Shri Hakimuddin Khambati, Indore V. ITO-4(4) Range-4, Indore

ITA 288/Ind/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3849 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-01-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 27-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N AGRAWAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Earning of tax free income; Question of law; Validity of assessment; Accommodation entries; Benefit of exemption; Penny stocks; Set aside
• Section: 143(3); 142(1); 234B; 143(2); 73; 13; 22; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE MANISH BORAD, ACCOUNTANT MEMBER AND HONBLE MADHUMITA ROY, JUDICIAL MEMBER ITA NO.288/IND/2019 ASSESSMENT YEAR 2014-15 SHRI HAKIMUDDIN KHAMBATI, : APPELLANT 43, SIYAGANJ INDORE PAN : ACVPK2484M V/S ITO-4(4), RANGE-4, INDORE : RESPONDENT ITA NO.410/IND/2019 ASSESSMENT YEAR 2014-15 SMT. MANISHA AGRAWAL, : APPELLANT 51, NEW ANAJ MANDI, SANYOGITAGANJ, CHHAWANI, INDORE PAN : AGLPA2930N V/S ITO-4(3), RANGE-4 INDORE : RESPONDENT HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 2 REVENUE BY SHRI HARSHIT BARI, SR.DR ASSESSEE BY SHRI S.N. AGRAWAL , CA DATE OF HEARING 08 .04 .2021 DATE OF PRONOUNCEMENT 2 5 . 0 5 . 202 1 O R D E R PER BENCH THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE OF THE ASSESSEE(S) FOR ASSESSMENT YEAR 2014-15 ARE DIREC TED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-I I (IN SHORT LD. CIT], INDORE EVENLY DATED 18.01.2019 WHICH ARE ARIS ING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHO RT THE ACT) DATED 26.12.2016 & 15.12.2016 FRAMED BY ITO-4(4) & ITO-4(3), INDORE RESPECTIVELY. 2. ASSESSEE(S) HAS RAISED FOLLOWING GROUNDS OF APPE AL:- (I) SHRI HAKIMUDDIN KHAMBATI ITA.NO.288/IND/2019 ASSESSMENT YEAR 2014-15 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN MAINTAINING THE ADDITION AS MADE BY THE ASSESSING OFFICER OF RS.17,15,240/- TO THE TOTAL IN COME OF THE APPELLANT ON ACCOUNT OF SALE PROCEEDS REALIZED ON S ALE OF SHARES UNDER SECTION 68 OF THE ACT BY TREATING IT AS UNEXP LAINED CASH CREDITS WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 3 SUBMISSIONS MADE BEFORE HIM MORE SO WHEN THE APPELL ANT HAD FILED AMPLE DOCUMENTS SO AS TO JUSTIFY THE GENUINEN ESS OF LONG TERM CAPITAL GAIN WHICH WERE NEVER DISPROVED BY THE ASSESSING OFFICER. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED ASSESSING OFFICER ERRED IN TAXING THE ENTIR E AMOUNT OF SALE PROCEEDS REALIZED ON SALE OF SHARES WITHOUT EVEN AL LOWING THE DEDUCTION OF COST OF SHARES AS ACTUALLY INCURRED BY THE APPELLANT WITHOUT ASSIGNING ANY SPECIFIC REASON FOR THE SAME. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN MAINTAINING THE ADDITION MA DE BY THE ASSESSING OFFICER ON ACCOUNT OF PROCEEDS AS REALIZE D ON SALE OF SHARES ON THE BASIS OF THIRD PARTY DOCUMENTS/STATEM ENTS WHICH WERE NEVER CONFRONTED WITH THE APPELLANT AND AGAINS T WHICH AN OPPORTUNITY OF CROSS EXAMINATION WAS ALSO NOT ALLOW ED TO THE APPELLANT. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN MAINTAINING THE ADDITION MA DE BY THE ASSESSING OFFICER OF RS.51,457/- TO THE TOTAL INCOM E OF THE APPELLANT ON ACCOUNT OF ALLEGED COMMISSION EXPENSES INCURRED FOR ARRANGING THE AMOUNT OF LONG TERM CAPITAL GAIN WITH OUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM MORE SO WHEN THE AMOUNT OF BROKERAGE WAS DULY C HARGED IN THE BILLS ISSUED BY THE BROKER. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN MAINTAINING THE INTEREST AS CHARGED BY THE ASSESSING OFFICER UNDER SECTION 234A OF THE ACT. 5.THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER AND M ODIFY THE GROUNDS OF APPEAL AS TAKEN BY HIM. HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 4 (II) SMT. MANISHA AGRAWAL ITA NO.410/IND/2019 ASSE SSMENT YEAR 2014-15 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN MAINTAINING THE ADDITION AS MADE BY THE ASSESSING OFFICER OF RS.20,70,496/- TO THE TOTAL IN COME OF THE APPELLANT ON ACCOUNT OF LONG TERM CAPITAL GAIN AS E ARNED ON SALE OF LONG TERM CAPITAL GAIN AS EARNED ON SALE OF SHARES BY TREATING IT AS INCOME FROM UNDISCLOSED SOURCES WITHOUT PROPERLY AP PRECIATING THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM M ORE SO WHEN THE APPELLANT HAD FILED AMPLE DOCUMENTS SO AS TO JU STIFY THE GENUINENESS OF LONG TERM CAPITAL GAIN WHICH WERE NE VER DISPROVED BY THE ASSESSING OFFICER. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN MAINTAINING THE ADDITION MA DE BY THE ASSESSING OFFICER ON ACCOUNT OF LONG TERM CAPITAL G AIN AS EARED ON SALE OF SHARES ON THE BASIS OF THIRD PARTY DOCUMENT S/STATEMENTS WHICH WERE NEVER CONFRONTED WITH THE APPELLANT AND AGAINST WHICH AN OPPORTUNITY OF CROSS EXAMINATION WAS ALSO NOT AL LOWED TO THE APPELLANT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN MAINTAINING THE INTEREST CH ARGED BY THE ASSESSING OFFICER UNDER SECTION 234B AND 234C OF T HE ACT. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER AND MODIFY THE GROUNDS OF APPEAL AS TAKEN BY HER. HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 5 3. BRIEF FACTS OF THE CASE AS CULLED OUR FROM THE R ECORDS IN THE CASE OF THE ASSESSEE NAMELY SHRI HAKUMUDDHIN KHAMBATI IS THAT HE IS AN INDIVIDUAL. IN THE E-RETUR N OF INCOME FILED FOR ASSESSMENT YEAR 2014-15 ON 21.3.20 15, EXEMPT INCOME OF LONG TERM CAPITAL GAIN AT RS. 16,28,029/- WAS CLAIMED FROM SALE OF EQUITY SHARES O F TURBOTECH ENGINEERING LIMITED. SALE CONSIDERATION OF RS.17,15,240/- WAS RECEIVED FROM ONLINE SALE MADE ON THE PORTAL OF RECOGNISED STOCK EXCHANGE THROUGH A REGIS TERED BROKER AND SHARE TRANSFERRED FROM DEMAT ACCOUNT. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS CARRIED OUT BY LD. A.O BY ISSUANCE OF NOTICES U/S 143(2) AND 142(1) THESE TRANSACTIONS GIVING RISE TO LONG TERM CAPITAL GAIN W AS QUESTIONED. ASSESSEE FILED RELEVANT DETAILS TO PRO VE THE GENUINENESS OF TRANSACTION BUT LD. A.O TREATED IT AS BOGUS LONG TERM CAPITAL GAIN ON ACCOUNT OF FOLLOWING THRE E REASONS; (I) PURCHASE MADE ON OFF LINE HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 6 (II) ABNORMAL INCREASE IN SHARE OF PRICE OF TURBO TECH ENGINEERS LTD NOT BACKED BY FINANCIAL GROWTH. (III) OUTCOME OF ENQUIRIES CONDUCTED BY DIRECTOR OF INVESTIGATION, KOLKATTA IN CASE OF SOME ENTRY OPER ATORS, SHARE BROKERS WHICH WERE ALLEGED TO BE ENGAGED IN PROVIDING VARIOUS ACCOMMODATION ENTRY OF LONG TERM CAPITAL GAIN AND SHORT TERM COMPUTED FROM TRANSACTION OF PURCHASE/SALE OF LISTED SECURITIES. THOUGH THE LD. A.O DID NOT MADE ANY SPECIFIC OBSERVATION ABOUT THE INVOLVEMENT OF THE ASSESSEE I N THE ALLEGED SCAM DONE BY THE ENTRY OPERATORS AND SHARE BROKERS AND ALSO LD. A.O DID NOT DISPUTED THE GENUINENESS OF DOCUMENTS DEPICTING THE SALE OF EQUITY SHARES AND DOCUMENTS FILED BY THE ASSESSEE STILL HE DENIED THE BENEFIT OF DEDUCTION U/S 10(38) OF THE ACT AND MADE ADDITION F OR THE SALE CONSIDERATION OF RS.17,15,240/- U/S 68 OF THE A CT. 4. BRIEF FACTS IN THE CASE OF ANOTHER ASSESSEE SMT . MANISHA AGRAWAL ARE THAT SHE IS AN INDIVIDUAL AND F ILED HER RETURN OF INCOME ON 31.7.2014 DECLARING INCOME OF RS.14,62,010/- AND ALSO CLAIMED THE LONG TERM CAPITA L HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 7 GAIN AT RS.20,70,496/- FROM SALE OF SHARES OF KAPPAC PHARMA LTD . THE PURCHASE OF SHARE ARE IN OFF LINE MODE AND SUBSEQUENTLY CONVERTED IN DEMAT FORM AND AFTER HOLDI NG THE SHARES FOR MORE THAN 12 MONTHS WERE SOLD THROUGH AR IHANT CAPITAL MARKETS LTD AT THE CONSIDERATION OF RS.20,7 9,642/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS CARRIED BY LD. A.O AFTER SELECTING THE CASE UNDER SCRUTINY THROUGH CASS AND SERVING OF NOTICES U/S 143(2) AND 142(1) OF THE ACT, DOCUMENTS PERTAINING TO LONG TERM CAPITAL GAIN WERE ASKED TO BE FURNISHED. ASSESSEE DULY SUBMITTED COMPLETE DETAILS OF THE TRANSACTION FROM PURCHASE TILL RECEIVING THE SALE CONSIDERATION IN THE BANK ACCOUNT. LD. A.O WAS NOT SATISFIED AND HE BASED ON THE SEARCH AND SEIZURE OP ERATION CARRIED OUT IN THE CASE OF MR. VIPUL VIDUR BHATT AN D HIS RELATED ENTITIES AND THEIR ADMISSION TO BE ENGAGED IN PROVIDING THE ACCOMMODATION ENTRIES TO VARIOUS BENE FICIARIES ON COMMISSION SPECIFICALLY WITH REGARD TO THE SCRIP T OF SUNRISE ASIAN LTD CAME TO A CONCLUSION THAT KAPPAC PHARMA LTD IS A PENNY STOCK COMPANY AND ALSO DOUBTED THE H UGE HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 8 PROFIT MADE FROM SALE OF EQUITY SHARES OF SMALL PEN NY STOCK COMPANY. HE FURTHER REFERRING TO THE INVESTIGATION REPORTS CARRIED OUT BY THE INVESTIGATION WING WITH SOME SUB BROKERS WHO ARE FRAUDULENTLY MISUSING THE PORTAL OF BSE AND ELECTRONIC MEDIA PROVIDE ACCOMMODATION ENTRY IN THE FORM OF LONG TERM CAPITAL GAIN WHICH IN HIS VIEW ARE BOGUS AND DOES NOT ENTITLE THE ASSESSEE TO CLAIM THE BENEFIT U/S 10(38) OF THE ACT. LD. A.O ACCORDINGLY ADDED BACK THE LONG TERM CAPITAL GAIN OF RS.20,70,496/-AND ASSESSED INCOME AT RS.35,32,506/-. 5. FROM PERUSAL OF THE ABOVE STATED FACTS AND THE G ROUNDS OF APPEAL RAISED BY BOTH THE ASSESSEE(S) WE OBSERVE THAT FOLLOWING COMMON ISSUES NEEDS TO BE ADJUDICATED. (I) WHETHER LD. CIT(A) ERRED IN DENYING THE BENEFI T OF EXEMPTION U/S 10(38) OF THE ACT FOR LONG TERM CAPI TAL GAIN EARNED BY THE ASSESSEE AND ALSO ERRED IN HOLDI NG THE TRANSACTIONS AS SHAM. (II) WHETHER LD. CIT(A) ERRED IN REJECTING THE ASS ESSEE(S) HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 9 GROUND CHALLENGING THE VALIDITY OF ASSESSMENT PROCEEDINGS WITH RESPECT TO THE ADDITIONS OF LONG TERM CAPITAL GAIN/ SALE CONSIDERATION WITHOUT BEING GRA NTED OPPORTUNITY OF CROSS EXAMINATION OF THE PERSONS WH OSE STATEMENTS WERE USED BY THE LD. A.O TO MAKE THE ADDITIONS. 6. SINCE THE ISSUES ARE COMMON WE WILL NOW ADJUDICA TE THE SAME ON THE BASIS OF FACTS OF THE CASE OF ASSESSEE NAMELY SHRI HAKIMUDDIN KHAMBATI IN ITA NO.288/IND/2019 AND OUR DECISION SHALL BE APPLIED MUTANDIS MUTANDIS ON THE GROUNDS RAISED BY ANOTHER ASSESSEE NAMELY SMT. MANI SH AGRAWAL. 7. ASSESSEE NAMELY SHRI HAKIMUDDIN KHAMBATI AGGRIEV ED WITH THE FINDING OF LD. A.O FILED APPEAL BEFORE LD. CIT(A) AGAIN FURNISHED ALL RELEVANT DOCUMENTS AND ALSO MAD E EXPLANATION THAT ALL THE CONDITIONS U/S 10(38) OF T HE ACT WERE FULFILLED AND THE CLAIM OF LONG TERM CAPITAL GA IN SHOULD BE ALLOWED AND ADDITIONS U/S 68 OF THE ACT I S UNCALLED FOR AS THE IDENTITY, GENUINENESS AND HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 10 CREDITWORTHINESS OF THE PERSON GIVING THE AMOUNT OF SALE CONSIDERATION TO THE ASSESSEE HAS NOT BEEN DISPUTED AT ANY STAGE. HOWEVER LD. CIT(A) PLACING RELIANCE ON VARIO US JUDGMENTS CONCLUDED THAT THE COMPANY OF WHICH THE S HARES HAVE BEEN SOLD ARE ACTUALLY PENNY STOCK COMPANIES A ND THEIR PRICES ARE ABNORMALLY RAISED BY CIRCULAR TRAD ING. HE ALSO HELD THAT THE ASSESSEE IS INDULGED IN ARRANGIN G BOGUS LONG TERM CAPITAL GAIN AND THE TRANSACTIONS ARE SHA M WHICH FAILED TO STAND THE TEST OF HUMAN PROBABILITY . HE ACCORDINGLY CONFIRMED THE FINDING OF LD. A.O. 8. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. 9. LD. COUNSEL FOR THE ASSESSEE MADE DETAILED ARGUM ENTS REFERRING TO THE PAPER BOOK AND WRITTEN SUBMISSION RUNNING FROM PAGE 1 TO 538 WHICH ALSO INCLUDES THE RELIANCE PLACED ON VARIOUS JUDGMENTS. HE LAID DOWN EMPHASIS ON THE DECISION OF CO-ORDINATE BENCH, DELHI IN THE CASE OF SWATI LUTHRA ITA NO.6480/DEL/2017 DATED 28.06.2019 STATING THAT THE HONBLE TRIBUNAL HAS DEALT THE VERY SAME ISSUE A ND THE SAME SCRIPT I.E. TURBOTECH ENGINEERING LIMITED. WI TH REGARD HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 11 TO THE LEGAL ISSUE THAT THE OPPORTUNITY OF CROSS EX AMINATION WAS NOT AWARDED TO THE ASSESSEE, EMPHASIS WAS LAID ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES V/S CCE CIVIL APPEAL NO.4228 OF 2 006 AND ALSO ANOTHER JUDGMENT OF HONBLE APEX COURT DATED 28.3.2018 DISMISSING THE SPECIAL LEAVE PETITION FIL ED BY THE REVENUE IN THE CASE OF CIT V/S SUNITA DHADDA (2018) 101 CCH 0277 ISCC CONFIRMING THE VIEW TAKEN BY THE LOWER AUTHORITIES THAT NO ADDITION COULD BE MADE TO THE T OTAL INCOME OF THE ASSESSEE IF OPPORTUNITY OF CROSS EXAM INATION IS NOT PROVIDED TO THE ASSESSEE. 10. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE REFER RING TO THE FINDING OF LOWER AUTHORITIES AND DECISIONS REF ERRED BY LD. CIT(A) RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE HIGH COURT OF DELHI IN THE CASE OF SUMAN PODDAR VS. ITO ITA NO.841/2019 DATED 17.09.2019. 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE DETAILED WRITTEN SUBMISSIONS AND PAPER BOOK RUNNING FROM HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 12 PAGE 1 TO 538 IN THE CASE OF ASSESSEE NAMELY SHRI HAKIMUDDIN KHAMBATI AND WRITTEN SUBMISSION AND PAPER BOOK RUNNING FROM PAGE 1 TO 584 IN THE CASE OF ASSE SSEE NAMELY SMT. MANISHA AGRAWAL. COMMON ISSUES HAVE BE EN RAISED BY BOTH THE ASSESSEE(S) CHALLENGING THE ADDI TION ON MERITS AND ALSO CHALLENGING THE VALIDITY OF ASSESSM ENT PROCEEDINGS BY RAISING LEGAL GROUND THAT ADDITION W AS UNCALLED FOR AS THE OPPORTUNITY OF CROSS EXAMINATIO N WAS NOT PROVIDED. 12. FACTS AND ISSUES OF BOTH THE ASSESSEE(S) ARE SI MILAR EXCEPT THAT IN THE CASE OF SHRI HAKIMUDDIN KHAMBATI. LD. A.O DENIED THE BENEFIT OF SECTION 10(38) OF THE ACT AND MADE ADDITION FOR SALE CONSIDERATION RECEIVED FROM SALE OF SHARES OF TURBOTECH ENGINEERING LTD AS UNEXPLAINED CASH CR EDIT U/S 68 OF THE ACT, WHEREAS IN THE CASE OF SMT. MANI SHA AGRAWAL, LD. A.O. DENIED THE BENEFIT OF SECTION 10(3 8) OF THE ACT FOR LONG TERM CAPITAL GAIN FROM SALE OF SHARE F ROM KAPPAC PHARMA LTD AND MADE THE ADDITION FOR LONG TE RM CAPITAL GAIN CLAIMED BY THE ASSESSEE. APART FROM TH IS LD. HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 13 A.O HAS COMMONLY CONCLUDED THAT BOTH THE TURBOTECH ENGINEERING LTD AND KAPPAC PHARMA LTD ARE SMALL AND PENNY STOCK COMPANIES AS THEIR SHARE PRICE HAVE INC REASED ABNORMALLY WHICH ARE NOT COMMENSURATE WITH THE FINA NCIAL STATUS AND GROWTH OF THE COMPANY. LD. A.O HAS ALSO ALLEGED BOTH THE COMPANIES AS PENNY STOCK COMPANIES BASED O N THE INVESTIGATION CARRIED OUT IN THE CASE OF SOME OTHER BROKERS/ SUB BROKERS AND COMPANIES AT KOLKATTA AND OTHER PLA CES WHERE SOME PERSONS HAVE STATED THAT THEY ARE ENGAGE D IN PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF BOGU S LONG TERM CAPITAL GAIN. THE BASIS OF THE ADDITION MADE BY THE LD. A.O IS ON THE STATEMENT OF THIRD PARTY AND THE A BNORMAL INCREASE IN THE SHARE PRICE PURCHASE OFFLINE BY THE ASSESSEE. 13. ON THE OTHER HAND THE ASSESSEE HAD FILED DOCUMEN TS IN SUPPORT OF GENUINENESS OF THE PURCHASE AND SALE OF THE EQUITY SHARE OF TURBOTECH ENGINEERING LTD AND CONDI TIONS PROVIDED U/S 10(38) OF THE ACT BEING FULFILLED AND THE SAME ARE MENTIONED BELOW:- HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 14 S.NO. PARTICULARS PAGE NO 1 COPY OF CONTRACT NOTE CUM BILL DATED 29.05.2012 AS ISSUED BY M/S PRAGATI SHARES AND STOCK SERVICES IN CONNECTION WITH SALE OF 4000 EQUITY SHARES OF M/S TURBOTECH ENGINEERING LIMITED TO THE APPELLANT FOR A CONSIDERATION OF RS.74,200/- 73 2 COPY OF HOLDING CUM POOL ACCOUNT CERTIFICATE DATED 31.01.2013 AS ISSUED BY M/S PRAGATI SHARES AND STOCK SERVICESDULY CONFIRMING THE SALE OF 4000 EQUITY SHARES OF M/S TURBOTECH ENGINEERING LIMITED TO THE APPELLANT 74 3 COPY OF DEMAT STATEMENT OF THE APPELLANT WITH M/S ARIHANT CAPITAL MARKETS LIMITED FOR THE PERIOD FROM 01.04.2013 TO 21.10.2016 75 4 COPY OF BALANCE SHEET AND CAPITAL ACCOUNT OF THE APPELLANT AS ON 31 ST MARCH, 2013 DULY HIGHLIGHTING THE INVESTMENT AS MADE BY THE APPELLANT IN THE SHARES OF M/S TURBOTECH ENGINEERING LIMITED. 76 5.1 COPY OF SALE NOTE DATED 11.07.2013 IN CONNECTION WITH SALE OF 3,600 EQUITY SHARES AS ISSUED BY M/S ARIHANT CAPITAL MARKETS LIMITED 77 - 78 5.2 COPY OF SALE NOTE DATED 18.07.2013 IN CONNECTION WITH SALE OF 400 EQUITY SHARES AS ISSUED BY M/S ARIHANT CAPITAL MARKETS LIMITED 79 - 80 6 COPY OF LEDGER ACCOUNT OF THE APPELLANT IN THE BOOKS OF M/S ARIHANT CAPITAL MARKETS LIMITED FOR THE PREVIOUS YEAR 2013-14. 81 7 COPY OF BANK STATEMENT OF THE APPELLANT DULY REFLECTING THE SALE PROCEEDS AS REALIZED ON SALE OF SHARES 82 - 83 HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 15 14. SIMILAR DOCUMENTS WERE ALSO FILED BY ANOTHER AS SESSEE FOR PURCHASE/SALE OF EQUITY SHARES OF KAPPAC PHARMA LTD. ALL THE ABOVE STATED DOCUMENTS HAVE NOT BEEN FOUND TO BE INCORRECT BY THE LD. A.O AND LD. CIT(A). WE FURTHER NOTE THAT SIMILAR SET OF FACTS, OBSERVATION BY LD. A.O, NATURE OF ADDITION MADE AND THE STEEP INCREASE IN PRICES OF E QUITY SHARE OF A COMPANY NOT SUPPORTED BY SUFFICIENT FINA NCIAL GROWTH CAME UP FOR ADJUDICATION BEFORE THE CO-ORDINA TE BENCH OF DELHI IN THE CASE OF SMT. SWATI LUTHRA (SUPRA) VIDE ORDER DATED 26.9.2019 AND THE CO-ORDINATE BENCH HELD IN FAVOUR OF THE ASSESSEE THEREBY ALLOWING THE CLAIM O F EXEMPTION U/S 10(38) OF THE ACT FOR LONG TERM CAPIT AL GAIN AND ALSO DEALING WITH THE LEGAL ISSUE OF THE OPPORT UNITY OF CROSS EXAMINATION BEING NOT PROVIDED TO THE ASSESSE E EVEN WHEN THE ADDITION WAS MADE ON THE BASIS OF STATEMEN T OF THIRD PERSON, THUS ALLOWING THE ASSESSEES APPEAL O N BOTH THE LEGAL GROUND AS WELL AS ON MERITS OBSERVING AS FOLLOWS:- 12.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . WE FIND THAT THE TRANSACTIONS OF THE ASSESSEE OF PURCHASE OF SHARES OF M/S ESTEEM BIO AND HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 16 M/S TURBOTECH., HOLDING OF THE SHARES FOR MORE THAN ONE YEAR AND THE SALE OF SHARES THROUGH A REGISTERED SHARE BROKER IN A RE COGNIZED STOCK EXCHANGE AND PAYMENT OF SECURITIES TRANSACTION TAX THEREON, ALL WERE SUPPORTED BY DOCUMENTARY EVIDENCES WHICH WERE PLACE D BEFORE THE LOWER AUTHORITIES. THE REVENUE COULD NOT POINT OUT ANY SP ECIFIC DEFECT WITH REGARDS TO THE DOCUMENTS SO SUBMITTED BY ASSESSEE. IN OUR CONSIDERED VIEW, EFFECT OF A TRANSACTION WHICH IS SUPPORTED BY DOCUMENTARY EVIDENCES CANNOT BE BRUSHED ASIDE ON SUSPICION OR PROBABILITI ES WITHOUT POINTING OUT ANY DEFECT THEREIN. 13. IN THE INSTANT CASE, THE ASSESSING OFFICER HIMS ELF OBSERVED THAT THE MOVEMENT IN PRICE OF SHARES OF M/S ESTEEM BIO AND M /S TURBOTECH WERE WITHOUT ANY BACKING OF FINANCIAL PERFORMANCE OF THE SAID COMPANIES. IN OUR CONSIDERED VIEW, THE ABOVE FACTOR AT BEST WAS A POI NTER OR CAUSE FOR CAREFUL SCRUTINY OF THE TRANSACTION BY THE ASSESSING OFFICE R BUT FROM IT CANNOT BE CONCLUDED THAT TRANSACTIONS WERE SHAM. IT IS A MATT ER OF COMMON KNOWLEDGE THAT PRICES OF SHARES IN THE SHARE MARKET DEPENDS UPON INNUMERABLE FACTORS AND PERCEPTION OF THE INVESTOR AND NOT ALONE ON THE FINANCIAL PERFORMANCE OF THE COMPANY. FURTHER, WE A LSO FIND FROM RECORD THAT LD. AO ALSO DIDN'T CONFRONT COPIES OF STATEMEN TS RECORDED BY INVESTIGATION WING, KOLKATA OF SH, NIKHIL JAIN, SH. SANJAY VORA, SH. RAKESH SOMANI, SH. ANIL KUMAR KHEMKA AND SH. BIDYOO T SARKAR TO THE APPELLANT DURING ASSESSMENT PROCEEDINGS AND MERELY EXTRACTED COPIES OF THEIR STATEMENT IN THE ASSESSMENT ORDER ONLY. THE L D. AO HAS NOT CONFRONTED ANY MATERIAL TO THE ASSESSEE NOR PROVIDE D ANY ADEQUATE OPPORTUNITY TO THE ASSESSEE TO DEFEND HER CASE. SIN CE THE STATEMENTS WERE NOT CONFRONTED TO THE ASSESSEE, SHE WAS DEPRIVED OF HER RIGHT TO CROSS EXAMINE THE WITNESSES. ALSO WHATEVER THEY HAVE STAT ED IN THEIR STATEMENT IS NO GOSPEL TRUTH AND CANNOT BE APPLIED BLINDLY TO ALL THE PERSONS WHO HAVE BROUGHT THE SCRIPS IN THE ENTIRE COUNTRY. THUS , UNDER THESE CIRCUMSTANCES, ATLEAST SOME INQUIRY SHOULD HAVE DON E FROM THESE PERSONS, WHETHER THEY HAVE PROVIDED ANY ENTRY TO THE ASSESSE E, IF THE REQUEST FOR CROSS EXAMINATION WAS NOT POSSIBLE AT THAT STAGE. C ROSS EXAMINATION OF A PERSON IN WHOSE BASIS ANY ADVERSE INFERENCE IS DRAW N, THEN IT CANNOT BE PRIMARY EVIDENCE OR MATERIAL TO NAIL THE ASSESSEE A ND SIMPLY BASED ON THE STATEMENT NO ADDITION CAN BE MADE. THIS HAS BEEN HE LD SO BY VARIOUS COURTS, AND ALSO BY HON'BLE APEX COURT IN THE CASE OF M/S ANDAMAN TIIMBER INDUSTRIES VS. CCE (SC ) REPORTED IN 127 DTR 241 HAS HELD AS FOLLOWS: 'ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERI OUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLAT ION OF PRINCIPLES OF HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 17 NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS A DVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIO NER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES . EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS- EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT T HIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY M ENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEAL T WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS C ONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NO T HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE AP PELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN ST ATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT AS MENTIONE D ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STA TEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMONY F OR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATIO N. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID D EALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF C OULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTE R OF THE CROSS- EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE . WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATT ER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTI NG OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINI ON THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY I TS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ON LY BASIS OF ISSUING THE SHOW CAUSE NOTICE WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL.' 14. THAT THE LD DR DURING THE COURSE OF HEARING PLA CED HEAVY RELIANCE ON JUDGMENT OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF UDIT KALRA VS ITO IN ITA NO. 220/2019. RELEVANT EXTRACTS OF SAID JUD GMENT ARE EXTRACTED AS BELOW: 'THE ASSESSEE IS AGGRIEVED BY THE CONCURRENT FINDIN GS OF THE TAX AUTHORITIES - INCLUDING THE LOWER APPELLATE AUTHORITIES REJECTI NG ITS CLAIM FOR A LONG TERM HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 18 CAPITAL GAIN REPORTED BY IT, TO THE TUNE OF RS.13,3 3,956/- AND RS.14,34,501/- IN RESPECT OF 4,000 SHARES OF M/S KA PPAC PHARMA LTD. THE ASSESSEE HELD THOSE SHARES FOR APPROXIMATELY 19 MON THS; THE ACQUISITION PRICE WAS RS.12/- PER SHARE WHEREAS THE MARKET PRIC E OF THE SHARES AT THE TIME OF THEIR SALE, WAS RS.720/-. IT IS CONTENDED T HAT THE ASSESSEE WAS NOT GRANTED FAIR OPPORTUNITY. MR. RAJESH MAHNA, LEARNED COUNSEL APPEARING FOR THE ASSESSEE RELIED UPON THE ORDERS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL , IN RESPECT OF THE SAME COMPANY I.E. M/S KAPPAC PHARMA LTD., ANDPOINTED OUT THAT THE TAX AUTHORITY'S APPROACH IN THIS CASE WAS ENTIRELY ERRO NEOUS AND INCONSISTENT. THE MAIN THRUST OF THE ASSESSEE'S ARGUMENT IS THAT HE WAS DENIED THE RIGHT TO CROSS-EXAMINATION OF THE TWO INDIVIDUALS WHOSE S TATEMENTS LED TO THE INQUIRY AND ULTIMATE DISALLOWANCE OF THE LONG TERM CAPITAL GAIN CLAIM IN THE RETURNS WHICH ARE THE SUBJECT MATTER OF THE PRESENT APPEAL. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF THE PARTIES. ASIDE FR OM THE FACT THAT THE FINDINGS IN THIS CASE ARE ENTIRELY CONCURRENT - A.O ., CIT(A) AND THE ITAT HAVE ALL CONSISTENTLY RENDERED ADVERSE FINDINGS - W HAT IS INTRIGUING IS THAT THE COMPANY (M/S KAPPAC PHARMA LTD.) HAD MEAGRE RES OURCES AND IN FACT REPORTED CONSISTENT LOSSES. IN THESE CIRCUMSTANCES, THE ASTRONOMICAL GROWTH OF THE VALUE OF COMPANY'S SHARES NATURALLY E XCITED THE SUSPICIONS OF THE REVENUE. THE COMPANY WAS EVEN DIRECTED TO BE DE LISTED FROM THE STOCK EXCHANGE. HAVING REGARD TO THESE CIRCUMSTANCES AND PRINCIPALLY ON THE GROUND THAT THE FINDINGS ARE ENTIRELY OF FACT, THIS COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESEN T APPEAL. THIS APPEAL IS ACCORDINGLY DISMISSED.' 15. ON GOING THROUGH THE AFORESAID JUDGMENT, WE FIN D THAT NO QUESTION OF LAW WAS FORMULATED BY HON'BLE HIGH COURT OF DELHI I N THE SAID CASE AND THERE IS ONLY DISMISSAL OF APPEAL IN LIMINE AND THE HON'BLE HIGH COURT FOUND THAT THE ISSUE INVOLVED IS A QUESTION OF FACT AS HELD BY HON'BLE APEX COURT IN KUNHAYYAMMED VS STATE OF KERALA REPORTED I N 245 ITR 360 AND ALSO IN CIT VS. RASHTRADOOT (HUF ) REPORTED IN 412 ITR 17. EVEN ON MERITS AND FACTS, THE SAID JUDGMENT IN THE CASE OF UDIT KALRA VS ITO (SUPRA) IS DISTINGUISHABLE AS IN THAT CASE THE SCRIPS OF THE C OMPANY WERE DELISTED ON STOCK EXCHANGE, WHEREAS, IN THE INSTANT CASE, THE I NTERIM ORDER OF SEBI IN THE CASES OF M/S ESTEEM BIO AND M/S TURBOTECH HAVE BEEN COOLED DOWN BY SUBSEQUENT ORDER OF SEBI PLACED BY ASSESSEES IN ITS PAPER BOOK. THUS, THE CASE OF UDIT KALRA VS ITO RELIED BY LD. DR IS CLEARLY DISTINGUISHABLE ON FACTS AND IS NOT APPLICABLE TO THE FACTS OF ASSESSE E. THUS, WE HOLD THAT THE CASE OF ASSESSEE IS FACTUALLY AND MATERIALLY DISTIN GUISHABLE FROM THE FACTS OF THE CASE OF UDIT KALRA VS ITO SO RELIED BY LD DR . HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 19 16. WE FURTHER FIND THAT LD. AO HAS ALSO MENTIONED ABOUT SOME ORDER OF SEBI. THIS ORDER ALSO WAS NEVER CONFRONTED TO THE A PPELLANT DURING ASSESSMENT PROCEEDINGS. MOREOVER, THE SAID ORDER SE EMS TO BE PASSED IN YEAR 2015, WHEREAS THE APPELLANT HAD PURCHASED THE SHARES IN YEAR 2011 AND 2013 AND SOLD THEM IN YEAR 2014. IT WAS EVIDENT FROM THIS DOCUMENT ONLY THAT NO ACTION HAS BEEN TAKEN BY THE SEBI AGAI NST THE COMPANY DURING THE PERIOD WHEN THE APPELLANT HOLDS THE SHAR ES. THUS, EVEN OTHERWISE, WE FIND THAT THE ORDER OF SEBI SO RELIED BY LD. AO AND CIT (A) IS NOT APPLICABLE FOR THE TRANSACTIONS UNDER CONSIDERA TION. IN ANY CASE AS STATED ABOVE, THE SEBI IN ITS SUBSEQ UENT DECISION HAS ABSOLVED MOST OF THE COMPANIES INCLUDING THE COMPAN IES WHOSE SCRIPS ARE UNDER SUSPICION, AS THEY WERE NOR FOUND TO BE RIGGI NG THE PRICE. THIS FACT ALONE VITIATES THE CASE OF REVENUE. 17. WE ALSO FIND THAT THE LD. AO HAS RAISED OBJECTI ON REGARDING THE CASH PURCHASE OF SHARES AND THAT SHARES WERE DEMATERIALI ZED FEW DAYS BACK ONLY FROM THE DATE OF SALE. THERE IS NO LAW WHICH P ROHIBITS THE PURCHASE OF SHARES IN CASH, HOWEVER IN THE PRESENT CASE, ASSESS EE HAD FILED COPIES OF BILLS OF PURCHASE, COPY OF SHARE CERTIFICATES AND T RANSFER FORMS ETC. BEFORE LD. AO AND NO ADVERSE INFERENCE COULD BE DRAWN ONLY BECAUSE THE SHARES WERE PURCHASED IN CASH. REGARDING DEMAT OF SHARES, WE HOLD THAT IT IS THE OPTION OF THE BUYER OF SHARES TO KEEP THE SHARES EI THER IN DEMAT FORM OR IN PAPER FORM. MERELY BECAUSE THE SHARES WERE DEMATTED AT A LATER STAGE, NO ADVERSE INFERENCE COULD BE DRAWN. THE LEARNED COUNS EL FOR THE ASSESSEE HAS TAKEN US THROUGH VARIOUS DOCUMENTS FILED IN THE PAPER BOOK AS REFERRED TO ABOVE WHICH SPECIFICALLY PROVE THE PURC HASE OF SHARES MADE BY ASSESSEE GENUINELY WHICH WERE ALSO SOLD GENUINELY. THE TRANSACTIONS WERE CARRIED THROUGH DEMAT ACCOUNT AND BANKING CHANNEL O N WHICH STT HAS BEEN PAID BY ASSESSEE. THE REPORT OF THE SEBI WAS N OT ADVERSE IN NATURE AGAINST THE ASSESSEE BECAUSE NAME OF THE ASSESSEE D ID NOT APPEAR THEREIN FOR CONDUCTING DUBIOUS TRANSACTION. THE REPORT OF T HE INVESTIGATION WING AND OTHER MATERIAL WAS NEITHER CONFRONTED TO ASSESS EE NOR THERE WAS ANY INQUIRY FROM WHERE IT TRANSPIRED THAT ASSESSEE WAS BENEFICIARY OF ANY BOGUS LONG-TERM CAPITAL GAIN; THEREFORE, THE SAME C ANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. A SPECIFIC MATERIAL AGAINST THE ASSESSEE SHOULD HAVE BEEN BROUGHT ON RECORD TO PUT ASSESSEE UNDER LIABILITY. HOWEVER, IN THE PRESENT CASE, THE ENTIRE DOCUMENTAR Y EVIDENCE ON RECORD HAS NOT BEEN DISPUTED BY THE AUTHORITIES BELOW AND THERE IS NO REBUTTAL TO THE EXPLANATION OF ASSESSEE. NO OTHER ADVERSE MATER IALS HAVE BEEN BROUGHT ON RECORD AGAINST THE ASSESSEE. FURTHER, NO PROPER ENQUIRY HAS BEEN CONDUCTED BY THE A.O. ON THE DOCUMENTARY EVIDENCES FILED BY ASSESSEE. WHATEVER STATEMENTS HAVE BEEN REFERRED TO IN THE OR DER WAS GENERAL IN NATURE WITH WHOM ASSESSEE DID NOT HAVE ANY TRANSACT ION. CONSIDERING THE HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 20 TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , WE HOLD THAT ASSESSEE HAS ENTERED INTO GENUINE TRANSACTION OF SALE AND PU RCHASE OF SHARES AND THEREFORE, SATISFIED THE CONDITIONS OF SECTION 10(38) OF THE I.T. ACT. THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER THE SAME P ROVISION. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND DELETE THE ADDITION OF RS. 41,85,762/-. APPEAL OF ASSESSEE IS ALLOWED. 18. THE FACTS OF THE CASES OF OTHER ASSESSEE'S ARE SIMILAR TO THE FACTS INVOLVED IN THE CASE OF THE PRESENT ASSESSEE I.E. S MT. SWATI LUTHRA, THEREFORE, OUR FINDINGS GIVEN IN RESPECT OF THE APP EAL IN ITA NO. 6480/DEL/2017 SHALL APPLY TO THE OTHER APPEALS OF D IFFERENT ASSESSEES WITH THE SAME FORCE IN ITA NOS. 6481 TO 6483/DEL/20 17. 19. IN THE RESULT, THE APPEAL OF ALL THE ABOVE FOUR ASSESSEES, NAMELY, SMT. SWATI LUTHRA, SMT. SHRUTI LUTHRA, SMT. NAMATA SEHGA L LUTHRA AND SMT. ASHA LUTHRA BEARING ITA NO. 6480 TO 6483/DEL/2017 A RE ALLOWED. 17. WE FURTHER FIND THAT RATIO LAID DOWN BY HON'BLE HIGH COURT OF DELHI IN THE CASE OF PR. CIT VS. SMT. KRISHNA DEVI (SUPRA) I S ALSO FAVOURABLE TO THE ASSESSEE. AS IN THE CASE OF ASSESSEE ALSO THERE WAS NO EVIDENCE PRODUCED BY THE LD. AO TO SHOW THAT THERE WAS AN AGREEMENT B ETWEEN ASSESSEE AND ANY OTHER PARTY WHICH ARE ALLEGED TO BE INVOLVE D IN PROVIDING ACCOMMODATION ENTRY. THE RELEVANT FINDING OF HON'BL E COURT DISMISSING THE REVENUES APPEAL IS REPRODUCED BELOW: 11. ON A PERUSAL OF THE RECORD, IT IS EASILY DISCER NIBLE THAT IN THE INSTANT CASE, THE AO HAD PROCEEDED PREDOMINANTLY ON THE BAS IS OF THE ANALYSIS OF THE FINANCIALS OF M/S GOLD LINE INTERNATIONAL FINVE ST LIMITED. HIS CONCLUSION AND FINDINGS AGAINST THE RESPONDENT ARE CHIEFLY ON THE STRENGTH OF THE ASTOUNDING 4849.2% JUMP IN SHARE PRICES OF T HE AFORESAID COMPANY WITHIN A SPAN OF TWO YEARS, WHICH IS NOT SUPPORTED BY THE FINANCIALS. ON AN ANALYSIS OF THE DATA OBTAINED FROM THE WEBSITES, THE AO OBSERVES THAT THE QUANTUM LEAP IN THE SHARE PRICE IS NOT JUSTIFIE D; THE TRADE PATTERN OF THE AFORESAID COMPANY DID NOT MOVE ALONG WITH THE SENSE X; AND THE FINANCIALS OF THE COMPANY DID NOT SHOW ANY REASON FOR THE EXTR AORDINARY PERFORMANCE OF ITS STOCK. WE HAVE NOTHING ADVERSE T O COMMENT ON THE ABOVE ANALYSIS, BUT ARE CONCERNED WITH THE AXIOMATI C CONCLUSION DRAWN BY THE AO THAT THE RESPONDENT HAD ENTERED INTO AN AGRE EMENT TO CONVERT UNACCOUNTED MONEY BY CLAIMING FICTITIOUS LTCG, WHIC H IS EXEMPT UNDER SECTION 10(38), IN A PRE-PLANNED MANNER TO EVADE TA XES. THE AO EXTENSIVELY RELIED UPON THE SEARCH AND SURVEY OPERA TIONS CONDUCTED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT IN KOLKATA, DELHI, MUMBAI AND AHMEDABAD ON PENNY STOCKS, WHICH SETS OU T THE MODUS HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 21 OPERANDI ADOPTED IN THE BUSINESS OF PROVIDING ENTRI ES OF BOGUS LTCG. HOWEVER, THE RELIANCE PLACED ON THE REPORT, WITHOUT FURTHER CORROBORATION ON THE BASIS OF COGENT MATERIAL, DOES NOT JUSTIFY H IS CONCLUSION THAT THE TRANSACTION IS BOGUS, SHAM AND NOTHING OTHER THAN A RACKET OF ACCOMMODATION ENTRIES. WE DO NOTICE THAT THE AO MAD E AN ATTEMPT TO DELVE INTO THE QUESTION OF INFUSION OF RESPONDENTS UNACC OUNTED MONEY, BUT HE DID NOT DIG DEEPER. NOTICES ISSUED UNDER SECTIONS 1 33(6)/131 OF THE ACT WERE ISSUED TO M/S GOLD LINE INTERNATIONAL FINVEST LIMITED, BUT NOTHING EMERGED FROM THIS EFFORT. THE PAYMENT FOR THE SHARE S IN QUESTION WAS MADE BY SH. SALASAR TRADING COMPANY. NOTICE WAS ISS UED TO THIS ENTITY AS WELL, BUT WHEN THE NOTICES WERE RETURNED UNSERVED, THE AO DID NOT TAKE THE MATTER ANY FURTHER. HE THEREAFTER SIMPLY PROCEE DED ON THE BASIS OF THE FINANCIALS OF THE COMPANY TO COME TO THE CONCLUSION THAT THE TRANSACTIONS WERE ACCOMMODATION ENTRIES, AND THUS, FICTITIOUS. T HE CONCLUSION DRAWN BY THE AO, THAT THERE WAS AN AGREEMENT TO CONVERT UNAC COUNTED MONEY BY TAKING FICTITIOUS LTCG IN A PRE-PLANNED MANNER, IS THEREFORE ENTIRELY UNSUPPORTED BY ANY MATERIAL ON RECORD. THIS FINDING IS THUS PURELY AN ASSUMPTION BASED ON CONJECTURE MADE BY THE AO. THIS FLAWED APPROACH FORMS THE REASON FOR THE LEARNED ITAT TO INTERFERE WITH THE FINDINGS OF THE LOWER TAX AUTHORITIES. THE LEARNED ITAT AFTER CONSI DERING THE ENTIRE CONSPECTUS OF CASE AND THE EVIDENCE BROUGHT ON RECO RD, HELD THAT THE RESPONDENT HAD SUCCESSFULLY DISCHARGED THE INITIAL ONUS CAST UPON IT UNDER THE PROVISIONS OF SECTION 68 OF THE ACT. IT I S RECORDED THAT THERE IS NO DISPUTE THAT THE SHARES OF THE TWO COMPANIES WER E PURCHASED ONLINE, THE PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL , AND THE SHARES WERE DEMATERIALIZED AND THE SALES HAVE BEEN ROUTED FROM DE-MAT ACCOUNT AND THE CONSIDERATION HAS BEEN RECEIVED THROUGH BAN KING CHANNELS. THE ABOVE NOTED FACTORS, INCLUDING THE DEFICIENT ENQUIR Y CONDUCTED BY THE AO AND THE LACK OF ANY INDEPENDENT SOURCE OR EVIDENCE TO SHOW THAT THERE WAS AN AGREEMENT BETWEEN THE RESPONDENT AND ANY OTH ER PARTY, PREVAILED UPON THE ITAT TO TAKE A DIFFERENT VIEW. B EFORE US, MR. HOSSAIN HAS NOT BEEN ABLE TO POINT OUT ANY EVIDENCE WHATSOE VER TO ALLEGE THAT MONEY CHANGED HANDS BETWEEN THE RESPONDENT AND THE BROKER OR ANY OTHER PERSON, OR FURTHER THAT SOME PERSON PROVIDED THE ENTRY TO CONVERT UNACCOUNTED MONEY FOR GETTING BENEFIT OF LTCG, AS A LLEGED. IN THE ABSENCE OF ANY SUCH MATERIAL THAT COULD SUPPORT THE CASE PU T FORTH BY THE APPELLANT, THE ADDITIONS CANNOT BE SUSTAINED. 12. MR. HOSSAINS SUBMISSIONS RELATING TO THE START LING SPIKE IN THE SHARE PRICE AND OTHER FACTORS MAY BE ENOUGH TO SHOW CIRCU MSTANCES THAT MIGHT CREATE SUSPICION; HOWEVER THE COURT HAS TO DECIDE A N ISSUE ON THE BASIS OF EVIDENCE AND PROOF, AND NOT ON SUSPICION ALONE. THE THEORY OF HUMAN BEHAVIOR AND PREPONDERANCE OF PROBABILITIES CANNOT BE CITED AS A BASIS TO TURN A BLIND EYE TO THE EVIDENCE PRODUCED BY THE RE SPONDENT. WITH REGARD HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 22 TO THE CLAIM THAT OBSERVATIONS MADE BY THE CIT(A) W ERE IN CONFLICT WITH THE IMPUGNED ORDER, WE MAY ONLY NOTE THAT THE SAID OBSE RVATIONS ARE GENERAL IN NATURE AND LATER IN THE ORDER, THE CIT(A) ITSELF NOTES THAT THE BROKER DID NOT RESPOND TO THE NOTICES. BE THAT AS IT MAY, THE CIT(A) HAS ONLY APPROVED THE ORDER OF THE AO, FOLLOWING THE SAME REASONING, AND RELYING UPON THE REPORT OF THE INVESTIGATION WING. LASTLY, RELIANCE PLACED BY THE REVENUE ON SUMAN PODDAR V. ITO (SUPRA) AND SUMATI DAYAL V. CIT (SUPRA) IS OF NO ASSISTANCE. UPON EXAMINING THE JUDGMENT OF SUMAN PO DDAR (SUPRA) AT LENGTH, WE FIND THAT THE DECISION THEREIN WAS ARRIV ED AT IN LIGHT OF THE PECULIAR FACTS AND CIRCUMSTANCES DEMONSTRATED BEFOR E THE ITAT AND THE COURT, SUCH AS, INTER ALIA, LACK OF EVIDENCE PRODUC ED BY THE ASSESSEE THEREIN TO SHOW ACTUAL SALE OF SHARES IN THAT CASE. ON SUCH BASIS, THE ITAT HAD RETURNED THE FINDING OF FACT AGAINST THE ASSESS EE, HOLDING THAT THE GENUINENESS OF SHARE TRANSACTION WAS NOT ESTABLISHE D BY HIM. HOWEVER, THIS IS QUITE DIFFERENT FROM THE FACTUAL MATRIX AT HAND. SIMILARLY, THE CASE OF SUMATI DAYAL V. CIT (SUPRA) TOO TURNS ON ITS OWN SP ECIFIC FACTS. THE ABOVE- STATED CASES, THUS, ARE OF NO ASSISTANCE TO THE CAS E SOUGHT TO BE CANVASSED BY THE REVENUE. 13. THE LEARNED ITAT, BEING THE LAST FACT-FINDING A UTHORITY, ON THE BASIS OF THE EVIDENCE BROUGHT ON RECORD, HAS RIGHTLY COME TO THE CONCLUSION THAT THE LOWER TAX AUTHORITIES ARE NOT ABLE TO SUSTAIN THE A DDITION WITHOUT ANY COGENT MATERIAL ON RECORD. WE THUS FIND NO PERVERSI TY IN THE IMPUGNED ORDER. 14. IN THIS VIEW OF THE MATTER, NO QUESTION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION. 15. ACCORDINGLY, THE PRESENT APPEALS ARE DISMISSED. 18. WE, THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY HON'BLE HIGH COURT OF DELHI IN THE CASE OF KRISHNA DEVI (SU PRA) AND THE DECISION OF COORDINATE BENCH IN THE CASE OF SWATI LUTHRA (SUPRA ) WHICH IS SQUARELY APPLICABLE ON THE FACTS AND ISSUES RAISED BEFORE US , ARE OF THE CONSIDERED VIEW THAT THE CLAIM OF LTCG U/S 10(38) OF THE ACT AT RS. 97,02,036/-FROM SALE OF EQUITY SHARES OF TERBOTECH ENGINEERING LIMI TED IS GENUINE AND THE ASSESSEES IS ENTITLED TO CLAIM THE BENEFIT. THUS, N O ADDITION AT RS.99,78,000/- WAS CALLED FOR U/S 68 OF THE ACT FOR UNEXPLAINED CASH CREDIT. WE, FURTHER HOLD THAT THE ASSESSEE IS REGUL ARLY DEALING IN EQUITY SHARES AS AN INVESTOR AND AS ITS MAIN SOURCE OF INC OME SALARY AND OTHER FROM OTHER SOURCES AND THE FREQUENCY OF TRANSACTION S IN PURCHASE AND SALE OF SHARES IS LESS, IT CANNOT BE HELD TO BE CARRYING ON BUSINESS OF PURCHASE/SALE OF SHARES AS AN ADVENTURE IN NATURE O F TRADE. HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 23 19. IN THE RESULT, ALL THE GROUNDS RAISED BY THE AS SESSEE ARE ALLOWED AND APPEAL FILED BY THE ASSESSEE THROUGH ITANO. 149/IND /2019 IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 15. THE ABOVE DECISION OF THE CO-ORDINATE BENCH IS S QUARELY APPLICABLE ON THE ISSUES RAISED IN BOTH THE CASE A ND FACTS ARE ALSO SIMILAR. HOWEVER AS REGARDS THE DECISION R EFERRED BY LD. DEPARTMENTAL REPRESENTATIVE IN THE CASE OF SUMAN PODDAR VS ITO (SUPRA) WE FIND THAT THIS JUDGMENT SUBSEQUENTLY CAME FOR CONSIDERATION BEFORE THE HONB LE DELHI HIGH COURT IN THE CASE OF PCIT V/S SMT. KRISHNA DEVI & OTHERS WHEREIN THE HONBLE COURT OBSERVED AS FOLLOWS:- 10. WE HAVE HEARD MR. HOSSAIN AT LENGTH AND GIVEN OUR THOUGHTFUL CONSIDERATION TO HIS CONTENTIONS, BUT ARE NOT CONVI NCED WITH THE SAME FOR THE REASONS STATED HEREINAFTER. 11. ON A PERUSAL OF THE RECORD, IT IS EASILY DISCER NIBLE THAT IN THE INSTANT CASE, THE AO HAD PROCEEDED PREDOMINANTLY ON THE BAS IS OF THE ANALYSIS OF THE FINANCIALS OF M/S GOLD LINE INTERNATIONAL FINVE ST LIMITED. HIS CONCLUSION AND FINDINGS AGAINST THE RESPONDENT ARE CHIEFLY ON THE STRENGTH OF THE ASTOUNDING 4849.2% JUMP IN SHARE PRICES OF T HE AFORESAID COMPANY WITHIN A SPAN OF TWO YEARS, WHICH IS NOT SUPPORTED BY THE FINANCIALS. ON AN ANALYSIS OF THE DATA OBTAINED FROM THE WEBSITES, THE AO OBSERVES THAT THE QUANTUM LEAP IN THE SHARE PRICE IS NOT JUSTIFIE D; THE TRADE PATTERN OF THE AFORESAID COMPANY DID NOT MOVE ALONG WITH THE SENSE X; AND THE FINANCIALS OF THE COMPANY DID NOT SHOW ANY REASON FOR THE EXTR AORDINARY PERFORMANCE OF ITS STOCK. WE HAVE NOTHING ADVERSE T O COMMENT ON THE ABOVE ANALYSIS, BUT ARE CONCERNED WITH THE AXIOMATI C CONCLUSION DRAWN BY THE AO THAT THE RESPONDENT HAD ENTERED INTO AN AGRE EMENT TO CONVERT UNACCOUNTED MONEY BY CLAIMING FICTITIOUS LTCG, WHIC H IS EXEMPT UNDER SECTION 10(38), IN A PRE-PLANNED MANNER TO EVADE TA XES. THE AO EXTENSIVELY RELIED UPON THE SEARCH AND SURVEY OPERA TIONS CONDUCTED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT IN KOLKATA, DELHI, HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 24 MUMBAI AND AHMEDABAD ON PENNY STOCKS, WHICH SETS OU T THE MODUS OPERANDI ADOPTED IN THE BUSINESS OF PROVIDING ENTRI ES OF BOGUS LTCG. HOWEVER, THE RELIANCE PLACED ON THE REPORT, WITHOUT FURTHER CORROBORATION ON THE BASIS OF COGENT MATERIAL, DOES NOT JUSTIFY H IS CONCLUSION THAT THE TRANSACTION IS BOGUS, SHAM AND NOTHING OTHER THAN A RACKET OF ACCOMMODATION ENTRIES. WE DO NOTICE THAT THE AO MAD E AN ATTEMPT TO DELVE INTO THE QUESTION OF INFUSION OF RESPONDENTS UNACC OUNTED MONEY, BUT HE DID NOT DIG DEEPER. NOTICES ISSUED UNDER SECTIONS 1 33(6)/131 OF THE ACT WERE ISSUED TO M/S GOLD LINE INTERNATIONAL FINVEST LIMITED, BUT NOTHING EMERGED FROM THIS EFFORT. THE PAYMENT FOR THE SHARE S IN QUESTION WAS MADE BY SH. SALASAR TRADING COMPANY. NOTICE WAS ISS UED TO THIS ENTITY AS WELL, BUT WHEN THE NOTICES WERE RETURNED UNSERVED, THE AO DID NOT TAKE THE MATTER ANY FURTHER. HE THEREAFTER SIMPLY PROCEE DED ON THE BASIS OF THE FINANCIALS OF THE COMPANY TO COME TO THE CONCLUSION THAT THE TRANSACTIONS WERE ACCOMMODATION ENTRIES, AND THUS, FICTITIOUS. T HE CONCLUSION DRAWN BY THE AO, THAT THERE WAS AN AGREEMENT TO CONVERT UNAC COUNTED MONEY BY TAKING FICTITIOUS LTCG IN A PRE-PLANNED MANNER, IS THEREFORE ENTIRELY UNSUPPORTED BY ANY MATERIAL ON RECORD. THIS FINDING IS THUS PURELY AN ASSUMPTION BASED ON CONJECTURE MADE BY THE AO. THIS FLAWED APPROACH FORMS THE REASON FOR THE LEARNED ITAT TO INTERFERE WITH THE FINDINGS OF THE LOWER TAX AUTHORITIES. THE LEARNED ITAT AFTER CONSI DERING THE ENTIRE CONSPECTUS OF CASE AND THE EVIDENCE BROUGHT ON RECO RD, HELD THAT THE RESPONDENT HAD SUCCESSFULLY DISCHARGED THE INITIAL ONUS CAST UPON IT UNDER THE PROVISIONS OF SECTION 68 OF THE ACT. IT I S RECORDED THAT THERE IS NO DISPUTE THAT THE SHARES OF THE TWO COMPANIES WER E PURCHASED ONLINE, THE PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL , AND THE SHARES WERE DEMATERIALIZED AND THE SALES HAVE BEEN ROUTED FROM DE-MAT ACCOUNT AND THE CONSIDERATION HAS BEEN RECEIVED THROUGH BAN KING CHANNELS. THE ABOVE NOTED FACTORS, INCLUDING THE DEFICIENT ENQUIR Y CONDUCTED BY THE AO AND THE LACK OF ANY INDEPENDENT SOURCE OR EVIDENCE TO SHOW THAT THERE WAS AN AGREEMENT BETWEEN THE RESPONDENT AND ANY OTH ER PARTY, PREVAILED UPON THE ITAT TO TAKE A DIFFERENT VIEW. B EFORE US, MR. HOSSAIN HAS NOT BEEN ABLE TO POINT OUT ANY EVIDENCE WHATSOE VER TO ALLEGE THAT MONEY CHANGED HANDS BETWEEN THE RESPONDENT AND THE BROKER OR ANY OTHER PERSON, OR FURTHER THAT SOME PERSON PROVIDED THE ENTRY TO CONVERT UNACCOUNTED MONEY FOR GETTING BENEFIT OF LTCG, AS A LLEGED. IN THE ABSENCE OF ANY SUCH MATERIAL THAT COULD SUPPORT THE CASE PU T FORTH BY THE APPELLANT, THE ADDITIONS CANNOT BE SUSTAINED. 12. MR. HOSSAINS SUBMISSIONS RELATING TO THE START LING SPIKE IN THE SHARE PRICE AND OTHER FACTORS MAY BE ENOUGH TO SHOW CIRCU MSTANCES THAT MIGHT CREATE SUSPICION; HOWEVER THE COURT HAS TO DECIDE A N ISSUE ON THE BASIS OF EVIDENCE AND PROOF, AND NOT ON SUSPICION ALONE. THE THEORY OF HUMAN BEHAVIOR AND PREPONDERANCE OF PROBABILITIES CANNOT BE CITED AS A BASIS TO HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 25 TURN A BLIND EYE TO THE EVIDENCE PRODUCED BY THE RE SPONDENT. WITH REGARD TO THE CLAIM THAT OBSERVATIONS MADE BY THE CIT(A) W ERE IN CONFLICT WITH THE IMPUGNED ORDER, WE MAY ONLY NOTE THAT THE SAID OBSE RVATIONS ARE GENERAL IN NATURE AND LATER IN THE ORDER, THE CIT(A) ITSELF NOTES THAT THE BROKER DID NOT RESPOND TO THE NOTICES. BE THAT AS IT MAY, THE CIT(A) HAS ONLY APPROVED THE ORDER OF THE AO, FOLLOWING THE SAME REASONING, AND RELYING UPON THE REPORT OF THE INVESTIGATION WING. LASTLY, RELIANCE PLACED BY THE REVENUE ON SUMAN PODDAR V. ITO (SUPRA) AND SUMATI DAYAL V. CIT (SUPRA) IS OF NO ASSISTANCE. UPON EXAMINING THE JUDGMENT OF SUMAN PO DDAR (SUPRA) AT LENGTH, WE FIND THAT THE DECISION THEREIN WAS ARRIV ED AT IN LIGHT OF THE PECULIAR FACTS AND CIRCUMSTANCES DEMONSTRATED BEFOR E THE ITAT AND THE COURT, SUCH AS, INTER ALIA, LACK OF EVIDENCE PRODUC ED BY THE ASSESSEE THEREIN TO SHOW ACTUAL SALE OF SHARES IN THAT CASE. ON SUCH BASIS, THE ITAT HAD RETURNED THE FINDING OF FACT AGAINST THE ASSESS EE, HOLDING THAT THE GENUINENESS OF SHARE TRANSACTION WAS NOT ESTABLISHE D BY HIM. HOWEVER, THIS IS QUITE DIFFERENT FROM THE FACTUAL MATRIX AT HAND. SIMILARLY, THE CASE OF SUMATI DAYAL V. CIT (SUPRA) TOO TURNS ON ITS OWN SP ECIFIC FACTS. THE ABOVE- STATED CASES, THUS, ARE OF NO ASSISTANCE TO THE CAS E SOUGHT TO BE CANVASSED BY THE REVENUE. 13. THE LEARNED ITAT, BEING THE LAST FACT-FINDING A UTHORITY, ON THE BASIS OF THE EVIDENCE BROUGHT ON RECORD, HAS RIGHTLY COME TO THE CONCLUSION THAT THE LOWER TAX AUTHORITIES ARE NOT ABLE TO SUSTAIN THE A DDITION WITHOUT ANY COGENT MATERIAL ON RECORD. WE THUS FIND NO PERVERSI TY IN THE IMPUGNED ORDER. 14. IN THIS VIEW OF THE MATTER, NO QUESTION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION. 15. ACCORDINGLY, THE PRESENT APPEALS ARE DISMISSED. 16. IN THE LIGHT OF ABOVE JUDGMENT OF HONBLE DELHI HI GH COURT IN THE CASE OF PCIT V/S SMT. KRISHNA DEVI (SUPRA), WE FIND THAT THE SAME IS ALSO FAVOURABLE TO THE ASSESS EE(S) SINCE THE LD. A.O HAS NOT INDICATED OR BROUGHT ON RECORD A NY EVIDENCE WHICH COULD PROVE THAT THE ASSESSEE(S) ARE HAVING ANY LINK WITH THE ALLEGED BROKERS/SUB BROKERS/COMPA NIES OR HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 26 ARE ASSOCIATED TO EARN BOGUS LONG TERM CAPITAL GAIN. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANCES OF T HE CASE AND RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE DE LHI HIGH COURT IN THE CASE OF PCIT V/S SMT. KRISHNA DEVI & OTHERS AND DECISION OF DELHI TRIBUNAL IN THE CASE OF SMT. SWATI LUTHRA V/S ITO (SUPRA) ARE OF THE CONSIDERED VIEWS THAT SINCE THE FACTS AND ISSUES RAISED ARE SIMILAR AND A SSESSEE HAS FILED NECESSARY DOCUMENTS TO PROVE THE GENUINEN ESS OF PURCHASE AND SALES OF EQUITY SHARES OF LISTED COMPA NY AND ALSO FULFILLED THE CONDITIONS PROVIDED U/S 10(38) O F THE ACT AND ALL THESE DOCUMENTARY EVIDENCES HAVE NOT BEEN F OUND TO BE NON GENUINE AND THE SOURCE OF SALE CONSIDERATION IS WELL SUPPORTED BY CONTRACT NOTE ISSUED BY THE REGISTERED BROKER AND SHARES HAVE BEEN TRANSFERRED FROM DEMAT ACCOUNT WHICH WERE HELD FOR MORE THAN 12 MONTHS, THE ASSESS EE IS ELIGIBLE FOR THE EXEMPTION U/S 10(38) OF THE ACT FO R LONG TERM CAPITAL GAIN OF RS.16,28,029/- AND THUS NO ADDI TION WAS CALLED FOR U/S 68 OF THE ACT AT RS.17,15,240/- A S WELL AS THE ADDITION FOR ESTIMATED BROKERAGE EXPENSES AT HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 27 RS.51,457/-. THUS WE SET ASIDE THE FINDING OF LD. CI T(A) AND ALLOW THE GROUND RAISED ON MERIT AS WELL AS LEGAL G ROUND. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO.288/IND /2019 IS ALLOWED. 17. AS REGARDS THE APPEAL OF THE OTHER ASSESSEE NA MELY SMT. MANISHA AGRAWAL, AS DISCUSSED ABOVE THE FACTS AND ISSUES ARE BEING SIMILAR AS THAT OF SHRI HAKUMUDDIN KHAMBATI EXCEPT FOR THE CHANGE IN THE NAME OF THE C OMPANY I.E. KAPPAC PHARMA LTD BUT THE ISSUE REMAINS THE SA ME, THEREFORE OUR FINDING GIVEN IN RESPECT OF APPEAL IN ITA NO.288/IND/2019 SHALL APPLY TO THIS APPEAL OF THE A SSESSEE NAMELY SMT. MANISHA AGRAWAL IN ITA NO.410/IND/2019. THUS THE FINDING OF LD. CIT(A) IS SET ASIDE AND I N OUR CONSIDERED VIEW THE ASSESSEE IS ELIGIBLE TO CLAIM T HE BENEFIT OF EXEMPTION OF LONG TERM CAPITAL GAIN U/S 10(38) OF THE ACT AT RS.20,70,496/-. THUS THE GROUND RAISED ON ME RITS WITH REGARD TO THE QUANTUM OF ADDITION AND THE LEGA L GROUND RAISED FOR NOT PROVIDING OPPORTUNITY OF CROSS EXAMI NATION IS ALLOWED IN FAVOUR OF THE ASSESSEE. IN THE RESULT A PPEAL OF THE HAKUMUDDIN KHAMBATI & ANR ITA NO.288 & 410/IND/2019 28 ASSESSEE IN ITA NO.410/IND/2019 IS ALLOWED. 18. IN THE RESULT APPEAL OF THE ASSESSEE NAMELY SHR I HAKUMUDDIN KHAMBATI IN ITA NO.288/IND/2019 AND SMT. MANISHA AGRAWAL IN ITA NO.410/IND/2019 ARE ALLOWED. THE ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 25.05.2021. SD/- SD/- (MADHUMITA ROY) (MANIS H BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 25.05. 2021 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE