Varun Naginbhai Patel, Ahmedabad V. DCIT, Circle-3(3), Ahmedabad

ITA 417/AHD/2019

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9631 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-12-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 10-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIASHOKKUMARSUTHAR; SRDR
• Assessee Lawyers: SHRIDHRUNALBHATT; SHRIGULABTHAKOR

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’D’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRISIDDHARTHANAUTIYAL,JUDICIALMEMBER आयकरअपीलसं ./ITANo.417/AHD/2019 धििाधरणवरध/Asstt.Year:2014-15 VarunNaginbhaiPatel, GallopsHouse, Nr.BabulPartyPlot,Thaltej, Ahmedabad-380059. PAN:AGMPP1852B Vs DCIT, Circle3(3), Ahmedabad (Applicant)(Respondent) Revenueby:ShriAshokKumarSuthar,SrDR Assesseeby:ShriDhrunalBhatt& ShriGulabThakor,ARs सुिवाईकीतारीख/DateofHearing:06/12/2023 घोरणाकीतारीख /DateofPronouncement:08/12/2023 आदेश /ORDER PERWASEEMAHMEDACCOUNTANTMEMBER: Thecaptionedappealhasbeenfiledattheinstanceoftheassesseeagainst theorderoftheLearnedCommissionerofIncomeTax(Appeals)-3,Ahmedabad (hereinafterreferredtoas“Ld.CIT(A)”)dated27.12.2018arisinginthematterof assessmentorderpassedunders.143(3)oftheIncomeTaxAct,1961 (hereinafterreferredtoas"theAct")relevanttotheAssessmentYear2014-15. ITANo.417/Ahd/2019 VarunNaginbhaiPatelVs.DCIT Asstt.Year:2014-15 2 2.Theassesseehasraisedfollowinggroundsofappeal: “1.Onthefactsandinthecircumstanceofthecase,thelearnedCIT(A)haserredin confirmingthedisallowancemadebyAssessingOfficerwithoutappreciatingfactthatthe AssessmentOrderpassedbyAssessingOfficerisvoidabinitioanddeservestobequashed. 2.Onthefactsandinthecircumstanceofthecase,thelearnedCIT(A)haserredin confirmingtheactionoftheAOindisallowingtheclaimofshorttermcapitallossofRs 1,78,23,848/-inrespectofsaleofsharesof"LooksHealthServicesLtd",treatingthe transactionasin-genuinewithoutappreciatingthefactthatduringthecourseof AssessmentProceedingsandappellateproceeding,theAppellanthasalreadysubmitted contractnote,purchaseandsalebills,brokersaccount,demataccountandtheBank statementtoprovethegenuinenessofthetransactions. 3.Onthefactsandinthecircumstanceofthecase,thelearnedCIT(A)haserredin confirmingtheactionoftheA.Oandtherebytreatingtheentirelossasnotgenuineby ignoringallthematerialevidencesfurnished,andhaserredintreatingthesaidtransaction asa"pennystock"transactionsimplyonpresumptionandonprobabilitiesandthereby incorrectobservations. 4.Onthefactsandinthecircumstanceofthecase,thelearnedCIT(A)haserredin confirmingtheallegedactionofA.Owhichispurelybasedonsuspicionandpresumptions thatthedifferenceinpurchaseandsalepriceofshareisunusuallyhighthoughthe revenuedidnotbringanymaterialonrecordtosupportitsfindingthattherehasbeen collusion/connivancebetweenthebrokerandtheassesseefortheintroductionofhis unaccountedmoney. 5.Onthefactsandinthecircumstanceofthecase,thelearnedCIT(A)haserredin confirmingtheallegedactionofA.Owhichisbasedonthesearchreportsconductedby theDDITInvestigationWing,Calcuttaintheirsearches.Thoughtheappellanthadno connectionwitheitherofthesearches. 6.Onthefactsandinthecircumstanceofthecase,thelearnedCIT(A)haserredin confirmingtheallegedactionofA.O.inlevyinginterestu/s234A,234B,234Cand234Dof theAct.” 3.TheonlyeffectiveissueraisedbytheassesseeisthattheAOaswellasthe learnedCIT(A)haserredintreatingtheshort-termcapitallossof₹1,78,23,848/- onsaleofsharesofM/sLooksHealthservicesLtdasbogus. 4.Thefactsinbriefarethattheassessee,anindividual,claimedtobe engagedintheactivityoftradingofshares&securities.Theassesseeinthe returnofincomefiledfortheyearunderconsiderationhasdeclaredincomeunder theheadsalary,businessincome,incomefromspeculativebusiness,shortterm capitallossandlong-termcapitalgain. ITANo.417/Ahd/2019 VarunNaginbhaiPatelVs.DCIT Asstt.Year:2014-15 3 5.Theassesseeduringtheyearpurchased1,38,400sharesofM/sLooks HealthServicesLtdonstockexchangethroughbrokernamelyM/sShashwat BrokersPvtLtd(anACMLCapitalMarketLtdauthorizedperson)ondifferentdates detailedasunder: DateNoofSharesPrice/share(Rs.)Totalvalue(Rs.) 19-Feb-201432800289.7195,02,488/- 20-Feb-201434400288.9199,38,504/- 26-Feb-20142000024549,00,000/- 18-Mar-201451200132.0467,60,448/- Total138400-3,11,01,440/- 5.1AllthesharesofM/sLooksHealthServicesLtdweresoldbytheassessee on26 th March2014for₹1,33,76,360/-(₹96.65persharex138400share). Accordingly,theassesseeincurredshorttermcapitallossof₹1,78,23,848/-on saleofsharesofM/sLooksHealthServicesLtd.Theimpugnedlosswassetoff againstthelong-termcapitalgainof₹2,46,90,000/-earnedonsaleofsharesof closelyheldcompanynamelyM/sGallopsMotorsPvtLtddated21 st May2013. 6.TheAOintheimpugnedtransactionofsaleandpurchaseofsharesofM/s LooksHealthServicesLimitedobservedcertaindeficiencywhicharedetailedas under: -Fundforpurchasesofimpugnedsharesweretransferredfromassessee’s fatheraccounttoACML-BSEclientaccountandnotfromthebankaccount oftheassessee. -Theassesseeduringtheyearhasenteredintosharetradingactivityin variousscrip(47scripexcludingthescripofLookHealthservices)through ParbhudasLilladharPvtorthroughCitigroupGlobalMarketIndiaLtd whereastransactioninscripofM/sLookHealthServicesLtdonlyentered ITANo.417/Ahd/2019 VarunNaginbhaiPatelVs.DCIT Asstt.Year:2014-15 4 throughthebrokerM/sShaswatBrokersPvtLtdwhosekeyperson,Shri RajeshJhaveriisfriendofassessee’sfather. -ThecompanyM/sLooksHealthServicesLtdisnotafinanciallyviable companywhosescriptmayattractthepublicatlarge.Assuchthecompany isconstantlymakingloss. -Thetradedataofthescriptofthecompanyclearlyshowsthatthepricehas beenriggedupthroughsynchronizedtradingatthestockexchangeandthe pricereacheditspeakduringtheyearunderconsideration.Duringthepeak periodbulktransactionswerecarriedoutintheimpugnedscriptandthe personswhowereinvolvedinthebulktransactionaremainlyfrom Ahmedabadonly. -Thesharepurchasedbytheassesseeon18 th March2014wasnotfoundin thetradedateofBSEwhichmeansthattheassesseepurchased51000 sharesthroughbrokerpoolinprearrangedtransaction. 7.TheAObasedontheaboveobservationandbyapplyingtheprincipleof surroundingcircumstantialevidencewasoftheviewthattheassesseeinorderto setoffhislong-termcapitalgainonsaleofthesharesofcloselyheldcompany enteredintoprearrangedtransactiontobookshorttermloss.TheAO,while applyingtheprinciplesofsurroundingcircumstantialevidencereferredtothe judgmentoftheHon’bleSupremeCourtinthecaseofCITvs.DurgaPrasadMore in82ITR540andSumatiDayalvsCITreportedin214ITR801.TheAOalsohold thatthepricemovementinthescripoftheM/sLooksHealthServicesLtdarealso abruptandunrealisticontheparameterofthehumanprobabilities.Inthisregard theAOreferredthejudgmentofHon’bleGuwahatiHighCourtincaseofCITvs. SanghmitraBharalireportedin361ITR481.Thus,theAOdisallowedtheclaimof theassesseeforshorttermcapitallossasboguslosstakentosetofflongterm capitalgainandaddedthesametothetotalincomeoftheassessee. ITANo.417/Ahd/2019 VarunNaginbhaiPatelVs.DCIT Asstt.Year:2014-15 5 8.Onappealbytheassessee,thelearnedCIT(A)confirmedthefindingofthe AO.TherelevantobservationofthelearnedCIT(A)isextractedasunder: 2.3.IhavecarefullyconsideredtheAssessmentOrderandsubmissionfiledbythe Appellant.TheappellanthasshownShortTermcapitalLossinaspanoflessthan40days ofholdingperiodfromasinglescripnamelyLooksHealthServicesLtd.Onverification,itis seenthatthecompanyLooksHealthServicesLtd.wasearlierknownasLooksCosmetic Clinic.TheappellantclaimedSTCLofRs.1,78,23,848/-onaccountofsaleofsharesof LooksHealthServicesLtd.SuchlosshadbeenadjustedwithLTCGderivedfromsaleof sharesofcloselyheldcompanyGallopsMotorsPvt.Ltd.ofRs.2,46,90,000/-.Normally,a persontreadsintotheinvestmentinshareshasasurplusfundhand.Thebankaccountof theappellantwithHDFCBankshowsthatsufficientcreditbalanceavailableforinvestment insharesonthedateoftransaction.Thefundsformakingsuchinvestmentsweredirectly paidbyappellant'sfatherShriNaginbhaiG.Pateltothebrokersaccount.Thesaleand purchaseofsharesinthecaseofLooksHealthServicesLtd.wascarriedoutthrough ShaswatStockBrokersPvt.Ltd.,whichisauthorizedpersonofACML.Duringassessment proceedingsstatementonoathofShriVarunN.Patelwasrecordedon19.12.2016.In replytoQ.No.6hestatedthathehasnoknowledgeofbulkdealsoftheshare.Whatever lossincurredisgenuinelossandshouldbeallowed.Thereplyoftheassesseecannotbe acceptedbytheAOinviewofthedetailsfurnishedbytheassesseeaswellasdata receivedfromBSE,MoneycontroletcandtheinputreceivedfromInvestigationWing.The sharesofLooksHealthServicesLtd.isnotahealthyandworthyscripintermsofvaluein whichpublicatlargepicksforinvestmentpurposeinrelationtoquotedpricebutasper thedataavailableinthepublicdomaini.e.BSE,Moneycontroletc.pricerigging/abnormal fluctuationinthescrippriceisnotedwhichisnotrelatableandjustifiableintermsofthe performanceofthecompany.Thedetailsofsuchfluctuationcaneasilybeseenfromthe pricegraphicrepresentationavailableonpublicdomainandhasbeendiscussedbyAOin theassessmentorder.TheextractofthegrapfromMoneycontrolisasunder:- ........ 2.4.Fromtheabovegraph,itcanbeeasilynotedthatthescripundergonepricerigging andthepeakforsuchriggingduringtheperiodinwhichassesseeenteredintothe transactionofpurchase/saleofsharesofthesaidcompany.Inthisscenariotheappellant bookedshorttermcapitallossieassesseeallegedlymadepurchaseandsaleofshareat pre-decidedlevelaspertheamountofaccommodationentryrequired.Asperthedata availableonBSEthatmajorportionofpurchaseandsaleofsharesaredoneinashort spanoftimeandarethroughBulki.e.highvolumeofsharesdealtinasingledealandin mostofthecasesitisinthenatureofprearrangedtransactions.Onverificationofthebulk dealsinrespectofLooksHealthServicesLtd.itisseenthatthereare80persons/firms wereinvolvedinsuchbulktradinginthesaidscrip.Majorityofthesepersons/firmswere basedatAhmedabad.Fromtheanalysisofthetransactionsofpurchaseandsaleofshares bytheassesseeinthescrip"looksHealthServicesLtd.",itisfoundthatthecasefallsin thecategoryofthosepersonswhohavetakentheadvantageincarryingoutbuy&saleof thesaidscripduringtheshortspanoftimeforthepurposeofshowingshorttermcapital loss.TheappellanthasclaimedShortTermCapitalLossofRs.1,78,23,848/-fortheperiod underconsideration.Onverificationitisevidentthattheactualclaimisthroughdubious methods.Thisisalsonotedthatwhenassesseehaspurchasedshareson18/03/2014, suchshareswerereceivedinpoolaccountofbrokermaintainedwithNSDLhoweverthe samewasnotcreditedtoassessee'sdemataccount.Thesaidtransactionisalsonot ITANo.417/Ahd/2019 VarunNaginbhaiPatelVs.DCIT Asstt.Year:2014-15 6 appearinginBSEdata,accordinglythesameappearstobeanarrangedaccommodation entry.Theonuswasontheassesseetoprovethattherewasnosuchschemeandevenif therewasone,thebenefittotheassesseewasaresultofgenuinetransaction.The assesseefailedtodischargethisonusandtherefore,theonlyinescapableconclusionis thatlikemanyotherindividualstheassesseehasalsotakenentryofbogusSTCLbypaying commissiontosetoffhisLTCGandavoidpaymentoftaxthereon. 2.5.Itcanbeseenfromfinancialdataofthecompanywhichisavailableatpublicdomain; noprudentpersonwillinvestinsuchcompanies.Whentherearelargenumberof fundamentalcompaniesareavailableinthemarket,whyappellanthaschosentoinvestin thesetypesofsharesclearlyprovethatappellantwishestoobtainexemptcapitalgainby obtainingaccommodativeentries.ItisanestablishedlawthatIncomeTaxproceedingsfall inthedomainofpreponderanceofprobabilities,meaningthattheactionofassesseeis consideredtoberationalandwellinformfallinginthedomainwhereprobablechoiceare exercised.InSumatiDayalCaseHon'bleSupremeCourthasheldthatamanisconsidered asmakingrationaldecisionsandthechoicesexercisedbyhimfallsunderprobable alternativesavailablebeforehim.Thefinancialanalysismadehereinaboveclearlyprove thatthedecisionofinvestmentinnondescriptpennystockishighlyunlikelyforaprudent investorandalsothatthequantumjumpinstockpricesofLooksHealthServicesLtd.The scripinwhichAppellanthasmadethetransactionislistedinpennystockbySEBIandno prudentpersonwouldinvestinsuchtypeofshares.Asdiscussedhereinabove, transactionsofshareswerenotgovernedbymarketpracticesandinitialpaymentwas madeincashwhichprovethattransactionsarenon-genuineandAppellanthasresortedto preconceivedschemetoprocurelongtermcapitalgainbywayofpricedifferenceinshare transactionswhichisnotsupportbymarket. 2.6.TheHon'bleSupremeCourtinthecaseofCommissionerofIncomeTax,WestVs. DurgaPrasadMore82ITR540observedtheoftenquotedfollowingrelevantobservation: "Itistruethatanapparentmustbeconsideredrealuntilitisshownthattherearereasons tobelievethattheapparentisnotthereal.Inacaseofthepresentkindapartywhorelies onarecitalinadeedhastoestablishthetruthofthoserecitalsotherwiseitwillbevery easytomakeself-servingstatementsindocumentseitherexecutedortakenbyaparty andrelyonthoserecitals.Ifallthatanassesseewhowantstoevadetaxistohavesome recitalsmadeinadocumenteitherexecutedbyhimorexecutedinhisfavourthenthe doorwillbeleftwideopentoevadetax.Alittleprobingwassufficientinthepresentcase toshowthattheapparentwasnotthereal.TheHon'bleApexcourtinMc.Dowell&Co. Ltd.-154ITR148(SC),hasheldthat:-"TaxPlanningmaybelegitimateprovideditis withintheframeworkofLaw.Colourabledevicescannotbeapartoftaxplanninganditis wrongtoencourageorentertainthebeliefthatitishonorabletoavoidthepaymentoftax byresortingtodubiousmethods.Itistheobligationofeverycitizentopaythetaxes honestlyandwithoutresortingtosubterfuges.Everypersonisentitledtosoarrangehis affairsastoavoidtaxation,butthearrangementmustberealandgenuineandnotasham ormake-believeone." 2.7.WithregardtoobservationofAppellantthatentiretransactionsaresupportedby variousdocumentaryevidences,itisobservedthatsharesinwhichAppellanthascarried outtransactionispennystockandentirecircumstantialevidencesclearlysuggestthat Appellanthasobtainedaccommodationentries.Thisissueandmodusoperandiinsimilar transactionisdiscussedbyMumbaiITATinthecaseofITOv/sShamimBharwani69 taxmann.com65asunder: ............ ............ ITANo.417/Ahd/2019 VarunNaginbhaiPatelVs.DCIT Asstt.Year:2014-15 7 2.9.TheHon'bleGujaratHighCourtinTaxAppealNo.1037of2017dated12/02/2018has confirmedtheviewtaken(supra)bytheHon'bleITAT,Ahmedabad.Inpresentcase Appellanthasdealtinpennystock,whichissimilartoshellcompaniesforwhichvarious investigationswerealreadycarriedoutbyCalcuttaInvestigationWing.Fromtheabove graphonpage23ofthisorder,itcanbeeasilynotedthatthescripundergoneprice riggingandthepeakforsuchriggingduringtheperiodinwhichassesseeenteredintothe transactionofpurchase/saleofsharesofthesaidcompany.Inthegivensituation,the assesseebookedshorttermcapitallossl.e.assesseeallegedlymadepurchaseandsaleof shareatpre-decidedlevelaspertheamountofaccommodationentry required/decided/allegedlyagreedupon.Inviewofthefactsanddiscussedsupraand circumstantialevidenceavailableonrecord,itisconcludedthatthetransactionswere shamtransactionsandaimedonlytobringunaccountedmoneyintheguiseofexempted longtermcapitalgainsandpaperworkhasbeengotupanddonemerelytogiveacolour ofauthenticitytothetransactionandbycreatingafacadeoflegitimatetransactions.In viewoftheaforesaid,Iamsatisfiedthatthetransactionoftheassesseeiswholly concoctedjustforthepurposeofsettingoffhisLTCGofRs.2,46,90,000/-andtoreduce thetaxableLTCG.Accordingly,theallegedclaimofshorttermcapitallossonaccountof purchase/saleofsharesofLooksHealthServicesLimitedisnotfoundgenuineand accordinglythesamei.e.STCLlossofRs1,78,23,848/-disallowedbytheAOisconfirmed inviewofthejudicialpronouncementsreferredhereinaboveandthecircumstantial evidencesasdiscussedabove.Thegroundofappealis,therefore,dismissed.” 9.BeingaggrievedbytheorderofthelearnedCIT(A),theassesseeisin appealbeforeus. 10.ThelearnedARbeforeusfiledapaperbookrunningfrompages1to42, compilationofcaselawsandsynopsisofargumentswhicharekeptonrecord.It wascontendedbythelearnedARthattheauthoritiesbelowwithoutpointingout anydefectinthedocumentsfurnishedwithrespecttothetransactionforthesale purchaseoftheshareshaveheldtheshort-termcapitallossasbogus.According tothelearnedARtherewasnoverificationcarriedoutbytherevenuefromthe partiesinvolvedinthetransactionespeciallythebrokerbutarbitrarilythe concludedthattheassesseehascarriedoutprearrangedtransaction.Asperthe learnedARthelossincurredbytheassesseewasbasedonthedocumentary evidenceandthereforethesamecannotbedisallowed. 11.Onthecontrary,thelearnedDRcontendedthattheassesseehasshown lossesinashortspanoftimejusttowipeouttheprofitagainstthelong-term capitalgain.ThelearnedDRvehementlysupportedtheorderoftheauthorities below. ITANo.417/Ahd/2019 VarunNaginbhaiPatelVs.DCIT Asstt.Year:2014-15 8 12.Wehaveheardrivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Inthecaseonhand,theshort-termcapitalloss claimedbytheassesseeonsaleofsharesofM/sLooksHealthServicesLtdwas heldasbogusbytheAOandsubsequentlybythelearnedCIT(A)forthereason elaboratedinthepreviousparagraph.Thefactsarewithoutambiguity.The purchasesandsalesofM/sLooksHealthServicesLtdwerecarriedoutonthe platformofBombayStockexchange.However,thelowerauthoritytreatedthe transactioncarriedoutbytheassesseeasshamtransaction.Theentirethrustof therevenueauthorityisbasedoncertaingeneralfactslikethecompanyM/s LooksHealthServicesLtdwasnotfinicallyviableinwhichgeneralpublicshould showinterest.Thepriceofthescripwasunusuallyskyrocketedwithoutany financialoreconomicbasisandunusuallydecreased.Thescriptinthatperiod weretradedinbulkandmostpeoplewhoindulgedinbulktradingwerefrom Ahmedabadcityonly.Basedonthesegeneralobservations,theAOconcludedthat thepriceofsharesM/sLooksHealthServicesLtdriggeduptoprovidebogus LTCG/STCLtobeneficiaries.TheAOinitsorderhasstatednowherethatany enquiryorinvestigationwascarriedoutwithanyconcernedauthorityorincome taxdepartmentregardingriggingupofthepriceofM/sLooksHealthServicesLtd orbytheassessee’sbroker.TheAOpredominantlyproceededtoholdthepriceof theshareswasriggedupmerelyonanalysisoftradedataofimpugnedscriptand financialstrengthofthecompany.Thus,theAObasedonsweepingobservation heldthattheassesseeenteredaprearrangedtransactiontosetoffthelong-term capitalgainearnedbyhimduringtheyear.Assuch,thereisnoinformationor findingbasedoncorroborativematerialavailablewiththeAOthatthepriceof impugnedscriptwasriggeduportheassesseealongwithhisbrokerhaverigged upthepriceorprearrangedthetransaction.TheAOandlearnedCIT(A)also emphasizestheprinciplesofsurroundingcircumstantialevidence.Inthisregard weareoftheconsideredopiniontheprincipleofsurroundingcircumstantial evidenceisalsonotasstrongtodrawadverseinferenceagainsttheassessee ITANo.417/Ahd/2019 VarunNaginbhaiPatelVs.DCIT Asstt.Year:2014-15 9 especiallyconsideringthefactthatthetransactionofpurchasesandsaleswere madeontheBSEplatformwheresellerandbuyerdonotknoweachother,and transactionenteredonthebasisofcurrentmarketscenario.Furtheritispertinent tomentionedthattheassesseeduringtheyearunderconsiderationhasearned LTCGofRs.2,46,90,000/-whereasclaimedsetoffofSTCLofRs.1,78,23,848/- only,hadtheassesseeprearrangedthetransactiontosetoffthegainthenhe mighthavesetoffentirecapitalgain.Itisalsopertinenttomentionthatthe assesseeduringtheyearenteredintosharetradingonshorttermbasisin48 differentscriptsandheincurredlossesaswellasearnedprofitwhichwerenot doubted.Atthisjuncture,wefinditnecessarytorefertothejudgmentofthe Hon’bleDelhiHighcourtinthecaseofPCITvs.KrishnaDevireported126 taxmann.com80.InthecaseofKrishnaDevi(supra)theAOpredominantly basedonfinancialandtradeanalysisofscripheldthatmodusoperandiissimilar topennystockanddisallowedtheLTCGclaimedbytheassesseeonthebasisof modusoperandi,parametersofhumanprobabilityetc.TheHon’bleBenchofDelhi Highcourtdecidedtheissueinfavouroftheassessee.Therelevantobservation oftheHon’bleHighCourtreadsasunder: 11.Onaperusaloftherecord,itiseasilydiscerniblethatintheinstantcase,theAOhad proceededpredominantlyonthebasisoftheanalysisofthefinancialsofM/sGoldLine InternationalFinvestLimited.HisconclusionandfindingsagainsttheRespondentare chieflyonthestrengthoftheastounding4849.2%jumpinsharepricesoftheaforesaid companywithinaspanoftwoyears,whichisnotsupportedbythefinancials.Onan analysisofthedataobtainedfromthewebsites,theAOobservesthatthequantumleapin thesharepriceisnotjustified;thetradepatternoftheaforesaidcompanydidnotmove alongwiththesensex;andthefinancialsofthecompanydidnotshowanyreasonforthe extraordinaryperformanceofitsstock.Wehavenothingadversetocommentonthe aboveanalysis,butareconcernedwiththeaxiomaticconclusiondrawnbytheAOthatthe Respondenthadenteredintoanagreementtoconvertunaccountedmoneybyclaiming fictitiousLTCG,whichisexemptundersection10(38),inapreplannedmannertoevade taxes.TheAOextensivelyrelieduponthesearchandsurveyoperationsconductedbythe InvestigationWingoftheIncome-taxDepartmentinKolkata,Delhi,Mumbaiand Ahmedabadonpennystocks,whichsetsoutthemodusoperandiadoptedinthebusiness ofprovidingentriesofbogusLTCG.However,therelianceplacedonthereport,without furthercorroborationonthebasisofcogentmaterial,doesnotjustifyhisconclusionthat thetransactionisbogus,shamandnothingotherthanaracketofaccommodationentries. WedonoticethattheAOmadeanattempttodelveintothequestionofinfusionof Respondent'sunaccountedmoney,buthedidnotdigdeeper.Noticesissuedunder sections133(6)/131oftheActwereissuedtoM/sGoldLineInternationalFinvestLimited, butnothingemergedfromthiseffort.Thepaymentforthesharesinquestionwasmade ITANo.417/Ahd/2019 VarunNaginbhaiPatelVs.DCIT Asstt.Year:2014-15 10 bySh.SalasarTradingCompany.Noticewasissuedtothisentityaswell,butwhenthe noticeswerereturnedunserved,theAOdidnottakethematteranyfurther.Hethereafter simplyproceededonthebasisofthefinancialsofthecompanytocometotheconclusion thatthetransactionswereaccommodationentries,andthus,fictitious.Theconclusion drawnbytheAO,thattherewasanagreementtoconvertunaccountedmoneybytaking fictitiousLTCGinapre-plannedmanner,isthereforeentirelyunsupportedbyanymaterial onrecord.ThisfindingisthuspurelyanassumptionbasedonconjecturemadebytheAO. ThisflawedapproachformsthereasonforthelearnedITATtointerferewiththefindings ofthelowertaxauthorities.ThelearnedITATafterconsideringtheentireconspectusof caseandtheevidencebroughtonrecord,heldthattheRespondenthadsuccessfully dischargedtheinitialonuscastuponitundertheprovisionsofSection68oftheAct.Itis recordedthat"Thereisnodisputethatthesharesofthetwocompanieswerepurchased online,thepaymentshavebeenmadethroughbankingchannel,andtheshareswere dematerializedandthesaleshavebeenroutedfromde-mataccountandtheconsideration hasbeenreceivedthroughbankingchannels."Theabovenotedfactors,includingthe deficientenquiryconductedbytheAOandthelackofanyindependentsourceorevidence toshowthattherewasanagreementbetweentheRespondentandanyotherparty, prevailedupontheITATtotakeadifferentview.Beforeus,Mr.Hossainhasnotbeenable topointoutanyevidencewhatsoevertoallegethatmoneychangedhandsbetweenthe Respondentandthebrokeroranyotherperson,orfurtherthatsomepersonprovidedthe entrytoconvertunaccountedmoneyforgettingbenefitofLTCG,asalleged.Inthe absenceofanysuchmaterialthatcouldsupportthecaseputforthbytheAppellant,the additionscannotbesustained. 13.Thus,inviewoftheabovediscussionandrespectfullyfollowingthe judgmentofHon’bleDelhiHighCourtinidenticalfactsandcircumstancesincase ofPCITvsKrishnaDevi,weherebyset-asidethefindingofthelearnedCIT(A)and directtheAOtodeletetheadditionmadebyhim.Hence,thegroundofappealof theassesseeisherebyallowed. 14.Intheresult,theappealoftheassesseeisherebyallowed. OrderpronouncedintheCourton08/12/2023atAhmedabad Sd/-Sd/- (SIDDHARTHANAUTIYAL)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER Ahmedabad;Dated08/12/2023 Bt/manish ITANo.417/Ahd/2019 VarunNaginbhaiPatelVs.DCIT Asstt.Year:2014-15 11 आदेशकीपधतधलधपगेधरत/CopyoftheOrderforwardedto: आदेशािुसार/BYORDER, TRUECOPY उप/सहायकपंजीकार(Dy./Asstt.Registrar) आयकरअपीलीयअधिकरण,अहमदाबाद/ITAT,Ahmedabad 1. अपीलार्/TheAppellant 2. प्यर्/TheRespondent. 3. संबंधितआयकरआयुक/ConcernedCIT 4. आयकरआयुक(अपील)/TheCIT(A) 5. धवभागीयपधतधिधि,आयकरअपीलीयअधिकरण/DR,ITAT, 6. गारधफाईल/Guardfile.