Shri Nilesh Jain HUF, Indore V. ITO 4(2), Indore

ITA 294/Ind/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6105 (ITAT-INDORE)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-03-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 09-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY TULASIYAN; RANJAN AGRAWAL ARS
• Keywords: Unexplained cash credit; Capital asset; Income from undisclosed sources; Search and seizure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Earning of tax free income; Deemed to accrue or arise in india; Question of law; Cost of acquisition; Tangible material; Third party statement; Accommodation entries; Scheme of amalgamation; Benefit of exemption; Sham transactions; Penny stocks; Capital Gains
• Section: 143(3); 142(1); 133A; 143(1); 113; 43; 48; 13; 22; 131; 68; 132

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.616/IND/2019 ASSESSMENT YEAR 2014-15 SHRI AYUSH JAIN, : APPELLANT 132, BAIKUNTHDHAM COLONY, BEHIND ANAND BAZAR, INDORE PAN : AHOPJ6426C V/S INCOME TAX OFFICER 4(2) INDORE : RESPONDENT ITA NO.617/IND/2019 & 293/IND/2020 ASSESSMENT YEAR 2015-16 & 2014-15 SHRI PRITESH JAIN (HUF) : APPELLANT 130, BAIKUNTHDHAM COLONY, BEHIND ANAND BAZAR, INDORE PAN : AAAHJ6285J V/S INCOME TAX OFFICER 4(2) INDORE : RESPONDENT AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 2 ITA NO.294/IND/2020 ASSESSMENT YEAR 2014-15 SHRI NILESH JAIN (HUF) : APPELLANT 131, BAIKUNTHDHAM COLONY, BEHIND ANAND BAZAR, INDORE PAN : AACHN2307P V/S INCOME TAX OFFICER 4(2) INDORE : RESPONDENT REVENUE BY SHRI HARSHIT BARI, SR.DR ASSESSEE BY S/ SHRI AJAY TULASIYAN & RANJAN AGRAWAL, ARS DATE OF HEARING 05.04 .2021 DATE OF PRONOUNCEMENT 30 . 0 4 . 202 1 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE OF THE ASSESSEE(S) FOR ASSESSMENT YEARS 2014-15 & 2015-1 6 ARE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TA X(APPEALS)-II (IN SHORT LD. CIT], INDORE DATED 28.02.2019 AND 31 .08.2020 WHICH ARE ARISING OUT OF THE ORDER U/S 143(3) OF THE INC OME TAX ACT AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 3 1961(IN SHORT THE ACT) DATED 14.12.2016, 06.12.20 16, 17.12.2018 AND 21.12.2018 FRAMED BY ITO-4(2), INDORE. 2. AS ACCEPTED BY BOTH THE PARTIES THE ISSUES RAISE D AND FACTS INVOLVED IN ALL THESE FOUR APPEALS ARE COMMON, THER EFORE IT WAS DECIDED TO HEAR ALL THESE APPEALS TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENI ENCE AND BREVITY. 3. ASSESSEE(S) HAS RAISED FOLLOWING GROUNDS OF APPE AL:- ITA NO.616/IND/2019 AYUSH JAIN ASSESSMENT YEAR 2015-16 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1,40,95,302/- MADE BY THE AO BY DISALLOWING THE CLAIM OF EXEMPTIO N U/S 10(38) IN RESPECT OF THE LONG TERM CAPITAL GAINS OF THE APPEL LANT. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E CLAIM OF THE APPELLANT BEING PROPER AND LEGAL IS PRAYED TO BE NOW ALLOWED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 4,22,859/- MADE BY THE AO U/S 68 ON ACCOUNT OF ALLEGED COMMISSION ON S URMISES AND CONJECTURES. THE SAID ADDITION BEING WRONG AND UNCA LLED FOR IS PRAYED TO BE DELETED. 3. THE ORDER PASSED BY THE AO WITHOUT FOLLOWING THE PR INCIPLE OF NATURAL JUSTICE IS BAD IN LAW AND IS PRAYED TO BE QUASHED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, A MEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 4 BEFORE FINAL HEARING, IF NECESSITY SO ARISES. ITA NO.617/IND/2019 PRITESH JAIN (HUF) ASSESSMENT YEAR 2015-16 1.THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITI ON OF RS. 37,40,741/- MADE BY THE AO BY DISALLOWING THE CLAIM OF EXEMPTIO N U/S 10(38) IN RESPECT OF THE LONG TERM CAPITAL GAINS OF THE APPEL LANT. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E CLAIM OF THE APPELLANT BEING PROPER AND LEGAL IS PRAYED TO BE NOW ALLOWED. 2.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1,17,022/- MADE BY THE AO U/S 68 ON ACCOUNT OF ALLEGED COMMISSION ON S URMISES AND CONJECTURES. THE SAID ADDITION BEING WRONG AND UNCA LLED FOR IS PRAYED TO BE DELETED. 3. THE ORDER PASSED BY THE AO WITHOUT FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE IS BAD IN LAW AND IS PRAYED TO BE QUASHED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER , AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. ITA NO.293/IND/2020 PRITESH JAIN (HUF) ASSESSMENT YEAR 2014-15 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS. 1,02,86,220/- MADE BY THE AO BY DISALLOWING THE CLAIM OF EXEMPTIO N U/S 10(38) IN RESPECT OF THE LONG TERM CAPITAL GAINS OF THE APPEL LANT. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E CLAIM OF THE APPELLANT BEING PROPER AND LEGAL IS PRAYED TO BE NOW ALLOWED. 2.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 5 LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 3,21,790/- MADE BY THE AO U/S 68 ON ACCOUNT OF ALLEGED COMMISSION ON S URMISES AND CONJECTURES. THE SAID ADDITION BEING WRONG AND UNCA LLED FOR IS PRAYED TO BE DELETED. 3.THE ORDER PASSED BY THE AO WITHOUT FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE IS BAD IN LAW AND IS PRAYED TO BE QUASHED. 4.THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. ITA NO.294/IND/2020 NILESH JAIN (HUF) ASSESSMENT YEAR 2014-15 1.THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITI ON OF RS. 1,43,22,060/- MADE BY THE AO BY DISALLOWING THE CLAIM OF EXEMPTIO N U/S 10(38) IN RESPECT OF THE LONG TERM CAPITAL GAINS OF THE APPEL LANT. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E CLAIM OF THE APPELLANT BEING PROPER AND LEGAL IS PRAYED TO BE NOW ALLOWED. 2.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE NET SALE PRO CEEDS AS RS.1,43,22,060 AS AGAINST ACTUAL SALE PROCEEDS OF R S.1,48,71,538/-. THE BALANCE AMOUNT OF RS.50,522/- REPRESENTED THE EXPEN SES WHICH HAVE BEEN INCURRED BY THE APPELLANT ON SALE OF SHARES AND THE REFORE THE SAME SHOULD HAVE BEEN ALLOWED. THE SAID ADDITION BEING WRONG A ND UNCALLED FOR IS PRAYED TO BE DELETED. ADDITION OF RS. 4,22,859/- MA DE BY THE AO U/S 68 ON ACCOUNT OF ALLEGED COMMISSION ON SURMISES AND CO NJECTURES. THE SAID ADDITION BEING WRONG AND UNCALLED FOR IS PRAYED TO BE DELETED. AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 6 3.THE ORDER PASSED BY THE AO WITHOUT FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE IS BAD IN LAW AND IS PRAYED TO BE QUASHED. 4.THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. 4. FROM PERUSAL OF THE GROUND IN ALL THE 4 APPEALS WE FIND THAT THE MAJOR COMMON ISSUE RAISED BY THE RESPECTIVE ASS ESSEE(S) IS AGAINST THE FINDING OF LD. CIT(A) CONFIRMING THE AC TION OF LD. A.O DENYING THE BENEFIT OF EXEMPTION OF LONG TERM CAPIT AL GAIN (IN SHORT LTCG) U/S 10(38) OF THE ACT ARISING FROM SA LE OF EQUITY SHARES OF LISTED COMPANY NAMELY M/S SUNRISE ASIAN L IMITED CARRIED OUT THROUGH A RECOGNIZED STOCK EXCHANGE. LD. A.O HAS ALSO MADE ADDITION IN THE CASE OF THREE ASSESSEE(S) ON ACCOUN T OF BROKERAGE EXPENSES ALLEGING THE SAME TO HAVE BEEN PAID BY THE ASSESSEE FOR ARRANGING ACCOMMODATION ENTRY IN THE FORM OF LONG T ERM CAPITAL GAIN FROM SALE OF EQUITY SHARES. A MINOR ADDITION F OR DISALLOWANCE OF EXPENSES IS ALSO MADE IN THE CASE OF NILESH JAIN HUF. THE ADDITION RAISED IN THESE APPEALS CAN BE SUMMARIZED BY WAY OF FOLLOWING CHARTS:- AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 7 NAME OF THE APPELLANT AYUSH JAIN PRITESH JAIN HUF PRITESH JAIN HUF NILESH JAIN HUF APPEAL NO. 616/IND/2019 617/IND/2019 293 /IND/20 20 293/IND/2020 ASSESSMENT. YEAR 2014 - 15 2015 - 16 2014 - 15 2014 - 15 SCRIP INVOLVED SUNRISE ASIAN LIMITED SUNRISE ASIAN LIMITED SUNRISE ASIAN LIMITED SUNRISE ASIAN LIMITED ADDITION ON ACCOUNT OF CAPITAL GAIN 14095302 3740741 10286220 14322060 ADDITION ON ACCOUNT OF BROKERAGE CHARGES 422859 117022 321970 0 DISALLOWANCE OF EXPENSES - - - 50522 5. SINCE THE ISSUES ARE COMMON WE ARE ADJUDICATING THE SAME ON THE BASIS OF FACTS OF THE CASE OF MR. AYUSH JAIN IN ITA NO.616/IND/2019 TO WHICH NO OBJECTION WAS RAISED BY ANY OF THE PARTIES. 6. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING SOURCE OF INCO ME FROM SALARY, CAPITAL GAIN AND OTHER SOURCES. RETURN OF INCOME W AS E-FILED ON 12.8.2015 DECLARING TOTAL INCOME OF RS.9,98,606/- A ND ALSO CLAIMING EXEMPTION FOR LONG TERM CAPITAL GAIN U/S 1 0(38) OF THE ACT ARISING FROM SALE OF EQUITY SHARES OF SUNRISE A SIAN LIMITED AT RS.1,40,95,302/-. CASE WAS SELECTED FOR SCRUTINY A SSESSMENT AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 8 THROUGH CASS AND NOTICE U/S 142(1) WAS DULY SERVED UPON THE ASSESSEE. DETAILED QUESTIONNAIRE WAS ALSO ISSUED. DETAILS SUBMISSIONS WERE FILED BY THE ASSESSEE. LD. A.O AS KED INFORMATION ABOUT THE TRANSACTION OF SALE OF 30,000 EQUITY SHAR ES OF M/S SUNRISE ASIAN LIMITED WHICH WERE PURCHASED ON 10.10 .2011 AT A COST OF RS.6,00,000/- AND SOLD DURING THE FINANCIAL YEAR 2013-14 AT RS.1,46,95,302/-. THE ASSESSEE FILED COMPLETE DETA ILS OF THE PURCHASE AND SALE OF SHARES EFFECTED THROUGH A RECO GNIZED STOCK EXCHANGE AND SHARES TRANSFERRED THROUGH DMAT ACCOUN T THEREBY FULFILLING THE CONDITION OF SECTION 10(38) OF THE A CT. HOWEVER, THE LD. A.O WAS NOT CONVINCED AND OBSERVED THAT THE FIG URES AVAILABLE FROM THE ANNUAL REPORT SHOWS THAT THE MARKET VALUE OF THE EQUITY SHARE OF THE COMPANY ON THE STOCK EXCHANGE IS UNRE ALISTIC AND NOT AT PAR WITH THE FINANCIALS OF THE COMPANY. THE PRI CE ARE MANIPULATED AND THEY ARE NOT IN CONSONANCE WITH THE GROWTH IN THE COMPANY AND THE STOCK PRICE INCREASED FOR NOT UNDER STANDABLE REASON. LD. A.O ACCORDINGLY CAME TO A CONCLUSION T HAT THE COMPANY NAMELY M/S SUNRISE ASIAN LIMITED IS A PENNY STOC K COMPANY AND THE SAID TRANSACTION OF EARNING ABNORMAL AMOUNT OF LONG TERM AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 9 CAPITAL GAIN IS THROUGH A COLORFUL DEVICE AND IS NO T GENUINE AND FABRICATED. LD. A.O GAVE BENEFIT OF PURCHASE AGAINS T THE SALE CONSIDERATION AND MADE ADDITION FOR UNEXPLAINED CAS H CREDIT U/S 68 OF THE ACT AT RS.1,40,95,302/-. LD. A.O FURTHER MADE ADDITION AT RS.4,22,859/- ON ACCOUNT OF ESTIMATED BROKERAGE EXP ENSES @3% ASSUMING THAT THE ASSESSEE MIGHT HAVE PAID IT FOR A RRANGING BOGUS LONG TERM CAPITAL GAIN FOR CONVERTING UNACCOUNTED M ONEY. ACCORDINGLY INCOME ASSESSED AT RS1,55,16,771/-. 6. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. C IT(A) BUT FAILED TO SUCCEED WHO AFTER REFERRING TO SOME DECIS IONS CONFIRMED THE ACTION OF LD. A.O OBSERVING THAT THE ALLEGED TR ANSACTION OF LONG TERM CAPITAL GAIN IS A SHAM TRANSACTION WHICH CANNO T STAND THE TEST OF HUMAN PROBABILITY AND CONFIRMED THE ADDITIO N FOR ESTIMATED BROKERAGE EXPENSES. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 8. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE APART FROM REFERRING TO THE WRITTEN SUBMISSION SUBMITTED THAT THE COMMON ISSUES RAISED IN ALL THESE FOUR APPEALS RELATING TO LONG TERM CAP ITAL GAIN FROM SALE OF EQUITY SHARE OF M/S SUNRISE ASIAN LIMITED A RE SQUARELY AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 10 COVERED BY THE RECENT DECISION OF CO-ORDINATE BENCH OF I.T.A.T. MUMBAI IN THE CASE OF DIPESH RAMESH VARDHAN V/S DCIT ITA NO. 7648/MUM/2019 DATED 11.08.2020 . THE FACTS ARE VERBATIM SIMILAR SO MUCH SO THAT SIMILAR ISSUE OF FACTS OF LONG TERM CAPITAL GAIN FROM SALE OF EQUITY SHARES OF M/S SUNRISE ASIAN LIM ITED AND ADDITION FOR BROKERAGE EXPENSES WAS MADE. HON'BLE MUMBAI BENCH AFTER DISCUSSING THE ISSUE AND FACTS OF THE CASE IN LENGTH HAVE DECIDED IN FAVOUR OF THE ASSESSEE THUS SETTING ASID E THE FINDING OF THE LD. CIT(A) SUSTAINING THE IMPUGNED ADDITION AND DELETED THE ADDITION MADE U/S 68 OF THE ACT FOR THE ALLEGED LON G TERM CAPITAL GAIN FROM PENNY STOCK COMPANY AND ESTIMATED BROKERA GE EXPENSES. 9. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ABOVE DECISION OF HON'BLE MUMBAI BENCH IN THE CASE OF DIPESH RAMESH VARDHAN V/S DCIT (SUPRA) WAS SUBSEQUENTLY FOLLOWED BY THE CO-ORDINA TE BENCH OF JAIPUR IN THE CASE OF ASHOK AGRAWAL V/S ACIT ITA NO.124/JP/2020 ORDER DATED 18.11.2020. 10. LD. COUNSEL FOR THE ASSESSEE ALSO RELIED HEAVIL Y ON THE RECENT JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT V/S KRISHNA DEVI & OTHERS IN ITA NO.125/2020 DATED 15.0 1.2021. AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 11 11. THE WRITTEN SUBMISSIONS IN THE FORM OF SYNOPSIS BY THE ASSESSEE IS REPRODUCED BELOW: 1. THE APPELLANT IS AN INDIVIDUAL WHICH HAS INCOME FRO M SALARY, CAPITAL GAINS AND OTHER SOURCES. 2. THE RETURN OF INCOME WAS FILED ON 12.08.2015 DECLAR ING A TOTAL INCOME OF RS.9,98,606/- AND CLAIMING AN AMOUNT OF R S.1,40,95,302/- ON ACCOUNT OF LONG TERM CAPITAL GAIN AS EXEMPT U/S 10( 38). 3. THE RETURN WAS PROCESSED U/S 143(1) ON THE SAME INC OME. THE RETURN WAS SELECTED FOR SCRUTINY. NOTICES U/S 142(1 ) WERE ISSUED FROM TIME TO TIME WHICH WERE DULY COMPLIED WITH. 1. 4. ASSESSMENT U/S 143(3) WAS COMPLETED ON 23.12.16 BY MAKING THE FOLLOWING ADDITIONS :- INCOME AS PER RETURN FILED U/S 139 RS. 9,98,610 ADD: CAPITAL GAIN EXEMPT U/S 10(38) TREATED AS UNEXPLAINED CASH CREDIT U/S 68 RS. 1,40,95,302 ADD: ALLEGED CHARGES ON TRANSACTION RS. 4,22,859 RS. 1,55,16,771 5. THE APPELLANT CONTESTED THE ADDITION MADE BEFORE TH E HBLE CIT (A), WHEREIN THE ADDITIONS WERE SUSTAINED AND CONSEQUENT LY THE PRESENT APPEAL WAS FILED BEFORE YOUR HONORS. THE TRANSACTION 6. DURING THE MONTH OF JUNE 2011, THE APPELLANT WAS AP PROACHED BY THE DIRECTORS OF M/S. SANTOSHIMA LEASE FINANCE AND INVESTMENT INDIA LIMITED (HEREINAFTER CALLED AS COMPANY), AN UNLISTE D LIMITED COMPANY AND THEIR AUTHORIZED PERSONS WITH A PROPOSAL TO INV EST MONEY IN THEIR COMPANY BY WAY OF ACQUIRING SHARES OF THE COMPANY O N A PRIVATE PLACEMENT BASIS. AFTER THE PRELIMINARY DISCUSSION H ELD, A WRITTEN AND FORMAL PROPOSAL DATED 05.07.2011 WAS RECEIVED FROM THE COMPANY FOR THE PROPOSED INVESTMENT TO BE MADE (COPY APPEARING AT P AGE NO.62 TO PAGE NO.66 OF THE PAPER BOOK) PROVIDING VARIOUS OTHER DO CUMENTS. AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 12 7. ON RECEIPT OF THE FORMAL PROPOSAL, DELIBERATION WA S MADE IN THE FAMILY AND A LETTER SEEKING ADDITIONAL DETAILS WAS ISSUED TO THE COMPANY (COPY APPEARING AT PAGE NO.67 TO PAGE NO.68 OF THE PAPER BOOK) ON 20.07.2011 BEFORE FINALIZING THE MATTER OF ACQUIRIN G OF THE SHARES. IN RESPONSE TO THE SAME, THE DETAILS WERE FURNISHED BY THE COMPANY VIDE LETTER DATED 28.07.2011 (COPY APPEARING AT PAGE NO. 69 TO PAGE NO.70 OF THE PAPER BOOK) 8. THE APPELLANT ON BEING SATISFIED BY THE INFORMATION AND EXPLANATIONS GIVEN BY THE COMPANY HAD APPLIED FOR P URCHASE OF 30,000 EQUITY SHARES OF THE COMPANY FOR A VALUE OF RS.20/- PER SHARES COMPRISING OF FACE VALUE OF RS.10/- AND SECURITIES PREMIUM OF RS.10/- (COPY APPEARING AT PAGE NO.1 OF THE PAPER BOOK). TH E PURCHASE CONSIDERATION FOR SHARES WAS PAID THROUGH ACCOUNT P AYEE CHEQUE WHICH WAS DULY CLEARED FROM THE BANK ACCOUNT OF THE APPEL LANT ON 21.09.2011 (COPY APPEARING AT PAGE NO.3 OF THE PAPER BOOK). SU BSEQUENTLY THE ASSESSE WAS ALLOTTED 30,000 SHARES ON 10.10.2011 AN D THE SHARE CERTIFICATE WAS ALSO ISSUED (COPY APPEARING AT PAGE NO.2 OF THE PAPER BOOK) 9. IN THE MONTH OF SEPTEMBER 2012, COPY OF ANNUAL REPO RT OF THE COMPANY FOR THE FY 2011-12 WAS RECEIVED THROUGH WHI CH THE APPELLANT WAS MADE AWARE THAT THE SHARES OF THE COMPANY COULD BE PLACED IN DEMAT FORM. THE APPELLANT TOOK THE BENEFIT OF THE S AME AND LODGED THE SHARES FOR DEMAT WHICH WERE DULY PROCESSED ON 29.10 .2012 (COPY APPEARING AT PAGE NO.48 TO PAGE NO.53 OF THE PAPER BOOK) 10. SUBSEQUENTLY THE APPELLANT RECEIVED A NOTICE OF MEE TING OF SHAREHOLDERS OF M/S. SANTOSHIMA TRADELINKS LIMITED (NEW NAME OF M/S. SANTOSHIMA LEASE FINANCE AND INVESTMENT INDIA LIMIT ED) IN THE MONTH OF OCTOBER 2012 ISSUED ON THE DIRECTION OF HBLE BO MBAY HIGH COURT FOR PROPOSAL FOR SCHEME OF AMLAGAMTION OF THE COMPANY W ITH M/S. SUNRISE ASIAN LIMITED. (COPY APPEARING AT PAGE NO.4 TO PAGE NUMBER 19 OF THE PAPER BOOK) 11. THE APPELLANT ALSO INQUIRED ABOUT THE RATIONALE BEH IND AMALGAMATION WITH THE COMPANY (COPY APPEARING AT PA GE NO.71 OF THE PAPER BOOK) AND RECEIVED EXPLANATIONS AND JUSTIFICA TION FOR THE SAME (COPY APPEARING AT PAGE NO.72 OF THE PAPER BOOK). 12. THE SCHEME OF AMALGAMATION WAS FINALLY APPROVED BY THE HBLE BOMBAY HIGH COURT IN THE MONTH OF MARCH 2013 (COPY APPEARING AT PAGE NO.20 TO PAGE NO.47 OF THE PAPER BOOK) AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 13 13. PURSUANT TO THE AMALGAMATION, IN LIEU OF THE SHARES HELD BY THE APPELLANT IN M/S. SANTOSHIMA TRADELINKS LIMITED, NE W 30,000 EQUITY SHARES OF M/S. SUNRISE ASIAN LIMITED WERE ALLOTTED TO THE APPELLANT ON 26.06.13 (COPY OF DEMAT ACCOUNT REFLECTING THE SHAR ES TRANSACTION IS APPEARING AT PAGE NO.55 TO PAGE NO.56 OF THE PAPER BOOK). 14. SUBSEQUENTLY, THE APPELLANT LIQUIDATED HIS INVESTME NT MADE ALMOST TWO YEARS BACK BY SELLING THE 30,000 SHARES OF M/S. SUNRISE ASIAN LIMITED FOR A NET CONSIDERATION OF RS.1,46,95 ,302/- AND AFTER CLAIMING THE DEDUCTION OF COST OF ACQUISITION OF RS .6,00,000/-, REFLECTED LONG TERM CAPITAL GAIN OF RS.1,40,95,302/- WHICH WA S CLAIMED AS EXEMPT U/S 10(38) IN THE RETURN FILED BY THE APPELLANT. THE SEQUENCE OF THE EVENTS IS TABULATED AS UNDER FO R BREVITY. PERIOD OF EVENT EVENT JUNE 2011 MEETING WITH DIRECTOR MR. NILESH P CHAUHAN REGARDING INVESTMENT IN SANTOSHIMA LEASE FINANCE & INVESTMENT (INDIA) LIMITED. 05 JULY 2011 ISSUE OF PROPOSAL FOR PRIVATE PLACEMENT OF SHARES OF THE COMPANY AT A PREMIUM OF RS.10/- PER SHARES ALONGWITH COPY OF LIST OF DIRECTORS AND COPY OF FINANCIAL REPORT FOR FY 2007-08, FY 2008-09 & FY 2009-10. 20 JULY 2011 LETTER ISSUED TO THE COMPANY FOR FURTHER CLARIFICATIONS AND REQUIRING COPIES OF MEMORANDUM OF ASSOCIATION, ARTICLES OF ASSOCIATION AND BALANCE SHEET FOR THE FY 2010-11. 28 JULY 2011 REPLY RECEIVED FORM THE COMPANY ALONGWITH THE DOCUMENTS DESIRED. 19 SEPTEMBER 2011 APPLIED FOR 30000 EQUITY SHARES OF THE COMPANY BY PAYING AN AMOUNT OF RS.6,00,000/-. OCTOBER 2011 RECEIVED SHARES CERTIFICATE IN RESPECT OF SHARES ALLOTTED. JULY 2012 RECEIVED BALANCE SHEET OF THE SANT OSHIMA TRADELINKS LIMITED (NAME OF COMPANY CHANGED W.E.F 16.09.11) FOR THE FY 2011-12. OCTOBER 2012 RECEIVED NOTICE FOR COURT CONVENED MEETING OF EQUITY SHARES HOLDERS FOR AMALGAMATION OF COMPANY AND ANOTHER COMPANY CONART TRADERS LIMITED WITH SUNRISE ASIAN LIMITED. 19 OCTOBER 2012 PLACED REQUEST FOR GETTING THE SHARES IN AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 14 DEMATERIALIZED FORM. 22 OCTOBER 2012 LETTER ISSUED TO MR NILESH P CHOUHAN, DIRECTOR OF THE COMPANY SEEKING INFORMATION IN RESPECT OF AMALGAMATION AND RAISING CONCERNS ABOUT THE PROPOSAL. NOVEMBER 2012 RECEIVED LETTER FROM THE COMPANY EXPLAINING THE RATIONALE FOR MERGER AND SATISFYING THE QUERIES RAISED. MARCH 2013 THE HBLE BOMBAY HIGH COURT PASSED THE ORDER FOR MERGER OF THE COMPANY WITH M/S. SUNRISE ASIAN LIMITED. JUNE 2013 NEW SHARES IN SUNRISE ASIAN LIMITED RECEIVED IN LIEU OF HOLDING OF SANTOSHIMA TRADELINKS LIMITED IN DEMAT ACCOUNT. JULY 2013 RECEIVED BALANCE SHEET OF THE SUNRISE ASIAN FOR THE FY 2012-13. NOV 13 ONWARDS SALE OF SHARES THROUGH STOCK EXCHANGE FOLLOWING DOCUMENTS WERE FURNISHED: COPIES OF CONTRACT NOTES IN RESPECT OF SALE OF SHARES COPY OF LEDGER ACCOUNT OF THE BROKER COPY OF THE BANK ACCOUNT STATEMENT FOR THE YEAR REFLECTING THE TRANSACTIONS WITH THE BROKER. 2. ASSESSMENT AND FIRST APPEAL PROCEEDINGS 15. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, IN QUIRES AND INFORMATION WAS CALLED IN RESPECT OF THE SHARE TRAN SACTION. THE APPELLANT EXPLAINED ALL THE ABOVE FACTS AND EVENTS TO THE LEA RNED AO DURING THE ASSESSMENT PROCEEDINGS. HOWEVER, WITHOUT POINTING O UT ANY SHORT COMING OR ANY DEFECT IN THE TRANSACTION OR WITHOUT BRINGING ON RECORD ANY SPECIFIC CHARGE, MERELY ON THE BASIS OF GENERAL REMARKS AND ALLEGATIONS, DRAWING ADVERSE INFERENCES FROM THE GE NERAL MODUS OPERANDI, MERELY ON SURMISES AND CONJECTURES, THE A MOUNT OF CAPITAL GAIN EARNED BY THE APPELLANT WAS TREATED AS UNEXPLA INED CASH CREDITS AND THE AMOUNT WAS TAXED IN THE HANDS OF THE APPELL ANT. 16. FURTHER, THE LEARNED AO ALSO ASSUMED THAT CERTAIN C HARGES WOULD HAVE BEEN INCURRED FOR ARRANGING THE ALLEGED NON GE NUINE CAPITAL GAIN AND THEREFORE AN AMOUNT EQUAL TO 3% OF THE CAPITAL GAIN EARNED OF RS.1,40,95,032/- AMOUNTING TO RS.4,22,859/- WAS ADD ED WITHOUT ANY BASIS AND WITHOUT ANY COGENT MATERIAL ON RECORD, TO THE INCOME OF THE APPELLANT AS INCOME FROM UNDISCLOSED SOURCES. AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 15 17. THE LEARNED CIT(A) CONFIRMED BOTH THE ADDITIONS MAI NLY ON THE SAME BASIS ON WHICH THE ADDITIONS WERE MADE BY THE AO AND HAS NOT CONTROVERTED THE VARIOUS FACTS AND SUBMISSIONS MADE BY THE APPELLANT DURING THE APPEAL PROCEEDINGS. THE FIRST APPEAL ORD ER IS ALSO BASED ON SURMISES AND CONJECTURES AND NOTHING CONCRETE HAS B EEN BROUGHT ON RECORD BEFORE THE CONFIRMING THE ADDITIONS MADE BY THE AO. 18. BOTH THE ABOVE ADDITIONS MADE BY THE LEARNED AO AND CONFIRMED BY THE LEARNED CIT(A) HAVE BEEN CHALLENGED BY THE A PPELLANT THROUGH GROUND NOS. 1 & 2 BEFORE YOUR HONOURS. ALLEGATIONS IN THE ASSESSMENT ORDER AND THEIR REBUT TAL 19.1 IN THE ASSESSMENT ORDER IN PARA 3.1 THE LD. AO HAS MADE GENERAL OBSERVATION IN RESPECT OF THE SEARCHES CONDUCTED U/ S 132 / SURVEYS U/S 133A / ENQUIRES CONDUCTED BY THE DEPARTMENT BASED U PON WHICH A REPORT WAS PREPARED BY THE INVESTIGATION WING STATI NG THE ALLEGED MODUS OPERANDI FOR NON GENUINE LONG TERM CAPITAL GAIN. HO WEVER, THERE IS NOT A SINGLE SPECIFIC INFORMATION ABOUT THE SO CALLED I NVESTIGATIONS AND THERE IS NO LINK OF ANY OF THESE OBSERVATIONS WITH THE AP PELLANT. THE OBSERVATION THAT THE WHOLE MODUS OPERANDI WAS TO GI VE ACCOMMODATION OF CAPITAL GAIN, IS WITHOUT ANY BASIS AND IS PURELY BASED ON SURMISES AND CONJECTURES. THE APPELLANT IS NOT AWARE OF ANY SUCH MODUS OPERANDI AND IS NOT A PARTY TO IT. 19.2 THE LD. AO IN PARA 3.3 BASED UPON THE FINANCIAL PER FORMANCE OF THE COMPANY FOR FEW YEARS HAS OPINED THAT THE SCRIP OF M/S. SUNRISE ASIAN LIMITED IS A PENNY STOCK. IT IS STATED THAT T HE PENNY STOCK COMPANIES HAVE NO ACTUAL BUSINESS OR ESTABLISHMENTS AND THE BENEFICIARIES SUBSCRIBE FOR THEIR SHARES THROUGH PR IVATE PLACEMENT. HOWEVER, THE ABOVE SALIENT FEATURES OF PENNY STOCK COMPANY AS STATED BY THE LD. AO DOES NOT HOLD GROUND IN THE INSTANT CASE . FROM THE PERUSAL OF THE PERUSAL OF THE YEARLY RESULTS FOR THE FY 2012-1 3 REPRODUCED BY THE LD. AO IN THE ORDER IT WOULD BE SEEN THAT M/S. SUNR ISE ASIAN LIMITED HAD A TURNOVER OF RS.73.52 CRORE AND AGAINST THE TRANSA CTION HAS EARNED A NET INCOME OF RS.0.40 CRORES. IT WOULD BE APT TO ME NTION THAT ACHIEVING A TURNOVER IN EXCESS OF RS.70 CRORES IS ITSELF A BIG ACHIEVEMENT IN THE CHALLENGING AND DEMANDING BUSINESS SCENARIO IN INDI A AND IT IS FOR THIS REASON THEY CANNOT BE SIMPLY BRUSHED ASIDE. 19.3 EVEN FURTHER, IF THE COMPANY WAS INDEED A PENNY STO CK AS ALLEGED BY THE AO, SOME SORT OF INQUIRY OR PROCEEDINGS MUST HAVE BEEN INITIATED BY VARIOUS GOVERNING BODIES LIKE SEBI, STOCK EXCHAN GE ETC AGAINST THE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 16 ALLEGED MANIPULATION AND PRICE RIGGING IN THE SHARE S OF M/S. SUNRISE ASIAN LIMITED. IT WOULD BE WORTHWHILE TO STATE THAT TO THE BEST OF THE KNOWLEDGE AND BELIEF OF THE APPELLANT, NO SUCH ACTI ON HAS BEEN TAKEN AGAINST THE COMPANY OR ANY OF ITS DIRECTOR BY ANY A UTHORITY WHICH ITSELF ESTABLISHES THAT THE COMPANY IS AN OPERATIONAL COMP ANY AND NOT A PENNY STOCK COMPANY AS ALLEGED BY THE AO. SUCH AN ALLEGAT ION IS ABSOLUTELY WITHOUT ANY BASIS AND WITHOUT BRINGING ANY COGENT M ATERIAL ON RECORD. 20.1 FURTHER WITH RESPECT TO THE OBSERVATIONS OF THE AO REGARDING HIGH GROWTH IN THE SHARE PRICE OF THE COMPANY, WHICH IS ONE OF THE MAJOR REASON OF DOUBTING THE TRANSACTIONS IT WOULD BE SUF FICIENT TO SAY THAT THE PRICE AT WHICH THE SCRIPT IS TRADED IN THE EXCHANGE IS AFFECTED BY THE PROFIT BUT THE SAME IS NOT THE ONLY DECIDING FACTOR . THE VARIOUS FACTORS WHICH DETERMINE THE PRICE OF THE SHARES CAN BE SUMM ARIZED AS UNDER: A) AT THE MOST FUNDAMENTAL LEVEL, SUPPLY AND DEMAND IN THE MARKET DETERMINES STOCK PRICE. B) EARNINGS OF THE COMPANY AND ITS PROSPECTUS C) INVESTORS' SENTIMENTS, ATTITUDES AND EXPECTATIONS T OWARDS THE SECTOR AS WELL AS THE COMPANY. D) WHEN A MAJOR BROKERAGE GETS BEHIND A STOCK OR UPGRA DES IT E) GOOD COMPANIES WITH BATTERED STOCKS THAT GET BOUGHT OUT CAN PROVIDE HUGE BOOSTS TO A STOCKS PRICE. IF THE DEA L GOES THROUGH, STOCK HOLDERS ARE OFTEN COMPENSATED AT A PREMIUM 20.2 THE MAJOR DECIDING FACTOR FOR INCREASE IN SHARE PRI CE IS MARKET SENTIMENT. THE FACT THAT THE MARKET SENTIMENT IS DE CIDING FACTOR IS PROVED BEYOND DOUBT THROUGH THE SUDDEN DROP IN STOC K MARKET INDICES AS WELL AS INDIVIDUAL SCRIPT FROM JANUARY 2008 WHIC H LASTED TILL 2010 WHEREIN SHARE PRICES OF MOST OF THE COMPANIES TUMBL ED DOWN AND TOUCHED A NEW LOW WITHOUT HAVING ANY EFFECT ON THE PROFITS OF THE COMPANY. SIMILARLY, DUE TO COVID PANDEMIC IN 2020, THE PRICES OF ALL SHARES LISTED ON THE EXCHANGE DROPPED INSTANTLY BY 30% TO 50% WITHIN A SPAN OF 10 DAYS WITHOUT ANY EFFECT ON THE FINANCIAL WORKING WHICH ALSO ESTABLISH THAT THE PROFIT/ EARNING PER SHARE IS NOT THE DETERMINING FACTOR FOR PRICE OF THE SHARES RATHER IT IS THE MARKET SEN TIMENT. 21.1 IN PARA NO.3.5 OF THE ORDER, IT HAS BEEN STATED BY THE LD. AO THAT THERE WERE NO TRANSACTION IN SHARES UNDERTAKEN BY T HE APPELLANT BEFORE THE ABOVE ACTIVITY OF GAIN EARNED DURING THE YEAR. IN THIS RESPECT ATTENTION IS DRAWN TO THE BALANCE SHEET OF THE APPE LLANT AS ON 31 ST MARCH 2013 (COPY APPEARING AT PAGE NO. 80 OF THE PAPER BOOK) FROM THE PERUSAL OF WHICH IT WOULD BE SEEN THAT THE APPELLANT HAD EA RNED AN INCOME OF RS.10 LACS DURING THE FY 12-13 AND AFTER TAKING EFF ECT OF ALL THE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 17 TRANSACTION DURING THE YEAR THE CLOSING CAPITAL OF THE APPELLANT WAS RS.25.18 LACS. BEING A SALARIED EMPLOYEE AND IN THE EARLY YEARS OF HIS CAREER, ONE CANNOT BE EXPECTED TO INVEST ALL THE CA PITAL IN A SINGLE BASKET AND ACCORDINGLY THE SOURCE OF INVESTMENT AND THE AV ENUE OF INVESTMENT MADE BY HIM WERE LIMITED. DURING THE YEAR UNDER CON SIDERATION BEING SADDLED WITH SUFFICIENT CAPITAL, INVESTMENTS WERE M ADE IN OTHER UNLISTED COMPANIES, DETAILS OF WHICH ARE APPEARING IN THE BA LANCE SHEET AS ON 31 ST MARCH 2014. (COPY APPEARING AT PAGE NO. 79 OF THE PAPER BOOK) 21.2 IT IS A WELL SETTLED PHENOMENON THAT AT THE INITIAL STAGE SMALL STEPS ARE BEING TAKEN AND WITH THE EFFLUX OF TIME AND BY GAINING KNOWLEDGE AND INFORMATION GIANT LEAPS ARE TAKEN IN FUTURE. IN THE SAME WAY, HAVING A GOOD RETURN ON INVESTMENT MADE EARLIER AND HOPING T O REPEAT THE SUCCESS IN FUTURE, INVESTMENT IN SHARES HAVE BEEN MADE BY T HE APPELLANT IN THE YEAR UNDER CONSIDERATION AND THEREFORE THERE DOES N OT OCCURS ANY REASON FOR TREATING THE TRANSACTION AS NON GENUINE. 22.1 IN PARA NO.3.6 OF THE ORDER, THE LD. AO DOUBTED THE TRANSACTION OF THE APPELLANT BY HOLDING THAT THE PRICE OF THE SHAR ES OF M/S. SUNRISE ASIAN LIMITED WAS NOT TRACKED SINCE STARTING. THE O BSERVATION MADE BY THE LD. AO IS NOT ONLY GROSSLY WRONG BUT ALSO CASTS NEGATIVE SHADOW ON THE ACTUAL AND GENUINE TRANSACTION. AS HAS BEEN STA TED IN THE FACTS OF THE CASE (SUPRA), THE APPELLANT HAS ACQUIRED THE SHARES OF M/S. SANTOSHIMA TRADELINKS LIMITED AFTER DISCUSSION WITH THE MANAGE MENT AND CONSIDERING THE FUTURE PROSPECTS OF THE BUSINESS OF THE SAID COMPANY. AT THAT POINT OF TIME THE ISSUE OF MERGER OF THE COMPA NY WITH M/S SUNRISE ASIAN LTD. WAS NOT UNDER CONSIDERATION AND THEREFOR E HE WAS UNAWARE OF THE EXISTENCE OF M/S. SUNRISE ASIAN LIMITED LET ALO NE ITS PRICE. THEREFORE, THIS OBSERVATION OF THE LEARNED AO IS MISCONCEIVED. 22.2 IT WOULD ALSO BE WORTHWHILE TO POINT OUT THAT THE E QUITY SHARES OF M/S. SUNRISE ASIAN LIMITED WERE ISSUED TO THE APPEL LANT ON 28.06.2013 POST APPROVAL OF SCHEME OF AMALGAMATION AND COMPLET ION OF THE FORMALITIES BY THE RESPECTIVE COMPANIES AND THEREFO RE, THERE WAS NO POINT IN TRACKING THE PRICE OF THE SHARES. HAVING RECEIVE D THE DETAILS OF CREDIT OF SHARES AT THE FAG END OF JUNE, THE APPELLANT STARTE D TRACKING THE PRICE OF THE SHARES FROM AUGUST 2013 ONWARDS. 22.3 FURTHER, FROM THE PERUSAL OF THE TRANSACTIONS OF TH E SALE OF SHARES IT WOULD BE SEEN THAT THE APPELLANT HAS SOLD THE SH ARES OVER A PERIOD OF ALMOST FOUR MONTHS I.E. FROM NOVEMBER 2013 TO FEBRU ARY 2014. DURING THE INTERVENING PERIOD THE PRICE OF THE SHARES WAS NOT FIXED AND RATHER THERE WERE UPWARD (HIGHEST PRICE BEING RS.510) AS W ELL AS DOWNWARD MOVEMENT (LOWEST PRICE BEING RS.392) IN THE PRICE O F SHARES. DUE TO THE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 18 TRACKING AND MONITORING THE PRICE OF THE SCRIP, THE APPELLANT WAS ABLE TO SELL THE SHARES AT A FAVOURABLE RATE LEADING TO LON G TERM GAIN FROM THE TRANSACTIONS. 22.4 THUS, THE OBSERVATION OF THE LD. AO THAT THERE WAS NO TRACKING OF THE SHARES BY THE APPELLANT SINCE BEGINNING IS FACT UALLY WRONG AS WELL AS IRRELEVANT. 23.1 DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E STATEMENT OF APPELLANT WAS TAKEN U/S 131 OF THE INCOME TAX ACT. IN THE COURSE OF SUCH STATEMENT, REFERENCE WAS RAISED ABOUT THE STAT EMENTS OF THE SOME PERSON WHO HAVE STATED THAT THERE WAS MANIPULATION IN THE PRICE OF EQUITY SHARES OF M/S. M/S. SUNRISE ASIAN LIMITED. H EAVY RELIANCE HAS BEEN PLACED BY THE LD. AO ON THE ALLEGED STATEMENTS OBTAINED FROM SOME PERSONS WHEREIN THEY HAVE BEEN ALLEGED TO HAVE ADMI TTED THAT THEY WERE INSTRUMENTAL IN BOGUS LTCG IN THE SHARES OF SUNRISE ASIAN LIMITED WHICH ALLEGEDLY WERE CONFRONTED TO THE APPELLANT. I N THIS RESPECT IT IS SUBMITTED THAT THERE ARE NO SPECIFIC DETAILS OF THE ALLEGED STATEMENTS, WHICH WERE TAKEN BEHIND THE BACK OF THE APPELLANT A ND NO OPPORTUNITY OF CROSS EXAMINATION WAS ALLOWED. THEREFORE, SUCH STAT EMENTS CANNOT BE USED AGAINST THE APPELLANT. FURTHER THE APPELLANT B EING A GENUINE INVESTOR AND UNAWARE OF ANY SUCH ACTIVITY WHICH HAS BEEN ALLEGEDLY UNDERTAKEN BY SOME PERSONS NOT KNOWN TO HIM AND NOT CONNECTED IN ANY MANNER, THE APPELLANT RIGHTLY STATED THAT HE WAS NO T AWARE OF THE STATEMENT AND IS NOT PRIVY TO THE MATTER. 23.2 THE REPLY GIVEN BY THE APPELLANT HAS BEEN MISCONCEI VED AND MISREPRESENTED AND NEGATIVE SHADOW HAS BEEN CASTED UPON BY STATING THAT THE APPELLANT HAS INVESTED IN THE SHARES FOR T HE FIRST TIME AND DESPITE OF INVESTING A SUBSTANTIAL MONEY IN ONE GO, NO MONITORING OF THE INVESTMENT WAS MADE. 23.3 AT THE COST OF REPETITION, ATTENTION IS DRAWN TO TH E FACT THAT THE DECISION OF INVESTMENT WAS A VERY CONSCIOUS ONE AND HAS BEEN DONE AFTER DUE DELIBERATION AND VETTING. FURTHER, EVEN AFTER T HE SHARES WERE PURCHASED, ATTENTION WAS GIVEN TO THE TRANSACTIONS AND ANNOUNCEMENTS MADE BY THE COMPANY WHICH WOULD HAVE AFFECTED THE S TATUS OF INVESTMENT. A TABULAR CHART OF THE EVENTS IN THE TO TAL TRANSACTION HAS ALREADY BEEN GIVEN ABOVE, FROM THE PERUSAL OF WHICH IT WOULD BE SEEN THAT THERE WAS CONTINUOUS AND PROACTIVE MONITORING OF TH E TRANSACTIONS WHICH CAN NOT BY ANY STRETCH OF IMAGINATION CAN BE CONSID ERED AS MEAGRE. 23.4 THE FACT THAT THE ASSESSMENT WAS MADE WITH A PRE-CO NCEIVED NOTION OF TREATING THE TRANSACTION AS NON GENUINE B Y RELYING ON THE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 19 STATEMENTS OBTAINED FROM SOME PERSONS IS ALSO EVIDE NT FROM THE FACT THAT DESPITE OF THE REQUEST MADE BY THE APPELLANT FOR CE RTIFIED COPIES OF THE STATEMENTS AND DOCUMENTS RELIED UPON WHILE FRAMING THE ASSESSMENT ORDER, NO DOCUMENTS HAVE BEEN PROVIDED TO THE APPEL LANT. NON PROVIDING OF THE DETAILS, ESTABLISH THAT THERE WERE NO DOCUME NTS / EVIDENCES WHICH COULD ESTABLISH THAT THE TRANSACTION UNDERTAKEN BY THE APPELLANT WERE NON GENUINE OR HE WAS INSTRUMENTAL IN ALLEGED PRICE MANIPULATION IN SHARES OF THE M/S. SUNRISE ASIAN LIMITED. 23.5 IN SPITE OF REQUEST FOR PROVIDING THE STATEMENT, NE ITHER THE STATEMENTS WERE PROVIDED NOR ANY OPPORTUNITY TO CRO SS EXAMINE THE CONCERNED PERSONS WHOSE STATEMENTS WERE OBTAINED U/ S 131 OF THE ACT WAS PROVIDED. STILL THE RELEVANT INFORMATION AND AL LEGATIONS, IF ANY, MADE THEREIN, HAS BEEN USED AGAINST THE APPELLANT. AT TH IS STAGE, IT WOULD BE APT TO POINT OUT THAT MERE INFORMATION IS NOT ENOUG H RATHER IT HAS TO BE SUBSTANTIATED WITH FACTS. THE INFORMATION MAY AND M AY NOT BE CORRECT. FOR FASTENING THE LIABILITY UPON ANYBODY, THE DEPAR TMENT HAS TO PROVIDE THE AUTHENTICITY OF THE INFORMATION TO THE PERSON A GAINST WHOM SUCH INFORMATION IS USED. THE PRINCIPLE OF NATURAL JUSTI CE, DEMANDS THAT WITHOUT CONFRONTING THE APPELLANT OF SUCH EVIDENCE, IF ANY, OR THE INFORMATION, NO ADDITION CAN BE MADE. 23.6 ATTENTION IS DRAWN TO THE FOLLOWING JUDICIAL DECISI ONS WHEREIN HONBLE COURTS HAVE HELD THAT ORDER PASSED IN VIOLA TION OF PRINCIPLE OF NATURAL JUSTICE IS BAD IN LAW: A. SMT. SUNITA DHADDA VS DCIT 71 DTR 33 B. DHAKESHWARI COTTON MILLS 26 ITR 775 C. LALCHAND BHAGAT AMBIKARAM VS CIT 37 ITR 288 D. PONKUNNAM TRADERS 83 ITR 508 E. SURAJ MALL MOHTA & CO. VS A.V. VISVANATHA SASTRI & OTHERS 26 ITR 001 F. C. B. GAUTAM VS CIT 199 ITR 530 G. SARUPCHAND HUKAMCHAND 13 IT THUS IT WOULD BE SEEN THAT THERE WAS CLEAR AND GROS S VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE. 24.1 IN PARA NO.3.8 OF THE ASSESSMENT ORDER IT HAS BEEN STATED THAT LETTERS WERE ISSUED TO VARIOUS PERSONS WHO WERE STA TED TO BE COUNTERPARTY IN THE TRANSACTION TO EXPLAIN THE TRAN SACTION AND IN MOST OF THE CASES THE LETTERS WERE RETURNED UNSERVED AND NO REPLY WAS RECEIVED FROM ANY OF THE PARTIES. ACCORDINGLY, THE TRANSACTI ON WAS DOUBTED AS THE IDENTITY OF THE PURCHASER WAS NOT ESTABLISHED. IN T HIS RESPECT, ATTENTION IS AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 20 DRAWN TO THE FACT THAT THE APPELLANT HAS SOLD ALL T HE SHARES OF M/S. SUNRISE ASIAN LIMITED THROUGH THE RECOGNIZED STOCK EXCHANGE I.E. BSE LIMITED THROUGH A REGISTERED BROKER M/S. ARIHANT CA PITAL MARKETS LIMITED WHEREIN ALL THE TRANSACTIONS ARE SETTLED ON LINE THROUGH MATCHING CONCEPT BY THE EXCHANGE WITHOUT HAVING ANY PHYSICAL CONTACT. THE TRANSACTIONS ARE ENTERED ON THE TERMINAL AND THE DE TAILS OF COUNTERPARTY ARE ONLY AVAILABLE WITH THE EXCHANGE AND BOTH THE P ARTIES ARE UNAWARE OF THE OTHER PARTY. IT IS SUBMITTED THAT IN THE CASE O F SCREEN BASE ONLINE TRADING, EVEN TODAY, THE BUYER AND THE SELLER ARE N OT AWARE OF EACH OTHER. IT IS FOR THIS REASON THE APPELLANT DURING THE COUR SE OF THE STATEMENT HAS STATED THAT HE IS UNAWARE OF THE PERSON WHO HAVE AC QUIRED THE SHARES SOLD BY HIM. ON THESE FACTS AND CIRCUMSTANCES THE A O WAS NOT AT ALL JUSTIFIED IN DRAWING ADVERSE INFERENCE ON THE BASIS OF THIS STATEMENT OF THE APPELLANT. 25.1 IT IS SUBMITTED THAT FROM THE EXAMINATION OF THE CO NTRACT NOTES, IT WOULD BE SEEN THAT THERE WAS CONSIDERABLE TIME GAP BETWEEN THE TIME AT WHICH THE SELL ORDER WAS PLACED AND THE TIME AT WHI CH THE SAME WAS EXECUTED. IF BY ANY STRETCH OF IMAGINATION, THE TRA NSACTION WOULD HAVE BEEN A MANAGED AFFAIRS, AS ALLEGED, THERE WOULD HAV E BEEN NO TIME GAP IN THE ORDER TIME AND EXECUTION TIME AS IT WOULD HAVE BEEN IMPOSSIBLE ON THE PART OF THE APPELLANT TO BE IN HAND IN GLOW WIT H MULTIPLE PERSONS AND THAT TOO AT DIFFERENT TIME SIMULTANEOUSLY. THERE AR E NO DOCUMENTS OR EVIDENCE WHICH COULD ESTABLISH THAT THERE WAS ANY S UCH CONNIVANCE ON THE PART OF THE APPELLANT. 26. THUS, IT IS SUBMITTED THAT VARIOUS BASELESS AND TOO GENERAL STATEMENTS / OBSERVATIONS HAVE BEEN MADE IN THE ASS ESSMENT ORDER AND THE STRENGTH FOR MAKING THE ADDITION IS BASED ON SU CH GENERALIZATIONS WITHOUT ANY DIRECT OR COGENT EVIDENCE WHICH COULD E STABLISH ANY WRONG DOING ON THE PART OF THE APPELLANT. 27. FURTHER, ON GOING THROUGH THE INCOME TAX RETURN, BA LANCE SHEET AND THE BANK STATEMENT OF THE APPELLANT IT WOULD BE SEEN THAT THERE IS NO SOURCE OF INCOME THROUGH WHICH SUCH A HUGE AMOUNT O F INCOME FROM UNDISCLOSED SOURCES COULD HAVE BEEN EARNED BY THE A PPELLANT WHICH WAS ALLEGEDLY BROUGHT IN THE ACCOUNTS IN THE FORM OF NO N GENUINE LONG TERM CAPITAL GAIN AS ALLEGED. THEREFORE, THE ADDITION MA DE BY THE AO IS AGAINST THE HUMAN PROBABILITIES. 28. TO SUM UP, THE LD. AO HAS PROCEEDED IN A MANNER WHI CH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE BY NOT PRO VIDING ANY OPPORTUNITY TO THE APPELLANT OF CROSS EXAMINATION. FURTHER, VAR IOUS ALLEGATIONS HAVE BEEN RAISED AGAINST THE APPELLANT WHICH ARE WITHOUT ANY CORROBORATIVE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 21 FACTS AND EVIDENCE ON RECORDS AND ARE TOO GENERAL. THE ADDITION MADE IN THE HANDS OF THE APPELLANT IS ON FLIMSY GROUNDS WIT HOUT HAVING ANY IOTA OF SUBSTANCE IN THE ALLEGATION. THE TRANSACTIONS UN DERTAKEN BY THE APPELLANT WERE IN THE COURSE OF ITS INVESTMENT HORI ZON WHICH ARE PRAYED TO BE ACCEPTED. 29. IT IS FURTHER SUBMITTED THAT THE APPELLANT HAS SOLD THE SHARES OF A LISTED COMPANY AFTER HOLDING THE SAME FOR A PERIOD OF MORE THAN ONE YEAR, THE SALES WERE AFFECTED THROUGH RECOGNIZED EXCHANGE AND THROUGH A REGISTERED BROKER AND STT WAS PAID ON SUCH SALE TRA NSACTIONS. THUS ALL THE CONDITIONS OF SECTION 10(38) OF THE ACT WERE DU LY COMPLIED WITH AND THE EXEMPTION CLAIMED UNDER THE SAID SECTION WAS PR OPERLY AND RIGHTLY CLAIMED, WHICH IS PRAYED TO BE NOW ALLOWED. 30. YOUR HONORS ATTENTION IS DRAWN TO THE ORDER DT.14- 12-09 OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF ARZOO ANAND VS JCIT IN APPEAL NO. ITA NO.113 OF 2009 FOR THE AY 05-06, WHICH DECISION SUBSEQUENTLY HAS ALSO BEEN APPROVED BY THE HONOURABLE JURISDICTIONAL HIGH COURT OF MADHYA PRADESH, WHEREIN ALLOWING RELIEF ON THE ISSU E OF LONG TERM CAPITAL GAIN ON SALE OF SHARES OF PENNY STOCK ON THE BASIS OF SUDDEN SPURT IN THE PRICE OF UNDERLYING SHARES AND THE REPORT OF SECURI TIES EXCHANGE BOARD OF INDIA (SEBI) WHEREIN THE BROKER, THROUGH WHOM THE A SSESSEE IN THAT CASE HAS TRANSACTED, WAS FOUND AS A PARTY INVOLVED IN MA NIPULATION OF PRICE OF ANOTHER SCRIPT, AT PARA NO.16 & PARA NO.17 OF THE O RDER, THE HONOURABLE ITAT HELD AS UNDER: 16. FROM THE ABOVE IT IS APPARENT THAT BOTH THE OR DERS ARE NOT BASED ON CONCRETE EVIDENCE AND NO SINGLE IOTA OF EV IDENCE HAS BEEN DISCUSSED TO PROVE THAT THE ASSESSEE WAS INVOL VED IN CREATING ARTIFICIAL PRICE RISE IN THE SHARES OF THE CONCERNED COMPANY. THE FINAL FAIT OF THE ORDER OF THE SEBI DI SCUSSED ABOVE ARE NOT KNOWN TO EITHER OF THE SIDES. THE ABOVE ORD ER DO NOT HELP THE REVENUE SO AS TO PROVE LIVE LINK BETWEEN CASH D EPOSITED BY THE ASSESSEE AND RECEIVED BACK IN FORM OF LONG TERM CAP ITAL GAIN. FURTHER, THE APPELLANT DID NOT DEALT WITH THE BROKE R SRI B.D. DAGA IN WHOSE CASE ENQUIRY WAS CONDUCTED ABOUT SHARES OF KONARK COMMERCE & INDUSTRIES LTD.. FURTHER, IN CASE, OF A NY VIOLATION OF THE PROVISION OF SEBI (INTERMEDIARIES) REGULATION ( 2008) OR SEBI ACT, 1922 HAVE BEEN COMMITTED, THE SAME IS FAULT OF THE SEBI BROKER. THE MANIPULATION IF ANY CONDUCTED BY THE BR OKER, THE APPELLANT IS NOT LIABLE TO BE PENALIZED. AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 22 17. FURTHER IN VIEW OF THE OVERWHELMING EVIDENCES F ILED BY THE ASSESSEE IN SUPPORT OF ITS TRANSACTION OF PURCHASE AND SALE OF SHARES IN THE SAID COMPANY DULY CONFIRMED BY THIRD PARTY EVIDENCE LIKE CONFIRMATION OF BROKERS AND BANK DETA ILS WE ARE OF THE VIEW THAT THE SHORT POINT FOR OUR DETERMINATION AS ENUMERATED IN PARA 4 (SUPRA) NEEDS TO BE ANSWERED IN THE FAVOU R OF THE ASSESSEE. THAT IS, THE SAID TRANSACTION WAS RIGHTLY REFLECTED BY THE ASSESSEE AS LONG TERM CAPITAL GAIN, THE LD. AO AS WELL AS THE LD CIT(A) WERE NOT JUSTIFIED IN TREATING THE SAME A S UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT WHEN THE ASSESSEE HAS BEEN ABLE TO DISCHARGE ITS PRIMARY ONUS EFFECTIVELY AND SATIS FACTORILY. THE REVENUE COULD NOT ESTABLISH LIVE LINK BETWEEN CASH DEPOSITED BY THE ASSESSEE IN FORM OF LONG TERM CAPITAL GAIN. ACC ORDINGLY, THIS GROUND OF APPEAL IS DECIDED IN THE FAVOUR OF THE ASSESSEE.(EMPHASIS SUPPLIED) FROM THE PERUSAL OF THE ABOVE DECISION IT WOULD BE APPARENT THAT THE LEGISLATURE HAS NOT INTENDED TO TREAT EACH AND EVERY TRANSACTION ON THE SAME FOOTING. IF THE REVENUE IS UNABLE TO PROVE BY WAY OF DOCUMENTARY EVIDENCE THAT THE ASSESSEE HAS MANIPULA TED THE TRANSACTION SO AS TO SUIT ITS PURPOSE AND THE ASSES SEE HAS FILED SATISFACTORY EVIDENCES WHICH ESTABLISHES THAT THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE THE ADDITION MADE IS NOT JUSTI FIED. ON THE SAME ANALOGY, IN THE INSTANT CASE, THERE ARE NO INCRIMIN ATING DOCUMENTS OR OTHER FACTS WHICH ESTABLISH OR FOR THAT MATTER EVEN REMOTELY SUGGESTS THAT THE APPELLANT HAS UNDERTAKEN ANY SORT OF AGREEMENT WITH ANY BROKER AND THE TRANSACTION UNDERTAKEN WITH IT WERE INGENUINE. 31. IT WOULD ALSO BE APT TO MENTION THAT THE TREATMENT OF LONG TERM CAPITAL GAIN EARNED ON ALLEGED PENNY STOCKS AS UNEX PLAINED CASH CREDIT WAS SUBJECT MATTER OF AN APPEAL BEFORE THE HBLE HI GH COURT OF DELHI IN PR. CIT VS KRISHNA DEVI IN ITA NO.125/2020 WHEREIN THEIR LORDSHIP VIDE MOST RECENT ORDER DATED 15.01.21 (COPY ENCLOSED AT PAGE NO. 01 TO 10 OF THE CASE LAW PAPER BOOK) HAVE DISMISSED THE APPEAL OF REVENUE BY MAKING THE FOLLOWING OBSERVATIONS: A) WHILE FRAMING THE ASSESSMENT ORDER, RELIANCE WAS PL ACED BY THE ASSESSING OFFICER ON THE STATEMENT OBTAINED OF VAR IOUS PERSONS DURING THE COURSE OF SEARCH/ SURVEY HOWEVER THOSE PERSONS/ THEIR STATEMENTS HAVE NOT BEEN INDEPENDENTLY VERIFIED / EXAMINED DURING THE COURSE OF ASSESSMENT. B) THERE WAS NO CORROBORATION OF ALLEGED BOGUS LONG TE RM CAPITAL EARNED BY THE ASSESSE ON THE BASIS OF COGENT MATER IAL. AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 23 C) NO EVIDENCE WAS FURNISHED WHICH ESTABLISHED THAT TH ERE WAS ANY ALLEGED TRANSFER OF MONEY FROM THE ASSESSE TO ANY THIRD PARTY FOR ALLEGED ACCOMMODATION ENTRY. THE FACTS IN THE INSTANT CASE BEFORE YOUR HONOUR AR E MORE OR LESS IDENTICAL TO THE FACTS OF PR. CIT VS KRISHNA DEVI ( SUPRA) BEFORE THE HONOURABLE DELHI HIGH COURT AS THE OBSERVATIONS WHI CH HAVE BEEN GIVEN BY THE HBLE HIGH COURT AND LACK OF DETAILS/ INFORM ATION/ CORROBORATIVE EVIDENCE ARE INTEGRAL IN THE ORDER APPEALED AGAINST . 32. FURTHER, VARIOUS COORDINATE BENCHES OF HBLE INCOME TAX APPELLATE TRIBUNAL IN THEIR ORDERS IN RESPECT OF THE LONG TER M CAPITAL GAINS EARNED ON SHARES OF M/S. SUNRISE ASIAN LIMITED TREATED AS UNEXPLAINED CASH CREDIT HAVE DELETED THE ADDITIONS MADE IN THE HANDS OF THE ASSESSEES. THE APPELLANT PLACES HEAVY RELIANCE ON FOLLOWING JU DICIAL PRONOUNCEMENTS IN THIS REGARDS: DATE BENCH APPEAL NO. NAME OF PARTY 18.11.20 JAIPUR B BENCH 124/JP/2020 ASHOK AGRAWAL 11.08.20 MUMBAI D BENCH 7648/MUM/2019 DIPESH RAMESH VARDHAN VS DCIT CENTRAL 08.08.19 MUMBAI B BENCH 4811/MUM/2018 NARAYAN RAMCHANDRARATHI VS ITO 16.07.19 MUMBAI SMC BENCH 4514/MUM/2018 ANRAJ HIRALAL SHAH (HUF) VS ITO 28.11.18 MUMBAI A BENCH 2560/ MUM/ 2018 ARUN S TRIPATHI VS CIT COPIES OF THE ABOVE ORDERS ARE ENCLOSED AT PAGE NO. 11 TO 129 OF THE CASE LAW PAPER BOOK . IT IS SUBMITTED THAT ALL THE ABOVE DECISIONS OF VAR IOUS COORDINATE BENCHES OF HONOURABLE ITAT ARE IN RESPECT OF THE SA ME SCRIPT I.E. SUNRISE ASIAN LTD. WHEREIN SIMILAR ADDITIONS WERE MADE ON A LMOST IDENTICAL FACTS. THE LATEST DECISION OF HONOURABLE JAIPUR BENCH IN I TA NO. 124/JP/2020 DATED 18.11.2020 (COPY AT PAGE NO. 11 TO 76 OF CASE LAW PAPER BOOK) IS AN ELABORATE AND DETAILED DECISION WHEREIN THE HONO URABLE ITAT HAS ALSO DISCUSSED VARIOUS OTHER DECISIONS OF HONOURABLE HIG H COURTS AND ALSO VARIOUS HONOURABLE ITAT AND ON THE SIMILAR SET OF F ACTS, FOLLOWING THE DECISION OF HONOURABLE RAJASTHAN HIGH COURT AND ALS O OF THE COORDINATE BENCHES HELD THAT THE LEARNED CIT(A) WAS NOT JUSTIF IED IN NOT ALLOWING AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 24 THE CLAIM OF THE ASSESSEE U/S 10(38) AND ALLOWED TH E APPEALS FILED BY THE ASSESSEE. THE APPELLANT PLACES HEAVY RELIANCE ON AL L THE ABOVE ORDERS. SECOND GROUND 33.1 THE SECOND GROUND OF APPEAL IS AGAINST ADDITION OF CHARGES PAID TO ALLEGED BROKER FOR TRANSACTIONS AS DEEMED INCOME OF THE APPELLANT. 33.2 THE LD. AO MADE AN ADDITION OF RS. 4,22,859/- BY ES TIMATING THAT COMMISSION @ 3% OF THE TRANSACTION AMOUNT MIGHT HAV E BEEN INCURRED FOR EARNING LONG TERM CAPITAL GAIN ON THE PRESUMPTI ON THAT IT IS A NORMAL EXPENSE REQUIRED TO BE INCURRED FOR ROUTING SUCH TRANSACTIONS. 33.3 FIRST OF ALL, AS SUBMITTED ABOVE, THERE IS NO EVIDE NCE WITH THE LD. AO THAT THE LONG TERM CAPITAL GAIN REFLECTED BY THE APPELLANT IS NOT A REGULAR TRANSACTION BUT UNACCOUNTED MONEY WHICH HAS BEEN CONVERTED INTO ACCOUNTED MONEY OF THE APPELLANT. THE ADDITION MADE IN THE HANDS OF THE APPELLANT ARE PURELY ON THE BASIS OF ASSUMPT ION IN ABSENCE OF THE VERY BASE ON WHICH ADDITION HAS BEEN MADE IN THE AP PELLANT, TREATING ANY EXPENSES WHICH MIGHT HAVE BEEN INCURRED ON THE TRAN SACTION ALSO DOES NOT STAND THE TEST OF LAW. 33.4 SECONDLY, IN THE ASSESSMENT ORDER (REFER PARA 4 OF THE ASSESSMENT ORDER), THE LD. AO HAS STATED THAT AS PER NORMAL BUSINESS PRACTICES SUCH EXPENSES IS WORKED OUT TOTALING TO 3% OF THE TOTAL TRANSACTION. IT WOULD BE SEEN THAT THE LD. AO HAS ALLEGED THAT THE APPELLANT HAS ENTERED INTO SOME SORT OF ARRANGEMENT WITH FOR ARRANGING THE ABO VE TRANSACTIONS. HOWEVER, NO EVIDENCE OR INFORMATION HAS BEEN SUPPLI ED TO THE APPELLANT AND THE BASIS ON WHICH SUCH INFERENCE HAS BEEN DRAW N IS ALSO NOT CLEAR. NO DETAILS HAVE BEEN GIVEN AS TO WHAT IS THE BASIS ON WHICH SUCH FIGURE HAS BEEN ARRIVED AT. IN ABSENCE OF ANY EVIDENCE, AD DITION MADE IN THE HANDS OF THE APPELLANT PURELY ON THE BASIS OF UNCON FIRMED OR UNESTABLISHED DETAILS IS IMPROPER. 33.5 FURTHER, DURING THE ASSESSMENT PROCEEDINGS, NO QUER Y WAS RAISED TO THE APPELLANT ON THIS ISSUE. IN ABSENCE OF ANY Q UERY OR SHOW CAUSE, THE ADDITION CANNOT BE MADE IN THE HANDS OF THE APP ELLANT. 33.6 WITHOUT PREJUDICE TO THE ABOVE, ATTENTION IS DRAWN TO THE COPIES OF CONTRACT NOTES FOR PURCHASE AND SALE OF SHARES OF M /S. SUNRISE ASIAN LIMITED. FROM THE EXAMINATION OF THE DOCUMENTS IT W OULD BE SEEN THAT THE APPELLANT HAS SOLD THE SHARES DURING THE YEAR U NDER CONSTRUCTION THROUGH M/S. ARIHANT CAPITAL MARKETS LIMITED THE BR OKER HAS CHARGED VARIOUS EXPENSES LIKE BROKERAGE, SERVICE TAX, SECUR ITIES TRANSACTION TAX AND OTHER CHARGES LEVIED BY THE EXCHANGE IN THE BIL L ITSELF. THE SAID AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 25 BROKER IS A LISTED COMPANY AND HAS ITS PRESENCE PAN INDIA THROUGH VARIOUS OWN OFFICE, JOINT VENTURES AND BRANCHES. IN THIS RESPECT, IT WOULD BE SUFFICIENT TO SAY THAT NO REPUTED COMPANY WITH P AN INDIA PRESENCE WILL GET INDULGED IN ANY MALPRACTICE FOR BENEFIT OF AN I NDIVIDUAL CLIENT. THEREFORE THERE IS NO REASON FOR CHARGING ANY AMOUN T APART FROM THE AMOUNT WHICH HAS BEEN CHARGED IN THE CONTRACT NOTE ITSELF. 33.7 IN VIEW OF THE ABOVE AND IN CONTINUATION TO THE SUB MISSIONS MADE IN RESPECT OF GROUND NO. 1 IT IS PRAYED THAT THE AD DITION OF RS. 4,22,859/- MADE ON ACCOUNT OF ALLEGED PAYMENT TO THE BROKER IS PURELY BASED ON PRESUMPTIONS AND SURMISES, WITHOUT ANY EVIDENCE AND HENCE, THE SAME MAY KINDLY BE DELETED. 12. IN THE FOLLOWING CASES HON'BLE CO-ORDINATE BENC HES OF TRIBUNAL HAVE DEALT THE IDENTICAL ISSUE OF LONG TERM CAPITAL GAIN IN RESPECT OF SALE OF SHARES OF SUNRISE ASIAN LTD:- DATE BENCH APPEAL NO. PARTICULARS 18.11.20 JAIPUR B BENCH 124/JP/2020 ASHOK AGRAWAL V/S ACIT JAIPUR 11.08.20 MUMBAI D BENCH 7648/MUM/2019 DIPESH RAMESH VARDHAN V/S DCIT CENTRAL MUMBAI 08.08.19 MUMBAI B BENCH 4811/MUM/2018 NARAYAN RAMCHANDRA RATHI V/S ITO 3(1) MUMBAI 16.07.19 MUMBAI SMC BENCH 4514/MUM/2018 ANRAJ HIRALAL SHAH (HUF) V/S ITO MUMBAI AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 26 28.11.18 MUMBAI A BENCH 2560/ MUM/ 2018 ARUN S TRIPATHI V/S CIT MUMBAI 13. FURTHER LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE VARIOUS ALLEGATIONS/ OBSERVATIONS MADE BY THE LD. A.O IN TH E APPELLANTS CASE VIS--VIS OBSERVATION/FINDING OF THE HON'BLE T RIBUNAL ON ALL THESE ALLEGATIONS/ OBSERVATIONS ARE TABULATED HEREU NDER:- ALLEGATION/ OBSERVATION OF THE AO DEALT IN THE CASE LAW RELIED UPON 1. MODUS OPERANDI OF LONG TERM CAPITAL GAIN WHICH HAS BEEN STATED IN THE REPORT OF THE INVESTIGATION WING AND HAS BEEN RELIED ON THE BY THE AO IT HAS BEEN HELD THAT THE OBSERVATIONS OF THE AO ARE ONLY GENERAL METHODOLOGY FOR CAPITAL GAINS AND THERE IS NOTHING SPECIFIC AGAINST THE TRANSACTIONS OF THE ASSESSEE. 1. ASHOK AGRAWAL JAIPUR BENCH PARA NO. 12 AT PAGE NO. 25 OF PB. 2. NARAYAN RATHI MUMBAI BENCH PARA NO. 11 AT PAGE NO. 108 OF PB 3. ANRAJHIRALAL SHAH MUMBAI BENCH PARA NO. 08 AT PAGE NO. 114 OF PB THE SUBMISSION AND ARGUMENTS OF THE APPELLANT ON TH IS ASPECT ARE COVERED IN PARA NO.19.1 TO 19.3 OF THE SYNOPSIS. 2 . HIGH GROWTH IN THE SHARE PRICE OF THE COMPANY WITHOUT ANY MAJOR FINANCIAL CHANGES WHICH WAS ON ACCOUNT OF ALLEGED MANIPULATION IN THE SHARE PRICE. IT HAS BEEN HELD THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE WAS PART OF FRAUDULENT PRICE RIGGING. 1. ASHOK AGRAWAL JAIPUR BENCH PARA NO. 21 AT PAGE NO. 54 OF PB 2. DIPESH RAMESH MUMBAI BENCH PARA NO. 7 AT PAGE NO. 92 OF PB 3. ANRAJHIRALAL SHAH MUMBAI BENCH PARA NO. 08 AT PAGE NO. 114 OF PB THE SUBMISSION AND ARGUMENTS OF THE APPELLANT ON TH IS ASPECT ARE COVERED AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 27 IN PARA NO.20.1 TO 20.2 OF THE SYNOPSIS. 3 . NO PRIOR TRANSACTIONS BY THE APPELLANT IN SHARES AND SECURITIES. THE APPELLANT IS A REGULAR INVESTOR IN SHARES AND THE SAME ARE REFLECTED IN THE BALANCE SHEETS OF VARIOUS YEARS. THEREFORE, IT CANNOT BE SAID THAT IT IS A SOLE TRANSACTION. 1. ASHOK AGRAWAL JAIPUR BENCH PARA NO. 15 AT PAGE NO. 34 OF PB THE SUBMISSION AND ARGUMENTS OF THE APPELLANT A ON THIS ASPECT ARE COV ERED IN PARA NO.21.1 TO 21.2 OF THE SYNOPSIS. 4 . RELIANCE BY THE AO ON VARIOUS STATEMENT OBTAINED U/S 131 OF THE ACT BY THE INVESTIGATION WING. IT HAS BEEN HELD THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE WAS PART OF FRAUDULENT PRICE RIGGING. THERE WAS NO EVIDENCE WHICH COULD ESTABLISH THE NEXUS BETWEEN THE ASSESSEE AND THE PERSONS WHOSE STATEMENTS WERE RECORDED. FURTHER NO OPPORTUNITY TO CROSS EXAMINE WAS PROVIDED WHICH IS AGAINST THE PRINCIPAL OF NATURAL JUSTICE AND THE FLAW COULD NOT BE CURED. 1. ASHOK AGRAWAL JAIPUR BENCH PARA NO. 13 AT PAGE NO. 29 OF PB & PARA NO. 14 AT PAGE NO. 31. 2. DIPESH RAMESH MUMBAI BENCH PARA NO. 07 AT PAGE NO. 91 OF PB 3. NARAYAN RATHI MUMBAI BENCH PARA NO. 06 AT PAGE NO. 102 OF PB THE SUBMISSION AND ARGUMENTS OF THE APPELLANT ON TH IS ASPECT ARE COVERED IN PARA NO.23.1 TO 23.6 OF THE SYNOPSIS. 5 . INDEPENDENT ENQUIRIES MADE FROM THIRD PARTY FOR SALE OF SHARES WERE RETURNED UNSERVED. IT HAS BEEN HELD THAT IN CASE OF TRANSACTION OF SHARE THROUGH STOCK EXCHANGE THE IDENTITY OF BUYERS IS NOT KNOWN TO THE ASSESSEE. THEREFORE, NO ADVERSE INFERENCE CAN BE DRAWN FOR UNAVAILABILITY OF RESPONSE FROM PURCHASER. 1. DIPESH RAMESH MUMBAI BENCH PARA NO. 9 & 10 AT PAGE NO. 93 OF PB THE SUBMISSION AND ARGUMENTS OF THE APPELLANT ON TH IS ASPECT ARE COVERED IN PARA NO.24.1 OF THE SYNOPSIS. AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 28 AT THIS JUNCTURE THE APPELLANT ALSO WISHES TO PLACE RELIANCE ON THE RECENT DECISION OF HONOURABLE HIGH COURT OF DELHI IN THE C ASE OF PCIT V/S KRISHNA DEVI & OTHERS IN ITA NO. 125/2020 ORDER DATED 15.01 .2021 (COPY ALREADY ENCLOSED AT PAGE NO. 01 TO 10 OF COMMON CASE LAW PAPER BOOK) WHEREIN ALSO THE LTCG EARNED BY THE ASSESSEE IN RESPECT OF SHARE S OF M/S GOLDLINE INTERNATIONAL FINVEST LTD. WAS TREATED AS A COLORAB LE DEVICE AND ADDITION WAS MADE U/S 68. THE HONOURABLE HIGH COURT WAS PLEASED TO ENDORSE THE ORDER OF THE HONOURABLE ITAT DELHI BENCH AND DISMISSED THE A PPEALS FILED BY THE DEPARTMENT. IT IS SUBMITTED THAT IN THIS CASE ALSO ALMOST SIMILAR ALLEGATIONS WERE MADE BY THE AO SUCH AS ABNORMAL INCREASE IN SH ARE PRICE WITHIN A SHORT SPAN WHICH WAS NOT SUPPORTED BY THE FINANCIALS, ALL EGATION OF CONVERSION OF UNACCOUNTED INCOME BY CLAIMING FICTITIOUS LTCG IN A PREPLANNED MANNER TO EVADE TAXES, SEARCH AND SEIZURE OPERATION CONDUCTED BY THE INVESTIGATION WING IN KOLKATTA, DELHI, BOMBAY AND AHMEDABAD, NON RESPO NSE TO THE NOTICES ISSUED TO THE INVESTEE COMPANY ETC. THEREFORE, THE PRESENT BEFORE YOUR HONOURS IS ALSO SQUARELY COVERED BY THE DECISION OF THE HON OURABLE HIGH COURT OF DELHI. APART FROM ABOVE THE APPELLANTS CASE IS FURTHER ST RENGTHENED ON THE BASIS OF FOLLOWING SALIENT FEATURES: - A. THE APPELLANT HAS FURNISHED PLETHORA OF DOCUMENTS I N CONNECTION WITH THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES AND HAS ALSO SUBMITTED VARIOUS COMMUNICATIONS WITH THE INVESTEE COMPANY WH ICH WERE NOT SUBMITTED IN ALL THE CASE LAWS RELIED UPON WHICH FU RTHER FORTIFIES THE TRANSACTIONS OF THE ASSESSEE. B. FURTHER ALL THESE DOCUMENTS REMAINED UNCONTROVERTED , SO AS TO SAY HAVE BEEN ACCEPTED BY THE AUTHORITIES BELOW. C. SUNRISE ASIAN LTD. CANNOT BE STATED TO BE A PENNY S TOCK FOR THE REASON THAT THE TURNOVER OF THE COMPANY WAS IN EXCESS OF R S. 70 CORERS AND RS. 113 CRORES AND THE PROFIT WAS IN EXCESS OF RS. 40 L ACS AND RS. 103 LACS FOR THE FY 2012-13 AND 2013-14 RESPECTIVELY AS EVID ENT FROM THE FINANCIAL DISCUSSED BY THE AO IN THE ASSESSMENT ORD ER ITSELF. THEREFORE, THE NOMENCLATURE GIVEN BY THE INVESTIGATION WING IS BASELESS AND DEVOID OF ANY SUBSTANCE. D. NO ACTION HAS BEEN TAKEN BY THE SEBI AGAINST THE IN VESTEE COMPANY FOR ALLEGED MANIPULATION IN THE PRICE OF SHARES OF THE COMPANY. E. NEITHER THE APPELLANT NOR THE BROKER THROUGH WHOM T HE APPELLANT HAS TRANSACTED IN SHARE HAVE BEEN SPECIFICALLY POINTED OUT IN THE REPORT OF INVESTIGATION WING. AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 29 14. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHE MENTLY ARGUED SUPPORTING THE DETAILED FINDING OF BOTH THE LOWER AUTHORITIES AND AGAIN ASSERTED THE FACT THAT THE ABNORMAL INCRE ASE IN PRICE OF SHARES OF M/S SUNRISE ASIAN LIMITED WERE NOT COMMEN SURATE WITH THE FINANCIAL STRENGTH OF THE COMPANY. FURTHER INV ESTIGATION WING HAS GATHERED SUFFICIENT MATERIAL BEFORE CONCLUDING THAT THE ALLEGED TRANSACTION IS A SHAM TRANSACTION AND HAS BEEN CARR IED OUT ACROSS THE COUNTRY THROUGH VARIOUS BROKERS. RELIANCE WAS PLACED ON THE DECISION OF HON'BLE HIGH COURT OF GAUHATI IN THE CA SE OF CIT V/S SMT. SANGHAMITRA BHARALI . LD. DR ALSO RELIED ON THE FOLLOWING JUDGMENTS OF :- (I) HON'BLE SUPREME COURT OF INDIA IN THE CASE OF SUMAN PODDAR V/S INCOME TAX OFFICER (2019) 112 TAXMANN.CO M 330 (SC) (II) HON'BLE HIGH COURT OF GAUHATI IN THE CASE OF CIT V/S SMT. SANGHAMITRA BHARALI (2014) 50 TAXMANN.COM 47 (GAUHA TI) 15. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED T HE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE JUD GMENTS AND DECISIONS REFERRED AND RELIED BY BOTH THE PARTIES. THE ISSUE OF AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 30 GENUINENESS OF CLAIM OF EXEMPTION OF LONG TERM CAPI TAL GAIN (IN SHORT LTGC) U/S 10(38) OF THE ACT FROM SALE OF EQ UITY SHARES OF A LISTED COMPANY NAMELY M/S SUNRISE ASIAN LIMITED (I N SHORT SAL) CARRIED OUT THROUGH A RECOGNIZED STOCK EXCHANGE AND SHARES BEEN TRANSFERRED THROUGH DEMAT ACCOUNT IS IN DISPUTE BEF ORE US. REVENUE AUTHORITIES HAVE ALLEGED THAT THE COMPANY N AMELY M/S SUNRISE ASIAN LTD IS A PENNY STOCK COMPANY AND TH E TRANSACTION GIVING RISE TO LTGC IS SHAM AND ASSESSEE HAS USED C OLORABLE DEVICE TO CONVERT ITS UNACCOUNTED MONEY INTO LONG TERM CAP ITAL GAIN IN ORDER TO CLAIM EXEMPTION U/S 10(38) OF THE ACT. AS SESSEE HAS ALSO CHALLENGED THE ACTION OF LD. A.O MAKING ADDITION FO R ESTIMATED BROKERAGE EXPENSES FOR ARRANGING THE ALLEGED BOGUS LONG TERM CAPITAL GAIN. 16. WE OBSERVE THAT THE ASSESSEE HAS CLAIMED TO HAV E SOLD 30000 EQUITY SHARES OF M/S SUNRISE ASIAN LIMITED FOR A CO NSIDERATION OF RS.1,46,95,302/-. THESE SHARES WERE CLAIMED TO BE PURCHASED ON 10.10.2011 AT COST OF RS.6,00,000/-. LD. COUNSEL F OR THE ASSESSEE HAS FILED FOLLOWING SEQUENCES OF EVENTS WHICH HAVE OCCURRED SINCE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 31 THE PURCHASE OF THESE EQUITY SHARES DURING THE FINA NCIAL YEAR 2011- 12 TILL THEY WERE FINALLY SOLD DURING FINANCIAL YEA R 2013-14. PERIOD OF EVENT EVENT JUNE 2011 MEETING WITH DIRECTOR MR. NILESH P CHAUHAN REGARDING INVESTMENT IN SANTOSHIMA LEASE FINANCE & INVESTMENT (INDIA) LTD 05 JULY 2011 ISSUE OF PROPOSAL FOR PRIVATE PLACEMENT OF SHARES OF THE COMPANY AT A PREMIUM OF RS.10/- PER SHARES ALONGWITH COPY OF LIST OF DIRECTORS AND COPY OF FINANCIAL REPORT FOR FINANCIAL YEAR 2007-08, FINANCIAL YEAR 2008-09 & FINANCIAL YEAR 2009-10 20 JULY 2021 LETTER ISSUED TO THE COMPANY FOR FURTHER CLARIFICATIONS AND REQUIRING COPIES OF MEMORANDUM OF ASSOCIATION, ARTICLES OF ASSOCIATION AND BALANCE SHEET FOR THE FINANCIAL YEAR 2010-11. 28 JU LY 2011 REPLY RECEIVED FROM THE COMPANY ALONGWITH THE DOCUMENTS DESIRED. 19 SEPTEMBER 2011 APPLIED FOR 30000 EQUITY SHARES OF THE COMPANY BY PAYING AN AMOUNT OF RS.6,00,000/- OCTOBER 2011 RECEIVED SHARES CERTIFICATE IN RESPECT OF SHARES ALLOTTED. JULY 2012 RECEIVED BALANCE SHEET OF THE SANTOSHIMA TRADELINKS LIMITED (NAME OF COMPANY CHANGED W.E.F. 16.09.11) FOR THE FINANCIAL YEAR 2011- 12 OCTOBER, 2012 RECEIVED NOTICE FOR COURT CONVENED MEETING OF EQUITY SHARES HOLDERS FOR AMALGAMATION OF COMPANY AND ANOTHER COMPANY CONART TRADERS LIMITED WITH SUNRISE ASIAN LIMITED. 19 OCTOBER 2012 PLACED REQUEST FOR GETTING THE SHARES IN DEMATERIALIZED FORM. 22 OCTOBER 2012 LETTER ISSUED TO MR NILESH P CHOUHAN, DIRECTOR AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 32 OF THE COMPANY SEEKING INFORMATION IN RESPECT OF AMALGAMATION AND RAISING CONCERNS ABOUT THE PROPOSAL. NOVEMBER 2012 RECEIVED LETTER FROM THE COMPANY EXPLAINING THE RATIONALE FOR MERGER AND SATISFYING THE QUERIES RAISED. MARCH 2013 THE HON'BLE BOMBAY HIGH COURT PASSED THE ORDER FOR MERGER OF THE COMPANY WITH M/S SUNRISE ASIAN LIMITED JUNE 2013 NEW SHARES IN SUNRISE ASIAN LIMITED RECEIVED IN LIEU OF HOLDING OF SANTOSHIMA TRADELINKS LIMITED IN DEMAT ACCOUNT. JULY 2013 RECEIVED BALANCE SHEET OF THE SUNRISE ASIAN FOR THE FY 2012-13 NOV 13 ONWARDS SALE OF SHARES THROUGH STOCK EXCHANGE FOLLOWING DOCUMENTS WERE FURNISHED: . COPIES OF CONTRACT NOTES IN RESPECT OF SALE OF SHARES. . COPY OF LEDGER ACCOUNT OF THE BROKER. . COPY OF THE BANK ACCOUNT STATEMENT FOR THE YEAR REFLECTING THE TRANSACTIONS WITH BROKER. 17. FROM GOING THROUGH THE ABOVE SEQUENCE OF EVENTS WHICH ARE DULY SUPPORTED BY EVIDENCE FILED BY THE ASSESSEE BE FORE BOTH THE LOWER AUTHORITIES AND BEFORE US PRIME FACIE SHOW THAT THE ASSESSE APPLIED FOR 30000 EQUITY SHARES ON 19.9.2011 THE NA ME OF THE COMPANY AT THE POINT OF TIME WAS SANTOSHIMA LEASE F INANCE & INVESTMENT LIMITED WHICH WAS LATER ON CHANGED TO SA NTOSHIMA TRADELINKS LIMITED. THIS COMPANY WITH ANOTHER COMP ANY NAMELY M/S CONART TRADERS LIMITED WAS PLANNED TO BE AMALGA MATED WITH AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 33 M/S SUNRISE ASIAN LIMITED. HON'BLE BOMBAY HIGH COU RT PASSED AN ORDER FOR MERGER OF THE COMPANY WITH M/S SUNRISE AS IAN LIMITED. NEW SHARES IN M/S SUNRISE ASIAN LIMITED WERE RECEIV ED IN THE DEMAT ACCOUNT OF THE ASSESSEE IN LIEU OF HOLDING IN THE SHARES OF M/S SANTOSHIMA TRADELINKS LIMITED. UNDISPUTEDLY TH E ASSESSEE HAS HELD THE SHARE FOR MORE THAN 12 MONTHS AND THE INCOME IN THE FORM OF LONG TERM CAPITAL GAIN IS CLAIMED TO HAVE A RISE FROM THE TRANSFER OF LONG TERM CAPITAL ASSETS BEING EQUITY S HARE IN THE COMPANY CARRIED OUT THROUGH RECOGNIZED STOCK EXCHAN GE AND THE TRANSACTION BEING CHARGEABLE TO SECURITY TRANSACTIO N TAX. ON THE STRENGTH OF THESE FACTS THE ASSESSEE HAS CLAIMED EX EMPTION U/S 10(38) OF THE ACT FOR LONG TERM CAPITAL GAIN FROM S ALE OF EQUITY SHARES OF M/S SUNRISE ASIAN LIMITED. ON THE OTHER HAND REVENUE AUTHORITIES ARE ALLEGING THAT THERE IS AN UPWARD IN CREASE IN THE PRICE OF EQUITY SHARE OF M/S SUNRISE ASIAN LIMITED AND L OOKING TO THE FINANCIAL GROWTH OF THE ASSESSEE THE INCREASE IN TH E SHARE PRICE IS ABNORMAL AND UNPRECEDENTED AND BEYOND HUMAN PROBABI LITY AND THUS IT WAS CONCLUDED THAT THE TRANSACTION IS SHAM TRANSACTION AND THE M/S SUNRISE ASIAN LIMITED IS A PENNY STOCK COMP ANY. AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 34 18. FURTHER IN VIEW OF THE CLAIM OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE RAISED BEFORE US IS SQUARELY COVERED BY THE DECISION OF CO-ORDINATE BENCHES, WE HAVE GONE THROUGH THE FACTS INVOLVED IN THE CASE OF DIPESH RAMESH VARDHAN V/S DCIT (SUPRA) AND FIND THAT THE CO-ORDINATE BENCH OF MUMBAI HAS THOROUGHLY EXAM INED THE SIMILAR SET OF FACTS AND THE SAME ISSUE AS RAISED B EFORE US INCLUDING THE CLAIM OF EXEMPT INCOME OF LONG TERM CAPITAL GAI N FROM SALE OF EQUITY SHARES OF SAL U/S 10(38) OF THE ACT AND THE REVENUE CONTENDING IT TO BE A SHAM AND BOGUS TRANSACTION LI ABLE TO BE TAXED U/S 68 OF THE ACT AS UNEXPLAINED CASH CREDIT AND E STIMATED BROKERAGE EXPENSE FOR ARRANGING LTCG. AFTER THOROU GHLY DISCUSSING THE FACTS AND ISSUES, CO-ORDINATE BENCH, MUMBAI HAS DECIDED IN FAVOUR OF THE ASSESSEE AND HELD THAT THE CLAIM OF L ONG TERM CAPITAL GAIN U/S 10(38) OF THE ACT FROM THE SALE OF EQUITY SHARES OF M/S SUNRISE ASIAN LIMITED IS GENUINE AND SAL IS NOT A P ENNY STOCK COMPANY AND FURTHER HOLDING THAT THE ALLEGED TRANSA CTION IS NEITHER BOGUS NOR SHAM. FURTHER THE TRIBUNAL HAS DELETED T HE ADDITION FOR ESTIMATED BROKERAGE EXPENSES FOR ARRANGING ACCOMMOD ATION ENTRY. RELEVANT FINDING OF HON'BLE MUMBAI TRIBUNAL IN THE CASE OF DIPESH AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 35 RAMESH VARDHAN VS DCIT RECENTLY DELIVERED ON 11.08.2020 IS REPRODUCED BELOW:- 6. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. SO FAR AS THE FACTUAL MATRIX IS CONCERNED, THERE IS NO SUBSTANTIAL DISPUTE REGARDING THE SAME. THE PERUSAL OF RECORD WOULD REVEAL THAT THE ASSESSEE PURCHASED CERTAIN SHARES O F AN ENTITY NAMELY M/S STL AS EARLY AS SEPTEMBER, 2011. THE SHARES WER E CONVERTED INTO DEMAT FORM IN ASSESSEES ACCOUNT DURING THE MONTH O F MARCH, 2012. THE TRANSACTIONS TOOK PLACE THROUGH BANKING CHANNELS. T HE INVESTMENTS WERE DULY REFLECTED BY THE ASSESSEE IN FINANCIAL STATEME NTS OF RESPECTIVE YEARS. THE COPIES OF FINANCIAL STATEMENTS OF M/S STL FOR F YS 2009-10 & 2010-11 WHICH LED TO INVESTMENT BY THE ASSESSEE IN THAT ENT ITY WAS ALSO FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SUBSEQ UENTLY, M/S STL GOT MERGED WITH ANOTHER ENTITY VIZ. M/S SAL PURSUANT TO SCHEME OF AMALGAMATION U/S 391 TO 394 OF THE COMPANIES ACT, 1 956. THE SCHEME WAS DULY APPROVED BY HONBLE BOMBAY HIGH COURT VIDE ORDER DATED 22/03/2013, A COPY OF WHICH IS ON RECORD. CONSEQUEN TLY, THE SHARES OF M/S STL HELD BY THE ASSESSEE GOT SWAPPED WITH THE S HARES OF M/S SAL AND NEW SHARES WERE ALLOTTED TO THE ASSESSEE DURING JUNE, 2013 PURSUANT TO THE APPROVED SCHEME OF AMALGAMATION. M/S SAL IS STATED TO BE LISTED PUBLIC COMPANY GROUP A SHARES SIGNIFYING HIGH TRA DES WITH HIGH LIQUIDITY. THE ASSESSEE HAS SOLD THESE SHARES THROUGH ITS STOC K BROKER NAMELY M/S UNIQUE STOCKBRO PRIVATE LIMITED IN ONLINE PLATFORM OF THE RECOGNISED STOCK EXCHANGE DURING THE MONTH OF MARCH, 2014. THE SELLI NG PRICE WAS IN THE RANGE OF RS.489/- TO RS.491/- PER SHARE. THE TRANSA CTIONS TOOK PLACE THROUGH ONLINE MECHANISM AFTER COMPLYING WITH ALL T HE FORMALITIES AND PROCEDURE INCLUDING PAYMENT OF STT. THE DELIVERY OF THE SHARES WAS THROUGH CLEARING MECHANISM OF THE STOCK EXCHANGE AN D SALE CONSIDERATION AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 36 WAS RECEIVED THROUGH BANKING CHANNELS. THE TRANSACT IONS ARE DULY EVIDENCED BY CONTRACT NOTES, DEMAT STATEMENTS, BANK STATEMENTS AND OTHER DOCUMENTARY EVIDENCES. THE KEY PERSON OF ASSE SSEE GROUP, IN HIS STATEMENT, MAINTAINED THE POSITION THAT TRADING TRA NSACTIONS WERE GENUINE TRANSACTIONS CARRIED OUT THROUGH STOCK EXCHANGE FOL LOWING ALL PROCESS AND LEGAL PROCEDURES. THE ASSESSEE ALSO FILED TRADING V OLUME DATA AND PRICE RANGE OF THE SCRIP FOR A PERIOD OF MORE THAN 2 YEAR S I.E. FROM JAN, 2013 TO JULY, 2015. THE SHARES REFLECTED HEALTHY TRADING VO LUME AND THE PRICE RANGE REFLECTED THEREIN WAS IN THE RANGE OF RS.360/ - TO RS.600/- PER SHARE. THE PRICE RANGE WAS STATED TO BE IN THE SAME RANGE FOR 15 MONTHS AFTER THE PERIOD OF SALE OF SHARES BY THE ASSESSEE, WHICH HAS NOT BEEN DISPUTED BY THE REVENUE. ON THE BASIS OF ALL THESE FACTS, IT CO ULD BE GATHERED THAT THE ASSESSEE HAD DULY DISCHARGED THE ONUS CASTED UPON H IM TO PROVE THE GENUINENESS OF THE STATED TRANSACTIONS AND THE ONUS HAD SHIFTED ON REVENUE TO REBUT THE SAME. 7. AS AGAINST THE ASSESSEES POSITION, THE PRIMARY MATERIAL TO MAKE ADDITIONS IN THE HANDS OF ASSESSEE IS THE STATEMENT OF SHRI VIPUL BHAT AND THE OUTCOME OF SEARCH PROCEEDINGS ON HIS ASSOCIATED ENTITIES INCLUDING M/S SAL. HOWEVER, THERE IS NOTHING ON RECORD TO ESTABLI SH VITAL LINK BETWEEN THE ASSESSEE GROUP AND SHRI VIPUL BHAT OR ANY OF HIS GR OUP ENTITIES. THE ASSESSEE, ALL ALONG, DENIED HAVING KNOWN SHRI VIPUL BHAT OR ANY OF HIS GROUP ENTITIES. HOWEVER, NOTHING HAS BEEN BROUGHT O N RECORD TO CONTROVERT THE SAME AND ESTABLISH THE LINK BETWEEN SHRI VIPUL BHAT AND THE ASSESSEE. THE OPPORTUNITY TO CROSS-EXAMINE SHRI VIP UL BHAT WAS NEVER PROVIDED TO THE ASSESSEE WHICH IS CONTRARY TO THE D ECISION OF HONBLE SUPREME COURT IN M/S ANDAMAN TIMBER INDUSTRIES V/S CCE (CA NO.4228 OF 2006) WHEREIN IT WAS HELD THAT NOT ALLOWING THE ASSESSEE TO CROSS- EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENT OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUG NED ORDER IS A SERIOUS AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 37 FLAW WHICH MAKES THE ORDER NULLITY IN AS MUCH AS IT AMOUNTS TO VIOLATION OF PRINCIPAL OF NATURAL JUSTICE BECAUSE OF WHICH THE A SSESSEE WAS ADVERSELY AFFECTED. THE WHOLE BASIS OF MAKING THE ADDITION IS THIRD PARTY STATEMENT WITHOUT THERE BEING ANY TANGIBLE MATERIAL. IT IS TR ITE LAW THAT ADDITIONS MERELY ON THE BASIS OF SUSPICIOUS, CONJECTURES OR S URMISES COULD NOT BE SUSTAINED IN THE EYES OF LAW AS HELD BY HONBLE SUP REME COURT IN OMAR SALAY MOHAMED SAIT V/S CIT (1959 37 ITR 151). THE S USPICION HOWEVER STRONG COULD NOT PARTAKE THE CHARACTER OF LEGAL EVI DENCE AS HELD BY HONBLE SUPREME COURT IN UMACHARAN SHAW & BROS. V/S CIT (19 59 37 ITR 271). THEREFORE, WE FIND THAT ONUS AS CASTER UPON REVENUE TO CORROBORATE THE IMPUGNED ADDITIONS BY CONTROVERTING THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE AND BY BRINGING ON RECORD, ANY COGE NT MATERIAL TO SUSTAIN THOSE ADDITIONS, COULD NOT BE DISCHARGED BY THE REV ENUE. THE ALLEGATION OF PRICE RIGGING / MANIPULATION HAS BEEN LEVIED WITHOU T ESTABLISHING THE VITAL LINK BETWEEN THE ASSESSEE AND VARIOUS ENTITIES OF S HRI VIPUL BHAT. WE FIND THAT THE WHOLE BASIS OF MAKING ADDITIONS IS THIRD P ARTY STATEMENT AND NO OPPORTUNITY OF CROSS-EXAMINATION HAS BEEN PROVIDED TO THE ASSESSEE TO CONFRONT THE SAID PARTY. AS AGAINST THIS, THE ASSES SEES POSITION THAT THAT THE TRANSACTIONS WERE GENUINE AND DULY SUPPORTED BY VARIOUS DOCUMENTARY EVIDENCES, COULD NOT BE DISTURBED BY TH E REVENUE. 8. THE ALLEGATIONS OF LD.AO THAT THE ASSESSEE WAS P ART OF THE GROUP WHICH INDULGED IN RIGGING OR MANIPULATION OF PRICES OF SH ARES IN CONNIVANCE WITH SHRI VIPUL BHAT IS NOT BACKED BY ANY INDEPENDENT MA TERIAL. FIRSTLY, THERE IS NOTHING ON RECORD WHICH ESTABLISHES THE FACT THAT T HE ASSESSEE WAS ACQUAINTED WITH SHRI VIPUL BHAT OR ANY OF HIS ENTIT IES AND SECONDLY, THE ONUS CASTED UPON ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS WAS ALREADY DISCHARGED BY THE ASSESSEE. SHRI VIPUL BHAT, IN HIS STATEMENT, STATED THAT ONE SHRI SANDEEP MAROO ACTED AS INTERMEDIARY WHO INTRODUCED VARDHAN FAMILY TO HIM. HOWEVER, NO FURTH ER INVESTIGATIONS HAVE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 38 BEEN CARRIED OUT TO ESTABLISH THIS VITAL LINK BETWE EN THE ASSESSEE AND SHRI VIPUL BHAT. WE DO NOT FIND ANY INDEPENDENT INVESTIG ATIONS BY LD. AO TO BRING ON RECORD ANY TANGIBLE MATERIAL TO CORROBORAT E THE SAME. THERE ARE NO EVIDENT OR EVEN ALLEGATION OF ANY CASH EXCHANGE BET WEEN THE ASSESSEE AND GROUP ENTITIES OF SHRI VIPUL BHAT. THIS IS FURTHER EVIDENCED BY THE FACT THAT NO SUBSTANTIAL INCRIMINATING MATERIAL / WEALTH OF T HAT MAGNITUDE HAS BEEN FOUND DURING THE COURSE OF SEARCH OPERATIONS ON ASS ESSEE WHICH WOULD CORROBORATE SUCH PRESUMPTION AND PROVE THAT THE TRA NSACTIONS WERE SHAM TRANSACTIONS, IN ANY MANNER. 9. THE FACT THAT THE ASSESSEE COULD NOT PRODUCE THE CONCERNED PERSON OF M/S SAL WAS RIGHTLY CONTROVERTED BY SUBMITTING THAT THE AFORESAID ENTITY WAS NOT UNDER THE CONTROL OF THE ASSESSEE AND THE A SSESSEE WAS UNDER NO OBLIGATION TO DO SO. THE EXISTENCE OF M/S SAL IS BE YOND DOUBT SINCE IT WAS A LISTED CORPORATE ENTITY AND SECONDLY, IT WAS SUBJ ECT MATTER OF SCHEME OF AMALGAMATION U/S 391 TO 394. THE SCHEME OF AMALGAMA TION WAS DULY BEEN APPROVED BY HONBLE BOMBAY HIGH COURT. THEREFO RE, THE EXISTENCE OF THE SAID ENTITY COULD NOT BE DOUBTED, IN ANY MANNER . 10. THE ABOVE CONCLUSION IS FURTHER FORTIFIED BY TH E FACT THAT IN SHARE SALE TRANSACTIONS THROUGH ONLINE MODE, THE IDENTITY OF T HE BUYER OF THE SHARES WOULD NOT BE KNOWN TO THE ASSESSEE. THEREFORE, THE ADVERSE CONCLUSION DRAWN BY LD. AO MERELY ON THE BASIS OF THE FACT THA T THE BUYER OF THE SHARES WERE GROUP ENTITIES OF SHRI VIPUL BHAT, COUL D NOT BE SUSTAINED. THE FACT THAT THERE WERE INDEPENDENT BUYERS ALSO WOULD REBUT THE SAME AND WEAKEN THE CONCLUSION DRAWN BY LD. AO. 11. THE LD. AR HAS RELIED ON PLETHORA OF JUDICIAL P RONOUNCEMENTS IN SUPPORT OF VARIOUS SUBMISSIONS, WHICH WE HAVE DULY CONSIDERED. THESE DECISIONS WOULD ONLY SUPPORT THE CONCLUSIONS DRAWN BY US THAT ONCE THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVING THE GEN UINENESS OF THE TRANSACTIONS, THE ONUS WOULD SHIFT ON THE REVENUE T O DISLODGE ASSESSEES AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 39 CLAIM AND BRING ON RECORD CONTRARY EVIDENCES TO REB UT THE SAME. UNTIL AND UNLESS THIS EXERCISE IS CARRIED OUT, THE ADDITIONS COULD NOT BE SUSTAINED IN THE EYES OF LAW. 12. TO ENUMERATE THE FEW, THE HONBLE BOMBAY HIGH C OURT IN CIT V/S SHYAM S.PAWAR (54 TAXMANN.COM 108 10/12/2014) DECLI NED TO ADMIT REVENUES APPEAL SINCE THE REVENUE FAILED TO CARRY FORWARD THE INQUIRY TO DISCHARGE THIS BASIC ONUS. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN MUKESH R.MAROLIA V/S ADDL. CIT (6 SOT 247 15/12/200 5) HELD THAT PERSONAL KNOWLEDGE AND EXCITEMENT ON EVENTS SHOULD NOT LEAD THE ASSESSING OFFICER TO A STATE OF AFFAIRS WHERE SALIE NT EVIDENCES ARE OVER- LOOKED. WHEN EVERY TRANSACTION HAS BEEN ACCOUNTED, DOCUMENTED AND SUPPORTED, IT WOULD BE VERY DIFFICULT TO BRUSH ASID E THE CONTENTIONS OF THE ASSESSEE THAT HE HAD PURCHASED SHARES AND HAD SOLD SHARES AND ULTIMATELY PURCHASED A FLAT UTILIZING THE SALE PROC EEDS OF THOSE SHARES AND THEREFORE, THE CO-ORDINATE BENCH CHOSE TO DELETE TH E IMPUGNED ADDITIONS. WE FIND THAT THIS DECISION WAS FIRSTLY BEEN APPROVE D BY HONBLE BOMBAY HIGH COURT VIDE ITA NO. 456 OF 2007 ON 07/09/2011 A ND THEREAFTER, SPECIAL LEAVE PETITION AGAINST THE SAID DECISION HA S BEEN DISMISSED BY HONBLE SUPREME COURT VIDE SLP NO. 20146 OF 2012 DA TED 27/01/2014 WHICH IS REPORTED AS 88 CCH 0027 SCC. THE SMC BENCH OF TRIBUNAL IN ANRAJ HIRALAL SHAH (HU F) V/S ITO (ITA NO. 4514/MUM/2018 DATED 16/07/2019) HELD THAT IN THE AB SENCE OF ANY EVIDENCE TO IMPLICATE THE ASSESSEE OR TO PROVE THAT THE TRANSACTIONS WERE BOGUS, THE LONG-TERM CAPITAL GAINS DECLARED BY THE ASSESSEE COULD NOT BE DOUBTED WITH. THIS CASE WAS DEALING WITH GAINS EARN ED BY THE ASSESSEE ON SALE OF SAME SCRIP I.E. M/S SUNRISE ASIAN LTD. 13. THEREFORE, CONSIDERING THE ENTIRETY OF FACTS AN D CIRCUMSTANCES, WE ARE NOT INCLINED TO ACCEPT THE STAND OF LD.CIT(A) IN SU STAINING THE IMPUGNED ADDITIONS IN THE HANDS OF THE ASSESSEE. RESULTANTLY , THE ADDITION ON AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 40 ACCOUNT OF ALLEGED LONG-TERM CAPITAL GAINS AS WELL AS ESTIMATED COMMISSION AGAINST THE SAME, STANDS DELETED. THE GR OUNDS OF APPEAL, TO THAT EXTENT, STAND ALLOWED. 19. SUBSEQUENTLY CO-ORDINATE BENCH OF JAIPUR IN THE CASE OF ASHOK AGRAWAL V/S ACIT IN ITA NO.124/JP/2020 DATED 18.11.2020 HAS FOLLOWED THE DECISION OF HON'BLE MUMBAI TRIBUNA L IN THE CASE OF DIPESH RAMESH VARDHAN (SUPRA) QWHILE DEALING WITH THE SAME ISSUE OF LONG TERM CAPITAL GAIN FROM SALE OF EQUITY SHARE S OF M/S SUNRISE ASIAN LIMITED CLAIMED TO BE EXEMPT U/S 10(3 8) OF THE ACT AND DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST T HE REVENUE OBSERVING AS FOLLOWS:- 23. IN THE AFORESAID DECISION, IT HAS BEEN HELD TH AT IT IS SESI WHO MONITORS AND REGULATES THE STOCK EXCHANGES & STOCK MARKET AN D WHEN THEIR INVESTIGATION DID NOT REVEAL ANY PRICE OR VOLUME MA NIPULATION BY THE ASSESSEE AND THESE TRANSACTIONS ARE IN THE NORMAL C OURSE THROUGH PROPER & LEGAL CHANNELS. THEN THE ALLEGATIONS OF THE IT DE PARTMENT FALL FLAT AND DENIAL OF DEDUCTION U/S 10(38) OF THE ACT IS ARBITR ARY AND ADDITION OF SALE PROCEEDS OF SHARES OF PAL U/S 68 IS AGAINST THE PRO VISIONS OF ACT. IN THE CASE IN HAND, THE ID. AO HAS REFERRED TO SESI ENQUI RY AGAINST M/S SUNRISE ASIAN LTD. HOWEVER, WE NOTE THAT THE SAID ENQUIRY W AS REGARDING FAILURE TO COMPLY WITH CERTAIN DISCLOSURE REQUIREMENTS AND THE REFORE, THE SUBJECT MATTER OF THE ENQUIRY HAS NO CONNECTION WITH THE TR ANSACTION OF BOGUS LONG TERM CAPITAL GAIN AND HAS NO BEARING IN JUDGING THE GENUINENESS OF THE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 41 TRANSACTION UNDERTAKEN BY THE ASSESSEE OR FOR THAT MATTER, THE PRICE AND REALIZATION ON SALE OF SHARES SO UNDERTAKEN BY THE ASSESSEE THROUGH THE STOCK EXCHANGE. FURTHER, IT HAS BEEN HELD IN THE AF ORESAID CASE THAT THE FINDINGS OF INVESTIGATION & MODUS OPERANDI IN OTHER CASES NARRATED BY THE AO AND ALSO CIT(A) NOWHERE PROVE ANY CONNECTION WIT H THE ASSESSEE NOR THE ASSESSEE'S INVOLVEMENT OR CONNECTION OR COLLUSI ON WITH THE BROKERS, EXIT PROVIDERS, ACCOMMODATION PROVIDERS OR COMPANIES OR DIRECTIONS ETC AND FOR MAKING THE ADDITION, IT IS NECESSARY TO BRING ON RE CORD EVIDENCE TO ESTABLISH INGENUITY IN TRANSACTIONS OR ANY CONNECTI ON OF THE ASSESSEE OR ITS TRANSACTION WITH ANY OF THE ALLEGED PARTIES. IN THE INSTANT CASE, AS WE HAVE DISCUSSED EARLIER, THERE IS NO FINDING WHICH PROVES ASSESSEE'S CONNECTION, INVOLVEMENT OR COLLUSION WITH SO CALLED ACCOMMODATI ON ENTRY PROVIDERS. FURTHER IN THE AFORESAID CASE, THE ISSUE AS TO WHET HER THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUIDE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILI TIES,' HUMAN BEHAVIOR AND DISCOVERY OF THE MODUS OPERANDI ADOPTED IN EARN ING ALLEGED BOGUS L TCG AND STCG, THAT HAVE SURFACED DURING INVESTIGATI ONS, SHOULD G'UIDE THE AUTHORITIES IN ARRIVING AT A CONCLUSION AS TO W HETHER THE CLAIM IS GENUINE OR NOT HAS BEEN DISCUSSED AT LENGTH. AND RE FERRING TO LEGAL PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT THAT THE BURDEN OF PROVING A TRANSACTION TO BE BOGUS HAS TO BE STRICTL Y DISCHARGED BY ADDUCING LEGAL EVIDENCE HELD THAT THE MODUS OPERAND I, GENERALISATION, PREPONDERANCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTING THE CLAIM OF THE ASSESSEE UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CONTROVERT THE VALIDITY AND CORRECTNESS O F THE DOCUMENTARY EVIDENCES PRODUCED, THE SAME CANNOT BE REJECTED. WE ARE IN COMPLETE AGREEMENT WITH THE SAID VIEW AND IN THE INSTANT CAS E, WE FIND THAT EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM OF PURCHASE AND SALE OF SHARES ON THE STOCK EXCHANGE HAVE NOT BEEN REFUTED BY ANY AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 42 ADVERSE FINDINGS OR MATERIAL WHICH COULD DEMONSTRAT E INVOLVEMENT OF THE ASSESSEE OR COLLUSION WITH SO CALLED ACCOMMODATION ENTRY PROVIDERS TO OBTAIN BOGUS LTCG AS SO ALLEGED BY THE AUTHORITIES BELOW. 24. WE ALSO FIND THAT WHILE ANALYZING SALE OF SHARE S OF SIMILAR SCRIP OF M/S SUNRISE ASIAN LTD AND CLAIM OF EXEMPTION OF LONG TE RM CAPITAL GAINS U/S 10(38), THE MUMBAI BENCHES OF THE TRIBUNAL IN CASE OF ANRAJ HIRALAL SHAH (HUF) VS ITO (SUPRA) HAS UPHELD THE CLAIM OF THE ASSESSEE'S CLAI M OF EXEMPTION UNDER SECTION 10(38) OF THE ACT AND THE R ELEVANT FINDINGS OF THE COORDINATE BENCH CONTAINED AT PARA 8 READ AS UNDER: - '8. THE ASSESSEE HAS EARNED SPECULATION PROFIT IN T HE IMMEDIATELY PRECEDING YEAR THROUGH M/S EDEN FINANCIAL SERVICES ALSO AND THE SAID PROFIT HAS BEEN USED TO PURCHASE THE SHARES OF M/S SUNRISE ASIAN LTD. THE ASSESSEE HAS OFFERED THE SPECULATION PROFIT FOR INCOME TAX PURPOSES IN THE IMMEDIATELY PRECEDING YEAR AND IT HAS BEEN ACCEPTED. FURTHER THE ASSESSEE HAS SHOWN THE PURCHA SE OF IMPUGNED SHARES AS INVESTMENT IN THE BALANCE SHEET. HENCE THE PURCHASE OF SHARES HAS BEEN ACCEPTED. FURTHER THE S HARES HAVE BEEN RECEIVED IN THE D-MAT ACCOUNT OF THE ASSESSEE AND THEY HAVE BEEN SOLD THROUGH THE DMAT ACCOUNT ONLY. HENCE THE DELIVERY OF SHARES A/SO STAND PROVED. THE AO HAS NOT BROUGHT AN Y MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE WAS PART OF FRAUDU LENT PRICE RIGGING. ACCORDINGLY, IN THE ABSENCE OF ANY EVIDENC E TO IMPLICATE THE ASSESSEE OR TO PROVE THAT THE TRANSACTIONS ARE BOGU S/ 'R AM OF THE VIEW THAT THE CAPITAL GAINS DECLARED BY THE ASSESSE E CANNOT BE DOUBTED WITH. IN THAT VIEW OF THE METIER; THE ADDITION MADE TOWARDS EXPENSES IS NOT ALSO SUSTAINABLE. AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 43 25. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIR ETY OF FACTS AND CIRCUMSTANCES PF THE CASE AND FOLLOWING THE DECISIO NS OF THE HON'BLE JURISDICTIONAL HIGH COURT AND OF THAT OF THE COORDI NATE BENCHES IN CASES REFERRED SUPRA, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS DISCHARGED THE NECESSARY ONUS CAST ON HIM IN TERMS OF CLAIM OF EXEMPTION OF LONG TERM CAPITAL GAINS U/S 10(38) OF THE ACT BY ESTABLISHING THE GENUINENESS OF TRANSACTION OF PURCHASE AND SALE OF SHARES AND SATISFYING THE REQUISITE CONDITIONS SPECIFIED THEREIN AND THE GAINS SO ARISING ON SALE OF SHARES THEREFORE HAS BEEN RIGHTLY CLAIMED AS EXE MPT U/S 10(38) OF THE ACT. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET-ASIDE THE ORDER OF THE ID. CIT(APPEALS) AND THE CLAIM OF THE ASSESSEE UL: 10(38) IS ALLOWED. THE MATTER IS THUS DECIDED IN FAVOUR OF TH E ASSESSEE AND AGAINST THE REVENUE. IN THE RESULT, THE GROUND OF APPEAL SO TAKEN BY THE ASSESSEE IS ALLOWED. 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. 19. WE FIND THAT BOTH THE ABOVE DECISIONS ARE SQUAR ELY APPLICABLE ON THE FACTS AND ISSUES RAISED BEFORE US. LD. DEPA RTMENTAL REPRESENTATIVE HAS RELIED ON TWO JUDGMENTS, THE ONE OF HON HIGH COURT OF GAUHATI IN THE CASE OF CIT V/S SMT. SANGHAMITRA BHARALI (2014) TO TAXMANN.COM 47 (GAUHATI) (SUPRA) IS NOT A PPLICABLE ON THE INSTANT CASE SINCE IN THIS CASE THE COMPANY ADDRESS WHERE SHARES WERE SOLD BY THE ASSESSEE HAS NOT BEEN FOUND BY THE INSPECTOR OF THE INCOME TAX DEPARTMENT PROVING ITS NON EXISTENCE . THIS IS NOT THE FACT IN THE INSTANT CASE AS NEITHER ANY SUCH EN QUIRY HAS BEEN AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 44 CONDUCTED AND SECONDLY NO DISPUTE HAS BEEN RAISED A BOUT THE EXISTENCE OF THE COMPANY. THEREFORE THE JUDGMENT O F HONBLE GAUHATI HIGH COURT IS NOT APPLICABLE AND THUS DISTI NGUISHABLE. 20. AS REGARDS THE JUDGMENT OF HONBLE SUPREME COUR T IN THE CASE OF SUMAN PODDAR V/S ITO (SUPRA) DELIVERED ON 22.11.2019, WE FIND THAT HONBLE HIGH COURT OF DELHI IN ITS RECENT JUDG MENT DATED 15.1.2021 IN THE CASE OF PCIT V/S KRISHNA DEVI & OTHERS ITA NO.125/2020 DEALING WITH THE SIMILAR ISSUE OF CLAIM OF EXEMPTION U/S 10(38) OF THE ACT FOR LONG TERM CAPITAL GAIN FR OM SALE OF EQUITY SHARES HAS DULY CONSIDERED THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SUMAN PODDAR V/S ITO (SUPRA) AND HAS CONFIRMED THE ORDER OF THE TRIBUNAL STATING IT TO BE THE LAST FACT FINDING AUTHORITY WHO ON THE BASIS OF EVIDENCE BROUGHT ON R ECORD HAS RIGHTLY CAME TO THE CONCLUSION THAT THE LOWER TAX A UTHORITIES ARE NOT ABLE TO SUSTAIN THE ADDITION WITHOUT ANY COGENT MAT ERIAL ON RECORD. RELEVANT EXTRACT OF THE JUDGMENT OF HONBLE DELHI H IGH COURT IN THE CASE OF PCIT V/S KRISHNA DEVI & OTHERS IS REPRODUCED BELOW:- AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 45 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, 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 AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 46 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 AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 47 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 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 AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 48 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. 21. WE THEREFORE ARE OF THE CONSIDERED VIEW THAT TH E FACTS INVOLVED AND ISSUES RAISED IN THE INSTANT APPEAL ARE SQUAREL Y COVERED BY THE DECISION OF CO-ORDINATE BENCH OF MUMBAI AND JAIPUR IN THE CASE OF DINESH RAMESH VARDHAN V/S DCIT AND ASHOK AGRAWAL V/S ACIT RESPECTIVELY AND FURTHER FIND SUPPORT FROM THE JUDG MENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT V/S KRISHNA DEVI & OTHERS AND THUS HOLD THAT THE ALLEGED TRANSACTION OF EARNING L ONG TERM CAPITAL GAIN FROM SALE OF EQUITY SHARES OF M/S SUNRISE ASIA N LIMITED IS NEITHER BOGUS NOR SHAM AND THUS ELIGIBLE FOR EXEMPT ION U/S 10(38) OF THE ACT AND NO ADDITION WAS THUS CALLED FOR U/S 68 OF THE ACT. WE ACCORDINGLY ALLOW GROUND NO.1 RAISED BY THE ASSESSE E NAMELY SHRI AYUSH JAIN AND DELETE THE ADDITION OF RS.1,40,95,30 2/- AND ALSO ALLOW GROUND NO.2 THUS DELETING ADDITION FOR ESTIMA TED BROKERAGE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 49 EXPENSES OF RS.4,22,859/-. THE OTHER TWO GROUNDS A RE GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 22. IN THE RESULT APPEAL OF THE ASSESSEE, SHRI AYUS H JAIN IN ITA NO.616/IND/2019 IS ALLOWED. 23. NOW WE TAKE UP REMAINING APPEALS OF SHRI PRITE SH JAIN (HUF) ITA NO.617/IND/2019 & 293/IND/2020 & SHRI NILESH JA IN ITA NO.294/IND/2020. THE COMMON ISSUE RELATING TO LONG TERM CAPITAL GAIN FROM SALE OF EQUITY SHARES OF SUNRISE ASIAN LIMITED (SAL) IS IN DISPUTE WHERE THE ASSESSEE HAS CLAIMED TO EXEMPTION U/S 10(38) OF THE ACT AND REVENUE AUTHORITIES ARE A LLEGING IT TO BE BOGUS AND SHAM TRANSACTIONS LIABLE TO BE TAXED U/S 68 OF THE ACT. SINCE WE HAVE ADJUDICATED SIMILAR ISSUE IN THE CASE OF MR. AYUSH JAIN DISCUSSED IN THE PRECEDING PARAS AND HAVE HELD IN FAVOUR OF THE ASSESSEE, THUS ALLOWING THE BENEFIT OF EXEMPTIO N U/S 10(38) OF THE ACT FOR LONG TERM CAPITAL GAIN EARNED FROM SALE OF EQUITY SHARES FROM M/S SUNRISE ASIAN LIMITED RELYING ON T HE DECISION OF CO-ORDINATE BENCHES OF MUMBAI AND JAIPUR IN THE CA SE OF DINESH RAMESH VARDHAN V/S DCIT AND ASHOK AGRAWAL V/S ACIT RESPECTIVELY HAVE HELD THAT SAL IS NOT A PENNY STOC K COMPANY. WE AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 50 THUS APPLYING THE SAME DECISION IN THESE THREE APPE ALS, DELETE THE ADDITION MADE FOR BOGUS LONG TERM CAPITAL GAIN AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ALLOW THE CLAIM O F EXEMPTION OF INCOME U/S 10(38) OF THE ACT FOR LONG TERM CAPITAL GAIN FROM SALE OF EQUITY SHARES OF M/S SUNRISE ASIAN LIMITED AT RS .37,40,741/-, RS. 1,02,86,220/- AND RS.1,48,71,538/- MADE BY TH E ASSESSEE NAMELY SHRI PRITESH JAIN (HUF) FOR ASSESSMENT YEAR 2015-16 AND 2014-15 AND SHRI NILESH JAIN (HUF) FOR ASSESSMENT YEAR 2014-15 RESPECTIVELY. ACCORDINGLY GROUND NO.1 RAISED IN IT A NO.617/IND/2019, 293/IND/2020 AND 294/IND/2020 ARE ALLOWED. 24. AS REGARDS GROUND NO.2 RAISED IN ITA NO.617/IND /2019 & 293/IND/2020 REGARDING ESTIMATED BROKERAGE EXPENSES AT RS.1,17,022/- AND RS.3,21,790/- MADE IN THE CASE OF SHRI PRITESH JAIN (HUF), WE APPLY THE SAME ANALOGY AND DECISION AS TAKEN IN THE CASE OF SHRI AYUSH JAIN IN ITA NO.616/IND/2019 AND DELETE THE ADDITION FOR ESTIMATED BROKERAGE EXPENSES AND ALLOW GROUND NO.2 RAISED IN APPEAL NO. ITA NO.617/IND/2019 & 293/IND/ 2020. 25. AS REGARDS GROUND NO.2 RAISED BY THE ASSESSEE S HRI NILESH JAIN (HUF) IN ITA NO.294/IND/2020 FOR DISALLOWANCE OF EXPENSES OF AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 51 RS.50,522/- CLAIMED BY THE ASSESSEE, WE FIND THAT T HE LD. A.O HAS MADE THE ADDITION FOR BOGUS LONG TERM CAPITAL GAIN AT RS.1,43,22,060/- WHICH IN VIEW OF LD. A.O IS CLAIME D AS LONG TERM CAPITAL GAIN. THERE IS A FACTUAL ERROR IN HIS OBSE RVATION. THE ASSESSEE RECEIVED SALE CONSIDERATION OF RS.1,48,71, 538/-, THE PURCHASE COST IS RS.6,00,000/- AND LONG TERM CAPITA L GAIN CLAIMED TO BE EXEMPT U/S 10(38) OF THE ACT IS RS.1, 42,71,538/- . WHEREAS THE LD. A.O HAS ADOPTED THE SALE CONSIDERAT ION AT RS.1,49,22,060/- WHICH WAS TAKEN FROM THE INFORMATI ON RECEIVED FROM THE INVESTIGATION WING. HOWEVER AS CLAIMED BY THE ASSESSEE THAT THERE WAS AN EXPENSES OF RS.50,522/- WHICH WAS INCURRED TO EFFECT THE SALES AND THE ASSESSEE RECEIVED NOT THE SALE CONSIDERATION OF RS.1,48,71,438/- ONLY. SINCE SUM OF RS.50,522/- WAS AN EXPENSE THE SAME SHOULD HAVE ALLOWED. WE FIND FORC E IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, OUT OF THE TOTAL ADD ITION OF RS.1,43,22,060/- SUM OF RS.1,42,71,538/- IS ELIGIBL E FOR EXEMPTION U/S 10(38) OF THE ACT AS LONG TERM CAPITAL GAIN AND REMAINING AMOUNT OF RS.55,522/- IS ALLOWED AS A CLAIM OF EXPE NSES MADE FOR AYUSH JAIN & ORS ITA NO.616, 617/IND/2019 & 293&294/IND/2020 52 EFFECTING THE SALES. IN THE RESULT GROUND NO.2 OF THE ASSESSEES APPEAL IN THE CASE OF SHRI NILESH JAIN (HUF) IS ALL OWED. 26. ALL OTHER GROUNDS RAISED IN THIS BUNCH OF APPEA LS ARE GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 27. IN THE RESULT ALL THE FOUR APPEALS VIZ ITA NO. 616/IND/2019, NO.617/IND/2019 & 293/IND/2020 AND NO.294/IND/2020 ARE ALLOWED IN FAVOUR OF ASSESSEE(S) AND AGAINST THE RE VENUE AS PER TERMS INDICATED ABOVE. THE ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 30.04.2021. SD/- SD/- (MADHUMITA ROY) (MA NISH BORAD) JUDICIAL MEMBER ACCOUNTAN T MEMBER / DATED : 30 TH APRIL, 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