Smt. Sabreen, Kanpur V. Income Tax Officer-3(4), Kanpur

ITA 498/LKW/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0454 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 09-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURENDRA KOHLI SHRI HARISH
• Keywords: Application of stay; Additional evidence; Question of law; Accommodation entries; Tax effect; Penny stocks; Set aside; Capital Gains
• Section: 69C; 143(3); 260A; 133(6); 143(1); 13; 22; 68; 144; 10

Judgement Text

I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW (THROUGH VIRTUAL HEARING) BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 SMT. SABREEN, 95/95 VISHWANATH KA HATA, PARADE, KANPUR. PAN:APZPS5157G VS. INCOME TAX OFFICER - 3(4), KANPUR. (APPELLANT) (RESPONDENT) STAY APPLICATION NO.38/LKW/2019 (IN I.T.A. NO.498/LKW/2019) ASSESSMENT YEAR:2014-15 SMT. SABREEN, 95/95 VISHWANATH KA HATA, PARADE, KANPUR. PAN:APZPS5157G VS. INCOME TAX OFFICER - 3(4), KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LEARNED CIT(A)-I, KANPUR DATED 11/07/2019 PERTAINING TO ASS ESSMENT YEAR 2014- 2015. IN THIS APPEAL THE ASSESSEE HAS TAKEN THE FO LLOWING GROUNDS: APPELLANT BY SHRI SURENDRA KOHLI, ADVOCATE RESPONDENT BY SHRI HARISH GIDWANI, D. R. DATE OF HEARING 14 / 0 7 /20 21 DATE OF PRONOUNCEMENT 20 / 07 /20 21 I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 2 1. THAT THE LEARNED CIT(A) ERRED IN LAW AS WELL AS FACTS IN CONFIRMING THE ADDITION OF RS.19709875/- WHICH IS C ONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LEARNED CIT(A) ERRED IN DENIAL OF EXEMP TION U/S 38 OF SECTION 10 AS WELL AS FINDING AND OBSERVATION S IN PARAS 4 AND 5 OF THE APPELLATE ORDER ARE BASED UPON PRESUMP TION AND SURMISES SIMPLY CONCLUDING THAT THE CASE WAS WITHIN THE AMBIT OF 'PENNY STOCKS' NOT HAVING ANY PLACE UNDER THE PR OVISIONS OF TAX LAWS. 3. THAT THE LEARNED CIT(A) /A.O. FAILED TO APPRECIA TE THAT THE TRANSACTION OF PURCHASE / SALE WERE GENUINE AND ALL THE REQUISITE PRESCRIBED CONDITIONS WERE IN EXISTENCE A ND HENCE THE ADDITION / DISALLOWANCE HAS NO LEGS TO STAND AND DE SERVES TO BE HELD AB INITIO NULL & VOID. 4. THAT THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE APPELLANT IS SIMPLY A GENUINE CUSTOMER AND THE TRAN SACTION WAS MADE THROUGH PROPER D-MAT ACCOUNT AND THE SALE PURC HASE EFFECTED PER APPROVED SHARE BROKERS AND CANNOT BE H ELD TO BE ACCOUNTABLE SIMPLY ON THE BASIS OF 'QUITE UNUSUAL A ND UNBELIEVABLE' BASED UPON IMAGINATION AND BASELESS G ROUNDS. 5. THAT THE REVENUE AUTHORITIES FAILED TO APPRECIAT E THAT FOR LOSSES THE ENTIRE BURDEN IS ON THE APPELLANT'S SHOU LDERS AND TO THE CONTRARY THE GAINS ARE HELD 'NON GENUINE' WHICH IS AGAINST THE PRINCIPLE OF EQUITY, JUSTICE AND GOOD CONSCIENC E. 6. THAT THE EX PARTE ORDER BASED U/S 144 OF THE IT. ACT 1961 IS A STRAIGHT DENIAL OF A REASONABLE AND SUFFICIENT OPPORTUNITY VIZ. ABSENCE OF CROSS EXAMINATION OF WITNESSES A RI GHT THE APPELLANT LEGALLY DESERVES UNDER THE PROVISIONS OF LAW LEADING TO A HASTY DECISION SIMPLY TO ADHERE LIMITATION. 7. THAT THE AUTHORITIES BELOW SIMPLY BASED THE DECI SIONS ON JUDGMENTS WHICH WERE NOT RELEVANT TO THE APPELLANT' S CASE AND AT THE SAME TIME FAILED TO GIVE ANY WEIGHTAGE TO DE CISIONS CITED DURING THE ASSESSMENT/APPELLATE LEVELS. 8. THAT THE APPELLANT DOES NOT DESERVES TO BE HELD 'IN DEFAULT' AND SHOULD NOT BE HELD RESPONSIBLE FOR THE SO CALLED DEFAULTS AT KOLKATA LEVEL, IF ANY AT THAT POINT OF TIME. I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 3 2. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE DID NOT ARGUE ON GROUND NOS.5,6,8 & 9 AND ARGUED ONLY REMAI NING GROUNDS. INVITING OUR ATTENTION TO THE FACTS OF THE CASE, LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD EARNED LON G TERM CAPITAL GAIN OF RS.1,97,09,875/- ON THE SALE OF A SCRIP OF M/S SULA BH ENGINEERING AND SERVICES LTD. WHICH THE ASSESSEE HAD CLAIMED AS EXE MPT U/S 10(38) OF THE ACT AND WHICH THE AUTHORITIES BELOW HAVE DENIED BY RELYING ON THE REPORT OF THE INVESTIGATION WING OF KOLKATA WHEREIN THE REPOR T HAS SAID THAT THROUGH A RACKET OF MANY PERSONS, WHICH INCLUDED OPERATORS, E XIT PROVIDERS AND PROMOTERS OF A FEW COMPANIES, VARIOUS PERSONS ARE G IVEN LONG TERM CAPITAL GAIN/ SHORT TERM CAPITAL GAIN/CAPITAL LOSS THROUGH MANAGED TRANSACTIONS. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHI LE DENYING THE BENEFIT TO THE ASSESSEE, THE AUTHORITIES BELOW HAVE NOT CON SIDERED THAT THE REPORT IS A VAGUE DOCUMENT AND THE SHARE BROKERAGE OF THE ASS ESSEE THROUGH WHOM SHE HAD CARRIED OUT TRANSACTIONS, WERE NOT EXAMINED AND ALL THE TRANSACTIONS WERE THROUGH BANKING CHANNEL AND SHARES WERE SOLD T HROUGH ONLINE TRANSACTIONS AND THE PAYMENT FOR PURCHASE OF SHARES WAS MADE THROUGH BANKING CHANNEL AND ALSO THE SALE PROCEEDS OF SALE OF SHARES WERE CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAD PAID SECURITY TRANSACTION TAX, SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY ON THE TRANSACTIONS AND THE TRANSACTIONS HAVE BEEN CARRIED OUT THROUGH THE SEBI REGISTERED STOCK BROKER WHICH CAN BE VERIFIED FROM THE STOCK EXCHANGE. IT WAS SUBMITTED THAT THE AUTHORITIES BELOW WERE NOT J USTIFIED IN TAKING ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRICE RISE AND ALLEGED PRICE RIGGING AS HON'BLE DELHI HIGH COURT IN THE CA SE OF PR. CIT VS. SMT. KRISHNA DEVI IN I.T.A. NO.130/2020, UNDER SIMILAR F ACTS AND CIRCUMSTANCES, HAS DEALT WITH THE ISSUE OF ABNORMAL RISE IN PRICE AND AFTER CONSIDERING THE CASE LAW OF HON'BLE SUPREME COURT IN THE CASE OF SU MATI DAYAL VS CIT [1995] 214 ITR 801, [WHICH HAS BEEN RELIED ON BY LE ARNED CIT(A)], HAS I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 4 DISMISSED THE THEORY OF PREPONDERANCE AND HAS RELIE D ON THE THEORY OF EVIDENCE AND HAS DISMISSED THE APPEAL OF THE REVENU E. IT WAS SUBMITTED THAT VARIOUS BENCHES OF THE TRIBUNAL INCLUDING THE LUCKNOW BENCH, UNDER SIMILAR FACTS AND CIRCUMSTANCES, HAVE ALREADY DECID ED THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE FOLLOWING CASES: I) SHRI DEEPAK KUMAR AGARWAL VS. ACIT CENTRAL CIRC LE - 3(1), IN IT(SS)A NOS. 125&I26 /KOL/2018 DATED 10-05-2019 A.Y 2013- 14 & 2014-15 DECIDED BY THE ITAT 'B' BENCH KOLKATA RELATING TO M/S SULABH ENGINEERING SERVICES LTD (SESL). II) SANJAY KUMAR AGARWAL (HUF) VS. ITO WARD 48(4) K OLKATA IN ITA NO. 2378/KOL/2018 DATED 07-08-2019 DECIDED BY T HE ITAT 'SMC' BENCH KOLKATA RELATING TO M/S SULABH ENGINEER ING SERVICES LTD.(SESL). III) SUMAN KOTHARI VS. ITO WARD 36(2) KOLKATA IN IT A NO. 2467/KOL/201 TDATED 10-05-2019 DECIDED BY ITAT 'B' BENCH KOLKATA RELATING TO M/S SULABH ENGINEERING SERVICES LTD.(SESL). IV) VASUDHA JAIN VS. ITO WARD 36(4) KOLKATA IN ITA NO. 1018/KOI/2018 DATED 15-02-2019 DECIDED BY ITAT 'SMC ' BENCH KOLKATA RELATING TO M/S SULABH ENGINEERING SE RVICES LTD. (SESL). V) RESHU GOEL VS. ITO WARD 3(4) NEW DELHI DATED 07- 10-2019 RELATING TO A.Y 2013-14 DECIDED BY THE ITAT DELHI B ENCH 'F' BENCH NEW DELHI IN ITA NO. 1691/DEL./2019. VI) SHRI ACHAL GUPTA VS. ITO 3(1) KANPUR IN ITA NO. 501/LKW/2019 DATED 16-12-2020 FOR THE A.Y. 2015-16 DECIDED BY THE HON'BLE ITAT LUCKNOW BENCH 'A' LUCKNOW. 2.1 IT WAS FURTHER SUBMITTED THAT AS REGARDS THE RE LIANCE PLACED BY LEARNED CIT(A) ON CERTAIN CASE LAWS, THE SAID CASE LAWS ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE AS IN T HOSE CASES, THE ISSUE WAS RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WHEREAS IN THE PRESENT CASE THE ISSUE IS EXEMPTION OF LONG TERM CAPITAL GAIN ON TRA NSACTIONS WHICH HAS BEEN DONE ON THE PLATFORM OF MUMBAI STOCK EXCHANGE AND FOR WHICH THE I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 5 ENTIRE EVIDENCE IS AVAILABLE. IT WAS SUBMITTED THA T THE ENTIRE EVIDENCE WAS FILED BEFORE THE ASSESSING OFFICER AND IN THIS RESP ECT OUR ATTENTION WAS INVITED TO PAGES 12 & 13 OF THE ASSESSMENT ORDER WH ERE THE ASSESSING OFFICER HAS NOTED ABOUT THE FACT OF ASSESSEE HAVING FILED VARIOUS DOCUMENTS IN SUPPORT OF CLAIM OF LONG TERM CAPITAL GAIN. LEA RNED COUNSEL FOR THE ASSESSEE IN THIS RESPECT INVITED OUR ATTENTION TO P AGES 1 TO 25 OF THE PAPER BOOK WHERE THE COPIES OF SUCH EVIDENCES, INCLUDING CONTRACT NOTES OF SUB- BROKERS, DEMAT ACCOUNT OF THE ASSESSEE AND BANK ACC OUNT OF THE ASSESSEE WERE PLACED. IN VIEW OF THE ABOVE FACTS AND CIRCUM STANCES, IT WAS PRAYED THAT THE APPEAL FILED BY THE ASSESSEE MAY BE ALLOWE D. 3. LEARNED D. R., ON THE OTHER HAND, HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT VARIOUS ASSESS EES HAVE BEEN TAKING LONG TERM CAPITAL GAIN THROUGH MANAGED TRANSACTIONS WITH THE HELP OF EXIT PROVIDERS, OPERATORS OF VARIOUS SCRIPS AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO THE INVESTIGATION REPORT WHEREIN THE INV ESTIGATION WAS CARRIED OUT BY THE KOLKATA WING AND 84 COMPANIES WERE IDENTIFIE D WHICH WERE USED FOR CREATING ARTIFICIAL LONG TERM CAPITAL GAIN. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THERE IS NO DISPUTE ABOUT THE DOCUMENTARY EVIDENCE WHICH THE ASSESSEE HAD FILED BEFORE THE AS SESSING OFFICER FOR CLAIMING EXEMPTION U/S 10(38) OF THE ACT. IN SUPPO RT OF THE CLAIM FOR PURCHASE OF SHARES FROM ANANT FIN CONSULTANCY (P) L IMITED, THE ASSESSEE HAD FILED A COPY OF SALE BILL IN FAVOUR OF THE ASSE SSEE WHEREIN THE SAID BROKER HAD SOLD 15,000 SHARES TO THE ASSESSEE FOR RS.21/- PER SHARE, A COPY OF SUCH SALE BILL IS PLACED AT PAGE 24 OF THE PAPER BOOK AN D A COPY OF LEDGER ACCOUNT OF THE ASSESSEE APPEARING IN THE BOOKS OF ANANT FIN CONSULTANCY (P) LIMITED, PLACED AT PAGE 25 OF THE PAPER BOOK WHEREI N IT HAS BEEN CONFIRMED I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 6 THAT AN AMOUNT OF RS.3,15,000/- WAS RECEIVED FROM T HE ASSESSEE AGAINST THE SALE OF 15,000 SHARES TO THE ASSESSEE. SUCH AMOUNT OF RS.3,15,000/- WAS DEBITED TO THE BANK ACCOUNT OF THE ASSESSEE MAINTAI NED WITH UNITED MERCANTILE CO-OPERATIVE BANK LTD., A COPY OF WHICH IS PLACED AT PAGE 23 OF THE PAPER BOOK. SUCH 15,000 SHARES PURCHASED BY TH E ASSESSEE BECAME 1,50,000 SHARES OF FACE VALUE OF RS.1/-, THE EVIDEN CE OF SPLIT OF THE SHARES FROM RS.10/- EACH SHARE TO RS.1/- EACH SHARE IS PLA CED AT PAGES 17 & 18 OF THE PAPER BOOK. SUCH 1,50,000 SHARES WERE CREDITED TO THE DEMAT ACCOUNT OF THE ASSESSEE MAINTAINED WITH BONANZA PORTFOLIO L IMITED, THE EVIDENCE OF WHICH IS PLACED AT PAGE 19 OF THE PAPER BOOK. THE ASSESSEE SOLD SUCH 1,50,000 SHARES BETWEEN THE PERIOD 05/08/2013 TO 12 /09/2013, THE COPY OF CONTRACT NOTES ISSUED BY INDIABULLS SECURITIES LIMI TED IS PLACED AT PAGES 5 TO 14 OF THE PAPER BOOK. SUCH CONTRACT NOTES SHOW THA T BROKERAGE, SERVICE TAX AND SECURITY TRANSACTION TAX WAS PAID BY THE AS SESSEE AND THE PROCEEDS OF SALES, AFTER DEDUCTION OF SUCH EXPENSES , WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH IDBI B ANK, A COPY OF WHICH IS PLACED AT PAGES 15 & 16 OF THE PAPER BOOK. ALL THE SE DOCUMENTARY EVIDENCES, WHICH HAVE BEEN GENERATED THROUGH THE TR ANSACTIONS MADE BY THE ASSESSEE ON THE ELECTRONIC EXCHANGE OF MUMBAI, PROVE THAT ASSESSEE DID SELL 1,50,000 SHARES AFTER HOLDING FOR A PERIOD OF MORE THAN ONE YEAR AND EARNED A LONG TERM CAPITAL GAIN. THE AUTHORITIES B ELOW HAVE DISALLOWED THE CLAIM OF THE ASSESSEE SOLELY ON THE BASIS OF A REPORT FROM INVESTIGATION DEPARTMENT OF REVENUE. HOWEVER, IN THAT INVESTIGA TION REPORT, NEITHER THE NAME OF THE ASSESSEE NOR THE NAME OF BROKER OF THE ASSESSEE HAS BEEN MENTIONED. THOUGH THE AUTHORITIES BELOW HAVE RELIE D ON THE STATEMENT OT CERTAIN BROKER AND OTHER PERSONS, THE NAME OF THE B ROKER OF THE ASSESSEE DO NOT APPEAR IN THAT LIST AND NEITHER THE BROKER OF T HE ASSESSEE WAS EXAMINED. THE AUTHORITIES BELOW, ON THE BASIS OF REPORT OF IN VESTIGATION, HAVE HELD THAT ASSESSEE HAD MANAGED TO OBTAIN LONG TERM CAPITAL GA IN THROUGH EXIT I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 7 PROVIDERS AS THE FINANCES OF THE COMPANY DO NOT SUG GEST THAT IT CAN RISE SO QUICKLY AND SO MANY TIMES IN A SHORT PERIOD. WHILE DENYING THE CLAIM AND CONFIRMING THE ORDER OF THE ASSESSING OFFICER, THE LEARNED CIT(A) HAS RELIED ON CERTAIN CASE LAWS. GOING THROUGH THE FACTS OF T HOSE CASE LAWS, IT IS FOUND THAT THOSE CASE LAWS RELATED TO THE ISSUE OF SHARE CAPITAL/SHARE PREMIUM RECEIVED BY VARIOUS ASSESSEES AND WHERE THE ASSESS EES WERE NOT ABLE TO DEMONSTRATE THE CREDITWORTHINESS AND GENUINENESS OF THE INVESTORS AND THAT IS WHY THE HON'BLE COURTS HAVE DECIDED THE ISSUE IN FAVOUR OF THE REVENUE. THE LEARNED CIT(A) HAS FURTHER RELIED ON THE CASE L AW OF SUMATI DAYAL VS. CIT (SUPRA) WHEREIN THE HUMAN PROBABILITY OF PREPON DERANCE OF THE TRANSACTION HAS BEEN DECIDED IN FAVOUR OF THE REVEN UE. SIMILARLY, LEARNED CIT(A) HAS RELIED ON THE CASE LAW OF SANJAY BIMALCH AND JAIN VS. PR. CIT, DECIDED BY HON'BLE BOMBAY HIGH COURT. AS REGARDS T HE DECISION OF SUMATI DAYAL VS CIT (SUPRA), THE HON'BLE DELHI HIGH COURT IN A RECENT JUDGMENT IN THE CASE OF PR. CIT VS. SMT. KRISHNA DEVI, UNDER SI MILAR FACTS AND CIRCUMSTANCES, HAS DISREGARDED THE PRINCIPLE OF PRE PONDERANCE AND HAS HELD THAT EVIDENCE PRODUCED BY THE ASSESSEE OVER POWER T HE PRINCIPLE OF PREPONDERANCE. IN THE CASE LAW DECIDED BY HON'BLE D ELHI HIGH COURT IN THE CASE OF KRISHNA DEVI, THE TRIBUNAL ALLOWED RELIEF T O THE ASSESSEE ON LONG TERM CAPITAL GAIN ON THE SCRIP OF GOLDLINE INTERNAT IONAL FINVEST LTD. WHICH APPEAR AT SL.NO.24 OF THE INVESTIGATION REPORT. TH E FINDINGS OF HON'BLE DELHI HIGH COURT ARE REPRODUCED BELOW: 3. THE PRESENT APPEALS UNDER SECTION 260A OF THE I NCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] AR E DIRECTED AGAINST THE COMMON ORDER DATED 6TH AUGUST, 2019 [HE REINAFTER REFERRED TO AS THE IMPUGNED ORDER] PASSED IN ITA NO. 1069/DEL/2019 (FOR AY 2014-15), 2772/DEL/2019 (FOR AY 2015- 16) AND OTHER APPEALS FOR THE SAME AYS, BY THE INCO ME TAX APPELLATE TRIBUNAL [HEREINAFTER REFERRED TO AS THE ITAT]. HOWEVER, THE IMPUGNED ORDER RECORDS THE FACTUAL POS ITION ONLY IN RESPECT OF ITA NO. 1069/DEL/2019. 4. THE REVENUE UR GES I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 8 IDENTICAL QUESTIONS OF LAW IN ALL THE AFORE-NOTED A PPEALS WITH THE ONLY DIFFERENCE BEING THE FIGURES RELATING TO THE A DDITIONS MADE UNDER SECTION 68 READ WITH SECTION 115BBE OF THE AC T. ACCORDINGLY, THE SAME ARE BEING DECIDED BY WAY OF T HIS COMMON ORDER. 5. IT IS NOT IN DISPUTE, AS NOTED IN THE IMP UGNED ORDER, THAT THE FACTUAL BACKGROUND IN ALL THE THREE APPEALS IS QUITE SIMILAR. HOWEVER, FOR THE SAKE OF CONVENIENCE, THE FACTS IN RESPECT OF ITA 125/2020 ARE BEING NOTED AND DISCUSSED ELABORATELY. BRIEFLY STATED, THE RESPONDENT-ASSESSEE IS AN INDIVIDUAL WH O HAS DERIVED INCOME FROM INTEREST ON LOAN, FDR, NSC AND BANK INT EREST UNDER THE HEAD OF INCOME FROM OTHER SOURCES IN RESPECT OF A.Y. 2015- 16. SHE FILED HER RETURN OF INCOME, DECLARING TOTAL INCOME OF RS. 13,96,116/-. AFTER CLAIMING DEDUCTION OF RS. 1,60,0 00/- UNDER CHAPTER VI-A, THE TOTAL TAXABLE INCOME OF RESPONDEN T WAS DECLARED TO BE RS. 12,36,120/-. THE RETURN WAS PROC ESSED UNDER SECTION 143(1) OF THE ACT AND THEREAFTER THE CASE W AS SELECTED FOR SCRUTINY. DURING THE SCRUTINY PROCEEDINGS, THE AO N OTICED THAT FOR THE RELEVANT YEAR UNDER CONSIDERATION, THE RESPONDE NT HAD CLAIMED EXEMPTED INCOME OF RS. 96,75,939/- AS RECEI PTS FROM LONG TERM CAPITAL GAIN [HEREINAFTER REFERRED TO AS LTCG] UNDER SECTION 10(38) OF THE ACT. HE INTER ALIA CONC LUDED THAT THE ASSESSEE HAD ADOPTED A COLORABLE DEVICE OF LTCG TO AVOID TAX AND ACCORDINGLY FRAMED THE ASSESSMENT ORDER UNDER S ECTION 143(3) OF THE ACT AT THE TOTAL INCOME OF RS. 1,09,1 2,060/-, MAKING AN ADDITION OF RS. 96,75,939/- UNDER SECTION 68 REA D WITH 115BBE OF THE ACT ON ACCOUNT OF BOGUS LTCG ON SALE OF PENN Y STOCKS OF A COMPANY NAMED M/S GOLD LINE INTERNATIONAL FINVEST L IMITED. THE APPEAL BEFORE THE CIT(A) WAS DISMISSED AND ADDITION S WERE CONFIRMED WITH THE OBSERVATION THAT THE RESPONDENT HAD INTRODUCED UNACCOUNTED MONEY INTO THE BOOKS WITHOUT PAYING TAXES. FURTHER APPEAL FILED BY THE RESPONDENT BEFOR E THE LEARNED ITAT WAS ALLOWED IN HER FAVOUR, AND THE ADDITIONS W ERE DELETED VIDE THE IMPUGNED ORDER, RELEVANT PORTION WHEREOF R EADS AS UNDER: 21. A PERUSAL OF THE ASSESSMENT ORDER CLEAR LY SHOWS THAT THE ASSESSING OFFICER WAS CARRIED AWAY BY THE REPOR T OF THE INVESTIGATION WING KOLKATA. IT CAN BE SEEN THAT THE ENTIRE ASSESSMENT HAS BEEN FRAMED BY THE ASSESSING OFFICER WITHOUT CONDUCTING ANY ENQUIRY FROM THE RELEVANT PARTIES OR INDEPENDENT SOURCE OR EVIDENCE BUT HAS MERELY RELIED UPON THE S TATEMENTS RECORDED BY THE INVESTIGATION WING AS WELL AS INFOR MATION RECEIVED FROM THE INVESTIGATION WING. IT IS APPAREN T FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ANY INDEPENDENT AND SEPARATE ENQUIRY IN THE CASE OF THE ASSESSEE. EVEN, THE STATEMENT RECORDED BY THE INVESTIGATION W ING HAS NOT I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 9 BEEN GOT CONFIRMED OR CORROBORATED BY THE PERSON DU RING THE ASSESSMENT PROCEEDINGS. XX XX XX 23. IT IS PROVIDED U/S. 142 (2) OF THE ACT THAT FOR THE PURPOSE OF OBTAINING FULL INFORMATION IN RESPECT OF INCOME OR LOSS OF ANY PERSON, THE ASSESSING OFFICER MAY MAKE SUCH ENQUIRY AS HE CONSIDERS NECESSARY. IN OUR CONSIDERED VIEW THE ASS ESSING OFFICER OUGHT TO HAVE CONDUCTED A SEPARATE AND INDEPENDENT ENQUIRY AND ANY INFORMATION RECEIVED FROM THE INVESTIGATION WIN G IS REQUIRED TO BE CORROBORATED AND AFFIRM DURING THE ASSESSMENT BY THE ASSESSING OFFICER BY EXAMINING THE CONCERNED PERSON S WHO CAN AFFIRM THE STATEMENTS ALREADY RECORDED BY ANY OTHER AUTHORITY OF THE DEPARTMENT. FACTS NARRATED ABOVE CLEARLY SHOW T HAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY AND THE ENTIRE ASSESSMENT ORDER AND THE ORDER OF THE FIRST APPELLA TE AUTHORITY ARE DEVOID OF ANY SUCH ENQUIRY. 24. THE REPORT FROM THE DIRECTORATE INCOME TAX INVESTIGATION WING, KOLKATA IS DATED 27.04.2015 WHEREAS THE IMPUGNED SALES TRANSACTIONS TOOK PLACE IN THE MONTH OF MARCH, 2014. THE EXPARTE AD INTERIM OR DER OF SEBI IS DATED 29.06.2015 WHEREIN AT PAGE 34 UNDER PARA 5 0 (A) M/S. ESTEEM BIO ORGANIC FOOD PROCESSING LTD WAS RESTRAIN ED FROM ACCESSING THE SECURITIES MARKET AND BUYING SELLING AND DEALING IN SECURITIES EITHER DIRECTLY OR INDIRECTLY IN ANY MAN NER TILL FURTHER DIRECTIONS. A LIST OF 239 PERSONS IS ALSO MENTIONED IN SEBI ORDER WHICH ARE AT PAGES 34 TO 42 OF THE ORDER THE NAMES OF THE APPELLANTS DO NOT FIND ANY PLACE IN THE SAID LIST. AT PAGES 58 AND 59 THE NAMES OF PRE IPO TRANSFEREE IN THE SCRIP OF M/S. ESTEEM BIO ORGANIC FOOD PROCESSING LTD IS GIVEN AND IN THE SAID LIST ALSO THE NAMES OF THE APPELLANTS DO NOT FIND ANY PLACE. AT PAGE 63 OF THE SEBI ORDER-TRADING BY TRADING IN M/S. ESTEEM BI O QRGANIC FOOD PROCESSING LTD A FURTHER LIST OF 25 PERSONS IS MENTIONED AND ONCE AGAIN THE NAMES OF THE APPELLANTS DO NOT F IND PLACE IN THIS LIST ALSO. 25. AS MENTIONED ELSEWHERE THE BROK ERS OF THE ASSESSEE NAMELY ISG SECURITIES LIMITED AND SMC GLOB AL SECURITIES LIMITED ARE STATIONED AT NEW DELHI AND T HEIR NAMES ALSO DO NOT FIND PLACE IN THE LIST MENTIONED HERE I N ABOVE IN THE SEBI ORDER. THERE IS NOTHING ON RECORD TO SHOW THAT THE BROKERS WERE SUSPENDED BY THE SEBI NOR THERE ANYTHING ON RE CORD TO SHOW THAT THE TWO BROKERS OF THE APPELLANTS MENTIONED HE RE IN ABOVE WERE INVOLVED IN THE ALLEGED SCAM. THE ASSESSING OF FICER HAS NOT EVEN CONSIDERED EXAMINING THE BROKERS OF THE APPELL ANTS. IT IS A MATTER OF THE FACT THAT SEBI LOOKS INTO IRREGULAR M OVEMENTS IN SHARE PRICES ON RANGE AND WARN INVESTOR AGAINST ANY SUCH UNUSUAL INCREASE IN SHARES PRICES. NO SUCH WARNINGS WERE ISSUED BY THE SEBI. I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 10 26. THERE IS NO DISPUTE THAT THE STATEMENTS WHICH W ERE RELIED BY THE ASSESSING OFFICER WERE NOT RECORDED BY THE ASSE SSING OFFICER IN THE ASSESSMENT PROCEEDINGS BUT THEY WERE PRE-EXI STING STATEMENTS RECORDED BY THE INVESTIGATION WING AND T HE SAME CANNOT BE THE SOLE BASIS OF ASSESSMENT WITHOUT COND UCTING PROPER ENQUIRY AND EXAMINATION DURING THE ASSESSMENT PROCE EDINGS ITSELF. IN OUR HUMBLE OPINION, NEITHER THE ASSESSIN G OFFICER CONDUCTED ANY ENQUIRY NOR HAS BROUGHT ANY CLINCHING EVIDENCES TO DISPROVE THE EVIDENCES PRODUCED BY THE ASSESSEE. TH E REPORT OF INVESTIGATION WING IS MUCH LATER THAN THE DATES OF PURCHASE / SALE OF SHARES AND THE ORDER OF THE SEBI IS ALSO MUCH LA TER THAN THE DATE OF TRANSACTIONS TRANSACTED AND NOWHERE SEBI HA S DECLARED THE TRANSACTION TRANSACTED AT EARLIER DATES AS VOID . XX XX XX 30. CONSIDERING THE VORTEX OF EVIDENCES, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS SUCCESSFULLY DISCHARGED THE ONUS CAST UPON HIM BY PROVISIONS OF SECTION 68 OF THE ACT AS MENTIONED ELSEWHERE, SUCH DISCHARGE OF ONUS IS PURELY A QUEST ION OF FACT AND THEREFORE THE JUDICIAL DECISIONS RELIED UPON BY THE DR WOULD DO NO GOOD ON THE PECULIAR PLETHORA OF EVIDENCES IN RE SPECT OF THE FACTS OF THE CASE IN HAND AND HENCE THE JUDICIAL DE CISIONS RELIED UPON BY BOTH THE SIDES, THOUGH PERUSED, BUT NOT CON SIDERED ON THE FACTS OF THE CASE IN HAND. 6. AGGRIEVED BY THE AFO RESAID FINDINGS, THE REVENUE HAS FILED THE INSTANT APPEALS CONTENDIN G THAT, NOTWITHSTANDING THE TAX EFFECT IN THE APPEALS FALLI NG BELOW THE THRESHOLD PRESCRIBED UNDER CIRCULAR NO. 23 DATED 6 TH SEPTEMBER, 2019, THE APPEALS ARE MAINTAINABLE IN VIEW OF THE O FFICE MEMORANDUM DATED 16TH SEPTEMBER, 2019 ISSUED BY THE CBDT, WHICH CLARIFIES THAT THE MONETARY LIMITS PRESCRIBED IN THE AFOREMENTIONED CIRCULAR SHALL NOT APPLY WHERE AN AS SESSEE IS CLAIMING BOGUS LTCG THROUGH PENNY STOCKS, AND THE A PPEALS BE HEARD ON MERITS. 7. MR. ZOHEB HOSSAIN, LEARNED SENI OR STANDING COUNSEL FOR THE REVENUE (APPELLANT HEREIN), CONTEND S THAT THE LEARNED ITAT HAS COMPLETELY ERRED IN LAW IN DELETIN G THE ADDITION, AND THUS THE IMPUGNED ORDER SUFFERS FROM PERVERSITY . HE SUBMITS THAT THERE ARE CERTAIN GERMANE FACTUAL ERRORS, INAS MUCH AS THE LEARNED ITAT HAS WRONGLY RECORDED THAT THERE WAS NO INDEPENDENT ENQUIRY CONDUCTED BY THE AO, WHEN IN FA CT THE AO HAD ISSUED NOTICES TO THE COMPANIES IN QUESTION UND ER SECTION 133(6) OF THE ACT. HE POINTS OUT THAT THE OBSERVATI ONS RECORDED IN PARA 25 OF THE IMPUGNED ORDER ARE FACTUALLY INCORRE CT, AND IN CONFLICT WITH PARA 4 OF THE ORDER OF THE CIT(A) DAT ED 24TH DECEMBER, 2018 WHICH READS AS FOLLOWS: 4. EVEN THE BROKER THROUGH WHOM THE SHARES WERE DEMATERIALIZED AND SOL D I.E. SMC GLOBAL SECURITIES LTD. WAS ALSO A PART OF THE SCAM. THIS IS A DELHI BASED BROKER WHOSE REGIONAL OFFICE WAS ALSO SURVEYE D. THE SUB I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 11 BROKERS WERE ALSO SURVEYED AND ALSO STATEMENTS RECO RDED WHICH CONFIRMED THE PAYMENT OF CASH COMMISSION BY THE BEN EFICIARIES FOR BEING PART OF THE SYNDICATE. 8. MR. HOSSAIN AR GUES THAT IN CASES RELATING TO LTCG IN PENNY STOCKS, THERE MAY N OT BE ANY DIRECT EVIDENCE IN THE HANDS OF THE REVENUE TO ESTA BLISH THAT THE INVESTMENT MADE IN SUCH COMPANIES WAS AN ACCOMMODAT ION ENTRY. THUS THE COURT SHOULD TAKE THE ASPECT OF HUMAN PROB ABILITIES INTO CONSIDERATION THAT NO PRUDENT INVESTOR WOULD INVEST IN PENNY SCRIPS. CONSIDERING THE FACT THAT THE FINANCIALS OF THESE COMPANIES DO NOT SUPPORT THE GAINS MADE BY THESE COMPANIES IN THE STOCK EXCHANGE, AS WELL AS THE FACT THAT DESPITE THE NOTI CES ISSUED BY THE AO, THERE WAS NO EVIDENCE FORTHCOMING TO SUSTAIN TH E CREDIBILITY OF THESE COMPANIES, HE ARGUES THAT IT CAN BE SAFELY CONCLUDED THAT THE INVESTMENTS MADE BY THE PRESENT RESPONDENTS WER E NOT GENUINE. HE SUBMITS THAT THE AO MADE SUFFICIENT IND EPENDENT ENQUIRY AND ANALYSIS TO TEST THE VERACITY OF THE CL AIMS OF THE RESPONDENT AND AFTER OBJECTIVE EXAMINATION OF THE F ACTS AND DOCUMENTS, THE CONCLUSION ARRIVED AT BY THE AO IN R ESPECT OF THE TRANSACTION IN QUESTION, OUGHT NOT TO HAVE BEEN INT ERFERED WITH. IN SUPPORT OF HIS SUBMISSION, MR. HOSSAIN RELIES UPON THE JUDGMENT OF THIS COURT IN SUMAN PODDAR V. ITO, [2020] 423 IT R 480 (DELHI), AND OF THE SUPREME COURT IN SUMATI DAYAL V . CIT, (1995) SUPP. (2) SCC 453. 9. MR. HOSSAIN FURTHER ARGUES THAT THE LEARNED ITAT HAS ERRED IN HOLDING THAT THE AO DID NOT CONSIDER EXAMINING THE BROKERS OF THE RESPONDENT. HE ASSERTS THAT THIS HOLDING IS CONTRAR Y TO THE FINDINGS OF THE AO. AS A MATTER OF FACT, THE DEMAT ACCOUNT STATEMENT OF THE RESPONDENT WAS CALLED FOR FROM THE BROKER M/S SMC GLOBAL SECURITIES LTD UNDER SECTION 133(6) OF T HE ACT, ON PERUSAL WHEREOF IT WAS FOUND THAT THE RESPONDENT WA S NOT A REGULAR INVESTOR IN PENNY SCRIPS. 10. WE HAVE HEARD MR. HOSSAIN AT LENGTH AND GIVEN OUR THOUGHTFUL CONSIDERATION TO HIS CONTENTIONS, BUT ARE NOT CONVINCED WITH THE SAME FO R THE REASONS STATED HEREINAFTER. 11. ON A PERUSAL OF THE RECORD, IT IS EASILY DISCERNIBLE THAT IN THE INSTANT CASE, THE AO HAD PR OCEEDED PREDOMINANTLY ON THE BASIS OF THE ANALYSIS OF THE F INANCIALS OF M/S GOLD LINE INTERNATIONAL FINVEST LIMITED. HIS CONCLU SION AND FINDINGS AGAINST THE RESPONDENT ARE CHIEFLY ON THE STRENGTH OF THE ASTOUNDING 4849.2% JUMP IN SHARE PRICES OF THE AFOR ESAID COMPANY WITHIN A SPAN OF TWO YEARS, WHICH IS NOT SU PPORTED BY THE FINANCIALS. ON AN ANALYSIS OF THE DATA OBTAINED FRO M THE WEBSITES, THE AO OBSERVES THAT THE QUANTUM LEAP IN THE SHARE PRICE IS NOT JUSTIFIED; THE TRADE PATTERN OF THE AFORESAID COMPA NY DID NOT MOVE ALONG WITH THE SENSEX; AND THE FINANCIALS OF THE CO MPANY DID NOT I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 12 SHOW ANY REASON FOR THE EXTRAORDINARY PERFORMANCE O F ITS STOCK. WE HAVE NOTHING ADVERSE TO COMMENT ON THE ABOVE ANA LYSIS, BUT ARE CONCERNED WITH THE AXIOMATIC CONCLUSION DRAWN B Y THE AO THAT THE RESPONDENT HAD ENTERED INTO AN AGREEMENT T O CONVERT UNACCOUNTED MONEY BY CLAIMING FICTITIOUS LTCG, WHIC H IS EXEMPT UNDER SECTION 10(38), IN A PREPLANNED MANNER TO EVA DE TAXES. THE AO EXTENSIVELY RELIED UPON THE SEARCH AND SURVEY OP ERATIONS CONDUCTED BY THE INVESTIGATION WING OF THE INCOME T AX DEPARTMENT IN KOLKATA, DELHI, MUMBAI AND AHMEDABAD ON PENNY STOCKS, WHICH SETS OUT THE MODUS OPERANDI ADOPTED I N THE BUSINESS OF PROVIDING ENTRIES OF BOGUS LTCG. HOWEVER, THE RE LIANCE 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 ACCO MMODATION ENTRIES. WE DO NOTICE THAT THE AO MADE AN ATTEMPT T O DELVE INTO THE QUESTION OF INFUSION OF RESPONDENTS UNACCOUNTE D MONEY, BUT HE DID NOT DIG DEEPER. NOTICES ISSUED UNDER SECTION S 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 A NY FURTHER. HE THEREAFTER SIMPLY PROCEEDED ON THE BASIS OF THE FIN ANCIALS OF THE COMPANY TO COME TO THE CONCLUSION THAT THE TRANSACT IONS WERE ACCOMMODATION ENTRIES, AND THUS, FICTITIOUS. THE CO NCLUSION DRAWN BY THE AO, THAT THERE WAS AN AGREEMENT TO CON VERT UNACCOUNTED MONEY BY TAKING FICTITIOUS LTCG IN A PR E-PLANNED MANNER, IS THEREFORE ENTIRELY UNSUPPORTED BY ANY MA TERIAL ON RECORD. THIS FINDING IS THUS PURELY AN ASSUMPTION B ASED ON CONJECTURE MADE BY THE AO. THIS FLAWED APPROACH FOR MS THE REASON FOR THE LEARNED ITAT TO INTERFERE WITH THE F INDINGS OF THE LOWER TAX AUTHORITIES. THE LEARNED ITAT AFTER CONSI DERING THE ENTIRE CONSPECTUS OF CASE AND THE EVIDENCE BROUGHT ON RECORD, HELD THAT THE RESPONDENT HAD SUCCESSFULLY DISCHARGE D THE INITIAL ONUS CAST UPON IT UNDER THE PROVISIONS OF SECTION 6 8 OF THE ACT. IT IS RECORDED THAT THERE IS NO DISPUTE THAT THE SHAR ES OF THE TWO COMPANIES WERE PURCHASED ONLINE, THE PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL, AND THE SHARES WERE DEMATE RIALIZED AND THE SALES HAVE BEEN ROUTED FROM DE-MAT ACCOUNT AND THE CONSIDERATION HAS BEEN RECEIVED THROUGH BANKING CHA NNELS. THE ABOVE NOTED FACTORS, INCLUDING THE DEFICIENT ENQUIR Y CONDUCTED BY THE AO AND THE LACK OF ANY INDEPENDENT SOURCE OR EV IDENCE TO SHOW THAT THERE WAS AN AGREEMENT BETWEEN THE RESPON DENT AND ANY OTHER PARTY, PREVAILED UPON THE ITAT TO TAKE A DIFFERENT VIEW. BEFORE US, MR. HOSSAIN HAS NOT BEEN ABLE TO POINT O UT ANY I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 13 EVIDENCE WHATSOEVER TO ALLEGE THAT MONEY CHANGED HA NDS BETWEEN THE RESPONDENT AND THE BROKER OR ANY OTHER PERSON, OR FURTHER THAT SOME PERSON PROVIDED THE ENTRY TO CONVERT UNAC COUNTED MONEY FOR GETTING BENEFIT OF LTCG, AS ALLEGED. IN T HE ABSENCE OF ANY SUCH MATERIAL THAT COULD SUPPORT THE CASE PUT F ORTH BY THE APPELLANT, THE ADDITIONS CANNOT BE SUSTAINED. 12. M R. HOSSAINS SUBMISSIONS RELATING TO THE STARTLING SPIKE IN THE SHARE PRICE AND OTHER FACTORS MAY BE ENOUGH TO SHOW CIRCUMSTANCES T HAT MIGHT CREATE SUSPICION; HOWEVER THE COURT HAS TO DECIDE A N ISSUE ON THE BASIS OF EVIDENCE AND PROOF, AND NOT ON SUSPICION A LONE. THE THEORY OF HUMAN BEHAVIOR AND PREPONDERANCE OF PROBA BILITIES CANNOT BE CITED AS A BASIS TO TURN A BLIND EYE TO T HE EVIDENCE PRODUCED BY THE RESPONDENT. WITH REGARD TO THE CLAI M THAT OBSERVATIONS MADE BY THE CIT(A) WERE IN CONFLICT WI TH 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, F OLLOWING THE SAME REASONING, AND RELYING UPON THE REPORT OF THE INVESTIGATION WING. LASTLY, RELIANCE PLACED BY THE REVENUE ON SUM AN PODDAR V. ITO (SUPRA) AND SUMATI DAYAL V. CIT (SUPRA) IS OF N O 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 BEFOR E THE ITAT AND THE COURT, SUCH AS, INTER ALIA, LACK OF EVIDENC E PRODUCED BY THE ASSESSEE THEREIN TO SHOW ACTUAL SALE OF SHARES IN THAT CASE. ON SUCH BASIS, THE ITAT HAD RETURNED THE FINDING OF FA CT AGAINST THE ASSESSEE, HOLDING THAT THE GENUINENESS OF SHARE TRA NSACTION WAS NOT ESTABLISHED BY HIM. HOWEVER, THIS IS QUITE DIFF ERENT FROM THE FACTUAL MATRIX AT HAND. SIMILARLY, THE CASE OF SUMA TI DAYAL V. CIT (SUPRA) TOO TURNS ON ITS OWN SPECIFIC FACTS. THE AB OVE-STATED CASES, THUS, ARE OF NO ASSISTANCE TO THE CASE SOUGHT TO BE CANVASSED BY THE REVENUE. 13. THE LEARNED ITAT, BEING THE LAST F ACT-FINDING AUTHORITY, ON THE BASIS OF THE EVIDENCE BROUGHT ON RECORD, HAS RIGHTLY COME TO THE CONCLUSION THAT THE LOWER TAX A UTHORITIES 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 L ESS A SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION. 15. A CCORDINGLY, THE PRESENT APPEALS ARE DISMISSED. 5. IN THE ABOVE NOTED JUDGMENT, THE HON'BLE COURT H AS HELD THAT STARTLING SPIKE IN THE SHARE PRICE AND OTHER FACTORS MAY BE E NOUGH TO SHOW CIRCUMSTANCES THAT MIGHT CREATE SUSPICION BUT THE C OURT HAS TO DECIDE AN I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 14 ISSUE ON THE BASIS OF EVIDENCE AND PROOF, AND NOT O N SUSPICION ALONE. THE HON'BLE COURT FURTHER DISTINGUISHED THE JUDGMENT IN THE CASE OF SUMAN PODAR WHICH WAS IN FAVOUR OF REVENUE. THE HON'BLE COURT FURTHER HELD THAT CASE OF SUMATI DAYAL U/S CIT WAS ALSO NOT APPLICABL E TO THE ASSESSEE. THE HON'BLE COURT FURTHER HELD THAT RELIANCE PLACED BY THE ASSESSING OFFICER ON THE INVESTIGATION REPORT OF INVESTIGATION WING WITH OUT FURTHER CORROBORATION ON THE BASIS OF COGENT MATERIAL DOES NOT JUSTIFY HI S CONCLUSION THAT THE TRANSACTION IS BOGUS, SHAM AND NOTHING OTHER THAN A RACKET OF ACCOMMODATION ENTRIES. 6. AS REGARDS THE RELIANCE PLACED BY LEARNED CIT(A) ON THE CASE OF SANJAY BIMALCHAND JAIN DECIDED BY HON'BLE BOMBAY HI GH COURT, WE FIND THAT THE ABOVE SAID CASE LAW HAS BEEN DISTINGUISHED BY H ON'BLE I.T.A.T. KOLKATA BENCH IN ITA NO. 2243/KOL/2017 WHERE THE HON'BLE TR IBUNAL VIDE PARA 31 HELD AS UNDER: 31. WE NOTE THAT THE ID. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF BIMALCHAND JAIN IN TAX APPEAL NO. 18 OF 2017. WE NO TE THAT IN THE CASE RELIED UPON BY THE ID. D.R, WE FIN D THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN H AND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MADE BY T HE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPA NIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DONE TH ROUGH THE BROKER AND THE ADDRESS OF THE BROKER WAS INCIDE NTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY TH E ASSESSEE WAS SHOWN AS CAPITAL GAINS WHICH WAS NOT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREATING THE SAL ES OF THE SHARES WITHIN THE AMBIT OF ADVENTURE IN NATURE OF T RADE. THUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UP ON BY THE ID. DR, THE DISPUTE WAS WHETHER THE PROFIT EARNED O N SALE OF SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT. I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 15 7.1 THE ABOVE CASE LAW OF HON'BLE BOMBAY HIGH COURT HAS FURTHER BEEN DISTINGUISHED BY MUMBAI BENCH OF THE TRIBUNAL IN TH E CASE OF GEETA KHARE IN ITA NO. 2243/KOL/2017 WHERE THE HON'BLE TRIBUNAL HA S HELD AS UNDER: 7.8 IT WOULD BE PERTINENT TO ADDRESS THE CASE LAW RELIED UPON BY THE LD DR BEFORE US ON THE DECISION OF HON'BLE B OMBAY HIGH COURT (NAGPUR BENCH) IN THE CASE OF SANJAY BIMALCHA ND JAIN VS PR. CIT (NAGPUR) REPORTED IN (2018) 89 TAXMANN.COM 196 (BOMBAY) DATED 10.4.2017 ON THE IMPUGNED ISSUE. FROM THE FAC TS OF SANJAY BIMALCHAND JAIN SUPRA, WE FIND THAT (I) IN THAT CAS E, THE BROKER COMPANY THROUGH WHICH THE SHARES WERE SOLD DID NOT RESPOND TO AO'S LETTER REGARDING THE NAMES AND ADDRESS AND BAN K ACCOUNT OF THE PERSON WHO PURCHASED THE SHARES SOLD BY THE ASS ESSEE; (II) MOREOVER, AT THE TIME OF ACQUISITION OF SHARES OF B OTH THE COMPANIES BY THE ASSESSEE, THE PAYMENTS WERE MADE I N CASH; (III) THE ADDRESS OF BOTH THE COMPANIES WERE INTERESTINGL Y THE SAME; (IV) THE AUTHORIZED SIGNATORY OF BOTH THE COMPANIES WERE ALSO THE SAME PERSON; (V) THE PURCHASE OF SHARES OF BOTH THE COMPANIES WAS DONE BY THAT ASSESSEE THROUGH BROKER, GSSL AND THE ADDRESS OF THE SAID BROKER WAS INCIDENTALLY THE ADDRESS OF THE TWO COMPANIES. BASED ON THESE CRUCIAL FACTS, THE HON'BL E BOMBAY HIGH COURT RENDERED THE DECISION IN FAVOUR OF THE REVENU E. NONE OF THESE FACTORS WERE PRESENT IN THE FACTS OF THE ASSE SSEE BEFORE US. HENCE IT COULD BE SAFELY CONCLUDED THAT THE DECISIO N OF HON'BLE BOMBAY HIGH COURT SUPRA IS FACTUALLY DISTINGUISHABL E. 7.2 AS REGARDS THE RELIANCE PLACED BY LEARNED CIT(A ) ON THE ORDER OF UDIT KALRA (SUPRA), WE FIND THAT THE ABOVE CASE LAW HAS BEEN HELD TO BE DISTINGUISHABLE BY HON'BLE DELHI TRIBUNAL IN THE CA SE OF KARUNA GARG IN I.T.A. NO.1069/LKW/2019 AND FURTHER IN THE CASE OF SWATI LUTHRA VS. INCOME TAX OFFICER IN I.T.A. NO.6480/LKW/2019, DATED 28/06 /2019. IN THESE TWO CASES THE HON'BLE TRIBUNAL HAS AGAIN ALLOWED RELIEF TO THE ASSESSEE THOUGH FROM A DIFFERENT SCRIPT BUT IN THE DECISIONS THEY H AVE HELD THAT THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN UDIT KALRA WAS DIST INGUISHABLE AS IN THAT CASE THE HON'BLE HIGH COURT HAS ONLY DISMISSED THE APPEA L AS THE HON'BLE HIGH COURT FOUND THAT THE ISSUE INVOLVED WAS ONLY A QUES TION OF FACT. IN THIS I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 16 RESPECT, PARA 28 OF THE TRIBUNAL ORDER IN THE CASE OF KARUNA GARG IS RELEVANT WHICH IS REPRODUCED BELOW: 28. THE DR HEAVILY RELIED UPON THE JUDGMENT OF HO N'BLE HIGH COURT OF DELHI IN THE CASE OF UDIT KALRA VS. ITO IN ITA NO.220/2019. WE HAVE CAREFULLY PERUSED THE ORDER OF THE HON'BLE HIGH COURT AND ON GOING THROUGH THE SAID JU DGMENT WE FIND THAT NO QUESTION OF LAW WAS FORMULATED BY THE HON'BLE HIGH COURT OF DELHI IN THE SAID CASE AND THERE IS ONLY D ISMISSAL OF APPEAL IN LIMINE AS THE HON'BLE HIGH COURT FOUND TH AT THE ISSUE INVOLVED IS A QUESTION OF FACT. 6.4 SIMILARLY IN THE CASE OF SWATI LUTHRA (SUPRA), THE HON'BLE TRIBUNAL WHILE DEALING WITH THE CASE LAW OF UDIT KA LRA VIDE PARA 14 HAS HELD AS UNDER: 14. THAT THE LD DR DURING THE COURSE OF HEARING P LACED HEAVY RELIANCE ON JUDGMENT OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF UDIT KALRA VS ITO IN ITA NO. 220/2019. RELEVANT EXTRACTS OF SAID JUDGMENT ARE EXTRACTED AS BELOW: 'THE ASSESSEE IS AGGRIEVED BY THE CONCURRENT FINDIN GS OF THE TAX AUTHORITIES - INCLUDING THE LOWER APPELLATE AUTHORITIES REJECTING ITS CLAIM FOR A LONG TERM CAP ITAL GAIN REPORTED BY IT, TO THE TUNE OF RS.13,33,956/- AND RS.14,34,501/- IN RESPECT OF 4,000 SHARES OF M/S KA PPAC PHARMA LTD. THE ASSESSEE HELD THOSE SHARES FOR APPROXIMATELY 19 MONTHS; THE ACQUISITION PRICE WAS RS.12/- PER SHARE WHEREAS THE MARKET PRICE OF THE S HARES AT THE TIME OF THEIR SALE, WAS RS.720/-. IT IS CONT ENDED THAT THE ASSESSEE WAS NOT GRANTED FAIR OPPORTUNITY. MR. RAJESH MAHNA, LEARNED COUNSEL APPEARING FOR THE ASSESSEE RELIED UPON THE ORDERS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, IN RESPECT OF THE SAME COMPANY I.E . M/S KAPPAC PHARMA LTD., AND POINTED OUT THAT THE TAX AUTHORITY'S APPROACH IN THIS CASE WAS ENTIRELY ERRO NEOUS AND INCONSISTENT. THE MAIN THRUST OF THE ASSESSEE'S ARGUMENT IS THAT HE WAS DENIED THE RIGHT TO CROSS-EXAMINATION OF THE TW O INDIVIDUALS WHOSE STATEMENTS LED TO THE INQUIRY AND I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 17 ULTIMATE DISALLOWANCE OF THE LONG TERM CAPITAL GAIN CLAIM IN THE RETURNS WHICH ARE THE SUBJECT MATTER OF THE PRESENT APPEAL. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF THE PA RTIES. ASIDE FROM THE FACT THAT THE FINDINGS IN THIS CASE ARE ENTIRELY CONCURRENT - A.O., CIT(A) AND THE ITAT HAV E ALL CONSISTENTLY RENDERED ADVERSE FINDINGS - WHAT IS IN TRIGUING IS THAT THE COMPANY (M/S KAPPAC PHARMA LTD.) HAD MEAGRE RESOURCES AND IN FACT REPORTED CONSISTENT LO SSES. IN THESE CIRCUMSTANCES, THE ASTRONOMICAL GROWTH OF THE VALUE OF COMPANY'S SHARES NATURALLY EXCITED THE SUSPICIONS OF THE REVENUE. THE COMPANY WAS EVEN DIRECTED TO BE DELISTED FROM THE STOCK EXCHANGE. HA VING REGARD TO THESE CIRCUMSTANCES AND PRINCIPALLY ON TH E GROUND THAT THE FINDINGS ARE ENTIRELY OF FACT, THIS COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT APPEAL. THIS APPEAL IS ACCORDINGLY DISMISSED.' 15. ON GOING THROUGH THE AFORESAID JUDGMENT, WE FIN D THAT NO QUESTION OF LAW WAS FORMULATED BY HON'BLE HIGH COUR T OF DELHI IN THE SAID CASE AND THERE IS ONLY DISMISSAL OF APP EAL IN LIMINE AND THE HON'BLE HIGH COURT FOUND THAT THE ISSUE INV OLVED IS A QUESTION OF FACT AS HELD BY HON'BLE APEX COURT IN KUNHAYYAMMED VS STATE OF KERALA REPORTED IN 245 ITR 360 AND ALSO IN CIT VS. RASHTRADOOT (HUF) REPORTED IN 412 I TR 17. EVEN ON MERITS AND FACTS, THE SAID JUDGMENT IN THE CASE OF UDIT KALRA VS ITO (SUPRA) IS DISTINGUISHABLE AS IN THAT CASE T HE SCRIPS OF THE COMPANY WERE DELISTED ON STOCK EXCHANGE, WHEREA S, IN THE INSTANT CASE, THE INTERIM ORDER OF SEBI IN THE CASE S OF M/S ESTEEM BIO AND M/S TURBOTECH HAVE BEEN COOLED DOWN BY SUBSEQUENT ORDER OF SEBI PLACED BY ASSESSEES IN ITS PAPER BOOK. THUS, THE CASE OF UDIT KALRA VS ITO RELIED BY LD. DR IS CLEARLY DISTINGUISHABLE ON FACTS AND IS NOT APPLICA BLE TO THE FACTS OF ASSESSEE. THUS, WE HOLD THAT THE CASE OF ASSESSE E IS FACTUALLY AND MATERIALLY DISTINGUISHABLE FROM THE FACTS OF TH E CASE OF UDIT KALRA VS ITO SO RELIED BY LD DR. I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 18 THEREFORE, THE ABOVE CASE LAWS RELIED ON BY LEARNED CIT(A) IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 8. BESIDES THE RELIANCE PLACED BY LEARNED COUNSEL F OR THE ASSESSEE ON THE ORDER OF HON'BLE DELHI HIGH COURT IN THE CASE O F SMT. KRISHNA DEVI, LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO RELIED ON VARIOUS CASE LAWS WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCES AND I N THE SAME SCRIP OF SULABH ENGINEERS, VARIOUS BENCHES OF THE TRIBUNAL H AVE ALLOWED RELIEF TO THE ASSESSEE. THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF UMA SHANKER DHANDHANIA VS. INCOME TAX OFFICER (1)5, KANPUR IN I TA NOS. 475 & 681/LKW/2019 WHEREIN THE SCRIP WAS SAME AS IS IN TH E CASE OF THE ASSESSEE AND WHEREIN LUCKNOW BENCH OF THE TRIBUNAL HAS ALLOW ED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THERE IS NO DISPUTE BETWEEN THE PARTIES REGARDING THE EVIDENCES WHICH THE ASSES SEE HAD PRODUCED BEFORE THE AUTHORITIES BELOW FOR CLAIMING THAT ASSE SSEE INDEED WAS ALLOTTED ONE LAC SHARES @ RS.20/- EACH AND WHICH WE RE SOLD PARTLY DURING AY 2014-15 AND PARTLY DURING AY 2015-16. TH ERE IS ALSO NO DISPUTE REGARDING CONTRACT NOTES ISSUED BY THE BROK ERS AND PROCEEDS PAID BY THEM THROUGH BANKING CHANNELS. THE ONLY DIS PUTE BETWEEN THE PARTIES IS THAT ASSESSING OFFICER ON THE BASIS OF A REPORT FROM INVESTIGATION WING OF THE DEPARTMENT HAS HELD THE C APITAL GAIN TO BE BOGUS AND HAS HELD THE AMOUNT OF CAPITAL GAIN AS AS SESSEES OWN MONEY BEING UNACCOUNTED MONEY CONVERTED INTO ACCOUN TED MONEY BY MANAGING THE CAPITAL GAINS. THE ASSESSEE, ON THE OTHER HAND, PRODUCED BEFORE THE AUTHORITIES BELOW EVIDENCES FOR ALLOTMENT OF SHARES AND FOR MAKING PAYMENT TO THE COMPANY DIRECT LY THROUGH BANKING CHANNELS. COPY OF ALLOTMENT LETTER FROM THE COMPANY IS PLACED AT PAPER BOOK PG.1 WHEREBY THE COMPANY HAD A CKNOWLEDGED THE RECEIPT OF RS.20.00 LACS AND HAD ALLOTTED ONE L AC SHARES TO THE ASSESSEE. THE PAYMENT TO THE COMPANY WAS MADE FROM THE BANK ACCOUNT OF THE ASSESSEE, A COPY OF WHICH IS PLACED IN PAPER BOOK PG. 2 TO 8. A PART OF THE SHARES WERE SOLD BY INDIA IN FOLINE LTD. IN THE TWO YEARS AND THE CONTRACT NOTES ISSUED BY INDIA IN FOLINE ARE PLACED IN PAPER BOOK PGS. 9 TO 14 AND 11 TO 15 IN THE TWO YEARS RESPECTIVELY. COPY OF DEMAT ACCOUNT OF THE ASSESSEE WHERE THE I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 19 SHARES ALLOTTED BY COMPANY WERE CREDITED AND FROM W HERE THE SHARES WERE SOLD IS PLACED AT PAPER BOOK PGS. 33 TO 40 AND 24 TO 31 RESPECTIVELY IN THE TWO YEARS. THE COPY OF BANK ACC OUNT WHEREIN THE PROCEEDS WERE CREDITED IS PLACED AT PGS. 2 TO 8 AND 2 TO 10 RESPECTIVELY FOR BOTH YEARS. FROM THE CONTRACT NOTE S ISSUED BY THE BROKER INDIA INFOLINE LTD. WE FIND THAT ASSESSEE HA D PAID SERVICE TAX AND STT AND SHARES WERE SOLD THROUGH SCREEN BASED T RANSACTIONS WHEREIN THE EXACT TIME AND ORDER NUMBERS ARE MENTIO NED. THE COPY OF DEMAT STATEMENT OF ASSESSEE SHOWS CREDIT OF TEN LAC SHARES AND ON SALE OF 1,11,700 DURING THE AY 2014-15 THE BALANCE IS REFLECTED AT 8,88,300 SHARES AS ON 31/03/2014 (PB-26) AND ON SAL E OF 30,000 SHARES DURING AY 2015-16, BALANCE SHARES ARE REFLEC TED AT 8,58,300 AS ON 31/03/2015 (PB-27). THESE BALANCE SHARES OF 8,58,300 ARE REFLECTED IN THE DEMAT STATEMENTS UPTO 31/03/2019. FROM THE DEMAT STATEMENT, WE FURTHER OBSERVE THAT ASSESSEE WAS HOL DING CERTAIN OTHER SCRIPS ALSO. THE ASSESSEE, THEREFORE, HAD FIL ED SUFFICIENT EVIDENCES TO PROVE THE GENUINENESS OF THE TRANSACTI ONS BUT AUTHORITIES BELOW HAS REJECTED THE CLAIM OF THE ASS ESSEE ON THE BASIS OF AN INVESTIGATION REPORT OF THE DEPARTMENT WHEREB Y THE SCRIP WAS HELD TO BE PENNY STOCK WHICH WAS BEING USED FOR PRO VIDING BOGUS LONG TERM GAINS. WE FIND THAT THE KOLKATA TRIBUNAL IN ITA 2467/KOL/2017, VIDE ORDER DATED 10.5.2018 HAS CONSI DERED A SIMILAR ISSUE OF THE SAME SCRIP M/S SULABH ENGINEERS AND SE RVICES LTD. AND HAS ALLOWED RELIEF TO THE ASSESSEE BY HOLDING AS UN DER: 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE HAS SUBMITTED BEFORE US THE STATEMENT SHOWING PURCHASES AND SALE OF LONG TERM C APITAL GAIN ON SALE OF EQUITY SHARES (PB-1). THE ASSESSEE SUBMITTE D ALLOTMENT ADVICE FOR 75,000 SHARES OF M/S SULABH ENGINEERS AND SERVI CES LTD. (PB-2). THE ASSESSEE SUBMITTED THE BANK DETAIL FOR PAYMENT (VIDE PB-3 TO 5). THE ASSESSEE SUBMITTED BEFORE US NSDL STATEMENT SHO WING PREFERENTIAL ALLOTMENT OF 75000 SHARES OF M/S SULAB H ENGINEERING AND SERVICES LTD. WE NOTE THAT THE ASSESSEE ALSO SUBMIT TED EXTRACT OF RESOLUTION PASSED AND SCREENSHOT OF MONEY CONTROL S HOWING SPLITTING OF FACE VALUE FROM RS.10 TO RS. 1 OF M/S SULABH ENGINE ERING AND SERVICES LTD. (PB-11 TO 13). THE ASSESSEE SUBMITTED THE NSDL STATEMENT SHOWING ALLOTMENT OF 7,50,000 SHARES OF M/S SULABH ENGINEERS AND SERVICES LTD. AT FAIR VALUE OF RS. 1 (PB-14 TO 17). THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT ALONG WITH INVESTMENT SCH EDULE SHOWING 7,50,000 SHARES OF M/S SULABH ENGINEERS AND SERVICE S LTD. FOR ASSESSMENT YEAR 2013-14 (PB-18 TO 23) WERE ALSO SUB MITTED. THE ASSESSEE ALSO SUBMITTED THE SALE BILL ALONG WITH CO NTRACT NOTE FROM BROKER FOR SALE OF 1,25,000 SHARES OF M/S SULABH EN GINEERS AND SERVICES LTD. (PB-23 TO 46). THE BROKERS STATEMENT SHOWING PAYMENT MADE FOR THE SALE HAS ALSO BEEN SUBMITTED BY THE AS SESSEE,(VIDE PB-47 TO 59). THE BANK STATEMENT REFLECTING RECEIPT OF SA LE CONSIDERATION FOR I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 20 SALE OF 1,25,000 SHARES OF M/S SULABH ENGINEERS AND SERVICES LTD IS PLACED IN PAPER BOOK VIDE,(PB-60 TO 63). THE PROFIT & LOSS ACCOUNT AND COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2014- 15 (PB-64 TO 69) WERE ALSO PLACED IN THE PAPER BOOK. WITH HELP OF TH ESE PLETHORA DOCUMENTS AND EVIDENCES, THE LD COUNSEL CLAIMED THA T LONG TERM CAPITAL GAIN ON SALE OF EQUITY SHARES OF SULABH ENG INEERING AND SERVICES LTD. OF RS. 1,12,13,010/- DURING THE CURRE NT FINANCIAL YEAR, IS GENUINE. 8. WE NOTE THAT THE ASSESSEE HAS EARNED LONG TERM C APITAL GAIN ON SALE OF EQUITY SHARES OF SULABH ENGINEERING AND SERVICES LTD. OF RS. 1,12,13,010/- DURING THE CURRENT FINANCIAL YEAR. DU RING ASSESSMENT PROCEEDINGS DETAILS AND EVIDENCES IN SUPPORT OF PUR CHASE AND SALE OF SHARES AS ASKED FOR HAVE BEEN SUBMITTED BEFORE THE LEARNED ASSESSING OFFICER FROM TIME TO TIME. HOWEVER, THE LD. ASSESSI NG OFFICER HAS TREATED THE TRANSACTION IN EQUITY SHARES OF M/S SUL ABH ENGINEERING AND SERVICES LTD. AS BOGUS AND ADDED RS. 1,12,13,010/- BEING LONG TERM CAPITAL GAIN ON SALE OF SUCH EQUITY SHARES ONLY ON THE BASIS OF HIS SUSPICION WITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD IN SUPPORT OF HIS CONTENTION IN SPITE OF THE FACT THAT THE SAL E TRANSACTIONS HAVE BEEN DONE THROUGH RECOGNIZED EXCHANGE THROUGH THE A UTHORIZED BROKER AND ALL RELEVANT SUPPORTING DOCUMENTS HAVE BEEN SUB MITTED BEFORE THE LEARNED ASSESSING OFFICER. FURTHER, LEARNED ASSESSI NG OFFICER HAS ALSO ADDED RS. 56,065/- ON ACCOUNT OF UNDISCLOSED COMMIS SION PAYMENT @ 0.5% OF THE LONG TERM CAPITAL GAIN THAT HAD BEEN AS SUMED TO BE INCURRED TO ARRANGE BOGUS LONG TERM CAPITAL GAIN AM OUNTING TO RS. 1,12,13,010/-. WE NOTE THAT THE SCRIPTS / EQUITY SHARES OF M/S SUL ABH ENGINEERING AND SERVICES LTD. HAS BEEN DEALT WITH BY THE SMC BENCH OF THIS TRIBUNAL IN THE CASE OF VASUDHA JAIN, IN ITA NO.1018/KOL/2018, FOR A.Y. 2015-16, ORDER DATED 15.02.2019, WHEREIN THE SMC BENCH OF TH IS TRIBUNAL HELD THAT ADDITION HAS BEEN MADE BY AO MAINLY ON THE BAS IS OF SUSPICION AND PROBABILITY. NO PRICE RIGGING ESTABLISHED BY AO. THE LD AO AS WELL AS LD CIT(A), WERE GUIDED BY THE REPORT OF THE INVESTIGATION WING, WHICH IS GENERAL IN NATURE AND NO SPECIFIC FINDINGS FOR THE ASSESSEE, AND HENCE BASED ON THESE FACTS THE SMC BENCH DELETE D THE ADDITION, OBSERVING THE FOLLOWING. 13. THE LD AR ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENE SS OF THE TRANSACTIONS, THE ONUS TO DISPROVE THE SAME IS ON R EVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CA SE OF KRISHNAN AND 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 EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECT LY PROVE THE FACT OF I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 21 BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND RE ASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURT HER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUS PICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGME NTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAIMED BY THE ASSE SSEE ON LTCG ON ALLEGEDPENNY SOCKS. (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 14. MOREOVER IT WAS SUBMITTED BEFORE US BY LD AR TH AT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASS ESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING P RICE RIGGING. IT WAS SUBMITTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFF ECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HIS BROKER WAS A PART Y TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN CSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SU PPORT OF THIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEF IT UNDER SECTION 10(38) OF THE ACT AND TO ASSESS THE SALE PROCEEDS O F SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS.AMITA AGARWAL & OTHERS - ITA NOS. 247/(KOL) / OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL/ 2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [ 2006] 6 SOT 247 (MUM) 15. WE NOTE THAT THE LD. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMAL CHAND JAIN IN TAX APPEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIND THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MAD E BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DONE THROUGH THE BROKER AND TH E ADDRESS OF THE BROKER WAS INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOWN AS CAPITAL GAINS WHICH WA S NOT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PRO FIT OF THE ASSESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBI T OF ADVENTURE IN NATURE OF TRADE. THUS, IT CAN BE SEEN THAT IN THE D ECISION RELIED UPON BY I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 22 THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARN ED ON SALE OF SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT. 16. IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF TH E CASE OF THE ASSESSEE ARE SIMILAR WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED T HE CLAIM OF LTCG ON SUCH SALE OF SHARES THEREFORE, RESPECTFULLY FOLL OWING THE SAME RATIO, I AM INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND ORD ER TO ALLOW THE CLAIM OF LTCG ON SALE OF SHARE OF M/S. SESL AND DELETE TH E CONSEQUENTIAL ADDITION. 9. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF THE SMC BENCH OF ITAT KOLKATA, AND THER E IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDINGS OF THE SMC BENCH IN THE CASE OF VASUDHA JAIN (SUPRA), WE FIND NO REASON TO INTERFER E IN THE SAID ORDER OF THE SMC BENCH OF THIS TRIBUNAL AND THE SAME IS H EREBY UPHELD. THEREFORE, WE DELETE THE ADDITION OF RS.1,12,13,010 /- AND WE ALSO DELETE THE CONSEQUENTIAL ADDITION ON ACCOUNT OF UNE XPLAINED EXPENDITURE TOWARDS COMMISSION AT RS.56,065/-. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 9. SIMILARLY THE CHENNAI BENCH OF ITAT IN ITA 384 V IDE ORDER DATED 18.06.2019 IN THE CASE OF SAME SCRIP OF M/S S ULABH ENGINEERING LTD. HAS ALLOWED RELIEF TO THE ASSESSEE . SIMILAR IS THE POSITION OF SMC BENCH KOLKATA, WHEREBY IN ITA NO. 2 378 VIDE ORDER DATED 07.08.2019, THE TRIBUNAL ALLOWED RELIEF TO TH E ASSESSEE. AGAIN SMC KOLKATA BENCH IN ITA 1018 VIDE ORDER DATED 15.0 2.2019 ALLOWED RELIEF TO THE ASSESSEE ON THE SAME SCRIP AN D SIMILAR IS THE POSITION OF B BENCH OF KOLKATA WHEREIN VIDE ORDER D ATED 10.05.2019 IN ITA NOS. 125 AND 126 THE SAME SCRIP OF SULAB ENG INEERING AND SERVICES LTD. WAS CONSIDERED AND RELIEF WAS GRANTE D TO THE ASSESSEE. 9.1 WE FURTHER FIND THAT IN A RECENT JUDGMENT BY TH E HON'BLE DELHI HIGH COURT VIDE ORDER DATED 15.01.2021 IN AN APPEAL FILED BY REVENUE AGAINST THE ORDER OF TRIBUNAL THE HON'BLE C OURT IN A CONSOLIDATED ORDER IN THREE APPEALS DISMISSED THE A PPEALS OF THE REVENUE. IN I.T.A. NO.125, ON THE BASIS OF SAME INV ESTIGATION REPORT, THE ASSESSING OFFICER AND CIT(A) HAD NOT ALLOWED CL AIM OF THE ASSESSEE OF LONG TERM CAPITAL GAIN ON THE SCRIP M/S GOLD LINE INTERNATIONAL FINVEST LTD. IN I.T.A. NO. 130 AND 1 31 SIMILAR CLAIM WAS MADE ON SCRIP OF M/S EASTERN BIO ORGANIC FOOD P ROCESSING LTD. AND ON SCRIP OF RANDER CORPORATION LTD. THE AUTHOR ITIES BELOW HAD NOT ALLOWED CLAIM OF THE ASSESSEE ON THE BASIS OF S AME INVESTIGATION REPORT ON THE BASIS OF WHICH CLAIM OF THE ASSESSEE HAS BEEN REJECTED. I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 23 THESE SCRIPS ARE MENTIONED AT SL. NO. 24, 19 AND 49 IN THE LIST OF PENNY STOCKS PREPARED BY INVESTIGATION TEAM. THE T RIBUNAL HOWEVER ALLOWED RELIEF TO THE ASSESSEE BY SEPARATE ORDERS W HICH WERE CONFIRMED BY HON'BLE DELHI HIGH COURT. THE RELEVAN T FINDINGS OF HON'BLE COURT ARE REPRODUCED BELOW: 3. THE PRESENT APPEALS UNDER SECTION 260A OF THE I NCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] AR E DIRECTED AGAINST THE COMMON ORDER DATED 6TH AUGUST, 2019 [HE REINAFTER REFERRED TO AS THE IMPUGNED ORDER] PASSED IN ITA NO. 1069/DEL/2019 (FOR AY 2014-15), 2772/DEL/2019 (FOR AY 2015- 16) AND OTHER APPEALS FOR THE SAME AYS, BY THE INCO ME TAX APPELLATE TRIBUNAL [HEREINAFTER REFERRED TO AS THE ITAT]. HOWEVER, THE IMPUGNED ORDER RECORDS THE FACTUAL POS ITION ONLY IN RESPECT OF ITA NO. 1069/DEL/2019. 4. THE REVENUE UR GES IDENTICAL QUESTIONS OF LAW IN ALL THE AFORE-NOTED A PPEALS WITH THE ONLY DIFFERENCE BEING THE FIGURES RELATING TO THE A DDITIONS MADE UNDER SECTION 68 READ WITH SECTION 115BBE OF THE AC T. ACCORDINGLY, THE SAME ARE BEING DECIDED BY WAY OF T HIS COMMON ORDER. 5. IT IS NOT IN DISPUTE, AS NOTED IN THE IMP UGNED ORDER, THAT THE FACTUAL BACKGROUND IN ALL THE THREE APPEALS IS QUITE SIMILAR. HOWEVER, FOR THE SAKE OF CONVENIENCE, THE FACTS IN RESPECT OF ITA 125/2020 ARE BEING NOTED AND DISCUSSED ELABORATELY. BRIEFLY STATED, THE RESPONDENT-ASSESSEE IS AN INDIVIDUAL WH O HAS DERIVED INCOME FROM INTEREST ON LOAN, FDR, NSC AND BANK INT EREST UNDER THE HEAD OF INCOME FROM OTHER SOURCES IN RESPECT OF A.Y. 2015- 16. SHE FILED HER RETURN OF INCOME, DECLARING TOTAL INCOME OF RS. 13,96,116/-. AFTER CLAIMING DEDUCTION OF RS. 1,60,0 00/- UNDER CHAPTER VI-A, THE TOTAL TAXABLE INCOME OF RESPONDEN T WAS DECLARED TO BE RS. 12,36,120/-. THE RETURN WAS PROC ESSED UNDER SECTION 143(1) OF THE ACT AND THEREAFTER THE CASE W AS SELECTED FOR SCRUTINY. DURING THE SCRUTINY PROCEEDINGS, THE AO N OTICED THAT FOR THE RELEVANT YEAR UNDER CONSIDERATION, THE RESPONDE NT HAD CLAIMED EXEMPTED INCOME OF RS. 96,75,939/- AS RECEI PTS FROM LONG TERM CAPITAL GAIN [HEREINAFTER REFERRED TO AS LTCG] UNDER SECTION 10(38) OF THE ACT. HE INTER ALIA CONC LUDED THAT THE ASSESSEE HAD ADOPTED A COLORABLE DEVICE OF LTCG TO AVOID TAX AND ACCORDINGLY FRAMED THE ASSESSMENT ORDER UNDER S ECTION 143(3) OF THE ACT AT THE TOTAL INCOME OF RS. 1,09,1 2,060/-, MAKING AN ADDITION OF RS. 96,75,939/- UNDER SECTION 68 REA D WITH 115BBE OF THE ACT ON ACCOUNT OF BOGUS LTCG ON SALE OF PENN Y STOCKS OF A COMPANY NAMED M/S GOLD LINE INTERNATIONAL FINVEST L IMITED. THE APPEAL BEFORE THE CIT(A) WAS DISMISSED AND ADDITION S WERE CONFIRMED WITH THE OBSERVATION THAT THE RESPONDENT HAD INTRODUCED UNACCOUNTED MONEY INTO THE BOOKS WITHOUT PAYING I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 24 TAXES. FURTHER APPEAL FILED BY THE RESPONDENT BEFOR E THE LEARNED ITAT WAS ALLOWED IN HER FAVOUR, AND THE ADDITIONS W ERE DELETED VIDE THE IMPUGNED ORDER, RELEVANT PORTION WHEREOF R EADS AS UNDER: 21. A PERUSAL OF THE ASSESSMENT ORDER CLEAR LY SHOWS THAT THE ASSESSING OFFICER WAS CARRIED AWAY BY THE REPOR T OF THE INVESTIGATION WING KOLKATA. IT CAN BE SEEN THAT THE ENTIRE ASSESSMENT HAS BEEN FRAMED BY THE ASSESSING OFFICER WITHOUT CONDUCTING ANY ENQUIRY FROM THE RELEVANT PARTIES OR INDEPENDENT SOURCE OR EVIDENCE BUT HAS MERELY RELIED UPON THE S TATEMENTS RECORDED BY THE INVESTIGATION WING AS WELL AS INFOR MATION RECEIVED FROM THE INVESTIGATION WING. IT IS APPAREN T FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ANY INDEPENDENT AND SEPARATE ENQUIRY IN THE CASE OF THE ASSESSEE. EVEN, THE STATEMENT RECORDED BY THE INVESTIGATION W ING HAS NOT BEEN GOT CONFIRMED OR CORROBORATED BY THE PERSON DU RING THE ASSESSMENT PROCEEDINGS. XX XX XX 23. IT IS PROVIDED U/S. 142 (2) OF THE ACT THAT FOR THE PURPOSE OF OBTAINING FULL INFORMATION IN RESPECT OF INCOME OR LOSS OF ANY PERSON, THE ASSESSING OFFICER MAY MAKE SUCH ENQUIRY AS HE CONSIDERS NECESSARY. IN OUR CONSIDERED VIEW THE ASS ESSING OFFICER OUGHT TO HAVE CONDUCTED A SEPARATE AND INDEPENDENT ENQUIRY AND ANY INFORMATION RECEIVED FROM THE INVESTIGATION WIN G IS REQUIRED TO BE CORROBORATED AND AFFIRM DURING THE ASSESSMENT BY THE ASSESSING OFFICER BY EXAMINING THE CONCERNED PERSON S WHO CAN AFFIRM THE STATEMENTS ALREADY RECORDED BY ANY OTHER AUTHORITY OF THE DEPARTMENT. FACTS NARRATED ABOVE CLEARLY SHOW T HAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY AND THE ENTIRE ASSESSMENT ORDER AND THE ORDER OF THE FIRST APPELLA TE AUTHORITY ARE DEVOID OF ANY SUCH ENQUIRY. 24. THE REPORT FROM THE DIRECTORATE INCOME TAX INVESTIGATION WING, KOLKATA IS DATED 27.04.2015 WHEREAS THE IMPUGNED SALES TRANSACTIONS TOOK PLACE IN THE MONTH OF MARCH, 2014. THE EXPARTE AD INTERIM OR DER OF SEBI IS DATED 29.06.2015 WHEREIN AT PAGE 34 UNDER PARA 5 0 (A) M/S. ESTEEM BIO ORGANIC FOOD PROCESSING LTD WAS RESTRAIN ED FROM ACCESSING THE SECURITIES MARKET AND BUYING SELLING AND DEALING IN SECURITIES EITHER DIRECTLY OR INDIRECTLY IN ANY MAN NER TILL FURTHER DIRECTIONS. A LIST OF 239 PERSONS IS ALSO MENTIONED IN SEBI ORDER WHICH ARE AT PAGES 34 TO 42 OF THE ORDER THE NAMES OF THE APPELLANTS DO NOT FIND ANY PLACE IN THE SAID LIST. AT PAGES 58 AND 59 THE NAMES OF PRE IPO TRANSFEREE IN THE SCRIP OF M/S. ESTEEM BIO ORGANIC FOOD PROCESSING LTD IS GIVEN AND IN THE SAID LIST ALSO THE NAMES OF THE APPELLANTS DO NOT FIND ANY PLACE. AT PAGE 63 OF THE SEBI ORDER-TRADING BY TRADING IN M/S. ESTEEM BI O QRGANIC FOOD PROCESSING LTD A FURTHER LIST OF 25 PERSONS IS MENTIONED I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 25 AND ONCE AGAIN THE NAMES OF THE APPELLANTS DO NOT F IND PLACE IN THIS LIST ALSO. 25. AS MENTIONED ELSEWHERE THE BROK ERS OF THE ASSESSEE NAMELY ISG SECURITIES LIMITED AND SMC GLOB AL SECURITIES LIMITED ARE STATIONED AT NEW DELHI AND T HEIR NAMES ALSO DO NOT FIND PLACE IN THE LIST MENTIONED HERE I N ABOVE IN THE SEBI ORDER. THERE IS NOTHING ON RECORD TO SHOW THAT THE BROKERS WERE SUSPENDED BY THE SEBI NOR THERE ANYTHING ON RE CORD TO SHOW THAT THE TWO BROKERS OF THE APPELLANTS MENTIONED HE RE IN ABOVE WERE INVOLVED IN THE ALLEGED SCAM. THE ASSESSING OF FICER HAS NOT EVEN CONSIDERED EXAMINING THE BROKERS OF THE APPELL ANTS. IT IS A MATTER OF THE FACT THAT SEBI LOOKS INTO IRREGULAR M OVEMENTS IN SHARE PRICES ON RANGE AND WARN INVESTOR AGAINST ANY SUCH UNUSUAL INCREASE IN SHARES PRICES. NO SUCH WARNINGS WERE ISSUED BY THE SEBI. 26. THERE IS NO DISPUTE THAT THE STATEMENTS WHICH W ERE RELIED BY THE ASSESSING OFFICER WERE NOT RECORDED BY THE ASSE SSING OFFICER IN THE ASSESSMENT PROCEEDINGS BUT THEY WERE PRE-EXI STING STATEMENTS RECORDED BY THE INVESTIGATION WING AND T HE SAME CANNOT BE THE SOLE BASIS OF ASSESSMENT WITHOUT COND UCTING PROPER ENQUIRY AND EXAMINATION DURING THE ASSESSMENT PROCE EDINGS ITSELF. IN OUR HUMBLE OPINION, NEITHER THE ASSESSIN G OFFICER CONDUCTED ANY ENQUIRY NOR HAS BROUGHT ANY CLINCHING EVIDENCES TO DISPROVE THE EVIDENCES PRODUCED BY THE ASSESSEE. TH E REPORT OF INVESTIGATION WING IS MUCH LATER THAN THE DATES OF PURCHASE / SALE OF SHARES AND THE ORDER OF THE SEBI IS ALSO MUCH LA TER THAN THE DATE OF TRANSACTIONS TRANSACTED AND NOWHERE SEBI HA S DECLARED THE TRANSACTION TRANSACTED AT EARLIER DATES AS VOID . XX XX XX 30. CONSIDERING THE VORTEX OF EVIDENCES, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS SUCCESSFULLY DISCHARGED THE ONUS CAST UPON HIM BY PROVISIONS OF SECTION 68 OF THE ACT AS MENTIONED ELSEWHERE, SUCH DISCHARGE OF ONUS IS PURELY A QUEST ION OF FACT AND THEREFORE THE JUDICIAL DECISIONS RELIED UPON BY THE DR WOULD DO NO GOOD ON THE PECULIAR PLETHORA OF EVIDENCES IN RE SPECT OF THE FACTS OF THE CASE IN HAND AND HENCE THE JUDICIAL DE CISIONS RELIED UPON BY BOTH THE SIDES, THOUGH PERUSED, BUT NOT CON SIDERED ON THE FACTS OF THE CASE IN HAND. 6. AGGRIEVED BY THE AFO RESAID FINDINGS, THE REVENUE HAS FILED THE INSTANT APPEALS CONTENDIN G THAT, NOTWITHSTANDING THE TAX EFFECT IN THE APPEALS FALLI NG BELOW THE THRESHOLD PRESCRIBED UNDER CIRCULAR NO. 23 DATED 6 TH SEPTEMBER, 2019, THE APPEALS ARE MAINTAINABLE IN VIEW OF THE O FFICE MEMORANDUM DATED 16TH SEPTEMBER, 2019 ISSUED BY THE CBDT, WHICH CLARIFIES THAT THE MONETARY LIMITS PRESCRIBED IN THE AFOREMENTIONED CIRCULAR SHALL NOT APPLY WHERE AN AS SESSEE IS CLAIMING BOGUS LTCG THROUGH PENNY STOCKS, AND THE A PPEALS BE I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 26 HEARD ON MERITS. 7. MR. ZOHEB HOSSAIN, LEARNED SENI OR STANDING COUNSEL FOR THE REVENUE (APPELLANT HEREIN), CONTEND S THAT THE LEARNED ITAT HAS COMPLETELY ERRED IN LAW IN DELETIN G THE ADDITION, AND THUS THE IMPUGNED ORDER SUFFERS FROM PERVERSITY . HE SUBMITS THAT THERE ARE CERTAIN GERMANE FACTUAL ERRORS, INAS MUCH AS THE LEARNED ITAT HAS WRONGLY RECORDED THAT THERE WAS NO INDEPENDENT ENQUIRY CONDUCTED BY THE AO, WHEN IN FA CT THE AO HAD ISSUED NOTICES TO THE COMPANIES IN QUESTION UND ER SECTION 133(6) OF THE ACT. HE POINTS OUT THAT THE OBSERVATI ONS RECORDED IN PARA 25 OF THE IMPUGNED ORDER ARE FACTUALLY INCORRE CT, AND IN CONFLICT WITH PARA 4 OF THE ORDER OF THE CIT(A) DAT ED 24TH DECEMBER, 2018 WHICH READS AS FOLLOWS: 4. EVEN THE BROKER THROUGH WHOM THE SHARES WERE DEMATERIALIZED AND SOL D I.E. SMC GLOBAL SECURITIES LTD. WAS ALSO A PART OF THE SCAM. THIS IS A DELHI BASED BROKER WHOSE REGIONAL OFFICE WAS ALSO SURVEYE D. THE SUB BROKERS WERE ALSO SURVEYED AND ALSO STATEMENTS RECO RDED WHICH CONFIRMED THE PAYMENT OF CASH COMMISSION BY THE BEN EFICIARIES FOR BEING PART OF THE SYNDICATE. 8. MR. HOSSAIN AR GUES THAT IN CASES RELATING TO LTCG IN PENNY STOCKS, THERE MAY N OT BE ANY DIRECT EVIDENCE IN THE HANDS OF THE REVENUE TO ESTA BLISH THAT THE INVESTMENT MADE IN SUCH COMPANIES WAS AN ACCOMMODAT ION ENTRY. THUS THE COURT SHOULD TAKE THE ASPECT OF HUMAN PROB ABILITIES INTO CONSIDERATION THAT NO PRUDENT INVESTOR WOULD INVEST IN PENNY SCRIPS. CONSIDERING THE FACT THAT THE FINANCIALS OF THESE COMPANIES DO NOT SUPPORT THE GAINS MADE BY THESE COMPANIES IN THE STOCK EXCHANGE, AS WELL AS THE FACT THAT DESPITE THE NOTI CES ISSUED BY THE AO, THERE WAS NO EVIDENCE FORTHCOMING TO SUSTAIN TH E CREDIBILITY OF THESE COMPANIES, HE ARGUES THAT IT CAN BE SAFELY CONCLUDED THAT THE INVESTMENTS MADE BY THE PRESENT RESPONDENTS WER E NOT GENUINE. HE SUBMITS THAT THE AO MADE SUFFICIENT IND EPENDENT ENQUIRY AND ANALYSIS TO TEST THE VERACITY OF THE CL AIMS OF THE RESPONDENT AND AFTER OBJECTIVE EXAMINATION OF THE F ACTS AND DOCUMENTS, THE CONCLUSION ARRIVED AT BY THE AO IN R ESPECT OF THE TRANSACTION IN QUESTION, OUGHT NOT TO HAVE BEEN INT ERFERED WITH. IN SUPPORT OF HIS SUBMISSION, MR. HOSSAIN RELIES UPON THE JUDGMENT OF THIS COURT IN SUMAN PODDAR V. ITO, [2020] 423 IT R 480 (DELHI), AND OF THE SUPREME COURT IN SUMATI DAYAL V . CIT, (1995) SUPP. (2) SCC 453. 9. MR. HOSSAIN FURTHER ARGUES THAT THE LEARNED ITAT HAS ERRED IN HOLDING THAT THE AO DID NOT CONSIDER EXAMINING THE BROKERS OF THE RESPONDENT. HE ASSERTS THAT THIS HOLDING IS CONTRAR Y TO THE FINDINGS OF THE AO. AS A MATTER OF FACT, THE DEMAT ACCOUNT STATEMENT OF THE RESPONDENT WAS CALLED FOR FROM THE BROKER M/S SMC GLOBAL SECURITIES LTD UNDER SECTION 133(6) OF T HE ACT, ON I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 27 PERUSAL WHEREOF IT WAS FOUND THAT THE RESPONDENT WA S NOT A REGULAR INVESTOR IN PENNY SCRIPS. 10. WE HAVE HEARD MR. HOSSAIN AT LENGTH AND GIVEN OUR THOUGHTFUL CONSIDERATION TO HIS CONTENTIONS, BUT ARE NOT CONVINCED WITH THE SAME FO R THE REASONS STATED HEREINAFTER. 11. ON A PERUSAL OF THE RECORD, IT IS EASILY DISCERNIBLE THAT IN THE INSTANT CASE, THE AO HAD PR OCEEDED PREDOMINANTLY ON THE BASIS OF THE ANALYSIS OF THE F INANCIALS OF M/S GOLD LINE INTERNATIONAL FINVEST LIMITED. HIS CONCLU SION AND FINDINGS AGAINST THE RESPONDENT ARE CHIEFLY ON THE STRENGTH OF THE ASTOUNDING 4849.2% JUMP IN SHARE PRICES OF THE AFOR ESAID COMPANY WITHIN A SPAN OF TWO YEARS, WHICH IS NOT SU PPORTED BY THE FINANCIALS. ON AN ANALYSIS OF THE DATA OBTAINED FRO M THE WEBSITES, THE AO OBSERVES THAT THE QUANTUM LEAP IN THE SHARE PRICE IS NOT JUSTIFIED; THE TRADE PATTERN OF THE AFORESAID COMPA NY DID NOT MOVE ALONG WITH THE SENSEX; AND THE FINANCIALS OF THE CO MPANY DID NOT SHOW ANY REASON FOR THE EXTRAORDINARY PERFORMANCE O F ITS STOCK. WE HAVE NOTHING ADVERSE TO COMMENT ON THE ABOVE ANA LYSIS, BUT ARE CONCERNED WITH THE AXIOMATIC CONCLUSION DRAWN B Y THE AO THAT THE RESPONDENT HAD ENTERED INTO AN AGREEMENT T O CONVERT UNACCOUNTED MONEY BY CLAIMING FICTITIOUS LTCG, WHIC H IS EXEMPT UNDER SECTION 10(38), IN A PREPLANNED MANNER TO EVA DE TAXES. THE AO EXTENSIVELY RELIED UPON THE SEARCH AND SURVEY OP ERATIONS CONDUCTED BY THE INVESTIGATION WING OF THE INCOME T AX DEPARTMENT IN KOLKATA, DELHI, MUMBAI AND AHMEDABAD ON PENNY STOCKS, WHICH SETS OUT THE MODUS OPERANDI ADOPTED I N THE BUSINESS OF PROVIDING ENTRIES OF BOGUS LTCG. HOWEVER, THE RE LIANCE 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 ACCO MMODATION ENTRIES. WE DO NOTICE THAT THE AO MADE AN ATTEMPT T O DELVE INTO THE QUESTION OF INFUSION OF RESPONDENTS UNACCOUNTE D MONEY, BUT HE DID NOT DIG DEEPER. NOTICES ISSUED UNDER SECTION S 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 A NY FURTHER. HE THEREAFTER SIMPLY PROCEEDED ON THE BASIS OF THE FIN ANCIALS OF THE COMPANY TO COME TO THE CONCLUSION THAT THE TRANSACT IONS WERE ACCOMMODATION ENTRIES, AND THUS, FICTITIOUS. THE CO NCLUSION DRAWN BY THE AO, THAT THERE WAS AN AGREEMENT TO CON VERT UNACCOUNTED MONEY BY TAKING FICTITIOUS LTCG IN A PR E-PLANNED MANNER, IS THEREFORE ENTIRELY UNSUPPORTED BY ANY MA TERIAL ON RECORD. THIS FINDING IS THUS PURELY AN ASSUMPTION B ASED ON CONJECTURE MADE BY THE AO. THIS FLAWED APPROACH FOR MS THE I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 28 REASON FOR THE LEARNED ITAT TO INTERFERE WITH THE F INDINGS OF THE LOWER TAX AUTHORITIES. THE LEARNED ITAT AFTER CONSI DERING THE ENTIRE CONSPECTUS OF CASE AND THE EVIDENCE BROUGHT ON RECORD, HELD THAT THE RESPONDENT HAD SUCCESSFULLY DISCHARGE D THE INITIAL ONUS CAST UPON IT UNDER THE PROVISIONS OF SECTION 6 8 OF THE ACT. IT IS RECORDED THAT THERE IS NO DISPUTE THAT THE SHAR ES OF THE TWO COMPANIES WERE PURCHASED ONLINE, THE PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL, AND THE SHARES WERE DEMATE RIALIZED AND THE SALES HAVE BEEN ROUTED FROM DE-MAT ACCOUNT AND THE CONSIDERATION HAS BEEN RECEIVED THROUGH BANKING CHA NNELS. THE ABOVE NOTED FACTORS, INCLUDING THE DEFICIENT ENQUIR Y CONDUCTED BY THE AO AND THE LACK OF ANY INDEPENDENT SOURCE OR EV IDENCE TO SHOW THAT THERE WAS AN AGREEMENT BETWEEN THE RESPON DENT AND ANY OTHER PARTY, PREVAILED UPON THE ITAT TO TAKE A DIFFERENT VIEW. BEFORE US, MR. HOSSAIN HAS NOT BEEN ABLE TO POINT O UT ANY EVIDENCE WHATSOEVER TO ALLEGE THAT MONEY CHANGED HA NDS BETWEEN THE RESPONDENT AND THE BROKER OR ANY OTHER PERSON, OR FURTHER THAT SOME PERSON PROVIDED THE ENTRY TO CONVERT UNAC COUNTED MONEY FOR GETTING BENEFIT OF LTCG, AS ALLEGED. IN T HE ABSENCE OF ANY SUCH MATERIAL THAT COULD SUPPORT THE CASE PUT F ORTH BY THE APPELLANT, THE ADDITIONS CANNOT BE SUSTAINED. 12. M R. HOSSAINS SUBMISSIONS RELATING TO THE STARTLING SPIKE IN THE SHARE PRICE AND OTHER FACTORS MAY BE ENOUGH TO SHOW CIRCUMSTANCES T HAT MIGHT CREATE SUSPICION; HOWEVER THE COURT HAS TO DECIDE A N ISSUE ON THE BASIS OF EVIDENCE AND PROOF, AND NOT ON SUSPICION A LONE. THE THEORY OF HUMAN BEHAVIOR AND PREPONDERANCE OF PROBA BILITIES CANNOT BE CITED AS A BASIS TO TURN A BLIND EYE TO T HE EVIDENCE PRODUCED BY THE RESPONDENT. WITH REGARD TO THE CLAI M THAT OBSERVATIONS MADE BY THE CIT(A) WERE IN CONFLICT WI TH 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, F OLLOWING THE SAME REASONING, AND RELYING UPON THE REPORT OF THE INVESTIGATION WING. LASTLY, RELIANCE PLACED BY THE REVENUE ON SUM AN PODDAR V. ITO (SUPRA) AND SUMATI DAYAL V. CIT (SUPRA) IS OF N O 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 BEFOR E THE ITAT AND THE COURT, SUCH AS, INTER ALIA, LACK OF EVIDENC E PRODUCED BY THE ASSESSEE THEREIN TO SHOW ACTUAL SALE OF SHARES IN THAT CASE. ON SUCH BASIS, THE ITAT HAD RETURNED THE FINDING OF FA CT AGAINST THE ASSESSEE, HOLDING THAT THE GENUINENESS OF SHARE TRA NSACTION WAS NOT ESTABLISHED BY HIM. HOWEVER, THIS IS QUITE DIFF ERENT FROM THE FACTUAL MATRIX AT HAND. SIMILARLY, THE CASE OF SUMA TI DAYAL V. CIT I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 29 (SUPRA) TOO TURNS ON ITS OWN SPECIFIC FACTS. THE AB OVE-STATED CASES, THUS, ARE OF NO ASSISTANCE TO THE CASE SOUGHT TO BE CANVASSED BY THE REVENUE. 13. THE LEARNED ITAT, BEING THE LAST F ACT-FINDING AUTHORITY, ON THE BASIS OF THE EVIDENCE BROUGHT ON RECORD, HAS RIGHTLY COME TO THE CONCLUSION THAT THE LOWER TAX A UTHORITIES 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 L ESS A SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION. 15. A CCORDINGLY, THE PRESENT APPEALS ARE DISMISSED. 10. IN THE ABOVE NOTED JUDGMENT, THE HON'BLE COURT HAS HELD THAT STARTLING SPIKE IN THE SHARE PRICE AND OTHER FACTOR S MAY BE ENOUGH TO SHOW CIRCUMSTANCES THAT MIGHT CREATE SUSPICION BUT THE COURT HAS TO DECIDE AN ISSUE ON THE BASIS OF EVIDENCE AND PROOF, AND NOT ON SUSPICION ALONE. THE HON'BLE COURT FURTHER DISTING UISHED THE JUDGMENT IN THE CASE OF SUMAN PODAR WHICH WAS IN FA VOUR OF REVENUE. THE HON'BLE COURT FURTHER HELD THAT CASE OF SUMATI DAYAL U/S CIT WAS ALSO NOT APPLICABLE TO THE ASSESSEE. T HE HON'BLE COURT FURTHER HELD THAT RELIANCE PLACED BY THE ASSESSING OFFICER ON THE INVESTIGATION REPORT OF INVESTIGATION WING 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. 11. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES AND IN VIEW OF JUDICIAL PRECEDENTS, GROUND NOS. 3 AND 4 ARE ALLOWE D IN ITA NO. 475/LKW/2019 AND GROUND NO. 1, 2, 5 & 6 WERE NOT AR GUED, THEREFORE, SAME ARE DISMISSED AS NOT PRESSED. IN VI EW OF ABOVE, APPEAL IN ITA NO. 475/LKW/2019 IS PARTLY ALLOWED. 12. AS REGARDS, APPEAL IN ITA NO. 681/LKW/2019, GRO UND NOS. 5 AND 6 ARE ALLOWED. GROUND NOS. 1 TO 4 AND GROUND NO. 7 TO 8 WERE NOT ARGUED, THEREFORE, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. AS REGARDS GROUND NO. 9 AND 10, THE ASSESSING OFFIC ER HAD MADE ADDITIONS U/S 69C AS DEEMED COMMISSION ON THE ARRAN GEMENT OF CAPITAL GAINS. SINCE WE HAVE ALLOWED RELIEF TO THE ASSESSEE ON GROUND NO. 5 & 6, THEREFORE, THESE GROUNDS ARE ALSO ALLOWE D. 13. AS REGARDS GROUNDS 11 TO 13 REGARDING DEPOSIT I N BANK, THE ASSESSEE HAS FILED ADDITIONAL EVIDENCES WHICH COULD NOT BE FILED BECAUSE OF MISTAKE OF COUNSEL AND ILLNESS OF ASSESS EE THEREFORE, WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE OFFICE OF THE ASSESSING OFFICER WHO, AFTER AFFORDING REASONABLE O PPORTUNITY OF BEING HEARD TO THE ASSESSEE, WILL PASS APPROPRIATE ORDERS. IN VIEW OF THE ABOVE, GROUND NO. 11 TO 13 ARE ALLOWED FORSTATI STICAL PURPOSES. I.T.A. NO.498/LKW/2019 ASSESSMENT YEAR:2014-15 30 14. IN VIEW OF ABOVE, APPEAL IN ITA NO. 681 IS ALS O PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE JUDICIAL PRECEDENTS, THE DENIAL OF CLAIM U/S 10(38) IS NOT JUSTIFIED AND THE ORDER OF LEARNED CIT(A) IS REVERSED AND GROUND NO. 1,2,3,4 & 7 OF THE APPEAL ARE ALLOWED. 10. GROUND NOS. 5,6,8 & 9 WERE NOT ARGUED AND THERE FORE, THESE ARE DISMISSED AS NOT PRESSED. 11. SINCE APPEAL OF THE ASSESSEE HAS BEEN ALLOWED O N THE MERITS, THE STAY APPLICATION FILED BY THE ASSESSEE HAS BECOME INFRUC TUOUS AND IS THEREFORE, DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S PARTLY ALLOWED AND STAY APPLICATION IS DISMISSED AS INFRUCTUOUS. (ORDER PRONOUNCED IN THE OPEN COURT ON 20/07/2021) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:20/07/2021 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW BY ORDER ASSISTANT REGISTRAR