALSO ALLOWED. 35 11. THE HONBLE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS JATIN INVESTMENT PVT. LTD. IN ITA NO.4325 & 4326/DE L/2009 ORDER DATED 27.05.2015 HELD AS FOLLOWS :- 11. IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND FURTHER SUBMITTED THAT THE ASSESSEE WAS HAVING INVESTMENT IN SHARES E TC. WHICH WERE DULY SHOWN ON THE ASSET ASIDE OF THE BALANCE SHEET, OUT OF THOSE INVESTMENTS SOME WERE SOLD AND FEW NEW WERE PURCHASED AND IF TH ERE WAS ANY GAIN ON THE SALE THE SAME WAS OFFERED FOR TAXATION. IT WAS FURTHER SUBMITTED THAT IN EARLIER YEAR 13 4325 & 4326/ DEL/2009 UNDER SIMI LAR CIRCUMSTANCES, THE CASE WAS REOPENED U/S 147 OF THE ACT AND THE ADDITI ON MADE BY THE AO WAS DELETED BY THE I.T.A.T. IT WAS FURTHER SUBMITTE D THAT THE ASSESSEE SOLD THE SHARES WHICH WERE EARLIER PURCHASED IN DIF FERENT YEARS AND DULY SHOWN IN THE BALANCE SHEET OF THE RESPECTIVE YEARS AND THAT THE ASSESSEE HAD SHOWN THE SALE PROCEEDS IN THE BOOKS OF ACCOUNT S, THE INVESTMENTS WERE REDUCED AFTER MAKING THE SALES. IT WAS CONTEND ED THAT THERE WAS NO OBLIGATION UNDER THE LAW THAT THE ASSESSEE WAS REQU IRED TO PROVE THE SOURCE OF PAYEE. IT WAS FURTHER CONTENDED THAT THE AO HAD NOT REJECTED THE BOOKS OF ACCOUNTS AND THE PURCHASES WERE DULY A CCEPTED SO THERE WAS NO REASON TO DOUBT THE SALES. IT WAS SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THI S BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S VISHAL HOLDING AND CAPIT AL PVT. LTD. IN ITA NO. 1788/DEL/2009 ORDER DATED 17.07.2009 WHICH HAS BEEN UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT AS REPORTED IN (2 011) 200 TAXMAN 186 (DELHI). IT WAS FURTHER, SUBMITTED THAT THE ISSUE I S ALSO COVERED BY THE ORDER OF THE ITAT, DELHI BENCH IN THE CASE OF ITO V S. GOODWILL CRESEC PVT. LTD. IN ITA NO. 4151/DEL./2010 ORDER DATED 25.01.20 12. RELIANCE WAS ALSO PLACED ON THE FOLLOWING CASES LAWS :- 14 4325 & 432 6/ DEL/2009 '1. CIT VS. SH. UDIT NARAIN AGGARWAL, ITA NO. 560 OF 2009, DT. 12.12.2012 2. CIT VS. SUDEEP GOENKA, ITA NO. 468 OF 2009, DT. 3.01.20 13. 3. CIT VS. ANIRUDH NARAIN AGGARWAL, ITA NO. 195 OF 2010, DT. 1 6.01.2013.' IT WAS POINTED OUT THAT THE SAME ISSUE HAS BEEN DECIDED BY THE I.T.A.T. IN 36 ASSESSEE'S OWN CASE IN I.T.A.T. NO. 1584/DEL./2009 FOR THE A.Y. 2002-03 VIDE ORDER DATED 13.11.2009, IN ASSESSEE'S FAVOUR ( COPY OF THE ORDER WAS FURNISHED WHICH IS PLACED ON RECORD) 12. WE HAVE CO NSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH TH E MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED T HAT THE ASSESSEE PURCHASED THE SHARES IN EARLIER YEARS WHICH WERE SH OWN AS INVESTMENT IN THE BOOKS OF ACCOUNTS AND REFLECTED IN THE 'ASSET S IDE' OF THE 'BALANCE SHEET', OUT OF THOSE INVESTMENTS (COPY WHICH IS PLA CED AT PAGE NO. 23 AND 24 OF THE ASSESSEE'S PAPER BOOK), THE ASSESSEE SOLD CERTAIN INVESTMENTS AND ACCOUNTED FOR THE PROFIT / LOSS AND OFFERED THE SAME FOR TAXATION. IN THE PRESENT CASE, THE AMOUNT IN QUESTION WAS NEITHE R A LOAN OR THE DEPOSIT , IT WAS ALSO NOT ON ACCOUNT OF SHARE APPLI CATION MONEY, THE SAID AMOUNT WAS ON ACCOUNT OF SALE OF INVESTMEN T THEREFORE THE PROVISIONS OF SECTION 68 OF THE ACT WERE NOT AP PLICABLE AND THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION. IN OUR OPINION, THE LD. CIT(A) RIGHTLY DELETED THE ADDITION MADE BY THE AO. 13. ON A SIMILAR ISSUE THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VISHAL HOLDING AND CAPITAL PVT. LTD. VIDE ORDER DATED 9TH AUGUST, 2010 UPHELD THE ORDER DATED 30.7.2009 OF THE ITAT IN ITA NO. 17 88/DEL/2007 FOR THE ASSESSMENT YEAR 2000-2001 WHEREIN THE ORDER OF THE LD. CIT(A) MAKING THE SIMILAR DELETION WAS UPHELD BY OBSERVING IN PAR A 6 AS UNDER :- 'WE ARE OF THE VIEW THAT THE ASSESSEE HAD PRODUCED COPIES O F ACCOUNTS, BILLS AND CONTRACT NOTES ISSUED BY M/S. MKM FINSEC PVT. LTD., AND HAD BEEN MAINTAINING BOOKS OF ACCOUNT AS PER COMPANIES ACT. THE ASSESSEE HAD ALSO DEMONSTRATED THE PURCHASE AND SALE OF SHARES O VER A PERIOD OF TIME AS SEEN FROM THE BALANCE SHEET'S. IN OUR OPINION, T HE ASSESSING OFFICER HAS SIMPLY ACTED ON THE INFORMATION RECEIVED FROM THE I NVESTIGATION WING WITHOUT VERIFYING THE DETAILS FURNISHED BY THE ASSE SSEE. THE ASSESSEE HAS ALSO PRODUCED BEST POSSIBLE EVIDENCE TO SUPPORT ITS CLAIM. CONSEQUENTLY THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT B E SUSTAINED.' 14. WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). A CCORDINGLY, WE DO NOT SEE 37 ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. IN ITA NO. 4326/DEL./2009 OF THE ASSESSMENT YEAR 2004- 05 IDENTICAL ISSUE HAVING SIMILAR FACTS IS INVOLVED, THE ONLY DIFFERENCE IS IN THE AMOUNT OF A DDITION WHICH WAS DELETED BY THE LD. CIT(A). THEREFORE, OUR FINDINGS GIVEN IN FORMER PART OF THIS ORDER, IN RESPECT OF 16 4325 & 4326/ DEL/2009 ASSESSMENT YEAR 2003-04, SHALL APPLY MUTATIS MUTANDIS FOR ASSESSMEN T YEAR 2004-05. 14. WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACT S DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CI T(A). ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. IN ITA NO. 4326/DEL./2009 OF THE ASSESSMENT YEAR 2004- 05 IDEN TICAL ISSUE HAVING SIMILAR FACTS IS INVOLVED, THE ONLY DIFFERENCE IS I N THE AMOUNT OF ADDITION WHICH WAS DELETED BY THE LD. CIT(A). THEREFORE, OUR FINDINGS GIVEN IN FORMER PART OF THIS ORDER, IN RESPECT OF 16 4325 & 4326/ DEL/2009 ASSESSMENT YEAR 2003-04, SHALL APPLY MUTATIS MUTAND IS FOR ASSESSMENT YEAR 2004-05. 12 . THE HONBLE DELHI HIGH COURT IN THE CASE OF PRINC IPAL C.I.T. VS JATIN INVESTMENT PVT. LTD. [2017 ] TMI 342 (DELHI) HELD AS FOLLOWS :- 4. THE ITAT AGREED WITH THE CONCLUSIONS OF THE CIT (A) UPON ITS INDEPENDENT EXAMINATION OF THE RECORD. IT ALSO DISC OUNTED THE REVENUE'S SUBMISSIONS THAT THE INVESTMENT SHOWN IN THE BOOK O F ACCOUNTS AND REFLECTED AS ASSETS IN THE SIDE OF THE BALANCE SHEE T, SHOULD HAVE BEEN PROPERLY TREATED AND THAT IN THE ABSENCE OF SUCH TR EATMENT .SECTION 68 APPLIES. THE ITAT REJECTED THIS CONTENTION AND HELD - BASED UPON THE PRINCIPLES ENUNCIATED IN CIT V. VISHAF HOLDING & CA PITAL PVT. LTD. (ORDER OF THIS COURT DATED 9.8.2010) THAT THE INVOCATION OF S ECTION'68 IN THE CIRCUMSTANCES IS UNWARRANTED. 5. LEARNED COUNSEL FO R THE REVENUE REITERATED THE GROUNDS CITED IN SOME OF THE CONTENT IONS MADE BEFORE THE ITAT. LEARNED COUNSEL ESPECIALLY EMPHASIZED ON THE SUBMISSION THAT THE INCORRECT REFLECTION OF THE RECEIPTS IN THE BALANCE SHEET BELIED THE TRUE NATURE OF THE RECEIPTS AS A JUSTIFICATION FOR THE A PPLICATION OF SECTION 68 . 6. THE ITAT IN OUR OPINION QUITE CORRECTLY APPRECIA TED THE LAW AND ITS APPLICATION BY THE FIRST APPELLATE AUTHORITY, I.E., CIT (A). HAVING REGARD TO 38 THE FACTS AND THE NATURE OF THE ANALYSIS BASED UPON THE DECISIONS OF THIS COURT, AS WELL AS THE RELIANCE ON VARIOUS DECISIONS WITH RESPECT TO THE TRUE NATURE OF SECTION 68, WE ARE OF THE OPINION THAT NO QUESTION OF LAW ARISES; THE APPEALS ARE ACCORDINGLY DISMISSED 13. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE C ITED AS CIT VS VISHAL HOLDING AND CAPITAL PVT. LTD. VIDE ORDER DAT ED 9TH AUGUST, 2010 UPHELD THE ORDER DATED 30.07.2009 OF THE ITAT IN I .T.A. NO. 1788/DEL/2007 FOR THE ASSESSMENT YEAR 2000-2001 WHE REIN THE ORDER OF THE LD. CIT(A) MAKING THE DELETION WAS UPHELD BY O BSERVING IN PARA 6 AS UNDER:- 'WE ARE OF THE VIEW THAT THE ASSESSEE HAD PRODUCED COPIES ) OF ACCOUNTS, BILLS AND CONTRACT NOTES ISSUED BY M/S. M KM FINSEC PVT. LTD., AND HAD BEEN MAINTAINING BOOKS OF ACCOUNT AS PER CO MPANIES ACT. THE ASSESSEE HAD ALSO DEMONSTRATED THE PURCHASE AND SAL E OF SHARES OVER A PERIOD OF TIME AS SEEN FROM THE BALANCE SHEET. IN O UR OPINION, THE ASSESSING OFFICER HAS SIMPLY ACTED ON THE INFORMATI ON RECEIVED FROM THE INVESTIGATION WING WITHOUT VERIFYING THE DETAILS FU RNISHED BY THE ASSESSEE. THE ASSESSEE HAS ALSO PRODUCED BEST POSSIBLE EVIDEN CE TO SUPPORT ITS CLAIM. CONSEQUENTLY THE ADDITION MADE BY THE ASSESS ING OFFICER CANNOT BE SUSTAINED.' 8. IN VIEW OF AFORESAID JUDGMENTS/ORDERS PASSED BY THE HONBLE HIGH COURTS AS WELL AS THE TRIBUNAL, I HAVE NO HESITATIO N TO HOLD THAT NEITHER AO NOR CIT-A HAS BEEN ABLE TO CONTROVERT ASSESSEES COPIOUS EVIDENCES FILED IN PRESENT CASE WHICH CLEARLY SUPPORTS THE CA SE OF ASSESSEE QUA LTCG CLAIMED AS EXEMPT U/S 10(38) OF THE ACT ON SALE OF SHARES OF M/S KAPPAC PHARMA LIMITED AND SO ISSUE FRAMED BY ME ABOVE NEED S TO BE ANSWERED IN FAVOR OF APPELLANT /ASSESSEE. SO ADDITION MADE O N A/C OF LTCG /S 68 READ WITH SECTION 115BEE IS DELETED. SO GROUNDS REL ATING TO ADDITION U/S 68 ARE ALLOWED. 9. AS REGARDS THE GROUND NO. 12 IN ITA 2826/DEL/201 8 IN NITASHA GUPTA CASE RELATING TO ADDITION OF RS 34,406 AND RS 95,000 ON A/C OF 26AS MISMATCH AND HRA DEDUCTION, AS REQUESTED BY THE LD . COUNSEL FOR THE ASSESSEE ARE SET ASIDE TO FILE OF LD AO FOR DENOVO ADJUDICATION. 39 10. SINCE IN ALL THE OTHER APPEALS, I.E., IN THE CA SE OF MANOJ KUMAR GUPTA AND ARUN KUMAR IN ITA 2825/DEL/2018 (AY 2014- 15) AND ITA 457/DEL/2018 (AY 2014-15) RESPECTIVELY, SIMILAR FA CTS ARE PERMEATING AND SAME FINDING HAS BEEN GIVEN, THEREFORE, MY FIND ING GIVEN ABOVE WILL APPLY MUTATIS MUTANDIS IN THESE TWO APPEALS ALSO, B ECAUSE THE NATURE OF TRANSACTIONS, EVIDENCES AND DOCUMENTS ARE EXACTLY T HE SAME. 11. IN THE RESULT, THE APPEAL NO. 2826/DEL/2018 (AY 2014-15)- NITASHA GUPTA VS. ITO, WARD 3(1), GURGAON STAND PARTLY AL LOWED FOR STATISTICAL PURPOSES AND ITA NO. 2825/DEL/2018 (AY 2014-15) M ANOJ KUMAR GUPTA VS. ITO WARD 2(4), GURGAON AND ITA NO. 457/D EL/2018 (AY 2014- 15) ARUN KUMAR VS. ACIT, CIRCLE-1, NOIDA STAND AL LOWED. THE DECISION IS PRONOUNCED ON 05 TH NOVEMBER, 2018. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 05 TH NOVEMBER, 2018. SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI