Pratap Bajaj, Indore V. ITO-4(1) Indore, Indore

ITA 489/Ind/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0181 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 22-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NISHA LAHOTI A RS
• Keywords: Principle of natural justice; Earning of tax free income; Question of law; Accommodation entries; Benefit of exemption; Penny stocks; Set aside; Capital Gains
• Section: 143(3); 142(1); 201; 143(2); 13; 68; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE RAJPAL YADAV, VICE PRESIDENT AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING ITA NO.39/IND/2019 ASSESSMENT YEAR 2014-15 SMT. MANORAMA DEVI SHARMA : APPELLANT DF23, SANATAN HOUSE, VIJAY NAGAR S. NO.74C, INDORE PAN : ASPPS5538J V/S ITO-3(1), INDORE : RESPONDENT ITA NO.489/IND/2019 ASSESSMENT YEAR 2014-15 SHRI PRATAP BAJAJ : APPELLANT 29, MAHARANI ROAD, INDORE PAN : ABRPB4864D V/S ITO-4(1), INDORE : RESPONDENT SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 2 APPELLANT BY SHRI GIRISH AGRAWAL, SHRI VIJAY BANSAL & MISS NISHA LAHOTI, ARS REVENUE BY SHRI HARSHIT BARI, SR.DR DATE OF HEARING 0 7 .0 7 .2021 DATE OF PRONOUNCEMENT 2 0 . 0 7 . 202 1 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF LD. COM MISSIONER OF INCOME TAX(APPEALS)-I (IN SHORT LD. CIT], INDORE D ATED 03.12.2018 & 25.01.2019 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 22.12 .2016, FRAMED BY ACIT-3(1) & ACIT-4(1), INDORE. FOLLOWING GROUNDS OF APPEAL IN ITANO.39/IND/2019(MA NORAMA DEVI SHARMA):- 1. THAT THE ORDER PASSED BY LD. CIT(A) IS ARBITRARY, BAD IN LAW AND ON FACTS. 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.28,24,342/- UNDER SECTION 68, WHEREAS SECTION 68 IS NOT APPLICABLE ON THE TRANSACTION ENTERED INTO BY THE A SSESSEE, WHICH IS QUITE UNJUST, ILLEGAL AND AGAINST THE FACTS OF THE CASE. 3. THAT THE LD. CIT(A) HAS ERRED IN CONSIDERING THE SCRIPT FROM WHICH THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN AS P ENNY STOCK, A TERM NOWHERE DEFINE UNDER THE INCOME TAX ACT AS AN Y OTHER LAW FOR THE TIME BEING IN FORCE, WHICH IS QUITE UNJUST, ILLEGAL AND AGAINST THE FACTS OF THE CASE. SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 3 4. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DI SALLOWANCE OF CLAIM OF ASSESSEE OF EXEMPTED LTCG BASED ON INFORMATION/STATEMENT GATHERED BY INVESTIGATION WIN G OF THE DEPARTMENT, WITHOUT ANY OPPORTUNITY TO CROSS EXAMINE SUCH PERSONS AND WITHOUT PROVIDING SUCH DOCUMENTS FOR ASSESSEES COMMENTS, WHICH IS QUITE UNJUST, ILLEGAL AND AGAINST THE FACT S OF THE CASE. 5. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE D ISALLOWING OF CLAIM OF EXEMPTED INCOME BASED ON WRONG ANALYSIS OF THE F INANCIAL AND PRICES OF THE SHARES, WHICH IS QUITE UNJUST ILLEGAL AND AGAINST THE FACTS OF THE CASE. 6. THAT THE LD. CIT(A) HAS ERRED IN IN MENTIONING THE FACT THAT LD. AO HAS TRIED TO CONDUCT INQUIRES DURING ASSESSMENT PROCE EDINGS, IN CONFIRMING DISALLOWANCE, WHEREAS NO SUCH INQUIRIES HAVE BEEN CARRIED OUT, WHICH IS QUITE UNJUST ILLEGAL AND AGAI NST THE FACTS OF THE CASE. 7. THAT THE LD. CIT(A) HAS ERRED IN MENTIONING THE FA CT WITHOUT ANY EVIDENCE THAT THE ASSESSEE HAS COLLUSION WITH BROKER S TO EARN LTCG, WHICH IS QUITE UNJUST ILLEGAL AND AGAINST THE FACTS OF THE CASE. 8. THAT THE LD. CIT(A) HAS ERRED IN CONCLUDING THAT THE PURCHASES HAVE BEEN MADE IN CASH WHICH IS QUITE UNJUST ILLEGA L AND AGAINST THE FACTS OF THE CASE. 9. THE LD. CIT(A) HAS ERRED IN MENTIONING THAT THE COMPANY, IN SHARES OF WHICH THE ASSESSEE HAS DEALT, HAS NOT BUSI NESS OR TURNOVER, WHICH IS QUITE UNJUST ILLEGAL AND AGAINST THE FACTS OF THE CASE. 10. THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT T HAT THE 2 COMPANIES WERE MERGED BY THE ORDER OF THE HON'BLE BOMBAY HIGH C OURT BY CONSIDERING THE COMPANY AS BOGUS, WHICH IS QUITE UNJ UST ILLEGAL AND AGAINST THE FACTS OF THE CASE. 11. THE LD. CIT(A) HAS ERRED BY IGNORING THE VARIOUS JUDGMENTS QUOTED BY THE ASSESSEE, WHICH IS QUITE UNJUST ILLEG AL AND AGAINST THE FACTS OF THE CASE. 12. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDI TION OF RS.89,230/- UNDER SECTION 69C, WITHOUT ANY EVIDENCE AGAINST THE ASSESSEE WHICH IS QUITE UNJUST ILLEGAL AND AGAINST THE FACTS OF THE CASE. 13. APPELLANT CRAVES TO LEAVE, ADD, AMEND, ALTER OR M ODIFY OF ANY GROUNDS BEFORE FINAL DATE OF HEARING. SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 4 FOLLOWING GROUNDS OF APPEAL IN ITANO.489/IND/2019 ( SHRI PRATAP BAJAJ):- 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE A DDITION MADE BY LD. AO BY TREATING LONG TERM CAPITAL GAIN AS BOGUS O NLY ON THE BASIS OF PRESUMPTIONS AND DOUBTS WHICH QUITE JUST I LLEGAL AND AGAINST THE FACTS OF THE CASE. 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE A DDITION MADE BY LD. AO BY RELYING ON THE REPORTS OF SOME DEPARTMENT A UTHORITIES, WHICH ARE NOT EVEN MENTIONING THE NAME OF THE APPEL LANT AND NOT EVEN CONFRONTED WITH THE APPELLANT WHICH IS QUITE UN JUST ILLEGAL AGAINST THE FACTS OF THE CASE. 3. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY LD. AO WITHOUT APPRECIATING THE RELEVANT DOCUMENTS W HICH WERE PRODUCED BEFORE THE LD. AO IN SUPPORT OF GENUINE LON G TERM CAPITAL GAIN. 4. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY LD. AO CONSIDERING THE SAME AS SHAM TRANSACTION WITH OUT ANY EVIDENCE AGAINST THE APPELLANT, WHICH QUITE JUST ILL EGAL AND AGAINST THE FACTS OF THE CASE. 5. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE A DDITION MADE BY LD. AO EVEN WHEN THE TRANSACTIONS ARE DONE THROUGH PR OPER BANKING CHANNEL AND RECOGNIZED STOCK EXCHANGE WHICH QUITE JU ST ILLEGAL AND AGAINST THE FACTS OF THE CASE. 6. APPELLANT CRAVES TO LEAVE, ADD, AMEND, ALTER OR MODIFY OF ANY GROUND BEFORE FINAL DATE OF HEARING. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE COMMON ISSUE RAISED IN THE INSTANT TWO APPEALS IS A GAINST THE FINDING OF LD. CIT(A) CONFIRMING THE ACTION OF LD. ASSESSING OFFICER DENYING THE BENEFIT OF EXEMPTION U/S 10(38) OF THE ACT FOR THE LONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE FROM SALE OF EQUITY SHARES OF LISTED COMPANY. LD. COUNSEL FOR THE ASSES SEE FURTHER SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 5 SUBMITTED THAT IN THE CASE OF PRATAP BAJAJ, LONG TE RM CAPITAL GAIN OF RS. 28,92,830/- AND IN THE CASE OF MANORAMA DEVI SHARMA OF RS. 28,24,342/-AROSE FROM SALE OF EQUITY SHARES OF SUNR ISE ASIAN LIMITED ( IN SHORT SAL). HE ALSO SUBMITTED THAT O RIGINALLY THE ASSESSEE(S) PURCHASED THE SHARES OF M/S.CONART TRAD ERS LTD. BUT SUBSEQUENTLY, M/S.CONART TRADERS LTD. WAS MERGED WI TH SUNRISE ASIAN LIMITED (SAL), PURSUANT TO ORDER OF HONBLE B OMBAY HIGH COURT.BOTH THE ASSESSEE(S) HELD THE SHARES FOR MORE THAN 12 MONTHS AND SOLD THEM DURING THE YEAR UNDER APPEAL T HROUGH RECOGNIZED STOCK EXCHANGE AND CLAIMED THE EXEMPTION U/S 10(38) OF THE ACT. 3. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED T HAT LD. ASSESSING OFFICER DENIED THE BENEFIT ON THE BASIS O F HIS OBSERVATION THAT THE SUDDEN SPIKE IN THE SHARE PRICE OF SAL IS NOT IN CONSONANCE WITH THE FINANCIAL STRENGTH AND GROWTH O F THE COMPANY. LD. AO FURTHER REFERRING TO SOME INVESTIGATION CARR IED OUT AT KOLKATA IN THE CASE OF SOME BROKERS AND OTHER RELATED PERSO NS ALLEGED SAL AS A PENNY STOCK COMPANY AND OBSERVED THAT THE ASSE SSEE MANAGED TO TAKE ACCOMMODATION ENTRY IN THE FORM OF LTCG IN ORDER TO CLAIM SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 6 THE BENEFIT OF EXEMPTION U/S 10(38) OF THE ACT AND AVOID TAX LIABLIITY. LD. ASSESSING OFFICER THUS DENIED THE EX EMPTION AND MADE THE ADDITION OF THE ALLEGED AMOUNT TO THE INCOME OF THE RESPECTIVE ASSESSEE(S). 4. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED T HAT SIMILAR SET OF FACTS AND THE ISSUE OF GENUINENESS OF CLAIM OF LTCG U/S 10(38) OF THE ACT CAME UP BEFORE HONBLE TRIBUNAL IN CASE OF SHIVNARAYAN SHARMA & ORS VIDE ITANO.889/IND/2018 & OTHERS AND HONBLE TRIBUNAL VIDE ORDER DATED 28.06.2021 DECIDED IN FAV OUR OF THE ASSESSEE PLACING RELIANCE ON THE SETTLED JUDICIAL P RECEDENCE. THE RATIO LAID DOWN IN THIS DECISION OF HONBLE TRIBUNA L IS SQUARELY APPLICABLE ON ISSUES RAISED IN THE INSTANT APPEALS. IT WAS ALSO SUBMITTED THAT ONE OF THE ASSESSEE NAMELY MANORAMA DEVI SHARMA IS WIFE OF SHIVNARAYAN SHARMA WHO WAS AN APPELLANT BEFORE THE HONBLE TRIBUNAL RAISING SIMILAR ISSUE. 5. PER CONTRA LD. SR. DEPARTMENTAL REPRESENTATIVE ( DR) THOUGH SUPPORTED THE FINDING OF BOTH THE LOWER AUTHORITIES BUT FAIRLY ACCEPTED THAT THE FACTS AND ISSUES RAISED IN THE IN STANT APPEALS ARE THE SAME AS WERE DEALT BY THE HONBLE TRIBUNAL IN T HE CASE OF SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 7 SHIVNARAYAN SHARMA & ORS (SUPRA). HOWEVER, LD. SR. DR PLACED RELIANCE ON THE JUDGMENT OF HONBLE HIGH COURT OF D ELHI IN THE CASE OF SUMAN PODDAR VS. ITO, VIDE ITANO.841/2019 DATED 17.09.2019. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE SUB MISSIONS MADE BY BOTH SIDES. COMMON ISSUE CHALLENGED IN THE INSTA NT TWO APPEALS IS THE DENIAL OF CLAIM OF EXEMPTION U/S 10(38) OF T HE ACT OF THE LONG TERM CAPITAL GAIN FROM SALE OF EQUITY SHARE OF LIST ED COMPANY NAMELY M/S. SUNRISE ASIAN LIMITED. 8. LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE RAISED IN THE INSTANT APPEALS IS COVERED BY THE DECISION O F THIS TRIBUNAL IN THE CASE OF SHIVNARAYAN SHARMA & ORS (SUPRA ) WHEREIN ALSO LTCG FROM SALE OF THE EQUITY SHARES OF SAME COMPANY NAME LY M/S. SAL WAS UNDER CHALLENGE. THE EQUITY SHARES WERE ORIGINA LLY PURCHASED IN THE NAME OF M/S.CONART TRADERS LTD. BUT LATER TH IS COMPANY WAS MERGED WITH SUNRISE ASIAN LIMITED. FOR BETTER UNDER STANDING WE WILL LIKE TO GO THROUGH THE BRIEF FACTS OBSERVED BY THIS TRIBUNAL IN THE CASE OF SHIVNARAYAN SHARMA & ORS (SUPRA), WHICH READS AS FOLLOWS: SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 8 7. BRIEF FACTS IN THE CASE OF SHRI SHIVNARAYAN SHARM A ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF BUS BODY BUILDING. E-RETURN OF INCOME FOR ASSESSMENT YEAR 201 4-15 FILED ON 29.9.2014 DECLARING INCOME AT RS.15,80,150/-. CASE WAS SELECTED FOR COMPLETE SCRUTINY ASSESSMENT THROUGH CASS FOLLO WED BY ISSUANCE OF NOTICE U/S 143(2) AND 142(1) OF THE ACT. WHILE EXAMINING THE RECORDS AND DETAILS FILED BY THE ASSESS EE, LD. A.O OBSERVED THAT THE ASSESSEE HAS CLAIMED EXEMPTION U/S 10(38) OF THE ACT AT RS.28,47,833/- ON SALE OF EQUITY SHARES IN T HE NAME OF THE COMPANY SUNRISE ASIAN LTD. 6,000 EQUITY SHARES OF M/S . CONART TRADERS LTD WERE PURCHASED ON 22.10.2011 AT RS.1,50 ,000/- FROM P. SAJI TEXTILES LIMITED. PURSUANT TO THE ORDER OF HON BLE BOMBAY HIGH COURT M/S. CONART TRADERS LIMITED WAS MERGED WITH M/S SUNRISE ASIAN LIMITED. THEREAFTER 6000 EQUITY SHARES OF M/ S SAL WERE RECEIVED IN LIEU OF THE SHARES OF M/S CONART TRADER S LIMITED. SUBSEQUENTLY ASSESSEE SOLD THE SHARES OF M/S SAL ON THE RECOGNISED STOCK EXCHANGE THROUGH A REGISTERED BROKER AND AGAINST THE SALE CONSIDERATION RECEIVED, THE COST OF PURCHA SE WAS DEDUCTED GIVING RISE OF LTCG AT RS.28,47,833/-. HOWEVER, LD. A.O WAS NOT SATISFIED SINCE IN HIS VIEW THE EXTENT OF GROWTH AN D FINANCIALS OF THE COMPANY WERE NOT SUFFICIENT TO JUSTIFY THE ABNORMAL INCREASE IN THE SHARE PRICE WITHIN A SHORT SPAN OF TIME, WHICH WERE VERY LOW IN DECEMBER, 2012 AND THEN INCREASED CONTINUOUSLY UP T O APRIL AND MAY, 2015 AND FELLED THEREAFTER. LD. A.O ALSO GAVE R EFERENCE TO VARIOUS SEARCHES CONDUCTED U/S 132 AND SURVEY U/S 133 A OF THE ACT CARRIED OUT BY THE DEPARTMENT ON VARIOUS BROKERS OF STOCK EXCHANGE AND OTHER COMPANIES WHERE THE INVESTIGATION TEAM CAM E ACROSS VARIOUS BOGUS TRANSACTIONS OF PROVIDING ACCOMMODATION ENTRIES TO GIVE BENEFIT TO VARIOUS PERSONS TO CONVERT THEIR UN ACCOUNTED CASH SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 9 INTO ACCOUNTED MONEY IN THE FORM OF BOGUS LTCG. LD . A.O ALSO TOOK STATEMENT OF THE ASSESSEE AND CAME TO THE CONCLUSIO N THAT THE ASSESSEE HAD NO KNOWLEDGE ABOUT THE COMPANY. HE CO NCLUDED THE ASSESSMENT OBSERVING THAT M/S SAL IS A PENNY STOCK COMPANY AND THE ALLEGED TRANSACTION OF EARNING LTCG IS BOGUS AN D SHAM AND THE ALLEGED LTCG IS LIABLE TO BE ADDED AS UNACCOUNTED CAS H CREDIT U/S 68 OF THE ACT AND ACCORDINGLY HE ADDED RS.28,47,833/ - AND DENIED THE BENEFIT OF EXEMPTION U/S 10(38) OF THE ACT AT R S.28,47,833/- AND ALSO MADE ADDITION FOR ESTIMATED BROKERAGE EXPENSES OF RS.89,935/- FOR ARRANGING BOGUS LTCG. INCOME ASSESSED AT RS.45 ,17,920/- 8. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT( A) AGAINST THE ADDITION MADE U/S 68 OF THE ACT AT RS.28,47,833/ -AND ADDITION OF BROKERAGE EXPENSES AT RS.89,935/-. AGAIN COMPLE TE DETAILS OF PURCHASE AND SALES WERE FILED ALONG WITH THE DEMAT ACCOUNT AND BANK STATEMENT. HOWEVER, LD. CIT(A) WAS NOT SATISFI ED AND HE CONFIRMED THE VIEW TAKEN BY LD. A.O OBSERVING THAT T HE ASSESSEE IS INDULGED IN ARRANGING BOGUS LTCG, THE APPELLANT HAD MADE INVESTMENT THROUGH THE DERECOGNISED BROKER AND HAVE EARNED EXCESSIVE RETURN WITHIN A SHORT SPAN OF TIME WHICH IS EXTREMELY UNFAIR. PLACING RELIANCE ON THE DECISIONS LD. CIT(A) HELD THAT THE TRANSACTIONS OF SALE OF EQUITY SHARES GIVING RISE TO THE ALLEGED LTCG AT RS.28,47,833/- ARE SHAM WHICH COULD NOT STAND THE TEST OF HUMAN PROBABILITY. 9. ON-GOING THROUGH THE FACTS OF THE INSTANT TWO AP PEALS IN LIGHT OF THE ABOVE STATED FACTS IN CASE OF SHIVNARAYAN SHARMA (SUPRA) WE FIND THAT THE FACTS ARE VERBATIM SIMILAR AS REGARD THE COMPANY, SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 10 PERIOD OF HOLDING, OBSERVATION OF THE LD. ASSESSING OFFICER AND EVEN THE FINDING OF LD. CIT(A). WE FURTHER OBSERVE THAT THIS TRIBUNAL IN THE CASE OF SHIVNARAYAN SHARMA & ORS (SUPRA), WHILE DEALING WITH THE ISSUE OF GENUINENESS OF LONG TERM CAPITAL GAIN FROM SALE OF SHARES OF M/S. SAL DECIDED THE ISSUE BY PLACING RELIANCE O N THE DECISION OF COORDINATE BENCH MUMBAI IN THE CASE OF DIPESH RAMESH VARDHAN VS. DCIT(SUPRA) ORDER DATED 11.08.2020, DECISION OF COORDINATE BENCH OF JAIPUR IN THE CASE OF ASHOK AGRAWAL VS. ACIT IN ITANO.124/JP/2020 DATED 18.11.2020 AND ALSO DEALT WITH THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF SUMAN PODDAR(SUPRA) RELIED BY THE LD. SR. DR BY RELYING ON THE LATEST JUDGMENT OF HONBLE HIGH COURT DELHI IN THE CASE OF PR. CIT VS. KRISHNA DEVI & OTHERS ITANO.125/2020 DATED 15.01.2021 WHEREIN HONBLE HIGH COURT OF DELHI HAS CONSIDERED THE JUDG MENT OF SUMAN PODDAR (SUPRA). 10. THE RELEVANT FINDING OF THIS TRIBUNAL IN THE CA SE OF SHIVNARAYAN SHARMA & ORS (SUPRA) 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 SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 11 DIPESH RAMESH VARDHAN (SUPRA) WHILE DEALING WITH THE SAME ISSUE OF LONG TERM CAPITAL GAIN FROM SALE OF EQUITY SHARE S OF M/S SUNRISE ASIAN LIMITED CLAIMED TO BE EXEMPT U/S 10(38) OF TH E ACT AND DECIDED IN FAVOUR OF THE ASSESSEE OBSERVING AS FOLLOWS:- 23. IN THE AFORESAID DECISION, IT HAS BEEN HELD TH AT IT IS SEBI WHO MONITORS AND REGULATES THE STOCK EXCHANGES & STOCK MARKET AND WHEN THEIR INVESTIGATION DID NOT REVEAL ANY PRICE OR VOL UME MANIPULATION BY THE ASSESSEE AND THESE TRANSACTIONS ARE IN THE NORMAL C OURSE THROUGH PROPER & LEGAL CHANNELS. THEN THE ALLEGATIONS OF THE IT DE PARTMENT FALL FLAT AND DENIAL OF DEDUCTION U/S 10(38) OF THE ACT IS ARBITR ARY AND ADDITION OF SALE PROCEEDS OF SHARES OF PAL U/S 68 IS AGAINST THE PRO VISIONS OF ACT. IN THE CASE IN HAND, THE ID. AO HAS REFERRED TO SEBI ENQUI RY AGAINST M/S SUNRISE ASIAN LTD. HOWEVER, WE NOTE THAT THE SAID ENQUIRY W AS REGARDING FAILURE TO COMPLY WITH CERTAIN DISCLOSURE REQUIREMENTS AND THE REFORE, THE SUBJECT MATTER OF THE ENQUIRY HAS NO CONNECTION WITH THE TR ANSACTION 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 AF ORESAID CASE THAT THE FINDINGS OF INVESTIGATION & MODUS OPERANDI IN OTHER CASES NARRATED BY THE AO AND ALSO CIT(A) NOWHERE PROVE ANY CONNECTION WIT H THE ASSESSEE NOR THE ASSESSEE'S INVOLVEMENT OR CONNECTION OR COLLUSI ON WITH THE BROKERS, EXIT PROVIDERS, ACCOMMODATION PROVIDERS OR COMPANIES OR DIRECTIONS ETC AND FOR MAKING THE ADDITION, IT IS NECESSARY TO BRING ON RE CORD EVIDENCE TO ESTABLISH INGENUITY IN TRANSACTIONS OR ANY CONNECTI ON 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 ACCOMMODATI ON ENTRY PROVIDERS. FURTHER IN THE AFORESAID CASE, THE ISSUE AS TO WHET HER THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUIDE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILI TIES,' HUMAN BEHAVIOR AND DISCOVERY OF THE MODUS OPERANDI ADOPTED IN EARN ING ALLEGED BOGUS LTCG AND STCG, THAT HAVE SURFACED DURING INVESTIGAT IONS, SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCLUSION AS TO W HETHER THE CLAIM IS GENUINE OR NOT HAS BEEN DISCUSSED AT LENGTH. AND RE FERRING TO LEGAL PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT THAT THE BURDEN OF PROVING A TRANSACTION TO BE BOGUS HAS TO BE STRICTL Y DISCHARGED BY ADDUCING LEGAL EVIDENCE HELD THAT THE MODUS OPERAND I, 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 O F THE DOCUMENTARY EVIDENCES PRODUCED, THE SAME CANNOT BE REJECTED. WE ARE IN COMPLETE AGREEMENT WITH THE SAID VIEW AND IN THE INSTANT CAS E, WE FIND THAT EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM OF PURCHASE AND SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 12 SALE OF SHARES ON THE STOCK EXCHANGE HAVE NOT BEEN REFUTED BY ANY ADVERSE FINDINGS OR MATERIAL WHICH COULD DEMONSTRAT E 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 SHARE S OF SIMILAR SCRIP OF M/S SUNRISE ASIAN LTD AND CLAIM OF EXEMPTION OF LONG TE RM CAPITAL GAINS U/S10(38), THE MUMBAI BENCHES OF THE TRIBUNAL IN CA SE OF ANRAJ HIRALAL SHAH (HUF) VS ITO (SUPRA) HAS UPHELD THE CLAIM OF T HE ASSESSEE'S CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT AND THE R ELEVANT FINDINGS OF THE COORDINATE BENCH CONTAINED AT PARA 8 READ AS UNDER: - '8. THE ASSESSEE HAS EARNED SPECULATION PROFIT IN T HE 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 INC OME 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 A CCOUNT ONLY. HENCE THE DELIVERY OF SHARES A/SO STAND PROVED. THE AO HA S NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE WAS PA RT OF FRAUDULENT PRICE RIGGING. ACCORDINGLY, IN THE ABSENCE OF ANY EVIDENC E TO IMPLICATE THE ASSESSEE OR TO PROVE THAT THE TRANSACTIONS ARE BOGU S I AM OF THE VIEW THAT THE CAPITAL GAINS DECLARED BY THE ASSESSEE CANNOT B E DOUBTED WITH. IN THAT VIEW OF THE MATTER THE ADDITION MADE TOWARDS EXPENS ES IS NOT ALSO SUSTAINABLE. 25. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY OF FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE DECISIO NS OF THE HON'BLE JURISDICTIONAL HIGH COURT AND OF THAT OF THE COORDI NATE 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 EXE MPT 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 REVENUE. IN THE RESULT, THE GROUND OF A PPEAL SO TAKEN BY THE ASSESSEE IS ALLOWED. 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 13 20. WE HAVE ALSO OBSERVED THAT THE ABOVE REFERRED D ECISION OF CO- ORDINATE BENCH OF MUMBAI AND JAIPUR HAS DEALT IN TH E ISSUE OF RELATING LONG TERM CAPITAL GAIN EARED FROM SALE OF EQUITY SH ARES 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 JA IN THE ALLEGED COMPANY IS M/S CONART TRADERS LTD SUBSEQUENTLY MERG ED WITH M/S SAL UNDER THE ORDER OF HONBLE MUMBAI HIGH COURT AND T HEREFORE 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 H ARINARAYAN AGRAWAL HUF, MANISH GOVIND AGRAWAL HUF ALLEGED ISS UE 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 SA LE OF SHARES OF TURBOTECH CAME UP BEFORE THE CO-ORDINATE BENCH HELD IN THE CASE OF SWATI LUTHRA WHEREIN THE CO-ORDINATE BENCH HAS DECI DED 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 RE COGNIZED STOCK EXCHANGE AND PAYMENT OF SECURITIES TRANSACTION TAX THEREON, ALL WERE SUPPORTED BY DOCUMENTARY EVIDENCES WHICH WERE PLACE D BEFORE THE LOWER AUTHORITIES. THE REVENUE COULD NOT POINT OUT ANY SP ECIFIC 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 PROBABILITI ES WITHOUT POINTING OUT ANY DEFECT THEREIN. 13. IN THE INSTANT CASE, THE ASSESSING OFFICER HIMS ELF 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 POI NTER OR CAUSE FOR CAREFUL SCRUTINY OF THE TRANSACTION BY THE ASSESSING OFFICE R BUT FROM IT CANNOT BE CONCLUDED THAT TRANSACTIONS WERE SHAM. IT IS A MATT ER 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 A LSO FIND FROM RECORD THAT LD. AO ALSO DIDN'T CONFRONT COPIES OF STATEMEN TS RECORDED BY INVESTIGATION WING, KOLKATA OF SH, NIKHIL JAIN, SH. SANJAY VORA, SH. RAKESH SOMANI, SH. ANIL KUMAR KHEMKA AND SH. BIDYOO T SARKAR TO THE SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 14 APPELLANT DURING ASSESSMENT PROCEEDINGS AND MERELY EXTRACTED COPIES OF THEIR STATEMENT IN THE ASSESSMENT ORDER ONLY. THE L D. AO HAS NOT CONFRONTED ANY MATERIAL TO THE ASSESSEE NOR PROVIDE D ANY ADEQUATE OPPORTUNITY TO THE ASSESSEE TO DEFEND HER CASE. SIN CE THE STATEMENTS WERE NOT CONFRONTED TO THE ASSESSEE, SHE WAS DEPRIVED OF HER RIGHT TO CROSS EXAMINE THE WITNESSES. ALSO WHATEVER THEY HAVE STAT ED 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 DON E FROM THESE PERSONS, WHETHER THEY HAVE PROVIDED ANY ENTRY TO THE ASSESSE E, IF THE REQUEST FOR CROSS EXAMINATION WAS NOT POSSIBLE AT THAT STAGE. C ROSS EXAMINATION OF A PERSON IN WHOSE BASIS ANY ADVERSE INFERENCE IS DRAW N, THEN IT CANNOT BE PRIMARY EVIDENCE OR MATERIAL TO NAIL THE ASSESSEE A ND SIMPLY BASED ON THE STATEMENT NO ADDITION CAN BE MADE. THIS HAS BEEN HE LD 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 CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERI OUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLAT ION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS A DVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIO NER 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 T HIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY M ENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEAL T WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS C ONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NO T HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE AP PELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN ST ATIC. 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 MENTIONE D ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STA TEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMONY F OR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATIO N. 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 D EALERS/WITNESSES AT THE SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 15 PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF C OULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTE R OF THE CROSS- EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE . WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATT ER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTI NG OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINI ON 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 I TS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ON LY 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 HONBLE DELHI HIGH C OURT IN THE CASE OF SUMAN PODDAR V/S ITO (SUPRA) DELIVERED ON 17.09.201 9 RELIED BY LD. DEPARTMENTAL REPRESENTATIVE, WE FIND THAT HONBLE H IGH 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 CAPIT AL GAIN FROM SALE OF EQUITY SHARES HAS DULY CONSIDERED THE JUDGMENT OF H ONBLE DELHI HIGH COURT IN THE CASE OF SUMAN PODDAR V/S ITO (SUPRA) AND HAS DECIDED AGAINST THE REVENUE CONFIRMING THE ORDER OF THE TRI BUNAL 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 CO GENT MATERIAL ON RECORD. RELEVANT EXTRACT OF THE JUDGMENT OF HONBL E 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 CONVI NCED WITH THE SAME FOR THE REASONS STATED HEREINAFTER. 11. ON A PERUSAL OF THE RECORD, IT IS EASILY DISCER NIBLE THAT IN THE INSTANT CASE, THE AO HAD PROCEEDED PREDOMINANTLY ON THE BAS IS OF THE ANALYSIS OF THE FINANCIALS OF M/S GOLD LINE INTERNATIONAL FINVE ST LIMITED. HIS CONCLUSION AND FINDINGS AGAINST THE RESPONDENT ARE CHIEFLY ON THE STRENGTH OF THE ASTOUNDING 4849.2% JUMP IN SHARE PRICES OF T HE 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 JUSTIFIE D; THE TRADE PATTERN OF THE AFORESAID COMPANY DID NOT MOVE ALONG WITH THE SENSE X; AND THE FINANCIALS OF THE COMPANY DID NOT SHOW ANY REASON FOR THE EXTR AORDINARY PERFORMANCE OF ITS STOCK. WE HAVE NOTHING ADVERSE T O COMMENT ON THE SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 16 ABOVE ANALYSIS, BUT ARE CONCERNED WITH THE AXIOMATI C CONCLUSION DRAWN BY THE AO THAT THE RESPONDENT HAD ENTERED INTO AN AGRE EMENT TO CONVERT UNACCOUNTED MONEY BY CLAIMING FICTITIOUS LTCG, WHIC H IS EXEMPT UNDER SECTION 10(38), IN A PRE-PLANNED MANNER TO EVADE TA XES. THE AO EXTENSIVELY RELIED UPON THE SEARCH AND SURVEY OPERA TIONS CONDUCTED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT IN KOLKATA, DELHI, MUMBAI AND AHMEDABAD ON PENNY STOCKS, WHICH SETS OU T THE MODUS OPERANDI ADOPTED IN THE BUSINESS OF PROVIDING ENTRI ES OF BOGUS LTCG. HOWEVER, THE RELIANCE PLACED ON THE REPORT, WITHOUT FURTHER CORROBORATION ON THE BASIS OF COGENT MATERIAL, DOES NOT JUSTIFY H IS CONCLUSION THAT THE TRANSACTION IS BOGUS, SHAM AND NOTHING OTHER THAN A RACKET OF ACCOMMODATION ENTRIES. WE DO NOTICE THAT THE AO MAD E AN ATTEMPT TO DELVE INTO THE QUESTION OF INFUSION OF RESPONDENTS UNACC OUNTED MONEY, BUT HE DID NOT DIG DEEPER. NOTICES ISSUED UNDER SECTIONS 1 33(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 SHARE S IN QUESTION WAS MADE BY SH. SALASAR TRADING COMPANY. NOTICE WAS ISS UED TO THIS ENTITY AS WELL, BUT WHEN THE NOTICES WERE RETURNED UNSERVED, THE AO DID NOT TAKE THE MATTER ANY FURTHER. HE THEREAFTER SIMPLY PROCEE DED ON THE BASIS OF THE FINANCIALS OF THE COMPANY TO COME TO THE CONCLUSION THAT THE TRANSACTIONS WERE ACCOMMODATION ENTRIES, AND THUS, FICTITIOUS. T HE CONCLUSION DRAWN BY THE AO, THAT THERE WAS AN AGREEMENT TO CONVERT UNAC COUNTED 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 CONSI DERING THE ENTIRE CONSPECTUS OF CASE AND THE EVIDENCE BROUGHT ON RECO RD, HELD THAT THE RESPONDENT HAD SUCCESSFULLY DISCHARGED THE INITIAL ONUS CAST UPON IT UNDER THE PROVISIONS OF SECTION 68 OF THE ACT. IT I S RECORDED THAT THERE IS NO DISPUTE THAT THE SHARES OF THE TWO COMPANIES WER E 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 BAN KING CHANNELS. THE ABOVE NOTED FACTORS, INCLUDING THE DEFICIENT ENQUIR Y 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 OTH ER PARTY, PREVAILED UPON THE ITAT TO TAKE A DIFFERENT VIEW. B EFORE US, MR. HOSSAIN HAS NOT BEEN ABLE TO POINT OUT ANY EVIDENCE WHATSOE VER 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 A LLEGED. IN THE ABSENCE OF ANY SUCH MATERIAL THAT COULD SUPPORT THE CASE PU T FORTH BY THE APPELLANT, THE ADDITIONS CANNOT BE SUSTAINED. SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 17 12. MR. HOSSAINS SUBMISSIONS RELATING TO THE START LING SPIKE IN THE SHARE PRICE AND OTHER FACTORS MAY BE ENOUGH TO SHOW CIRCU MSTANCES THAT MIGHT CREATE SUSPICION; HOWEVER THE COURT HAS TO DECIDE A N 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 RE SPONDENT. WITH REGARD TO THE CLAIM THAT OBSERVATIONS MADE BY THE CIT(A) W ERE IN CONFLICT WITH THE IMPUGNED ORDER, WE MAY ONLY NOTE THAT THE SAID OBSE RVATIONS 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 PO DDAR (SUPRA) AT LENGTH, WE FIND THAT THE DECISION THEREIN WAS ARRIV ED AT IN LIGHT OF THE PECULIAR FACTS AND CIRCUMSTANCES DEMONSTRATED BEFOR E THE ITAT AND THE COURT, SUCH AS, INTER ALIA, LACK OF EVIDENCE PRODUC ED 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 ASSESS EE, HOLDING THAT THE GENUINENESS OF SHARE TRANSACTION WAS NOT ESTABLISHE D 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 SP ECIFIC FACTS. THE ABOVE- STATED CASES, THUS, ARE OF NO ASSISTANCE TO THE CAS E SOUGHT TO BE CANVASSED BY THE REVENUE. 13. THE LEARNED ITAT, BEING THE LAST FACT-FINDING A UTHORITY, 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 A DDITION WITHOUT ANY COGENT MATERIAL ON RECORD. WE THUS FIND NO PERVERSI TY 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 WH ICH ARE SQUARELY APPLICABLE IN THE ISSUES RAISED IN THE INSTANT APPE ALS ARE OF THE CONSIDERED VIEW THAT THE CLAIM OF LONG TERM CAPITAL GAIN MADE BY THE RESPECTIVE ASSESSEE(S) DESERVES TO BE ALLOWED AS TH EY HAVE ENTERED INTO THE TRANSACTIONS OF PURCHASE AND SALES DULY SUPPORT ED BY THE DOCUMENTS WHICH HAVE NOT FOUND TO BE INCORRECT. THE CONDITIO NS PROVIDED U/S 10(38) OF THE ACT HAVE BEEN FULFILLED BY THE ASSESS EE(S) NAMELY SHIVNARAYAN SHARMA, SAPAN SHAW, PRAYANK JAIN, GOVIN D HARINARAYAN AGRAWAL (HUF) AND MANISH GOVIND AGRAWAL (HUF) AS TH EY HAVE SOLD THE SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 18 EQUITY SHARES HELD IN DEMAT ACCOUNT AND TRANSACTION S PERFORMED ON A RECOGNISED STOCK EXCHANGE THROUGH REGISTERED BROKER AT THE PRICE APPEARING ON THE EXCHANGE PORTAL AND AT THE POINT O F 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 OPPOR TUNITY WAS AWARDED TO CROSS EXAMINATION THE THIRD PERSON WHICH WERE AL LEGEDLY FOUND TO BE PROVIDING ACCOMMODATION ENTRIES AND THEREFORE NO AD DITION WAS CALLED FOR IN THE HANDS OF THE ASSESSEE WITHOUT PROVIDING OPPO RTUNITY OF CROSS EXAMINATION IN VIEW OF THE RATIO LAID DOWN BY HON'B LE APEX COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. CCE 281 CTR 241 (SC) THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESSE S 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 AFFECTE D. 24. WE ACCORDINGLY IN VIEW OF OUR ABOVE DISCUSSIONS , FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWIN G JUDICIAL PRECEDENTS AND THE DECISIONS OF CO-ORDINATE BENCHES SQUARELY A PPLICABLE ON THE INSTANT CASES, ARE OF THE CONSIDERED VIEW THAT IN T HE 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 ALLO WED 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 ASID E 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. 11. FROM PERUSAL OF THE ABOVE FINDING WE FIND THAT THE DECISION OF THIS TRIBUNAL IN THE CASE OF SHIVNARAYAN SHARMA & OTHERS (SUPRA) IS SQUARELY APPLICABLE ON THE COMMON ISSUES RAISED IN THE INSTANT APPEALS AND THUS TAKING CONSISTENT VIEW AND RESPECT FULLY FOLLOWING DECISIONS AND JUDGMENTS REFERRED HEREINABOVE, WE SE T ASIDE THE FINDING OF LD. CIT(A) AND DIRECT THE LD. ASSESSING OFFICER TO ALLOW SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 19 CLAIM OF THE EXEMPTION OF U/S 10(38) OF THE ACT FOR LONG TERM CAPITAL GAIN EARNED FROM SALE OF LISTED EQUITY SHAR ES OF SUNRISE ASIAN LTD. WHICH HAVE BEEN EFFECTED THROUGH RECOGNI ZED STOCK EXCHANGE, AFTER MAKING PAYMENT OF SECURITY TRANSACT ION TAX (STT) AND HOLDING THE EQUITY SHARES FOR MORE THAN 12 MON THS. THUS, THE ADDITION OF RS. 28,24,342/- IN THE CASE OF SMT. MAN ORAMA DEVI SHARMA AND RS.28,92,830/- IN THE CASE OF SHRI PRATA P BAJAJ STANDS DELETED. ALL THE EFFECTIVE GROUNDS OF APPEAL RAISED BY BOTH THE ASSESSEE(S) ARE ALLOWED. 12. IN THE RESULT, APPEALS OF THE ASSESSEE(S) NAMEL Y SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ VIDE ITANOS.39/IND /2019, & 489/IND/2019 ARE ALLOWED. THE ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 20.07.2021. SD/- SD/- (RAJPAL YADAV) (MANISH BORAD) VICE PRESIDENT ACCOUN TANT MEMBER / DATED : 20.07. 2021 PATEL/PS SMT. MANORAMA DEVI SHARMA & SHRI PRAKASH BAJAJ ITA NOS. 39 & 489/IND/2019, 20 COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE