Rita Goel, Ghaziabad V. ITO, Ward- 2(2), Ghaziabad

ITA 2929/DEL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6618 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 25-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: VIPIN GARG
• Keywords: Unexplained cash credit; Share purchase agreement; Penny stocks; Set aside; Capital Gains
• Section: 133(6); 201; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.2927/DEL/2018 ASSESSMENT YEAR: 2014-15 1.SMT. MADHU GOEL, GHAZIABAD. VS. DCIT, CIRCLE-1, GHAZIABAD. TAN/PAN: AATPG 1691E (APPELLANT) (RESPONDENT) I.T.A. NO.2928/DEL/2018 ASSESSMENT YEAR: 2014-15 1.SMT. ANCHAL GOEL, GHAZIABAD. VS. DCIT, CIRCLE-1, GHAZIABAD. TAN/PAN: ANNPG 9069M (APPELLANT) (RESPONDENT) I.T.A. NO.2929/DEL/2018 ASSESSMENT YEAR: 2014-15 1.SMT. RITA GOEL, GHAZIABAD. VS. DCIT, CIRCLE-1, GHAZIABAD. TAN/PAN: AATPG 1691E (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AKHILESH KUMAR AND SHRI VIPIN GARG, ADV. RESPONDENT BY: SHRI S.L. ANURAGI, SR.D.R. DATE OF HEARING: 20 12 2018 DATE OF PRONOUNCEMENT: 27 02 2019 O R D E R THE AFORESAID APPEALS HAVE BEEN FILED BY THE ABOVE NAMED ASSESSEES, AGAINST SEPARATE IMPUGNED ORDER DA TED 30.01.2018, IN THE CASE OF SMT. ANCHAL GOEL AND SMT . MADHU I.T.A. NO.2927, 2928 & 2929/DEL/2018 2 GOEL FOR THE QUANTUM OF ASSESSMENT PASSED U/S. 143( 3) FOR THE ASSESSMENT YEAR 2014-15: AND ORDER DATED 29.01. 2018 IN THE CASE OF SMT. RITA GOEL, PASSED BY LD. COMMISSIO NER OF INCOME TAX (APPEALS), GHAZIABAD FOR THE ASSESSMENT YEAR 2014-15. SINCE ISSUES INVOLVED IN ALL THE THREE APP EALS ARE COMMON ARISING OUT OF IDENTICAL SET OF FACTS AND SI MILAR SET OF FINDINGS BY ASSESSING OFFICER LD. CIT (A), THEREFOR E, SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. 2. IN ALL THE APPEALS, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF EXEMPTION U/S. 10(38) ON ACCOUNT OF LONG TERM CAPITAL GAIN ON SALE OF LISTED EQUITY SHARES W HICH HAS BEEN TAXED U/S. 68 READ WITH SECTION 115BBE. THE QU ANTUM OF DISALLOWANCE IN ALL THE THREE APPLES IS AS UNDER : SMT. ANCHAL GOEL RS.20,49,574/- SMT. MADHU GOEL RS.18,62,400/- SMT. RITA GOEL RS.18,99,960/- 3. FOR THE SAKE OF READY REFERENCE, WE ARE TAKING U P THE APPEAL IN THE CASE OF SMT. ANCHAL GOEL. OUR FINDING GIVEN THEREIN WILL APPLY MUTATIS MUTANDIS IN OTHER APPEAL S ALSO. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN I NDIVIDUAL AND SALARIED EMPLOYEE, WHO HAD FILED HER RETURN OF INCOME SHOWING AN INCOME OF RS.2,32,000/- ON 29.7.2014. DU RING THE YEAR THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN OF RS.20,49,574/- ON SALE OF SHARES OF JOLLY PLASTIC INDUSTRIES LIMITED WHICH WAS CLAIMED AS EXEMPT U/S. 10(38). S INCE I.T.A. NO.2927, 2928 & 2929/DEL/2018 3 BEING A SALARIED EMPLOYEE, ASSESSEE WAS NOT MAINTAI NING ANY BOOKS OF ACCOUNT WHICH FACT HAS BEEN ADMITTED BY TH E ASSESSING OFFICER IN PARAGRAPH 2 OF THE ASSESSMENT ORDER. ASSESSEE HAS HAD PURCHASED 7800 SHARES OF M/S. JOL LY PLASTIC INDUSTRIES LIMITED ON 14-2-2018 AT A FACE V ALUE OF RS.10 PER SHARE FROM M/S. CORE CAPITAL SERVICES LTD . DELHI. SHARES SO PURCHASED WERE DISCLOSED IN A STATEMENT O F AFFAIRS OF THE ASSESSEE AS ON 31 ST MARCH, 2012. THE SHARES WERE CREDITED IN THE DEMAT ACCOUNT ON 18-12-13; AND THER EAFTER THE SAID SHARES WERE SOLD ON 20-12-2013 FOR RS.21,2 7,574/-; AND ACCORDINGLY LONG TERM CAPITAL GAIN OF RS.20,49, 574/- WAS DECLARED. 5. THE ASSESSING OFFICER IN THE IMPUGNED ORDER, FIR ST OF ALL, NOTED BACKGROUND AND THE MODUS OPERANDI IN GENERAL AS TO HOW SOME OF THE PEOPLE ROUTED THEIR UNACCOUNTED MON EY IN THE GARB OF BOGUS LONG TERM CAPITAL GAIN. THEREAFTE R, AT PAGE 3, HE MAKES FOLLOWING OBSERVATIONS WHICH IS QUITE R ELEVANT:- IN THIS RESPECT, ASSESSEE SMT. ARCHANA AGARWAL, VIDE SUMMON U/S.131 OF THE ACT, DATED 11.11.2016 WAS ASKED TO A TTEND PERSONALLY THIS OFFICE, ALONG WITH HER COUNSEL (CA/ ADVOCATE) ON 18.11.2016 AT 11.30 A.M. TO GIVE EVIDENCE AND TO PR ODUCE THE INFORMATION AND THE DOCUMENTS ASKED IN THE QUESTION NAIRE DATED 06.09.2016. HOWEVER, THE ASSESSEE DID NOT ATTEND TH IS OFFICE IN PERSON ON THE FIXED DATE TO COMPLY WITH THE SUMMON. HOWEVER, A REPLY DATED 22.11.2016 WAS RECEIVED IN THIS OFFICE ON 25.11.2016 IN DAK IN WHICH ASSESSEE HAS SUBMITTED THE FOLLOWING: WE ARE IN RECEIPT OF YOUR ABOVE NOTICE DT. 11.11.2 016, WHICH HAS BEEN RECEIVED BY US ONLY ON 22-11-16, IN WHICH YOU HAVE I.T.A. NO.2927, 2928 & 2929/DEL/2018 4 ASKED US TO COMPLY WITH THE QUESTIONNAIRE DT. 06.09 .2016. IN THIS REGARD, IT IS STATED THAT THE ASSESSEE HAS ALREADY FIELD REPLY DT.10.10.2016 (COPY ENCLOSED) OF THE ABOVE MENTIONE D QUESTIONNAIRE. PLEASE CONSIDER THE SAME. IN ADDITION TO ABOVE, ASSESSEE IS ALSO IN RECEIPT O F YOUR NOTICE U/S.131 OF INCOME TAX ACT, 1961 DATED. 11.11.2016, WHICH HAS BEEN RECEIVED BY US ONLY ON 22.11.2016, IN WHICH YO U HAVE ASKED ASSESSEE TO ATTEND THE PROCEEDINGS PERSONALLY. IN T HIS REGARD, IT IS STALED THAT THE ASSESSEE IS OUT OF STATION AND THER EFORE WILL NOT BE ABLE TO ATTEND THE PROCEEDINGS. YOU ARE REQUESTED TO PLEASE RE-FIX THE DATE AFTER 1 5 DAYS TO ENABLE THE ASSESSEE TO ATTEND THE SAME. AS THE CASE OF THE ASSESSEE IS GOING TO BE TIME-BAR RED ON 31.12.2016, NO FURTHER ADJOURNMENT COULD BE GIVEN T O THE ASSESSEE DUE TO SHORTAGE OF TIME. THEREFORE, THE CASE DESERV ES TO BE ASSESSED ON THE BASIS OF MATERIAL AVAILABLE ON RECO RD. THE REPLY OF THE ASSESSEE HAS BEEN GONE THROUGH. IT IS QUITE CLE AR THAT ALLEGED INVESTMENT TRANSACTION MADE BY HER WAS MADE BEYOND ANY HUMAN PROBABILITIES. IT WAS NO COINCIDENCE THAT SHE EARNE D SUCH HUGE CAPITAL GAINS FROM A PENNY FUNDAMENTAL DEVOID SCRIP . IT WAS PART OF AN ELABORATE SCHEME IN WHICH SHE CONSCIOUSLY TOOK P ART TO CONVERT HER BLACK MONEY INTO WHITE. 5.1. THEREAFTER, AO AGAIN INCORPORATES THE MODUS OP ERANDI ADOPTED BY THE VARIOUS ENTRY OPERATORS TO GENERATE BOGUS LONG TERM CAPITAL GAIN WHICH IS CONTINUING FROM PAG ES 4 TO 9 OF HIS ORDER. AT PAGE 8, HE ALSO NOTED THE FACT THA T SEBI HAD SUSPENDED THE TRADING ACTIVITIES OF MANY COMPANIES WHICH INCLUDED JOLLY PLASTIC INDUSTRIES LTD. THUS, HE OBS ERVED THAT THE SALE TRANSACTION IN THE SHARES OF JOLLY PLASTIC INDUSTRIES LTD IS A SHAM TRANSACTION WHICH IS TO BE ADDED U/S. 68, HE I.T.A. NO.2927, 2928 & 2929/DEL/2018 5 ALSO DISCUSSES THE VARIOUS JUDGEMENTS IN HIS ORDERS AND FINALLY HE HELD THAT SUCH A BOGUS LONG TERM CAPITAL GAIN HAS TO BE TREATED AS UNEXPLAINED CASH CREDIT TO BE ADDE D U/S. 68 WHICH IS TAXABLE @ 30% GIVEN U/S. 115BBE. ACCORDING LY, HE MADE THE ADDITION OF RS.20,49,574/-. 6. LD. CIT (A) AFTER INCORPORATING THE ENTIRE ASSES SMENT ORDER INCLUDING THE FACT THAT TRADING IN THE SHARE OF JOLLY PLASTIC INDUSTRIES LTD. WAS SUSPENDED BY SEBI, FURT HER NOTES THAT OTHER FAMILY MEMBERS OF THE ASSESSEE HAVE ALSO INVESTED IN THE SAME SCRIP. HE FURTHER OBSERVES THAT ASSESSI NG OFFICER HAS DISCUSSED AS TO HOW THE PRICES OF THE SHARES HA VE INCREASED AND SUCH INCREASE IN SHARE PRICE WERE MAN IPULATED WITHOUT ANY FINANCIAL FUNDAMENTALS. HE FURTHER NOTE D THAT THE ASSESSEE HAS PURCHASED THE SHARES IN CASH ON VARIOU S DATES STARTING FROM 20.02.2012 TO 23-2-2012 AND HAS ALSO INCORPORATED THE PURCHASE TRANSACTION ACCOUNT AND T HE CONTRACT NOTE ISSUED BY M/S. SOUTH ASIAN STOCK LTD. IN SUPPORT OF THE SALE OF SHARES IN HIS ORDER. HE HELD THAT DETAILS SUBMITTED BY THE ASSESSEE FAIL TO SUBSTANTIATE WHEN THE PURCHASE WAS MADE, AS ASSESSEE HAS ONLY PRODUCED CONFIRMATION REPORT OF SETTLEMENT ISSUED BY M/S. CO RE CAPITAL SERVICES LTD. AND NO EVIDENCE HAS BEEN GIVEN IN SUP PORT OF GENUINENESS OF PURCHASE OF SHARES. AFTER REITERATIN G THE ASSESSING OFFICERS OBSERVATION, HE ALSO MADE ONE M ORE OBSERVATION THAT DETAILS OF ACTUAL DEMAT ACCOUNT HA VE NOT BEEN FURNISHED AND THE FINDING OF THE ASSESSING OFF ICER IS I.T.A. NO.2927, 2928 & 2929/DEL/2018 6 CORROBORATED BY THE INFORMATION GIVEN BY THE INVEST IGATION WING. IN THIS MANNER HE HAS CONFIRMED THE SAID ADDI TION. 8. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IN SUPPORT OF PURCHASES , FIRST OF ALL, HAS FILED THE CONFIRMATION REPORT OF THE BROKE R, M/S. CORE CAPITAL SERVICES LIMITED ALONG WITH BILL/ ACCOUNT S TATEMENT. NOT ONLY THAT, ASSESSEE HAS ALSO FILED DEMAT ACCOUN T NOT ONLY BEFORE THE ASSESSING OFFICER BUT ALSO BEFORE THE LD . CIT(A), THE COPY OF WHICH IS APPEARING AT PAGES 7 TO 8 OF THE P APER BOOK. THUS, THE OBSERVATION OF THE LD. CIT (A) THAT SHARE S HAVE NOT BEEN DEMATERIALISED IS INCORRECT, BECAUSE THE SAID SHARES WERE DEMATERIALISED ON 18-12-13 WHICH CLEARLY SHOWS PURCHASE OF 7800 SHARES CREDITED IN THE DEMAT ACCOU NT. ALL THESE SHARES WERE DULY DISCLOSED IN THE EARLIER YEA R, I.E., IN THE ASSESSMENT YEAR 2012-13 WHICH IS EVIDENT FROM C OPY OF BALANCE SHEET, STATEMENT OF AFFAIRS AS ON 31-3-2012 . THUS, PURCHASE OF THE SHARES CANNOT BE DOUBTED AT ALL. TH EREAFTER, THE ASSESSEE HAS FILED FOLLOWING DOCUMENTS IN SUPPO RT OF THE SALES, NAMELY; CONTRACT NOTE; COPY OF BANK ACCOUNT; CLEARING OF THE CHEQUE OF BROKER, COPY OF ASSESSEES ACCOUNT IN THE LEDGER ACCOUNT OF BROKER. ONCE ALL THESE DETAILS HA VE BEEN GIVEN, THEN CREDIT APPEARING IN THE BANK ACCOUNT HA S TO BE ON ACCOUNT OF SALES OF THE SHARES AVAILABLE WITH THE A SSESSEE BOUGHT TWO YEARS BACK. THEREFORE, SUCH ADDITION COU LD NOT HAVE BEEN MADE U/S. 68. MOREOVER, ONCE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNT, THEN NO ADDITION U/S. 68 CAN BE MADE BECAUSE THE AMOUNT WAS CREDITED IN THE BANK AC COUNT I.T.A. NO.2927, 2928 & 2929/DEL/2018 7 OF THE ASSESSEE. THIS PROPOSITION HAS BEEN UPHELD B Y THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SM T. SARIKA JAIN VS. CIT REPORTED IN 407 ITR 254 (ALL) AND OTHE R DECISIONS OF THE TRIBUNAL AND HIGH COURT WHICH ARE AS UNDER:- SMT. SARIKA JAIN VS. CIT - 407 ITR 254 (ALL) VIJAY KUMAR V ITO -ITA 2483/2015-ORDER DT. 27.11.1 8 (DEL-F) INDER SINGH V ITO -ITA 1931/2016 -ORDER DT. 5.12.1 8 (DEL-B) SMT. SHANTA DEVI V CIT (1987) 171 ITR 532 (P&H) - RAMESHBHAI SOMEBHAI PATEL V ITO 1864/AHD/2014 - ORDER DT 19.04.18 SMT. RAMILABEN B. PATEL V ITO [2018] 100 TAXMANN.COM 325 (AHMEDABAD - TRIB.C). 8.1 FURTHER, ON MERITS, HE SUBMITTED THAT HERE IN T HIS CASE ASSESSING OFFICER AT PAGE 3 HAS MENTIONED THAT ASSE SSEES NAME IS SMT. ARCHANA AGARWAL TO WHOM HE HAS ISSUE D SUMMONS U/S. 131. FIRST OF ALL, ASSESSEE HAS NO CON NECTION WHATSOEVER WITH SMT. ARCHANA AGARWAL AND IT APPEARS THAT ASSESSING OFFICER HAS INCORPORATED THESE FACTS FROM SOME OTHER CASE WHICH GOES TO SHOW THAT THERE IS NO APPL ICATION OF MIND AT ALL. AT PAGE1 OF THE ORDER AO HAS NOTED THA T ASSESSEES NAME IS ANCHAL GOEL AND THEN AGAIN AT PA GE 3, HE INCORPORATES THE FACTS OF DIFFERENT ASSESSEE, SMT. ARCHANA AGARWAL. APART FROM THAT, ALL THROUGHOUT THE ASSESS MENT ORDER THERE IS ONLY DISCUSSION OF GENERAL MODUS OPERANDI WITHOUT REFERRING TO ANY MATERIAL WHATSOEVER FOUND DURING ANY INVESTIGATION OR INQUIRY RELATING TO ASSESSEE O R THAT ASSESSEES NAME HAS EITHER BEEN FOUND TO BE AS BENE FICIARY IN I.T.A. NO.2927, 2928 & 2929/DEL/2018 8 THE INVESTIGATION OF ANY ENTRY OPERATOR OR ELSEWHER E; NOR ASSESSING OFFICER HAS MADE ANY KIND OF ENQUIRY OR INVESTIGATION TO FIND ANY INCRIMINATING DOCUMENT AG AINST THE ASSESSEE OR TO SHOW THAT DOCUMENTS AND EVIDENCES FI LED BY THE ASSESSEE ARE NOT GENUINE. HE ALSO REFERRED TO O NE INSTRUCTION ISSUED BY PR.CIT-13, NEW DELHI ISSUED I N HIS CHARGE WITH READS AS UNDER: TO, ALL THE ASSESSING OFFICER POSTED IN THE CHARGE OF PR. CIT-13, NEW DELHI. SUBJECT: ASSESSMENT OF LTCG SHOWN ON SALE OF SHARES - REGARDING PLEASE REFER TO THE LETTER NO. PR.CIT-13/DLI/CLARIF ICATION/2016-17 DATED 29.08.2016 ON THE SUBJECT ABOVE. THE ATTENTION IS DRAWN TO PARA (VII) OF THE SAID LE TTER. VARIOUS COUNSELS, AUTHORISED REPRESENTATIVE OF THE ASSESSEE S AND THE AOS HAVE APPROACHED ME AND EXPRESSED THAT THERE ARE FAV OURABLE JUDGMENTS BY VARIOUS BENCHES OF THE ITAT, HIGH COUR T AND CLARIFICATIONS WHEREIN IT HAS BEEN CLARIFIED THAT T HE CLAIM OF THE ASSESSEE SHOULD NOT BE REJECTED MERELY IF THE NAME OF THE COMPANY WHOSE SHARES HAVE BEEN TRANSACTED, OVER WHICH LTCG HAS BEEN EARNED BY THE ASSESSEE, FIGURES IN SOME INTERNAL/OF FICIAL CIRCULATION OF THE LIST OF SUCH COMPANIES. THE ASSESSING OFFICERS NEED TO GO BEYOND AND AS ME NTIONED IN PARA (VIII) OF THE SAME LETTER IF THERE IS ENOUGH A ND CONCLUSIVE EVIDENCE, THEN ONLY THE CLAIM OF THE ASSESSEE SHOUL D BE QUESTIONED. IF NO SUCH CORROBORATIVE EVIDENCE IS BROUGHT ON REC ORD OR IS AVAILABLE, THEN MERELY MENTIONING THAT THE NAME OF THE COMPANY (BEING IN THE LIST CIRCULATED INTERNALLY BY THE DEP ARTMENT OF VARIOUS I.T.A. NO.2927, 2928 & 2929/DEL/2018 9 COMPANIES LABELLED AS PENNY STOCKS) SHOULD NOT BE THE GROUND FOR REJECTING THE CLAIM. 8.2 THUS, MERELY BECAUSE IF NAME OF A COMPANY WHO SE SHARES HAVE BEEN TRANSACTED, FIGURES IN SOME INTERN AL/OFFICIAL CIRCULATION OF LIST OF SUCH COMPANIES, THE ASSESSIN G OFFICER HAS TO GO BEYOND THE SAID INTERNAL LETTER TO FIND SOME CONCLUSIVE EVIDENCE, THEN ONLY CLAIM OF THE ASSESSEE SHOULD BE QUESTIONED AND IF NO SUCH CORROBORATIVE EVIDENCE IS BROUGHT ON RECORD THEN MERELY MENTIONING THE NAME OF COMPAN Y SHOULD NOT BE THE GROUND FOR REJECTING THE CLAIM. H ERE, IN THIS CASE, LIST OF SHELL COMPANIES WAS PUBLISHED BY SEBI IN WHICH NOWHERE THE NAME OF JOLLY PLASTIC INDUSTRIES LIMITE D IS APPEARING. APART FROM THAT, THE SEBI SUBSEQUENTLY H AS WITHDRAWN THE SUSPENSION OF MOST OF THE COMPANIES I NCLUDING THAT OF JOLLY PLASTIC INDUSTRIES LTD. THUS, ONE OF THE MAIN REASONS GIVEN BY THE ASSESSING OFFICER TO TREAT THE TRANSACTION AS SHAM/ BOGUS ON THE GROUND THAT THE TRADING OF SH ARES OF JOLLY PLASTIC INDUSTRIES LIMITED WAS SUSPENDED GETS NEGATED. THAT IS, ONCE THIS SUSPENSION HAS BEEN REVOKED THEN THE PREMISE OF THE ASSESSING OFFICER AND LD. CIT (A) GO ES AWAY. MOREOVER, HERE IN THIS CASE, THE SALE UNDER CONSIDE RATION IS SUPPORTED BY FOLLOWING EVIDENCES:- A) CONTRACT NOTE GIVING DETAILS OF SETTLEMENT NO./S ALE RATE/BSE NO. ETC. B) STT IS PAID ON TRANSACTION. C) TRANSACTION IS THROUGH SOUTH ASIAN STOCKS LIMITE D, A BROKER OF REPUTE, J) SALE IS MADE ON ONLINE MARKET OF BOMBAY STOCK EXCHANGE. D) CONSIDERATION IS RECEIVED ELECTRONICALLY IN BANK THROUGH RTGS WHICH IS DULY CREDITED UNION BANK OF INDIA A/C I) SHARES ARE TRANSFERRED FROM D - MAT A/C. I.T.A. NO.2927, 2928 & 2929/DEL/2018 10 8.3 THUS, WHEN SALE OF SHARES STANDS PROVED BY TH ESE EVIDENCES, THEN WITHOUT ANY CONTRARY MATERIAL AGAIN ST THE ASSESSEE OR AGAINST THE COMPANY, M/S. JOLLY PLASTIC INDUSTRIES LTD. THE GAIN ARRIVED ON SALE OF SHARES CANNOT BE T AXED U/S 68. HE FURTHER POINTED OUT THAT THE SAID SALE WAS M ADE THROUGH REGISTERED STOCK BROKER IN BOMBAY STOCK EXC HANGE ON A QUOTED PRICE AND HERE IN THIS CASE THE HIGHEST PRICE LIST OF THIS SCRIP IN BSE WAS RS.300, WHEREAS ASSESSEE H AS SOLD IT AT RS.272. ONCE, SALE OF SHARES IS THROUGH STOCK EX CHANGE WITH PROPER TRADING TIME AND AMOUNT HAS BEEN CREDIT ED IN THE ASSESSEES BANK ACCOUNT THEN SUCH CREDIT CANNOT BE TREATED AS UNEXPLAINED. HE FURTHER RELIED UPON VARIOUS JUDG EMENT RENDERED BY TRIBUNAL AND THE HIGH COURTS AND THE LI ST OF SUCH JUDGEMENTS RELIED UPON BY HIM ARE AS UNDER:- PR. CIT VS. PREMPAL GANDHI -ITA NO. 95 OF2017 DATED 18.01.18 (P&H) (HC). CIT VS. SUDEEP GOENKA (2013) 29 TAXMANN.COM 402 (AL L). SMT. SIMI VERMA V. ITO- ITA NO.3387/2018 ORDER DATE D 6.11.2018 SMC DEL. AMIT RASTOGI HUF VS. ITO, ITA NO.2128/D/2018 DATED 24.10.2018 (ITAT DEL). SHIKHA DHAWAN VS. ITO WARD - 4(2) - ITA NO. 3035/D/ 2018 DATED 27.06.18. PR. CIT VS. SHRI HITESH GANDHI - ITA NO. 18 OF 2017 DATED 16.02.17 (P&H) (HC). PRAMOD KUMAR LODHA V ITO (2018) 100 TAXMANN.COM8 (J AIPUR D.B). NAVNEET AGARWAL VS ITO - ITA NO. 2281/KOL/2017 DT 2 0.07.2018 (ITAT - KOL). CIT VS. SADHNA JAIN (2014) 45 TAXMANN.COM 432 (ALL) . I.T.A. NO.2927, 2928 & 2929/DEL/2018 11 9. ON THE OTHER HAND, LD. D.R. STRONGLY RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND LD. CIT (A), HAD RELIED UPON THE FOLLOWING JUDGEMENTS AND THE RATIOS LAID DOWN TH EREIN:- SANJAY BIMALCHAND JAIN L/H SHANTIDEVI BIMALCHAND JA IN VS CIT (120171 ITA NO. 18/2017 [BOMBAY HIGH COURT (NAGPUR BENCH)] (COPY ENCLOSED) THE ASSESSEE HAD PURCHASED SHARES OF TWO PENNY STOC KS OF KOLKATA BASED COMPANIES I.E., 8000 SHARES AT THE RA TE OF RS. 5.50 PER SHARE ON 08.08.2003 AND 4000 SHARES AT THE RATE OF RS. 4/- PER SHARE ON 05.08.2003. THE ASSESSEE SOLD 2200 SHARES AT AN EXORBITANT RATE OF RS.486.55 PER SHARE ON 07.06.200 5 AND 800 SHARES ON 20.06.2005 AT THE RATE OF RS.486.55, THE AUTHORITIES HELD THAT THE ASSESSEE HAD NOT TENDERED COGENT EVIDENCE TO EXPLAIN AS TO HOW THE SHARES IN AN UNKNOWN COMPANY WORTH RS.5/- H AD JUMPED TO RS.485/- IN NO TIME. ADDITION CONFIRMED. CHANDAN GUPTA VS CIT (F2015L 54 TAXMANN.COM 10 (P& H) I F2015L 229 TAXMAN 173 (COPY ENCLOSED) WHERE ASSESSEE COULD NOT EXPLAIN RECEIPT OF ALLEGED SHARE TRANSACTIONS P ROFITS CREDITED IN HIS BANK ACCOUNTS, THEN SALE PROCEEDS HAD TO BE ADD ED AS INCOME UNDER SECTION 68. 3. BALBIR CHAND MAINI VS CIT R20111 12 TAXMANN.COM 27 6 (P&H)/ R20111 201 TAXMAN 94 (P&HXMAG.) I T20121 340 ITR 161 (P&H U20121 247 CTR 468 (COPY ENCLOSED) ASSESSEE HAD PURCHASED CERTAIN SHARES OF A COMPANY AT RATE OF RS. 2.50 AND RS. 3.40 PER SHARE IN MONTH OF APRIL, 1997 AND PART OF THOSE SHARES WERE SOLD THROUGH A BROKER AT RS. 55 P ER SHARE. AO RECORDED STATEMENT OF BROKER WHO ADMITTED TO HAVE P URCHASED SHARES IN QUESTION BUT FAILED TO PRODUCE BOOKS OF A CCOUNTS AND OTHER RELEVANT DOCUMENTS. THE ALLEGED SALE OF SHARE S HAD NOT TAKEN PLACE THROUGH ANY STOCK EXCHANGE. BROKER COULD NOT GIVE DETAILS OF I.T.A. NO.2927, 2928 & 2929/DEL/2018 12 PURCHASER OF SHARES. ADDITION HELD TO BE JUSTIFIED. 4. USHA CHANDRESH SHAH VS ITO NTAT MUMBAI! T20141 2014-TIQL-1459-ITAT- MUM (COPY ENCLOSED) IN THIS CASE, THE ASSESSEE COULD NOT PRODUCE THE CO PIES OF SHARE CERTIFICATES AND COPIES OF SHARE TRANSFER FORMS. TH E TRANSACTION OF PURCHASE OF SHARES COULD NOT BE CROSS VERIFIED. THE SHARES OF THE COMPANY WAS DECLARED AS PENNY STOCK BY SEBI AND T HE BROKER SANJU KABRA, THROUGH WHOM THE SHARES WERE SOLD BY T HE ASSESSEE WAS INDICATED FOR MANIPULATING THE PRICES OF PENNY STOCK SHARES. THE TAX AUTHORITIES HAVE RIGHTLY APPLIED THE TEST O F HUMAN PROBABILITIES TO EXAMINE THE CLAIM OF PURCHASE AND SALE OF SHARES MADE BY THE ASSESSEE. THE CIT(A) WAS JUSTIFIED IN C ONFIRMING THE ORDER OF THE AO BY APPLYING THE TEST OF HUMAN PROBA BILITIES. 5. RATNAKAR M PUIARI VS ITO MTAT MUMBAI! R20161 2016- TIQL-1746-ITAT-MUM (COPY ENCLOSED) A TRANSACTION OF OFF MARKET PURCHASE OF SHARE FOR WHICH PAYMENTS WERE MADE IN CASH AND THE SHARE BROKERS HAD ISSUED PREDATED CONTRACT NOTES, IS LIABLE TO BE TREATED AS BOGUS TR ANSACTIONS, AND HENCE SUCH CASH RECEIPTS ARE LIABLE TO BE TREATED A S UNEXPLAINED CASH RECEIPTS. 6. ABHIMANVU SOIN VS ACIT \ 2018-TIQL-733-ITAT-CHD 1 (COPY ENCLOSED) WHERE HONBLE ITAT CHANDIGARH HELD THAT UNNATURAL L TCG @ 3072% OVER A PERIOD OF 1.5 YEARS FROM SCRIP OF THE UNLISTED COMPANY WHOSE EVEN NET WORTH IS NOT KNOWN TO THE AS SESSEE, WITHOUT EXPERT ADVICE IS BEYOND THE BUSINESS LOGICS AND IS VALID REASON TO MAKE ADDITION FOR UNDISCLOSED INCOME. WHE N ASSESSEE FAILS TO PROVE THROUGH EVIDENCES THAT PURCHASE AND SALE TRANSACTIONS OF SHARES ARE GENUINE, CLAIM OF EXEMPT ED LTCG CAN BE DISALLOWED AND ADDITION FOR UNDISCLOSED INCOME CAN BE MADE. WHEN FACTS INDICATE THAT WHOLE PROCESS OF TRADING I N SHARES IS I.T.A. NO.2927, 2928 & 2929/DEL/2018 13 DEPICTED JUST TO AVOID TAX LIABILITY, THE ADDITION FOR UNDISCLOSED INCOME SHOULD BE UPHELD. 7. ARVIND M KARIYA VS ACIT \ ITA NO. 7024/MUM/2010 1 WHERE HONBLE ITAT MUMBAI HELD AS UNDER: HAVING REGARD TO THE CIRCUMSTANCES AND THE CONDUCT OF THE ASSESS AS DISCLOSED IN HIS STATEMENT U/S. 132(4) OF THE AC T AS WELL AS OTHER MATERIAL ON RECORD, INFERENCE COULD BE REASONABLY D RAWN THAT THE SHARES PURCHASED BY THE ASSESSEE HAVE BEEN BACKDATE D TO GIVE IT A COLOUR OF LONG TERM CAPITAL GAIN BY SHOWING THE PER IOD OF HOLDING FOR MORE THAN 12 MONTHS. NEEDLESS TO SAY THAT INCOM E TAX PROCEEDINGS ARE CIVIL PROCEEDINGS AND THE DEGREE OF PROOF REQUIRED IS BY PREPONDERANCE OF PROBABILITIES, THEREFORE APPLYI NG THE TEST OF PREPONDERANCE OF PROBABILITIES AND CONSIDERING THE ENTIRE SEQUENCES OF EVENTS, THE REVENUE AUTHORITIES HAVE RIGHTLY CON CLUDED THAT THE ASSESSEES CLAIM ABOUT THE LONG TERM CAPITAL GAINS FROM THE SALE OF SHARES' IS NOT GENUINE. 8. HONBLE ITAT MUMBAI IN THE CASE OF ITO VS SHAMI M M BHARWANI (2016) (69 TAXMANN.COM 65) WHERE HONBLE ITAT MUMBAI HELD THAT WHERE ASSESSEE CLAIMED INCOME EARNED FROM SALE OF SHARES AS EXEMPT UNDER S ECTION 10(38), IN VIEW OF FACT THAT PURCHASE TRANSACTION OF SAID S HARES WAS NOT RECORDED IN STOCK EXCHANGE AND, MOREOVER, SELLING R ATES WERE ARTIFICIALLY HIKED LATER ON WITH NO REAL BUYERS, AS SESSING OFFICER RIGHTLY REJECTED ASSESSEES CLAIM AND ADDED AMOUNT IN QUESTION TO HIS TAXABLE INCOME UNDER SECTION 68. 10. I HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO P ERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER A S WELL AS MATERIAL REFERRED TO BEFORE ME. FROM THE PERUSAL OF THE IMPUGNED ORDER AS WELL AS MATERIAL PLACED ON RECORD , IT APPEARS TO BE UNDISPUTED FACT THAT ASSESSEE HAS PUR CHASED I.T.A. NO.2927, 2928 & 2929/DEL/2018 14 7800 SHARES OF M/S. JOLLY PLASTIC INDUSTRIES LIMITE D ON 14-2- 2018, FOR WHICH PAYMENT HAS BEEN MADE FROM 20-2-201 8 TO 23-2-2018 TO M/S. CORE CAPITAL SERVICES LIMITED. TH E PURCHASE PRICE OF M/S. JOLLY PLASTIC INDUSTRIES LIM ITED WAS @ 10 PER SHARE. THE PURCHASE OF SHARES WAS DULY SUPPO RTED WITH INVOICE/CONFIRMATION REPORT AND ACCOUNT STATEM ENT WHICH ARE APPEARING FROM PAGES 4 TO 8 OF THE PAPER BOOK. APART FROM THAT, IT IS SEEN IN THE ASSESSMENT YEAR 2012-13, THE ASSESSEE IN ITS STATEMENT OF AFFAIRS AS ON 31ST MARCH, 2012 HAD SHOWN THE INVESTMENT IN THE SHARES OF M/S. JOLLY PLASTIC INDUSTRIES LIMITED. THUS, PURCHASE OF SHARE S IN THE EARLIER YEARS CANNOT BE IN DOUBT. APART FROM THAT, THE PURCHASES OF SUCH SHARES HAVE BEEN DEMATERIALIZED I N THE DEMAT ACCOUNT OF THE ASSESSEE AS ON 18-12-2013. THE REAFTER, THE SHARES HAVE BEEN SOLD THROUGH REGISTERED STOCK BROKER M/S. SOUTH ASIAN STOCK LTD. IN BOMBAY STOCK EXCHANG E; AND THE CONTRACT NOTE ISSUED CLEARLY DEPICTS SCRIP DETA ILS, TRADE NUMBER, TRADE TIME, QUANTITY SOLD, GROSS TOTAL AMOU NT AND OTHER CHARGES PAID AND PAYMENT OF SECURITY TRANSACT ION TAX. AFTER THE SALE, THE AMOUNT HAS BEEN CREDITED IN THE ASSESSEES BANK ACCOUNT ON 26 TH DECEMBER, 2013. THUS, CREDIT IN THE BANK ACCOUNT OSTENSIBLY IS FLOWING FROM SALE OF SCR IP OF M/S. JOLLY PLASTIC INDUSTRIES LTD. 11. THE ASSESSING OFFICER WITHOUT REFERRING TO O R DISCUSSING ANY INFORMATION OR MATERIAL FOUND AGAINS T THE ASSESSEE, LIKE WHETHER, ASSESSEES NAME IS APPEARIN G AS A BENEFICIARY IN SOME INVESTIGATION OR ENQUIRY CARRIE D OUT IN THE I.T.A. NO.2927, 2928 & 2929/DEL/2018 15 CASE OF ANY ENTRY OPERATOR OR BROKER OR ELSEWHERE. IN HIS ENTIRE ORDER, HE HAS MERELY DISCUSSED THE GENERAL MODUS OPERANDI OF LAUNDERING OF UNACCOUNTED MONEY THROUGH BOGUS LONG TERM CAPITAL GAIN AND HAS ALSO CITED VARIOUS JUDGEMENTS ON HUMAN PROBABILITIES. ONE IMPORTANT FAC T NOTED BY HIM IS THAT SEBI HAS SUSPENDED THE TRADING OF SE CURITIES OF MANY COMPANIES INCLUDING THAT OF M/S. JOLLY PLASTIC INDUSTRIES LIMITED. HOWEVER, AS POINTED OUT BY LD. COUNSEL, SUCH BAN/ SUSPENSION HAS BEEN REVOKED BY THE SEBI L ATER ON. ONCE THIS PREMISE FOR ADVERSE INFERENCE GOES, THEN THE ENTIRE SUBSTRATUM OF AOS CASE ALSO WHITTLES DOWN. APART F ROM THAT, IT IS SEEN THAT THE ASSESSING OFFICER APPEARS TO HA VE ISSUED SUMMONS U/S. 131 TO SOME DIFFERENT ASSESSEE WHICH I S EVIDENT FROM THE RELEVANT OBSERVATION OF THE AO AS QUOTED IN THE EARLIER PART OF THE ORDER. THIS SHOWS THAT ASSE SSING OFFICER HAS APPLIED HIS MIND MECHANICALLY. 12. ANOTHER FACT WHICH HAS BEEN NOTED BY THE AS SESSING OFFICER IN THE ASSESSMENT ORDER OF SMT. MADHU GOEL THAT, NOTICE U/S. 133(6) WAS ISSUED TO M/S. JOLLY PLASTIC INDUSTRIES LIMITED AND M/S. CORE SERVICES LIMITED AND NO COMPL IANCE WAS MADE. THEREAFTER, HE NOTICES THAT THE SHARE PRI CE OF M/S. JOLLY PLASTIC INDUSTRIES LIMITED SUDDENLY STARTED R ISING FROM JULY 2013. HOWEVER, AGAIN THERE IS NO REFERENCE OF ANY OTHER MATERIAL OR INFORMATION. SIMILARLY, THERE IS NO SUC H FINDING OR MATERIAL IN THE CASE OF SMT. RITA GOEL ALSO, EXCEPT FOR, THERE IS SOME GENERAL DISCUSSION ABOUT SOME INFORMATION RECE IVED FROM INVESTIGATION WING AS TO HOW THE TRADING OF TH IS COMPANY I.T.A. NO.2927, 2928 & 2929/DEL/2018 16 WAS SUSPENDED. FIRST OF ALL, IF ANY SUCH INFORMATIO N IS RECEIVED TO THE AO, REGARDING ANY PARTICULAR SCRIP, EITHER THROUGH INTERNAL FORMATION OR THROUGH INVESTIGATION WING, THEN IT IS INCUMBENT UPON THE ASSESSING OFFICER TO CARRY OUT SOME PRIMA FACIE ENQUIRY TO EXAMINE THE TRANSACTION OF THE ASSESSEE, BOTH WITH REGARD TO PURCHASE AND SALE, WH ETHER THEY ARE AFFECTED BY ANY BOGUS ENTRIES CONTROLLED B Y SOME ENTRY OPERATOR. FURTHER, HE HAS TO SEE THE BACKGROU ND CHECK IN THE CASE OF ENTITIES INVOLVED IN THE PRICE MOVEM ENT AND THE STATEMENT OF ENTITIES INVOLVED IN PRICE MOVEMENT OR THERE IS ANY SUCH INFORMATION OR MATERIAL THAT ANY OF SUCH S CRIPT OR ENTRY OPERATOR OR PROMOTERS OF LISTED COMPANY OR BR OKER HAVE EITHER ACCEPTED THEIR ROLE IN GIVING BOGUS ENTRIES, OR THERE IS ANY STATEMENT OF THE ASSESSEE ACCEPTING THE ENTRY. THE BACKWARD TRAIL OF BANK ACCOUNT OF THE ASSESSEE CAN BE INVESTIGATED AND TO SEE WHETHER THE ASSESSEES PURC HASE AND SALE REVEAL EITHER CASH DEPOSIT OR CASH WITHDRAWAL SO AS TO COME TO A CONCLUSION THAT THE TRANSACTION IS ACTUAL LY BOGUS OR NOT. HERE NO SUCH ENQUIRY OR MATERIAL HAS BEEN BROU GHT ON RECORD BY THE ASSESSING OFFICER. EVEN THE LD. CIT ( A) HAS NOT DISCUSSED ANY SUCH EVIDENCE. HE HAS IN FACT GONE TO EVEN DENY THE EXISTENCE OF DEMAT ACCOUNT WHICH FACTS ITS ELF IS NOT CORRECT, BECAUSE DEMAT ACCOUNT WAS NOT ONLY FURNISH ED BEFORE THE AUTHORITIES BELOW BUT HAS ALSO BEEN FILE D BEFORE ME IN THE FORM OF PAPER BOOK. FURTHER, AS POINTED OUT ABOVE, SEBI WHO HAS SUSPENDED THE TRADING OF THIS SCRIP OF M/S. JOLLY PLASTIC INDUSTRIES LIMITED HAS LATER ON REVOK ED ITS I.T.A. NO.2927, 2928 & 2929/DEL/2018 17 SUSPENSION. HENCE, THIS ALSO CANNOT BE GROUND FOR T REATING THE TRANSACTION TO BE BOGUS LONG TERM CAPITAL GAIN. THUS, WITHOUT ANY MATERIAL OR INFORMATION TO CONTROVERT T HE DOCUMENTS AND EVIDENCES FILED BY THE ASSESSEE, I FI ND IT DIFFICULT AS TO HOW ADDITION U/S. 68 CAN BE MADE WH EN THE CREDITS IN THE BANK ACCOUNT ARE APPARENTLY FROM SAL E OF SHARES WHICH IS EVIDENCED FROM TRADING IN BSE AND PAYMENT OF STT ON SUCH SALE. THUS, UNDER THESE CIRCUMSTANCES, I DO NOT FIND ANY REASON TO TREAT THE LONG TERM CAPITAL GAIN SHOW N BY THE ASSESSEE AS BOGUS AND CONSEQUENTLY, THE ORDER OF TH E ASSESSING OFFICER AND LD. CIT(A) IS SET ASIDE AND A SSESSEES CLAIM FOR EXEMPTION U/S. 10(38) FOR LONG TERM CAPIT AL GAIN IS ALLOWED. 13. AS STATED EARLIER THE FACTS AND ISSUES INVOLVED IN OTHER TWO CASES OF, SMT. MADHU GOEAL AND SMT. RITA GOEL A RE IDENTICALLY BASED ON SAME SCRIP WITH EXACTLY SIMILA R SET OF EVIDENCES AND DOCUMENTS FILED WITH REGARD TO PURCHA SE AND SALE. ACCORDINGLY, MY FINDING GIVEN ABOVE WILL APPL Y MUTATIS MUTANDIS IN THESE TWO APPEALS ALSO. 14. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH FEBRUARY, 2019. SD/- [AMIT SHUKLA] JUDICIAL MEMBER DATED: 27 TH FEBRUARY, 2019 PKK