Sunita Khemka, New Delhi V. ACIT, Central Circle- 15, Jhandewalan Extn., New Delhi

ITA 389/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4738 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 12-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: SUMIT GOE L
• Keywords: Unexplained cash credit; Capital asset; Depreciation; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Question of law; Cost of acquisition; Corroborative evidences; Accommodation entries; Onus to prove; Sham transactions
• Section: 131; 68; 144; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.389/DEL./2018 ASSESSMENT YEAR 2014-2015 SMT. SUNITA KHEMKA, 5A/4B, ANSARI ROAD, DARYA GANJ, NEW DELHI PIN 110 002. PAN ABGPK4707P VS THE ACIT, CC-15, JHW. EXTENSION, NEW DELHI. (APP ELLANT ) (RESPONDENT) FOR ASSESSEE : SHRI RAJ KUMAR, C.A. & SHRI SUMIT GOEL, C.A. FOR REVENUE : SHRI S.L. ANURAGI, SR. D.R. DATE OF HEARING : 12 .0 7 .2018 DATE OF PRONOUNCEMENT : 02 .0 8 .2018 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-XXVI, NEW DELHI, DATED 28.12.2017, FOR THE A.Y. 2014-2015 ON THE FOLLOWING GROUNDS : 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, BOTH THE LO WER AUTHORITIES ERRED IN LAW AS WELL AS ON MERITS IN AS SESSING THE DECLARED LTCG OF RS.47,16,264/- ON SALE OF SHAR ES 2 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. AS UNACCOUNTED INCOME AND FURTHER ERRED IN NOT ALLO WING THE EXEMPTION U/S. 10 (38) AS CLAIMED. 2. THAT IN THE ABSENCE OF CONFRONTING WITH THE ADVERSE MATERIAL USED AGAINST THE ASSESSEE AND IN THE ABSEN CE OF PROVIDING CROSS-EXAMINATION OF PERSONS WHOSE STATEMENTS HAVE BEEN RECORDED ON THE BACK OF THE ASSESSEE, NO COGNIZENCE OF SUCH MATERIAL AN STATEME NTS SHOULD HAD BEEN TAKEN. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT ASSESSE E FILED HER RETURN OF INCOME FOR ASSESSMENT YEAR UNDER APPE AL ON 30.07.2014 DECLARING TOTAL INCOME OF RS. NIL. THIS CASE WAS TAKEN UP FOR SCRUTINY UNDER CASS WITH MAIN REASON F OR SELECTION BEING TO EXAMINE THE SOURCE OF SUSPICIOUS LONG TERM CAPITAL GAIN CLAIMED EXEMPT FROM TAXATION UNDER SEC TION 10(38). DURING THE ASSESSMENT PROCEEDINGS, IT WAS N OTICED THAT THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL GAINS OF RS.46,63,728/- ON SALE OF SHARES OF FOLLOWING COMPA NIES. 3 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. NAME OF THE COMPANY SALE PRICE PURCHASE PRICE TRANSFER EXPENSES EXEMPT U/S. 10(38). HPC BIOSCIENCES LTD. 23,23,548/- 25,000/- --- 22,99,548/- ESTEEM BIO ORGANIC & FOOD PROCESSING LTD., 25,66,716/- 1,50,000/- --- 24,16,716/- TOTAL 47,16,264/ - 2.1. THE A.O. ISSUED SHOW CAUSE NOTICE AND ASKED T HE ASSESSEE TO FURNISH SUPPORTING DOCUMENTS AND TO EXP LAIN SUCH AN EXPONENTIAL RISE IN THE PRICE OF SHARES IN MERELY 13- 14 MONTHS THAT TOO WITHOUT ANY POSITIVE INDICATION IN THE BASIC FUNDAMENTALS OR EARNINGS OF THE COMPANIES IN WHICH ASSESSEE HAVE MADE INVESTMENT AND ASKED THE ASSESSE E AS TO WHY THE SAME BE NOT ADDED TO THE INCOME OF THE A SSESSEE. COPY OF THE SHOW CAUSE NOTICE ISSUED TO THE ASSESSE E IS REPRODUCED IN THE ASSESSMENT ORDER IN WHICH A.O. HA S ALSO NOTED THAT ASSESSEE HAS FURNISHED BANK ACCOUNT STAT EMENT, DEMAT ACCOUNT AND BROKERS NOTE TO STRENGTHEN THE C LAIM OF LONG TERM CAPITAL GAINS. THE A.O. HOWEVER, PROPOSED THAT IT IS AN ARRANGED TRANSACTION THROUGH PENNY STOCK COMP ANIES 4 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. WHO RIGGED THE PRICE OF SHARES. THE A.O. REFERRED T O SOME REPORT OF THE SEBI ORDER AND STATEMENTS OF CERTAIN PERSONS I.E., MR. SOMAIN CHOUDHARY AND MR. SANJAY VORA ETC. THE ASSESSEE REPLIED EACH AND EVERY QUERY OF THE A.O. S UPPORTED BY DOCUMENTARY EVIDENCE TO SHOW THAT ASSESSEE ENTER ED INTO GENUINE TRANSACTION AND THAT NONE OF THE ENQUIRIES CONDUCTED AT THE BACK OF THE ASSESSEE ARE RELEVANT TO ASSESSEE AND HAVE ALSO HAVE NOT BEEN CONFRONTED TO ASSESSEE. THEREFORE, NO ADDITIONS SHOULD BE MADE. THE A.O. HO WEVER, DID NOT ACCEPT THE CONTENTION OF ASSESSEE AND HELD THAT THE CLAIM OF LONG TERM CAPITAL GAINS IS PRIMA FACIE BOG US. A.O. ACCORDINGLY MADE ADDITION OF RS.47,16,264/-. THE LD . CIT(A) ON THE SAME REASONING AS GIVEN BY THE A.O. BASED ON INVESTIGATION CONDUCTED BY THE INCOME TAX DEPARTMEN T AND ORDER OF SEBI, CONFIRMED THE ADDITION AND DISMISSED THE APPEAL OF ASSESSEE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE HAS REITE RATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND 5 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. SUBMITTED THAT THE ASSESSEE SOLD THE SHARES OF TWO COMPANIES ABOVE FOR WHICH LONG TERM CAPITAL GAINS WAS EARNED AND CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE I.T. ACT. IN THE CASE OF HPC, SHARES WERE PURCHASED DIRECTLY FROM COMPANY IN PRECEDING A.Y. 2013-2014 ON PREFERENTIAL ALLOTMENT. PURCHASES WAS NOT DOUBTED IN PRECEDING A.Y. 2013-2014. PURCHA SES WERE THROUGH BANKING CHANNEL. HE HAS FILED COPY OF THE S HARE APPLICATION FORM IN THE PAPER BOOK WITH LETTER FROM HPC FOR ALLOTMENT OF 2500 SHARES ALONG WITH INTIMATION OF A LLOTMENT OF BONUS SHARES SUPPORTED BY BANK STATEMENT SHOWING PA YMENT OF PURCHASE COST. SIMILARLY, SALE WAS PROVED THROUG H DOCUMENTS I.E., BROKER NOTE FOR SALE OF 1200 SHARES BY ISF (B ROKER) DATED 19.03.2014 AND SIMILARLY SOLD SHARES THROUGH THE SA ME BROKER ON 20.03.2014 AND 21.03.2014. THE TRANSACTION STATE MENT FOR SALE OF SHARES THROUGH DEMAT ACCOUNT ARE FILED IN T HE PAPER BOOK WHICH IS SUPPORTED BY LEDGER ACCOUNT IN THE BO OK OF THE BROKER AND BANK STATEMENTS SHOWING CREDIT OF SALE P ROCEEDS. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN THE CASE OF M/S. ESTEEM BIO ORGANIC & FOOD PROCESSING L TD., THESE 6 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. SHARES WERE DIRECTLY PURCHASED FROM COMPANY IN PREC EDING A.Y. 2013-2014 IN IPO. PURCHASES IS NOT DOUBTED WHICH IS THROUGH BANKING CHANNEL. THE PURCHASE IS PROVED THROUGH SHA RE APPLICATION FORM OF IPO, COPY OF THE CHEQUE ISSUED FOR IPO ALLOTMENT, ALLOTMENT LETTER, COPY OF DEMAT ACCOUNT SHOWING IPO AND BANK STATEMENT SHOWING PAYMENT OF RS.1,50,000/- THE SALES STAND PROVED THROUGH BROKER NOTE DATED 06.03. 2014, 07.03.2014 AND 10.03.2014. THE TRANSACTION STATEMEN T FOR SALE OF SHARES THROUGH DEMAT ACCOUNT SUPPORTED BY LEDGER ACCOUNT IN BOOKS OF BROKER AND BANK STATEMENT SHOWING CREDI T OF SALE PROCEEDS, ALL THE DOCUMENTS ARE FILED IN THE PAPER BOOK. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SHARES HAVE BEEN PURCHASED THROUGH BANKING CHANNEL AND THROUGH DEMAT ACCOUNT THROUGH BROKER/RECOGNIZED STOCK EXCHANGE. S ALES ARE SUBJECTED TO STT. SALES HAVE BEEN MADE AFTER RETAI NING THE SAME FOR A PERIOD OF MORE THAN 12 MONTHS. ALL THE S HARES ARE OF LISTED COMPANY REGISTERED IN STOCK EXCHANGE. THE PU RCHASE AND SALES ARE AT PREVAILING MARKET PRICE. LEARNED COUNS EL FOR THE ASSESSEE SUBMITTED THAT ALL THESE DOCUMENTARY EVIDE NCES HAVE 7 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. NOT BEEN DISPUTED BY THE AUTHORITIES BELOW AND NO E NQUIRY HAVE BEEN MADE FOR THE SAME. THEREFORE, ASSESSEE ENTERED INTO GENUINE SHARE TRANSACTION AND ALSO PROVED CONDITION S OF SECTION 10(38) OF THE I.T. ACT. THE FINDINGS OF THE AUTHORI TIES BELOW ARE WITHOUT BASIS AND WITHOUT JUSTIFICATION. THE REPORT OF THE SEBI CANNOT BE TAKEN AS EVIDENCE TO PROVE THE TRANSACTIO N AS NON- GENUINE. IN THE INTERIM SEBI REPORT DATED 29.06.201 5, NAME OF THE ASSESSEE WAS NOT INCLUDED IN THE LIST OF DUBIOU S ENTITIES AND ALSO LARGE NUMBER OF PERSONS WHICH WERE INCLUDED IN THE REPORT DATED 29.06.2015 WERE GIVEN CLEAN CHIT BY SEBI VIDE INTERIM REPORT DATED 06.09.2017. THUS, THE ASSESSEE WAS NEV ER LISTED BY SEBI AS DOUBTFUL PERSON. THE REPORT OF THE INVES TIGATION WING, KOLKATA IS NOT RELEVANT TO THE CASE OF THE AS SESSEE. A.O. REFERRED TO STATEMENTS OF MR. SOMAIN CHOUDHARY AND MR. SANJAY VORA WITH WHOM ASSESSEE HAS NO TRANSACTION. THEIR STATEMENTS ARE NOT SUBJECTED TO CROSS-EXAMINE, THER EFORE, CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. TH E OBJECTIONS OF THE A.O. ARE INCORRECT. LEARNED COUNSEL FOR THE ASSESSEE IN 8 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. SUPPORT OF THE ABOVE CONTENTION RELIED UPON THE FOL LOWING DECISIONS : (I) PR. CIT VS. PREMPAL GANDHI ITA.NO.95 OF 2017 DATED 18.01.2018 (P & H ) (HC). (II) PR. CIT VS. SHRI HITESH GANDHI ITA.NO.18 OF 2017 DATED 16.02.2017 (P & H ) (HC) (III) MEENU GOEL VS. ITO ITA.NO.6235/DEL./2017 DA TED 19.03.2018 (ITAT) (DELHI, SMC-BENCH) (IV) CHANDER PRAKASH VS. ITO ITA.NO.6880/DEL./201 7 DATED 12.03.2018 (ITAT) (DELHI SMC-BENCH) (V) ITO VS. ARVIND KUMAR JAIN HUF ITA.NO.4862/MUM/2014 DATED 18.09.2017 (ITAT) (MUM. H-BENCH). (VI) PRAKASH CHAND BHUTORIA VS. ITO ITA.NO.2394/KOL./2017 DATED 27.06.2018 (ITAT) (KOLKATA, SMC-BENCH). 4. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORD ERS OF THE AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. ON THE IDENTICAL ISSUE AND IDENTICAL FACTS, THE ITAT, DELHI, SMC-BENCH IN THE CASE OF SMT. SHIKHA DHAWAN, GURGAON VS. ITO, WARD-4(2), GURGAON IN 9 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. ITA.NO.3035/DEL./2018 FOR THE A.Y. 2014-2015 VIDE O RDER DATED 27.06.2018 ALLOWED THE APPEAL OF ASSESSEE. TH E ORDER IS REPRODUCED AS UNDER : THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A)-1, GURGAON DATED 09.03.2018 FOR AY 2014-15 ON THE FOLLOWING GROUNDS: - 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) 1, GURGAON HAS FURTHER GROSSLY ERRED BOTH IN LAW AN D, ON FACTS IN DENYING THE CLAIM OF EXEMPTION OF LONG TERM CAPITAL GAIN OF RS. 19,39,357/- ON SALE OF SHARES SOLD ON RECOGNIZED ST OCK EXCHANGE AND, ELIGIBLE FOR EXEMPTION U/S 10(38) OF THE ACT A ND BRINGING TO TAX AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 2. THAT LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN MAKING AN AD DITION OF RS. 19,51,357/- BEING SALE CONSIDERATION ON SALE OF SHA RES LISTED ON RECOGNIZED STOCK EXCHANGE AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 2.1. THAT WHILE SUSTAINING THE AFORESAID ADDITION A ND DENYING THE EXEMPTION LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS FAILED TO APPRECIATE THAT, APPELLANT WAS OWNER OF EQUITY SHARES OF A LISTED COMPANY WHICH HAD BEEN HELD BY I T FOR A PERIOD EXCEEDING 12 MONTHS AND THE SAME WERE SOLD ON RECOG NIZED 10 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. STOCK EXCHANGE AFTER PAYMENT OF STT, RESULTING INTO A LONG TERM CAPITAL GAIN AND THEREFORE THE LONG TERM CAPITAL GA IN ACCRUED TO THE ASSESSEE ON TRANSFER OF LONG TERM 'CAPITAL ASSE T' WAS NOT INCLUDIBLE IN TOTAL INCOME OF THE ASSESSEE IN VIEW OF SECTION 10(38) OF THE ACT. 2.2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS FAILED TO APPRECIATE THE EVIDENCE TENDERED BY T HE APPELLANT TO SUPPORT THE CLAIM OF SALE OF SHARES AND HENCE, F INDINGS MECHANICALLY RECORDED ON BORROWED INFERENCE IN DISR EGARD OF EVIDENCE AND BASED ON IRRELEVANT AND EXTRANEOUS CON SIDERATIONS ARE MISCONCEIVED AND, MISPLACED. 2.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS CONFIRMED THE ABOVE ADDITION AND DENIED EXEMPTI ON WITHOUT CONFRONTING THE MATERIAL/INVESTIGATION TO A PPELLANT AND ALSO PROVIDING CROSS EXAMINATION OF THE PARTIES ON WHOSE STATEMENTS RELIANCE HAS BEEN PLACED IN IMPUGNED ORD ER OF ASSESSMENT AND THEREFORE ORDER SO MADE IS IN DISREG ARD OF PRINCIPLES OF NATURAL JUSTICE IS VITIATED. 2.4 THAT FURTHER MORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS SUSTAINED THE ADDITION ON MERE SP ECULATION, GENERALIZED STATEMENTS, THEORETICAL ASSUMPTIONS AND ALLEGATIONS AND ASSERTIONS, WITHOUT THERE BEING ANY SUPPORTING EVIDENCE AND IS THEREFORE NOT IN ACCORDANCE WITH LAW. 11 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. 2.5 THAT LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS FAILED TO APPRECIATE THAT ONCE THE BROKER OF THE AS SESSEE M/S INDUS PORTFOLIO (P) LTD. HAD NEITHER DENIED AND NOR DISPUTED THE GENUINENESS OF TRANSACTION, THE CONCLUSION ARRIVED IN THE ORDER IS HIGHLY WHIMSICAL, ARBITRARY, ILLOGICAL AND WHOLLY U NTENABLE. 2.6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) WHILE SUSTAINING THE ABOVE ADDITION HAS ARBITRARILY AND, MECHANICALLY REJECTED THE EXPLANATION AND EVIDENCE TENDERED BY THE APPELLANT AND MADE THE ADDITION AND DENIED EXEM PTION BY DRAWING SUBJECTIVE, PREMEDITATED AND PRECONCEIVED I NFERENCES THEREFORE THE SAME IS NOT SUSTAINABLE. 2.7 THAT THE FINDING OF THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) THAT THE APPELLANT DID NOT DIVULGE TH E NAME OF THE PERSON WHO ADVISED HER TO BUY THE SHARES OF MIS. TU RBO TECH ENGINEERING LTD. AND APPELLANT DID NOT HAVE BASIC K NOWLEDGE OF SHARE TRADING ARE IRRELEVANT CONSIDERATIONS EITHER TO BRING TO TAX LONG TERM CAPITAL GAIN UNDER SECTION 68 OF THE ACT OR DENY CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT AND TH EREFORE, THE ADDITION MADE AND CONFIRMED IS INVALID. 2.8 THAT VARIOUS ADVERSE FINDINGS AND CONCLUSIONS RECORDED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE 12 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. FACTUALLY INCORRECT AND CONTRARY TO RECORD, LEGALLY MISCONCEIVED AND UNTENABLE. 2.9 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS ERRED IN CONCLUDING WITHOUT ANY BASIS THAT ASSE SSEE HAS INTRODUCED HIS UNACCOUNTED INCOME IN THE FORM OF LO NG TERM CAPITAL GAIN BY MANIPULATING THE PENNY STOCK. 3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN NOT ALLO WING DEPRECIATION OF COST INCURRED ON PURCHASE OF SHARES AND SOLD BY THE APPELLANT IN THE NEXT YEAR. IT IS THEREFORE, PRAYED THAT IT BE HELD THAT EXEMPT ION DENIED AND ADDITION MADE AND SUSTAINED BY THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) MAY KINDLY BE DELETED AND A PPEAL OF THE APPELLANT BE ALLOWED. 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. IN ALL THE GROUNDS OF APPEAL, THE ASSESSEE CHALLENGED THE ADDI TION OF RS.19,51,357/- U/S 68 OF THE INCOME TAX ACT, 1961 ( IN SHORT ACT). 13 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. 3. BRIEF FACTS OF THE CASE ARE THAT RETURN DECLARIN G INCOME OF RS. 5,31,370/- WAS FILED ON 18.11.2014. IN THIS RETURN THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAINS OF RS.19,39,557/- AS EXEMPT U/S 10(38) OF THE IT ACT. THE ASSESSING OFFICER REFERRED TO THE INVESTIGATION CAR RIED OUT BY THE DIRECTORATE OF INVESTIGATION, KOLKATA TO UNEART H THE ORGANIZED RACKET OF GENERATING BOGUS ENTRIES OF LON G TERM CAPITAL GAINS WHICH IS EXEMPT FROM TAX. AFTER DISCU SSING THE MODUS OF SUCH RACKET OF GENERATING OF BOGUS ENTRIES , THE ASSESSING OFFICER POINTED OUT THAT THE DIRECTORATE OF INVESTIGATION, KOLKATA INVESTIGATED TRANSACTIONS IN 84 PENNY STOCK SHARES QUOTED ON BSE AND EXAMINED ON OA TH A LARGE NUMBER OF BROKERS, PROMOTERS AND ENTRY OPER ATORS. AS A RESULT OF THIS INVESTIGATIONS, LARGE NUMBER OF INDIVIDUALS HAD BEEN IDENTIFIED WHO HAD TAKEN SUCH ACCOMMODATION ENTRIES AND A NUMBER OF SUCH INDIVIDU AL HAD SURRENDERED THE ACCOMMODATION ENTRY FOR TAXATIO N PURPOSES. THE ASSESSING OFFICER POINTED OUT THAT TH E ASSESSEE WAS ALSO BENEFICIARY OF THE ACCOMMODATION 14 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. ENTRIES. IN THIS REGARD THE ASSESSING OFFICER POINT ED OUT THE FOLLOWING FACTS:- '8. THE ASSESSEE IS ONE SUCH BENEFICIARY WHO HAS TAKEN THE ENTRY OF RS. 19,39,357/- DURING THE ASSESSMENT YEAR 2014-15 UNDER CONSIDERATION ALONG WITH OTHER SO MANY PERSON S. THUS THE FACTS OF THIS CASE, THEREFORE, SHOULD NOT BE VIEWED IN ISOLATION BUT AS ONE OF THE BENEFICIARY IN THE LARGER AFOREMENTIO NED SCHEME. 8.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AR OF THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS ENC LOSING COPIES OF COMPUTATION BANK STATEMENTS AND FURNISHED THE DETAILS OF LONG TERM CAPITAL GAIN. THE ASSESSEE PURCHASED T HE 10,000 SHARES OF M/S TURBO TECH ENGINEERING LTD. OFF MARKE T ON 22.11.2011 FROM M/S SHREE JI BROKING PVT. LTD., WHO WAS THE ORIGINAL ALLOTTEE OF THE SHARES FOR A TOTAL SALE CO NSIDERATION OF RS.20,000/- -I.E. RS.2 PER SHARE. PAYMENT WAS MADE BY THE ASSESSEE TO M/S SHREE JI BRAKING PVT. LTD IN CASH O N 24.11.2011 AND THE SHARES WERE GOT TRANSFERRED IN HER NAME 28. 11.2011. LATER ON OUT OF THESE 6000 SHARES WERE SOLD ON 30.07.2013 AND 31.07.2013 (500+5500=6000) THROUGH THE BROKER M/S I NDUS PORTFOLIO PVT. LTD, FOR A TOTAL SALE CONSIDERATION OF RS. 19,53,372/- 15 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. 8.2. ON GOING THROUGH THE INFORMATION MADE AVAILA BLE PRIMA FACIE IT IS FOUND THAT THE ASSESSEE INDULGED IN BOGUS LONG TERM CAPITAL GAIN AND CLAIMED THE ABOVE AMOUNT AS E XEMPT U/S. 10(38) OF THE ACT, 1961. IT IS ALSO FOUND THAT THE ABOVE SCRIP M/S. TURBO TECH PVT. LIMITED, WHICH THE ASSESSEE PU RCHASED, WAS INVOLVED IN PROVIDING BOGUS ACCOMMODATION ENTRI ES IN THE SHAPE OF BOGUS LONG TERM CAPITAL GAINS. ' 3.1. ALL THESE FACTS WERE BROUGHT TO THE NOTICE OF THE ASSESSEE BY THE ASSESSING OFFICER IN THE SHOW CAUSE DATED 19/12/2016 AND THE APPELLANT WAS ASKED TO EXPLAIN W HY TRANSACTIONS MAY NOT BE HELD TO BE ACCOMMODATION EN TRY. THE ASSESSING OFFICER ALSO REFERRED TO THE INVESTIG ATION CONDUCTED BY THE INVESTIGATION WING KOLKATA AND PARTICULARLY REFERRED TO THE STATEMENTS OF SH.ANIL KUMAR KHEMKA RECORDED U/S 131 OF THE ACT WHEREIN IT WAS S TATED BY THESE PERSONS THAT M/S TURBO TECH LTD WAS USED F OR THE PURPOSE OF PROVIDING ACCOMMODATION ENTRIES. AFTER CONSIDERING THE FACTS OF THE CASE AND THE SUBMISSIO NS OF THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE TRANS ACTION 16 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. WAS A ACCOMMODATION ENTRY AND IN THIS REGARD OBSERV ED AS UNDER:- '9.1. THE ASSESSEE SOLD THE SHARES ON 30.07.2013 & 31.07.2013 (500+5500=6000) THROUGH THE BROKER M/S I NDUS PORTFOLIO PVT. LTD, FOR A TOTAL SALE CONSIDERATION OF RS.19,53,372/- FOR WHICH THE SHARES WERE DEMATERIALI ZED ONLY ON 11.06.2013. IT IS THUS EVIDENT THAT JUST A FEW DAYS PRIOR TO THE DATE OF SALE, THESE SHARES ARE DEMATER IALIZED THOUGH THESE ARE SAID TO HAVE BEEN PURCHASED ON 22.11.2011. THE TRANSACTION ENTERED INTO BY THE ASS ESSEE DOES NOT AUTHENTICATE LONG TERM CAPITAL GAIN IN VIE W OF THE FACT THAT THESE PHYSICAL SHARES WERE PURCHASED THRO UGH OFF MARKET AND THESE SHARES WERE DEMATERIALIZED ONLY JU ST A FEW DAYS PRIOR TO THE DATE OF SALE. 10. THE ASSESSEE HAS SHOWN CREDIT OF RS.19,51,357/- IN HIS BANK ACCOUNT AS SALE PROCEEDS OF SHARES. AS IS EVIDENT FROM THE INVESTIGATION THE AC TUAL SOURCE OF THIS CREDIT IS THE UNACCOUNTED CASH OF TH E ASSESSEE. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOU RCE OF THIS CREDIT. THE EXPLANATION OFFERED THAT IT IS SAL E PROCEEDS OF SHARES ARE FOUND TO BE NOT ONLY UNSATISFACTORY B UT FALSE. THE ASSESSEE HAS BEEN CONFRONTED WITH ALL THE EVIDE NCE 17 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. GATHERED AND THE ISSUES MENTIONED IN THE FOREGOING PARAGRAPHS. THE EXPLANATION OF THE ASSESSEE IS GENE RAL IN NATURE THAT AS THE TRANSACTION IS THROUGH STOCK EXC HANGE AND THE PAYMENT IS BY CHEQUE, THE TRANSACTIONS SHOU LD BE TREATED AS GENUINE. THE BACKGROUND OF THE SCHEME GI VEN IN THE BEGINNING OF THE 'ORDER CLEARLY SHOWS THAT BOTH THE REQUIREMENTS ARE IN BUILT IN THE SCHEME AND DOES NO T IPSO FACTO PROVE GENUINENESS OF TRANSACTION. THE SEBI AF TER THOROUGH INVESTIGATION HAS CERTIFIED THAT SUCH TRAN SACTIONS ARE RIGGED AND ARE CARRIED OUT TO CONVERT BLACK MON EY INTO WHITE. THAT BEING SO, THE CREDIT IN THE BANK ACCOUN T OF THE ASSESSEE CANNOT BE TREATED AS EXPLAINED AND IS THER EFORE, LIABLE TO BE ADDED UNDER SECTION 68 OF THE ACT. THE EVIDENCE GATHERED HAS TO BE EVALUATED IN THE BACKGROUND OF W HAT THE HON'BLE SUPREME COURT REFERRED TO AS THE TEST O F PREPONDERANCE OF HUMAN PROBABILITY JUDGED ON THE BA SIS OF SURROUNDING CIRCUMSTANCES. THAT THERE WAS A SCHE ME IS NOT IN DOUBT AND THAT THE ASSESSEE IS A BENEFICIARY IS ALSO AN ADMITTED FACT. THE ONUS WAS THEREFORE, ON THE ASSES SEE TO PROVE THAT EITHER THERE WAS NO SUCH SCHEME AND EVEN IF THERE WAS ONE, THE BENEFIT TO THE ASSESSEE WAS AS A RESULT OF GENUINE TRANSACTION. THE ASSESSEE HAS MISERABLY FAI LED TO DISCHARGE THIS ONUS AND THEREFORE, THE ONLY INESCAP ABLE 18 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. CONCLUSION IS THAT LIKE THOUSAND OTHER INDIVIDUALS THE ASSESSEE HAS ALSO TAKEN ENTRY OF BOGUS LTCG BY PAYI NG UNACCOUNTED INCOME. 10.1. IT IS TRUE THAT IN CASES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES ON TH E DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PR OVISION AND IF A RECEIPT IS IN THE NATURE OF INCOME, THE BU RDEN OF PROVING THAT IT IS NOT TAXABLE BECAUSE IT FALLS WIT HIN EXEMPTION PROVIDED BY THE ACT, LIES UPON THE ASSESS EE. BUT, IN VIEW OF SECTION 68 OF THE ACT, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVI OUS YEAR; THE SAME MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATI ON OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACT ORY. TO REITERATE, THE BURDEN OF PROOF, CAST UPON THE ASSES SEE TO PROVE THAT THE CLAIM OF LONG TERM CAPITAL GAIN AS E XEMPT U/S 10(38), IS NOT DISCHARGED IN THE INSTANT CASE. ' 3.2. THE ASSESSING OFFICER REFERRED TO ALL THE AFORESAID FACTS AND HELD THAT LTCG AMOUNTING TO RS. 19,39,357/- WAS UNACCOUNTED INCOME OF THE ASSESSEE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 19 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. OF THE IT ACT. THE ASSESSING OFFICER FURTHER HELD T HAT THE TAX ON THESE ADDITIONS WOULD BE CHARGED AS PER SECTION 115BBE OF THE IT ACT. 4. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD.C IT(A) AND FILED A WRITTEN SUBMISSION WHICH IS REPRODUCED IN THE APPELLATE ORDER WHICH READS AS UNDER:- 1. WHILE ASSESSING THE INCOME OF THE APPELLANT, L D. AO COMPLETELY IGNORED THE FACTS OF THE CASE AND THE DOCUMENTS/EVIDENCES FILED BY THE APPELLANT. APPELLA NT PURCHASED SHARES, GET THE SHARES DEMATERIALIZED, SO LD THE SHARES ON RECOGNIZED STOCK EXCHANGE, PAID STT AND RECEIVED AMOUNT THROUGH BANKING CHANNEL FROM THE BROKER. COPY OF B ILLS OF PURCHASE OF SHARES; COPY OF SHARE CERTIFICATES, COP Y OF SHARE TRANSFER FORM, COPY OF BANK STATEMENT, COPY OF DEMA T ACCOUNT, AND COPY OF ACCOUNT FROM THE BROKER M/S INDUS PORTF OLIO P. LTD ARE ENCLOSED HEREWITH. 2. LD. AO HAS MENTIONED SEVERAL PERSONS IN HIS ASS ESSMENT ORDER INCLUDING SH. ANIL KHEMKA, SH. SANJAY VOHRA, BIDYOOT SARKAR AND SH. NIKHIL JAIN ON WHICH INCOME TAX SURV EY WERE CONDUCTED BY THE DEPARTMENT. IN THIS REGARD, IT IS TO SUBMIT THAT THE APPELLANT HAS NO DIRECT OR INDIRECT RELA TION WITH ANY OF 20 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. THESE PERSONS OR WITH THE DIRECTOR/PROMOTORS OF T HE COMPANY M/S TURBOTECH ENGINEERING LTD. OR ANY OF THEIR SUBS IDIARY OR ASSOCIATE COMPANIES OR CONCERNS. APPELLANT NEVER DE ALT WITH THEM AND THE LD. AO ALSO FAILS TO PROVIDE ANY EVIDE NCE WHICH ESTABLISHES ANY KIND OF RELATIONSHIP, BETWEEN THE A PPELLANT AND THESE PERSONS. BROKER OF THE APPELLANT IS M/S INDUS PORTFOLIO P. LTD AND THE LD AO COULD NOT MENTION ANY EVIDENCE OR MATERIAL WHICH SHOWS THAT MY BROKER IS INVOLVED IN ANY KIND OF MANIPULATION OF SHARES. LD. AO ALSO DIDN'T CONFRONT COPIES OF STATEMENT REC ORDED OF SH. ANIL KHEMKA, SH. SANJAY VOHRA, BIDYOOT SARKAR AND S H. NIKHIL JAIN TO THE APPELLANT DURING ASSESSMENT PROCEEDINGS AND ENCLOSED COPIES OF THEIR STATEMENT IN THE ASSESSMEN T ORDER ONLY. THIS IS DONE BY THE LD. AO IN CLEAR VIOLATION OF TH E PROVISIONS OF LAW BY NOT CONFRONTING THE MATERIAL TO THE APPELLAN T AND BY NOT GIVING ANY ADEQUATE OPPORTUNITY TO THE APPELLANT TO DEFEND HIS CASE. SINCE THE STATEMENTS WERE NOT CONFRONTED TO T HE APPELLANT, APPELLANT WAS DEPRIVED OF HER RIGHT TO CROSS EXAMIN E THE WITNESSES. ALSO WHATEVER THEY HAVE STATED IN THEIR STATEMENT IS NO GOSPEL TRUTH AND CANNOT BE APPLIED BLINDLY TO OU R CASE. 3. STATEMENTS OF FOUR PERSONS INCORPORATED BY THE LD. AO IN ASSESSMENT ORDER ARE INCOMPLETE. LD. AO HAS 21 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. INCORPORATED ONLY A PART OF STATEMENT IN THE ASSESS MENT ORDER ACCORDING TO HIS CHOICE, WHICH IS AGAIN AGAINST THE BASIC PRINCIPLES OF LAW. 4. LD. AO HAS ALSO ENCLOSED COPY OF SOME ORDER OF SEBI. THIS ORDER ALSO WAS NEVER CONFRONTED TO THE APPELLA NT DURING ASSESSMENT PROCEEDINGS. MOREOVER, THE ORDER WHICH I S NOT VERY LEGIBLE, SEEMS TO BE PASSED IN YEAR 2015, WHEREAS T HE APPELLANT HAD PURCHASED THE SHARES IN YEAR 2011 AND SOLD THEM IN YEAR 2013. IT WAS EVIDENT FROM THIS DOCUMENT ONLY THAT N O ACTION HAS BEEN TAKEN BY THE SEBI AGAINST THE COMPANY DURING T HE PERIOD WHEN THE APPELLANT HOLDS THE SHARES. 5. DOCUMENTS INCORPORATED BY THE LD. AO IN THE ASSESSMENT ORDER AT PAGE 20 TO 22 ARE NOT AT ALL LE GIBLE. THEREFORE APPELLANT IS NOT IN A POSITION TO COMMENT ON THESE DOCUMENTS. 6. LD. AO HAS RAISED OBJECTION REGARDING THE CASH PURCHASE OF SHARES AND THAT SHARES WERE DEMATERIALI ZE FEW DAYS BACK ONLY FROM THE DATE OF SALE. IN THIS REGARD, IT IS TO SUBMIT THAT THERE IS NO LAW WHICH PROHIBITS THE PURCHASE OF SHA RES IN CASH. APPELLANT FILED COPY OF BILLS OF PURCHASE, COPY OF SHARE CERTIFICATES AND TRANSFER FORMS ETC. BEFORE LD. AO AND NO ADVERSE INFERENCE COULD BE DRAWN ONLY BECAUSE THE SHARES WE RE PURCHASED IN CASH. REGARDING DEMAT OF SHARES, IT IS TO SUBMIT 22 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. THAT IT IS THE OPTION OF THE BUYER OF SHARES TO KEE P THE SHARES EITHER IN DEMAT FORM OR IN PAPER FORM. MERELY BECAUSE THE SHARES WERE GET DEMAT BY THE APPELLANT AT A LATER STAGE, NO ADV ERSE INFERENCE COULD BE DRAWN. 7. LD. AO HAS NO EVIDENCE IN HIS FAVOUR TO PROVE THAT THE TRANSACTION OF PURCHASE AND SALES OF SHARES IS BOGUS AND HE IS PROCEEDING ONLY ON SUSPICION, CONJECTURES AND SURMI SES. LD. AO HAS FAILED TO PROVE ANY MATERIAL ON RECORD WHICH PR OVES THAT THE TRANSACTION ON THE RECOGNISED STOCK EXCHANGE IS MANI PULATED AND BOGUS. 8. INCREASE AND DECREASE IN MARKET RATES OF SHARE S ON STOCK EXCHANGE ALWAYS BASED ON MARKET FORCES AND AR E DETERMINED ON THE BASIS OF SO MANY FACTORS. IT IS N OT WITHIN THE POWER OF APPELLANT TO MANIPULATE THE RATES OF SHARE S ON STOCK EXCHANGE. MERELY BECAUSE THERE IS, A SHARP INCREASE IN THE RATES OF SHARES, NO ADVERSE INFERENCE COULD BE DRAWN ONLY ON THE BASIS OF MERE SUSPICION AND IN ABSENCE OF ANY DIRECT OR C OGENT EVIDENCE. 9. LD AO HAS ALLEGED IN HIS ASSESSMENT ORDER THAT THE APPELLANT WAS NOT PRODUCED BEFORE HIM FOR RECORDING OF STATEMENT. IN THIS REGARD, IT IS TO SUBMIT THAT THE APPELLANT HAD DELIVERED A BABY FEW TIME BACK ONLY AND SHE WAS NOT IN A 23 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. POSITION TO APPEAR BEFORE THE LD. AO DUE TO HER MED ICAL CONDITION. WE HAD MADE THIS REQUEST BEFORE THE LD A O ALSO ALONG WITH MEDICAL CERTIFICATE AND REQUESTED HIM TO PASS THE ASSESSMENT ORDER ON THE BASIS OF DOCUMENTS/INFORMAT ION AVAILABLE ON RECORD. 10. CASE LAWS RELIED UPON BY THE LD AO ARE DISTINGUISHABLE ON THE FACTS AND CIRCUMSTANCES OF T HE PRESENT APPEAL AND HENCE ARE NOT APPLICABLE. 11. APPELLANT'S CASE IS COVERED BY FOLLOWING JUDG EMENTS: HITESH GANDHI, ITA NO. 180 OF 2017( P & H HIGH COUR T) PREM PAL GANDHI, ITA NO. 95 OF 2017 (P&H HIGH COURT ) CARBO INDUSTRIA! HOLDINGS LTD. 244 ITR 422 (CAL) HIMANI M VAKIL, 41 TAXMANN.COM 425 (GUJ) MUKESH RATILAL MAROLIA, ITA NO. 456 OF 2007 (BOMBAY HIGH COURT) SMT. JAMNADEVI AGRAWAL 328 ITR 656 (BOM) ASHISH INTERNATIONAL, ITA NO. 4299 OF 2009 (BOMBAY HIGH COURT) FARRAH MARKER, ITAT MUMBAI BENCH IN ITA NO. 3801/MUM/2011 SUNIL PRAKASH, ITAT MUMBAI BENCH IN ITA NO. 6494/MUM/2014 PARDEEP KUMAR AGGARWAL 159 ITD 54 (CHANDIGARH) 24 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. SRI DOLARRAI HEMANI, ITAT KOLKATA BENCH IN ITA NO. 19/KOL/2014 INDRAVADAN JAIN HUF, ITAT MUMBAI BENCH IN ITA NO. 4861/MUM/2014 KAMLA DEVI S DOSHI, ITAT MUMBAI BENCH IN ITA NO. 1957/MUM/2015 SURYA PRAKASH TOSHNIWAL, ITAT KOLKATA BENCH IN ITA NO. 1213/KOL/2016 SUNITA JAIN, ITAT AHMEDABAD BENCH IN ITA NO. 501 & 502/AHD/2016 PRATIK SURYAKANT SHAH, 77 TAXMANN.COM 260 (AHMEDABAD-TRIB) COPY OF ALL THESE JUDGEMENTS ARE ENCLOSED HEREWITH. 12. LD. AO ALSO ERRED IN' MAKING ADDITION U/S 68 OF THE ACT, ALTHOUGH THE IMPUGNED ADDITION SHOULD NOT BE M ADE UNDER THIS SECTION. AS PER THE REQUIREMENT OF LAW, APPELL ANT NEED NOT TO MAINTAIN ANY BOOKS OF ACCOUNTS AND IN ABSENCE OF BO OKS OF ACCOUNTS, NO ADDITION COULD BE MADE U/S 68 OF THE A CT. 13. THAT THE GOA NO.5 IS REGARDING ISSUANCE OF NO TICE U/S 143(2), WHICH WAS ISSUED BY THE ITO, WARD-27(4) , NEW DELHI. ITO, WARD-27(4), NEW DELHI HAS NO JURISDICTI ON OVER THE CASE OF THE APPELLANT AND HENCE NOTICE ISSUED WAS W ITHOUT JURISDICTION AND INVALID. 25 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. IN VIEW OF ABOVE SUBMISSION, IT IS PRAYE D THAT ALL THE ADDITIONS MADE MAY KINDLY BE DELETED & THE APPEAL O F THE APPELLANT MAY KINDLY BE ALLOWED & OBLIGE. 5. LD.CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE AND MATERIAL ON RECORD, NOT ONLY CONFIRMED THE ADDITION OF RS.19,39,357/- BUT ALSO ENHANCED THE SA ME ADDITION TO 19,51,357/- THUS, THE APPEAL OF THE AS SESSEE HAS BEEN DISMISSED WITH ENHANCEMENT. THE FINDINGS O F LD. CIT(A) IN PARA 3.5 TO 3.18 IS REPRODUCED AS UNDER:- 3.5. I HAVE CAREFULLY CONSIDERED THE APPELLANT'S S UBMISSIONS. BEFORE GOING TO THE MERITS OF THE ISSUE AT HAND IT MAY BE RELEVANT TO LOOK INTO THE GENERAL MODUS OPERANDI ADOPTED BY THE PERSONS WHO INDULGE IN CONVERTING THEIR UNACCOUNTED CASH TO ACCOUNTED FORM THROUGH THE ROUTE OF CAPITAL GAINS. WITH THE E XEMPTION REDUCTION IN TAX ON CAPITAL GAINS ON SHARES, THERE IS RAMPANT PRACTICE OF ROUTING THE UNACCOUNTED CASH IN THE FOR M OF LONG TERM CAPITAL GAINS AND CLAIMING THE SAME AS EXEMPT/ CONC ESSIONAL TAX RATE. THE GENERAL MODUS OPERANDI ADOPTED BY SUCH TY PE OF PERSONS IS AS UNDER: 26 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. (I) WITH THE COLLUSION OF BROKER, SHARES ARE PURCHA SED OF AN UNKNOWN COMPANY WITH DUBIOUS BACKGROUND FOR MINISCULE CONSIDERATION. FOR THIS PURPOSE, THE BROK ER ISSUES A FAKE BROKERAGE NOTE. (II) THE COMPANIES IN WHICH SHARES ARE TRADED ARE U SUALLY IN LEAGUE WITH THE BROKER AND THE BROKER UNDERTAKES OFF- MARKET TRANSACTIONS TO ACCOMMODATE THE APPELLANT. (III) AFTER A YEAR, THE SHARES ARE SOLD BACK BY THE BUYER. (IV) IN THE MEANTIME, THE SHARES PRICES ARE RIGGED BY THE CONCERNED BROKER/COMPANY TO AN ABNORMALLY HIGH LEVE L. (V) THE SHARES ARE SOLD BY THE BUYER AND SALE CONSI DERATION IS RECEIVED. THE SALE CONSIDERATION IS IN FACT FIRS T PAID BY THE BUYER IN CASH TO THE BROKER. THIS CASH CONSIDER ATION WHICH IS- INTRODUCED IN A BANKING CHANNEL BY ROUTIN G THROUGH A NUMBER OF ACCOUNTS, FINALLY REACHES THE A CCOUNTS OF THE BROKER. WITH THIS AMOUNT, THE BROKER PAYS TH E CONSIDERATION TO THE BUYER. (VI) THUS THE BUYER'S OWN CASH IS INTRODUCED AND CO MES BACK IN THE FORM OF LONG TERM CAPITAL GAIN THEREBY CLAIMING CONCESSIONAL TAX RATE. 27 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. (VII) THE SCRIP INVESTED IS AN OBSCURE ONE IN MOST CASES. IT IS MERELY SHELL COMPANY WITH NO ACTIVITIES WHATSOEV ER. (VIII) THE BUYER HIMSELF IS NORMALLY UNAWARE OF THE FINANCIAL PERFORMANCE OF THE COMPANY IN WHICH HE HA S INVESTED. (IX) THE SHARES ARE PURCHASED AT LOWER RATES AND SO LD AT HIGHER RATES THROUGH THE SERIES OF OFF-MARKET TRANS ACTIONS CREATED BY THE BROKER WITH VESTED INTEREST. THE SHA RE PRICES ARE ARTIFICIALLY RIGGED THROUGH OFF MARKET TRANSACT IONS. THIS HIKE IS NOT SUPPORTED BY THE FUNDAMENTALS OF THE CO MPANY. 3.6. TO FULLY APPRECIATE THE ISSUE AT HAND IT IS R ELEVANT TO TAKE NOTICE OF THESE COMMONLY KNOWN NOTORIOUS FACTS ABOUT THE MODUS OPERANDI OF CONVERTING THE UNACCOUN TED FUNDS THROUGH WILLING DUBIOUS ENTITIES. REFERENCE IN THIS REGARD CAN ALSO BE MADE TO THE FOLLOWING DECISIONS: - (A) CWT V, ROHTAS INDUSTRIES LIMITED, 67 ITR 283 (SC) , WHEREIN IT WAS HELD THAT- 'IN THE ABSENCE OF ANY DIRECT EVIDENCE, A JUDICIAL OR QUASI-JUDICIAL TRIBUNAL CAN BASE ITS CONCLUSIONS ON THE BASIS OF WHAT ARE KNOWN AS NOTORIOUS FACTS 28 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. BEARING IN MIND THE PRINCIPLES OF SECTION 144 OF TH E EVIDENCE ACT.' (B) ATTAR SINGH GURMUKH SINGH V. ITD,'191 ITR 667 (S C), WHEREIN, WHILE INTERPRETING THE PROVISIONS OF SECTI ON 40A(3), IT WAS HELD THAT- 'IN INTERPRETING A TAXING STATUTE, THE COURT CANNOT BE OBLIVIOUS OF THE PROLIFERATION OF BLACK MONEY WHICH IS UNDER. CIRCULATION IN OUR COUNTRY.' 3.7. IT MAY NOW BE RELEVANT TO REFER TO THE VARIOU S FACTS WHICH EMERGE FROM THE ASSESSMENT ORDER-AND THE SUBMISSION OF THE APPELLANT WHICH ARE AS UNDER:- I) THE APPELLANT PURCHASED 10,000 SHARES OF M/S TUR BO TECH LTD FOR AN AMOUNT OF RS. 20,000/-. II) THE SHARES WERE PURCHASED IN OFF MARKET TRANSA CTION FROM M/S SHREE JI BROKING PVT LTD. III) THE SHARES WERE PURCHASED IN THE NAME OF THE APPELLANT ON 22.11.2011. IV) PAYMENT FOR THESE SHARES WAS CLAIMED TO HAVE BE EN MADE ON 24.11.2011 BY CASH I.E. TWO DAYS AFTER THE SHARES WERE PURCHASED. 29 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. V) THE SHARES WERE DEMATERIALISED JUST BEFORE THE SALE OF SHARES. VI) THE SHARES WERE SOLD ON IN JULY 2013 FOR AN AMO UNT OF RS. 19,53,372/-. 3.8. FURTHER, FROM THE DETAILS GATHERED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOLLOWING FACT S EMERGE:- I) DURING THE COURSE OF PROCEEDINGS U/S 131(1) OF THE IT ACT BEFORE THE INVESTIGATION WING SH. ANIL KUMAR KH EMKA STATED THAT HIS BROKERAGE COMPANY WAS BEING USED FO R PROVIDING ACCOMMODATION ENTRIES IN VARIOUS SCRIPS AND M/S TURBO TECH LTD WAS ONCE SUCH SCRIP. II) THE FINANCIALS OF THE PENNY STOCK M/S TURBO TE CH LTD. AND MOVEMENT OF THE PRICE IS ABRUPT, UNREALIST IC AND NOT BASED UPON ANY REALISTIC PARAMETERS. THE HISTOR Y OF INVESTMENT IN SHARES MADE BY THE APPELLANT ALSO GEN ERALLY REVEALS THAT SHE HAS NOT BEEN DEALING IN SHARES ON A REGULAR BASIS. IT HAS ALSO BEEN FOUND THAT ENTRIES OF LTCG HAVE ALSO BEEN TAKEN BY OTHER MEMBERS OF THE FAMILY OF THE APPELLANT. 30 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. III) THE PURCHASE OF THESE SHARES WERE CLAIMED TO BE THROUGH OFF MARKET DEALS AND NOT THROUGH STOCK EXCH ANGE AND THE SHARES WERE NOT ENTERED IN D'MAT ACCOUNT EV EN UPTO ONE WEEK BEFORE THEY WERE ACTUALLY SOLD AND TH E SALE IS THROUGH STOCK EXCHANGE. THE APPELLANT FURNISHED THE ACCOUNT COPY OF THE D'MAT ACCOUNT WHEREIN IT WAS OBSERVED THAT THE SAID SHARES WERE D'MATERIALIZED O NLY A MONTH BEFORE THEY WERE ACTUALLY SOLD. THE DATE OF DEMATERIALIZATION IS ONLY ON 11.06.2013 AND THE SHA RES WERE SOLD DURING THE PERIOD FROM 30.07.2013 TO 31.07.201 3. IV) THE APPELLANT IS UNABLE TO FURNISH ANY OTHER P ROOF FOR PURCHASE OF SHARES EXCEPT THE BILL ISSUED BY THE B ROKER. V) THE RELEVANT COLUMS IN THE PURCHASE BILL I.E. OR DER NO., TRADE NO., AND TRADE TIME ARE LEFT BLANK. VI) NO PROOF/SOURCE OF PAYMENT FOR PURCHASE OF THE SE SHARES WAS BROUGHT ON RECORD. THE PAYMENT WAS CLAIM ED TO HAVE BEEN MADE IN CASH. VII) THE PURCHASE OF THE SHARES CANNOT BE VERIFIED FROM THE CALCUTTA STOCK EXCHANGE SINCE THE VITAL COLUMS IN THE SAID BROKER BILL SUCH AS ORDER NO, TRADE NO. & TRAD E TIME WAS LEFT BLANK. 31 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. 3.9. AS PER APPELLANT'S OWN VERSION, THE SHARES WE RE PURCHASED M/S SHREE JI BROKING PVT LTD ON 22.11.201 1 DIRECTLY IN CASH AND NOT THROUGH RECOGNIZED STOCK EXCHANGE. MOREOVER, AS PER THE DOCUMENTS ON RECORD THE SHARES WERE PURCHASED IN THE NAME OF APPELLANT ON 22.11.2011 WHEREAS THE PAYMENT OF THE SAME AS MADE ONLY ON 24.11.2011. THUS AS PER THE FACTS ON RECORD THE SHARES WERE PURCHASED IN THE NAME OF THE APPELLANT EVEN BE FORE THE PAYMENT WAS MADE. FURTHER, FROM ALL THE AFORESA ID FACTS, IT IS EVIDENT THAT THE MEAGER INVESTMENT OF RS. 6,000 MADE BY THE APPELLANT ON 22.11.2011 WENT UP TO MORE THAN RS.19 LAKHS WITHIN A PERIOD OF 24 MONTHS. SUCH A STE EP RISE IN VALUE OF INVESTMENT IS NOT WITHIN THE REALM OF H UMAN PROBABILITY. IN THESE CIRCUMSTANCES, IT IS EVIDENT THAT THE TRANSACTION WAS AS AN ARRANGED AFFAIR BETWEEN THE APPELLANT AND THE ACCOMMODATION ENTRIES PROVIDERS A ND THIS FACT HAS BEEN DULY ADMITTED BY SH. ANIL KUMAR KHEMKA AND NIKHIL JAIN REFERRED TO ABOVE. FROM THE FACTS DISCUSSED ABOVE IT IS EVIDENT THAT M?S TURBO TECH L TD WAS BEING USED FOR THE PURPOSE OF PROVIDING ENTRY OF LO NG TERM CAPITAL GAINS BY THE ENTRY PROVIDERS AND THE TRANSA CTION OF SALE AND PURCHASE OF SHARES M/S TURBO TECH LTD WAS NOT GENUINE TRANSACTION. 32 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. 3.10. FROM THE FACTS ON RECORD IT IS ALSO EVIDENT THAT THE APPELLANT IS NOT A REGULAR INVESTOR IN SHARES. HENCE, IT IS QUITE SURPRISING AS TO HOW SHE EARNED A PHENOMEN AL RETURN OF ALMOST 50 TIMES WITHIN A SHORT SPAN OF PE RIOD WHICH IS EXTREMELY UNUSUAL. THIS BEING THE CASE, IT IS APPARENT THAT THE APPELLANT HAS ENTERED INTO A SHAM TRANSACTION WITH THE FULL KNOWLEDGE OF IT, SO AS TO CONVERT UNACCOUNTED MONEY INTO ACCOUNTED MONEY IN THE GUISE OF CAPITAL GAINS. 3.11. THE APPARENT IS TRUE UNTIL AND UNLESS IT IS DISPROVED. HERE IN THE INSTANT CASE, THE MANAGING D IRECTOR AND OTHER DIRECTOR SHRI NIKHIL JAIN & SHRI ANIL KUM AR KHEMKA ON 02.06.2015 & 30.03.2015 OF ABHINANDAN STO CK BROKING PVT. LTD. & DEVSHYAM STOCK BROKING PVT.LTD, HAD CATEGORICALLY STATED THAT THEY WERE INVOLVED IN PRO VIDING ACCOMMODATION ENTRIES REGARDING SALE AND PURCHASE O F SHARES THROUGH HIS COMPANIES. THEREFORE, HUMAN PROBABILITIES HAVE ALSO TO BE APPLIED TO COMPREHEND THE TRANSACTIONS AND TO SEE THE REAL INTENTION BEHIND E NTERING INTO THESE TRANSACTIONS. IN SIMILAR CIRCUMSTANCES, THE HONOURABLE GAUHATI HIGH COURT OF CIT VS SANGHAMITRA BHARALI (361 ITR 481) HAD HELD THAT THE CAPITAL GAIN S ARE SHAM TRANSACTIONS ENTERED ONLY TO GIVE COLOUR OF 33 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. GENUINENESS AND THEREFORE, HELD THAT THE CAPITAL GA IN ARISING OUT OF THESE TRANSACTIONS CANNOT BE BELIEVE D AS GENUINE AND UPHELD TAXING THE SAID AMOUNT AS UNACCOUNTED INCOME BROUGHT INTO BOOKS IN THE GUISE OF EXEMPTED CAPITAL GAINS. 3.12. THE ASSESSING OFFICER HAS REFERRED TO THE I SSUE OF THE ORGANIZED RACKET OF GENERATING BOGUS ENTRIES OF LONG TERM CAPITAL GAINS WHICH IS EXEMPT FROM TAX AND HAS DISCUSSED THE MODUS OPERANDI OF THIS OPERATION IN P ARA 7.1, PARA 7.2 AND PARA 7.3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS HELD THAT THE FACTS IN THE AP PELLANT'S CASE SHOW THAT THE AMOUNT OF CAPITAL GAINS GENERATE D IN THE TRANSACTION WITHIN A SHORT SPAN ARE BEYOND HUMAN PROBABILITY. I AGREE WITH THIS OBSERVATION OF THE A SSESSING OFFICER. THESE TYPES OF COMPANIES FUNCTION IN THE C APITAL MARKET WHOSE SALE PRICE IS MANIPULATED TO ASTRONOMI CAL HEIGHT ONLY TO CREATE THE ARTIFICIAL TRANSACTION IN THE FORM OF CAPITAL GAIN. SURROUNDING CIRCUMSTANCES DIFFER FROM THE NORMAL SHARE MARKET TRANSACTIONS IN WHICH THEY ARE ORDINARILY CARRIED OUT. TAKING ALL THE STEPS TOGETH ER, FINAL CONCLUSION DOES NOT ACCORD WITH THE HUMAN PROBABILI TIES. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. DUR GA PRASAD MORE 82 ITR 540 HELD AS UNDER: 34 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. 'IT IS A STORY THAT DOES NOT ACCORD WITH HUMAN PROBABILITIES. IT IS STRANGE THAT HIGH COURT FOUND FAULT WITH THE TRIBUNAL FOR NOT SWALLOWING THAT STO RY. IF THAT STORY IS FOUND TO BE UNBEHEVABLE AS THE TRIBUNAL HAS FOUND AND IN OUR OPINION, RIGHTLY THAT THE DECISIONS REMAINS THAT THE CONSIDERATION FOR TH E SALE PROCEEDED FROM THE ASSESSEE AND THEREFORE, IT MUST BE ASSUMED TO BE HIS MONEY. ' 3.13. GENERALLY, IT IS EXPECTED THAT APPARENT IS REAL BUT IT IS NOT SACROSANCT. IF FACTS AND CIRCUMSTANCE S SO WARRANT THAT IT DOES NOT ACCORD WITH THE TEST OF HU MAN PROBABILITIES, TRANSACTIONS HAVE BEEN HELD TO BE NO N- GENUINE. IT IS HIGHLY IMPROBABLE THAT SHARE PRICE O F A NON DESCRIPT COMPANY CAN GO UP BY ALMOST 50 TIMES, IN A SHORT SPAN OF TIME. THE TAXING AUTHORITIES ARE NOT REQUIR ED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY ARE ENTITLED TO LOOK INTO THE SUR ROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITA LS MADE IN THOSE DOCUMENTS. MERE RECEIPT BY CHEQUE DOES NOT RE NDER A TRANSACTION GENUINE. CAPITAL GAIN TAX WAS CREATED TO OPERATE IN A REAL WORLD AND NOT THAT OF MAKE BELIEF . FACTS OF THE CASE ONLY LEAD TO THE INFERENCE THAT THESE TRAN SACTIONS ARE NOT GENUINE. SIMILAR VIEW HAS BEEN HELD BY THE HON'BLE 35 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE C ASE OF BALBIR CHAND MAINI V/S CIT 340 ITR 161 (P&H) 247 CT R 468 (P&H) AND THE CASE OF SOM NATH MAINI V/S CIT 30 6 ITR 484 (P&H). 3.14. REFERENCE IN THIS REGARD MAY ALSO BE MADE TO THE FOLLOWING CASE LAWS.- I. SANJAY BIMAL CHAND JAIN L/H OF SHANTI DEVI BIMAL CHAND JAIN V/S CIT ITA NO. 18/2017 (MUMBAI HIGH COU RT NAGPUR BENCH) II. RATNAKAR M. PUJARI V/S ITD ITA NO. 995/MUM/2012 (RES) DATED 03/08/2016 III. KAMALCHAND NATHIMAL LUNIA V/S ITO IN ITA NO. 436/AHD./2013 (LTAT AHMEDABAD) IV. SH. SANJAY ASHOK JAIN IN ITA NO. 4185/MUM/2015 AND ITA NO. 4186/MUM/2015 (LTAT MUMBAI) V. SANTLAL GUPTA IN ITA NO. 2802 (MUM/20B (ITAT MUMBAI) KANTADEVI GUPTA IN ITA NO. 2829/MUML2016 VI. SUDHIR BALRAJ JUMANI HUF ITA NO. 1570/AHD/2012 (ITA AHD.) VII. DISHA N. DALWANI ITA NO. 6398/MUM/2012 ITAT MUMBAI. 36 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. VIII ZAKRULLAH CHOUDHARY, PIMPRI V/S ACIT IN ITA NO . 669/PN/2012 DATED 18/02/2014. 3.15. KEEPING IN VIEW THE AFORESAID FACTUAL AND L EGAL POSITION, THE ADDITION MADE BY THE ASSESSING OFFICE R IS CONFIRMED. THESE GROUNDS OF APPEAL ARE DISMISSED. 3.16. DURING THE COURSE OF APPELLATE PROCEEDINGS IT WAS NOTED THAT THE ACTUAL SALE PROCEEDS RECEIVED BY THE APPELLANT DURING THE YEAR WAS RS. 19,51,357/- AGAINS T WHICH THE APPELLANT HAD CLAIMED COST OF ACQUISITION S OF RS. 12,000/- AND SHOWN THE AMOUNT OF RS.19,39,357/- AS LTCG. IN VIEW OF THE FACT THAT THE TRANSACTION WAS ACCOMM ODATION ENTRY, THE WHOLE OF SALE PROCEEDS AMOUNTING TO RS. 19,51,357/- SHOULD HAVE BEEN ADDED TO THE TOTAL INC OME OF THE APPELLANT. ACCORDINGLY, NOTICE U/S 251 OF THE I T ACT DATED 26.02.2018 WAS ISSUED TO THE APPELLANT AND WA S ASKED TO EXPLAIN WHY THE PURCHASE COST OF RS. 12,000 /- ALLOWED BY THE AO AS DEDUCTION MAY NOT BE ADDED TO THE TOTAL INCOME AND THE INCOME MAY NOT BE ENHANCED ACCORDINGLY. NO REPLY HAS BEEN FILED BY THE APPELLA NT. 3.17. WITH REGARD TO THE FACTS OF THIS ISSUE IT I S EVIDENT THAT THE APPELLANT HAS RECEIVED RS. 19,51,35 7/- AS ACCOMMODATION ENTRY DURING THE YEAR. ANY EXPENDITUR E 37 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. CLAIMED TO HAVE BEEN INCURRED IN THE EARLIER YEARS IS THEREFORE NOT GENUINE AND CANNOT BE CLAIMED AND ALL OWED AS EXPENDITURE DURING THE CURRENT YEAR. THE ADDITI ON MADE BY AO IS ACCORDINGLY ENHANCED TO RS.19,51,357/-. 3.18. IN THE RESULT THE APPEAL OF THE APPELLANT IS DISMISSED WITH ENHANCEMENT AS ABOVE. 6. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT AN INQUIRY CONDUCTED IN THE CASES OF OTHER ASSESSEES AND STATEMENTS REFERRED TO BY THE AO IN T HE ASSESSMENT ORDER HAVE NOT BEEN CONFRONTED TO THE AS SESSEE. THE ASSESSEE HAS NOT BEEN NAMED BY ANY OF THESE PER SONS FOR INDULGING IN TAKING ACCOMMODATION ENTRIES. HE HAS, THEREFORE, SUBMITTED THAT SUCH EVIDENCE CANNOT BE R EAD IN EVIDENCE AGAINST THE ASSESSEE AND RELIED UPON THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF KISHAN CHAND CHELA RAM 125 ITR 713 (SC). HE HAS SUBMITTED THAT FOR CLAIMING EXEMPTION U/S 10(38) OF THE ACT, THE ASSES SEE SHALL HAVE TO PROVE TWIN CONDITIONS I.E. THE INCOME ARIS E FROM THE 38 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. TRANSFER OF LONG TERM CAPITAL ASSET AND BEING EQUIT Y SHARE IN A COMPANY WHERE THE TRANSFER OF SALE OF SUCH EQUITY SHARE IS ENTERED INTO ON OR AFTER THE DATE OF WHICH CHAPT ER-VII OF THE FINANCE ACT, 2004 COMES INTO FORCE AND SUCH TRA NSACTION IS CHARGEABLE TO SECURITY TRANSACTION TAX UNDER THA T CHAPTER. IN THE CASE OF THE ASSESSEE, BOTH TWIN CO NDITIONS ARE SATISFIED. HE HAS FILED COPY OF THE SHARES CER TIFICATE WITH TRANSFER FORM, COPY OF DEBIT NOTE ISSUED BY SHREEJI BROKING (P) LTD., COPY OF CASH RECEIPT OF SHREEJI BROKING ( P) LTD., COPY OF LEDGER ACCOUNT OF INDUS PORTFOLIO (P) LTD., COPY OF FORM FOR EVIDENCE FOR PAYMENT OF SECURITIES TRANSACTION TAX ON TRANSACTION ENTERED IN A RECOGNIZED STOCK EXCHANGE AND COPY OF THE BANK STATEMENT OF THE ASSESSEE IN THE P APER BOOK. HE HAS FURTHER SUBMITTED THAT ON IDENTICAL F ACTS, ITAT SMC BENCH, DELHI IN THE CASE OF MEENU GOEL VS ITO I N ITA NO.6235/DEL/2017 FOR AY 2014-15 VIDE ORDER DATED 19.03.2018 RELYING UPON THE DECISION OF HONBLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF PR.CIT VS PREM PA L GANDHI IN ITA NO.95-2017 VIDE ORDER DATED 18.01.201 8, 39 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. ALLOWED THE CLAIM OF THE ASSESSEE. THE FINDINGS OF THE TRIBUNAL IN PARA 6 TO 8 ARE REPRODUCED AS UNDER:- 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH ME, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND THE CASE LAW CITED BY B OTH THE PARTIES. I NOTE THAT ASSESSEE HAS EARNED LONG TER M CAPITAL GAIN AMOUNTING TO RS. 18,46,600/- DURING THE FINANCI AL YEAR 2013-14 AND THE SAME HAS BEEN CLAIMED EXEMPT U NDER SECTION 10(38) OF INCOME TAX ACT, 1961. THE ASSESSE E HAD PURCHASED OF 45,000/- SHARES OF UNISYS SOFTWARE HOL DING INDUSTRIES LTD AMOUNTING RS. 9,38,600/- AT A PREMIUM OF RS. 20.85 PER SHARE IN PHYSICAL FORM. OUT OF THE AFO RESAID 45000/- SHARES ASSESSEE SOLD OF 8000 SHARES ONLY I. E. 17.77%. THUS, THE MAJOR PART OF THE SHARES I.E. 82. 33% ARE STILL IN THE HAND OF THE ASSESSEE. IN MY VIEW THE THE ASSESSEE JUST WANTED TO ENTER INTO THE TRANSACTION TO EARN E XEMPTED CAPITAL GAIN, BUT THE ASSESSEE DID NOT SELL ALL TH E SHARE 45000 SHARES INSTEAD OF SALE OF A PART I.E. 8000 SHARES O NLY WHEN THAT TIME WAS THE BEST PRICE EVER. ALL THE TRANSACT ION WERE MADE THROUGH ACCOUNT PAYEE CHEQUE / BANKING CHANNEL AND ASSESSEE HAD PURCHASED SHARE IN FINANCIAL YEAR 2009-10 AND SOLD THE SAME IN THE FINANCIAL YEAR 2013-14 RES ULTING IN LONG TERM CAPITAL GAIN. THE ASSESSEE HAS SUBMITTED 40 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. VARIOUS DOCUMENTARY EVIDENCES TO PROVE THE GENUINEN ESS OF THE TRANSACTION OF SALE AND PURCHASE OF SHARES W HICH INCLUDES A COPY OF PURCHASE BILL DATED 22.02.2010; A COPY OF SHARE TRANSFER FORM IN THE FAVOUR OF THE ASSESSEE; COPY OF BANK STATEMENT HIGHLIGHTING THE PAYMENT MADE AGA INST THE SHARE PURCHASED; TRANSACTION STATEMENT OF THE STOCK BROKER I.E. PACE STOCK BROKING SERVICES (P) LTD., A CCOUNT; COPY OF BANK STATEMENT IN WHICH SALE PROCEED FROM T HE SALE OF SHARES RECEIVED; COPY OF CALCULATION OF LONG TER M CAPITAL GAIN, WHICH WAS NOT FAULTED BY THE AO. HOWEVER, THE LOWER AUTHORITIES HAVE NOT CONSIDERED THE AFORESA ID DOCUMENTS AND REJECTED ALL THE CLAIMS MADE BY THE A SSESSEE BY RELYING ON THE REPORT OF THE INVESTIGATION WIN G AND THEREBY MADE THE ADDITION, WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW. I FURTHER FIND THAT THE AO HAS GIVEN D ETAILED EXPLANATION IN THE ORDER REGARDING THE MODUS OPERAN DI OF BOGUS LTCG SCHEME BUT FAILED TO SUBSTANTIATE HOW TH E ASSESSEE FELL IN THE PURVIEW OF THE SAME WITHOUT BR INGING ANY MATERIAL ON RECORD AND PROVING THAT THE ASSESSS EE WAS DIRECTLY INVOLVED IN THE SO CALLED BOGUS TRANSACTIO N. I FURTHER NOTE THAT THE ADDITION IN DISPUTE MADE BY T HE AO AND UPHELD BY THE LD. CIT(A) U/S 68 AS UNEXPLAINED CREDIT INSTEAD OF LONG TERM CAPITAL GAIN AS CLAIMED BY THE ASSESSEE, 41 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. HOWEVER, THE SOURCE IDENTITY AND GENUINENESS OF THE TRANSACTION HAVING BEEN ESTABLISHED BY DOCUMENTARY EVIDENCES AND THERE IS NO CASE FOR MAKING ADDITION U/S 68 OF THE ACT, HENCE, THE SAME DESERVE TO BE DELETED. I NOTE THAT IN MOST OF THE CASE LAWS OF THE HONBLE HIGH C OURTS REFERRED BY THE LD. DR THE REASON ON THE BASIS OF AD DITION WAS CONFIRMED WAS THAT THE ASSESSEE HAD NOT TENDER ED COGENT EVIDENCE WITH REGARD TO SHARE TRANSACTION, HOWEVER, IN THE PRESENT THE CASE ASSESSEE HAS SUBMI TTED ALL THE DOCUMENTS / EVIDENCES, THEREFORE, THE CASE LAWS RELIED BY THE LD. DR ARE BASED ON DISTINGUISHED FACTS AND CIRCUMSTANCES, HENCE, THE SAID CASE LAWS ARE NOT A PPLICABLE IN THE PRESENT CASE. HOWEVER, IN MY CONSIDERED OPI NION, THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE VA RIOUS DECISIONS OF THE ITAT AND THE HONBLE HIGH COURTS INCLUDING THE RECENT DECISION DATED 18.1.2018 OF TH E HONBLE HIGH COURT I.E. HONBLE HIGH COURT OF PUN JAB & HARYANA IN THE CASE OF PCIT (CENTRAL), LUDHIANA VS . PREM PAL GANDHI PASSED IN ITA NO. 95 OF 2017. DECISION DATED 18.1.2018 OF THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF PCIT (CENTRAL), LU DHIANA VS. PREM PAL GANDHI PASSED IN ITA NO. 95 OF 2017 WH EREIN IT HAS BEEN HELD AS UNDER:- 42 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. 2. THE FOLLOWING QUESTIONS OF LAW HAVE BEEN RAISED :- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE INCOME TAX APPELLATE TRIBUNAL HAS ERRED IN UPHOLDING THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS. 4,11,77,474/- MADE BY THE AO ON ACCOUNT OF SHAM SHARE TRANSACTIONS IGNORING AN IMPORTANT ASPECT THAT THE TRANSACTION OF SHARES SHOWING THEIR PURCHASE PRICE AT RS. 11,00,000/- AND SALE CONSIDERATION AT RS. 4,23,45,295/- WITHIN A PERIOD OF LESS THAN TWO YEARS / PURCHASES OF SHARES MADE IN CASH NOT CHEQUE THAT TOO BEFORE SHARES GOT DEMATERIALIZED / WORTH OF THE COMPANY AT THE TIME OF PURCHASE / SALE OF SHARES NOT PROVED- ALL SUGGEST NON- GENUINENESS OF THE SAID TRANSACTION? (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE INCOME TAX APPELLATE TRIBUNAL HAS ERRED IN LAW IN UPHOLDING THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS. 4,11,77,474/- MADE BY THE AO ON ACCOUNT OF SHAM SHARE TRANSACTIONS, WHEREAS THE CIT(A) HIMSELF HAD HELD THAT THE ASSESSEE HAD NOT BEEN 43 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. ABLE TO SUBSTANTIATE THE SOURCE OF INVESTMENT OF RS. 11,00,000/- IN THE SAID SHARES PURCHASED DURING THE FINANCIAL YEAR 2005-06 AND THE AO WAS DIRECTED TO REOPEN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 ON THIS ISSUE? (III) WHETHER THE HONBLE ITAT HAS ERRED IN IGNORING AN IMPORTANT ASPECT THAT IN SUCH CASES OF SHAM TRANSACTIONS OF SHARES SHOWING ABNORMAL HIKE IN THEIR VALUE, WHERE THE FACTS THEMSELVES SPEAK LOUD AND CLEAR, THE AO IS JUSTIFIED TO EVEN DRAW AN INFERENCE FROM THE ATTENDANT CIRCUMSTANCES? (IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE INCOME TAX APPELLATE TRIBUNAL HAS ERRED IN LAW IN UPHOLDING THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS. 12,59,000/- MADE BY THE AO ON THE BASIS OF SEIZED DOCUMENT ON THE GROUNDS THAT THE AO HAS NOT POINTED OUT AS TO HOW THE FIGURES OF RS. 12.59 LACS HAS BEEN WORKED OUT IGNORING THE FACT THAT THE ASSESSEE HIMSELF IN HIS REPLY TO THE AO HAD TRIED TO EXPLAIN THE SOURCE OF THE RECEIPTS OF RS. 12,59,000/- INSTEAD OF 44 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. CHALLENGING THE WORKING OUT OF THE SAID FIGURE BY THE AO? 3. THE FIRST THREE QUESTIONS OF LAW RAISED IN THIS APPEAL ARE COVERED AGAINST THE APPELLANT BY AN OR DER AND JUDGMENT OF A DIVISION BENCH OF THIS COURT DATE D 16.02.2017 IN ITA-18-2017 TITLED AS THE PR. COMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA VS. SH. HITESH GANDHI, BHATTI COLONY, CHANDIGARH ROAD, NAWANSHAHAR. 4. THE ISSUE IN SHORT IS THIS : THE ASSESSEE PURCHASED SHARES OF A COMPANY DURING THE ASSESSMENT YEAR 2006-07 AT RS. 11/- AND SOLD THE SAME IN THE ASSESSMENT YEAR 2008-09 AT RS. 400/- PER SHARE. IN THE ABOVE CASE, NAMELY, ITA 18-2017 ALSO THE ASSESSEE HAD PURCHASED AND SOLD THE SHARES IN THE SAME ASSESSMENT YEARS. THE AO IN BOTH THE CASES ADDED THE APPRECIATION TO THE ASSESSEES INCOME ON THE SUSPICION THAT THESE WERE FICTITIOUS TRANSACTIO NS AND THAT THE APPRECIATION ACTUALLY REPRESENTED THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. IN ITA - 18-2017 ALSO THE CIT(APPEALS) AND THE TRIBUNAL HELD THAT THE AO HAD NOT PRODUCED ANY EVIDENCE WHATSOEVER IN SUPPORT OF THE SUSPICION. ON THE OTHE R 45 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. HAND, ALTHOUGH THE APPRECIATION IS VERY HIGH, THE SHARES WERE TRADED ON THE NATIONAL STOCK EXCHANGE AND THE PAYMENTS AND RECEIPTS WERE ROUTED THROUGH THE BANK. THERE WAS NO EVIDENCE TO INDICATE FOR INSTANCE THAT THIS WAS A CLOSELY HELD COMPANY AND THAT THE TRADING ON THE NATIONAL STOCK EXCHANGE WAS MANIPULATED IN ANY MANNER. 5. IN THESE CIRCUMSTANCES, FOLLOWING THE JUDGMENT IN ITA-18-2017, IT MUST BE HELD THAT THERE IS NO SUBSTANTIAL QUESTION OF LAW IN THE PRESENT APPEAL. 6. QUESTION (IV) HAS BEEN DEALT WITH IN DETAIL BY THE CIT(A) AND THE TRIBUNAL. FIRSTLY, THE DOCUMENTS ON WHICH THE AO RELIED UPON THE APPEAL WERE NOT PUT TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE CIT(A) NEVERTHELESS CONSIDERED THEM IN DETAIL AND FOUND THAT THERE WAS NO CO-RELATION BETWEEN THE AMOUNTS SOUGHT TO BE ADDED AND THE ENTRIES IN THOSE DOCUMENTS. THIS WAS ON AN APPRECIATION OF FACTS. THERE IS NOTHING TO INDICATE THAT THE SAME WAS PERVERSE OR IRRATIONAL. ACCORDINGLY, NO QUESTION OF LAW ARISES. 7. IN THE CIRCUMSTANCES, THE APPEAL IS DISMISSED. 46 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. 7. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE CASE AS EXPLAINED ABOVE AND RESPECTFULLY FOLLOWING THE PRECEDENT, AS AFORESAID, THE ADDITION AMOUNTING RS. 18,46,600/- MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS HEREBY DELETED AND GROUND RAISED BY THE A SSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. 6.1. HE HAS, THEREFORE, SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ABOVE DECIS ION. THE ASSESSEE ENTERED INTO GENUINE TRANSACTION, THEREFORE, NO ADDITION U/S 68 OF THE ACT BE MADE AGAINST THE ASSESSEE. 7. ON THE OTHER HAND, LD. SR. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE PLA CED SUFFICIENT DOCUMENTARY EVIDENCES BEFORE THE AO WHIC H ARE COPY OF THE SHARES CERTIFICATES WITH TRANSFER F ORM, COPY OF DEBIT NOTE ISSUED BY SHREEJI BROKING (P) LT D., 47 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. COPY OF CASH RECEIPT OF SHREEJI BROKING (P) LTD., COPY OF THE ACCOUNT STATEMENT OF THE ASSESSEE IN THE BOO KS OF THE BROKER, COPY OF LEDGER ACCOUNT OF INDUS PORT FOLIO (P) LTD., COPY OF EVIDENCE FOR PAYMENT OF SECURITIE S TRANSACTION TAX AND COPY OF THE BANK STATEMENT OF T HE ASSESSEE TO SHOW THAT THE ASSESSEE HAD ENTERED INTO GENUINE TRANSACTION OF PURCHASE OF SHARE WHICH WERE LATER ON SOLD THROUGH THE BROKER ON RECOGNIZED STOC K EXCHANGE AFTER PAYMENT OF STT. THE CLAIM OF THE ASSESSEE FOR SALE OF SHARES HAS BEEN SUPPORTED BY T HE DOCUMENTARY EVIDENCES WHICH HAVE NOT BEEN REBUTTED BY THE AUTHORITIES BELOW. WHATEVER INQUIRY WAS CONDUCTED IN THE CASES OF OTHER PARTIES AND STATEME NT RECORDED OF SEVERAL PERSONS NAMELY SH. ANIL KHEMKA, SH. SANJAY VOHRA AND SH. BIDYOOT SARKAR AS REFERRED IN THE ASSESSMENT ORDER AND THE REPORT OF THE INVESTIGATION WING WERE NOT CONFRONTED TO THE ASSESSEE AND ABOVE STATEMENTS WERE ALSO NOT SUBJECT TO CROSS-EXAMINATION ON BEHALF OF THE ASSESSEE. 48 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. THEREFORE, SUCH EVIDENCES CANNOT BE READ IN EVIDENC E AGAINST THE ASSESSEE. THE ORDER OF THE SEBI WAS AL SO NOT CONFRONTED TO THE ASSESSEE. AO DID NOT MENTION ANY SUCH FACT IN ASSESSMENT ORDER. MORE SO IN THO SE REPORTS AND STATEMENTS, THE NAME OF THE ASSESSEE HA S NOT BEEN REFERRED TO. LD. COUNSEL FOR THE ASSESSEE , THEREFORE, RIGHTLY CONTENDED THAT THE TWIN CONDITIO NS OF SECTION 10(38) OF THE ACT HAVE BEEN SATISFIED IN TH E CASE OF THE ASSESSEE. THE ASSESSEE HAS BEEN ABLE T O PROVE THAT SHE HAS ENTERED INTO THE GENUINE TRANSACTION OF PURCHASE AND SALE OF SHARES AND THE SALE CONSIDERATION IS RECEIVED FROM BROKER THROUGH BANKING CHANNEL. THE BROKERS HAVE NOT DENIED THE TRANSACTION WITH THE ASSESSEE. THE ASSESSEE ROOTED THE TRANSACTION OF SALE OF SHARES THROUGH RECOGNIZE D STOCK EXCHANGE AFTER MAKING PAYMENT OF STT. IN SIMILAR CIRCUMSTANCES, ITAT SMC BENCH, DELHI IN THE CASE OF MEENU GOEL VS ITO (SUPRA) FOLLOWING THE DECISION OF JURISDICTIONAL HONBLE P&H HIGH COURT I N 49 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. THE CASE OF PR.CIT VS PREM PAL GANDHI (SUPRA) DELET ED THE SIMILAR ADDITION. THEREFORE, THE ISSUE IS COVE RED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF ITAT, DELHI BENCH IN THE CASE OF MEENU GOEL VS ITO (SUPRA) FOLLOWED BY JUDGEMENT OF JURISDICTIONAL P&H HIGH COURT WHICH IS BINDING. THERE IS NO OTHER MATERIA L AVAILABLE ON RECORD TO REBUT THE CLAIM OF THE ASSES SEE OF EXEMPTION CLAIMED U/S 10(38) OF THE ACT. 9. KEEPING IN VIEW OF THE ABOVE DISCUSSION AND THE MATERIAL ON RECORD, IN THE LIGHT OF THE ORDER OF TH E TRIBUNAL IN THE CASE OF MEENU GOEL VS ITO (SUPRA), I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELET E THE ADDITION OF RS.19,51,357/-. THE APPEAL OF THE ASSESSEE IS, ACCORDINGLY, ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. LEARNED COUNSEL FOR THE ASSESSEE HAS TAKEN ME T O VARIOUS DOCUMENTS IN THE PAPER BOOK AS REFERRED TO ABOVE WHICH 50 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. SPECIFICALLY PROVE THE PURCHASE OF SHARES MADE BY A SSESSEE GENUINELY WHICH WERE ALSO SOLD GENUINELY. THE TRANS ACTIONS WERE CARRIED THROUGH DEMAT ACCOUNT AND BANKING CHAN NEL ON WHICH STT HAS BEEN PAID BY ASSESSEE. THE REPORT OF THE SEBI WAS NOT ADVERSE IN NATURE AGAINST THE ASSESSEE BECA USE NAME OF THE ASSESSEE DID NOT APPEAR THEREIN FOR CONDUCTI NG DUBIOUS TRANSACTION. THE REPORT OF THE INVESTIGATION WING A ND OTHER MATERIAL WAS NOT CONFRONTED TO ASSESSEE, THEREFORE, THE SAME CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. MO RE SO, THE GENERAL ENQUIRY CONDUCTED ABOUT MODUS OPERANDI WITH OUT VERIFYING BOGUS LONG TERM CAPITAL GAINS COULD BE IN DICATED TO TAKE ACTION AGAINST SOME OF THE ASSESSEES. A SPECIF IC QUERY AND MATERIAL AGAINST THE ASSESSEE SHOULD HAVE BEEN BROU GHT ON RECORD TO PUT ASSESSEE UNDER LIABILITY. HOWEVER, IN THE PRESENT CASE, THE ENTIRE DOCUMENTARY EVIDENCE ON RECORD HAV E NOT BEEN DISPUTED BY THE AUTHORITIES BELOW AND THERE IS NO R EBUTTAL TO THE EXPLANATION OF ASSESSEE. NO ADVERSE MATERIAL HAVE B EEN BROUGHT ON RECORD AGAINST THE ASSESSEE. FURTHER, NO PROPER ENQUIRY HAVE BEEN CONDUCTED BY THE A.O. ON THE DOCUMENTARY EVIDE NCES FILED 51 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. BY ASSESSEE. WHATEVER STATEMENTS HAVE BEEN REFERRED TO IN THE ORDER WERE GENERAL IN NATURE WITH WHOM ASSESSEE DID NOT HAVE ANY TRANSACTION. LEARNED COUNSEL FOR THE ASSESSEE H EAVILY RELIED UPON THE ORDER OF ITAT, DELHI IN THE CASE OF MEENU GOEL VS. ITO (SUPRA) AND JUDGMENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF PR. CIT VS. PREMPAL GANDHI (SUPRA). BOTH TH E DECISIONS HAVE BEEN CONSIDERED IN THE CASE OF SMT. SHIKHA DHA WAN VS. ITO (SUPRA) REPRODUCED ABOVE. CONSIDERING THE TOTAL ITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING T HE REASONS FOR DECISION IN THE CASE OF SMT. SHIKHA DHAWAN VS. ITO (SUPRA), I HOLD THAT ASSESSEE HAS ENTERED INTO GENUINE TRANS ACTION OF SALE AND PURCHASE AND THEREFORE, SATISFIED THE CONDITION S OF SECTION 10(38) OF THE I.T. ACT. THE ASSESSEE IS ENTITLED FO R EXEMPTION UNDER THE SAME PROVISION. I, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS .47,66,264/- APPEAL OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 52 ITA.NO.389/DEL./2018 SMT. SUNITA KHEMKA, NEW DELHI. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 02 ND AUGUST, 2018 VBP/- COPY TO 1. THE APP ELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.