NAINA JAIN, Jaipur V. ITO, Jaipur

ITA 371/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2127 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 11-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDER JHA
• Keywords: Income from undisclosed sources; Salary income; Share purchase agreement; Principle of natural justice; Accommodation entries; Scheme of amalgamation; Sham transactions; Penny stocks
• Section: 143(3); 131; 68; 69; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 368 /JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 SHRI PRAMOD JAIN D-260 DEVI MARG, BANI PARK, JAIPUR. CUKE VS. THE DCIT, CIRCLE- 3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AALPJ8838J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 369 /JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 SHRI ANKIT JAIN D-260 DEVI MARG, BANI PARK, JAIPUR. CUKE VS. THE DCIT, CIRCLE- 3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AFTPJ0723P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 370/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 SHRI SUNIL JAIN D-260 DEVI MARG, BANI PARK, JAIPUR. CUKE VS. THE DCIT, CIRCLE- 3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACQPJ1286P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 2 VK;DJ VIHY LA- @ ITA NO. 371/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 SMT. NINA JAIN D-260 DEVI MARG, BANI PARK, JAIPUR. CUKE VS. THE ITO, WARD-3(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AALPJ8842N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 372/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 SMT. NISHA JAIN D-260 DEVI MARG, BANI PARK, JAIPUR. CUKE VS. THE ITO, WARD-3(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AALPJ8841R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDER JHA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 27/11/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 31/01/2018 VKNS'K@ ORDER PER BENCH: THESE FIVE APPEALS BY FIVE ASSESSEES WHO ARE FAMIL Y MEMBERS/RELATED PERSONS ARE DIRECTED AGAINST THE FI VE SEPARATE ORDERS OF LD. CIT(A) ALL DATED 23.03.2017 FOR THE ASSESSME NT YEAR 2013-14. THESE APPEALS AROSE FROM THE IDENTICAL FACTS AND CI RCUMSTANCES OF PURCHASE AND SALE OF SHARES TREATED AS BOGUS TRANSA CTIONS BY THE AO ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 3 AND THEREBY THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE WAS ASSESSED AS AN UNEXPLAINED INCOME. SINCE, ALL THE A PPEALS ARE CONNECTED AND INVOLVE COMMON ISSUES ARISING FROM TH E IDENTICAL FACTS, THEREFORE, FOR THE SAKE OF CONVENIENCE THESE FIVE A PPEALS WERE CLUBBED FOR THE PURPOSE OF HEARING AND ARE BEING DISPOSED O FF BY THIS COMPOSITE ORDER. FOR THE PURPOSE OF RECORDING THE FACTS AS WE LL AS ANALYZING THE FACTS AND EVIDENCES THE APPEAL IN ITA NO. 268/JP/20 17 IS TAKEN AS LEAD CASE WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 2,64,04,191/- MADE IN THE ASSESSMENT COMPLETED U/S 143(3) BY THE AO BY TREATING THE LONG TERM CAPITAL GAIN INCOM E CLAIMED EXEMPT U/S 10(38), AS UNEXPLAINED INCOME U/S 69 OF THE I .T .ACT 1961, WITHOUT ANY BASIS AND WITH THE SOLE PURPOSE T O MAKE ADDITIONS VVITHOUT BRINING ON RECORD ANY CORROBORAT IVE MATERIAL FOUND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AND ALSO BY COMPLETELY IGNORING THE WELL ESTABLISHED LAW THAT N O ADDITION CAN BE MADE SOLELY ON THE BASIS OF STATEMENTS RECORDED ON OATH DURING THE COURSE OF SURVEY CONDUCTED JUST ON THE B ASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING OF INC OME TAX, KOLKOTA COMMUNICATED TO AO THROUGH DGIT ( INV. ) , JAIPUR , WITHOUT MAKING ITS OWN INDEPENDENT ENQUIRY AND EFFO RTS. THUS, THE ADDITIONS MADE SOLELY ON THE BASIS OF SUCH RETR ACTED STATEMENTS DESERVE TO BE DELETED. 1.1THAT , THE LD. CIT(A) HAS GROSSLY ERRED IN CONF IRMING THE ADDITION MADE IN THE ASSESSMENT COMPLETED U/S 143(3 ) SOLELY ON THE BASIS OF STATEMENTS OF SHRI DEEPAK PATWARI RECO RDED BY I.T. ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 4 OFFICIALS AFTER GIVING SUMMONS U/S 131 OF THE I.T. ACT 1961 DURING THE COURSE OF SEARCH OPERATIONS CARRIED OUT ON THE ENTRY PROVIDERS AND SURVEY CONDUCTED ON THE BROKING HOUSES IN KOLKA TA , BY THE INCOME TAX OFFICIALS . AND ALSO NO OPPORTUNITY OF C ROSS EXAMINING SHRI DEEPAK PATWARI WAS PROVIDED. THUS , THE ASSESS MENT ORDER DESERVES TO BE HELD BAD IN LAW AND THE ADDITIONS MA DE THERE UNDER DESERVE TO BE DELETED . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 2,64,04,191/- MADE IN THE ASSESSMENT COMPLETED U/S 143(3) BY THE AO BY TREATING THE LONG TERM CAPITAL GAIN INCOM E CLAIMED EXEMPT U/S 10(38) , AS UNEXPLAINED INCOME U/S 68 OF THE I .T .ACT 1961, AS THE PROVISIONS OF SECTION 68 ARE APPL ICABLE ONLY WHEN THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNTS AND IN THE PRESENT CASE ASSESSEE IS A SALARIED INDIVIDUAL NOT REQUIRING TO MAINTAIN THE BOOKS OF ACCOUNTS . THUS, THE ADDITION S MADE BY THE LD. CIT(A) BY APPLYING THE PROVISION OF SECTION 68 IS BAD IN LAW AND DESERVES TO BE DELETED . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN MAKING ADDITION OF RS. 1,32,020/- ON PRESUMPTIONS AND ASSUMPTIONS @ 0.50 % OF TRANSACTIO N AMOUNT OF LONG TERM CAPITAL GAIN , WITHOUT ANY BASIS AND W ITH OUT ESTABLISHING THE AS TO HOW THE AMOUNT HAS BEEN PAID TO THE BROKER. THUS ADDITIONS MADE WITHOUT ANY BASIS JUST ON PRESUMPTIONS AND ASSUMPTIONS IS BAD IN LAW AND DESE RVES TO BE DELETED . 3.1 THAT, THE LD. AO AND THE LD. CIT(A) HAS FURTHER ERRED IN MAKING THE ADDITION OF RS. 1,32,020 /- SOLELY ON TH E BASIS OF THE STATEMENTS GIVEN BY SHRI DEEPAK PATWARI, RECORDED B Y I.T. OFFICIALS AFTER GIVING SUMMONS U/S 131 OF THE I.T. ACT 1961 DURING THE COURSE OF SEARCH OPERATIONS CARRIED OUT ON THE ENTRY PROVIDERS AND SURVEY CONDUCTED ON THE BROKING HOUSE S IN KOLKATA , BY THE INCOME TAX OFFICIALS . NO DOCUMENTARY EVID ENCE OF PAYMENT MADE COULD BE BROUGHT ON RECORD BY THE LD A O . THUS ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 5 ADDITIONS MADE WITHOUT ANY BASIS JUST ON PRESUMPTIO NS AND ASSUMPTIONS IS BAD IN LAW AND DESERVES TO BE DELETE D . 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN DISALLOWING THE SUM OF RS. 12,500/- CLAIMED BY THE ASSESSEE ON ACCOUNT OF LEGAL EXPENDI TURE, WITHOUT PROVIDING ANY OPPORTUNITY TO GIVE EXPLANATION AND J USTIFICATION FOR. CLAIMING THE EXPENDITURE . ALSO NO OPPORTUNITY GIVEN TO PRODUCE THE EVIDENCE OF CLAIMING THE EXPENDITURE. T HUS THE ADDITIONS MADE WITHOUT PROVIDING ANY OPPORTUNITY TO GIVE JUSTIFICATION AND PRODUCE THE EVIDENCE OF CLAIMING THE EXPENDITURE IS BAD IN LAW AND DESERVES TO BE DELETE D. 5. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELE TE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HARING OF APPEAL. 2. GROUND NOS. 1 AND 2 ARE REGARDING CAPITAL GAIN D ECLARED BY THE ASSESSEE WAS TREATED AS UNEXPLAINED INCOME. THE ASS ESSEE IS AN INDIVIDUAL AND DIRECTOR OF ARL INFRATECH LIMITED A ND FILED ITS RETURN OF INCOME ON 20.09.2013 DECLARING TOTAL INCOME OF RS. 1,58,70,180/- WHICH INCLUDES THE INCOME FROM SALARY, HOUSE PROPER TY & INCOME FROM OTHER SOURCES. DURING THE SCRUTINY ASSESSMENT THE A SSESSING OFFICER NOTICED THAT THE ASSESSEE HAS EARNED INCOME FROM LO NG TERM CAPITAL GAIN FROM SALE SHARE OF M/S LUMINAIRE TECHNOLOGIES LTD. AND M/S OASIS CINE COMMUNICATION LTD. AMOUNTING TO RS. 2,64,04,19 1. THIS INCOME FROM LONG TERM CAPITAL GAIN HAS BEEN CLAIMED AS EXE MPT U/S 10(38) OF THE ACT. THE ASSESSING OFFICER DOUBTED THE GENUINEN ESS OF THE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 6 TRANSACTIONS IN VIEW OF THE FACT THAT THE INVESTIGA TION WING OF KOLKATA HAD CARRIED OUT SEARCH U/S 132 OF THE INCOME TAX AC T ON SOME ENTRY PROVIDERS INCLUDING ONE SHRI DEEPAK PATWARI. THE DI RECTORATE OF INVESTIGATION KOLKATA VIDE THEIR LETTER F. NO. 4/20 12-13 DATED 30.03.2014 ADDRESSED TO DGIT (INV) JAIPUR INFORMED THAT IN THE COURSE OF SURVEY OPERATION CARRIED OUT AT THE OFFICE OF TH E BROKING HOUSES WERE BEING MADE BY COMPANIES OF KOLKATA FOR PURCHASE OF MOSTLY PENNY STOCKS AT BSE. FURTHER, INVESTIGATION REVEALED THAT ALL THE PURCHASING COMPANIES WERE PAPER COMPANIES OPERATED BY AN ENTRY OPERATOR SHRI DEEPAK PATWARI AND IN HIS STATEMENT RECORDED U/S 13 1 OF THE ACT ACCEPTED THAT HE WAS MERELY AN OPERATOR AND WAS BUY ING SHARES BY USING MONEY PROVIDED BY OTHER OPERATORS FOR CREATIN G BOGUS ENTRY OF LONG TERM CAPITAL GAINS. THE AO AFTER DISCUSSING TH E MODUS OPERANDI OF ENTRY PROVIDING OPERATOR AS WELL AS THE STATEMENT O F SHRI DEEPAK PATWARI ISSUE A SHOW CAUSE NOTICE TO THE ASSESSEE A S TO PROVE THAT THE TRANSACTIONS CARRIED OUT WERE GENUINE AND EXEMPT LO NG TERM CAPITAL GAIN EARNED BY IT IS BEYOND DOUBT. THE ASSESSEE WAS ALSO ASKED TO MAKE APPEARANCE OF PRINCIPAL OFFICERS OF THE COMPAN IES WHOSE SHARES WERE PURCHASED AND SOLD BY THE ASSESSEE. IN RESPONS E THE ASSESSEE FILED ITS REPLY VIDE LETTER DATED 15.03.2016 AND EX PLAINED THAT THE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 7 ASSESSEE HAS PURCHASED THE SHARES OF M/S GRAVITY BA RTER PVT. LTD. SUBSEQUENTLY CHANGED ITS NAME TO M/S GRAVITY BARTER LTD. AND THEREAFTER GOT MERGED WITH M/S OASIS CINE COMMUNICA TION LTD. AFTER APPROVAL OF HONBLE KOLKATA HIGH COURT. THE SHARES WERE PURCHASED AGAINST THE CONSIDERATION PAID BY THE ASSESSEE THRO UGH CHEQUE AND THE SHARES WERE TRANSFERRED IN THE NAME BY THE ASSESSEE BY THE COMPANIES WHICH WERE DULLY TAKEN ON RECORD BY THE REGISTRAR O F COMPANIES. SIMILARLY THE ASSESSEE PURCHASED SHARES OF M/S PARI DHI PROPERTIES LTD. WHICH ALSO GOT MERGED WITH A LISTED COMPANY M/S LUN INAIRE TECHNOLOGIES LTD. AND THEREFORE SUBSEQUENT TO MERGE R THE ASSESSEE WAS ISSUED THE SHARES OF THE NEW ENTITY IN THE EXC HANGE RATIO AS PROVIDED IN THE SCHEME OF MERGER/ AMALGAMATION. THE ASSESSEE FILED ALL THE RELEVANT DETAILS AND SUPPORTING DOCUMENTS I NCLUDING THE CORRESPONDENCE BETWEEN THE ASSESSEE AND THESE COMP ANIES AT THE TIME OF PURCHASE OF SHARES AND SUBSEQUENT ALLOTMENT OF SHARES AND RESOLUTION OF THE BOARD OF DIRECTORS AS WELL AS THE DOCUMENTS WHICH WERE FILED BEFORE THE ROC IN RESPECT OF CHANGE OF N AME, SHARES CERTIFICATE, TRANSFER OF SHARES, THE ORDER OF HONB LE KOLKATA HIGH COURT AND BOMBAY HIGH COURT APPROVING AMALGAMATION AND ME RGING OF THE COMPANIES AND DEMATERIALIZATION OF THE SHARES IN TH E DEMAT ACCOUNT ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 8 AND THEREAFTER SALE OF THE SHARES. THE ASSESSING OF FICER HAS NOT DISPUTED THE DEMATERIALIZED OF SHARES AS PER THE DE MAT ACCOUNT RECORD AS WELL AS SUBSEQUENT SALE OF THE SHARES BY THE ASS ESSEE HOWEVER, THE AO DOUBTED THAT THE ASSESSEE HAS EARNED EXTRAORDINA RY PROFIT/ GAIN ON THESE TRANSACTIONS WHICH ARE APPARENTLY NOT GENUINE . THE AO ANALYZED THE FACE VALUE AND PREVAILING MARKET PRICE OF THE S HARES AT THE TIME WHEN THE ASSESSEE ALLEGEDLY PURCHASED AND THEN STEE P HIKE IN THE SHARE PRICE OF THE SHARES WHEN THE ASSESSEE SOLD TH E SAME. SINCE, THE SHARES WERE PURCHASED FROM THE COMPANIES BELONGING TO SHRI DEEPAK PATWARI, THEREFORE, THE AO HELD THAT THE TRANSACTIO NS ARE NOT GENUINE AND CONSEQUENTLY THE CAPITAL GAIN DECLARED BY THE A SSESSEE WAS TREATED AS UNEXPLAINED INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A) BUT COULD NO T SUCCEED. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT DURING THE FINANCIAL YEAR 2010-11 THE ASSESSEE PURCHASED 8 00 EQUITY SHARES HAVING FACE VALUE OF RS. 10 EACH OF M/S GRAVITY BAR TER LTD. FOR A CONSIDERATION OF RS. 4,00,000/-. THE SHARES WERE PU RCHASED FROM M/S WINALL VINIMAY PVT. LTD. THE LD. AR HAS REFERRED TO THE SALE BILL DATED 25.01.2011 AND 03.02.2011 UNDER WHICH 400 SHARES ON EACH DAY WERE PURCHASED BY THE ASSESSEE @ RS. 500 PER SHARES. ACC ORDINGLY THE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 9 ASSESSEE PAID A TOTAL CONSIDERATION OF RS. 4,00,000 /- FOR PURCHASE OF 800 EQUITY SHARES. THE LD. AR HAS THEN REFERRED TO THE BANK STATEMENT OF THE ASSESSEE AND SUBMITTED THAT THE PAYMENT OF R S. 4,00,000/- WAS MADE THROUGH CHEQUE ON 17.05.2011 AND THEREFORE, M/ S WINALL VINIMAY PVT. LTD. IS SHOWN AS AS CREDITOR IN THE BALANCE SHEET AS ON 31.03.2011. HE HAS FURTHER SUBMITTED THAT IN THE ME AN TIME M/S GRAVITY BARTER PVT. LTD. CHANGED ITS NAME AND STATUS FROM PRIVATE LIMITED TO A PUBLIC LIMITED COMPANY VIDE BOARD OF RESOLUTION D ATED 08.01.2011, WHICH WAS APPROVED BY THE REGISTRAR OF COMPANIES AN D FRESH CERTIFICATE OF INCORPORATION WAS ISSUED ON 05.02.2011 PLACED AT PAGE NO. 43-46 OF THE PAPER BOOK. THE LD. AR HAS FURTHER SUBMITTED TH AT PVT. SUBSEQUENTLY AMALGAMATED WITH M/S OASIS CINE COMMUNICATION LTD. AS PER THE ORDER DATED 25.08.2011 OF HONBLE KOLKATA HIGH COURT AND AS PER THE TERMS OF SCHEME OF AMALGAMATION APPROVED BY THE HONBLE HIGH COURT EVERY SHAREHOLDER OF M/S GRAVITY BARTER LTD. WAS ALLOTTE D 44 SHARES OF M/S OASIS CINE COMMUNICATION LTD. FOR EACH SHARE HELD B Y IT. THE LD. AR HAS REFERRED TO THE LETTER DATED 01.11.2011 OF M/S OASI S CINE COMMUNICATION LTD. WHEREBY THE ASSESSEE WAS COMMUNI CATED ABOUT THE AMALGAMATION OF CONSEQUENTIAL ALLOTMENT ADVICE ALONG WITH PHYSICAL SHARE CERTIFICATES OF 35,200 EQUITY SHARES IN THE NAME OF THE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 10 ASSESSEE WERE ISSUED ON 04.02.2012. THE LD. AR OF THE ASSESSEE HAS REFERRED TO THE SHARE CERTIFICATE ISSUED BY M/S OAS IS CINE COMMUNICATION LTD. AT PAGE NO. 101-104 OF THE PAPER BOOK. THEREAFTER THESE SHARES WERE DEMATERIALIZED ON 16.02.2012 AND A COPY OF DEMAT ACCOUNT IS PLACED AT 149-153 OF THE PAPER BOOK. THE LD. AR HAS THEN POINTED OUT THAT THE NAME OF THE M/S OASIS CINE COM MUNICATION LTD. WAS CHANGED TO M/S ECOWAVE INFOTECH LTD. W.E.F. 14. 08.2012 AS PER THE CERTIFICATE AT PAGE NO. 112 OF THE PAPER BOOKS. ACC ORDINGLY, THE SHARES APPEARING IN THE DEMATERIALIZED ACCOUNT BEFORE THAT DATE WAS OF M/S OASIS CINE COMMUNICATION LTD. AND THEREAFTER OF M/S ECOWAVE INFOTECH LTD. OUT OF THESE SHARES THE ASSESSEE SOLD 18,000 E QUITY SHARES IN THE MONTH OF JULY, 2012 AS PER THE CONTRACT A NOTE AT P AGE NO. 106-110 OF THE P.B. THE SHARES SOLD WERE CONSEQUENTLY DEBITED IN THE DEMAT ACCOUNT OF THE ASSESSEE AND THE REMAINING 17,200 E QUITY SHARES ARE STILL HELD BY THE ASSESSEE AS REFLECTED IN THE DEMA T ACCOUNT AND THE BALANCE SHEET AS ON 31.03.2016. 4. SIMILARLY THE ASSESSEE PURCHASED 50,000 SHARES O F THE M/S PARIDHI PROPERTIES LTD. HAVING FACE VALUE OF RS. 10/- EACH ON 26.03.2011. THE SHARE APPLICATION OF MONEY OF RS. 5,00,000/- WAS PA ID AND DEBITED IN THE BANK ACCOUNT OF THE ASSESSE ON 28.03.2011. THE LD. AR HAS REFERRED ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 11 TO THE SHARE APPLICATION AT PAGE NO. 113 OF THE PAP ER BOOKS AND THE BANK STATEMENT OF THE ASSESSEE AT PAGE 114 OF THE P .B. THE SHARES WERE ALLOTTED TO THE ASSESSEE ON31.03.2011 WHICH WE RE SUBSEQUENTLY DEMATERIALIZED AND CREDITED IN THE DEMANT ACCOUNT O F THE ASSESSE ON 21.10.2011. THEREAFTER M/S PARIDHI PROPERTIES LTD. GOT MERGED WITH M/S LUNINAIRE TECHNOLOGIES LTD. AS PER THE SCHEME OF ME RGER APPROVED BY THE HONBLE BOMBAY HIGH COURT VIDE ORDER DATED 27.0 7.2012. THE ASSESSEE WAS ALLOTTED ONE EQUITY SHARE OF RS. 1/- E ACH IN THE SWAP RATIO OF 1:1. HE HAS REFERRED TO ALLOTMENT OF SHARES AS C OMMUNICATED BY M/S LUNINAIRE TECHNOLOGIES LTD. VIDE LETTER DATED 4 TH SEPTEMBER, 2012 AT PAGE NO. 124 OF THE P.B. ACCORDINGLY, THE ASSESSEE WAS ALLOTTED 5 LACS EQUITY SHARE OF RS. 1/- EACH OF M/S LUNINAIRE TECHN OLOGIES LTD. WHICH IS CREDIT IN THE DEMAT ACCOUNT OF THE ASSESSEE. THESE SHARES WERE SOLD BY THE ASSESSEE BETWEEN PERIOD 01.11.2012 TO 14.12.201 2 AS PER CONTRACT NOTES AT PAGE NO. 125-145 OF THE P.B. FOR A CONSIDE RATION OF RS. 2,12,34,671/-. THE SALE PROCEEDS WERE CREDITED IN T HE BANK ACCOUNT OF THE ASSESSEE. THUS, THE LD. AR HAS CONTENDED THAT W HEN THE ASSESSEE PRODUCED ALL EVIDENCES TO PROVE THE TRANSACTIONS OF PURCHASE OF SHARES, THE PAYMENT OF PURCHASE CONSIDERATION, AMALGAMATION AND MERGER OF THE COMPANIES SUBSEQUENT TO THE PURCHASE OF SHARES, ALLOTMENT OF THE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 12 SHARES OF THE MERGE ENTITY, DEMATERIALIZATION OF SH ARES IN THE DEMAT ACCOUNT AND SUBSEQUENT SALE OF THE SHARE FROM DEMAT ACCOUNT OF THE ASSESSEE THEN THE FINDING OF THE AUTHORITIES BELOW ARE BASED ON PRESUMPTION AND SUSPICION ALONG. HE HAS FURTHER CON TENDED THAT THE AO HAS GIVEN ITS FINDING ON THE BASIS OF THE STATEMENT OF SHRI DEEPAK PATWARI WITHOUT GIVING AN OPPORTUNITY TO THE ASSESS EE TO CROSS EXAMINE. FURTHER, SHRI DEEPAK PATWARI WAS NOWHERE STATED THA T THE ASSESSEEE EVER APPROACHED HIM FOR PROVIDING ENTRY FOR CAPITAL GAINS. RATHER THE ASSESSEE HAS PURCHASED THE SHARES PAYING THE CONSID ERATION THROUGH CHEQUES. THE ASSESSING OFFICER HAS DOUBTED THE TRAN SACTIONS BECAUSE OF THE CHANGED NAME OF THE COMPANIES AND SUBSEQUENT AM ALGAMATION AND MERGERS WITHOUT APPRECIATING THE FACTS THAT ALL THE SE CHANGES WERE EFFECTED THROUGH PROPER PROCEDURE AND WERE DULY APP ROVED BY THE REGISTRAR OF COMPANIES ISSUING A FRESH CERTIFICATE. THE FRESH CERTIFICATE OF INCORPORATION WAS ISSUED BY THE ROC ON 05.02.201 1 WHEN M/S GRAVITY BARTER PVT. LTD. CONVERTED INTO PUBLIC LIMI TED AND THE CHANGED THE NAME OF M/S GRAVITY BARTER PVT. LTD. HOWEVER, T HE AUTHORITIES BELOW HAVE IGNORED THE CERTIFICATE ISSUED BY THE ROC ON 0 5.02.2011 AND GAVE MUCH EMPHASIS ON THE DATE MENTIONED IN THE ORDER O F THE HIGH COURT AS 18.04.2011. THE LD. AR HAS POINTED OUT THAT THE DATE MENTIONED IN ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 13 THE ORDER OF THE HONBLE KOLKATA HIGH COURT IS A TY POGRAPHICAL MISTAKE AS THE FRESH CERTIFICATE OF INCORPORATION WAS DULLY ISSUED BY THE ROC ON 05.02.2011 AND A COPY OF WHICH WAS DULY PLACED BEFO RE THE AUTHORITIES BELOW AS WELL AS AT PAGE NO. 46 OF THE PAPER BOOK. THEREFORE, THE SAID DISCREPANCY IN THE DATE MENTIONED BY THE HIGH COURT HAS NO RELEVANCY TO THE GENUINENESS OF THE TRANSFER OF THE SHARES WH EN THE ASSESSEE PURCHASED THE SHARES OF M/S GRAVITY BARTER LTD. PRI OR TO THE FRESH CERTIFICATE BY THE ROC. RELIANCE IS PLACED BY THE A O ON THE STATEMENT OF SHRI DEEPAK PATWARI RECORDED BY THE INVESTIGATION W ING OF KOLKATA IS UNWARRANTED AND NOT SUSTAINABLE WHEN THE ASSESSEE W AS NOT GIVEN AN OPPORTUNITY TO CROSS EXAMINE TO SHRI DEEPAK PATWARI . IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HON BLE SUPREME COURT IN CASE OF ANDAMAN TIMBER INDUSTRIES VS. CCE 127 DTR 241 WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT THE DENIAL OF OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE WI TNESS WHOSE STATEMENTS WERE MADE THE SOLE BASIS OF ASSESSMENT I S A SERIOUS FLAW RENDERING THE ORDER A NULLITY IN AS MUCH AS IT AMOU NTS TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THEREFORE, WHEN THER E IS NO ALLEGATION BY SHRI DEEPAK PATWARI THAT ASSESSEE EVER APPROACHED HIM FOR ANY BOGUS ENTRY FOR LONG TERM CAPITAL GAIN OR HE HAS PROVIDED ANY ENTRY TO THE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 14 ASSESSEE THEN, THE AUTHORITIES BELOW ARE NOT JUSTIF IED ON DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE ON THE BASIS OF THE PRICE OF THE SHARES QUOTED IN THE STOCK EXCHANGE. THE LD. AR HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF LA LCHAND BHAGAR AMBIKA RAM VS. CIT 37 ITR 288 AND SUBMITTED THAT TH E HONBLE SUPREME COURT HAS HELD THAT THE SUSPICION OR PRESUM PTION HOWSOEVER STRONG IT MAY APPEAR TO BE TO TRUE NEEDS TO BE CORR OBORATED BY SOME EVIDENCE TO ESTABLISH A LINK THAT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNT INCOME IN FORM OF LONG TERM CAPITAL GAIN. THE LD. AR HAS ALSO RELIED UPON THE DECISION OF MUMBAI SPECIAL BENCH OF THIS TRIBUNAL IN CASE OF GTC INDUSTRIES VS. ACIT 164 ITD 1. THUS THE LD. AR HAS CONTENDED THAT IN CASE OF THE ASSESSEE, THERE IS NO DIRECT EVIDENCE BROUGHT ON RECORD BY THE AO TO HOLD THAT THE ASSESS EE INTRODUCED HIS OWN UNACCOUNTED MONEY BY WAY OF BOGUS LONG TERM CAP ITAL GAIN. THE ASSESSEE HAS FURNISHED ALL THE EVIDENCES IN SUPPORT OF ITS CLAIM SHOWING THE INVESTMENT IN THE SHARES AND PURCHASES OF THE S HARES HAS BEEN ACCEPTED BY THE AO IN THE YEAR OF ITS ACQUISITION A ND THEREAFTER, UNTIL THE SAME WERE SOLD. THE LD. AR HAS SUBMITTED THAT T HE ASSESSEE HAS SHOWN THE SHARES IN THE BALANCE SHEET AS ON 31.03.2 011 WHICH WERE NOT DOUBTED BY THE AO AND ONLY WHEN THE SAME WERE S OLD, THE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 15 ASSESSING OFFICER HAS RAISED THE SUSPICION OF GENUI NENESS OF THE TRANSACTIONS. FURTHER, THE ASSESSEE STILL HOLDS 17, 200 EQUITY SHARES OF M/S OASIS CINE COMMUNICATION LTD./ M/S ECOWAVE INFO TECH LTD. THE ASSESSEE IS REGULARY INVESTING IN THE SHARES AS CAN BE SEEN FROM THE VARIOUS SHARES APPEARING IN HIS BALANCE SHEET AND I N THE DEMAT ACCOUNT. THE TRANSACTIONS OF PURCHASE AND SALE ARE ALL THROUGH ACCOUNT PAYEE CHEQUE AND THE SAME IS REFLECTED IN THE DEMAN T ACCOUNT. THE SALE OF SHARES SUFFERED STT, BROKERAGES, ETC. AND T HEREFORE ELIGIBLE FOR EXEMPTION U/S 10(38) OF THE INCOME TAX ACT. THE LD. AR HAS RELIED UPON THE DECISION OF HONBLE JURISDICTION HIGH COUR T IN CASE OF CIT VS. SMT. POOJA AGRAWAL IN DBIT APPEAL NO. 385/2011 DAT ED 11.09.2017 AS WELL AS DECISION OF HONBLE MADRAS HIGH COURT DATE D 11.08.2017 IN CASE OF M/S LALITHA JEWELLERY MART P. LTD. VS. DCIT. 5. ON THE OTHER HAND LD. DR HAS RELIED UPON THE AUT HORITIES BELOW AND SUBMITTED THAT DURING THE INVESTIGATION CARRIED OUT BY THE KOLKATA INVESTIGATION WING, SHRI DEEPAK PATWARI HAS ADMITTE D OPERATING AS AN ENTRY PROVIDER IN RESPECT OF THE PENNY STOCK OF VAR IOUS COMPANIES. M/S LUMINAIRE TECHNOLOGIES LTD. IS ONE OF SUCH COMPANY AS ADMITTED BY HIM AND CLEARLY MENTIONED IN THE STATEMENT RECORDED BY THE INVESTIGATION WING KOLKATA AND THE ASSESSEE HAS FAI LED TO PROVE THE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 16 GENUINENESS OF THE TRANSACTIONS. THE AO ASKED THE A SSESSEE TO PRODUCE THE PRINCIPAL OFFICERS M/S GRAVITY BARTER LTD. AS W ELL AS M/S PARIDHI PROPERTIES LTD BUT THE ASSESSEE FAILED TO COMPLY WI TH THE NOTICES ISSUED BY THE AO. THE AO HAS CLEARLY MADE OUT THE FACT THA T THE ASSESSEE HAS SHOWN THE SHARES CERTIFICATE WHEREBY THE ASSESSEE P URCHASE THE SHARE OF M/S GRAVITY BARTER LTD. ON 25.01.2011 AND 03.02. 2011 WHEREAS THE HONBLE HIGH COURT HAS STATED IN THE ORDER THAT THE DATE OF CERTIFICATE OF CORROBORATION AFTER THE NAME CHANGE IS 18.04.2011. THUS, HOW COULD THE ASSESSEE PURCHASE THE SHARES OF A PUBLIC LIMITE D COMPANY PRIOR TO 18.04.2011. THE ASSESSING OFFICER HAS MADE THE ANAL YSIS OF THE FACTS AND CIRCUMSTANCES WHERE THE ASSESSEE HAS CLAIMED TO HAVE EARNED EXCEPTIONAL AND EXTRAORDINARY LONG TERM CAPITAL GAI N IN A SHORT DURATION WHICH CLEARLY SHOWS THAT THE TRANSACTIONS OF LONG T ERM CAPITAL GAIN ARE NOTHING BUT THE BOGUS ENTRY PROVIDED BY THE PAPER C OMPANY. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE PURCHASES 800 EQU ITY SHARES M/S GRAVITY BARTER LTD. FOR A CONSIDERATION OF RS. 4 LA CS THE ASSESSEE HAS PRODUCED THE PURCHASE BILL OF THE SHARES PURCHASE F ROM M/S WINALL VINIMAY PVT. LTD. WHICH SHOWS THAT THE ASSESSEE PUR CHASE 800 EQUITY SHARES HAVING FACE VALUE OF RS. 10/- EACH M/S GRAVI TY BARTER PVT. LTD. IN ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 17 ALLOTS OF 400 EACH FOR A CONSIDERATION OF RS. 2 LAC S EACH TOTAL AMOUNT TO RS. 4 LACS @ RS. 500 PER SHARES. THE PURCHASE PRICE OF RS. 500 PER SHARE ITSELF SHOWS THAT IT WAS NOT A TRANSACTION OF PURCHASE OF PENNY STOCK. THESE SHARES WERE DULY REFLECTED IN THE BALA NCE SHEET AS 31.03.2011. THE PAYMENT OF THE PURCHASE CONSIDERATI ON WAS MADE BY THE ASSESSEE VIDE CHEQUE ON 17.05.2011 WHICH IS EVI DENT FROM THE BANK ACCOUNT OF THE ASSESSEE AT PAGE 40 OF THE PAPER BO OK. IN THE MEAN TIME THE SAID M/S GRAVITY BARTER PVT. LTD. CHANGED ITS STATUS FROM PRIVATE LIMITED TO A PUBLIC LIMITED AND FRESH CERTI FICATE WAS ISSUED BY THE REGISTRAR OF COMPANY ON 05.02.2011 WHICH IS PLACED AT PAGE 43 OF THE PAPER BOOK. THEREFORE, THERE IS NO REASON TO DISBEL IEF THE FACT OF FRESH CERTIFICATE ISSUED BY THE REGISTRAR OF COMPANIES ON 05.02.2011 AND HENCE, THE DATE MENTIONED IN THE ORDER OF THE HONB LE KOLKATA HIGH COURT AS 18.04.2011 APPEARS TO BE TYPOGRAPHICAL MIS TAKE. EVEN OTHERWISE THESE TWO DATES DO NOT HAVE ANY EFFECT ON THE GENUINENESS OF THE TRANSACTIONS OF PURCHASE OF EQUITY SHARES BY TH E ASSESSEE OF M/S GRAVITY BARTER PVT. LTD. THE ASSESSEE THOUGH PRODUC ED ALL THE RELEVANT RECORDS AND EVIDENCES RIGHT FROM THE PURCHASE BILLS , CERTIFICATE ISSUED BY THE REGISTRAR ABOUT THE CHANGE OF NAME, THE COMMUNI CATION BETWEEN THE ASSESSEE AND THE SELLER OF THE SHARES AND THERE AFTER, THE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 18 AMALGAMATION OF M/S GRAVITY BARTER LTD. WITH M/S OA SIS CINE COMMUNICATION LTD. WHICH WAS DULY APPROVED BY THE H ONBLE HIGH COURT VIDE ORDER DATED 28.8.2011. THE ASSESSEE IN T HE MEAN TIME GOT THE PHYSICAL SHARE CERTIFICATE DEMATERIALIZED INTO DEMAT ACCOUNT ON 16.02.2012. THERE IS NO REASON TO DOUBT THE ALLOTME NT OF THE SHARES TO THE ASSESSEE AFTER AMALGAMATION TOOK PLACE BETWEEN M/S GRAVITY BARTER LTD. AND M/S OASIS CINE COMMUNICATION LTD. AND SUBS EQUENT TO AMALGAMATION THE ASSESSEE WAS ALLOTTED SHARES OF M/ S OASIS CINE COMMUNICATION LTD. ON 04.02.2012. HENCE, THE ALLOTM ENT OF 35,200 EQUITY SHARES OF M/S OASIS CINE COMMUNICATION LTD. CANNOT BE DOUBTED OR DISPUTED AS THESE SHARES WERE ISSUED POST AMALGA MATION AND BY A LISTED COMPANY. IT IS ALSO NOT IN DISPUTE THAT THES E SHARES OF M/S OASIS CINE COMMUNICATION LTD. WERE ISSUED IN EXCHANGE OF THE SHARES HELD BY THE ASSESSEE OF M/S GRAVITY BARTER LTD. THEREFORE, ONCE THE SHARES ISSUED BY M/S OASIS CINE COMMUNICATION LTD. CANNOT BE DOUBTED THEN THE HOLDING OF THE SHARES OF THE M/S GRAVITY BARTER LTD. BY THE ASSESSEE CORRESPONDINGLY CANNOT BE DOUBTED BECAUSE OF THE RE ASONS THAT THE SHARES OF M/S OASIS CINE COMMUNICATION LTD. COULD B E ALLOTTED ONLY IN EXCHANGE OF SHARES OF M/S GRAVITY BARTER LTD. THE H OLDING THE SHARES OF M/S GRAVITY BARTER LTD. AND THE ALLOTMENT OF SHARES M/S OASIS CINE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 19 COMMUNICATION LTD. ARE DIRECTLY INTERCONNECTED. IN THE ABSENCE OF HOLDING OF SHARES M/S GRAVITY BARTER LTD. THE SHARE S OF THE M/S OASIS CINE COMMUNICATION LTD. COULD NOT BE ISSUED OR ALLO TTED TO THE ASSESSEE. THEREFORE, HOLDING OF THE SHARES BY THE A SSESSEE AT LEAST AT TIME OF AMALGAMATION TOOK PLACE AND SHARES OF THE M /S OASIS CINE COMMUNICATION LTD. ON 04.02.2012 CANNOT BE DOUBTED. MOREOVER, THESE SHARES WERE DEMATERIALIZED BY THE ASSESSEE IN THE D EMAT ACCOUNT, THEREFORE, ON THE DATE OF ALLOTMENT OF SHARE OF M/S OASIS CINE COMMUNICATION LTD THE ASSESSEE WAS HOLDING THESE S HARES AND PRIOR TO THAT THE ASSESSEE WAS HOLDING THE SHARES OF M/S GRA VITY BARTER LTD. ON EXCHANGE OF THE SAME THE SHARES OF M/S OASIS CINE COMMUNICATION LTD. WERE ISSUED TO THE ASSESSEE. THE ASSESSING OFF ICER HAS DOUBTED THE GENUINENESS OF THE TRANSACTIONS HOWEVER, ONCE THE H OLDING OF SHARES OF THE ASSESSEE AT THE TIME OF THE SAME WERE ISSUED BY M/S OASIS CINE COMMUNICATION LTD. IS NOT IN DISPUTE THEN THE HOLDI NG OF SHARES OF M/S GRAVITY BARTER LTD. ALSO CANNOT BE DISPUTE BECAUSE OF THE FACT THAT WITHOUT HOLDING OF THE SAME THE SHARES OF M/S OASIS CINE COMMUNICATION LTD. COULD NOT BE ISSUED TO THE ASSES SEE. ONCE, THE SHARES WERE HELD BY THE ASSESSEE THEN, THE QUESTION OF GENUINENESS OF THE TRANSACTION DOES NOT ARISE HOWEVER, THE PURCHAS E CONSIDERATION CAN ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 20 BE DOUBTED BY THE AO IF THE SHARES WERE CLAIMED TO HAVE BEEN PURCHASED AGAINST CONSIDERATION PAID IN CASH WHICH IS NOT IN CASE OF THE ASSESSEE. THE ASSESSEE HAS PAID PURCHASE CONSIDERAT ION THROUGH CHEQUE AND THEREFORE, EVEN IF THE SAID CONSIDERATIO N IS FOUND TO BE VERY LESS IN COMPARISON TO THE SALE PRICE AT THE TIME OF SALE OF SHARES IN THE ABSENCE OF ANY MATERIAL OR OTHER FACTS DETECTED OR BROUGHT ON RECORD BY THE AO THAT THE ASSESSEE HAS BROUGHT BACK HIS OWN U NACCOUNTED MONEY IN THE SHAPE OF LONG TERM CAPITAL GAIN AND HAS USED THE SAME AS A DEVICE TO AVOID TAX, THE PURCHASE CONSIDERATION PAI D BY THE ASSESSEE CANNOT BE DOUBTED IN THE ABSENCE OF ANY CORROBORATI NG EVIDENCE. THE ASSESSING OFFICER HAS NOT DISPUTED THAT THE FAIR MA RKET VALUE OF THE SHARES OF M/S GRAVITY BARTER LTD. WAS MORE THAN TH E PURCHASE PRICE CLAIMED BY THE ASSESSEE. IT MAY BE A CASE THAT ENSU RING MERGER/AMALGAMATION OF THE SAID COMPANY WITH M/S OA SIS CINE COMMUNICATION LTD. THE ASSESSEE MIGHT HAVE ANTICIPA NT THE EXCEPTIONAL APPRECIATION IN THE SHARE PRICE DUE TO EXTRAORDINAR Y EVENT OF MERGER/ AMALGAMATION. HOWEVER, THE SAME CANNOT BE A REASON FOR DOUBTING GENUINENESS OF THE TRANSACTION IF THE MOTIVE OF PUR CHASE OF THE SHARE IS TO EARN AN EXTRAORDINARY GAIN BECAUSE OF SOME INTER NAL INFORMATION AVAILABLE TO THE ASSESSEE. ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 21 7. IN CASE OF EQUITY SHARES M/S PARIDHI PROPERTIES LTD. THE ASSESSEE PURCHASE 50,000 EQUITY SHARE ON 26.03.2011 BY PAYIN G SHARE APPLICATION MONEY OF RS. 5 LACS WHICH IS DULY REFLE CTED IN THE BANK ACCOUNT OF THE ASSESSEE AS PAID ON 28.03.2011. THER EFORE, THE PAYMENT OF SHARE APPLICATION MONEY HAS BEEN DULY ESTABLISHE D BY THE ASSESSEE THROUGH HIS BANK ACCOUNT FOR ALLOTMENT OF SHARES OF 50,000 EQUITY SHARES OF M/S PARIDHI PROPERTIES LTD. THE SHARE ALL OTTED IN PRIVATE PLACEMENT AS PER OF RS. 10/- CANNOT BE TERMED AS PE NNY STOCK. THE AO DOUBTED THAT THE ENTIRE PROCESS OF APPLICATION AND ALLOTMENT OF SHARES AS IT HAVE BEEN COMPLETED WITHIN A SHORT DURATION O F 5 DAYS, WHICH IN THE OPINION OF THE AO IS NOT POSSIBLE IN ORDINARY C OURSE. HOWEVER, WHEN THE ASSESSEE HAS PRODUCED THE RECORD INCLUDING THE SHARE APPLICATION, PAYMENT OF SHARE APPLICATION MONEY, ALLOTMENT OF SH ARE THEN MERELY BECAUSE OF A SHORT PERIOD OF TIME WILL NOT BE A SUF FICIENT REASON TO HOLD THAT THE TRANSACTION IS BOGUS. THE SHARES ALLOTTED TO THE ASSESSEE VIDE SHARE CERTIFICATE DATED 31.03.2011 WERE DEMATERIALI ZED ON 21.10.2011, THEREFORE, ON THE DATE OF DEMATERIALIZATION OF THE SHARES THE HOLDING OF THE SHARES OF THE ASSESSEE CANNOT BE DOUBTED AND HE NCE THE ACQUISITION OF THE SHARES OF THE ASSESSEE CANNOT BE TREATED AS A BOGUS TRANSACTION. NOBODY CAN HAVE THE SHARES IN HIS OWN NAME IN DEMAN T ACCOUNT ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 22 WITHOUT ACQUIRING OR ALLOTMENT THROUGH DUE PROCESS HENCE, EXCEPT THE PURCHASE CONSIDERATION PAID BY THE ASSESSEE HOLDING OF SHARES CANNOT BE DOUBTED WHEN THE ASSESSEE HAS PRODUCED ALL THE R ELEVANT RECORD OF ISSUING OF ALLOTMENT OF SHARES, PAYMENT OF SHARE AP PLICATION MONEY THROUGH BANK, SHARE CERTIFICATE AND DEMAT ACCOUNT S HOWING THE SHARES CREDITED IN THE DEMAT ACCOUNT OF THE ASSESSEE ON DE MATERIALIZATION. THE SAID COMPANY M/S PARIDHI PROPERTIES LTD. WAS SUBSEQ UENTLY MERGED WITH M/S LUMINAIRE TECHNOLOGIES LTD. VIDE SCHEME APPROV ED BY THE HONBLE BOMBAY HIGH COURT ORDER DATED 27.07.2012. HENCE, TH E ASSESSEE GOT ALLOTTED THE EQUITY SHARES OF M/S LUMINAIRE TECHNOL OGIES LTD. AS PER SWAP RATIO APPROVED IN THE SCHEME AND CONSEQUENTLY THE ASSESSEE WAS ALLOTTED 5 LACS SHARE OF RS. 1/- EACH ON M/S LUMINA IRE TECHNOLOGIES LTD. THE EVIDENCE PRODUCED BY THE ASSESSEE LEAVE NO SCOP E OF ANY DOUBT ABOUT THE HOLDING OF THE SHARES BY THE ASSESSEE. 8. AS REGARDS THE PURCHASE CONSIDERATION WHEN THE A SSESSEE HAS SHOWN THE SHARE APPLICATION MONEY PAID THROUGH HIS BANK ACCOUNT AND THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SH OW THAT APART FROM THE SHARE APPLICATION MONEY PAID THROUGH BANK ACCOU NT THE ASSESSEE HAS BROUGHT HIS OWN UNACCOUNTED MONEY BACK AS LONG TERM CAPITAL GAIN. IT IS ALSO PERTINENT TO NOTE THAT THE SHARES OF M/S OASIS CINE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 23 COMMUNICATION LTD. ARE STILL HELD BY THE ASSESSEE I N ITS DEMAT ACCOUNT TO THE EXTENT OF 17,200 SHARES AND THEREFORE, THE H OLDING OF THE SHARES BY ANY PARAMETER OR STRETCH OF IMAGINATION CANNOT B E DOUBTED. THE AO HAS PASSED THE ASSESSMENT YEAR BASED ON THE STATEME NT OF SHRI DEEPAK PATWARI RECORDED BY THE INVESTIGATION WING OF KOLK ATA HOWEVER, THE ASSESSEE HAS SPECIFICALLY DEMANDED THE CROSS EXAMI NATION OF SHRI DEEPAK PATWARI VIDE LETTER DATED 15.03.2016 SPECIFI CALLY IN PARAS 3 AND 4 AS REPRODUCED BY THE AO AT PAGE NO. 7 OF THE ASSE SSMENT ORDER AS UNDER:- 3. SINCE, THE SHARES WERE ALLOTTED BY THE COMPANY THROUGH PRIVATE PLACEMENT AFTER COMPLETING THE FORMALITIES OF ROC AND WERE SOLD THROUGH THE RECOGNIZED BOMBAY STOCK EXCHA GE (BSE) THERE IS NO QUESTION OF KNOWING INDIVIDUAL PERSONS OR COMPANY OFFICIAL PERSONALLY IN THE WHOLE PROCESS, SO THE AS SESSEE IS NOT IN POSITION TO PRODUCE ANY ONE FOR CROSS EXAMINATION B EFORE YOUR GOOD SELF. SINCE YOUR GOOD SELF HAS GOT THE AUTHORI TY, WE HUMBLY REQUEST YOU TO KINDLY ISSUE THE NOTICE U/S 131 OF T HE INCOME TAX ACT 1961 TO THE CONCERNED INDIVIDUAL PERSONS OR COM PANY OFFICIALS FOR CROSS EXAMINATION. PLEASE NOTE THAT THE ASSESSE E IS READY TO BEAR THE COST OF THEIR TRAVELLING IN THIS REGARDS. 4. AS REGARD YOUR OPPORTUNITY GIVEN TO US TO READ T HE RECORDED STATEMENT OF SHRI DEEPAK PATWARI AND TO PRODUCE HIM FROM THE CROSS EXAMINATION BEFORE YOUR GOOD SELF, WE HAVE TO SUBMIT THAT FROM THE READING OF THE STATEMENTS OF SHRI DEEPAK P ATWARI IT IS CLEAR THAT HE HAS NEVER TAKEN THE NAME OF THE ASSES SEE, NOR THE ASSESSEE IS AWARE OF ANY SHRI DEEPAK PATWARI NEITHE R HE HAS MADE ANY TRANSACTION WITH HIM, SO IN WHAT CAPACITY HE CAN CALL HIM FOR CROSS EXAMINATION BEFORE YOUR GOOD SELF. SI NCE YOUR GOOD ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 24 SELF HAS GOT THE AUTHORITY, WE HUMBLY REQUEST YOUTO KINDLY ISSUE THE NOTICE U/S 131 OF THE INCOME TAX ACT 1961 TO HI M ALSO FOR CROSS EXAMINATION. WE ALSO REQUEST YOUR GOOD SELF T O KINGLY PROVIDE US THE COPY OF STATEMENTS OF SHRI DEEPAK PA TWARI ALONG WITH THE OTHER RELEVANT DOCUMENTS. PLEASE NOTE THAT THE ASSESSEE IS READY TO BEAR THE COST OF HIS TRAVELLING IN THIS REGARD. IT IS MANIFEST FROM THE ASSESSEES REPLY TO SHOW CA USE NOTICE THAT THE ASSESSEE HAD SPECIFICALLY DEMANDED THE CROSS EXAMIN ATION OF SHRI DEEPAK PATWARI HOWEVER, THE ASSESSING OFFICER DID N OT OFFER THE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SHRI DEEPAK PATWARI. FURTHER, THE AO ASKED THE ASSESSEE TO PRODUCE THE P RINCIPAL OFFICERS OF THE M/S GRAVITY BARTER LTD. AND M/S PARIDHI PROPERT IES LTD. HOWEVER, IN OUR VIEW IF THE ASSESSING OFFICER WANTED TO EXAMINE THE PRINCIPAL OFFICERS OF THOSE COMPANIES HE WAS HAVING THE AUTHO RITY TO SUMMON THEM AND RECORD THEIR STATEMENTS INSTEAD OF SHIFTIN G BURDEN ON THE ASSESSEE. IT IS NOT EXPECTED FROM THE ASSESSEE INDI VIDUAL TO PRODUCE THE PRINCIPAL OFFICERS OF THE COMPANIES RATHER THE AO O UGHT TO HAVE SUMMONED THEM IF THE EXAMINATION OF THE OFFICERS WE RE CONSIDERED AS NECESSARY BY THE AO. HENCE, IT WAS IMPROPER AND UNJ USTIFIED ON THE PART OF THE AO TO ASKED THE ASSESSEE TO PRODUCE THE PRINCIPAL OFFICERS OF THOSE COMPANIES. AS REGARDS THE NON GRANT OF OPPORT UNITY TO CROSS EXAMINE, THE HONBLE SUPREME COURT IN CASE OF ANDAM AN TIMBER ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 25 INDUSTRIES VS. CCE (SUPRA) WHILE DEALING WITH THE I SSUE HAS HELD IN PARA 5 TO 8 AS UNDER: 5. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, AND MR. K. RADHAKRISHNA N, LEARNED SENIOR COUNSEL WHO APPEARED FOR THE REVENUE. 6. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS O F THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE OR DER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMIS SIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TW O WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASS ESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PAS SED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONE D THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS N OT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE T RIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS T OTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATI ON OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHI CH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXP LAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT F OR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLA NT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. 7. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESS ES AND WANTED TO DISCREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT W ANTED TO AVAIL ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 26 THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, T HE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FAC T, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIO NED IN THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CR OSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORIT Y TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS -EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALS O POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAM E BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. 8. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTI FY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS TH E ONLY BASIS OF ISSUING THE SHOW CAUSE NOTICE. THEREFORE, THE STATEMENT OF WITNESS CANNOT BE SOLE BASIS OF THE ASSESSMENT WITHOUT GIVEN AN OPPORTUNITY OF CROSS EX AMINATION AND CONSEQUENTLY IT IS A SERIOUS FLAW WHICH RENDERS THE ORDER A NULLITY. THE MUMBAI SPECIAL OF THE TRIBUNAL IN CASE OF GTC INDUS TRIES VS. ACIT (SUPRA) HAD THE OCCASION TO CONSIDER THE ADDITION M ADE BY THE AO ON THE BASIS OF SUSPICION AND SURMISES AND OBSERVED IN PAR 46 AS UNDER:- 46. IN SITUATIONS LIKE THIS CASE, ONE MAY FALL INTO REALM OF 'PREPONDERANCE OF PROBABILITY' WHERE THERE ARE MANY PROBABLE FACTORS, SOME IN FAVOUR OF THE ASSESSEE AND SOME MA Y GO AGAINST THE ASSESSEE. BUT THE PROBABLE FACTORS HAVE TO BE W EIGHED ON ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 27 MATERIAL FACTS SO COLLECTED. HERE IN THIS CASE THE MATERIAL FACTS STRONGLY INDICATE A PROBABILITY THAT THE WHOLESALE BUYERS HAD COLLECTED THE PREMIUM MONEY FOR SPENDING IT ON ADVE RTISEMENT AND OTHER EXPENSES AND IT WAS THEIR LIABILITY AS PE R THEIR MUTUAL UNDERSTANDING WITH THE ASEESSEE. ANOTHER VERY STRON G PROBABLE FACTOR IS THAT THE ENTIRE SCHEME OF 'TWIN BRANDING' AND COLLECTION OF PREMIUM WAS SO DESIGNED THAT ASSESSEE-COMPANY NE ED NOT INCUR ADVERTISEMENT EXPENSES AND THE RESPONSIBILITY FOR SALES PROMOTION AND ADVERTISEMENT LIES WHOLLY UPON WHOLES ALE BUYERS WHO WILL BORNE OUT THESE EXPENSES FROM ALLEGED COLL ECTION OF PREMIUM. THE PROBABLE FACTORS COULD HAVE GONE AGAIN ST THE ASSESSEE ONLY IF THERE WOULD HAVE BEEN SOME EVIDENC E FOUND FROM SEVERAL SEARCHES EITHER CONDUCTED BY DRI OR BY THE DEPARTMENT THAT ASSESSEE-COMPANY WAS BENEFICIARY OF ANY SUCH ACCOUNTS. AT LEAST SOMETHING WOULD HAVE BEEN UNEART HED FROM SUCH GLOBAL LEVEL INVESTIGATION BY TWO CENTRAL GOVE RNMENT AUTHORITIES. IN CASE OF CERTAIN DONATIONS GIVEN TO A CHURCH, ORIGINATING THROUGH THESE BENAMI BANK ACCOUNTS ON T HE BEHEST OF ONE OF THE EMPLOYEES OF THE ASSESSEE COMPANY, DOES NOT IMPLICATE THAT GTC AS A CORPORATE ENTITY WAS HAVING THE CONTROL OF THESE BANK ACCOUNTS COMPLETELY. WITHOUT GOING INTO THE AUTHENTICITY AND VERACITY OF THE STATEMENTS OF THE WITNESSES SMT. NIRMALA SUNDARAM, WE ARE OF THE OPINION THAT THIS O NE INCIDENT OF DONATION THROUGH BANK ACCOUNTS AT THE DIRECTION OF ONE OF THE EMPLOYEE OF THE COMPANY DOES NOT IMPLICATE THAT THE ENTIRE PREMIUM COLLECTED ALL THROUGHOUT THE COUNTRY AND DE POSITED IN BENAMI BANK ACCOUNTS ACTUALLY BELONGS TO THE ASSESS EE-COMPANY OR THE ASSESSEE-COMPANY HAD DIRECT CONTROL ON THESE BANK ACCOUNTS. ULTIMATELY, THE ENTIRE CASE OF THE REVENU E HINGES UPON THE PRESUMPTION THAT ASSESSEE IS BOUND TO HAVE SOME LARGE SHARE IN SO-CALLED SECRET MONEY IN THE FORM OF PREMIUM AN D ITS CIRCULATION. HOWEVER, THIS PRESUMPTION OR SUSPICION HOW STRONG IT MAY APPEAR TO BE TRUE, BUT NEEDS TO BE CORROBORATED BY SOME EVIDENCE TO ESTABLISH A LINK THAT GTC ACTUALLY HAD SOME KIND OF A SHARE IN SUCH SECRET MONEY. IT IS QUITE A TRITE LAW THAT SUSPICION ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 28 HOWSOEVER STRONG MAY BE BUT CANNOT BE THE BASIS OF ADDITION EXCEPT FOR SOME MATERIAL EVIDENCE ON RECORD. THE TH EORY OF 'PREPONDERANCE OF PROBABILITY' IS APPLIED TO WEIGH THE EVIDENCES OF EITHER SIDE AND DRAW A CONCLUSION IN FAVOUR OF A PARTY WHICH HAS MORE FAVOURABLE FACTORS IN HIS SIDE. THE CONCLU SIONS HAVE TO BE DRAWN ON THE BASIS OF CERTAIN ADMITTED FACTS AND MATERIALS AND NOT ON THE BASIS OF PRESUMPTION OF FACTS THAT MIGHT GO AGAINST ASSESSEE. ONCE NOTHING HAS BEEN PROVED AGAINST THE ASSESSEE WITH AID OF ANY DIRECT MATERIAL ESPECIALLY WHEN VAR IOUS ROUNDS OF INVESTIGATION HAVE BEEN CARRIED OUT, THEN NOTHING C AN BE IMPLICATED AGAINST THE ASSESSEE. THEREFORE, WHEN THE ASSESSING OFFICER HAS NOT BROUG HT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PAID OVER AND ABOVE THE PURCHASE CONSIDERATION AS CLAIMED AND EVIDENT FROM THE BANK ACCOUNT THEN, IN THE ABSENCE OF ANY EVIDENCE IT CANNOT BE HELD THAT THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED MONEY BY WAY OF BOGU S LONG TERM CAPITAL GAIN. THE HONBLE JURISDICTION HIGH COURT I N CASE OF CIT VS. SMT. POOJA AGRAWAL (SUPRA) HAS UPHELD THE FINDING OF THE TRIBUNAL ON THIS ISSUE IN PARA 12 AS UNDER:- 12. HOWEVER, COUNSEL FOR THE RESPONDENT HAS TAKEN US TO THE ORDER OF CIT(A) AND ALSO TO THE ORDER OF TRIBUNAL A ND CONTENDED THAT IN VIEW OF THE FINDING REACHED, WHICH WAS DONE THROUGH STOCK EXCHANGE AND TAKING INTO CONSIDERATION THE RE VENUE TRANSACTIONS, THE ADDITION MADE WAS DELETED BY THE TRIBUNAL OBSERVING AS UNDER:- ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 29 'CONTENTION OF THE AR IS CONSIDERED. ONE OF THE MAI N REASONS FOR NOT ACCEPTING THE GENUINENESS OF THE TRANSACTIONS D ECLARED BY THE APPELLANT THAT AT THE TIME OF SURVEY THE APPELLANT IN HIS STATEMENT DENIED HAVING MADE ANY TRANSACTIONS IN SHARES. HOWE VER, SUBSEQUENTLY THE FACTS CAME ON RECORD THAT THE APPE LLANT HAD TRANSACTED NOT ONLY IN THE SHARES WHICH ARE DISPUTE D BUT SHARES OF VARIOUS OTHER COMPANIES LIKE SATYAM COMPUTERS, H CL, IPC L, BPCL AND TATA TEA ETC. REGARDING THE TRANSACTIONS I N QUESTION VARIOUS DETAILS LIKE COPY OF CONTRACT NOTE REGARDIN G PURCHASE AND SALE OF SHARES OF LIMTEX AND KONARK COMMERCE & IND. LTD., ASSESSEE'S ACCOUNT WITH P.K. AGARWAL & CO. SHARE BR OKER, COMPANY'S MASTER DETAILS FROM REGISTRAR OF COMPANIE S, KOLKATA WERE FILED. COPY OF DEPOSITORY A/C OR DEMAT ACCOUNT WITH ALANK RIT ASSIGNMENT LTD., A SUBSIDIARY OF NSDL WAS ALSO FILE D WHICH SHOWS THAT THE TRANSACTIONS WERE MADE THROUGH DEMAT A/C. WHEN THE RELEVANT DOCUMENTS ARE AVAILABLE THE FACT OF TRANSA CTIONS ENTERED INTO CANNOT BE DENIED SIMPLY ON THE GROUND THAT IN HIS STATEMENT THE APPELLANT DENIED HAVING MADE ANY TRANSACTIONS I N SHARES. THE PAYMENTS AND RECEIPTS ARE MADE THROUGH A/C PAYEE CH EQUES AND THE TRANSACTIONS ARE ROUTED THROUGH KOLKATA STOCK E XCHANGE. THERE IS NO EVIDENCE THAT THE CASH HAS GONE BACK IN APPELLANTS'S ACCOUNT. PRIMA FACIE THE TRANSACTION WHICH ARE SUPP ORTED BY DOCUMENTS APPEAR TO BE GENUINE TRANSACTIONS. THE AO HAS DISCUSSED MODUS OPERANDI IN SOME SHAM TRANSACTIONS WHICH WERE DETECTED IN THE SEARCH CASE OF B.C. PUROHIT GROUP. THE AO HAS ALSO STATED IN THE ASSESSMENT ORDER ITSELF WHILE DI SCUSSING THE MODUS OPERANDI THAT ACCOMMODATION ENTRIES OF LONG T ERM CAPITAL GAIN WERE PURCHASED AS LONG TERM CAPITAL GAIN EITHE R WAS EXEMPTED FROM TAX OR WAS TAXABLE AT A LOWER RATE. A S THE APPELLANT'S CASE IS OF SHORT TERM CAPITAL GAIN, IT DOES NOT EXACTLY FALL UNDER THAT CATEGORY OF ACCOMMODATION TRANSACTI ONS. FURTHER AS PER THE REPORT OF DCIT, CENTRAL CIRCLE-3 SH. P.K . AGARWAL WAS FOUND TO BE AN ENTRY PROVIDER AS STATED BY SH. PAWA N PUROHIT OF ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 30 B.C. PURIHIT AND CO. GROUP. THE AR MADE SUBMISSION BEFORE THE AO THAT THE FACT WAS NOT CORRECT AS IN THE STATEMEN T OF SH. PAWAN PUROHIT THERE IS NO MENTION OF SH. P. K. AGARWAL. I T WAS ALSO SUBMITTED THAT THERE WAS NO MENTION OF SH. P. K. AG ARWAL IN THE ORDER OF SETTLEMENT COMMISSION IN THE CASE OF SH. S USHIL KUMAR PUROHIT. COPY OF THE ORDER OF SETTLEMENT COMMISSION WAS SUBMITTED. THE AO HAS FAILED TO COUNTER THE OBJECTI ONS RAISED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS. SI MPLY MENTIONING THAT THESE FINDINGS ARE IN THE APPRAISAL REPORT AND APPRAISAL REPORT IS MADE BY THE INVESTING WING AFTE R CONSIDERING ALL THEMATERIAL FACTS AVAILABLE ON RECORD DOES NOT HELP MUCH. THE AO HAS FAILED TO PROVE THROUGH ANY INDEPENDENT INQU IRY OR RELYING ON SOME MATERIAL THAT THE TRANSACTIONS MADE BY THE APPELLANT THROUGH SHARE BROKER P.K. AGARWAL WERE NON-GENUINE OR THERE WAS ANY ADVERSE MENTION ABOUT THE TRANSACTION IN QU ESTION IN STATEMENT OF SH. PAWAN PUROHI. SIMPLY BECAUSE IN TH E SHAM TRANSACTIONS BANK A/C WERE OPENED WITH HDFC BANK AN D THE APPELLANT HAS ALSO RECEIVED SHORT TERM CAPITAL GAIN IN HIS ACCOUNT WITH HDFC BANK DOES NOT ESTABLISH THAT THE TRANSACT ION MADE BY THE APPELLANT WERE NON GENUINE. CONSIDERING ALL THE SE FACTS THE SHARE TRANSACTIONS MADE THROUGH SHRI P.K. AGARWAL C ANNOT BE HELD AS NON-GENUINE. CONSEQUENTLY DENYING THE CLAIM OF SHORT TERM CAPITAL GAIN (6 OF 6) [ ITA-385/2011] MADE BY THE APPELLANT BEFORE THE AO IS NOT APPROVED. THE AO IS THEREFORE, DIRECTED TO ACCEPT CLAIM OF SHORT TERM CAPITAL GAIN AS SHOWN BY THE APPELLANT.' IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AO IS BASED ON MERE SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO SHOW THAT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN. ON THE OTHER HAND, THE ASSESSEE HAS BROUGHT ALL THE ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 31 RELEVANT MATERIAL TO SUBSTANTIATE ITS CLAIM THAT TR ANSACTIONS OF THE PURCHASE AND SALE OF SHARES ARE GENUINE. EVEN OTHER WISE THE HOLDING OF THE SHARES BY THE ASSESSEE AT THE TIME OF ALLOTMENT SUBSEQUENT TO THE AMALGAMATION/MERGER IS NOT IN DOUBT, THEREFORE, THE TRANSACTION CANNOT BE HELD AS BOGUS. ACCORDINGLY WE DELETE THE ADDITIO N MADE BY THE AO ON THIS ACCOUNT. 9. GROUND NO. 3 IS REGARDING ADDITION ON ACCOUNT OF PAYMENT OF COMMISSION TO SHRI DEEPAK PATWARI. THIS ISSUE IS CO NSEQUENTIAL TO THE ISSUE INVOLVED IN GROUND NO. 1 AND 2 THEREFORE, WHE N WE HAVE GIVEN A FINDING THE TRANSACTION OF PURCHASE AND SALE SHARES AND CONSEQUENTIAL LONG TERM CAPITAL GAIN CANNOT BE TREATED AS BOGUS T HEN THE ADDITION MADE BY THE AO ON ACCOUNT OF NOTIONAL COMMISSION PA ID TO SHRI DEEPAK PATWARI WILL NOT BE SUSTAINABLE BEING CONSEQUENTIAL TO THE FIRST ISSUE AND HENCE DELETED. 10. GROUND NO. 4 IS REGARDING DISALLOWANCE OF LEGAL EXPENDITURE OF RS. 12,500/- . 11. WE HAVE HEARD LD. AR AS WELL AS LD. DR AND CONS IDERED THE RELEVANT MATERIAL ON RECORD. THE AO HAS DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT IT DOES NOT PERTAIN TO THE LONG TERM CAPITAL GAIN WHICH WAS TREATED AS BOGUS BY THE AO. THE LD. CIT(A) HAS ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 32 CONFIRMED THE DISALLOWANCE BY HOLDING THAT AS PER S ECTION 57 OF THE ACT AN EXPENDITURE CAN BE ALLOWED WHICH IS INCURRED TO EARN THE INCOME CHANGEABLE TO TAX. THE LD. CIT(A) HAS THUS OBSERVED THAT THERE IS NO NEXUS BETWEEN THE EXPENDITURE AND EARNING OF INTERE ST INCOME WHICH IS OFFERED TO TAX UNDER THE HEAD INCOME FROM OTHER SOU RCES. WE FIND THAT THE ASSESSEE CLAIMED THE PAYMENT OF RS. 12,500/- TO M/S R. MANGAL & CO., CHARTERED ACCOUNTANTS TOWARDS LEGAL FEES FOR F ILING THE INCOME TAX RETURN. THE GENUINENESS OF THE PAYMENT HAS NOT BE D OUBTED BY THE AUTHORITIES BELOW. THEREFORE, THE SAID EXPENDITURE IS ALLOWABLE CLAIM AGAINST INCOME DECLARED BY THE ASSESSEE UNDER THE H EAD INCOME FROM OTHER SOURCES FOR WHICH THE ASSESSEE HAS FILED THE RETURN OF INCOME AND PAID TAXES. ACCORDINGLY WE ALLOW THE CLAIM OF THE A SSESSEE. 12. IN THE REST OF THE APPEALS THE ISSUE RAISED BY THE ASSESSEES ARE COMMON AND ARISING FROM IDENTICAL FACTS AS IN THE A PPEAL IN ITA NO. 368/JP/2017 EXCEPT THE DIFFERENCE OF ADDITION MADE BY THE AO. ACCORDINGLY, IN VIEW OF OUR FINDING ON THESE ISSUES IN ITA NO. 368/JP/2017 THE GROUNDS RAISED IN THESE APPEALS IN ITA NO. 369/JP/2017 TO 372/JP/2017 ARE DECIDED IN FAVOUR OF THE ASSESSEE. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE AL LOWED. ITA NO. 368 & 372/JP/2017 SHRI PRAMOD JAIN VS. DCIT, JAIPUR. 33 ORDER PRONOUNCED IN THE OPEN COURT ON 31/01/201 8 SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:-31/01/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PRAMOD JAIN AND OTHERS, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE-3/ ITO,WARD-3(2), JAIP UR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 368 TO 372/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR