ITO, Bhadrak Ward, Bhadrak V. Deepansu Mohapatra, Bhadrak

ITA 43/CTK/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5972 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 16-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MOHIT
• Keywords: Gift; Search and seizure; Principle of natural justice; Opportunity of cross examination; Earning of tax free income; Question of law; Wrong claim; Corroborative evidences; Third party statement; Accommodation entries; Retraction; Revised return; Penny stocks; TDS; Set aside; Capital Gains; Bogus
• Section: 68; 69; 10; 143(3); 133A; 64

Judgement Text

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ, कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI MANISH BORAD, AM ITA Nos.42 & 43/CTK/2020 (नििाारण वषा / Assessment Year :2014-2015 & 2015-16) ITO Bhadrak Ward, Bhadrak Vs Deepansu Mohapatra Kuansh, Bhadrak, PAN No. : AQHPM3912G (अऩीलाथी /Appellant) .. (प्रत्यथी / Respondent) ITA Nos.44 & 45/CTK/2020 (नििाारण वषा / Assessment Year :2014-2015 & 2015-16) ITO Bhadrak Ward, Bhadrak Vs Himansu Mohapatra Kuansh, Bhadrak, PAN No. : AJDPM0006A (अऩीलाथी /Appellant) .. (प्रत्यथी / Respondent) ITA Nos.38 & 39/CTK/2020 (नििाारण वषा / Assessment Year :2014-2015 & 2015-16) ITO Bhadrak Ward, Bhadrak Vs Sitansu Sekhar Mohapatra Kuansh, Bhadrak, PAN No. : AJDPM0001H ITA Nos.40 & 41/CTK/2020 (नििाारण वषा / Assessment Year :2014-2015 & 2015-16) ITO Bhadrak Ward, Bhadrak Vs Anupama Mohapatra Kuansh, Bhadrak, PAN No. : BKJPM0846A ITA Nos.46 /CTK/2020 (नििाारण वषा / Assessment Year :2014-2015) ITO Bhadrak Ward, Bhadrak Vs Amruta Preetam Mohapatra Kuansh, Bhadrak, PAN No. : ALXPD0024H ITA No. 46 & others/CTK/2020 2 (अऩीलाथी /Appellant) .. (प्रत्यथी / Respondent) ITA Nos.47 /CTK/2020 (नििाारण वषा / Assessment Year :2014-2015) ITO Bhadrak Ward, Bhadrak Vs Mamta Mohapatra Kuansh, Bhadrak, PAN No. : AQOPM9526F (अऩीलाथी /Appellant) .. (प्रत्यथी / Respondent) ITA No.48 /CTK/2020 (नििाारण वषा / Assessment Year :2014-2015) ITO Bhadrak Ward, Bhadrak Vs Kishore Kumar Mohapatra Kuansh, Bhadrak, PAN No. : ABKPM8242M (अऩीलाथी /Appellant) .. (प्रत्यथी / Respondent) ITA No.49 /CTK/2020 (नििाारण वषा / Assessment Year :2014-2015) ITO Bhadrak Ward, Bhadrak Vs Parbati Mohapatra Kuansh, Bhadrak, PAN No. : ABKPM8240K (अऩीलाथी /Appellant) .. (प्रत्यथी / Respondent) ITA No.50 /CTK/2020 (नििाारण वषा / Assessment Year :2014-2015) ITO Bhadrak Ward, Bhadrak Vs Smt. Kuntala Mohapatra Kuansh, Bhadrak, PAN No. : ALXPD0024H (अऩीलाथी /Appellant) .. (प्रत्यथी / Respondent) ननधाारिती की ओर से /Assessee by : Shri S.C Mohanty, Sr. DR Respondent by : S/Shri P.K. Mishra & Mohit Sheth ARs ITA No. 46 & others/CTK/2020 3 स ु नवाई की तािीख / Date of Hearing : 27/10/2021 घोषणा की तािीख/Date of Pronouncement : 21/10/2021 आदेश / O R D E R Per Bench: The captioned appeals filed at the instance of Revenue are directed against the order passed by the Ld. CIT(A), Cuttack, dated 26.03.2019, 29.03.2019,23.04.2019 for the assessment year 2014-2015 & 2015-16. 2. As the issues raised in these appeals are common and relate to different assessee, at the request of all the parties all the appeals were heard together and are being disposed of by this common order for sake of convenience and brevity. 3. From going through grounds of appeals raised by the revenue in the instant appeals we find that common issue relates to genuineness of claim of Long Term Capital Gain u/s 10(38) of the Act for sale of equity shares of listed companies denied by the ld. AO in the case of following assessees: Name of Assessee A.Y. Amount Name of listed Company Deepansu Mohapatra 2014-15 38,00,000/- M/s Kailash Auto Finance Ltd. (KAFL) 2015-16 62,42,000/- M/s Lifeline Durgs & Pharma Ltd. Himansu Mohapatra 2014-15 39,34,500/- M/s Kailash Auto Finance Ltd. (KAFL) 2015-16 61,12,000/- M/s Lifeline Durgs & Pharma Ltd. Sitansu Mohapatra 2014-15 61,25,908/- M/s Kailash Auto Finance Ltd. (KAFL) 2015-16 37,25,000/- M/s Lifeline Durgs & Pharma Ltd. ITA No. 46 & others/CTK/2020 4 Anupama Mohapatra 2014-15 61,25,908/- M/s Kailash Auto Finance Ltd. (KAFL) 2015-16 62,58,250/- M/s Lifeline Durgs & Pharma Ltd. Amruta Preetam Mohapatra 2014-15 59,99,250/- M/s Kailash Auto Finance Ltd. (KAFL) Mamta Mohapatra 2014-15 56,73,845/- M/s Kailash Auto Finance Ltd. (KAFL) Kishore Kumar Mohapatra 2014-15 38,82,500/- M/s Kailash Auto Finance Ltd. (KAFL) Parbati Mohapatra 2014-15 50,83,000/- M/s Lifeline Durgs & Pharma Ltd. Kuntala Mohapatra 2014-15 50,43,545/- M/s Kailash Auto Finance Ltd. (KAFL) 4. The common grievance of revenue relates to holding of bogus Long Term Capital Gain from sale of equity shares as genuine and for adjudicating this issue we will take the facts in case of Deepansu Mohapatra in ITANo.42 & 43/CTK/2020 for A.Y. 2014-15 & 2015-16 and our decision shall apply mutatis mutandis to the revenue‟s appeals of another assessees, as revenue has raise similar ground of appeal for captioned assessees. 5. The Revenue has raised the following grounds of appeal in ITANo. 42/CTK/2020:- Bogus Long Term Capital Gains Generated on Sale of Penny Stock of Rs.38,00,000/- Ground No.1: On the facts and in the circumstances of the case, the Ld.CIT(A) was not justified in law~ accepting the claim of the assessee regarding exemption uls 10(38) with regard to alleged income of Rs. 38,00,000/- under the head 'Long Term Capital Gain' on sale of 1,00,000 shares of penny stock, namely, M/s Kailash Auto Finance Ltd (KAFL) without properly appreciating the relevant facts of the case, which have been brought on record by the Assessing Officer in the assessment order, more so when no such claim was made in the return of income or in the Statement of Income. A copy of the Statement of Income is enclosed herewith as ITA No. 46 & others/CTK/2020 5 Annexure-1. Ground No.2: On the facts and in the circumstances of the case, the CIT(A) has erred in ignoring the fact that subsequent to survey operation u/s 133A of the 1.T. Act, 1961 on 21.07.2015 on their group, a letter had been filed on 09.10.2015 by Shri Himanshu Mohapatra, before the Addl.DIT (Investigation), Bhubaneswar wherein he had admitted on behalf of the assessee that complete tax would be paid on the bogus L TCG claimed by the group. A copy of the said letter and its enclosures are enclosed herewith as Annexure-2. Ground No.3: On the facts and in the circumstances of the case, the CIT(A) has erred in relying upon the documents submitted by the assessee to prove the genuineness of transaction, which are nothing but a smoke screen to cover up the true nature of the transaction so arranged as to create bogus profit in the garb of tax- exempt long term capital gains by well-organized network OT entry providers with the sole motive to provide such accommodation entries to enable the beneficiary to convert his undisclosed income to tax free income. Ground No.4: On the facts and in the circumstances of the case, the Ld CIT(A), Cuttack was not justified in allowing the claim of the assessee regarding Long Term Capital Gains (L TCG) on sales of shares on the specious ground that the assessee was not qranted an opportunity to cross-examine the persons making adverse statement against the assessee, when facts on record reveal that no such opportunity for cross examination was sought by the assessee before the AO. Moreover, in their statements recorded before the Investigation Wing, Kolkata, (i) Shri Pawan Kumar Kayan, , one of the brokers, (ii) Shri Praveen Kumar Agarwal (iii) Shri Anuj Agarwal, another broker had stated that the shares of Mis Kailash Auto Finance Ltd (KAFL) w~ rigged to generate bogus Long Term Cap~ Gains through accommodation entries. When those statements were confronted to the assessee, he had not been able to controvert the averments made therein, as mentioned in the assessment order. Ground No. 5 : On the facts and in the circumstances of the case, the Ld.CIT(A), Cuttack was not justified in allowing the claim of the assessee regarding Long Term Capital Gains(L TCG) on sale of shares of penny stocks of MIs Kailash Auto Finance Ltd (KAFL) by merely relying upon a couple of decisions of ITAT Benches, ignoring the following judgments of various High Courts and Tribunals, which are rendered in favour of revenue on the same issue of "Penny Stocks": (a) CIT vs Sanghamitra Bharali (2014) 361 ITR 481 (Gauhati) (b) Sanjay Bimalchand Jain vs. Pr.CIT (2018) 89 taxmann.com 196 (Bombay) (c) Purviben Snehalbhai Panchhigar vs. ACIT (2018) 409 ITR 124(Guj) (d) Udit Kalra vs. ITO, Ward-SO(1) [ITA No.220/2019 of Delhi High Court, date of order - 08.03.2019] ITA No. 46 & others/CTK/2020 6 (e) Ratnakar M Pujari vs. ITO, Ward-2S(3)(3), Mumbai [ITA No.99S/MUM/2012 dt.09.0S.2016 (f) Pooja Ajmani vs ITO [ITA No.S714/De1/2018 dt.2S.04.2019] (g) Sanat Kumar vs. ACIT, Circle-36(1), Delhi [ITA No.1881/DeI/2018] (h) Abhimanyu Soin vs. ACIT, Circle VII, Ludhiana [ITA No.9S1/Chd/2016 dt.18.04.2018] (i) Shri Satish Kishore vs. ITO, Ward-47(2), New Delhi [ITA No.1704/De1l2019 dt.06.09.2019] (j) Mrs. Vidya Reddy Vs. ITO, ITA No.2016/CHNY/2017 dt.15.05.2018 (k) Rajnish Agarwal and Sons(HUF) Vs. ITO, ITA No.1415/CHNY/2018 dt.06.12.2018 (I) Anip Rastogi and Anju Rastogi Vs. ITO, Ward-1(1), Meerut, ITA No. 3809 and 3810/DELl2018 Ground No.6: On the facts and in the circumstances of the case, it is prayed that the order of the Ld. CIT(A) be set aside and that of the Assessing Officer may be restored, keeping in view the ratio of Supreme Court's decisions in the cases of CIT vs. D.P. More (1971) 82 ITR 540 (SC) & Sumati Dayal vs CIT (1995) 214 ITR 801 (SC), wherein it has been held that tax authorities can go behind a transaction to look at its substance by looking at the surrounding circumstances. Failure to consider the Revised return filed & self-assessment tax paid by the assessee on bogus Long Term Capital Gains in the light of Supreme Court's decision in the case of CIT vs MIs Shelly Products And Another (2003) 261 ITR 367 (SC) Ground No.7: On the facts and in the circumstances of the case, the Ld. CIT(Appeals) has erred in ignoring the fact that subsequent to survey operation on the group, the assessee had filed revised return of income and had offered bogus Long Term Capital Gains to tax by paying additional self-assessment tax. In spite of the same, the CIT(A) has erred in holding that the alleged transaction of shares of Mis Kailash Auto Finance Ltd (KAFL) are genuine, when the assessee had suo motto offered the entire alleged L TCG for taxation without claim of exemption u/s 10(38) of the I.T. Act, 1961 by filing revised return of income and paid self-assessment tax thereon after survey u/s 133A of the I.T. Act, 1961 was carried out in this group of cases by the Investigation Wing, Bhubaneswar, based upon the inputs of Investigation Wing, Kolkata. The above action of the CIT(A) violates the ratio of decision of Hon'ble Supreme Court in the case of CIT vs M/s Shelly Products And Another (2003) 261 ITR 367 (SC), wherein it is held that no refund of tax would be granted on the admitted returned income even though the assessment is annulled. Ground No.8. The appellant craves leave to add, alter, amend one or more grounds of appeal before the appeal is heard. ITA No. 46 & others/CTK/2020 7 6. The Revenue has raised the following grounds of appeal in ITANo. 43/CTK/2020:- Bogus Long Term Capital Gains Generated on Sale of Penny Stock of Rs.62,42,000/- Ground No.1: On the facts and in the circumstances of the case, the Ld.CIT(A) was not justified in law~ accepting the claim of the assessee regarding exemption uls 10(38) with regard to alleged income of Rs. 62,42,000/- under the head 'Long Term Capital Gain' on sale of 25,000 shares of penny stock, namely, M/s. Lifeline Drugs & Pharma Ltd. (LD& DL) without properly appreciating the relevant facts of the case, which have been brought on record by the Assessing Officer in the assessment order, more so when no such claim was made in the return of income or in the Statement of Income. A copy of the Statement of Income is enclosed herewith as Annexure-1. Ground No.2: On the facts and in the circumstances of the case, the CIT(A) has erred in ignoring the fact that subsequent to survey operation u/s 133A of the 1.T. Act, 1961 on 21.07.2015 on their group, a letter had been filed on 09.10.2015 by Shri Himanshu Mohapatra, before the Addl.DIT (Investigation), Bhubaneswar wherein he had admitted on behalf of the assessee that complete tax would be paid on the bogus L TCG claimed by the group. A copy of the said letter and its enclosures are enclosed herewith as Annexure-2. Ground No.3: On the facts and in the circumstances of the case, the CIT(A) has erred in relying upon the documents submitted by the assessee to prove the genuineness of transaction, which are nothing but a smoke screen to cover up the true nature of the transaction so arranged as to create bogus profit in the garb of tax- exempt long term capital gains by well-organized network OT entry providers with the sole motive to provide such accommodation entries to enable the beneficiary to convert his undisclosed income to tax free income. Ground No.4: On the facts and in the circumstances of the case, the Ld CIT(A), Cuttack was not justified in allowing the claim of the assessee regarding Long Term Capital Gains (L TCG) on sales of shares on the specious ground that the assessee was not qranted an opportunity to cross-examine the persons making adverse statement against the assessee, when facts on record reveal that no such opportunity for cross examination was sought by the assessee before the AO. Moreover, in their statements recorded before the Investigation Wing, Kolkata, (i) Shri Pawan Kumar Kayan, , one of the brokers, (ii) Shri Praveen Kumar Agarwal (iii) Shri Anuj Agarwal, another broker had stated that the shares of M/s. Lifeline Drugs & Pharma Ltd. (LD& DL) were rigged to generate bogus Long Term ITA No. 46 & others/CTK/2020 8 Cap~ Gains through accommodation entries. When those statements were confronted to the assessee, he had not been able to controvert the averments made therein, as mentioned in the assessment order. Ground No. 5 : On the facts and in the circumstances of the case, the Ld.CIT(A), Cuttack was not justified in allowing the claim of the assessee regarding Long Term Capital Gains(L TCG) on sale of shares of penny stocks of M/s. Lifeline Drugs & Pharma Ltd. (LD& DL)by merely relying upon a couple of decisions of ITAT Benches, ignoring the following judgments of various High Courts and Tribunals, which are rendered in favour of revenue on the same issue of "Penny Stocks": (a) CIT vs Sanghamitra Bharali (2014) 361 ITR 481 (Gauhati) (b) Sanjay Bimalchand Jain vs. Pr.CIT (2018) 89 taxmann.com 196 (Bombay) (c) Purviben Snehalbhai Panchhigar vs. ACIT (2018) 409 ITR 124(Guj) (d) Udit Kalra vs. ITO, Ward-SO(1) [ITA No.220/2019 of Delhi High Court, date of order - 08.03.2019] (e) Ratnakar M Pujari vs. ITO, Ward-2S(3)(3), Mumbai [ITA No.99S/MUM/2012 dt.09.0S.2016 (f) Pooja Ajmani vs ITO [ITA No.S714/De1/2018 dt.2S.04.2019] (g) Sanat Kumar vs. ACIT, Circle-36(1), Delhi [ITA No.1881/DeI/2018] (h) Abhimanyu Soin vs. ACIT, Circle VII, Ludhiana [ITA No.9S1/Chd/2016 dt.18.04.2018] (i) Shri Satish Kishore vs. ITO, Ward-47(2), New Delhi [ITA No.1704/De1l2019 dt.06.09.2019] (j) Mrs. Vidya Reddy Vs. ITO, ITA No.2016/CHNY/2017 dt.15.05.2018 (k) Rajnish Agarwal and Sons(HUF) Vs. ITO, ITA No.1415/CHNY/2018 dt.06.12.2018 (I) Anip Rastogi and Anju Rastogi Vs. ITO, Ward-1(1), Meerut, ITA No. 3809 and 3810/DELl2018 Ground No.6: On the facts and in the circumstances of the case, it is prayed that the order of the Ld. CIT(A) be set aside and that of the Assessing Officer may be restored, keeping in view the ratio of Supreme Court's decisions in the cases of CIT vs. D.P. More (1971) 82 ITR 540 (SC) & Sumati Dayal vs CIT (1995) 214 ITR 801 (SC), wherein it has been held that tax authorities can go behind a transaction to look at its substance by looking at the surrounding circumstances. Failure to consider the Revised return filed & self-assessment tax paid by the assessee on bogus Long Term Capital Gains in the light of Supreme Court's decision in the case of CIT vs MIs Shelly Products And Another (2003) 261 ITR 367 (SC) Ground No.7: On the facts and in the circumstances of the case, the Ld. CIT(Appeals) has erred in ignoring the fact that subsequent to survey operation on the group, the assessee had filed revised return of income and had offered bogus Long Term Capital Gains to tax by paying additional self-assessment tax. In spite of the same, the ITA No. 46 & others/CTK/2020 9 CIT(A) has erred in holding that the alleged transaction of shares of M/s. Lifeline Drugs & Pharma Ltd. (LD& DL)are genuine, when the assessee had suo motto offered the entire alleged L TCG for taxation without claim of exemption u/s 10(38) of the I.T. Act, 1961 by filing revised return of income and paid self-assessment tax thereon after survey u/s 133A of the I.T. Act, 1961 was carried out in this group of cases by the Investigation Wing, Bhubaneswar, based upon the inputs of Investigation Wing, Kolkata. The above action of the CIT(A) violates the ratio of decision of Hon'ble Supreme Court in the case of CIT vs M/s Shelly Products And Another (2003) 261 ITR 367 (SC), wherein it is held that no refund of tax would be granted on the admitted returned income even though the assessment is annulled. Ground No.8. The appellant craves leave to add, alter, amend one or more grounds of appeal before the appeal is heard 7. Brief facts of the case pertaining to A.Y. 2014-15 are that the assessee is an individual earning income from various sources including income from truck plying, income from Long Term Capital Gains (LTCG) and income from other sources. The original return of income for A.Y. 2014-15 was filed on 29.07.2014 disclosing a total income of Rs.4,79,990/- and claimed exemption of LTCG u/s 10(38) of the Act. A survey operation u/s 133A was conducted on the business premises of Shri Kishore Kumar Mohapatra Group on 22.07.2015. During the course of this survey the assessee who is a family member of this group, was confronted with the statements of directors of certain Kolkata based companies whose shares bought and sold in the stock market by assessee. It appears that these Kolkata based companies were under the scanner of the I.T. Department for allegedly providing accommodation ITA No. 46 & others/CTK/2020 10 entries and had subsequently been subjected to search and seizure operations. A list of beneficiaries who had allegedly taken accommodation entries from these Kolkata based companies had been drawn up by the I.T. Department and the family members of the Shri Kishore Kumar Mohapatra Group featured in it. Consequently the assessee filed a revised return of income for A.Y. 2014-15 on 12.09.2015 wherein the original claim of exemption u/s 10(38) in respect of Long term capital gains(LTCG) on shares was withdrawn and the entire income of Rs.38,00,000/- was offered for taxation as „Income from other sources‟. During the course of scrutiny proceedings, the assessee submitted that the revised return for A.Y. 2014-15 was invalid as it had been filed on 12.09.2015 whereas the last date for filing the same was 31.03.2015. The assessee contended that the revised return was filed under duress during the survey operation u/s 133A on 22.07.2015. Therefore, it was submitted that the claim made u/s 10(38) in the original return was valid as the receipt was from transfer of equity shares of listed companies, securities transaction tax (STT) had been duly paid and the period of holding of the equity shares exceeded twelve months. Ld. AO rejected this plea of the assessee and rejected the claim of exemption u/s ITA No. 46 & others/CTK/2020 11 10(38 on the LTCG on transfer of shares and proceeded to treat the same as “income from other sources”. 8. So far as A.Y. 2015-16 is concerned, brief facts are that subsequent to the survey proceedings u/s 133A of the Act conducted on 22.07.2015 the assessee filed return of income for A.Y. 2015-16 on 24.09.2015 disclosing total income of Rs.64,83,770/- inter alia disclosing capital gain of Rs.61,59,697/- without claiming exemption u/s 10(38) of the Act. However, during the course of the scrutiny assessment, the assessee filed a revised computation before the AO on 02.06.2017 wherein exemption of long term capital gains (LTCG) was claimed u/s 10(38). It was submitted that the claim made u/s 10(38) in the revised computation was valid as the receipt was from transfer of listed shares securities transaction tax (STT) has been duly paid and the period of holding of the shares exceeded twelve months. But Ltd. AO rejected this plea of the assessee and rejected the claim of exemption u/s 10 (38) of the LTCG made by assessee during assessment proceedings and proceeded to treat the same as “Income from other Sources”. 9. Aggrieved assessee challenged the action of the Ld. AO ITA No. 46 & others/CTK/2020 12 before Ld. CIT(A) of denying the benefit of exemption u/s 10(38) of the Act, and treating the claim of Long Term Capital Gain as bogus towards LTCG claimed at Rs.38,00,000/- and Rs.62, 42,000/- for A.Y. 2014-15 & 2015-15 from sale of equity shares of M/s Kailash Auto Finance Ltd (KAFL) & M/s. Lifeline Drugs & Pharma Ltd. (LD& DL) respectively. 10. In the appellate proceedings it was submitted by the assessee that the purchase of equity shares in question was made through account payee cheque, shares were held in the Demat Account, equity shared were held for more than 12 months and sold through recognized stock exchange after payment of security of transaction tax. It was also submitted that Ld. AO erred in accepting the revised return for A.Y.2014- 15 and also disregarding the claim of LTCG u/s 10(38) of the Act made for A.Y.2014-15 & 2015-16 during the assessment proceedings without bringing anything contrary on record to prove that the claim was bogus. It was also submitted that the ld. AO merely relied on an investigation report in case of 3 rd party which was prepared much before the date of survey. Nothing incriminating material relating to the alleged transaction was found with the assessee during the survey proceedings and also assessee was not afforded any opportunity to ITA No. 46 & others/CTK/2020 13 cross examine the person whose statement have been relied by the revenue authorities. The assessee also placed reliance on various decisions before the ld. CIT(A). ld. CIT(A) after examining the records, evidence placed by assessee and settled judicial precedence held that the assessee has rightly claimed the exemption u/s 10(38) of the Act for LTCG for the sale of equity shares of M/s Kailash Auto Finance Ltd (KAFL) & M/s. Lifeline Drugs & Pharma Ltd. (LD& DL). 11. Aggrieved revenue is now in appeal before this Tribunal. 12. Ld. DR vehemently argued supporting the order of Ld. AO. Reference was also made to the statement of Mr. Pawan Kumar Kayan which were recorded during the course of search on 30.03.2015, statement of Mr. Praveen Kumar Agarwal recorded on oath u/s 133A of the Act on 11.02.2015 and Shri Anuj Agarwal recorded during the survey operation on 31.03.2015 for the common contention that the companies in question for which LTCG has been claimed by the assessee are indulged in providing bogus LTCG. Reliance was placed on following decisions: 1. Suman Poddar vs. ITO (2019) 112 taxmann.com 330 (SC) 2. Sanjay Bimalchand Jain vs. Pr. CIT (2018) 89 taxmann.com 196(Bombay) 3. Pooja Ajmani vs. ITO (2019) 106 Taxmann.com 65(Delhi- Tri.) ITA No. 46 & others/CTK/2020 14 4. Satish Kishore vs. ITO (2019) 110 taxmann.com 307 (Delhi-Tribunal.) 5. Anip Rastogi vs. ITO in ITANo.3809/Del/2018 (I.T.A.T., Delhi ) 6. CIT vs. Jasvinder Kaur (2013) 37 taxmann.com 286 (Gauhati High Court) 7. Chandan Gupta vs. CIT (2015) 54 taxmann.com 10 (Punjab & Haryana HC) 13. Per contra Ld. counsel for the assessee vehemently argued supporting the order of the Ld. CIT(A) stating that LTCG earned by the assessee for the year under appeal are genuine and supported by sufficient documentary evidences towards purchase sale and holding them for more than 12 months and none of these documents have been found to be incorrect or ingenuine by the revenue authorities by placing any contrary material on record. For A.Y. 2014-15 it was submitted that in the original return assessee claimed exemption u/s 10(38). During the survey proceedings carried out on 22.07.2015, the assessee under duress and out of fear filed the revised return not claiming the exemption u/s 10(38) and offering the LTCG for tax. During the assessment proceedings it was stated that the claim is genuine and revised return cannot be accepted since the original return was filed belatedly. Similar for A.Y. 2015-16 in the original return assessee did not claim the benefit of LTCG and paid tax on capital gain, but during the ITA No. 46 & others/CTK/2020 15 course of assessment proceedings revise computation was filed along with documentary evidences claiming that the assessee deserves the benefit of exemption u/s 10(38) of the Act. Reference was also made to CBDT circular No.286/98/2013 dated 09.01.2014 which strictly debars the Revenue Authorities from obtaining admission/statement during the course of survey rather, insisted on collecting evidences. To support this contention that claims not made in the return can be claimed at the time of assessment for assessing the correct income of the assessee, reliance placed on following decisions: 1. Hon’ble Gujarat High Court in the case of Gopal Bhai Babu Bhai Parikh –vs- Pr. CIT-4, reported in [2021], 127 taxman.com 245 (Guj 2. Hon’ble Bambay High Court in the case of Sanchit Software & Solutions (P.) Ltd. –vs- Commissioner of Income Tax-8, (Bombay), reported in [2012], 25 taxman.com 123 (Bombay), 3. Hon’ble Bombay High Court in the case of CIT, Central-1 –vs- M/s. Pruthvi Brokers and Share Holders in ITA No.3908/2010 vide its order dated 21.06.2012 4. Hon’ble Bombay High Court in the case of CIT –vs- Prabhu Steel Industries Pvt. Ltd., reported in [1988], 171 ITR 530 (Bombay 5. Hon’ble Delhi High Court in the case of CIT Vs Bharat General Reinsurrance Co. LTD., reported in 81 ITR 303 (DEL) have held that, 14. Further in view of the judgment of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., vs. CIT, reported in 229 ITR 383 (SC), assessee is entitled to make a fresh claim or modify a claim already made in the return of income, during course of Assessment proceedings with the restriction that, ITA No. 46 & others/CTK/2020 16 such a claim or modification must be presented to the A.O. before the completion of the Assessment. 15. As regards the contention that assessee was not provided any opportunity for cross examines those persons whose statements were relied by the ld. AO to make the impugned additions, reliance was placed on the judgment of Supreme Court of India in the case of CCE vs. Andaman Timber industries 127 DTR 241(SC), 16. Further with regard to the claim that the LTCG earned by the assessee is eligible for exemption u/s 10(38) of the Act from sale of equity shares of M/s Kailash Auto Finance Ltd (KAFL) & M/s. Lifeline Drugs & Pharma Ltd. (LD& DL) which are duly supported by documentary evidences, reliance was placed on following decisions: 1. Pr. CIT vs. Smt. Krishna Devi (2021) 126 taxmann.com 80 (Delhi, HC) 2. CIT vs. Shyam R. Pawar (2015) 54 taxmann.com 108 (Bom. HC) 3. Swati Luthra vs. ITO (2020) 115 Taxmann.com 167 (Delhi Tri.) 4. Ramprasad Agarwal vs. ITO (2018) 100 taxmann.com 172 (Mumbai Tri.) 5. Kiran Agarwal vs. ITO in ITANo.196/CTK/2018(Tribunal Cuttack) 6. S.K. Agarwal vs. ITO ITANo.197/CTK/2018 (Tribunal Cuttack) 7. Manish Kumar Baid vs. ACIT ITANo.1236/Kol/2017(Tribunal Kolkata) ITA No. 46 & others/CTK/2020 17 17. We have heard rival contentions and perused the records placed before us and carefully gone through decisions referred and relied by both the pareis and have also perused the paper book 18(vi) I.T.A.T. Rules from all the parties. 18. First we will take common ground no.1,2,4 & 7 raised by the revenue for A.Y. 2014-15, mainly challenging the action of Ld. CIT(A) of accepting the assessee‟s claim of exempt long term capital gain from sale of equity shares u/s 10(38) of the Act by way of ignoring the revised return for A.Y.2014-15, by way of accepting revised computation of income for A.Y.2015- 16 even when the assessee has already offered the alleged LTCG to tax and thirdly, for allowing the claim of assessee since no opportunity of cross examination was provided to confront the third party whose statements were used against the assessee. 18.1. We notice that during course of survey, assessee under compulsion and pressure has admitted and paid tax on the exempted LTCG by way of revising returns for Assessment year 2014-15 and declared the exempt capital gain as taxable gain, but subsequently, after examining the fact and law, found that, the admission of exempted income as taxable income and payment of tax on exempted income is wrong. The Assessee ITA No. 46 & others/CTK/2020 18 retracted from his own admission and vehemently objected before the A.O. that, the impugned admission as well as the tax paid on exempted capital gains is wrong. To justify his retraction, he submitted all necessary evidences and the learned A.O. could not dispute the evidences produce by the Assessee. Even the learned A.O. could not question the evidences and has accepted it. The rebuttal is permissible in the eye of law, if it is supported by the corroborative evidences. 18.2 The CBDT circular vide F.No.286/98/2013 dt.09.01.2014 and F.No.286/2/2003 had strictly debarred the Authority from obtaining admission statement during course of survey rather, insisted in collecting evidences. In view of these Circulars, admission made by the Assessee which was given on force is contrary to the CBDT Circular. 18.3 Hon‟ble Gujarat High Court in the case of Kailash Ben Monoharlal Chokshi, reported in [2008] 174 taxman 466 (Guj. High Court), in paragraph No.23 of the said judgment, their Lordships have held that, whether a statement recorded U/s.132(4) at midnight can be considered as voluntary statements, if it is subsequently retracted by the Assessee and necessary evidence is laid contrary to such admission. Held-No; ITA No. 46 & others/CTK/2020 19 The other question in this judgment is that, whether merely on basis of admission, Assessee could be subjected to such admission, when despite retraction, revenue could not furnish any corroborative evidence in support of such admission, Held- No; 18.4 In the case of ACIT-1(1), Bhopal –vs- Shri Sudeep Maheswari, in ITA No.524/Ind/2013, Hon‟ble ITAT Indore Bench, in paragraph No.6 of its order held that, it is an undisputed fact that, the statement recorded has better evidentiary value but it is also a settled position of law that, the addition cannot be sustained merely on the basis of statement. There has to be some material corroborating the contents of the statements. In the case revenue could not point out as what was the material before the A.O. which supported the contents of the statement. The A.O. failed to co-relate the disclosures made in the statement with the incriminating materials. 18.5 It is settled principles of law that, if an Assessee had wrongly offered an item of income or omitted to claim a deduction in the return of income, he is entitled to correct such mistakes by making a request to the Assessing officer to that ITA No. 46 & others/CTK/2020 20 effect. In this context, the Appellant relies on certain judicial pronouncement. 18.6 Hon‟ble Gujarat High Court in the case of Gopal Bhai Babu Bhai Parikh –vs- Pr. CIT-4, reported in [2021], 127 taxman.com 245 (Guj.), have held that, Assessee an employee of a bank, opted for scheme of early voluntary retirement as declared by bank and received a sum of certain amount - He filed his return of income without claiming benefit of exemption under section 10(10C) on said amount- Same was processed under section 143(3) and an Assessment order was passed - In meantime, Supreme Court in a case of another employee of same bank passed a dictum that he was entitled to exemption under section 10(10C) on amount received under early retirement scheme - On basis of same, Assessee filed an application before Commissioner seeking to claim exemption under section 10(10C) - Commissioner disallowed same on ground that Assessee had not claimed exemption during filing of return - Whether even if Assessee had not claimed exemption in his return of income, he could claim same later in point of time- Held, Yes - Whether thus Assessee was to be allowed exemption ITA No. 46 & others/CTK/2020 21 under section 10(10C) on such amount received from bank under early retirement scheme – Held, Yes. 18.7 Hon‟ble Bombay High Court in the case of Sanchit Software & Solutions (P.) Ltd. –vs- Commissioner of Income Tax- 8, (Bombay), reported in [2012], 25 taxman.com 123 (Bombay), in paragraph Nos.5, 6 & 7 of its order have held that, it is judicially settled Assessing Officer not to take advantage of Assessee‟s ignorance: In any civilized system, the Assessee is bound to pay the tax which he liable under the law to the Government. The government on the other hand is obliged to collect only that amount of tax which is legally payable by an Assessee. The entire object of administration of tax is to secure the revenue for the development of the country and not to charge Assessee more tax than that which is due and payable by the Assessee. It is in aforesaid circumstances that as far back as in 11.04.1955 the Central Board of Direct Tax had issued a circular directing Assessing Officer not to take advantage of Assessee‟s ignorance and/or mistake. Therefore, the above Circular should always be borne in mind by the officers of the respondent-Revenue while administering the said Act. ITA No. 46 & others/CTK/2020 22 18.8 We observed that Ld. AO proceeded on the erroneous basis that the Assessee had admittedly not claimed the benefit of sections 10(34) and 10(38) in respect of its dividend income and long term capital gains on sale of shares respectively in its return of income for A.Y. 2014-15. In fact, in the return of income, the Assessee had admittedly sought to exclude its dividend income and long term capital gains from sale of shares under section 10 as is evident from the return of income. However, in the return of income as filed originally for A.Y. 2015-16 the Assessee by mistake, omitted to exclude the dividend income and income from long term capital gains from the total income being declared by it. 18.9. We further notice that Hon‟ble Supreme court of India in case of M/s. E.P. Royappa –vs- State of Tamilnadu reported in AIR 1974 SC 555, at page 586, has observed that, "the burden of establishing mala fide is very heavy on the person who alleges it. The allegations of mala fides are often more easier made then proved and the very seriousness of such an allegation demands proof of a high order of credibility." That, when the claim of the Appellant is well supported by documentary evidences and the learned A.O. during the course ITA No. 46 & others/CTK/2020 23 of scrutiny Assessment, could not controvert, he cannot ignore the evidences blindly relying on the report submitted by the survey team, particularly when, the report so submitted by the survey team is not based on any concrete evidences rather based on the statement of a third party which were even not recorded by the survey team. Further, the learned A.O. relied on the statement of a third party which was recorded by another officer under a different circumstances and particularly when, the Respondent company has no financial relations with the director.” 18.10 We also observe that, additions were made by the A.O. without adhering the principles of natural justice which constitutes bedrock in any quasi-judicial proceeding. A.O‟s reliance on the statement of so called entry operators to justify the additions U/s.68 and 69 of the Act was factually unsustainable, because the statement of entry operators were recorded on various dates connected with some other proceeding and not at all connected with the Appellant proceedings and it is also not known as to what was the condition in which the makers of the statement made the statement and in what context they made the statement. These statements were ITA No. 46 & others/CTK/2020 24 recorded much before the date of survey conducted upon the Appellant. Admittedly, these statements were recorded in absence/back of the Appellant, therefore, the Appellant did not have any means to determine the veracity or correctness of the averments made in these statements. In the above background, if the A.O. intended to use these statements to draw adverse inference against the Appellant, he himself ought to have examined these entry providers to ascertain the correctness of facts and in case, if it is revealed by these entry operators as to any role of the Appellant or connection with the share capital holders as suspected by the A.O., then he should have collected materials and in all fairness, thereafter, give a copy of the admission against the Assessee or material discovered in the process and allowed the Assessee an opportunity to cross- examine the makers of these statements and also to give an opportunity to rebut the material against it and after hearing the explanation or defends of the Appellant should have drawn his conclusion or else. The action of the Authorities will be held to be bad in the eyes of law for violation of principles of natural justice, in case of failure. ITA No. 46 & others/CTK/2020 25 18.11. In the case in hand, Ld. A.O. has accepted the statements recorded by some other officers of the Department in some unconnected proceeding and believed it as a gospel truth against the Appellant and relying on it proceeded to draw inference against the Appellant. Be that as it may be, if these statements of so called entry operators somehow triggered suspicion in the mind of the A.O. in relation to the Appellant‟s long term capital gain/claim then the A.O. was duty bound to conduct inquiry independently from the said persons and not simply rely on the statements recorded by some officers of the Department in unconnected proceedings admittedly behind back of the Assessee and cannot be used against the Assessee without testing it on the tough stone of cross-examination. The A.O. is no doubt an authority appointed by the State to exercise statutory powers to ascertain the income of a subject and the tax payable by him to the State. It is well settled that, the principles of natural justice shall be presumed to be necessary unless there exist a statutory interdict. The principles of natural justice a cardinal part of which is “audi alterem partem” (the right to be heard) is the bedrock of all quasi-judicial proceedings. It should be kept in mind by the A.O. that, his decision must be based upon logical proof or evidence and should not be based on speculation or suspicion or surmises or conjectures, because while discharging the duties as an Assessing officer, he was expected to function both as on Investigator and Adjudicator. In his role as an investigator, he was duty bound to investigate fully and bring out all the facts on record and while discharging the duty as an Adjudicator, he was required to comply with the principles of natural justice. In the ITA No. 46 & others/CTK/2020 26 instant case, the A.O. failed to perform his twin duties that of the investigator and adjudicator resulting in the additions being vitiated in the process. 18.12 Our view is supported by the judgment of the Hon’ble Apex Court in the case of CIT –vs- Odeon Builders (P) Ltd. reported in 110 Taxman.com 64 (SC) involving similar facts as involved in the present case. In this decided case, the Revenue had disallowed the purchase made by the Assessee holding it to be bogus based on the statement given by a third party. On appeal, the learned CIT(A) deleted the addition holding that, on one hand, the Assessee has discharged his initial burden whereas, on the other hand, the Revenue had denied the opportunity of cross-examination to the Appellant. On the self same reasoning, the Hon‟ble Tribunal and later the Hon‟ble high Court also dismissed the appeal of the Revenue. The Hon‟ble Supreme Court in paragraph No.3 of their judgment have held that, a disallowance was based solely on third party information which was not subjected to any further scrutiny. The entire disallowances in this case is based on third party information gathered by the Investigation Wing of the Department which have not been independently subjected to further verification by the A.O., who has not provided the copy of such statement to the Appellant, thus denying opportunity of cross-examination to the Appellant, who has prima facie discharged the initial burden, the impugned addition made by the A.O. is not sustainable, thus is directed to be deleted. ITA No. 46 & others/CTK/2020 27 19.13 That, further the Respondent also relies the judgment of Hon’ble Supreme Court in the case of Andaman Timber Industries Ltd. In addition to this, the Appellant also relies on the judgment of Hon’ble Bombay High Court in the case of CIT –vs- Reliance Industries Ltd., reported in 102 taxman.com 372. In this case, the claim of deduction of consultancy charges was disallowed on the basis of a statement recorded from „S‟. The tribunal held that, the impugned disallowances based solely on the statement of a person without there being any independent material was not justified. The Hon‟ble High Court upheld the order of the Tribunal. Similar view was also expressed by the Hon’ble Gujarat High Court in the case of CIT –vs- Kantibhai Ravidas Patel, reported in 42 taxman.com 128 and Hon’ble Rajasthan High Court in the case of CIT –vs- AL Lalpuria Constructions (P) Ltd. reported in 32 taxman.com 384. That, in the fact of the present case, save and except relying on the statement of so called entry operators, the Revenue could not bring on record any credible evidence which could show that, the Appellant has routed his unaccounted money in the form of bogus capital gain. The A.O. never examined any one of these persons, whose statement relied upon by him in the Assessment order nor did he grant an opportunity for cross-examination except the bald references to ITA No. 46 & others/CTK/2020 28 the recorded statement. The Revenue could not bring on record any material which could link the Assessee with any wrong doing. When the learned CIT(A) found that, the A.O. has not followed the due procedure of law as stated in the above paragraph, he rightly deleted the impugned additions. 18.15 We, therefore, in view of our above discussion and settled judicial precedents that assessee should be assessed for the correct income and ignorance if any made by the assessee in filing the return but brought to the notice of the Ld. AO before the conclusion of the assessment proceedings should be entertained and also as per the principle of natural justice if any addition is made on the basis of statement of 3 rd party, a proper opportunity of cross examination should be given to the affected party and if the same is not done, action of the Ld. AO making additions cannot be held to be justified. We, therefore, dismiss revenues common ground no.1,2,4 & 7 raised for A.Y.2014-15 & 2015-16 in the instant appeals. 19. Now we take up common ground no.3 & 6 raised on merits of the case. To keep the facts straight we notice that the assessee purchased the equity shares by making payment through banking channel. Subsequent to certain merger and split of equity shares assessee hold the equity shares of the ITA No. 46 & others/CTK/2020 29 limited company in question in the Demat Accunt and held them for more than 12 months and thereafter the same was sold through recognized stock exchange after paying security transaction tax. So far as the A.Y. 2014-15 is concerned we find that the assessee purchased 1,00,000/- shares of Panchashul Marketing Ltd. for Rs.1,00,000/- each share @ Re.1/- on 21.11.2012. These shares were purchased though Jatadhari Marketing (P) Ltd. and amount of Rs.1,00,000/- was paid by Cheque No.504054 from his SB A/c. No.30160100000851 with Bank of Barod, Bhadrak. The cheque was encashed on 19.12.2012. The shares of Panchshul Marketing Ltd. were subsequently merged with Kailash Auto Finance Ltd. The total holding by the appellant as on 11.07.2013 were as under as per statement issued by Motilal Oswal Securities ltd.:- Kailash Auto Finance Ltd. 1,00,000/- Shagun Trexim 1,000/- Life Line Drugs 2,500/- The appellant also purchased certain shares of other companies and the total holding as on 05.12.2013 were as under: Kailash Auto Finance Ltd. 1,00,000 Lifeline Drugs 25,000 Newever Tradewin 10,000 Shagun Trexim 1,000 ITA No. 46 & others/CTK/2020 30 Subsequently all the shares of KAFL (1,00,000 shares) were sold through shares brokers, authorized by SEBI. The details are as under: i. 1,00,000 shares of Kailash Auto (KAFL) were sold for Rs.37,96,200 on 19.02.2014, through Destiny Securities Ltd. The amount received after payment of security Transaction Tax and Brokerage etc. was Rs.37,91,465.50. The amount was received through S.B. A/c No. 398010100014438 with Axis Bank on 28.02.2014. 19.1 So far as A.Y. 2015-16 is concerned we observe that the assessee purchased 500 shares of Sprint Vinijya P. Ltd.. for Rs.50,000/- each share @ Re.100/- on 10.10.2011. the amount of paid by Cheque No.98961 against his SB A/c. Axis Bank on 25.10.2011. Subsequently the shares of Sprint Vanijya P. ltd. were transferred to Lifeline Drugs and Pharma Ltd., Though Purva Sharegistry (India) Pvt. Ltd. as per their intimation dated. 24.05.2012 (share transfer No.1074). Further Lifeline Drugs and Pharma Ltd. allotted 2000 bonus shares (4:1) on 16.08.2012 per intimation dated. 17.08.2012 issued by Purva Sharegistry (India) Ltd. Thus the appellant held 2500 shares of Lifeline Drugs and Pharma Ltd. Subsequently by a resolution of the company dated.01.10.2013 the share of Rs.10/- face value were ITA No. 46 & others/CTK/2020 31 converted into Re.1 per share and thus the appellant‟s holding as on 05.12.2013 was as under: Kailash Auto Finance Ltd. 100000 shares Lifeline Drugs & Pharma Ltd. 25,000 shares Newever Tradewin 10,000 shares Shagun Trexin 1,000 shares 19.2 During the year under consideration the appellant sold the entire 25,000 shares of Lifeline Drugs and Pharma Ltd. as under: No. of shares date of sale value received 3000 17.07.2014 7,44,000 3,000 18.07.2014 7,56,000 2,000 21.07.2014 5,03,000 3,000 23.07.2014 7,53,000 3,000 07.08.2014 7,53,000 1,000 08.08.2014 2,49,000 7,000 07.10.2014 17,43,000 3,000 07.11.2014 7,41,000 25,000 62,42,000 19.3 After deduction the cost price of Rs.50,000/- and other expenses including STT the Net Long Term Capital Gains was computed at Rs.61,59,697/-. 19.4 All the above details of purchase and sales were placed before the ld. AO along with contract notice for purchase and sale, Demat Account and Bank statement and Ld. AO could not find any mistake or defect in these documents. Action of ITA No. 46 & others/CTK/2020 32 the Ld. AO of treating the alleged LTCG as bogus was solely based on the enquiry report carried out in the case of 3 rd persons much before the date of survey conducted at the assessee premises. Nothing incriminating was found during the course of survey to challenge the genuineness of documents filed by the assessee. Ld. AO also could not bring on record any evidence to prove that the assessee had any direct connection with the alleged entries operators or the management of the listed companies in question. Under these uncontroverted fact we find that Ld. CIT(A) has rightly deleted the addition for bogus LTCG made u/s 68 of the Act by the ld. AO observing as follows: Finding for A.Y. 2014-15 I have perused the facts of the case and have examined the assessment order u/s. 143(3) for AY.- 2014-15 dt. 29/12/2016 as well as the detailed arguments tendered by the counsel for the assessee. The status of the revised return for AY.-2014-15 filed on 16/09/2015 is 'invalid' as the same was filed beyond the last date up to which one could file a revised return for AY.- 2014-15 as per section 139(5), namely, 31/03/2015. Now, in the original return for AY.- 2014-15, the assessee had made a claim u/s. 10(38) on the long term capital gains earned on the sale of shares. The AO rejected this claim by holding that these receipts constituted accommodation entries taken by the assessee from certain Kolkata based companies. However, on perusal of the assessment order u/s. 143(3) dt. 29/12/2016, it is seen that the AO has not even named these companies. The addresses of the companies, their identity and the recorded statements of their directors wherein they have alleged that the assessee was provided with bogus capital gain accommodation entries- all these salient facts are absent in the body of the assessment order. It is also unclear whether the assessee was granted an opportunity to cross question the directors of the Kolkata based companies, the same being an unalienable right of the assessee as per the principles of natural justice. ITA No. 46 & others/CTK/2020 33 The appellant submitted that the shares had been held for more than twelve months and 'were transferred through a recognized stock exchange after duly paying securities transaction tax (STT). Therefore, the consideration received was in the nature of a long term capital gain (LTC G) held to be exempt u/s. 10(38) of the LT Act, 1961. From the submissions of the assessee, it is seen that the assessee purchased 1,00,000/- shares of M/s. Panchashul Marketing Ltd for Rs.1,00,000/-, each share Rs.1/-, on 21/11/2012. These shares were purchased through Jatadhari Marketing (P) Ltd. and the purchase amount was paid by cheque no. 510691 drawn against the assessee's savings bank account no. 30160100001797 with the Bank of Baroda, Bhadrak. The shares of Panchashul Marketing Ltd. were subsequently merged with that of M/s. Kailash Auto Finance Ltd. (KAFL). The assessee also purchased share of another company, namely Drugs and Pharma Pvt. Ltd. on 24/05/2012. Subsequently, the shares of M/s. KAFL and M/s. Lifeline Drugs were sold by the assessee through SEBI authorized brokers, M/s. Destiny Securities Ltd (SEBI Registration no. INB011241834) and M/s. Motilal Oswal Securities Ltd. on 05/02/2014, 06/02/2014 and 24/03/2014 for Rs. 37,96,200/-. The amount received after payment of Security Transaction Tax (STT) and brokerage was Rs. 37,91,465/-. This amount was received by the assessee through Savings Bank account no. 30160100001797 with Bank of Baroda, Bhadrak on 13/02/2014 and 24/03/2014 and the assessee, after computing the income from capital gains, claimed the same as exempt 1/s.10(38). The order of the Hon'ble Income Tax Appellate Tribunal, "A" Bench, Kolkata in the cases of Shri Manish Kumar Baid V /s ACIT, Cirke- 35, Kolkata (ITA No.1236/Kol/2017 for 2014-15) and Shri Mahendra Kumar Baid V /s ACIT, CircIe-35, Kolkata (ITA. No. 1237/Kolj2017 for AY.- 2014-15) has also been perused by me. The ground of appeal raised before the ITAT, Kolkata is identical to the issue being contested in the case before the undersigned and is being reproduced herewith-: If For that under the facts and in the circumstances of the case the Income as determined under head other sources at Rs. 38,00,000/- should have been treated as income from Long Term Capital Gains out of dealing in shares and the learned AD should have allowed exemption u/s. 10(38) as claimed." After extensive deliberation, the ITAT gave its verdict vide order dt. 18/08/2017 and upheld the assessee's claim for exemption of long term capital gains (LTCG) »[e. 10(38) in respect of the sale of shares of MIs. Kailash Auto Finance Ltd. (KAFL). The relevant extracts from the ITAT order are as under-: 'We find force in the arguments of the ld AR that the Id AD was not justified in rejecting the claim of the assessee on the basis of theory of surrounding circumstances, human conduct and preponderance of probability without bringing on record any legal evidence against the assessee. We rely on the judgment of Special Bench of Mumbai Tribunal in the case of GTC Industries Ltd Vis. ACIT (2017) 164 lTD ITA No. 46 & others/CTK/2020 34 (supra) for this proposition wherein the tribunal held as under-: "Ultimately the entire case of Revenue hinges upon the presumption that assessee is bound to have some large share in so called secret money in the form of premium and 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 GTe 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 theory 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 conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumptions of facts that might to against the assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigations have been carried out, then nothing can be implicated against the assessee." The enquiry by the Investigation wing and/or the statements of several persons recorded by the Investigation Wing in connection with the alleged bogus transactions in the shares of KAFL also did bt implicate the assessee and/or his broker. It is alSlJ' a matter of record that the assessee furnished all evidences in the form of bills, contract notes, demand statements and the bank accounts to prove the genuineness of the transactions relating to purchase and sale of shares resulting in LTCG. These evidences were neither found by the ld AD to be false or fabricated. The facts of the case and the evidences in support of the assessee's case clearly support the claim of the assessee that the transactions of the assessee were bonafide and genuine and therefore the ld AD was not justified in rejecting the assessee's claim of exemption under section 10(38) of the Act. We also find that the various case laws of Hon'ble jurisdictional High Court relied upon by the ld AR and finding given thereon would apply to the facts of the instant case. The ld DR was not able to furnish any contrary cases to this effect. Hence we hold that the ld AD was not justified in assessing the sale proceeds of shares of KAFL as undisclosed income of the assessee u/s. 68 of the Act.' The ITAT, Delhi Bench "SMC", New Delhi adjudicated on an identical issue in the case of Vidhi Malhotra v /s ITO, Ward-2(S), Faridabad (ITA No. 93/Del/2018 for AY.-2014-15 and Santosh Mendiratta vIs. ITO, Ward-2(3), Faridabad (ITA No. 94/Del/2018 for AY.- 2014-15). In both these appeals, the assessee's had claimed exemption u/s. 10(38) on the LTCG in respect of sale of shares of Mis. Kailash Auto Finance Ltd (KAFL) but the same were denied by the AD by holding the transaction to be a colourable device to route the assessee's unaccounted income. The ITAT, SMC Bench, Delhi vide order dt. 20/12/2018 upheld the claim of exemption u/s. 10(38) and held as under-: "Thus, SEBI also did not find any prima facie material for ITA No. 46 & others/CTK/2020 35 manipulation of price of scrip of Kailash Auto Finance Limited. If AO had found out that scrips of Kailash Auto Finance Limited was used by certain persons for providing accommodation entry, then he should have carried out some prima facie inquiry to find out whether assessee too was involved in routing her own unaccounted money for getting bogus term capital on the scripts of such company. General observation about the modus operandi of long term capital gain would be of no use unless and until there is some specific information and material qua the assessee. Once purchase of the shares are not doubted and sale has been made through Bombay Stock exchange routed through DMAT account then consideration received has to be treated from amount of sale of shares whether the price has been rigged of1"not. One factor which has weighed heavily oTl"the authorities below in the present case is that share price has arisen to more than 37 times. Once the SEBf has held that there is no adverse evidence or material that there was any violation of regulations in respect of Kailasii Auto Finance Limited and restrain order on the trading has been revoked} then it follows that the share price of which has been sold for genuine quoted price and therefore} the sale proceeds has to be reckoned from sale of such shares and would be treated as explained credit or investment. Accordingly, on the facts and circumstances of the case) we hold that the long term capital gain shown by the assessee is genuine and consequently liable for exemption u/s. 10(38). Thus} appeal of the assessee is allowed. 11 In the light of the foregoing observations, it is held that the AO was not justified in rejecting the claim of exemption u/s. 10(38) in respect of LTCG arising on the sale of shares of M/s. Kailash Auto Finance Ltd (KAFL) and M/s. Lifeline Drugs. The consideration received by the assessee was out of the sale of shares effected on a recognized stock exchange. The shares had been held for a period of more than twelve months and securities transaction tax (STT) had been paid at the time of the transfer. Hence, the amount received by the assessee is undeniably in the nature of a long term capital gain (L TCG). The AO's action was based entirely on surmises and suspicions and at the same time. the AD was unable to rebut the concrete evidence tendered by the assessee in support of his claim. Further, the prevailing weight of judicial opinion is heavily in the assessee's favour as adduced by the decision of the Hon'ble Kolkata and Delhi Bench of the I.T.A.T. where the issue adjudicated was identical to the facts in the assessee’s case. Hence the addition of Rs.59,99,250/- made by the AO is hereby deleted and the assessee’s appeal is upheld. Finding for A.Y. 2015-16 I have perused the facts of the case and have examined the assessment order u/s. 143(3) for AY.- 2015-16 dt. 30/06/2017 as well as the detailed arguments tendered by the counsel for the assessee. Now, in the original return for AY.- 2015-16, the assessee had made a claim u/s. 10(38) on the long term capital gains earned ITA No. 46 & others/CTK/2020 36 on the sale of shares. The AO rejected this claim by holding that these receipts constituted accommodation entries taken by the assessee from certain Kolkata based companies. However, on perusal of the assessment order u/s, 143(3) dt. 30/06/2017, it is seen that the AO has not even named these companies. The addresses of the companies, their identity and the recorded statements of their directors wherein they have alleged that the assessee was provided with bogus capital gain accommodation entries- all these salient facts are absent in the body of the assessment order. It is also unclear whether the assessee was granted an opportunity to cross question the directors of the Kolkata based companies, the same being alienable right of the assessee as per the principles of natural justice. In view of decision of the Hon'ble Supreme Court In the case of CCE vs. Andaman Timber industries 127 DTR 241(SC), the assessment based on a statement without giving an opportunity to the assessee to cross examine the maker of the adverse statement relied upon by the AD, is not sustainable in law. Also, the AO has not brought any material on record to show that the assessee paid any amount over and above the purchase consideration of the shares and therefore, it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long term capital gains. The Assessing Officer has repeatedly stressed in his assessment order that the Director of the assessee group had agreed in a written statement filed before the Income Tax investigation wing, Bhubaneswar to pay tax on long term capital gains without seeking an exemption u/s. 10(38) of the LT Act, 1961. A copy of the said letter dt. 09/10/2015 addressed to the Add. Director (Investigation), Bhubaneswar was produced in the main assessee company had agreed to pay tax on the long term capital gains during the course of the survey u/s. 133A that was conducted on the assessee's premises on 22/07/2015. On page 3 of his assessment order, the AO states that the assessee, Shri Himanshu Mohapatra in a recorded statement u/s. 133A given to the survey authorities, had admitted to the fact of taking accommodation entries from certain Kolkata based companies. On the basis of these 'admissions' by the assessee, the AO concluded that the bogus nature of the long term capital gains had been established beyond doubt and, consequently, proceeded to make the disallowance. Now, unlike section 132(4) which treats the statements recorded during a search operation as 'evidence' in any proceeding under the ~ Act, 1961, section 133A, while authorizing recording statements by the survey officer, does not give the same status of 'evidence' to such recorded statements. It is therefore open to the assessee to explain this 'statement' to the AO during the course of the assessment proceedings which would also include the circumstances under which such statement was recorded and whether the same was taken in a state of duress. From this it follows that if the assessee were to retract his statement and pursue a course of action in assessment proceedings which conflicts with his recorded statement, he would be well within his rights to do so. In other words, a ITA No. 46 & others/CTK/2020 37 retracted statement cannot justify an addition by the Assessing Officer and the latter must. necessarily look to other corroborative evidence The appellant submitted that the shares had been held for more than twelve months and were transferred through a recognized stock exchange after duly paying securities transaction tax (STT). Therefore, the consideration received was in the nature of a long term capital gain (LTC G) held to be exempt uls.l0(38) of the LT Act, 1961. The appellant purchased 500 Shares of Sprint Vanijya (P) Ltd. for Rs.50,0001-, each shares @ Rs.l001-, on 10.10.2011. This amount was paid by cheque # 175764 against SB Ale with Punjab National Bank on 25.10.2011. Subsequently, the shares of Sprint Vanijya (P) Ltd. were transferred to Lifeline Drugs and Pharma Ltd., though Purva Share registry (India) Pvt. Ltd., as per their intimation dt.24.0S.2012 ( Share Transfer No.l074). Further, Lifeline Drugs and Pharma Ltd. allotted 2000 Bonus Shares (4:1) on 16.08.2012 per intimation dt.17.08.2012 issued by Purva Share registry (India) Ltd. Thus the appellant held 2500 Shares of Lifeline Drugs and Pharma Ltd. Subsequently by a resolution of the company dt.01.10.2013 the shares of Rs.l0/- face value were converted into Rs.l per share and thus the appellant's holding as on 05.12.2013 was as under-: Kailash Auto Finance Ltd. 1,00,000 Shares Lifeline Drugs & Pharma Ltd. 25,000 Shares Newever Tradewin 10,000 Shares Shagun Trexin 1,000 Shares Out of the above, entire shares of Kailash Auto Finance Ltd. and 10000 Shares of Lifeline Drugs & Pharma Ltd. were sold in Feb. 2014 and this was considered in the Assessment Year 2014-15. During the year under consideration the appellant sold the balance 15,000 Shares of Lifeline Drugs and Pharma Ltd. as under-: No. of Shares Date of Sale Value Received 4,000 02.06.2014 9,88,000 2,000 06.06.2014 4,96,000 9.000 08.08.2014 22,41,000 15.000 37.25.000 After deducting the proportionate cost price of Rs.30,000/- and other expenses including STT the Net Long Term Capital Gains was computed at Rs.36,76,819/- and the same was claimed an exempt u/s. 10(38). The order of the Hon'ble Income Tax Appellate Tribunal, "A" Bench, Kolkata in the cases of Shri Manish Kumar Baid V [s ACIT, Cirlce- 35, Kolkata (ITA No.1236/Kolj2017 for 2014-15) and Shri Mahendra Kumar Baid V /s ACIT, Circle-35, Kolkata (ITA. No. 1237/Kolj2017 for AY.- 2014-15) has also been perused by me. The ground of appeal raised before the ITAT, Kolkata is identical to the issue being contested in the case before the undersigned and is being ITA No. 46 & others/CTK/2020 38 reproduced herewith-: "For that under the facts and in the circumstances of the case the Income as determined under head other sources at Rs. 38,00,000/- should have been treated as income from Long Term Capital Gains out of dealing in shares and the learned AD should have allowed exemption u/s. 10(38) as claimed." After extensive deliberation, the ITAT gave its verdict vide order dt. 18/08/2017 and upheld the assessee's claim tor exemption of long term capital gains (LTCG) u/s. 10(38) in respect of the sale of shares of MIs. Kailash Auto Finance Ltd. (KAFL). The relevant extracts from the ITAT order are as under-: 'We find force in the arguments of the ld AR that the Id AD was not justified in rejecting the claim of the assessee on the basis of theory of surrounding circumstances, human conduct and preponderance of probability without bringing on record any legal evidence against the assessee. We rely on the judgment of Special Bench of Mumbai Tribunal in the case of GTC Industries Ltd Vis. ACIT (2017) 164 lTD (supra) for this proposition wherein the tribunal held as under-: "Ultimately the entire case of Revenue hinges upon the presumption that assessee is bound to have some large share in so called secret money in the form of premium and 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 GTe 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 theory 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 conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumptions of facts that might to against the assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigations have been carried out, then nothing can be implicated against the assessee." The enquiry by the Investigation wing and/or the statements of several persons recorded by the Investigation Wing in connection with the alleged bogus transactions in the shares of KAFL also did bt implicate the assessee and/or his broker. It is alSlJ' a matter of record that the assessee furnished all evidences in the form of bills, contract notes, demand statements and the bank accounts to prove the genuineness of the transactions relating to purchase and sale of shares resulting in LTCG. These evidences were neither found by the ld AD to be false or fabricated. The facts of the case and the evidences in support of the assessee's case clearly support the claim of the assessee that the transactions of the assessee were bonafide and genuine and therefore the ld AD was not justified in rejecting the assessee's claim of exemption under section 10(38) of the Act. We also find that the various case laws of Hon'ble jurisdictional High Court relied upon by the ld AR and finding given thereon would ITA No. 46 & others/CTK/2020 39 apply to the facts of the instant case. The ld DR was not able to furnish any contrary cases to this effect. Hence we hold that the ld AD was not justified in assessing the sale proceeds of shares of KAFL as undisclosed income of the assessee u/s. 68 of the Act.' The ITAT, Delhi Bench "SMC", New Delhi adjudicated on an identical issue in the case of Vidhi Malhotra v /s ITO, Ward-2(S), Faridabad (ITA No. 93/Del/2018 for AY.-2014-15 and Santosh Mendiratta vIs. ITO, Ward-2(3), Faridabad (ITA No. 94/Del/2018 for AY.- 2014-15). In both these appeals, the assessee's had claimed exemption u/s. 10(38) on the LTCG in respect of sale of shares of Mis. Kailash Auto Finance Ltd (KAFL) but the same were denied by the AD by holding the transaction to be a colourable device to route the assessee's unaccounted income. The ITAT, SMC Bench, Delhi vide order dt. 20/12/2018 upheld the claim of exemption u/s. 10(38) and held as under-: "Thus, SEBI also did not find any prima facie material for manipulation of price of scrip of Kailash Auto Finance Limited. If AO had found out that scrips of Kailash Auto Finance Limited was used by certain persons for providing accommodation entry, then he should have carried out some prima facie inquiry to find out whether assessee too was involved in routing her own unaccounted money for getting bogus term capital on the scripts of such company. General observation about the modus operandi of long term capital gain would be of no use unless and until there is some specific information and material qua the assessee. Once purchase of the shares are not doubted and sale has been made through Bombay Stock exchange routed through DMAT account then consideration received has to be treated from amount of sale of shares whether the price has been rigged of1"not. One factor which has weighed heavily oTl"the authorities below in the present case is that share price has arisen to more than 37 times. Once the SEBf has held that there is no adverse evidence or material that there was any violation of regulations in respect of Kailasii Auto Finance Limited and restrain order on the trading has been revoked} then it follows that the share price of which has been sold for genuine quoted price and therefore} the sale proceeds has to be reckoned from sale of such shares and would be treated as explained credit or investment. Accordingly, on the facts and circumstances of the case) we hold that the long term capital gain shown by the assessee is genuine and consequently liable for exemption u/s. 10(38). Thus} appeal of the assessee is allowed. 11 In the light of the foregoing observations, it is held that the AO was not justified in rejecting the claim of exemption u/s. 10(38) in respect of LTCG arising on the sale of shares of M/s. Lifeline Drugs. The consideration received by the assessee was out of the sale of shares effected on a recognized stock exchange. The shares had been held for a period of more than twelve months and securities transaction tax (STT) had been paid at the time of the transfer. Hence, the amount received by the assessee is undeniably in the nature of a long term capital gain (L TCG). The AO's action was based entirely ITA No. 46 & others/CTK/2020 40 on surmises and suspicions and at the same time. the AD was unable to rebut the concrete evidence tendered by the assessee in support of his claim. Further, the prevailing weight of judicial opinion is heavily in the assessee's favour as adduced by the decision of the Hon'ble Kolkata and Delhi Bench of the I.T.A.T. where the issue adjudicated was identical to the facts in the assessee’s case. Hence the addition of Rs.62,42,000/- made by the AO is hereby deleted and the assessee’s appeal is upheld. 19.5 The above finding of Ld. CIT(A) is well supported by various decisions and judgments which commonly states that if the assessee fulfills all the relevant conditions to claim the benefit of exemption of LTCG on sale of listed equity shares u/s 10(38) of the Act and the assessee is not found to be part of the alleged group of accommodation entry providers then the claim made for exempt income u/s 10(38) of the Act should not be denied. 19.6 Similar view was also taken by Coordinate Bench Mumbai, The relevant finding of Coordinate Bench Mumbai in case of Ramprasad Agarwal vs. ITO vide ITA No.1228/M/2018 has held as under: 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 transactions of the purchase and sale of shares are genuine. Even otherwise 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 addition made by the AO on this account." Thus, it is clear that the Tribunal in the said case has analyzed an identical issue wherein the shares allotted in the private placement ITA No. 46 & others/CTK/2020 41 @ Rs. 10 at par of face value which were dematerialized and thereafter sold by the assessee and accordingly the Tribunal after placing reliance on the decision of Hon'ble Supreme Court in case of CCE vs. Andaman Timber Industries (supra) as well as the decision of Hon'ble jurisdiction High court in case of CIT vs. Smt. Pooja Agarwal (supra) as held that when the Assessing Officer has not brought 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 it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long term capital gain. Similar in the case in hand the assessee has produced the relevant record to show the allotment of shares by the company on payment of consideration by cheque and therefore, it is not a case of payment of consideration by in cash. But the transaction is established from the evidence and record which ITA No.1228/M/2018 Mr. Ramprasad Agarwal cannot be manipulated as all the entries are part of the bank account of the assessee and the assessee dematerialized the shares in the D-mat account which is also an independent material and evidence cannot be manipulated. Therefore, the holding of the shares by the assessee cannot be doubted and the finding of the AO is based merely on the suspicion and surmises without any cogent material to show that the assessee has introduction 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 the M/s Anand Rathi Share and Stock Brokers Ltd. However, we note that the said enquiry was regarding financial irregularities and use of fund belonging to the clients for the purpose other than, the purchase of shares on behalf of the clients. Therefore, the subject matter of the enquiry has no connection with the transaction of bogus long term capital gain. The decisions replied upon the ld. DR in case of Sanjay Bimalchand Jain vs. Pr. CIT (supra) is not applicable in the facts of the present case as the said decision is in respect penny stock purchase by the assessee from a persons who was found to be indulged in providing bogus capital gain entries whereas in the case of the assessee the shares were allotted to the assessee by the company at par of face value. Hence, in view of the facts and circumstances when we hold that the order of the Assessing Officer treating the long term capital gain as bogus and consequential addition made to the total income of the assessee is not sustainable. Hence, we delete the addition made by the AO on this account." 10. It is clear from the above that the facts of the case of the assessee are identical with the facts in the above case wherein the co-ordinate bench of the Tribunal has deleted the addition. We, therefore, respectfully following the same set aside the order of Ld. CIT(A) and direct the AO to not to treat the long term capital as bogus and delete the consequential addition. 11. In the result, appeal of the assessee is allowed. ITA No. 46 & others/CTK/2020 42 19.7. Similar view was also taken by Coordinate Bench Indore. The relevant finding of Coordinate Bench Indore in case of Shivnarayan Sharma & Ors vide ITANo.889/Ind/2018 & others dated 28.06.2021 reads as follows: 19. Subsequently Co-ordinate Bench of Jaipur in the case of Ashok Agrawal V/s ACIT in ITA No.124/JP/2020 dated 18.11.2020 has followed the decision of Hon'ble Mumbai Tribunal in the case of Dipesh Ramesh Vardhan (supra) while dealing with the same issue of Long Term Capital Gain from sale of equity shares of M/s Sunrise Asian Limited claimed to be exempt u/s 10(38) of the Act and decided in favour of the assessee observing as follows:- “23. In the aforesaid decision, it has been held that it is SEBI who monitors and regulates the stock exchanges & stock market and when their investigation did not reveal any price or volume manipulation by the assessee and these transactions are in the normal course through proper & legal channels. Then the allegations of the IT Department fall flat and denial of deduction u/s 10(38) of the Act is arbitrary and addition of sale proceeds of shares of PAL u/s 68 is against the provisions of Act. In the case in hand, the Id. AO has referred to SEBI enquiry against M/s Sunrise Asian Ltd. However, we note that the said enquiry was regarding failure to comply with certain disclosure requirements and therefore, the subject matter of the enquiry has no connection with the transaction of bogus long term capital gain and has no bearing in judging the genuineness of the transaction undertaken by the assessee or for that matter, the price and realization on sale of shares so undertaken by the assessee through the stock exchange. Further, it has been held in the aforesaid case that the findings of investigation & modus operandi in other cases narrated by the AO and also CIT(A) nowhere prove any connection with the assessee nor the assessee's involvement or connection or collusion with the brokers, exit providers, accommodation providers or companies or directions etc and for making the addition, it is necessary to bring on record evidence to establish ingenuity in transactions or any connection of the assessee or its transaction with any of the alleged parties. In the instant case, as we have discussed earlier, there is no finding which proves assessee's connection, involvement or collusion with so called accommodation entry providers. Further in the aforesaid case, the issue as to whether the legal evidence produced by the assessee has to guide our decision in the matter or the general observations based on statements, probabilities,' human behavior and discovery of the modus operandi adopted in earning alleged bogus LTCG and STCG, that have surfaced during investigations, should guide the authorities in arriving at a conclusion as to whether the claim is genuine or not has been discussed at length. And referring to legal ITA No. 46 & others/CTK/2020 43 proposition laid down by the Hon'ble Supreme Court that the burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidence held that the modus operandi, generalisation, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee unless specific evidence is brought on record to controvert the validity and correctness of the documentary evidences produced, the same cannot be rejected. We are in complete agreement with the said view and in the instant case, we find that evidence produced by the assessee in support of his claim of purchase and sale of shares on the stock exchange have not been refuted by any adverse findings or material which could demonstrate involvement of the assessee or collusion with so called accommodation entry providers to obtain bogus LTCG as so alleged by the authorities below. 24. We also find that while analyzing sale of shares of similar scrip of M/s Sunrise Asian Ltd and claim of exemption of long term capital gains u/s10(38), the Mumbai Benches of the Tribunal in case of Anraj Hiralal Shah (HUF) vs ITO (supra) has upheld the claim of the assessee's claim of exemption under section 10(38) of the Act and the relevant findings of the Coordinate Bench contained at Para 8 read as under:- "8. The assessee has earned speculation profit in the immediately preceding year through M/s Eden Financial Services also and the said profit has been used to purchase the shares of M/s Sunrise Asian Ltd. The assessee has offered the speculation profit for income tax purposes in the immediately preceding year and It has been accepted. Further the assessee has shown the purchase of impugned shares as investment in the Balance Sheet. Hence the purchase of shares has been accepted. Further the shares have been received in the D-mat account of the assessee and they have been sold through the Dmat account only. Hence the delivery of shares a/so stand proved. The AO has not brought any material on record to show that the assessee was part of fraudulent price rigging. Accordingly, in the absence of any evidence to implicate the assessee or to prove that the transactions are bogus I am of the view that the capital gains declared by the assessee cannot be doubted with. In that View of the matter the addition made towards expenses is not also sustainable. 25. In light of above discussions and in the entirety of facts and circumstances of the case and following the decisions of the Hon'ble jurisdictional High Court and of that of the Coordinate Benches in cases referred supra, we are of the considered view that the assessee has discharged the necessary onus cast on him in terms of claim of exemption of long term capital gains u/s 10(38) of the Act by establishing the genuineness of transaction of purchase and sale of shares and satisfying the requisite conditions specified therein and the gains so arising on sale of shares therefore has been rightly claimed as exempt u/s 10(38) of the Act. Accordingly, in the facts and circumstances of the case, we set-aside the order of the Id. CIT(Appeals) and the claim of the assessee u/s 10(38) is allowed. The matter is thus decided in favour of the assessee and against the ITA No. 46 & others/CTK/2020 44 Revenue. In the result, the ground of appeal so taken by the assessee is allowed. 26. In the result, the appeal of the assessee is allowed.” 20. We have also observed that the above referred decision of Co- ordinate Bench of Mumbai and Jaipur has dealt in the issue of relating Long Term Capital Gain eared from sale of equity shares of M/s SAL holding it to be a genuine gain and in this context we also note that in the case of Shri Shivnarayahn Sharma and Prayank Jain the alleged company is M/s Conart Traders Ltd subsequently merged with M/s SAL under the order of Hon‟ble Mumbai High Court and therefore the above stated decision will be squarely applicable in the case of these two assessee(s). 21. Further we observe that in the case of Govind Harinarayan Agrawal HUF, Manish Govind Agrawal HUF alleged issue of gain from share is from sale of equity shafes of Turbotech. Similar type of issue of the alleged bogus of Long Term Capital Gain from sale of shares of Turbotech came up before the Co-ordinate Bench held in the case of Swati Luthra wherein the Co-ordinate Bench has decided in favour of the assessee allowing both the grounds raised on merits as well as legal observing as follows:- 12. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. We find that the transactions of the assessee of purchase of shares of M/s Esteem Bio and M/s Turbotech., holding of the shares for more than one year and the sale of shares through a registered share broker in a recognized Stock Exchange and payment of Securities Transaction Tax thereon, all were supported by documentary evidences which were placed before the lower authorities. The Revenue could not point out any specific defect with regards to the documents so submitted by assessee. In our considered view, effect of a transaction which is supported by documentary evidences cannot be brushed aside on suspicion or probabilities without pointing out any defect therein. 13. In the instant case, the Assessing Officer himself observed that the movement in price of shares of M/s Esteem Bio and M/s Turbotech were without any backing of financial performance of the said companies. In our considered view, the above factor at best was a pointer or cause for careful scrutiny of the transaction by the Assessing Officer but from it cannot be concluded that transactions were sham. It is a matter of common knowledge that prices of shares in the share market depends upon innumerable factors and perception of the investor and not alone on the financial performance of the company. Further, we also find from record that Ld. AO also didn't confront copies of statements recorded by Investigation Wing, Kolkata of Sh, Nikhil Jain, Sh. Sanjay Vora, Sh. Rakesh Somani, Sh. Anil Kumar Khemka and Sh. Bidyoot Sarkar to the appellant during assessment proceedings and merely extracted copies of their statement in the assessment order only. The Ld. AO has not ITA No. 46 & others/CTK/2020 45 confronted any material to the assessee nor provided any adequate opportunity to the assessee to defend her case. Since the statements were not confronted to the assessee, she was deprived of her right to cross examine the witnesses. Also whatever they have stated in their statement is no gospel truth and cannot be applied blindly to all the persons who have brought the scrips in the entire country. Thus, under these circumstances, atleast some inquiry should have done from these persons, whether they have provided any entry to the assessee, if the request for cross examination was not possible at that stage. Cross examination of a person in whose basis any adverse inference is drawn, then it cannot be primary evidence or material to nail the assessee and simply based on the statement no addition can be made. This has been held so by various courts, and also by Hon'ble Apex Court in the case of M/s Andaman Tiimber Industries vs. CCE (SC) reported in 127 DTR 241 has held as follows: "According to us, not allowing the assessee to cross-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 justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority 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 Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession 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- examine those dealers and what As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil ITA No. 46 & others/CTK/2020 46 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 its reasons for accepting or rejecting the submissions. 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 justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 22. As regards the judgment of Hon’ble Delhi High Court in the case of Suman Poddar V/s ITO (supra) delivered on 17.09.2019 relied by Ld. Departmental Representative, we find that Hon’ble High Court of Delhi in its recent judgment dated 15.1.2021 in the case of PCIT V/s Krishna Devi & Others ITA No.125/2020 dealing with the similar issue of claim of exemption u/s 10(38) of the Act for Long Term Capital Gain from sale of equity shares has duly considered the judgment of Hon’ble Delhi High Court in the case of Suman Poddar V/s ITO (supra) and has decided against the revenue confirming the order of the Tribunal stating it to be the last fact finding authority who on the basis of evidence brought on record has rightly came to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. Relevant extract of the judgment of Hon’ble Delhi High Court in the case of PCIT V/s Krishna Devi & Others is reproduced below:- “10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same for the reasons stated hereinafter. 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a pre-planned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction ITA No. 46 & others/CTK/2020 47 is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent’s unaccounted money, but he did not dig deeper. Notices issued under Sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that “There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels.” The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain’s submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance ITA No. 46 & others/CTK/2020 48 placed by the Revenue on Suman Poddar v. ITO (supra) and Sumati Dayal v. CIT (supra) is of no assistance. Upon examining the judgment of Suman Poddar (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal v. CIT (supra) too turns on its own specific facts. The above-stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. 14. In this view of the matter, no question of law, much less a substantial question of law arises for our consideration. 15. Accordingly, the present appeals are dismissed. 23. We therefore in the light of above judgments which are squarely applicable in the issues raised in the instant appeals are of the considered view that the claim of Long Term Capital Gain made by the respective assessee(s) deserves to be allowed as they have entered into the transactions of purchase and sales duly supported by the documents which have not found to be incorrect. The conditions provided u/s 10(38) of the Act have been fulfilled by the assessee(s) namely Shivnarayan Sharma, Sapan Shaw, Prayank Jain, Govind Harinarayan Agrawal (HUF) and Manish Govind Agrawal (HUF) as they have sold the equity shares held in Demat account and transactions performed on a recognised stock exchange through registered broker at the price appearing on the exchange portal and at the point of time of sale of equity shares, companies were not marked as shell companies by SEBI and nor the trading of these scrips were suspended. The assessee also deserves to succeed on the legal ground as no opportunity was awarded to cross examination the third person which were allegedly found to be providing accommodation entries and therefore no addition was called for in the hands of the assessee without providing opportunity of cross examination in view of the ratio laid down by Hon'ble Apex Court in the case of Andaman Timber Industries vs. CCE 281 CTR 241 (SC) that “not allowing the assessee to cross 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 justice because of which the assessee was adversely affected”. 24. We accordingly in view of our above discussions, facts and circumstances of the case and respectfully following judicial ITA No. 46 & others/CTK/2020 49 precedents and the decisions of Co-ordinate benches squarely applicable on the instant cases, are of the considered view that in the case of the assessee(s) namely Shivnarayan Sharma, Sapan Shaw, Prayank Jain, Govind Harinarayan Agrawal (HUF) and Manish Govind Agrawal (HUF), the claim of exempt income u/s 10(38) of the Act of Long Term Capital Gain from sale of equity shares deserves to be allowed and no addition is called for the estimated brokerage expenses made in the hands of the assessee(s). Thus finding of Ld. CIT(A) is set aside and the Grounds raised by the assessee(s) in ITA Nos.889/Ind/2018, 474/Ind/2019, 206/Ind/2019, 60/Ind/2019, 61/Ind/2019 and 987/Ind/2019 are allowed. 19.8. Recently coordinate Bench Mumbai in the case Kamlesh Gupta vs. DCIT ITANo.1462/Mum/2020 dated 25.11.2021, the relevant finding of this case reads as follows: 11. We shall now advert to the documentary evidence/material that was placed on record by the assessee in order to drive home his claim of having carried out genuine transactions of purchase/sale of shares of JMD Telefilms Industries Ltd. As is discernible from the orders of the lower authorities, we find that the assessee had on 26.02.2009 by way of an off-market transaction purchased one lac equity shares of JMD Telefilms Industries Ltd. of a face value of Rs.10/- each at a premium of Rs. 7/- per share i.e for a total consideration of Rs. 17 lac by way of a preferential allotment in physical form. The payment of the purchase consideration of Rs. 17 lac was made by the assessee vide account payee Cheque no. 168253, dated 15.01.2009 drawn on his Saving Bank A/c No. 06130100003249 with Bank of Baroad, Branch: Mittal Tower, Nariman Point, Mumbai in favour of JMD Telefilms Industries Ltd. Our attention was drawn by the ld. A.R to the copy of the share application form, copy of the bank account a/w the copy of the cheque vide which payment of the purchase consideration of the aforementioned shares was made. Also, the assessee had filed before the lower authorities the copy of the share allotment letter and share certificate as regards allotment of one lac shares bearing distinctive nos. 3214601 to 3314600. On 30.06.2009 the one lac shares were dematerailzed by the assessee via Motilal Oswal Securities. Thereafter, the aforesaid shares were split in the ratio of 10:1 and the assesee had 10 lac shares. Out of the 10 lac shares the assesee had in March, 2010 i.e in the period relevant to the immediately preceding year sold 1,32,500 shares and the LTCG arising on the same was claimed by him as exempt u/s 10(38) of the Act. On a specific query by the bench as regards the treatment given by the department to the LTCG on sale of 1,32,500 shares of JMD Telefilms Industries Ltd. by the assessee in the immediately preceding year i.e A.Y 2010-11, it was submitted by the ld. A.R that ITA No. 46 & others/CTK/2020 50 the department had on a similar footing declined the assessee‟s claim for exemption u/s 10(38) of the LTCG arising from the sale of shares during the said year and, had added the sale consideration of shares as an unexplained cash credit u/s 68 of the Act. It was submitted by the ld. A.R that the assessee had challenged the said assessment order and the same as on date is pending before the CIT(A). Out of the balance 8,67,500 shares the assessee had transferred 1,00,000 shares to his wife Mrs. Mridulla Gupta through an unregistered gift deed. The balance 7,67,500 shares were sold by the assessee during the year under consideration i.e over the period June, 2010 to October, 2010 and the LTCG of Rs. 5,93,15,038/- arising therefrom was claimed by him as exempt u/s 10(38) of the Act. Copies of the contract notes and the transaction report of Motilal Oswal Securities Ltd. evidencing the aforesaid transaction of sale of shares was filed by the assessee before the lower authorities. As regards the initial off-market purchase of one lac shares of JMD Telefims Industries Ltd. by the assessee, we may herein observe that an off-market transaction for purchase of shares is not illegal. As observed by us hereinabove, the purchase transaction of shares was carried out by the assessee vide account payee cheque and the sale of shares have suffered STT, service tax, total turnover tax, stamp duty charge etc. As is discernible from the orders of the lower authorities, we find that neither of them had dislodged the authenticity of the aforesaid documentary evidence that was filed by the assessee to support his claim of having carried out genuine transactions of purchase/sale of shares of JMD Telefilms Industries Ltd. 12. As stated by the ld. A.R, and rightly so, the observations of the A.O are found to be more or less backed by information received by him from the Directorate of Investigation, Kolkata and the unsubstantiated statements of third parties who are not connected with the assessee. Insofar the third party statements relied upon by the A.O are concerned, the same, as observed by us hereinabove, do not raise any allegation qua the authenticity of the transactions of purchase/sale of shares of JMD Telefilms Industries Ltd. by the assessee. Also, the A.O instead of disproving the contents of the aforesaid documentary evidence that were filed by the assessee in support of his claim of having made genuine purchase/sale of shares in question, had rather in disregard of the same chosen to remain guided by assumptions, presumptions, surmises and principles of preponderance of human probabilities. Insofar the observation of the A.O that the statement of the assessee recorded u/s 131 of the Act in the course of the assessment proceedings revealed, viz. that the assessee had no understanding of the company in which he had claimed to have made the investment; that the assessee had never in the past invested as a preferential share allottee; that the assessee did not understand the meaning of preferential allotment and stock split; and that the assessee had invested only in a few shares besides M/s JMD Telefilms Industries Ltd., are observations which though would reveal that the assessee was not that well informed about the stock market, but then, we are ITA No. 46 & others/CTK/2020 51 afraid that the said fact on a standalone basis cannot justify holding the transaction of purchase/sale of shares by the assessee as a bogus transaction. At this stage, we may herein observe or in fact not loose sight of the fact, that as observed by the CIT(A), the assessee is a director of several West Coast Group Companies and he and his family members were/are directors in 17 public limited and private limited companies which are either promoted by them and/or promoted by their relatives. As regards the observations of the A.O that the information received from the Directorate of Investigation, Kolkata revealed the modus operandi that was adopted by the promoters/operators/brokers a/w the beneficiaries for obtaining bogus LTCG/STCL entries, we find that the same are only in the nature of general observations and the same on a standalone basis in the absence of any material/evidence proving that the assessee had colluded with the promoters/brokers/operators for laundering his unaccounted money in the garb of tax exempt LTCG, cannot justify drawing of any adverse inferences as regards the transaction of purchase/sale of shares in question by the assessee. As is discernible from the assessment order, one of the major aspect that had weighed in the mind of the A.O for stamping the transaction of purchase/sale of shares of JMD Telefilms Industries Ltd. by the assessee as a structured transaction with a purpose of facilitating tax evasion in the garb of a bogus claim of tax exempt capital gain u/s 10(38) of the Act and laundering of his ill-gotten money; was the fact that within a short span there was a steep rise in the price of shares of JMD Telefilms Industries Ltd., i.e by 19 times in 8 months i.e from Rs. 7.93 in October, 2008 to Rs. 145 in June, 2009, which trade pattern of the aforesaid company as per the A.O did not move along with the commercial principles and market factors; and the financials of the company also did not show any reason for the extraordinary performance of its stock. In our considered view, though the aforesaid data gathered by the A.O being based on the facts cannot be faulted on our part, but we are unable to persuade ourselves to concur with him that for the said reason the assessee is to be held to have evaded taxes and laundered his unaccounted money by booking a bogus claim of LTCG that is exempt u/s 10(38) of the Act. Although, the A.O had at length discussed in his order the information that was shared with him by the Investigation wing of Kolkata i.e the modus operandi adopted by beneficiaries with the help of entry operators to obtain tax free capital gains, however, we are afraid that nothing concrete has been brought on record which would prove to the hilt the falsity of the assessee‟s claim of having carried out genuine transactions of purchase/sale of shares under consideration, and therein prove that he in the garb of a bogus transaction had only procured a bogus entry of capital gain. On the contrary, we find that the assessee had duly substantiated the purchase of shares under consideration on the basis of supporting documentary evidence. Admittedly, the assessee had paid for the purchase consideration of the shares to the company, viz. JMD Telefilms Industries Ltd. through account payee cheque, and the said ITA No. 46 & others/CTK/2020 52 fact had duly been substantiated by him by placing on record the copy of the cheque a/w copy of his bank account reflecting the said transaction. Further, we find that the aforesaid one lac shares of JMD Telefilms Industries Ltd which were purchased by the assessee by way of a preferential allotment on basis of an off-line transaction were thereafter dematerialized by him on 30.06.2009 via Motilal Oswal Securities Limited and were thus credited in the said account much prior to their sale. Thereafter, the aforesaid one lac shares were split in the ratio of 10:1 and the total number of shares increased to 10 lac. Out of the 10 lac shares, the assessee after selling 1,32,500 shares in the immediately preceding year was left with 8,67,500 shares. Out of the 8,67,500 shares the assessee had during the year under consideration gifted 1,00,000 shares to his wife Smt. Mridulla Gupta. The balance 7,67,500 shares were sold by the assessee on the floor of BSE through his broker Motilal Oswal Securities Limited for a consideration of Rs. 6,06,49,780/-. Backed by the substantial documentary evidence filed by the assessee which beyond doubt substantiates the genuineness of the transaction of purchase and sale of shares of JMD Telefilms Industries Ltd. by him, we are afraid that the unsubstantiated claim of the A.O that the assessee had converted his unaccounted money by taking fictitious LTCG in a pre-planned manner cannot be accepted. At this stage, we may herein observe, that the very basis adopted by the CIT(A) for sustaining the view of the A.O that the assessee had obtained a bogus entry of LTCG, viz. that the assessee had only after a period of 2 ¼ years i.e in the year 2014 invested in shares of another company, i.e Justdial company; that the assessessee had not revealed the user of the sale proceeds of the shares of JMD Telefilms Industries Ltd; that the assessee did not derive such gain from purchase/sale of shares in the preceding/succeeding years; that why did the assessee not invest the surplus funds in the any of the companies in which he was a director and had invested the same in a company whose antecedents were not even known to him, are observations wherein the CIT(A) had tried to put himself in the arm chair of the assessee and indirectly had called for an explanation as to why the investments were not made by him or; if they were so made, then, why they were not made in a desired manner. At this stage, we may herein observe that the prudence of the assessee qua the manner of making of investments remains his sole prerogative and cannot be interfered with by the department. Insofar the invoking of the principle of preponderance of human probability is concerned, the same, in our considered view would come into play after disproving and dislodging to the hilt the documentary evidence that had been placed on record by the assessee to substantiate the genuineness of the transaction of purchase/sale of shares in question. Our aforesaid view that in the absence of any evidence, whatsoever, to allege that money had changed hands between the assessee and the broker or any other person, or that some person provided the entry to convert unaccounted money for getting benefit of LTCG, the unsubstantiated claim of the department that the assesseee had ITA No. 46 & others/CTK/2020 53 taken recourse to a structured transaction for evading his taxes and laundering his unaccounted money in the garb of exempt LTCG u/s 10(38) of the Act, cannot be accepted, is supported by the judgment of the Hon‟ble High Court of Delhi in the case of Pr. CIT & Ors. Vs. Krishna Devi & Ors. (2021) 110 CCH 9 (Del). In its aforesaid order it was observed by the Hon‟ble High Court, as under : 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a pre-planned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent's unaccounted money, but he did not dig deeper. Notices issued under Sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that "There is no dispute that the shares of the two ITA No. 46 & others/CTK/2020 54 companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjectures made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provision of Section 68 of the Act. It is recorded that “There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar v. ITO (supra) and Sumati Dayal v. CIT (supra) is of no assistance. Upon examining the judgment of Suman Poddar (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had ITA No. 46 & others/CTK/2020 55 returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal v. CIT (supra) too turns on its own specific facts. The above-stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue.” Also, a similar view had been taken by the Hon‟ble High Court of Bombay in the case of CIT Vs. Shyam R. Pawar (2015) 229 Taxman 256 (Bom). In its aforesaid judgment, the Hon‟ble High Court referring to the facts of the case before them observed, that while for the department had extensively referred to the correspondence and the contents of the report of the Investigation, what was however important and vital for the purpose of the present case was whether the transactions in shares were genuine or sham and bogus. It was observed by the Hon‟ble High Court, that if the purchase and sale of shares that were reflected in the assessee‟s de-mat account were to be termed as arranged transactions, and projected to be real, then, such conclusion of the CIT(A) and the A.O required a deeper scrutiny. It was further observed that the Tribunal had rightly concluded that there was something more which was required, which would connect the assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. Observing that the Tribunal after extensively referring to certain facts/documents, viz. the sale of 20,000 shares of Mantra Online Ltd for a total consideration of Rs.25,93,150/- by the assessee a/w the details as to how they were sold, on what dates and for what consideration, and the fact that the sale consideration was received vide account payee cheques; copy of de-mat account of the assessee showing the share transactions; contract notes of the brokers (which are system generated documents prescribed by the stock exchange) giving details of transactions; the Hon‟ble High Court observed that the Tribunal had rightly concluded that the transaction of purchase/sale of shares was not an accommodation transaction for conversion of cash into accounted or regular payment. Insofar the discrepancy as pointed out by the stock exchange as regards the client code was concerned, the Hon‟ble High Court upheld the view taken by the Tribunal that the same would not suffice to prove that the share transactions were bogus or sham. 13. We, thus, in the backdrop of our aforesaid deliberations are of the considered view that de hors any cogent material made available on record by the department which would prove to the hilt that the assessee had not carried out any genuine transaction of purchase/sale of shares of JMD Telefilms Industries Ltd. and, in the garb of bogus entry of a tax exempt LTCG u/s 10(38) of the Act, laundered his unaccounted money, the assessee‟s duly substantiated claim of having carried out genuine transaction of purchase/sale of shares of JMD Telefilms Industries Ltd. which is duly supported by him on the basis of documentary evidence, could not have been dislodged. Accordingly, for the reasons discussed at length by hereinabove, not finding favour with the view taken by the lower authorities, we herein set-aside the orders of the lower ITA No. 46 & others/CTK/2020 56 authorities qua treating the transaction of purchase/sale of shares of JMD Telefilms Industries Ltd. by the assessee as a bogus transaction and, consequently vacate the addition made by the A.O under Sec. 68 of Rs. 6,06,49,780/-. The Grounds of appeal Nos. 2 & 3 are allowed in terms of our aforesaid observations 19.9 We, therefore, respectfully following the above judicial precedence and discussion made hereinabove are satisfied that the assessee has fulfilled necessary conditions to claim the exemption u/s 10(38) of the Act for the Long Term Capital Gain earned from sale of equity shares of M/s Kailash Auto Finance Ltd. and M/s Lifeline Drugs & Pharma Ltd. Therefore, we hold that the assessee has rightly claimed the exemption u/s 10(38) of the Act before the conclusion of assessment proceedings. We, therefore, find no reason to interfere in the finding of ld. CIT(A) and the same is confirmed. Thus, ground no.3 & 6 raised by the revenue‟s appeals are dismissed. 20. Now we take up remaining revenue‟s appeals in ITANos.45 to 50/CTK/2020 and ITANo.38 to 41/CTK/2020 raising similar grounds of appeals as were raised in the case of Deepansu Mohapatra in ITANo.42 & 43/CTK/2020 for A.Y. 2014-15 & 2015-16 with the only difference of figures. The action of the Ld. AO and finding of Ld. CIT(A) are verbatim similar to one given in the case of assessee, Deepansu ITA No. 46 & others/CTK/2020 57 Mohapatra (supra). Since we have already adjudicated there issue in the case of Deepansu Mohapatra (supra), we apply our decision mutatis mutandis in other revenue‟s appeals in ITANos.45 to 50/CTK/2020 and ITANo.38 to 41/CTK/2020 and delete all the grounds raised by the revenue‟s appeals. 21. In the result, Appeals of the revenue in in ITANos.38 to 50/CTK/2020 are dismissed. Order pronounced in the open court on 21/12/ 2021. Sd/- (सी.एम.गगा) (C.M.GARG) Sd/- (मिीष बोरड़) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER कटक Cuttack; ददनाांक Dated 21/12/2021 Patel, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : आदेशाि ु सार/ BY ORDER, (Senior Private Secretary) 1. अऩीलाथी / The Appellant- 2. प्रत्यथी / The Respondent- ITO(TDS/TCS), Rourkela 3. आयकि आय ु क्त(अऩील) / The CIT(A), 4. आयकि आय ु क्त / CIT 5. ववभागीय प्रनतननधध, आयकि अऩीलीय अधधकिण, कटक / DR, ITAT, Cuttack 6. गार्ा पाईल / Guard file. सत्यावऩत प्रनत //True Copy//