OM PRAKASH MODI, Jaipur V. DCIT, Jaipur

ITA 402/JPR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2554 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 19-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Keywords: Capital asset; Income from undisclosed sources; Search and seizure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Earning of tax free income; Cost of acquisition; Wrong claim; Valuation report; Accommodation entries; Competent authority; Scheme of amalgamation; Retraction; Sham transactions
• Section: 69C; 133A; 153A; 131; 68; 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. 402 & 403/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2012-13 & 2013-14 SHRI OM PRAKASH MODI B-49, KESHAV PATH, SURAJ NAGAR (WEST), CIVIL LINES, JAIPUR. CUKE VS. THE DCIT, CENTRAL CIRCLE-2 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACFPM 8683 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA. NO. 406/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 SMT. SNEHLATA MODI B-49, KESHAV PATH, SURAJ NAGAR (WEST), CIVIL LINES, JAIPUR. CUKE VS. THE DCIT, CENTRAL CIRCLE-2 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAXPM 8076 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA. NO. 413/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 SMT. RADHIKA MODI B-49, KESHAV PATH, SURAJ NAGAR (WEST), CIVIL LINES, JAIPUR. CUKE VS. THE DCIT, CENTRAL CIRCLE-2 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AGPPM 2153 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 2 VK;DJ VIHY LA-@ ITA. NO. 404/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 SHRI. ATUL KRISHNA MODI B-49, KESHAV PATH, SURAJ NAGAR (WEST), CIVIL LINES, JAIPUR. CUKE VS. THE DCIT, CENTRAL CIRCLE-2 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AFYPM 5174 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA. NO. 412/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 SHRI. AJAY KRISHNA MODI B-49, KESHAV PATH, SURAJ NAGAR (WEST), CIVIL LINES, JAIPUR. CUKE VS. THE DCIT, CENTRAL CIRCLE-2 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAWPM 8549 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA. NO. 405/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 SHRI. VIJAY KRISHNA MODI B-49, KESHAV PATH, SURAJ NAGAR (WEST), CIVIL LINES, JAIPUR. CUKE VS. THE DCIT, CENTRAL CIRCLE-2 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACEPM 9993 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MANISH AGARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 25/05/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 24/08/2018 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 3 VKNS'K@ ORDER PER BENCH ALL THESE APPEALS HAVE BEEN FILED BY THE RESPECTIV E ASSESSEES AGAINST THE RESPECTIVE ORDERS PASSED BY LD. CIT(A)- 4 JAIPUR DATED 31.03.2017 FOR THE ASSESSMENT YEARS 2012-13 & 2013- 14. SINCE COMMON ISSUES ARE INVOLVED, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2. AT THE OUTSET, THE LD. AR HAS SUBMITTED THAT THE MATTER PERTAINING TO OM PRAKASH MODI IN ITA NO. 402/JP/2017 MAY BE TA KEN AS A LEAD CASE FOR DISCUSSIONS AND THE FACTS AND CIRCUMSTANCE S OF OTHER CASES ARE EXACTLY IDENTICAL. THE LD. DR DID NOT RAISE ANY SP ECIFIC OBJECTION AGAINST TAKING THE CASE OF OM PRAKASH MODI AS A LEAD CASE. THEREFORE, FOR THE PURPOSE OF THE PRESENT DISCUSSIONS, THE CASE OF SHR I OM PRAKASH MODI IS TAKEN AS A LEAD CASE. 3. IN CASE OF OM PRAKASH MODI IN ITA NO. 402/JP/201 7, THE ASSESSEE HAS TAKEN VARIOUS GROUNDS OF APPEAL AND HAS EFFECTI VELY CHALLENGED THE ADDITION MADE BY THE AO U/S 68 OF THE ACT BY DENYIN G THE EXEMPTION OF LONG TERM CAPITAL GAIN U/S 10(38) OF THE ACT AND AL SO MAKING AN ADDITION U/S 69C OF THE ACT. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE HAS FILED HIS RETURN OF INCOME U/S 139(1) OF THE ACT ON 24.07.201 2 DECLARING TOTAL INCOME OF RS. 12,34,370/-. THEREAFTER, A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT ON THE MEMBERS OF OK AY PLUS-JKD GROUP ON 04.09.2013 OF WHICH THE ASSESSEE IS ONE OF THE M EMBERS. ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 4 THEREAFTER, NOTICE U/S 153A WAS ISSUED ON 03.03.201 4 AND IN RESPONSE THE ASSESSEE FILED HIS RETURN OF INCOME ON 31.03.20 14 DECLARING THE INCOME OF RS. 1,234,370/- AS ORIGINAL DECLARED. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE AS SESSEE HAS SHOWN LONG TERM CAPITAL GAINS OF RS. 26,83,000/- ON SALE OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WHICH WERE CLAIMED AS EXEMPT U/S 10(38) OF THE ACT. SIMULTANEOUSLY, THE AO RECEIVED INFORMA TION FROM THE INVESTIGATION WING, KOLKATA, THAT SURVEY U/S 133A O F THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF SHRI PRAKASH JAJODIA WHO IS ONE OF THE PROMOTER OF M/S QUEST FINANCIAL SERVICES LTD AND IT HAS BEEN FOUND OUT THAT SHRI PRAKASH JAJODIA THROUGH A NUMBE R OF PRIVATE LIMITED SHELL COMPANIES AND SOME PENNY STOCK COMPANIES WAS INVOLVED IN PROVIDING BOGUS LONG TERM CAPITAL GAIN TO ITS CUSTO MERS FOR COMMISSION. ACCORDINGLY, A SHOW CAUSE DATED 18.01.2016 WAS ISSU ED TO THE ASSESSEE AS TO WHY THE LONG TERM CAPITAL GAINS ON SALE OF SH ARES OF M/S QUEST FINANCIAL SERVICES LTD. BE NOT TREATED AS BOGUS AND WHY COMMISSION EXPENSES RANGING BETWEEN 5 TO 6% OF THE TRANSACTION VALUE SHOULD NOT BE BROUGHT TO TAX AS UNDISCLOSED EXPENSES. 5. IN RESPONSE, THE ASSESSEE FILED HIS REPLY ON 21. 01.2016 REQUESTING FOR THE COPIES OF STATEMENTS OF SHRI PRA KASH JAJODIA AND OTHER ASSOCIATES RECORDED DURING THE COURSE OF SURV EY PROCEEDINGS. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT HE HAD P URCHASED SHARES OF THE COMPANIES WHICH WERE SUBSEQUENTLY AMALGAMATED W ITH M/S QUEST FINANCIAL SERVICES LTD. BY VIRTUE OF THE ORDER PASS ED BY THE HONBLE CALCUTTA HIGH COURT. IT WAS FURTHER SUBMITTED THAT THE SALE TRANSACTION TOOK PLACE THROUGH AUTHORIZED BROKER ON THE ONLINE SYSTEM OF RECOGNIZED STOCK EXCHANGE WHERE THE SELLERS AND BUY ERS ARE RANDOM ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 5 PARTIES AND THEY DO NOT KNOW EACH OTHER. IT WAS FU RTHER SUBMITTED THAT NO INCRIMINATING DOCUMENTS WAS FOUND DURING THE COU RSE OF SEARCH WHICH SUPPORT THE ALLEGATION OF BOGUS LONG TERM CAP ITAL GAIN. IT WAS FURTHER SUBMITTED THAT THE ALLEGATION IS MADE AGAIN ST THE ASSESSEE ON THE BASIS OF SO CALLED STATEMENTS RECORDED OF A THI RD PERSONS HAVING NO PRIVITY OF CONTRACT WITH THE ASSESSEE THUS AN EFFEC TIVE OPPORTUNITY MAY BE PROVIDED TO CROSS EXAMINE ALL SUCH PERSONS TO AR RIVE AT A FAIR CONCLUSION IN THE MATTER. 6. THE ASSESSEES SUBMISSION WAS NOT FOUND ACCEPTAB LE TO THE ASSESSING OFFICER. FIRSTLY, REGARDING THE PLEA OF T HE ASSESSEE THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF THE SEARCH PROCEEDINGS, THE ASSESSING OFFICER HELD THAT AS ON THE DATE OF SEARCH I.E. 04.09.2013, THERE WAS TIME LIMIT FOR ISSUING N OTICE U/S 143(2) OF THE ACT AND THEREFORE, THE ASSESSMENT PROCEEDINGS FOR T HE ASSESSMENT YEAR 2012-13 GOT ABATED AND IT IS, THEREFORE NOT NECESSA RY THAT THE ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MA TERIAL FOUND DURING THE COURSE OF SEARCH. THUS, ORIGINAL JURISDICTION A S WELL AS JURISDICTION AS PER SECTION 153A OF THE ACT IS RETAINED BY THE AO. REGARDING THE ASSESSEES PLEA THAT AN EFFECTIVE OPPORTUNITY MAY B E PROVIDED FOR CROSS EXAMINATION OF PERSONS WHOSE STATEMENTS HAVE BEEN R ECORDED AND TAKEN AS A BASE, THE AO HELD THAT HE IS NOT BOUND B Y ANY TECHNICAL RULES OF THE LAW OF EVIDENCE AND IT IS OPEN TO HIM TO COL LECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY PRIVATE ENQUIRY. REGA RDING THE ASSESSEES PLEA THAT STATEMENT OF ALL THE PERSONS ARE ON SAME PATTERN, THE ASSESSING OFFICER OBSERVED THAT ALL THE CONCERNS OF SHRI PRAKASH JAJODIA ARE BEING MANAGED BY HIM ONLY AND ALL OTHER DIRECTO RS ARE DUMMY AND THEREFORE, WHEN ALL THE CONCERNS ARE ENGAGED IN THE SAME KIND OF ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 6 ACTIVITIES AND ARE MANAGED BY THE SAME PERSON THEN ANSWER TO THE QUESTION IN THE STATEMENT IS ALSO SUPPOSE TO BE THE SAME. 7. THE AO THEREAFTER STATED THAT THE ASSESSEE HAD P URCHASED SHARES OF M/S DRISTI SUPPLIERS LIMITED AND M/S REWARD AGEN CIES LIMITED AND LATER ON, IN TERMS OF AMALGAMATION SANCTIONED BY TH E HONBLE KOLKATA HIGH COURT, SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WERE ALLOTTED TO THE ASSESSEE IN LIEU OF SHARES IN M/S DRISTI SUPPLI ERS LIMITED AND M/S REWARD AGENCIES LIMITED. THE AO THEREAFTER REFERRED TO THE STATEMENT OF DIRECTOR OF M/S DRISTI SUPPLIERS LIMITED AND M/S REWARD AGENCIES LIMITED AND HELD THAT M/S QUEST FINANCIAL SERVICES LTD. WAS A COMPANY IN WHICH SHRI PRAKASH JAJODIA WAS A DIRECTOR AND HE WAS INVOLVED IN THE RACKET OF PROVIDING ACCOMMODATION ENTRIES OF BOGUS LONG TERM CAPITAL GAIN. IT WAS ACCORDINGLY HELD BY THE AO THAT SHRI O M PRAKASH MODI HAS RECEIVED ENTRIES OF BOGUS LONG TERM CAPITAL GAINS O F RS. 26,83,000/- OUT OF HIS UNTAXED INCOME AND IT IS AN ATTEMPT TO INTRO DUCE UNTAXED INCOME IN HIS CAPITAL ACCOUNT, THEREFORE, LONG TERM CAPITA L GAINS OF RS. 26,83,000/- WAS ADDED TO THE TOTAL INCOME U/S 6 8 OF THE IT ACT. FURTHER, RELYING ON THE INFORMATION RECEIVED FROM T HE INVESTIGATION WING, KOLKATA, THE AO HELD THAT THE ASSESSEE HAD PA ID COMMISSION AT THE RATE OF 5% TO 6% OF THE LONG TERM CAPITAL GAIN AND THEREFORE, THE AMOUNT OF RS. 1,60,980/- WAS TREATED AS UNDISCLOSED INCOME AND BROUGHT TO TAX U/S 69C OF THE ACT. 8. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). THE LD CIT(A) OBSERVED THAT THE ASS ESSEE HAD PURCHASED 400 PHYSICAL SHARES OF M/S REWARD AGENCIES PVT. LTD . FROM M/S GANGOTRI DEALERS PVT. LTD. DURING APRIL, 2011 @ 500 PER SHAR E, AND 400 SHARES OF ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 7 M/S DRISHTI SUPPLIERS PVT. LTD. FROM M/S LOKSEVA TE XTRADE PVT. LTD. DURING OCTOBER, 2010 @ 500 PER SHARE AND AS PER SCH EME OF AMALGAMATION SANCTIONED BY THE HONBLE KOLKATA HIGH COURT, THE ASSESSEE HAD RECEIVED 36,000/- EQUITY SHARES OF M/S QUEST FINANCIAL SERVICES LTD. IN LIEU OF 400 SHARES OF M/S DRISHTI SUPPLIERS PVT. LTD. AND 40,000 EQUITY SHARES OF M/S QUEST FINANCIAL SERVICE S LTD. IN LIEU OF 400 SHARES IN M/S REWARD AGENCY PVT. LTD. FURTHER, THE LD. CIT(A) NOTED THAT THE ASSESSEE HAD SUBSEQUENTLY MADE ONLINE SALE THROUGH BROKER M/S GIRIRAJ STOCK BROKING PVT. LTD. OF CALCUTTA STO CK EXCHANGE OF 36,000 EQUITY SHARES OF M/S QUEST FINANCIAL SERVICES LTD. FOR A TOTAL CONSIDERATION OF RS. 28,82,800/- AND AFTER REDUCING THE PURCHASE COST OF RS. 1,99,800/, THE ASSESSEE HAS EARNED GAINS OF RS. 26,83,000/-. 9. REGARDING CROSS EXAMINATION OF SHRI PRAKASH JAJO DIA, THE LD. CIT(A) HELD THAT THE RIGHT OF CROSS EXAMINATION IS NOT ABSOLUTE RIGHT AND SO LONG AS THE AO HAS MADE AVAILABLE THE STATEMENTS TO THE ASSESSEE FOR REBUTTAL, THE AO HAS NOT ACTED ARBITRARILY. IT WAS ACCORDINGLY HELD THAT THE ASSESSMENT WAS VALIDLY MADE THOUGH THE ASS ESSEE WAS NOT GIVEN THE RIGHT OF CROSS EXAMINATION. REGARDING ASS ESSEES PLEA THAT SHRI PRAKASH JAJODIA HAS SUBSEQUENTLY RETRACTED HIS STATEMENT BY FILING AFFIDAVIT DATED 20.02.2015, THE LD. CIT(A) HELD THA T THE ASSESSEE HAS NOT PRODUCED ANY MATERIAL TO SHOW THAT THE ADMISSIO N MADE BY SHRI PRAKASH JAJODIA WAS INCORRECT. FURTHER, THE LD. CIT (A) HAS HELD THAT THE SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WERE AL LOTTED TO THE ASSESSEE ON 27.02.2012, THEREFORE, THE PERIOD OF HO LDING IS LESS THAN 12 MONTHS AND THE ASSESSEE IS NOT ENTITLED FOR EXEMPTI ON OF LONG TERM CAPITAL GAIN U/S 10(38) OF THE ACT. THEREAFTER, TH E LD. CIT(A) HAS HELD IN PARA 3.1.2.10 & 3.2.2 AS UNDER:- ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 8 3.1.2.10 FROM THE ABOVE, IT IS SEEN THAT ASSESSEE HAS NOT CONTROVERTED AO'S FINDINGS NOR DISPROVES THOSE FACT S. HERE AO HAS GENUINELY DOUBTED THE VERACITY OF THE PURCHASE BILL DT 06.04.2011 & 13.04.2011 FROM M/S GANGOTRI DEALERS P VT LTD ON FOLLOWING GROUNDS: A) THE BILL HAS GOT NO RUNNING NO OR DISTINCTIVE NO . B) PURCHASE TRANSACTION WAS NOT ONLINE AS SHARE IN PHYSICAL FORMS THROUGH TRANSFER DEEDS WERE PURCHASED DIRECTLY FROM THE INVESTORS. C) NO STT WAS PAID ON THIS SHARE TRANSFER TRANSACTI ON. D) THE PURCHASE OF SHARE WAS NOT CREDITED IN DEMAT ACCOUNT. E) HIGH RATIO OF ALLOTMENT OF SHARES 1:100 WHEN. F) SEBI CONDUCTED A PRELIMINARY INQUIRY IN THE DEAL INGS OF THE BROKING FIRM OF SH PRAKASH CHAND JAJODIA M/S CONCOR D VINIMAY PVT LTD AND M/S GIRIRAJ STOCK BROKING PVT LTD AND S UBSEQUENTLY DEBARRED THEM ALSO. M/S GIRIRAJ STOCK BROKING PVT L TD HAS SURRENDERED ITS CSE AND BSE CARD ALSO. ASSESSEE HAS DELIBERATELY KEPT THESE FACTS AWAY FROM THE KNOWLEDGE OF THE AO. G) SEBI HAS ALSO BARRED FROM TRADING MORE THAN 250 ENTITIES INCLUDING INDIVIDUALS AND COMPANIES FROM THE SECURI TIES MARKET FROM SUSPECTED TAX EVASION AND LAUNDERING OF BLACK MONEY THROUGH STOCK MARKET PLATFORMS. H) NO DETAILS FILED BY THE ASSESSEE TO PROVE ITS CO NTENTION OR DISPROVE AOS FINDINGS. DOCUMENTS E.G. (I) COPY OF SHARE CER TIFICATES (REWARD ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 9 AGENCIES PVT. LTD, DRISHTI SUPPLIERS PVT. LTD. ALLO TTED TO IT (II) ARTICLE OF ASSOCIATION OF COMPANY (III) VALUATION REPORT OF A REGISTERED VALUER EVIDENCING VALUE OF SHARES ALLOTTED TO ASSESSEE (IV ) DETAILS OF ANNUAL RETURN FILED BEFORE THE REGISTRAR OF COMPANIES (ROC ) KOLKATA (V) COPY OF BOARD'S RESOLUTION AUTHORIZING ADDITION OF SHARE HOLDERS DURING THE YEAR 2011 (VI) DETAILS OF REGISTER OF MEMBERS/ SHARE HOLDERS DULY AUTHENTICATED BY COMPETENT AUTHORITY & (VII) M INUTES OF GENERAL & BOARD MEETING DURING FY 2011-12. ALL THES E DETAILS COULD HAVE PROVED BONAFIDY OF ORIGINAL PURCHASE OF SHARE FROM M/S GANGOTRI DEALERS PVT LTD. I) ASSESSEE IN THE INVOICE AND VARIOUS SUBMISSIONS MADE BEFORE THE AO AND DURING THE APPELLATE PROCEEDING HAS MENTIONE D THE NAME OF M/S QUEST FIN VEST SERVICES LTD WHEREAS HE CLAIMS T O HAVE RECEIVED SHARES OF M/S QUEST FINANCIAL SERVICES LTD IN LIEU OF SHARES OF M/S REWARD AGENCIES PVT LTD & M/S DRISHTI SUPPLIERS PVT LTD. IT IS PERTINENT TO MENTION HERE THAT ASSESSEE HAS NOT PRO VIDED COPIES OF SHARES CERTIFICATE (IN PHYSICAL FORM) OF M/S REWARD AGENCIES PVT LTD & M/S DRISHTI SUPPLIERS PVT LTD NOR THE DEMAT STATE MENT EVIDENCING OWNERSHIP OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD. J) EVEN TO PROVE HIS CONTENTION, ASSESSEE COULD HAV E ASKED THE AO EXAMINE M/S GANGORTI DEALERS PVT LTD AND M/S GIRIRAJ STOCK BROKING PVT LTD. IT IS PERTINENT TO MENTION T HAT THE ORDER TIME IS NOT MENTIONED CONTRACT NOTES IN FORM A ISSU ED BY M/S GIRIRAJ STOCK BROKINGS PVT LTD. ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 10 K) PERIOD OF HOLDING OF M/S QUEST FINANCIAL SERVICE S LTD. IS LESS THAN 12 MONTHS. AFTER DULY CONSIDERING ABOVE FACTS AND CIRCUMSTANCE S OF THE CASE, I WOULD LIKE TO RELY ON THE DECISIONS BY THE APEX COU RT IN THE CASE OF SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC); DURGA PRASAD MORE REPORTED IN 82 ITR 540 (SC) AND MC. DOWELL & CO. LT D. 154 ITR 148 (SC), BESIDES BY THE TRIBUNAL IN THE CASE OF ASST. CIT VS. SOM NATH MANI [2006] 100 TTJ 917 (CHD), THE IMPUGNED CLAIM O F BOGUS LTCG AS UNEXPLAINED INCOME U/S. 68 OF THE ACT IS HEREBY SUSTAINED. 3.2.2. I HAVE DULY CONSIDERED ASSESSEES SUBMISSION AND CAREFULLY GONE THROUGH ASSESSMENT ORDER. I HAVE ALSO TAKEN A NOTE OF FACTUAL MATRIX OF THE CASE AS WELL AS APPLICABLE CASE LAWS RELIED UPON. THE ISSUE IS COVERED BY THE FINDINGS GIVEN FOR GR. NO. 1. AS THE PURCHASES OF ORIGINAL SHARES OF M/S REWARD AGENCIES PVT. LTD AND M/S DRISHTI SUPPLIERS PVT. LTD ARE NOT GENUINE, ACCORDINGLY, IT IS PRESUMED THAT ASSESSEE HAS PAID COMMISSION @ 5 TO 6% OF THE BOGUS CLAIM OF LTCG. ACCORDINGLY, IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE, AS DISCUSSED ABOVE, AOS ACTION IS HEREBY SUSTAINED. A SSESSEES APPEAL FAILS IN GR. NO. 2. 10.1 DURING THE COURSE OF HEARING, THE LD. AR HAS S UBMITTED THAT THE IMPUGNED ASSESSMENT ORDER IS PRIMA FACIE ILLEGA L INASMUCH AS IT IS SOLELY BASED ON THE STATEMENTS OF A THIRD PARTY WHO IS COMPLETELY UNKNOWN AND UNRELATED TO THE ASSESSEE. IT MUST BE N OTED THAT THE STATEMENTS OF THE SAID THIRD PARTY WERE NOT RECORDE D BY THE ASSESSING ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 11 OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS , BUT WERE RECORDED IN THE INVESTIGATION PROCEEDINGS CONDUCTED BY THE I NVESTIGATION WING. THUS, IN THE PRESENT CASE, THE LD. AO HAS BASED THE ENTIRE ASSESSMENT ORDER UPON THE STATEMENTS OF A THIRD PARTY WHICH WE RE RECORDED BY SOME OTHER AUTHORITIES AND THAT TOO BEHIND THE BACK OF THE ASSESSEE. AS A MATTER OF FACT, AND AS CAN BE SEEN FROM THE ASSES SMENT ORDER ITSELF THAT NO CORROBORATIVE MATERIAL WAS EITHER FOUND DUR ING THE COURSE OF SEARCH OR WAS REFERRED TO IN THE ASSESSMENT ORDER, NOR WAS BROUGHT ON RECORDS BY MAKING INDEPENDENT ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ON THE OTHER HAND THE ASSES SEE HAS FILED VARIOUS DOCUMENTS EVIDENCING ALLOTMENT OF SHARES, C OPY OF D-MAT ACCOUNT, PAYMENTS BEING MADE BY ACCOUNT PAYEE CHEQU E AND SIMILARLY ALSO THE EVIDENCE RELATED TO PROPER SALE, WHICH WAS MADE ONLINE ON THE CALCUTTA STOCK EXCHANGE. HOWEVER ALL THESE EVIDENCE S WERE JUST IGNORED AND NOT REBUTTED BY THE AO BEFORE MAKING ADDITION. IN VIEW OF THESE FACTS, IT IS SUBMITTED THAT THE IMPUGNED ADDITION B EING SOLELY BASED UPON SUCH UNCORROBORATED STATEMENTS OF A THIRD PART Y IS CLEARLY BAD IN LAW. 10.2 THE LD AR REFERRING TO THE DECISION OF HONBL E RAJASTHAN HIGH COURT IN THE CASE OF CIT VS POOJA AGRAWAL, STATED T HAT IN THE SAID DECISION, THE HONBLE HIGH COURT HAS HELD THAT SO F AR AS ASSESSEE HAS FURNISHED ALL THE SUPPORTING DOCUMENTS IN THE SHAPE OF COPY OF CONTRACT NOTES REGARDING PURCHASE AND SALE OF SHARES, COPY O F D-MAT ACCOUNT ETC, THE FACT OF TRANSACTION ENTERED INTO CANNOT BE DENI ED SIMPLY ON THE GROUND THAT IN HIS STATEMENTS APPELLANT DENIED HAVI NG MADE ANY TRANSACTIONS. FURTHER AS PAYMENTS AND RECEIPTS WERE MADE THROUGH ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 12 ACCOUNT PAYEE CHEQUES AND TRANSACTIONS WERE ROUTED THROUGH CALCUTTA STOCK EXCHANGE AND THERE WAS NO EVIDENCE THAT THE C ASH HAS GONE BACK IN APPELLANTS ACCOUNT, IT WAS HELD BY THE COURT TH AT SIMPLY MENTIONING THAT FINDINGS WERE ON THE BASIS OF APPRAISAL REPORT PREPARED BY INVESTIGATION WING AFTER CONSIDERING ALL THE MATERI AL FACTS AVAILABLE ON RECORD IS NOT SUFFICIENT. IT WAS THUS OBSERVED BY T HE HONBLE COURT THAT THE AO HAS FAILED TO PROVE THROUGH ANY INDEPENDENT ENQUIRY OR RELYING ON SOME MATERIAL THAT THE TRANSACTIONS MADE BY THE APPELLANT THROUGH SHARE P.K. AGRAWAL WERE NON GENUINE OR THERE WAS AN Y ADVERSE MENTION ABOUT THE TRANSACTION IN QUESTION IN STATEMENT OF S H. PAWANPUROHIT. IN VIEW OF ABOVE, IT WAS SUBMITTED THAT HEAVY RELIA NCE PLACED BY THE LOWER AUTHORITIES ON THE SO CALLED STATEMENTS OF SH . PRAKASH JAJODIA WITHOUT MAKING ANY DIRECT INQUIRY IS NOT IN ACCORDA NCE WITH LAW LAID DOWN BY HONBLE RAJASTHAN HIGH COURT. 10.3 RELIANCE WAS ALSO PLACED ON JUDGMENT DELIVERED BY HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF THE PR . CIT VS SH. HITESH GANDHI, WHEREIN IT HAS BEEN OBSERVED THAT WHEN: SHARES WERE ACTUALLY PURCHASED AS THESE WERE REFLEC TING IN D-MAT ACCOUNTS ; AO REJECTED THE CONTENTION OF PURCHASE ON THE BASIS OF SUSPICION ARISING OUT OF RECKLESS/ CASUAL REPLIES GIVEN BY AS SESSEE DURING ASSESSMENT PROCEEDINGS ; NO POST SEARCH ENQUIRIES WERE CONDUCTED IN THE FORM OF RECORDING STATEMENTS OF BROKER SO AS TO BRING ON RECORD ANY E VIDENCE OF THE SAID TRANSACTION BEING AN ACCOMMODATION ENTRY ; ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 13 STT HAS BEEN ON SALE OF SHARES AND SHARES HAD BEEN SOLD THROUGH NATIONAL STOCK EXCHANGE ; PAYMENT FOR SALE OF SHARES WAS RECEIVED THROUGH BAN KING CHANNELS; THUS, WHEN ALL THE DOCUMENTARY EVIDENCES FILED BEFO RE THE LD. AO WERE IN FAVOUR OF ASSESSEE, SOLELY ON THE BASIS OF SOME CASUAL REPLIES GIVEN BY ASSESSEE, TRANSACTIONS CANNOT BE HELD AS SHAM. 10.4 IT WAS SUBMITTED THAT IN THE CASE BEFORE HONB LE PUNJAB AND HARYANA HIGH COURT, SHARES WERE PURCHASED FOR CASH, THEN TOO, TRANSACTION WAS HELD AS GENUINE AS ALL THE DOCUMENT S WERE IN FAVOUR OF ASSESSEE, THUS CASE OF ASSESSEE IS FAR BETTER AS PA YMENT FOR PURCHASE OF SUCH SHARES WAS MADE BY ACCOUNT PAYEE CHEQUES. 10.5 IT WAS SUBMITTED THAT IT IS ALSO A MATTER OF F ACT THAT THE STATEMENTS OF SHRI PRAKASH JAJODIA WAS RECORDED ON 26.08.2014. SUBSEQUENTLY, A SHOW CAUSE NOTICE WAS SERVED ON M/S QFSL ON 16.02.2015 WHEREIN IT WAS STATED THAT SHRI PRAKASH JAJODIA HAS ACCEPTED IN HIS SWORN STATEMENTS THAT QFSL WAS ENGAGED IN PR OVIDING ACCOMMODATION ENTRIES AS BOGUS LTCG. ON RECEIPT OF SUCH SHOW CAUSE NOTICE, RETRACTION AFFIDAVIT WAS FILED BY SH. PRAKA SH JAJODIA ON 20.02.2015, WHEREIN HE HAS SPECIFICALLY NARRATED TH E SITUATION UNDER WHICH HIS STATEMENTS WERE RECORDED BY THE AUTHORITI ES, AND DEPOSED ON OATH, THAT THE SAID STATEMENTS DULY MENTIONED AT TH E END IN HIS OWN HANDWRITING THAT THEY WERE BEING RECORDED IN PRESSU RE, FORCE AND COERCION. SINCE IN THE CASE OF ASSESSEE, ADDITIONS WERE MADE BY PLACING SOLE AND HEAVY RELIANCE ON THE SO CALLED RETRACTED STATEMENTS OF SHRI PRAKASH JAJODIA, IT IS SUBMITTED THAT NO COGNIZANCE OF THE SAME COULD BE PLACED OVER THE SAME TO CONCLUDE AND IMPLEAD ANY AS SESSEE WITH SUCH A HIGHER DEMAND OF TAX. THE LD. CIT(A), HAS DISREGARD ED THE CONTENTION ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 14 OF ASSESSEE REGARDING RETRACTION FILED BY SH. PRAKA SH JAJODIA BY PLACING RELIANCE ON THE JUDGMENT OF JURISDICTIONAL HIGH COU RT IN THE CASE OF RAVI MATHUR & OTHERS. IN THIS REGARD, IT IS SUBMITTED TH AT IN THE SAID CASE, RETRACTION WAS HELD AS AN AFTERTHOUGHT WHEN THE ADD ITIONS WERE MADE IN THE CASE OF THE PERSON WHO HAD MADE THE RETRACTION AND NOT IN THE CASE OF THE THIRD PARTY AS HAPPENED IN OUR CASE ON WHICH HEAVY AND SOLE RELIANCE IS PLACED FOR MAKING ADDITION IN THE HANDS OF ASSESSEE STOOD RETRACTED BY HIM IN TERMS OF HIS AFFIDAVIT. FURTHER THE STATEMENTS OF RAVI MATHUR WERE RECORDED AT THE TIME OF SEARCH ON 09.11 .1995, WHEREAS RETRACTION WAS MADE AS LATE AS IN NOVEMBER 1996, DU RING ASSESSMENT PROCEEDINGS, WHEREAS SH. PRAKASH JAJODIA HAS RETRAC TED FROM HIS STATEMENTS MERELY 4 DAYS AFTER THE SHOW CAUSE NOTIC E WAS SERVED ON HIM. THEREFORE, FACTS OF THE CASE RELIED UPON ARE T OTALLY DIFFERENT AND THUS RELIANCE PLACED BY LD. CIT(A) IS MISPLACED 10.6 THE LD. AR FURTHER SUBMITTED THAT THE STATEMEN TS OF SHRI PRAKASH JAJODIA WERE RECORDED BEHIND THE BACK OF ASSESSEE, THEREFORE VIDE REPLY TO THE SHOW CAUSE NOTICE, IT WAS REQUESTED TO THE LD. AO THAT SUCH PERSON BE CONFRONTED TO ASSESSEE AND BE ALLOWED TO CROSS-EXAMINE HIM SO AS TO VERIFY THE VERACITY / TRUTHFULNESS OF THE STATEMENTS MADE BY HIM. HOWEVER, IN SPITE OF THE DIRE NECESSITY OF CRO SS-EXAMINATION IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSEES REQUEST F OR CROSS-EXAMINATION WAS TURNED DOWN IN AN ARBITRARY MANNER, WITHOUT SPE CIFYING ANY JUSTIFIABLE REASON. THE LD. AO MERELY STATED THAT H E WAS NOT BOUND BY THE TECHNICAL RULES OF EVIDENCE AND THEREFORE, WAS NOT UNDER ANY OBLIGATION TO PROVIDE CROSS-EXAMINATION OF THE AFOR ESAID PERSON. THE LD. AO FURTHER REFERRED THAT THERE IS NO PROVISION FOR PERMITTING CROSS- EXAMINATION AND ALSO THAT RIGHT TO CROSS-EXAMINATIO N IS NOT NECESSARILY A ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 15 PART OF REASONABLE OPPORTUNITY. LD. CIT(A) ALSO AFF IRMED SUCH ACTION OF LD. AO IN NOT AFFORDING OPPORTUNITY OF CROSS EXAMIN ATION BY PLACING RELIANCE ON SOME JUDICIAL PRONOUNCEMENTS, WHICH ALL ARE NOT AT ALL RELEVANT AND IGNORED THE BINDING JUDGMENT OF THE HO NBLE APEX COURT IN THE CASE OF CCE VS. ANDAMAN TIMBER INDUSTRIES, (324 ) ELT 641 WHEREIN IT HAS BEEN HELD AS UNDER: 6. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO C ROSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED U PON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EV EN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NO T GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHO RITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDI CATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS C OULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSS ESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX- FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXA MINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FR OM 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. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 16 THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, T HE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAIN TAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEV Y OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED I N THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINA TION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUP POSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATIO N AND MAKE THE REMARKS AS MENTIONED ABOVE. IN THIS REGARD, IT WAS SUBMITTED THAT :- I. IMPUGNED ADDITION HAVE BEEN MADE SOLELY ON THE B ASIS OF STATEMENTS OF A THIRD PARTY I.E. SHRI PRAKASH JAJOD IA WHO IS COMPLETELY UNKNOWN AND UNRELATED TO THE ASSESSEE. THERE IS NO CORROBORATIVE EVIDENCE FOUND EITHER DURING THE COURSE OF SEARCH O R ASSESSMENT PROCEEDINGS. NO OTHER MATERIAL HAS BEEN REFERRED TO BY THE LD. AO. II. THE SAID STATEMENTS WERE NOT EVEN RECORDED BY A SSESSING OFFICER HIMSELF, BUT WERE RECORDED BY SOME OTHER AUTHORITY. THUS, THE LD. AO COULD NOT HAVE SIMPLY USED THESE STATEMENTS AGAINST ASSESSEE WITHOUT AT LEAST EXAMINING SUCH PERSON HIMSELF DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. III. THE SAID STATEMENTS OF SHRI PRAKASH JAJODIA ST OOD RETRACTED BY HIMSELF THUS HAS NO EVIDENTIARY VALUE. IV. STATEMENTS OF SHRI PRAKASH JAJODIA WERE RECORDE D BEHIND THE BACK OF ASSESSEE AND WERE NOT ALLOWED TO BE CROSS-EXAMIN ED IN SPITE OF THE SPECIFIC REQUESTS MADE BY ASSESSEE WHICH WERE TURNE D DOWN IN ARBITRARY MANNER. V. SUCH UNCORROBORATED AND RETRACTED STATEMENTS WER E RELIED UPON AND USED AGAINST THE ASSESSEE WITHOUT PROVIDING ANY OPPORTUNITY OF ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 17 CROSS-EXAMINATION, NOR WAS ANY OTHER CORROBORATIVE MATERIAL BROUGHT ON RECORD. VI. THE SHARES OF QFSL WERE ALLOTTED TO THE ASSESSE E BY VIRTUE OF ORDER OF THE HONBLE CALCUTTA HIGH COURT, WHO HAS G RANTED THE PERMISSION OF AMALGAMATION OF COMPANIES AFTER THORO UGH INVESTIGATION AND EXAMINATION OF SCHEME OF AMALGAMATION, THUS IT CANNOT BE SAID THAT THE ASSESSE IN CONJUNCTION WITH SOME PERSONS HAS MA NAGED THE AFFAIRS IN SUCH A MANNER WHICH COULD AFFECT THE WORKING OF AN INSTITUTION SUCH AS THE HONBLE CALCUTTA HIGH COURT. VII. TRANSACTION OF SALE WAS ROUTED THROUGH RECOGNI ZED STOCK EXCHANGE WHERE TRADING IS DONE ON AN ON-LINE SYSTEM AND IS IMPOSSIBLE FOR A PERSON TO HAVE KNOWLEDGE ABOUT THE BUYER WHO CAN BE ANY PERSON OF THIS PLANET. VIII. EVEN IN THE SAID RETRACTED STATEMENTS, NOTHIN G ADVERSE HAS BEEN STATED AGAINST ASSESSEE BY SHRI PRAKASH JAJODIA. A PERUSAL OF THE STATEMENTS SHOWS THAT HE HAS MADE GENERAL REMARKS A BOUT HOW HE PROVIDED BOGUS LTCG TO CERTAIN PERSONS HOWEVER, THE ASSESSEE HAS NO WHERE BEEN IMPLICATED BY HIM ANYWHERE IN HIS STATEM ENTS. IX. THE REQUIREMENT OF ALLOWING CROSS-EXAMINATION O F WITNESSES, WHOSE STATEMENTS ARE SOUGHT TO BE USED AGAINST THE ASSESSEE, IS A SINE QUA NONE FOR VALIDITY OF ADJUDICATION PROCEEDINGS. THE LD. AO HAS UNLAWFULLY TRIED TO DISPENSE WITH THIS REQUIREMENT BY STATING THAT HE IS NOT BOUND BY THE TECHNICAL RULES OF EVIDENCE ACT. I N THIS REGARD, IT IS SUBMITTED THAT SUCH REQUIREMENT IS NOT A TECHNICAL RULES OF EVIDENCE, BUT IS ONE OF THE PRINCIPLES OF NATURAL JUSTICE WHICH T HE ASSESSING OFFICER BEING A QUASI-JUDICIAL AUTHORITY IS BOUND BY LAW TO FOLLOW. IN THE PRESENT CASE HOWEVER, THE IMPUGNED ASSESSMENT ORDER HAS BEE N PASSED IN ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 18 VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND THEREFORE, IS PRIMA-FACIE BAD IN LAW. 10.7 IT WAS SUBMITTED THAT JAIPUR BENCH OF TRIBUNAL IN THE CASE OF SH. PRAMOD JAIN VS. DCIT (ITA NO. 368/JP/2017 DATED 31.01.2018) HAS RELIED UPON THE VIEW TAKEN BY HONBLE APEX COURT IN ANDAMAN TIMBERS AND HELD THAT THE STATEMENTS OF WITNESS CANNOT BE M ADE SOLE BASIS OF MAKING ASSESSMENT WITHOUT GIVING AN OPPORTUNITY OF CROSS EXAMINATION AND CONSEQUENTLY IT IS A SERIOUS FLAW WHICH RENDERS THE ORDER A NULLITY. 10.8 IT WAS FURTHER SUBMITTED THAT AHMEDABAD BENCH OF TRIBUNAL IN THE CASE OF SMT. SUNITA JAIN VS ITO QUASHED THE ASSESSM ENT ORDER BY PLACING RELIANCE ON APEX COURT JUDGMENT IN THE CASE OF ANDAMAN TIMBER (CITED SUPRA) AS ENTIRE ASSESSMENT WAS BASED UPON T HE STATEMENTS OF SH. MUKESH CHOKSI, WHICH WERE NEITHER SUPPLIED TO A SSESSEE NOR WAS OPPORTUNITY OF CROSS EXAMINATION WAS PROVIDED. 10.9 THE AO AS WELL LD. CIT(A) HAVE PLACED RELIANCE ON SOME JUDICIAL PRONOUNCEMENTS TO HOLD THAT RIGHT TO CROSS EXAMINE IS NOT ABSOLUTE, HOWEVER SUCH JUDGMENTS HAVE BEEN PASSED IN DIFFEREN T SET OF FACTS AND FURTHERMORE HAVE BEEN SUPERSEDED BY HONBLE APEX CO URT JUDGMENT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) WHICH NOW GOVERNS THE FIELD. 10.10 THE LD. AR ALSO SUBMITTED THAT THE TRANSACTIO N OF SALE OF SHARES BY THE ASSESSEE IS COMPLETELY GENUINE DULY SUPPORTED B Y NECESSARY EVIDENCES AND THUS, COULD NOT HAVE BEEN HELD AS BOG US IN VIEW OF THE FOLLOWING: ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 19 I. THE ASSESSEE HAS ACQUIRED SHARES IN LIEU OF HIS ORI GINAL HOLDINGS, AS A RESULT OF AMALGAMATION WITH QFSL. SUCH ACQUISITIO N AND SALE WERE MADE UNDER PROPER DOCUMENTARY EVIDENCES IN THE SHAP E OF ALLOTMENT LETTER AND BILLS AND VOUCHERS WHICH WERE DULY SUBMITTED BEFORE THE LD. AO DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. A PERUSAL OF SUCH EVIDENCES WOULD SHOW THAT ALL THE T RANSACTIONS WERE CARRIED OUT THROUGH THE CALCUTTA STOCK EXCHANGE (CS E) HAVING INDEPENDENT TRADE NOS., DULY APPEARING IN THE RESPE CTIVE BILLS OF SALES. II. IN CONSIDERATION OF ALLOTMENT OF SHARES, THE PAYMEN T WAS MADE THROUGH AN ACCOUNT PAYEE CHEQUE WHICH STANDS DEBITE D IN THE BANK ACCOUNT OF THE ASSESSEE. ALSO THE PAYMENTS IN RESPE CT OF BILLS RAISED BY THE BROKER I.E. M/S GANGOTRI DEALERS (P) LTD AGA INST THE SERVICES RENDERED TO ASSESSEE WERE MADE THROUGH ACCOUNT PAYE E CHEQUE. FURTHER, ALL THE SALE TRANSACTIONS WERE MADE THROUG H ONLINE PORTAL. THE SHARES SOLD BY THE ASSESSEE WERE THROUGH THE ST OCK EXCHANGE. III. ALL THE SALE TRANSACTIONS WERE MADE THROUGH ONLINE PORTAL AFTER DUE PAYMENT OF STT, THUS THE ASSESSE FULFILLS ALL THE C ONDITIONS OF SECTION 10(38) TO CLAIM SUCH PROFITS AS EXEMPT INCOME. AT T HIS JUNCTURE IT IS FURTHER SUBMITTED THAT THE LD. CIT(A) HAS ALLEGED A T PAGE 42 OF THE APPELLATE ORDER THAT SINCE THE SHARES OF QFSL WHICH WERE RECEIVED BY THE ASSESSEE IN LIEU OF ORIGINAL SHARES POST AMA LGAMATION ONLY IN JANUARY 2012, AND WERE SUBSEQUENTLY DEMATERIALIZED AND SOLD BETWEEN SEPT TO NOV 2012, THE CAPITAL GAIN ARISING IN THE HANDS OF THE ASSESSEE WAS SHORT TERM AND THE ASSESSEE WAS NO T ENTITLED TO LTCG AS CLAIMED. THE LD. CIT(A) FURTHER PLACED RELI ANCE ON VARIOUS PRONOUNCEMENTS TO SUPPORT HIS ALLEGATIONS. IN THIS REGARD IT IS ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 20 HUMBLY SUBMITTED THAT THE VARIOUS CASE LAWS CITED B Y THE LD.CIT ARE ON THE BACKDROP OF WHETHER HOLDING PERIOD OF SHARES SHOULD BE RECKONED FROM THE DATE OF MAKING APPLICATION FOR A PARTICULAR SHARE OR FROM THE DATE OF ACTUAL ALLOTMENT. IT IS IN THIS BACKDROP THAT VARIOUS JUDGEMENTS WERE PRONOUNCED WHEREIN IT WAS H ELD THAT THE DATE ON WHICH THE SHARES WERE ALLOTTED OR THE RIGHT S WERE CONFERRED UPON THE HOLDER WAS TO BE CONSIDERED FOR THE PURPOS E OF COMPUTING THE HOLDING PERIOD. AS AGAINST THIS THE FACT OF THE PRESENT CASE IS THAT THE ORIGINAL SHARES WERE BOUGHT BY THE ASSESSE E IN 2010 AGAINST WHICH SHARES OF QFSL WERE ALLOTTED IN LIEU OF AMALGAMATION BETWEEN THE COMPANIES. THUS, THE HOLDING PERIOD FOR ASCERTAINING WHETHER THE SHARES WERE SHORT TERM OR LONG TERM HAS TO BE RECKONED FROM THE DATE WHEN SHARES WERE ORIGINALLY PURCHASED BY THE ASSESSEE. ALSO WITH REGARDS TO THE OBSERVATION OF LOWER AUTHORITIES THAT THE PURCHASE TRANSACTION WAS NOT O NLINE, AND NO STT WAS PAID THEREON AND ACCORDINGLY NOT CREDITED TO DM AT ACCOUNT, IT IS SUBMITTED THAT THERE WAS NO REQUIREMENT OF PURCHASE S TO BE ONLINE FOR CLAIMING EXEMPTION U/S 10(38). IT HAS BEEN FURT HER ALLEGED THAT SWAP RATIO FOR ALLOTMENT OF SHARES OF QFSL WAS QUIT E HIGH, IN THIS REGARD IT IS SUBMITTED THAT THE SAID SWAP RATIO WAS APPROVED BY THE HONBLE CALCUTTA HIGH COURT AND ASSESSEE HAD NO CON TROL OVER THE SAME. THUS THESE FINDINGS OF THE LD. CIT(A) NEEDS T O BE GROSSLY IGNORED. 10.11 IT WAS FURTHER SUBMITTED THAT THE AO HAS FAIL ED TO SUBSTANTIATE HIS CASE BY CONDUCTING ANY INDEPENDENT ENQUIRY OR BY BR INGING ANY MATERIAL ON RECORD TO PROVE THAT ASSESSEE HAS RECEIVED HIS M ONEY BACK. THUS ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 21 DOUBTS REGARDING GENUINENESS OF TRANSACTION ARE NOT HING MORE THAN SUSPICION ON THE BASIS OF SO CALLED STATEMENTS OF A THIRD PARTY NOT RELATED TO THE ASSESSEE IN ANY MANNER. 10.12 IT WAS SUBMITTED THAT THE LD. CIT(A) HAS CONF IRMED THE SAID TRANSACTION AS NON GENUINE RELYING UPON VARIOUS JUD GMENTS ON PREPONDERANCE OF HUMAN PROBABILITIES. IN THIS REG ARD, IT WAS SUBMITTED THAT SUCH CASES CANNOT AT ALL BE RELIED UPON TO DRA W ADVERSE INFERENCE IN THE CASE OF ASSESSEE AS ASSESSEES TRANSACTION IS S UPPORTED BY ALL THE REQUISITE DOCUMENTARY EVIDENCES. IN THIS REGARD, RELIANCE IS PLACED ON DECISION OF H ONBLE SPECIAL BENCH OF MUMBAI ITAT IN THE CASE OF ITO VS. M/S. GTC INDUSTR IES LIMITED TOBACCO HOUSE WHERE THE HONBLE SPECIAL BENCH OF IT AT AFTER CONSIDERING ALL THE ASPECTS OF PREPONDERANCE OF HU MAN PROBABILITIES AND OTHER ISSUES HAS HELD THAT : 46. ..IT IS QUITE A TRITE LAW THAT SUSPICION HOW SO EVER STRONG MAY BE BUT CANNOT BE THE BASIS OF ADDITION EXCEPT FOR SOME MATERIAL EVIDENCE ON RECORD. THE THEORY OF PREPONDERANCE OF PROBABILITY IS APPLIED TO WEIGH THE EVIDENCES OF EITHER SIDE AN D DRAW A CONCLUSION IN FAVOUR OF A PARTY WHICH HAS MORE FAVO URABLE FACTORS IN HIS SIDE. THE CONCLUSIONS HAVE TO BE DRAWN ON TH E 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 A ID OF ANY DIRECT MATERIAL ESPECIALLY WHEN VARIOUS ROUNDS OF I NVESTIGATION HAVE BEEN CARRIED OUT, THEN NOTHING CAN BE IMPLICAT ED AGAINST THE ASSESSEE. ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 22 THE AFORESAID JUDGMENT OF HONBLE SPECIAL BENCH WAS FOLLOWED BY HONBLE KOLKATTA ITAT IN THE CASE OF MAHENDRA KUMAR BAID VS. ACIT DATED 18.08.2017. IN CASE OF DHAKESWARI COTTON MILLS LTD. VS. CIT 26 ITR 775 HONBLE SUPREME COURT HELD THAT THERE MUST BE SOMETHING MOR E THAN BARE SUSPICION TO SUPPORT THE ASSESSMENT U/S 23(3) OF TH E ACT. 10.13 THE LD. FURTHER SUBMITTED THAT THE SEBI ENQUI RY CANNOT BE A BASIS FOR ADDITION. THE LD. CIT(A) HAS OBSERVED THAT SEBI HAS DEBARRED M/S GIRRIRAJ STOCK BROKING (P) LTD (MEMBER OF CALCUTTA STOCK EXCHANGE) IN FEB 2016 AND THAT IT HAD SURRENDERED ITS MEMBERSHIP . IN THIS REGARD, IT IS SUBMITTED THAT SUCH ACTION WAS MUCH AFTER (I.E. ALMOST 4 YEARS) ASSESSEE SOLD SHARES, THUS NO ADVERSE INFERENCE CAN BE DRAWN IN THE CASE OF ASSESSEE ON THE BASIS OF SUCH ORDER IN ASSE SSMENT YEAR UNDER REFERENCE. THE MAIN REASON OF ADDITION IS THE ENQUI RY MADE BY SEBI THAT THESE COMPANIES ARE INVOLVED IN PRICE RIGGING AND T HEREBY HELPING OTHERS IN PURCHASING THE CAPITAL GAIN. THIS CANNOT BE CONS IDERED AS CONCLUSIVE EVIDENCE TO HOLD THE ASSESSEE AS LIABLE FOR MAKING ADDITION IN THE INCOME TAX PROCEEDINGS. FURTHERMORE, ORDER OF SEBI DIRECTING INVESTIGATION IN THE CASE OF BROKER WAS PASSED MUCH LATER THAN THE TRANSACTIONS ENTERED IN BY ASSESSEE, THUS NEGATIVE CONCLUSION DRAWN IN THE CASE OF ASSESSEE ON THE BASIS OF SUCH ORDER DOE S NOT HOLD GOOD. IN THIS REGARD, RELIANCE IS PLACED ON THE DECISION OF HONBLE JHARKHAND HIGH COURT IN THE CASE OF CIT V. ARUN KUMAR AGARWAL (HUF ) (2013) 085 DTR 0219 WHEREIN IT HAS BEEN HELD AS UNDER: ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 23 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEAR NED COUNSEL FOR THE PARTIES AND WE ARE OF THE CONSIDERED OPINION TH AT THE LEARNED ASSESSING OFFICER WAS MUCH INFLUENCED BY THE ENQUIR Y REPORT WHICH MAY HAS BEEN BROUGHT ON RECORD BY THE EFFORTS OF TH E ASSESSING OFFICER AND THAT ENQUIRY REPORT WAS PREPARED BY THE SEBI AND FROM THE OBSERVATIONS MADE BY THE ASSESSING OFFICER HIMS ELF, IT IS CLEAR THAT AFTER GETTING THAT ENQUIRY REPORT, THE SEBI PRIMA F ACIE FOUND INVOLVEMENT OF SOME OF THE SHARE BROKERS IN UNFAIR TRADE PRACTICES. EVEN IN A CASE WHERE THE SHARE BROKER WAS FOUND INV OLVED IN UNFAIR TRADE PRACTICE AND WAS INVOLVED IN LOWERING AND RIS ING OF THE SHARE PRICE, AND ANY PERSON, WHO HIMSELF IS NOT INVOLVED IN THAT TYPE OF TRANSACTION, IF PURCHASED THE SHARE FROM THAT BROKE R INNOCENTLY AND BONAFIDELY AND IF HE SHOW HIS BONAFIDE IN TRANSACTI ON BY SHOWING RELEVANT MATERIAL, FACTS AND CIRCUMSTANCES AND DOCU MENTS, THEN MERELY ON THE BASIS OF THE REASON THAT SHARE BROKER WAS INVOLVED IN DEALING IN THE SHARE OF A PARTICULAR COMPANY IN COL LUSION WITH OTHERS OR IN THE MANNER OF UNFAIR TRADE PRACTICES AGAINST THE NORMS OF S.E.B.I AND STOCK EXCHANGE, THEN MERELY BECAUSE OF THAT FAC T A PERSON WHO BONAFIDELY ENTERED INTO SHARE TRANSACTION OF THAT C OMPANY THROUGH SUCH BROKER THEN ONLY BY MERE ASSUMPTION SUCH TRANS ACTIONS CANNOT BE HELD TO BE A SHAME TRANSACTION. FACT OF TINTED B ROKER MAY BE RELEVANT FOR SUSPICION BUT IT ALONE NECESSARILY DOE S LEAD TO CONCLUSION OF ALL TRANSACTION OF THAT BROKER AS TINTED. IN SUC H CIRCUMSTANCES, FURTHER ENQUIRY IS NEEDED AND THAT IS FOR INDIVIDUA L CASE. SUCH FURTHER ENQUIRY WAS NOT CONDUCTED IN THAT CASE. 11. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO MENTI ON HERE THAT IT IS NOT DISPUTED BY THE REVENUE BEFORE US THAT THE SHARES O F THESE ASSESSEES WERE ALREADY SHOWN IN THE EARLIER BALANCE SHEET SUB MITTED BY THE ASSESSEES, AND THEREFORE, IN THAT SITUATION, HOW TH E REVENUE CONDEMNED THE TRANSACTION EVEN ON THE GROUND OF STE EP RISE IN THE SHARES. IF WITHIN A PERIOD OF ONE YEAR, THE SHARE P RICE HAS RISEN FROM RS.5 TO 55 AND FROM 9 TO 160 AND ONE PERSON WAS HOL DING THE SHARES MUCH PRIOR TO THAT START OF RISE OF THE SHARE, THEN HOW IT CAN BE INFERRED THAT SUCH PERSON ENTERED INTO SHAM TRANSAC TION FEW YEARS AGO AND PREPARED FOR GETTING THE BENEFIT AFTER FEW YEARS WHEN THE ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 24 SHARE WILL START RISING STEEPLY. IN PRESENT CASE EV EN THERE WAS NO REASON FOR SUCH SUSPICION WHEN THE SHARES WERE PURC HASED YEARS BEFORE THE UNUSUAL FLUCTUATION IN THE SHARE PRICE. HERE IN THIS CASE, WE HAVE GIVEN EXAMPLE OF ONE OF THE TAX APPEAL WHER EIN THE SHARES WERE PURCHASED IN THE YEAR 2004 AND WERE SOLD IN TH E YEAR 2006, WHICH IS SAID TO BE ONE OF THE CASE WHEREIN THE GAP IN THE PURCHASE AND SALE OF THE SHARES WAS NARROWEST. IN OTHER CASE S AS WE HAVE NOTICED FROM THE VARIOUS ORDERS OF THE C.I.T(APPEAL S) THAT, THE SHARES OF SOME OF THE COMPANIES WERE PURCHASED BY THE ASSE SSEES EVEN FIVE YEARS AGO FROM THE TIME OF SALE AND THOSE PURCHASER S WERE ALREADY DISCLOSED IN THE BALANCE SHEET OF THE ASSESSEE, THE N FROM ANY ANGLE, IT IS PROVED THAT THE ASSESSEES HAD HELD THE SHARES MUCH PRIOR TO 12 MONTHS OF THE SALE OF THE SHARES. 10.14 IT WAS SUBMITTED THAT IN THE CASE OF ASSESSE E, NO MATERIAL WAS FOUND WHICH COULD SUPPORT THE ALLEGATION OF THE LD. AO THAT ASSESSEE HAS CONVERTED HIS UNDISCLOSED MONEY IN THE GUISE OF LTCG. THEREFORE, IN THE CIRCUMSTANCES, IT IS HUMBLY SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO A GENUINE TRANSACTION OF PURCHASES AND SALES O F SHARES ROUTED THROUGH THE RECOGNIZED STOCK EXCHANGE AND THE FUNDS HAVE BEEN TRANSACTED THROUGH BANKING CHANNELS AND THE SHARES WERE KEPT BY THE ASSESSEE IN D-MAT ACCOUNT AND THE SALES WERE SUBJEC T TO STT. THUS ALL THE CONDITIONS ENUMERATED IN SECTION 10(38) FOR HOL DING THE PROFIT FROM THE SALE OF SHARES AS EXEMPT HAVE DULY BEEN FULFILL ED BY THE ASSESSEE, THUS IN NO CIRCUMSTANCES IT COULD BE HELD AS BOGUS OR SHAM TRANSACTION MORE PARTICULARLY WHEN NO CORROBORATIVE EVIDENCE WA S BROUGHT ON RECORD BY THE DEPARTMENT TO HOLD THAT ASSESSEE HAD INTRODUCED HIS UNDISCLOSED INCOME IN THE GARB OF LONG TERM CAPITAL GAIN AND THE STATEMENTS OF THIRD PARTY RELIED UPON BY THE DEPART MENT STOOD RETRACTED ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 25 BY SUCH PERSON HIMSELF WHICH FACT HAD NOT BEEN CONS IDERED AT ALL BY LOWER AUTHORITIES. 11. PER CONTRA, LD. DR HAS SUBMITTED THAT THE ASSES SEE HAS SHOWN A HUGE LONG TERM CAPITAL GAIN WITHIN A SHORT PERIOD O F ONE YEAR FROM THE SALE OF SHARES AND THEREFORE, AS PER THE RULE OF PR EPONDERANCE OF HUMAN PROBABILITY THE TRANSACTION OF THE ASSESSEE C ANNOT BE ACCEPTED AS GENUINE AND THE ONUS IS ON THE ASSESSEE TO PROVE THE SAME AS HOW THERE IS A SPIKE IN THE PRICE OF THE SHARES WITHIN SUCH SHORT DURATION. THE SURROUNDING CIRCUMSTANCES CLEARLY LEAD TO ONLY ONE POSSIBLE CONCLUSION THAT THE ASSESSEE HAS MANIPULATED THE EN TIRE RECORD AND AVAILED THE BOGUS TRANSACTION OF LONG TERM CAPITAL GAIN TO CONVERT HIS UNACCOUNTED INCOME TO AVOID TAX THROUGH LONG TERM C APITAL GAIN. FURTHER, THE LD. DR HAS RELIED UPON THE ORDERS OF T HE ASSESSING OFFICER AS WELL AS LD. CIT(A) AND SUBMITTED THAT DURING THE COURSE OF SURVEY CONDUCTED U/S 133A OF THE ACT, STATEMENT OF SHRI PR AKASH JAJODIA WAS RECORDED WHO HAS ADMITTED THAT HE IS INVOLVED IN PR OVIDING ACCOMMODATION ENTRIES OF BOGUS LONG TERM CAPITAL GA INS THROUGH HIS COMPANIES AND M/S QFSL IS ONE SUCH COMPANY AND IN V IEW OF THAT THE LOWER AUTHORITIES HAVE RIGHTLY BROUGHT THE AMOUNT O F RS. 26,83,000/- TO TAX U/S 68 OF THE ACT. IT WAS FURTHER SUBMITTED THA T THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AND WHERE THE STATEMENT OF SHRI PRAKASH JAJODIA AND OTHER PERSONS WERE MADE AVAILAB LE TO THE ASSESSEE, THERE IS NO PREJUDICE WHICH WAS CAUSED TO THE ASSES SEE. IN LIGHT OF SAME, IT WAS SUBMITTED THAT THE ORDER PASSED BY THE LOWER AUTHORITIES BE CONFIRMED. ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 26 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS PURCHASED 400 SHARES OF M/S DRISHTI SUPPLIERS PVT. LTD. FOR A CONSIDERATION OF RS. 2,00,000/- AND IN SUPPORT OF THE SAME, THE ASSESSEE HAS PRODUCED THE PURCHASE BILL OF THE SHARES PURCHASED FROM M/S LOKSEVA TEXTRADE PVT. LTD . DATED 15.10.2010 WHICH SHALL THE DISTINCT NUMBERS OF THE SHARES WHICH HAVE BEEN ACQUIRED BY THE ASSESSEE. THE PURCHASE PRICE O F RS. 500 PER SHARES ITSELF SHOWS THAT IT WAS NOT A TRANSACTION O F PURCHASE OF PENNY STOCK. THE PAYMENT OF PURCHASE CONSIDERATION WAS MA DE BY THE ASSESSEE THROUGH CHEQUE WHICH IS EVIDENT FROM THE B ANK ACCOUNT OF THE ASSESSEE AT PAGE 29 TO 30 OF THE PAPER BOOK. THEREA FTER, M/S DRISHTI SUPPLIERS PVT. LTD. ALONG WITH OTHER COMPANIES WERE AMALGAMATED WITH M/S QUEST FINANCIAL SERVICES PVT. LTD. WHICH WAS DU LY APPROVED BY THE HONBLE KOLKATA HIGH COURT VIDE ITS ORDER DATED 22. 09.2011. THE ASSESSEE IN THE MEANTIME GOT THE PHYSICAL SHARES CE RTIFICATE DEMATERIALIZED INTO DEMAT ACCOUNT ON 21.11.2011. TH ERE IS THUS, NO REASON TO DOUBT THE ALLOTMENT OF SHARES TO THE ASSE SSEE AFTER THE AMALGAMATION TOOK PLACE BETWEEN M/S DRISHTI SUPPLIE RS PVT. LTD. AND M/S QUEST FINANCIAL SERVICES PVT. LTD. AND SUBSEQUE NT TO THE AMALGAMATION, THE ASSESSEE WAS ALLOTTED SHARES OF M /S QUEST FINANCIAL SERVICES PVT. LTD. ON 21.02.2012 DULY REFLECTED IN THE ASSESSEES DEMAT STATEMENT. HENCE, THE ALLOTMENT OF 36,000 EQUITY SH ARES OF M/S QUEST FINANCIAL SERVICES PVT. LTD. CANNOT BE DOUBTED OR D ISPUTED AS THESE SHARES WERE ISSUED IN DEMAT FORM POST AMALGAMATION BY A LISTED COMPANY. IT IS ALSO NOT IN DISPUTE THAT THE SHARES WERE ISSUED IN EXCHANGE OF THE SHARES HELD BY THE ASSESSEE IN M/S DRISHTI SUPPLIERS PVT. LTD. THEREFORE, ONCE THE SHARES ISSUED BY M/S QUEST FINANCIAL ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 27 SERVICES PVT. LTD. CANNOT BE DOUBTED THEN, HOLDING OF THE SHARES IN M/S DRISHTI SUPPLIERS PVT. LTD. BY THE ASSESSEE CANNOT BE DOUBTED AS THE SHARES COULD BE ALLOTTED ONLY ON EXCHANGE OF SHARES . THE HOLDING OF THE SHARES OF M/S DRISHTI SUPPLIERS PVT. LTD. AND ALLOT MENT OF SHARES OF M/S QUEST FINANCIAL SERVICES PVT. LTD. ARE DIRECTLY INT ERCONNECTED, THEREFORE, THE GENUINENESS OF THE PURCHASE TRANSACTION CANNOT BE QUESTIONED. FURTHER, THE PURCHASE CONSIDERATION HAS ALSO BEEN P AID THROUGH CHEQUE, THEREFORE, EVEN IF THE PURCHASE CONSIDERATION IS FO UND TO BE VERY LESS IN COMPARISON TO THE SALE CONSIDERATION 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 UNACCOUNTED MONEY IN THE SHAPE IN THE LONG TERM CAP ITAL GAIN AND HAS USED THE SAME AS A DEVICE TO AVOID TAX, THE PURCHAS E CONSIDERATION PAID BY THE ASSESSEE CANNOT BE DOUBTED IN ABSENCE OF ANY CORROBORATING EVIDENCE. FURTHER, THE AO HAS PASSED THE ASSESSMENT ORDER BASED ON THE STATEMENT OF SHRI PRAKASH JAJODIA AND HIS ASSOC IATES HOWEVER, THE ASSESSEE HAS SPECIFICALLY DEMANDED THE CROSS EXAMIN ATION OF SHRI PRAKASH JAJODIA DURING THE COURSE OF ASSESSMENT PRO CEEDINGS AS WE HAVE NOTED ABOVE. HOWEVER, THE ASSESSING OFFICER DI D NOT OFFER THE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SHRI P RAKASH JAJODIA. IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN CA SE OF CCE VS. ANDAMAN TIMBER INDUSTRIES 127 DTR 241 THE ASSESSMEN T BASED ON STATEMENT WITHOUT GIVING AN OPPORTUNITY IS NOT SUST AINABLE IN LAW. WE FURTHER NOTE THAT THE ASSESSEE PRODUCED COPY OF AFF IDAVIT OF SHRI PRAKASH JAJODIA WHO HAS RETRACTED HIS STATEMENT, HO WEVER WITHOUT GOING INTO CONTROVERSY OF THE RETRACTION OF THE STA TEMENT, THE FACT REMAINS THAT THE STATEMENT OF A THIRD PARTY CANNOT BE USED BY THE AO ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 28 WITHOUT GIVING AN OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. A SIMILAR ISSUE HAS COME UP BEFORE THIS BENCH IN CAS E OF SHRI PRAMOD JAIN AND OTHERS VS. DCIT (ITA NO. 368/JP/2017 DATED 31.01.2018) WHILE DEALING WITH AN IDENTICAL IN PARA 6 TO 8 WE HAVE HE LD AS UNDER:- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE PURCHASES 800 EQUI TY 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 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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 29 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 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 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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 30 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 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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 31 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. 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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 32 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 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 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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 33 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 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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 34 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 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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 35 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 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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 36 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. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 37 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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 38 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 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. ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 39 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:- '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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 40 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 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 ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 41 ALL THE MATERIAL 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 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. ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 42 13. THUS, IT IS CLEAR THAT THE BENCH IN THE SAID CA SE HAS ANALYZED AN IDENTICAL ISSUE WHEREIN THE SHARES ALLOTTED IN THE PRIVATE PLACEMENT @ RS. 10 AT PAR OF FACE VALUE WHICH WERE DEMATERIALIZ ED AND THEREAFTER SOLD BY THE ASSESSEE AND ACCORDINGLY THE BENCH AFTE R PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF C CE VS. ANDAMAN TIMBER INDUSTRIES (SUPRA) AS WELL AS THE DECISION O F HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. SMT. P OOJA AGARWAL (SUPRA) AS HELD THAT WHEN THE ASSESSING OFFICER HAS NOT BRO UGHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PAID OVER AND ABOVE PURCHASE CONSIDERATION AS CLAIMED AND EVIDENT FROM THE BANK ACCOUNT, THEN IN THE ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD, IT C ANNOT BE HELD THAT THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED MON EY BY WAY OF BOGUS LONG TERM CAPITAL GAIN. SIMILARLY, IN THE CAS E IN HAND, THE ASSESSEE HAS PRODUCED THE RELEVANT RECORDS TO SHOW THE PURCHASE OF SHARES BY THE COMPANY ON PAYMENT OF CONSIDERATION B Y CHEQUE AND THEREFORE, IT IS NOT A CASE OF PAYMENT OF CONSIDERA TION IN CASH. BUT THE TRANSACTION IS ESTABLISHED FROM THE EVIDENCE AND RE CORD WHICH CANNOT BE MANIPULATED AS ALL THE ENTRIES ARE PART OF THE B ANK ACCOUNT OF THE ASSESSEE AND THE ASSESSEE DEMATERIALIZED THE SHARES IN THE D-MAT ACCOUNT WHICH IS ALSO AN INDEPENDENT MATERIAL AND T HE SAID EVIDENCE CANNOT BE MANIPULATED. THEREFORE, THE HOLDING OF TH E SHARES BY THE ASSESSEE CANNOT BE DOUBTED AND THE FINDING OF THE A O IS BASED MERELY ON THE SUSPICION AND SURMISES WITHOUT ANY COGENT MA TERIAL TO SHOW THAT THE ASSESSEE HAS INTRODUCED HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN. WE FIND THAT THE LD. CIT(A) HAS ALSO REFERRED TO SEBI ENQUIRY AGAINST M/S GIRRIRAJ STOCK BROKING (P) LTD AND HAS STATED ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 43 THAT CURRENT STATUS IS THAT M/S GIRRIRAJ STOCK BROK ING (P) LTD IS UNDER INVESTIGATION. THEREFORE, IN ABSENCE OF SPECIFIC F INDINGS WHICH CAN BE KNOWN ONLY ON COMPLETION OF ENQUIRY AND IN ABSENCE OF ANY MATERIAL ON RECORD THAT THE SUBJECT MATTER OF THE ENQUIRY HAS A NY CONNECTION WITH THE TRANSACTION OF BOGUS LONG TERM CAPITAL GAIN, TH E SAME CANNOT BE RELIED UPON BY THE REVENUE. FURTHER, THE LD CIT(A) HAS STATED THAT PERIOD OF HOLDING IS LESS THAN 12 MONTHS. IN THIS REGARD, REFERENCE CAN BE DRAWN TO THE PROVISIONS OF SECTION 2(42A)(C) WHI CH PROVIDES THAT IN THE CASE OF A CAPITAL ASSET BEING A SHARE OR SHARES IN AN INDIAN COMPANY, WHICH BECOMES THE PROPERTY OF THE ASSESSEE IN CONSIDERATION OF A TRANSFER REFERRED TO IN CLAUSE (VII) OF SECTIO N 47, THERE SHALL BE INCLUDED THE PERIOD FOR WHICH THE SHARE OR SHARES I N THE AMALGAMATING COMPANY WERE HELD BY THE ASSESSEE. IN THE PRESENT CASE, THE ORIGINAL SHARES IN M/S DRISHTI SUPPLIERS LTD WERE BOUGHT BY THE ASSESSEE IN 2010 AGAINST WHICH SHARES OF QUEST FINANCIAL SERVICES LT D WERE ALLOTTED TO THE ASSESSEE PURSUANT TO AMALGAMATION BETWEEN THE C OMPANIES. THUS, THE HOLDING PERIOD HAS TO BE RECKONED FROM THE DATE WHEN SHARES IN M/S DRISHTI SUPPLIERS LTD WERE ORIGINALLY PURCHASED BY THE ASSESSEE. HENCE, IN VIEW OF THE FACTS AND CIRCUMSTANCES WHEN WE HOLD THAT THE ORDER OF THE ASSESSING OFFICER TREATING THE LONG TE RM CAPITAL GAIN AS BOGUS AND CONSEQUENTIAL ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE IS NOT SUSTAINABLE. HENCE, WE DELETE THE A DDITION MADE BY THE AO ON THIS ACCOUNT. 14. GROUND NO. 6 IS REGARDING THE ADDITION MADE BY THE AO ON ACCOUNT OF NOTIONAL COMMISSION OF RS. 1,60,980/- U/ S 69C OF THE ACT WHICH IS CONSEQUENTIAL TO THE ISSUE OF TREATMENT OF LONG TERM CAPITAL ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 44 GAIN AS BOGUS. ONCE, WE HAVE REVERSED THE FINDING O F THE AO ON THE ISSUE OF TREATMENT OF LONG TERM CAPITAL GAIN AS BOG US THEN, THE CONSEQUENT ADDITION MADE BY THE AO ON NOTIONAL COMM ISSION IS NOT SUSTAINABLE. ACCORDINGLY, THE SAME IS DELETED. 15. IN REST ALL APPEALS, THE ISSUE RAISED BY THE RE SPECTIVE ASSESSEES ARE COMMON AND ARISING FROM IDENTICAL FACTS AS IN T HE APPEAL IN ITA NO. 402/JP/2017 EXCEPT THE DIFFERENCE OF ADDITION MADE BY THE AO. ACCORDINGLY, IN VIEW OF OUR FINDING ON THESE ISSUES IN ITA NO. 402/JP/2017, THE GROUNDS RAISED IN THESE APPEALS IN ITA NO. 403/JP/2017, 404/JP/2017, 405/JP/17, 406/JP/17, 412 /JP/2017 & 413/JP/2017 ARE DECIDED IN FAVOUR OF THE ASSESSEE. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/08/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24/08/2018. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-A. SHRI OM PRAKASH MODI, JAIPUR. B. SMT. SNEHLATA MODI, JAIPUR. C. SMT. RADHIKA MODI, JAIPUR. D. SHRI. ATUL KRISHNA MODI, JAIPUR. E. SHRI. AJAY KRISHNA MODI, JAIPUR. ITA NO. 402 TO 406, 412 & 413/JP/2017 SHRI OM PRAKASH MODI & ORS. VS. DCIT 45 F. SHRI. VIJAY KRISHNA MODI, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CENTRAL CIRCLE-2, JAIPUR. 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. 402 TO 406, 412 & 413/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR