Kiran Kothari HUF, Kolkata V. ITO, Ward 35(3), Kolkata, Kolkata

ITA 443/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0997 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 06-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained cash credit; Income from undisclosed sources; Question of law; Penny stocks
• Section: 133A; 68

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA () BEFORE .., /AND . ' # $%&% , ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] / I.T.A NO. 443/KOL/2017 / ASSESSMENT YEAR: 2013-14 KIRAN KOTHARI, (HUF) (PAN: AAGHK 9024 E) VS. INCOME-TAX OFFICER, WD-35(3), KOLKATA ( )* /APPELLANT ) ( +,)* / RESPONDENT ) DATE OF HEARING 01.09.2017 DATE OF PRONOUNCEMENT 15.11.2017 FOR THE APPELLANT/ )* SHRI MIRAJ D.SHAH FOR THE RESPONDENT/ +,)* SHRI SALLONG YADEN, ADDL. CIT, DR / ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-10, KOLKATA DATED 16.01.2017 FOR AY 2013-14. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL OF ASSESSEE IS AS TO WHETHER THE LONG TERM CAPITAL GAINS OF RS.24,87,605 ARISING OUT OF SALE O F QUOTED EQUITY SHARES CAN BE ASSESSED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT 1961 (HEREIN AFTER THE ACT) ON THE BASIS OF ADVERSE STATEMENTS RELIED ON BY THE AO. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A RESIDENT INDIVIDUAL AND FOR THE AY UNDER APPEAL I.E. 2013-14, RETURN WAS FILED ON 18/0 7/2014 DECLARING AN INCOME OF RS.7,70,950 AND IN THE SAID RETURN OF INCOME THE AS SESSEE CLAIMED TO HAVE EARNED LONG 2 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 2 TERM CAPITAL GAINS OF RS.24,87,605 ON SALE OF SHARE S OF M/S TUNI TEXTILE MILLS LTD. THE AO NOTED THAT THE ASSESSEE PURCHASED 13,500 SHARES OF TUNI TEXTILE MILLS LTD ON 06/04/2011 FROM A STOCK BROKER IN AN OFF-MARKET TRA NSACTION FROM M/S BADRI PRASAD & SONS WHO WAS A MEMBER OF THE CALCUTTA STOCK EXCHANG E. THESE SHARES WERE HELD IN THE DEMAT ACCOUNT OF THE ASSESSEE MAINTAINED WITH M/S C D EQUI SEARCH PRIVATE LIMITED AND WAS SOLD THROUGH THE CD EQUI SEARCH PRIVATE LIMITED A MEMBER OF THE MUMBAI STOCK EXCHANGE AND ON SUCH SALE SECURITY TRANSACTION TAX WAS DULY PAID. THE PAYMENTS WERE DULY RECEIVED IN THE BANK ACCOUNT OF THE ASSESSEE. THE AO FOUND THAT THERE WAS AN INVESTIGATION CONDUCTED AGAINST THIS COMPANY BY THE DIRECTOR OF INVESTIGATION AND AS PER THE REPORT SEVERAL COMPANIES WERE USED FOR PROV IDING BOGUS CAPITAL GAINS AND ONE SUCH COMPANY WAS TUNI TEXTILE MILLS LTD. THE AO HAD ISSUED NOTICE TO THE BROKER AND STOCK EXCHANGE TO VERIFY THE OFF-MARKET PURCHASE TR ANSACTION AND NO REPLY WAS RECEIVED IN RESPONSE TO THE SAID NOTICE. THE AO TOOK NOTE OF SIMILAR PATTERNS OF TRANSACTIONS CARRIED OUT BY OTHER COMPANIES WHICH WAS DETECTED B Y THE INVESTIGATION WING AND THE AO EXAMINED THE AUDITED ACCOUNTS OF TUNI TEXTILE MI LLS LTD AND FOUND THAT ON 25-01- 2010 THERE WAS A PREFERENTIAL ALLOTMENT OF THE SHAR ES OF THIS COMPANY RAISING RS.7.5 CRORE. THE AO FOUND THAT THE SHARE PRICE OF THE CO MPANY INCREASED FROM RS.34.50 TO RS.269.50 I.E. THERE WAS A RISE OF 681% IN THE SHAR E PRICE OF THE COMPANY AND THE AO ALSO FOUND THAT THERE WAS INCREASE IN SHARE TRADING VOLUME DURING THE PERIOD. THE AO FOUND THAT THERE WAS A SURVEY U/S 133A OF THE ACT O N THE COMPANY ON 02.06.2015 AND IN THE SURVEY A DEPOSITION WAS TAKEN, WHEREIN THE M ANAGING DIRECTOR OF THE COMPANY SRI NP SUREKHA WAS EXAMINED; AND THE SRI NP SUREKHA STATED THAT 47 PERSONS WERE ALLOTTED PREFERENCE SHARES ON 25/01/2010 AND A SUM OF RS.7.50 CRORE WAS RAISED BY THE COMPANY. ACCORDING TO HIM, THIS ENTIRE DEAL WAS DON E BY ONE SRI MANISH BAID; AND THEN THESE 47 INVESTORS USED THE SHARES ALLOTTED TO THEM TO SELL THE SAME AT JACKED UP PRICES AND THUS THEY EARNED BOGUS LONG TERM CAPITAL GAINS FROM SUCH TRANSACTIONS WHICH WAS STAGE MANAGED BY SRI MANISH BAID. THE AO THUS C ONCLUDED THAT THE TRANSACTION OF 3 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 3 THE ASSESSEE WAS ALSO A PART OF THE BOGUS TRANSACTI ONS AND THE SAME WAS ACCORDINGLY HELD TO BE UNEXPLAINED CASH CREDIT AND ASSESSED U/S 68 O F THE ACT. 4. ON APPEAL, THE LD CIT (A) UPHELD THE DECISION O F THE AO AND IN HIS ORDER, HE REPRODUCED THE BALANCE SHEET AND PROFIT LOSS ACCOUN T OF THE SAID COMPANY FOR THE PERIOD 31-03-2011 TO 31-03-2015 AND HE CONCLUDED THAT THE COMPANY HAD POOR FINANCIALS AND THUS IT DID NOT JUSTIFY THE PRICE RISE. THE LD CIT( A) ALSO REPRODUCED THE STATEMENT RECORDED IN THE SURVEY PROCEEDINGS. THE LD CIT(A) C ONSIDERING THE STATEMENT HELD THAT THE ADDITION MADE BY THE AO DESERVES TO BE UPHELD A ND HE ACCORDINGLY UPHELD THE SAME. 5. AGGRIEVED BY THE AFORESAID ORDER PASSED BY THE L D. CIT(A) UPHOLDING THE ADDITION OF RS.24,87,605, THE ASSESSEE HAS PREFERRED THIS APPEA L BEFORE US SEEKING RELIEF FOR DELETION OF THE ADDITION AND DIRECTING THE AO TO TREAT THE C APITAL GAINS AS EXEMPT U/S 10(38) OF THE ACT. 6. THE LD AR SUBMITTED THAT THE ADDITION MADE BY TH E AO AND UPHELD BY THE LD CIT (A) WAS BASED ON SURMISES, PRESUMPTIONS AND SUSPICI ON ALONE AND ARE THEREFORE PERVERSE. IN THE COURSE OF HEARING OF THE CASE, TH E LD AR REFERRED TO VARIOUS DOCUMENTARY EVIDENCES FURNISHED IN THE PAPER BOOK I N SUPPORT OF THE CLAIM OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIO NS RELATING TO LTCG ON SALE OF SHARES. THE DOCUMENTARY EVIDENCES INCLUDED THE FOLLOWING: (I) BALANCE SHEET OF THE ASSESSEE FOR FY 2011-2012 WHEREIN THE INVESTMENT MADE IN SHARES WERE DULY RECORDED AND REFLECTED. (II) THE BILLS FOR PURCHASE OF THE SHARES OF MS TU NNI TEXTILE MILLS LTD (III) COPY OF DEMATE STATEMENT MAINTAINED WITH MS CD EQUISEARCH P LTD WHERE THE SHARES WERE HELD. (IV) COPY OF CONTRACT NOTES ISSUED BY CD EQUISEARCH P LTD, MEMBER OF MUMBAI STOCK EXCHANGE HAVING SEBI REGISTRATION NO INB 0107 81133 AND CODE NO 087. 4 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 4 (V) THE BANK STATEMENT OF THE MAINTAINED WITH BANK OF MAHARASTRA REFLECTING THE PAYMENT RECEIVED FOR THE SALE OF SHARES. 7. THE SUBMISSIONS OF THE LD AR ARE SUMMARIZED AS F OLLOWS: (A) THAT THE ASSESSEE HAD NOT PURCHASED THE SHARES BY THE PREFERENCE SHARE ROUTE. THE ALLOTMENT MADE IN PREFERENCE SHARE WAS O N 25-01-2010 WHILE THE ASSESSEE PURCHASED THE SHARES ON 06-04-2011 THROUGH THE BROKER. (B) THAT THE TRANSACTIONS OF PURCHASE OF SHARES WE RE NOT DOUBTED BY THE AO IN THE YEAR OF PURCHASE I.E AY 2010-2011. THE OFF MARK ET TRANSACTION FOR PURCHASE OF SHARES IS NOT ILLEGAL AS WAS HELD BY THE DECISIO N OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DOLARRAI HEMANI VS. ITO IN ITA NO. 19/KOL/2014 DATED 2.12.2016 . THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE C HEQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE OF SHARES AND THE SALE OF SHARES WERE ALSO REFLECTED IN DEMAT ACCOUNT STATEMENTS. TH E SALE OF SHARES SUFFERED STT, BROKERAGE ETC. (C) THE AR ALSO STATED THAT AS THE SALE WAS MADE O N THE ONLINE PLATFORM OF THE STOCK EXCHANGE IT WAS HIS SUBMISSION THAT THE ASSES SEE DID NOT KNOW THE NAMES OF THE BUYERS AND HAS NO CONNECTION AND/OR RELATIONS W ITH ANY SUCH PERSONS. THE TRANSACTIONS OF SALE OF SHARES WERE ONLINE TRADING SYSTEM THROUGH HIS BROKER FROM WHOM HE RECEIVED THE SALE CONSIDERATION. THE BROKER ALSO RECEIVES PAYMENTS FOR ALL HIS TRANSACTIONS FROM STOCK EXCHANGE. THE SELLE R AND THE BUYER CANNOT KNOW THE NAMES OF EACH OTHER AS WELL AS THEIR RESPECTIVE BROKERS, WHO WERE INVOLVED IN THE TRADING TRANSACTIONS IN THE SECONDARY PLATFORM. IN SUCH A SITUATION ACCORDING TO LD AR, IT CANNOT BE PRESUMED THAT THERE COULD BE ANY TRANSFER OF CASH BETWEEN THE BUYERS AND SELLERS TO CONVERT THE UNACCOUNTED M ONEY OF THE BENEFICIARIES AS ALLEGED BY THE AO. THE LD AR REFERRED TO THE JUDGE MENT OF HONBLE BOMBAY 5 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 5 HIGH COURT IN THE CASE OF CIT VS. LAVANYA LAND PVT. LTD. [2017] 83 TAXMANN.COM 161 (BOM) TO CONTEND THAT THERE WAS NO EVIDENCE WHATSOEVER T O ALLEGE THAT MONEY CHANGED HANDS BETWEEN THE ASSESSE E AND THE BROKER OR ANY OTHER PERSON INCLUDING THE ALLEGED EXIT PROVIDER WH ATSOEVER TO CONVERT UNACCOUNTED MONEY FOR GETTING BENEFIT OF LTCG AS AL LEGED. IN THE SAID CASE, THE HONBLE HIGH COURT AT PARA 21 HELD THAT IN ABSENCE OF ANY MATERIAL TO SHOW THAT HUGE CASH WAS TRANSFERRED FROM ONE SIDE TO ANOTHER, ADDITION CANNOT BE SUSTAINED. (D) THAT THE BROKERS AND PERSONS NAMED IN THE STATE MENT OF THE MD OF THE COMPANY WHICH WAS RECORDED IN THE SURVEY PROCEEDING S OF THE DEPARTMENT DID NOT CONTAIN THE NAME OF THE ASSESSEE, NOR HIS BROKE R AND NOR DID THE ASSESSEE KNOW ANY OF THE PERSONS NAME THEREIN. (E) THE LD AR SUBMITTED THAT ALL THE OBSERVATIONS, CONCLUSIONS AND FINDINGS OF THE LOWER AUTHORITIES ARE BASED ON SUSPICION, SURMISES AND HEARSAY. ACCORDING TO LD AR, IT IS TRITE LAW THAT THE SUSPICION HOWSOEVER ST RONG CANNOT PARTAKE THE CHARACTER OF LEGAL EVIDENCE. REFERENCE WAS MADE TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT (1959) 37 ITR 288 (SC, , UMACHARAN SHAW 37 ITR 271 AND OMAR S ALAY MOHAMED SAIT 37 ITR 151 . THE LD AR SUBMITTED THAT THE ENTIRE CASE OF THE R EVENUE IS BASED UPON THE PRESUMPTION THAT THE ASSESSEE HAS PLOUGHED BACK HIS OWN UNACCOUNTED MONEY IN THE FORM OF BOGUS LTCG. HOWEVER, THIS PRESUMPTIO N OR SUSPICION HOW SO EVER STRONG IT MAY APPEAR TO BE, BUT NEEDS TO BE CORROBO RATED BY SOME EVIDENCE TO ESTABLISH A LINK THAT THE ASSESSEE HAD BROUGHT BACK HIS UNACCOUNTED INCOME IN THE FORM OF LTCG. THE LD AR REFERRED TO THE JUDGEMENT O F SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF GTC INDUSTRIES LTD. VS. ACI T [2017] 164 ITD 1 (MUMBAI-TRIB.)(SB). 6 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 6 (F) THE LD AR DREW OUR ATTENTION TO THE FACT THAT N EITHER THE STATEMENT RELIED ON BY THE AUTHORITIES BELOW WERE PROVIDED TO THE ASSESSEE NOR ANY CROSS EXAMINATION WAS ALLOWED TO PROVE THE VERACITY OF THE STATEMENT. THE LD AR DREW OUR ATTENTION TO THE FACT THAT IN THE STATEMENT OF THIRD PARTY, T HE NAME OF THE ASSESSEE WAS NOT IMPLICATED. EVEN OTHERWISE, ACCORDING TO LD AR, NO ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE ON THE BASIS OF UNTESTED STATEMENTS WITHOUT ALLOWING OPPORTUNITY OF CROSS-EXAMINATION. THE LD AR REFERRE D TO AND RELIED ON THE FOLLOWING JUDGEMENTS IN SUPPORT OF THE AFORESAID SU BMISSIONS:- (I) ANDMAN TIMBER INDUSTRIES VS. CCE [2015] 62 TAXMAN N.COM 3 (SC) (II) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 (AGRA ITAT) (III) ACIT VS. AMITA AGARWAL & OTHERS ITA NO. 247/(KOL) OF 2011 (KOL ITAT) (IV) ITO VS. BIJAYA GANGULY - ITA NOS. 624 & 625/KOL/20 11 (KOL ITAT) (V) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (VI) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VII) MALTI GHANSHYAMBHAI PATADIA VS. ITO - ITA NO.3400/ AHD/2015 (AHMEDABAD ITAT) (VIII) PRATIK SURYAKANT SHAH VS. ITO [2017] 77 TAXMANN.C OM 260 (AHMEDABAD ITAT) (IX) SUNITA JAIN VS. ITO - ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (X) ATUL KUMAR KHANDELWAL VS. DCIT ITA NO. 874/DEL/20 16 (DELHI ITAT) (XI) FARAH MARKER VS. ITO ITA NO. 3801/MUM/2011 (MUMBA I ITAT) 7 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 7 (G) THAT ACCORDING TO LD AR, THE STATEMENT RECORDED UNDER OATH DURING SURVEY PROCEEDINGS HAS NO EVIDENTIARY VALUE AND HENCE THE SAME CANNOT BE USED AGAINST THE ASSESSEE. THE LD AR REFERRED TO AND RELIED ON T HE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS S KHADER KHAN SONS REPORTED IN (2012) 210 TAXMAN 248 (SC) WHEREIN IT WAS HELD THAT THE STATEM ENT RECORDED ON OATH U/S 133A OF THE ACT HAS NO EVIDENTIARY VALUE, SINCE DUR ING SURVEY, AUTHORITIES UNDER THE ACT HAS NOT BEEN EMPOWERED TO ADMINISTER OATH A ND SO ANY ADMISSION MADE DURING SUCH STATEMENT CANNOT BE MADE THE SOLE BASIS OF ADDITION. (H) THE LD AR RELIED ON THE FOLLOWING DECISIONS AND THE SUMMARIZED THEIR RATIO AS HELD IN THE SAID DECISIONS: (I) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER W AS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BROKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. (II) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM ED THE DECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUN AL ALLOWED THE APPEAL OF THE ASSESSEE WHERE THE LD AO DID NOT ACCEPT THE EXP LANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STO CKS. THE TRIBUNAL FOUND THAT THE LD AO DISALLOWED THE LOSS ON TRADING OF PE NNY STOCK ON THE BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS A LSO FOUND THAT THE LD AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS S UBMITTED BY THE 8 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 8 ASSESSEE. THE TRIBUNAL HELD THAT THE LD AOS CONCLU SIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILE D BY THE REVENUE WAS DISMISSED. (III) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIR MED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFF ERED BY THE ASSESSEE WAS ALLOWED SINCE THE LD AO FAILED TO BRING ON RECORD A NY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GE NUINE. (IV) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCOME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE LD AO, BASED ON THE INFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECOR DED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. TH E HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL W HEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES , DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENT S WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APP EAL OF THE REVENUE WAS SUMMARILY DISMISSED BY HIGH COURT. (I) THE AR DREW OUR ATTENTION TO THE DECISION OF T HE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PR CIT VS RUNGTA PROPERTIES PR IVATE LIMITED ITAT NO 105 OF 2016 DATED 8 TH MAY 2017 WHEREIN IT WAS HELD: 9 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 9 (11) ON THE LAST POINT, THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT BROUGHT ON RECORDS ANY MATERIAL TO SHOW THA T THE TRANSACTIONS IN SHARES OF THE COMPANY INVOLVED WERE FALSE OR FICTITIOUS. IT IS FINDING OF THE ASSESSING OFFICER THAT THE SCRIPS OF THIS COMPANY WAS EXECUTED BY A BROKER THROUGH CROSS DEAL S AND THE BROKER WAS SUSPENDED FOR SOME TIME. IT IS ASSESSEE S CONTENTION ON THE OTHER THAT EVEN THOUGH THERE ARE ALLEGATIONS AG AINST THE BROKER, BUT FOR THAT REASON ALONE THE ASSESSEE CANNOT BE HE LD LIABLE. ON THIS POINT THE TRIBUNAL HELD AS A MATTER OF FACT THE AO DOUBTED THE INTEGRITY O F THE BROKER OR THE MANNER IN WHICH THE BROKER OPERATION AS PER THE STATEMENT OF ONE OF THE DIRECTORS OF THE BROKER FIRM AND ALSO AO OBSERVED THAT ASSESSEE HAD NOT FURNISHED AN Y EXPLANATION IN RESPECT OF THE INTENTION OF SHOWING TRADING OF SHARES ONLY IN THREE PENNY STOCKS. AO RELIED THE LO SS OF RS.25,30,396/- ONLY ON THE BASIS OF INFORMATION SUB MITTED BY THE STOCK FICTITIOUS. AO HAS ALSO NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS PLACED ON RECORD BY TH E ASSESSEE. AOS OBSERVATION AND CONCLUSION ARE MEREL Y BASED ON THE INFORMATION REPRESENTATIVE. THEREFORE ON SUCH BASIS NO DISALLOWANCE CAN BE MADE AND ACCORDINGLY W E FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A), WHO HAS RI GHTLY ALLOWED THE CLAIM OF ASSESSEE. THUS GROUND NO. 1 OF THE REVENUE IS DISMISSED. WE AGREE WITH THE REASONING OF THE TRIBUNAL ON THIS POINT ALSO. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGN ED ORDER. THE SUGGESTED QUESTIONS, IN OUR OPINION DO NOT RAISE AN Y SUBSTANTIAL QUESTION OF LAW. (J) THE AR DREW OUR ATTENTION TO THE DECISION OF T HE HONBLE HIGH COURT AT CALCUTTA IN THE CASE OF ALPINE INVESTMENTS ITA 620 OF 2008DATED 26 TH AUGUST 2008 WHEREIN THE HONBLE COURT HELD AS FOLLO WS: IT APPEARS THAT THE SHARE LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCKBROKER OF THE CALCUTTA STOCK EXCHAN GE AND ALL THE PAYMENTS MADE TO THE STOCKBROKER AND ALL THE PAYMEN TS RECEIVED 10 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 10 FROM STOCKBROKER THROUGH ACCOUNT PAYEE INSTRUMENTS, WHICH WERE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME THE TRIBUNAL CAME TO T HE CONCLUSION AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. IN DO ING SO, THE TRIBUNAL HELD THAT THE TRANSACTION FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCES COULD NOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER, IT WAS HELD THAT THE TRANSAC TIONS OF SHARE ARE GENUINE. THEREFORE, WE DO NOT FIND THAT THERE I S ANY REASON TO HOLD THAT THERE IS ANY SUBSTANTIAL QUESTION OF LAW INVOLVED IN THIS MATTER. HENCE, THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. (K) THE LD AR CONCLUDED THAT WHERE THE PURCHASE AND SALE TRANSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATE MENTS AND BANK STATEMENTS ETC., THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTE D BY THE AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BA SIS OF SOME REPORTS OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR , IN ADDITION TO THE AFORESAID JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLO WING CASES:- (I) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (II) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (IV) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (V) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VI) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (VII) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) 11 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 11 (IX) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (X) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XI) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XII) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XIII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XIV) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XVI) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XVII) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XVIII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XIX) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) (L) THE LD AR FURTHER SUBMITTED BEFORE US THAT ONC E THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADESH [1977] 1 SCC 816 (SC) . IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNER ALWAYS RESTS ON THE PER SON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EV IDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ES TABLISH CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMST ANCES WHICH MIGHT CREATE 12 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 12 SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BA SIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. AS PER TH E LD AR THE AO/ CIT(A) WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT TO HOLD THAT THE SALE PROCEEDS OF SHARES. THERE IS NO EVIDENCE ON RE CORD TO DISBELIEVE THAT THE ASSESSEE SOLD SHARES THROUGH REGISTERED SHARE AND S TOCK BROKER WITH CSE. THE ASSESSEE PRODUCED ALL EVIDENCES TO EXPLAIN THE SOUR CE OF THE AMOUNTS RECEIVED BY THE ASSESSEE FROM THE BROKERS. THE AO WAS NOT JUSTI FIED IN ASSESSING THE SALE PROCEEDS OF SHARES AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 8. ON THE OTHER HAND, THE LD. DR VEHEMENTLY OPPOSE D THE PLEA OF THE LD. AR AND RELIED ON THE DECISION OF THE LD CIT(A) AND THE AO AND URGED BEFORE THE BENCH NOT TO INTERFERE WITH THE ORDER OF THE LD CIT (A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS. WE NOTE THAT IN THE PRESENT CASE, THE APPELLANT HAD PURCHASED 13500 SHA RES OF M/S. TUNI TEXTILE MILLS PRIVATE LIMITED ON 06.04.2011 FROM A STOCK BROKER IN OFF-MARKET TRANSACTIONS FROM M/S BADRI PRASAD & SONS, WHO WAS A MEMBER OF CALCUTTA STOCK EXCHANGE. THESE SHARES WERE HELD IN THE DEMAT ACCOUNT OF THE ASSESSEE MAIN TAINED WITH M/S CD EQUISEARCH PVT. LTD , A MEMBER OF MUMBAI STOCK EXCHANGE AND U LTIMATELY THESE SHARES WERE SOLD THROUGH M/S. CD EQUISEARCH AND ON SUCH SALE, SECURI TY TRANSACTION TAX WAS DULY PAID. PAYMENTS WERE DULY RECEIVED IN THE BANK ACCOUNT OF THE ASSESSEE. WE TAKE NOTE THAT THE PURCHASE OF SHARES BY OFF-MARKET TRANSACTIONS FOR P URCHASE OF SHARES IS NOT ILLEGAL AS WAS HELD BY THE COORDINATE BENCH OF THIS TRIBUNAL IN TH E CASE OF DOLARRAI HEMANI VS ITO IN ITA NO.19/KOL/2014 DATED 02.12.2016. THE TRANSACTIO NS WERE ALL THROUGH A REGISTERED BROKER (PAGES 18 AND 19 OF THE PAPER BOOK), BACKED BY A CONTRACT NOTE (PAGE 22 OF THE PAPER BOOK) AND SHARES WERE CREDITED IN THE DEMAT A CCOUNTS (PAGE 25 OF THE PAPER BOOK) AND DULY REFLECTED IN THE BOOKS OF ACCOUNT. IN THE LIGHT OF THESE EVIDENCES ON RECORD WE ARE OF THE OPINION THAT THE PURCHASE OF SHARES PER- SE CANNOT BE HELD TO BE BAD. 13 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 13 9.1. WE NOTE THAT THERE WAS A SURVEY CONDUCTED U/S 133A OF THE ACT BY THE MUMBAI INVESTIGATION WING AGAINST M/S. TUNI TEXTILE MILLS PVT. LTD ON 02.06.2015 AND IN THE SURVEY A DEPOSITION WAS TAKEN ON OATH WHEREIN THE MANAGING DIRECTOR OF THE SAID COMPANY SHRI N.P.SUREKHA WAS EXAMINED AND HE STATED THAT 47 PERSONS WERE ALLOTTED PREFERENCE SHARES ON 25.01.2010 AND A SUM OF RS.7.5 0 CRORES WAS RAISED BY THE COMPANY. HE FURTHER SUBMITTED THAT THIS ENTIRE DEAL WAS DONE BY ONE SHRI MANISH BAID AND THEN THESE 47 INVESTORS USED THE SHARES ALLOTTE D TO THEM, SOLD THE SAME AT JACKED UP PRICE AND IN THE PROCESS THEY EARNED BOGUS LONG TER M CAPITAL GAIN FROM SUCH TRANSACTIONS WHICH WAS STAGE MANAGED BY SHRI M.BAID. BASED ON TH IS STATEMENT, THE LOWER AUTHORITIES CONCLUDED THAT THE TRANSACTIONS OF THE ASSESSEE WERE ALSO PART OF THE BOGUS TRANSACTIONS AND THE SAME WAS ACCORDINGLY HELD TO B E UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. WE DO NOT SUBSCRIBE TO THE SAID VIEW TAKEN BY THE AUTHORITIES BELOW FOR THE REASONS STATED BELOW:- WE NOTE THAT THE ASSESSEE WAS NOT A PART OF 47 PERS ONS, WHO THE MANAGING DIRECTOR HAS NAMED IN THE LIST OF 47 PERSONS AND WE ALSO NOTE THAT THERE IS NO MATERIAL TO REMOTELY SUGGEST THAT THE ASSESSEE DEALT WITH THE SAID ENTRY OPERATOR SHRI MANISH BAID, WHO IS SAID TO HAVE STAGE MANAGED AND UNDERTAKEN TH E ENTIRE TRANSACTIONS. WE ALSO FIND THAT THE ASSESSEE HAS NOT DEALT WITH ANY PERSON OR BROKER NAMED IN QUESTION NO.28 OF THE STATEMENT WHICH HAS BEEN RECORDED ON OATH BY THE SURVEY TEAM AND WHICH HAS BEEN REPRODUCED BY THE LD. CIT(A) FROM PAGES 31 TO 36 OF THE IMPUGNED ORDER(QUESTION NO.28 FINDS PLACE IN PAGE-35 OF THE IMPUGNED ORDER) . WE THEREFORE FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT THE STATEMENT RECO RDED ON OATH DURING THE SURVEY CANNOT BE THE SOLE BASIS FOR ADVERSE FINDING AGAINS T THE ASSESSEE. FOR THIS WE RELY ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS KHADER KHAN SON 352 ITR 480 (SC) WHEREIN IT HAS BEEN HELD THAT SECTION 133A (SURVEY) DOES NOT EMPOWER ANY INCOME TAX AUTHORITIES TO EXAMINE ANY PERSON ON OAT H, HENCE ANY SUCH STATEMENT LACKS EVIDENTIARY VALUE AND ANY ADMISSION MADE DURING THE SURVEY CANNOT BY ITSELF BE MADE THE BASIS OF ADDITION. WE THEREFORE HOLD THAT THE S TATEMENT OF SHRI N.P.SUREKHA RECORDED 14 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 14 ON OATH DURING THE SURVEY PROCEEDINGS CANNOT BE THE SOLE BASIS TO MAKE THE IMPUGNED ADDITION. WE NOTE THAT THE ASSESSEE HAD NOT PURCHASED THE SHA RES BY THE PREFERENCE SHARE ROUTE AS STATED BY THE PARTY BEFORE THE SURVEY PARTY. THE ALLOTMENT MADE IN PREFERENCE SHARE WAS ON 25-01-2010, WHEREAS THE ASSESSEE PURCHASED THE SHARES ON 06- 04-2011 THROUGH THE BROKER . ( I.E AFTER MORE THAN ONE YEAR AND THREE MONTHS) WE FIND THAT THE TRANSACTIONS OF CAPITAL GAINS AS CLAIMED B Y THE ASSESSEE WAS DULY BACKED BY RELEVANT DOCUMENTARY EVIDENCES WHICH INCLUDE THE FO LLOWING :- (I)THE BALANCE SHEET OF THE ASSESSEE FOR THE FINAN CIAL YEAR 2011-12 WHEREIN THE INVESTMENT MADE IN THESE SHARES WERE DULY RECORDED AND REFLECTED (PAGE 16 OF THE PAPER BOOK); II) THE BILLS OF PURCHASE OF SHARES OF M/S. TUNI T EXTILE MILLS PVT. LTD (PAGE 18 OF THE PAPER BOOK) III)COPY OF THE DEMAT STATEMENT MAINTAINED WITH M/S . CD EQUI SEARCH WHERE THE SHARES WERE HELD (PAGE 24 OF THE PAPER BOOK) IV) COPY OF THE CONTRACT NOTES ISSUED BY M/S. CD EQ UI SEARCH LTD, MEMBER OF MUMBAI STOCK EXCHANGE HAVING SEBI REGISTRATION NO.INB01078 1133 AND CODE NO.087 (PAGE 19 TO 22 OF THE PAPER BOOK V) THE BANK STATEMENT MAINTAINED BY THE ASSESSEE WI TH BANK OF MAHARSHTRA REFLECTING THE PAYMENT RECEIVED FOR THE SALE OF SHARES (PAGE 2 3 OF THE PAPER BOOK). 9.2. WE FIND FORCE IN THE CONTENTIONS OF THE LD . AR THAT THE AO AND CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCE, HUMAN CONDUCT AND PREPONDERANCE OF PR OBABILITY WITHOUT BRINGING ON RECORD ANY RELEVANT LEGALLY ADMISSIBLE EVIDENCE AGA INST THE ASSESSEE. FOR THE SAID PROPOSITION WE RELY ON THE JUDGMENT OF THE SPECIAL BENCH OF MUMBAI BENCH IN THE CASE OF GTC INDUSTRIES LTD. (SUPRA). THE VARIOUS FACETS OF THE CONTENTION OF THE AO, TO ROPE IN THE ASSESSEE FOR DRAWING ADVERSE INFERENCES WHIC H REMAIN UNPROVED BASED ON THE 15 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 15 EVIDENCE AVAILABLE ON RECORD ARE NOT REITERATED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOUS CASE LAWS RELIED UPON BY THE L D. AR ARE ALSO NOT REITERATED FOR THE SAKE OF BREVITY. WE FURTHER FIND THAT NEITHER THE R EPORTS RELIED ON BY THE AO HAS NOT BEEN BROUGHT ON RECORD NOR IS THERE ANY REFERENCE OF FIN DING OF SUCH REPORT TO IMPUTE THE ASSESSEE IS THERE ON RECORD. THE AO HAS MERELY CARV ED OUT CERTAIN FEATURES/MODUS- OPERANDI OF COMPANIES INDULGING IN PRACTICES NOT SA NCTIONED BY LAW AND AS MENTIONED IN SUCH REPORT. HOWEVER, WE NOTE THAT NEITHER ANY INVE STIGATION WAS CARRIED OUT AGAINST THE ASSESSEE NOR AGAINST THE BROKERS TO WHOM THE ASSESS EE DEALT WITH THE PURCHASE AND SALE OF SHARES IN QUESTION. THUS THE AO HAS FAILED TO BR ING ON RECORD ANY MATERIAL CONTAINED IN THE PURPORTED REPORTS WHICH ARE HAVING SO CALLED ADVERSE IMPACT ON THE ASSESSEE. WE FURTHER FIND THAT THE COMPANY UNDER SCANNER WAS HAV ING SHARE CAPITAL AS ON 31.03.2013 OF RS.13.18 CRORES AND WAS HAVING ASSETS WORTH RS.2 4.25 CRORES AND A TURN OVER OF RS.19.32 CRORES AND PROFIT OF RS.1.35 CRORES. THUS THE ALLEGATION THAT THESE COMPANIES DID NOT HAVE FINANCIAL CREDENTIALS IS NOT CORRECT A ND SO IS PERVERSE AND THEREFORE WE DO NOT SUBSCRIBE TO THE SAID FINDING AND NECESSARILY N EGATE THE FINDING. AT THE COST OF REPETITION, WE FIND THAT THE TRANSAC TIONS OF SALE OF SHARES BY THE ASSESSEE WAS DULY BACKED UP BY MATERIAL/EVIDENCE IN CLUDING CONTRACT NOTES, DEMAT STATEMENT, BANK ACCOUNT REFLECTING TRANSACTIONS, TH E STOCK BROKERS HAVE CONFIRMED THE TRANSACTIONS (PAGES 24-25 OF THE PAPER BOOK), THE S HARES HAVING BEEN SOLD ON THE ONLINE PLATFORM OF THE STOCK EXCHANGE AND EACH TRADE OF SA LE OF SHARES WERE HAVING UNIQUE TRADE NUMBER AND TRADE TIME. IT IS NOT THE CASE OF THE AO THAT THE SHARES WHICH WERE SOLD ON THE DATE MENTIONED IN THE CONTRACT NOTE WERE NOT THE TRADED PRICE ON THAT PARTICULAR DATE. THE AO DOUBTED THE TRANSACTIONS DUE TO THE HI GH RISE IN THE STOCK PRICE AND FOR THAT THE ASSESSEE CANNOT BE BLAMED UNLESS THERE WAS ANY MATERIAL/EVIDENCE TO PROVE THAT THE ASSESSEE OR ANY ONE ON HIS BEHALF HAS RIGGED THE ST OCK PRICE. IT SHOULD BE NOTED THAT THE STOCK EXCHANGE AND SEBI ARE THE STATUTORY AUTHORITI ES APPOINTED BY THE GOVT. OF INDIA TO ENSURE THAT THERE IS NO STOCK RIGGING OR MANIPUL ATION. THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT THESE AGENCIES HAVE ALLEGED ANY STOCK MANIPULATION 16 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 16 AGAINST THE ASSESSEE OR THE BROKERS OR THE COMPANY IN QUESTION. IN ABSENCE OF ANY EVIDENCE TO BACK THE CONCLUSION OF AO/CIT(A), IT CA NNOT BE SAID THAT MERELY BECAUSE THE STOCK PRICE MOVED SHARPLY, THE ASSESSEE WAS TO BE BLAMED FOR BOGUS TRANSITIONS. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE HAS PURCHA SED THE STOCKS THROUGH REGISTERED BROKERS AND THEREAFTER THE ASSESSEE HAS SOLD THE S HARES THROUGH THE REGISTERED SHARE/STOCK BROKERS WITH CALCUTTA STOCK EXCHANGE, A ND BOTH HAVE CONFIRMED THE TRANSACTIONS AND HAVE ISSUED VALID CONTRACT NOTES A S PER LAW; AND IN SIMILAR CASE, THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPA L CIT VS RUNGTA PROPERTIES IN ITA NO.105 OF 2016 DATED 08 MAY, 2017 WHEREIN IT WAS HE LD THAT ON THE LAST POINT, THE TRIBUNAL HELD THAT THE AO HAD NOT BROUGHT RELEVANT MATERIAL TO SHOW THAT THE TRANSACTIONS IN SHARES OF THE COMPANY INVOLVED WERE FALSE OR FICTITIOUS. IT IS THE FINDING OF THE AO THAT THE SCRIPTS OF THIS COMPANY WAS EXEC UTED BY A BROKER AND THE BROKER WAS SUSPENDED FOR SOME TIME. IT IS THE ASSESSEES CONTE NTION THAT EVEN THOUGH THERE ARE ALLEGATIONS AGAINST THE BROKER, AND FOR THAT REASON THE ASSESSEE CANNOT BE HELD LIABLE ON THIS POINT, THE TRIBUNAL HELD THAT AS A MATTER OF FACT THE AO DOUBTED THE INTEGRITY O F THE BROKER AND THE BROKER FIRM AND ALSO AO OBSERV ED THAT THE ASSESSEE HAD NOT FURNISHED ANY EXPLANATION IN RESPECT OF ANY DISCUSSION OF TRADING OF SHARES. THE AO RELIED THE LOSS OF RS.25,30,396/- ONLY ON THE BA SIS OF INFORMATION SUBMITTED BY STOCK AS FICTITIOUS . THE AO HAS ALSO NOT DOUBTED THE GENUINENESS OF THE DOCU MENTS PLACED BY THE ASSESSEE ON RECORD. THE AOS OBSERVATION AND CONCLUSION ARE MERELY BASED ON INFO RMATION. THEREFORE ON SUCH BASIS, NO DISALLOWANCE CAN BE MADE AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY ALLOW ED THE CLAIM OF THE ASSESSEE. THIS GROUND NO.1 OF THE REVENUE IS DISMISSED. WE AGREE WITH THE REASONING OF THE TRIBUNAL ON THIS POINT ALSO. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. THE SU GGESTED QUESTION, IN OUR OPINION DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. 9.3. IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I T O V) IN PAGE14(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICAT E THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAND AND THEREFO RE HAS TO FALL. WE TAKE NOTE THAT THE 17 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 17 LD. DR COULD NOT CONTROVERT THE FACTS WHICH ARE SUP PORTED WITH MATERIAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND C OULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT THE ALLEGATIONS THAT THE AS SESSE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE CONSE QUENTLY FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACC OUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF S HARES RESULTING IN LONG TERM CAPITAL GAIN. NEITHER THESE EVIDENCES WERE FOUND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE EXEMPTED U/S 10(38) OF THE ACT ON THE BASIS OF SUSP ICION, SURMISES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRON G, CANNOT PARTAKE THE CHARACTER OF LEGAL EVIDENCE. IN THE AFORESAID FACTS AND CIRCUMST ANCE, FOR ALLOWING THE APPEAL WE RELY ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INVESTMENTS IN ITA NO.620 OF 2008 DATED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOWS : IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCK BROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECE IVED FROM THE SHARE BROKER THROUGH ACCOUNT PAYEE WHICH ARE ALSO FILED IN ACCOR DANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLA CED BEFORE THE TRIBUNAL AND AFTER EXAMINING THE SAME, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESSEE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANS ACTIONS CANNOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER IT WAS HELD THAT TH E TRANSACTIONS OF THE SHARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS NO SUBSTANTIAL QUESTION OF LAW HELD IN THIS MATTER. HE NCE THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. 18 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF A.Y.2013-14 18 9.4. WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY B EEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO S UPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTA NCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE AC T. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 TH NOVEMBER, 2017 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :15TH NOVEMBER, 2017 RG.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT KIRAN KOTHARI (HUF), C/O D.J.SHAH & CO. , KALYAN BHAWAN, 2, ELGIN ROAD, KOLKATA-700020. 2 RESPONDENT ITO, WARD-35(3), KOLKATA 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECY.,