ACIT CEN CIR 24 & 26, MUMBAI V. ZIAUDDIN A. SIDDIQUE, MUMBAI

ITA 5182/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3222 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 21-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 06-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Assessee Lawyers: RAJESH SANGHAVI
• Keywords: Unexplained cash credit; Additional evidence; Question of law; Accommodation entries; Penny stocks
• Section: 143(3); 153A; 68; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI D KARUNAKARA RAO, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NOS 5182 & 5183/MUM/2011 ASSESSMENT YEAR : 2005-06 & 2006-07 ACIT CEN CIR. 24 & 26 MUMBAI. VS. SHRI ZIAUDDIN A SIDDIQUE 401, ALICE VILLA, OPP ALMEDIA PARK, ROAD NO.5, BANDRA (W), MUMBAI 400 050 PAN AHLPS0554P (APPELLANT) RESPONDENT) APPELLANT BY : MS. VIDISHA KALRA CIT -DR RESPONDENT BY : SHRI RAJESH SANGHAVI DATE OF HEARING : 10 .0 8 .201 6 DATE OF PRONOUNCEMENT : 09 .0 9 . 201 6 O R D E R PER D KARUNAKARA RAO, ACCOUNTANT MEMBER THERE ARE TWO APPEALS UNDER CONSIDERATION INVOLVIN G TWO DIFFERENT ASSESSMENT YEARS, NAMELY 2005-06 AND 2006-07. 2. ITA NO. 5182/MUM/2011 FOR A.Y. 2005-06. THIS IS AN APPEAL BY THE REVENUE. THE GROUND RAIS ED BY THE REVENUE IS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), ERRED IN DELETING THE ADDITION MADE AFTER T HOROUGH INVESTIGATION ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 OF TH E I.T.ACT AMOUNTING TO RS.1,03,33,955/- INSTEAD OF LONG TERM CAPITAL GAIN AS ADOPTED BY THE ASSESSEE IN HIS RETURN OF INCOME. ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 2 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSES SEE FILED RETURN OF INCOME FOR THE A.Y. 2005-06 ORIGINALLY U/S. 139(1) OF THE ACT DECLARING THE INCOME OF RS.18,96,007/-. SUBSEQUENTLY, THERE WAS SEARCH ACT ION U/S. 132 OF THE ACT ON 08.05.2007 AT THE RESIDENTIAL AND BUSINESS PREMISES OF BINDRA ROHIRA GROUP OF CASES. THE ASSESSEE WAS ALSO COVERED IN THE SEARCH OPERATION. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF BUILDING S. CONSEQUENT TO SEARCH ACTION, THE AO ISSUED NOTICE U/S. 153A OF THE ACT CALLING F OR RETURN OF INCOME. THE ASSESSEE RESPONDED AND FILED THE RETURN OF INCOME DECLARING THE SAME INCOME AS DONE U/S. 139 (1) OF THE ACT. IN THE RETURN OF INCOME, THERE IS A CLAIM OF EXEMPTION OF CAPITAL GAINS. IN THE ASSESSMENT PROCEEDINGS U/S. 153A R.W .S. 143(3) OF THE ACT, THE AO DETERMINED THE ASSESSED INCOME AT RS.1,44,63,135/- AFTER MAKING ADDITIONS ON ACCOUNT OF CAPITAL GAINS. THE DETAILS OF THE TRANS ACTIONS AND CONCLUSIONS OF THE AO ARE GIVEN IN PARA 5 OF THE ASSESSMENT ORDER. IN TH E RE-ASSESSMENT U/S. 153A OF THE ACT, THE AO MADE THE ADDITION OF RS.28,58,138/- IN THE REGULAR ASSESSMENT QUA THE TRANSACTIONS REVOLVING AROUND THE PURCHASE AND SALE OF PENNY STOCK OF SHARES OF ELTROL LTD. FURTHER THE AO MADE ADDITION OF RS.1, 03,33,925/- INVOLVING THE PURCHASE AND SALE OF PENNY STOCK OF SHARES OF RAMKR ISHNA FINCAP LTD. (RFL IN SHORT), AND THERE WERE OTHER ADDITIONS TOO. THE AB OVE SAID ADDITION OF RS.28,58,138/- INVOLVING ELTROL LTD., WAS SUBJECT M ATTER OF DISPUTE IN THE REGULAR ASSESSMENT DATED 31.12.2007 AND THE ASSESSEE WAS IN APPEAL BEFORE THE CIT(A) AND THEN BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE IT S COMPOSITE ORDER DATED 25.04.2014 FOR A.YS. 2002-03 TO 2008 09 CONFIRMED THE SAID ADDITION OF RS.28,58,138/-. FURTHER, THE TRIBUNAL ALSO GAVE A FINDING MISTAKENLY IN CONNECTION WITH THE SHARE TRADING ACTIVITY INVOLVING RFL TOO, INADVERTENTLY IGNORING THE FACT THAT ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 3 THE SAME WAS NOT THE SUBJECT MATTER OF APPEAL. IN THE MISCELLANEOUS APPLICATION PROCEEDINGS OF THE ASSESSEE, THE TRIBUNAL EXPUNGED THE SAID ADVERSE CONCLUSIONS ON THE TRADING TRANSACTION INVOLVING SHARES OF RFL VID E ITS ORDER IN MISCELLANEOUS APPLICATION DATED 10.12.2014. IN EFFECT, THE TRIBU NAL APPRECIATED AND DISTINGUISHED THE FACTS RELATING TO THE TRANSACTIONS INVOLVING TH E PURCHASE AND SALE OF SHARES OF RFL FROM THE PURCHASE AND SALE OF SHARES OF ELTROL LTD., AND ALSO MENTIONED THAT THE TRIBUNAL HAS NO JURISDICTION ON SUCH TRANSACTIONS I NVOLVING RFL, AS IT IS THE SUBJECT MATTER OF ADDITION IN THE ASSESSMENT MADE U/S. 153A OF THE ACT AND NOT THE REGULAR ASSESSMENT. 4. THEREFORE, THE ISSUE FOR ADJUDICATION BEFORE US RELATES TO THE ADDITION OF RS.1,03,33,925/- MADE ON ACCOUNT OF PURCHASE AND SA LE OF SHARES OF RFL IN THE ASSESSMENT MADE U/S. 153A OF THE ACT. REFERRING TO THE SAID TRANSACTIONS OF PURCHASE AND SALE OF SHARES OF RFL HELD BY THE ASSE SSEE, LEARNED COUNSEL NARRATED THE FACTS THAT THE ASSESSEE PURCHASED THESE SHARES AT PAR IN FEBRUARY 2004 AND DEMATED THE SAME IMMEDIATELY IN MARCH 2004. PAYMEN TS WERE MADE INVOLVING BANKING CHANNELS AND THERE WAS NO SPLITTING OF SHAR ES UNLIKE THE SHARES OF ELTROL LTD., REFERRED ABOVE. ALL THESE TRANSACTIONS OF PU RCHASE AND SALE WERE DONE THROUGH STOCK MARKET. THERE ARE NO NEGATIVE STATEMENTS AGA INST THE TRANSACTIONS INVOLVING RFL, MANY PERSON CONNECT TO THE PURCHASE AND SALE. PER CONTRA, BRING OUR ATTENTION TO THE TRANSACTIONS INVOLVING THE SHARES OF ELTROL LTD., ARE THAT THE ASSESSEE PURCHASED 1,43,000 SHARES IN JULY 2002 AND THE SAME WAS DEMATED ON 03.03.2003. SUBSEQUENTLY, THESE SHARES WITH THE FACT VALUE OF R S.10/- WERE SPLIT INTO SHARES WITH FACE VALUE OF RE. 1/- ON 03.05.2003. THUS, 1,43,00 0 SHARES BECAME 14,30,000 SHARES AFTER SPLITTING. SUBSEQUENTLY, THESE SHARES WERE SOLD AFTER ONE YEAR BETWEEN ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 4 AUGUST 2003 AND MARCH 2004. PURCHASE AND SALE OF T HESE SHARES HAPPENED IN THE OFF MARKET AND NOT THROUGH EXCHANGE. PAYMENTS WERE NOT DONE THROUGH BANKING CHANNELS. EVENTUALLY, THE AO NOTICED THAT THE SAID SHARES OF RFL WERE SOLD BY THE ASSESSEE AT A RATE AS HIGH AS RS.185/- IN THE KOLKA TA STOCK EXCHANGE. THE AO GATHERED VARIOUS DETAILS IN THE ASSESSMENT PROCEEDI NGS AND PROCEEDED TO MADE ADDITION OF RS.1,03,33,925/- U/S. 68 OF THE ACT. T HE AO HELD THE FINANCIALS OF RFL ARE TOO WEAK TO COMMAND SUCH A HIGH PRICE AND, THER EFORE, HE CAME TO THE CONCLUSION THAT THE TRANSACTIONS RELATED TO THE SHA RES WERE SHAM AND NOT GENUINE. IT IS A CASE OF COLOURABLE DEVICE. AGGRIEVED WITH THE ABOVE ADDITION, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). 5. THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT TH E SHARES OF RFL WERE PURCHASED THROUGH SEBI REGISTERED BROKERS. THE SHA RES OF THE ASSESSEE WERE DEMATED IMMEDIATELY THEREAFTER. SUBSEQUENTLY, THE SHARES WERE SOLD THROUGH SEBI REGISTERED BROKERS AND STT WAS PAID ON SALE OF SAID SHARE TRANSACTIONS. THE PAYMENTS WERE MADE THROUGH BANKING CHANNELS AND TRA NSFER OF SHARES TOOK PLACE THROUGH DEMAT ACCOUNT. THE ASSESSEE RELIED ON THE CONTRACT NOTES ISSUED BY THESE BROKERS AND TRANSACTIONS WERE CONFIRMED BY THE SHAR E BROKERS AND THE RELATED PARTIES. THERE WERE NO ADVERSE WITNESSES OR STATEM ENTS GATHERED BY THE REVENUE DURING THE SEARCH ACTION INVOLVING THESE TRANSACTIO NS. HE ARGUED THAT SINCE THE SALE OF SHARES WAS DONE AT HIGHER RATES IT DOES NOT CONS TITUTE CONCLUSIVE EVIDENCE AGAINST THE ASSESSEE. THEREFORE, THE ADDITION IS N OT JUSTIFIED AS THE SAME IS DONE BASED ON SURMISES AND CONJECTURES. CONSIDERING THE ABOVE, THE CIT(A) GRANTED RELIEF TO THE ASSESSEE AS PER THE DISCUSSIONS GIVEN IN PARA 14.13 TO 14.18 OF THE ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 5 ORDER OF THE CIT(A). THE CONTENTS OF PARA 14.18 AR E EXTRACTED HEREUNDER FOR THE SAKE OF CONVENIENCE:- 14.18. THE FACTS IN THE APPLICANTS CASE IS MORE F AVOURABLE TO THE APPELLANT COMPARED TO THE FACTS OF THE ABOVE MENTIO NED JAMNADEVI AGARWALS CASE. THE HONBLE BOMBAY HIGH COURT DECI SION IS SQUARELY APPLICABLE IN THIS CASE. RESPECTFULLY FOLLOWING TH E HONBLE BOMBAY HIGH COURT JUDGMENT, I HOLD THAT THE CLAIM OF LONG TERM CAPITAL GAINS IS GENUINE IN THIS CASE AND I DELETE THE ADDITION OF R S.1,03,33,955/- MADE U/S. 68 OF THE ACT. AGGRIEVED WITH THE SAID RELIEF GRANTED BY THE CIT(A ), THE REVENUE IS IN APPEAL BEFORE US. 6. TO START WITH, THE DR FOR THE REVENUE RELIED HEA VILY ON THE ORDER OF THE AO. THE LEARNED DR FILED WRITTEN SUBMISSIONS, WHIC H BASICALLY CONTAINS HER ARGUMENTS MADE BEFORE US. HER ARGUMENTS INCLUDES T HAT THE SHARES OF RFL CONSTITUTES PENNY STOCKS. THEY WERE PURCHASED AT A RATE AS LOW AS RS.2.5/- TO RS.3/- PER SHARE IN FEBRUARY 2004 AND THEY WERE SOL D AT A RATE EXTREMELY AS HIGH AS RS.125/- TO RS.185/- PER SHARE. THIS RATE DIFFEREN CE IN ABOUT A GAP OF ONE YEAR. REFERRING TO THE FINANCIAL STATUS OF RAMAKRISHNA FI N CORP LTD., THE CITDR SUBMITTED THAT THE MARKET VALUE OF THE SHARES IS NO T IN ANY WAY NEARER TO THE NET ASSET VALUE OF THE COMPANY. SHE ALSO MENTIONED THA T M/S. BASANT PERIWAL & CO., IS A BROKER THROUGH WHOM THE ASSESSEE PURCHASED SHARES AND THE SAID BROKER WAS FOUND GUILTY OF CERTAIN DISCREPANCY BY THE SEBI. R EFERRING TO THE DISCREPANCY ON THE CLIENT CODE, THE CIT-DR SUBMITTED THAT THERE WAS AN ERROR IN THIS REGARD IN THE BOOKS MAINTAINED BY THE SAID BROKER. ALTHOUGH, THE SAME WAS EXPLAINED AS A MISTAKE OF THE STAFF OF THE BROKER, THE EXPLANATION IS UNACCEPTABLE AND RAISES DOUBTS ABOUT THE GENUINENESS OF THE PURCHASE TRANSACTIONS OF THE SHARES FROM THE BROKER. ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 6 THE LEARNED CIT-DR ALSO RELIED ON THE JUDGMENT OF T HE HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL [214 ITR 801] AND REQUESTE D US TO APPLY THE TEST OF HUMAN PROBABILITY AGAINST THE ASSESSEE. REFERRING TO THE IMPUGNED ORDER OF THE CIT(A), THE CIT-DR SUBMITTED THAT THE JURISDICTIONA L HIGH COURT JUDGEMENTS IN THE CASE OF JAMNADEVI AGARWAL [328 ITR 656] WAS HEAVILY RELIED FOR GRANTING RELIEF TO THE ASSESSEE. IN THIS REGARD, THE CIT-DR IS OF THE OPINION THAT THE SAID JUDGMENT ONLY MENTIONED ABOUT THE ABSENCE OF ANY QUESTION OF LAW AND THERE IS NO FINDING OF FACT BY THE HONBLE HIGH COURT THAT HELPS THIS ASSE SSEE. FURTHER REFERRING TO THE PENALTY ORDER IMPOSED BY THE SEBI ON BASANT PERIWAL & CO., THE CIT-DR SUBMITTED THAT PENALTY OF RS.3,00,000/- WAS LEVIED ON THE BRO KER IN CONNECTION WITH THE ALLEGATION AGAINST THE BROKER ON PRICE RIGGING OF T HE RFL SHARES. FOR THIS REASON, THE CIT-DR SUBMITTED THAT THE ORDER OF THE CIT(A) S HOULD BE REVERSED ON THIS ISSUE AND THAT OF THE AO SHOULD BE REVIVED. 7. PER CONTRA, THE LEARNED AR FOR THE ASSESSEE OPEN ED HIS REMARKS BY STATING THAT THE CASE WAS ADJOURNED PERIODICALLY BY THE BENCH. MENTIONING THE REQUIREMENT OF FILING OF COPIES OF THE DECISION OF THE TRIBUNAL OF KOLKATA BENCH INVOLVING THE TRANSACTIONS OF SALE AND PURCHASE OF SHARES OF RFL, IN THIS REGARD, LEARNED COUNSEL SUBMITTED THAT THERE IS NO SUCH DEC ISION IN EXISTENCE FROM KOLKATA BENCH INVOLVING RFL. IN THIS REGARD, LEARNED COUNS EL BROUGHT ATTENTION TO THE ASSESSEES CLARIFICATION VIDE HIS LETTER DATED 16.0 6.2016. THUS, THE AR FOR THE ASSESSEE CATEGORICALLY SUBMITTED THAT THIS ISSUE IN VOLVING TRANSACTIONS OF SALE OF PURCHASE OF RFL HAS TO BE INDEPENDENTLY DECIDED/ADJ UDICATED NOT INFLUENCED BY THE DECISION OF THE TRIBUNAL ON THE TRANSACTIONS INVOLV ING PURCHASE AND SALE OF SHARES OF ELTROL LTD. THE ADVERSE COMMENTS IF ANY ARE EVENTUA LLY EXPUNGED BY THE TRIBUNAL ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 7 VIDE MISCELLANEOUS APPLICATION PROCEEDINGS (SUPRA). OTHERWISE, LEARNED COUNSEL FOR THE ASSESSEE NARRATED THAT THERE IS NO IOTA OF DEFI CIENCIES OF ANY KIND FOUND BY THE AO WITH REGARD TO THE DOCUMENTATION I.E. PURCHASE A ND SALE BILLS, CONTRACT NOTES, CHEQUE PAYMENTS, SEBI TRANSACTIONS ETC. IT IS A ST RAIGHT CASE OF BUYING SHARES OF RFL THOUGH BONA FIDE TRANSACTIONS INVOLVING THE STO CK EXCHANGE AND SELLING OF THE SAME FOR EARNING LONG TERM CAPITAL GAINS. THE GAIN S ARE EXEMPT FROM TAX. THE AO HAS NOT BROUGHT OUT ANY INCRIMINATING EVIDENCE OR M ATERIAL TO DEMONSTRATE THAT THE TRANSACTIONS ARE SHAM OR BOGUS OR ENTERED WITH ANY MALA FIDE INTENTIONS OF CONVERTING UNACCOUNTED MONEY INTO ACCOUNTED GAINS. REFERRING TO THE OTHER JUDGMENTS OF THE TRIBUNAL INVOLVING SIMILAR TRANSAC TIONS OF PURCHASE AND SALE OF SHARES OF SAME RFL, THE LEARNED COUNSEL FILED A COP Y OF THE ORDER OF THE TRIBUNAL IN THE CASE OF MS/. INDRAVARDHAN JAIN & SHRI INDRAVADA N JAIN (HUF) DATED 27.05.2016, WHEREIN THE TRIBUNAL GRANTED RELIEF TO THE ASSESSEE . IN THIS CASE ALSO, THE SHARES INVOLVED ARE SHARES OF RFL AND THE BROKER INVOLVED IS SAME AS BASANT PERIWAL & CO. FURTHER, REFERRING TO THE DECISION OF THIS TRIBUNAL IN THE CASE OF RANJEET SINGH BINDRA IN ITA NO. 6254 & 6255/MUM/2012 DATED 19.11.2014, T HE LEARNED COUNSEL SUBMITTED THAT SIMILAR TRANSACTIONS OF RFL SHARES W AS ALLOWED IN FAVOUR OF THE ASSESSEE THOUGH THE SAID TRANSACTIONS IN THE SAID C ASE HAPPENED IN THE OFF MARKET TRANSACTIONS AND THERE WERE NO CHEQUE PAYMENTS BUT ONLY LEDGER ENTRIES. HE ALSO REFERRED TO ANOTHER DECISION OF THE TRIBUNAL IN THE CASE OF RANJEET BINDRA [ITA NO. 5534/MUM/2011 FOR AY 2004-05], WHICH WAS ALSO DECID ED IN FAVOUR OF THE ASSESSEE, OF COURSE, THE SCRIPT INVOLVED IN THE CASE IS BLUEC HIP INDIA LTD. THE COUNSEL ALSO RELIED HEAVILY ON THE JURISDICTIONAL HIGH COURT JUD GMENT IN THE CASE OF JAMNADEVI AGRAWAL (SUPRA). THE HONBLE HIGH COURT IS OF THE OPINION THAT WHEN THE DOCUMENTS ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 8 PRODUCED ARE IN ORDER AND THE TRANSACTIONS ARE CONF IRMED BY THE EXCHANGES AND THE PURCHASE AND SALE PRICES ARE IN SYNC WITH THE PRICE S APPEARED ON THE STOCK EXCHANGES, OTHER DISCREPANCIES RELATING TO OFF MARK ET/CASH TRANSACTIONS ETC. ARE NO GROUND FOR MAKING ADDITIONS U/S. 68 OF THE ACT. RE FERRING TO THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF SHYAM R PA WAR [INCOME TAX APPEAL NO. 1568 TO 1571 OF 2012], THE LEARNED COUNSEL SUBMITTE D THE DISCREPANCY WITH REFERENCE TO THE RECTIFICATION OF CLIENT CODE IS NO T A GROUND FOR DENYING BENEFITS TO THE ASSESSEE AS THE SAME CONSTITUTE FLIMSY EVIDENCE AND CONFIRMED THE APPLICABILITY OF THE JAMNADEVI AGRAWAL JUDGMENT WHILE GRANTING RE LIEF TO THE ASSESSEE. WITH REFERENCE TO THE FINANCIALS OF RFL THE LEARNED COUN SEL FOR THE ASSESSEE SUBMITTED THAT WHAT MATTERS TO THE ASSESSEE, WHO IS A BUYER A ND SELLER OF SHARES IN EXCHANGE, IS THE MARKET RATES OF THE LISTED SHARES OF RFL AND HE IS NOT TO BE BOTHERED BY THE FINANCIALS OF THE COMPANY. THIS IS FOR THE EXPERTS IN THE CAPITAL MARKETS TO KNOW AND NOT FOR THE PERSONS LIKE THE ASSESSEE, WHO IS I NVOLVED IN INVESTING IN SHARES FOR SELLING AFTER A PERIOD OF HOLDING OF THE SHARES. T HE PRICE OF THE SHARES IN THE CAPITAL MARKET GOES UP AND DOWN AND THE SAME IS NOT SOLELY CONTROLLED BY THE FINANCIALS OF THE SAID COMPANY. LOTS OF OTHER FACTS SUCH AS EMOT IONS, PROJECTIONS, LIQUIDITY, VOLUMES ETC. HAVE IMPACT ON THE PRICE RISE OF THE S HARES IN THE MARKET. THEREFORE, THE LEARNED AR IS OF THE OPINION THAT THE ORDER OF THE CIT(A) , WHICH WAS DECIDED BASED ON THE JURISDICTION HIGH COURT JUDGMENT IS FA IR AND REASONABLE AND THE SAME SHOULD BE CONFIRMED. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT MATERIAL AVAILABLE BEFORE US. WE FIND THAT THERE IS NO DISP UTE ON THE FACTS RELATING TO THE NUMBER OF SHARES, RATES/PRICE ETC. THE TRANSACTION S OF PURCHASE AND SALE OF RFL ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 9 SHARES IS DONE THROUGH THE STOCK EXCHANGE INVOLVING REGISTERED BROKERS IN STOCK. THE PAYMENTS ARE MADE THROUGH BANKING CHANNELS. WE FIND THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES ARE EXECUTED WITHOUT VI OLATING ANY PROCEDURES PRESCRIBED BY ANY LAW. SO FAR AS THE ASSESSEE IS C ONCERNED, THE DOCUMENTATION INVOLVING THE SAID PURCHASE AND SALE OF SHARES IS W ITHOUT ANY CRITICISM BY THE AO. THE ASSESSEE MAINTAINED RELEVANT PAPERS PROPERLY. IN OUR VIEW, THE AO PROCEEDED TO INVOKE THE PROVISIONS OF SECTION 68 OF THE ACT D ESPITE THE CLARITY WITH REFERENCE TO THE ISSUES RELATING TO IDENTITY AND CREDIT WORTHINE SS OF THE ASSESSEE. IT APPEARS THAT THE AO IS PREDOMINANTLY INFLUENCED BY THE PENNY STO CK RELATED ISSUES ON THE SHARES OF RFL AND TREATED THE SAID TRANSACTIONS AS SHAM. IN OUR VIEW, THE DECISION OF THE AO IS NOT VALID AND APPROPRIATE AS THERE IS NO ADVE RSE CRITICISM ON THE RELEVANT DOCUMENTATION INVOLVING THESE SHARE TRANSACTIONS. THERE IS NO ALLEGATION AGAINST THE ASSESSEE INDIVIDUALLY AS INVOLVED IN PRICE RIGG ING. UNLIKE IN THE SHARES OF ELTROL LTD., THERE ARE NO ADVERSE WITNESSES OR STATEMENTS GIVEN BY THIRD PARTIES QUESTIONING THE GENUINENESS OF THE TRANSACTIONS. I N THIS CASE, THE TRANSACTIONS ARE DONE VERY MUCH THROUGH THE EXCHANGE AND THE PAYMENT S ARE MADE INVOLVING BANKING CHANNELS. NO EVIDENCE IS GATHERED BY THE S EARCH TEAM DURING THE PROCEEDINGS U/S. 132 TO SUPPORT THE ALLEGATION ABOU T THE GENUINENESS OF THE TRANSACTIONS. NO EVIDENCE IS GATHERED ABOUT THE CA SH TRANSFERS IF ANY EITHER AT THE PURCHASE POINT OR AT THE SALE POINT OF SHARE TRANSA CTION. NOTHING ADVERSE WAS BROUGHT ABOUT BY THE SEARCH TEAM THAT THE ASSESSEE IS PERSONALLY INVOLVED IN PRICE RAISING OF SHARES FROM RS.2.5/- TO RS.185/- PER SHA RE. THERE IS NO ADVERSE INFERENCE ABOUT THE BONA FIDES OF THE ASSESSEE IN BUYING AND SELLING OF THE SAID SHARES OF RFL. IN SUCH CIRCUMSTANCES WHEN THERE IS NO EVIDENCE AGA INST THE ASSESSEE ON THE ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 10 TRANSACTIONS INVOLVED, WE ARE OF THE OPINION THAT W HY NOT THE ASSESSEE SHOULD BE ONE GENUINE INVESTOR AND, THEREFORE, THERE IS NO CA SE FOR INVOKING THE PROVISIONS OF SECTION 68 FOR MAKING THE ADDITIONS ON ACCOUNT OF T RANSACTIONS INVOLVING THE SHARES OF RFL. 9. FURTHER WE HAVE ALSO PERUSED THE CITED DECISIONS OF THE TRIBUNAL IN THE CASE OF MS/. INDRAVARDHAN JAIN & SHRI INDRAVADAN JA IN (HUF) DATED 27.05.2016 [ITA NO. 4861/MUM/2014 & ITA 5168/MUM/2014], RANJEET SIN GH BINDRA [ITA NO. 6254 & 6255/MUM/2012 DATED 19.11.2014], JAMNADEVI AGARWA L [328 ITR 656 (BOM)], M/S. SUBHLAKSHMI VANIJYA PVT. LTD.[ITA NO. 1104/KOL /2014] DATED 30.07.2015 ETC. IN THE CASE OF MS/. INDRAVARDHAN JAIN & SHRI INDRAV ADAN JAIN (HUF), WHERE SIMILAR TRANSACTIONS INVOLVING RFL SHARES ON ONE SIDE AND T HE BROKER M/S. BASANT PERIWAL & CO. ON THE OTHER, BOMBAY BENCH OF THE TRIBUNAL GAVE A FINDING THAT THE TRANSACTIONS INVOLVED ARE GENUINE AND THE ADDITIONS WERE DELETED . THE CONTENTS AT PARA 8 OF THE SAID ORDER OF THE TRIBUNAL ARE RELEVANT AND WE PROC EED TO EXTRACT THE SAME HERE AS UNDER: 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFUL LY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE AO HAS TREATED THE SHARE TRANSACTION AS BOGUS ON THE P LEA THAT SEBI HAS INITIATED INVESTIGATION IN RESPECT OF RAMKRISHNA FI NCAP PVT. LTD. THE AO FURTHER STATED THAT INVESTIGATION REVEALED THAT TRA NSACTION THROUGH M/S BASANT PERIWAL AND CO. ON THE FLOOR OF STOCK EXCHAN GE WAS MORE THAN 83%. WE FOUND THAT AS FAR AS INITIATION OF INVESTIG ATION OF BROKER IS CONCERNED, THE ASSESSEE IS NO WAY CONCERNED ITH THE ACTIVITY OF THE BROKER. DETAILED FINDING HAS BEEN RECORDED BY CIT(A ) TO THE EFFECT THAT ASSESSEE HAS MADE INVESTMENT IN SHARES WHICH WAS PU RCHASED ON THE FLOOR OF STOCK EXCHANGE AND NOT FROM M/S BASANT PER IWAL AND CO. AGAINST PURCHASES PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CH EQUE, DELIVERY OF SHARES WERE TAKEN, CONTRACT OF SALE WAS ALSO COMPLE TE AS PER THE CONTRACT ACT, THEREFORE, THE ASSESSEE IS NOT CONCER NED WITH ANY WAY OF THE BROKER. NOWHERE THE AO HAS ALLEGED THAT THE TRA NSACTION BY THE ASSESSEE WITH THESE PARTICULAR BROKER OR SHARE WAS BOGUS, MERELY ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 11 BECAUSE THE INVESTIGATION WAS DONE BY SEBI AGAINST BROKER OR HIS ACTIVITY, ASSESSEE CANNOT BE SAID TO HAVE ENTERED INTO INGENU INE TRANSACTION, INSOFAR AS ASSESSEE IS NOT CONCERNED WITH THE ACTIV ITY OF THE BROKER AND HAVE NO CONTROL OVER THE SAME. WE FOUND THAT M/S BA SANT PERIWAL AND CO. NEVER STATED ANY OF THE AUTHORITY THAT TRANSACT ION IN M/S RAMKRISHNA FINCAP PVT. LTD. ON THE FLOOR OF THE STOCK EXCHANGE ARE INGENUINE OR MERE ACCOMMODATION ENTRIES. THE CIT(A) AFTER RELYING ON THE VARIOUS DECISION OF THE COORDINATE BENCH, WHEREIN ON SIMILAR FACTS A ND CIRCUMSTANCES, ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, CAME T O THE CONCLUSION THAT TRANSACTION ENTERED BY THE ASSESSEE WAS GENUINE. DE TAILED FINDING RECORDED BY CIT(A) AT PARA 3 TO 5 HAS NOT BEEN CONT ROVERTED BY THE DEPARTMENT BY BRINING ANY POSITIVE MATERIAL ON RECO RD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF CIT(A). MOREOVER, ISSUE IS ALSO COVERED BY THE DECISION OF JURISDICTI ONAL HIGH COURT IN THE CASE OF SHYAM R. PAWAR (SUPRA), WHEREIN UNDER SIMIL AR FACTS AND CIRCUMSTANCES, TRANSACTIONS IN SHARES WERE HELD TO BE GENUINE AND ADDITION MADE BY AO WAS DELETED. RESPECTFULLY FOLLO WING THE SAME VIS-- VIS FINDINGS RECORDED BY CIT(A) WHICH ARE AS PER MA TERIAL ON RECORD, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 10. WE HAVE ALSO PERUSED THE DECISION OF THE D BE NCH OF THE MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF RANJEET SING H BINDRA AND FIND THAT THE TRIBUNAL GRANTED RELIEF TO THE ASSESSEE ON MERITS A ND FIND THE CONTENTS OF PARA 5 FOR THE PROPOSITION THAT THERE IS NO CASE FOR MAKING AD DITIONS ON ACCOUNT OF TRANSACTIONS INVOLVING SHARES OF RFL. 4. ON A PERUSAL OF THE ORDER PASSED BY LD CIT (A),WE NOTICE THAT THE ASSESSEE HAS PROVED THE SOURCES FOR THE PURCHAS E OF SHARES OF M/S RAMAKRISHNA FINCAP LTD AND ALSO FURNISHED BROKE R BILL AND CONTRACT NOTE IN SUPPORT OF THE SAME. THE BROKERS H AVE ALSO CONFIRMED THE FACT OF PURCHASE. SINCE IT WAS AN OFF MARKET TR ANSACTION, THE PURCHASES WERE NOT AVAILABLE WITH THE STOCK EXCHANG E. THEREAFTER, THE ASSESSEE HAS DEMATED THE SHARES IN SEP, 2004 AND ST ARTED SELLING THE SHARES IN INSTALLMENTS FROM 4.11. 2004 TO 25.4.2005 . ALL THE SALE HAVE BEEN CARRIED THROUGH STOCK EXCHANGE. THE LD CIT(A) HAVE ALSO NOTICED THAT THE PURCHASE OF SHARES HAVE BEEN DULY ACCOUNTED FOR IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF IN COME PERTAINING TO ASSESSMENT YEAR 2004-05 ON 1.11.2004. THE SALE TRAN SACTIONS HAVE ALSO BEEN ACCOUNTED FOR IN THE BOOKS. THE ASSESSEE HAS POINTED OUT THAT THE SHARE PRICE OF THE ABOVE SAID COMPANY HAS GONE UP FURTHER ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 12 AFTER ITS SALE BY THE ASSESSEE. UNDER THESE SET OF FACTS, THE LD CIT(A) HELD THAT THE ASSESSING OFFICER HAS MERELY DISBELIE VED THE EVIDENCES FURNISHED BY THE ASSESSEE ONLY ON SURMISES AND SUSP ICION. ACCORDINGLY HE ALLOWED THE APPEAL OF THE ASSESSEE I N RESPECT OF THIS GROUND. 5. DURING THE COURSE OF HEARING BEFORE US, THE LD D.R COULD NOT PRODUCE ANY MATERIAL TO CONTRADICT THE FINDINGS GIV EN BY LD CIT(A). EVEN THOUGH THE LD D.R SUBMITTED THAT THE LD CIT(A) HAS ACCEPTED ADDITIONAL EVIDENCES, WE NOTICE THAT THE FIRST APPE LLATE AUTHORITY HAS CONFRONTED THE SAME WITH THE AO BY CALLING FOR A RE MAND REPORT. LATER, THE LD CIT(A) HAS DECIDED THE ISSUE IN BOTH THE YEA RS IN FAVOUR OF THE ASSESSEE BY EXAMINING THE DOCUMENTS FILED BY THE AS SESSEE. UNDER THESE SET OF FACTS, WE DO NOT FIND ANY INFIRMITY IN THE VIEW TAKEN BY LD CIT(A). ACCORDINGLY, WE UPHOLD HIS ORDERS IN BOTH T HE YEARS. REGARDING THE DISCREPANCIES WITH REGARD TO THE CLIE NT CODE, WE FIND THAT THIS DISCREPANCY SHOULD CONSTITUTE A FLIMSY GROUND FOR T HE AO TO INVOKE THE PROVISIONS OF SECTION 68 OF THE ACT. TO SUM UP, WE ARE OF THE OP INION THAT THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL STAND COVERED BY THE VAR IOUS DECISIONS CITED ABOVE AND IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 11. IN THE RESULT, THE APPEAL BY THE REVENUE IS DIS MISSED. 12. ITA NO. 5183/MUM/2011 FOR A.Y. 2005-06. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) DATED 28.04.2011 FOR A.Y. 2006-07. THE GROUND RAISED IN THIS APPEAL IS IDENTICAL TO THE ONE RAISED BY THE REVENUE FOR A.Y. 2005-06. THE DE TAILS ARE GIVEN ABOVE. THE ONLY DIFFERENCE IS WITH REFERENCE TO THE FIGURE OF ADDIT ION OF RS.80,44,460/- U/S. 68 OF THE ACT ON ACCOUNT OF LONG TERM CAPITAL GAIN. 13. AT THE OUTSET, BOTH THE PARTIES SUBMITTED THAT THE FACTS RELATING TO PURCHASE AND SALE TRANSACTIONS OF RFL ARE IDENTICAL AND ARGUMENTS OF THE COUNSELS ITA NO.5182 & 5183/MUM/2011 SHRI ZIAUDDIN A SIDDIQUE 13 ARE ALSO COMMON FOR THIS APPEAL. ON CONSIDERING TH E ARGUMENTS OF THE REPRESENTATIVES OF BOTH SIDES, WE FIND THAT THE FAC TS ARE IDENTICAL. THEREFORE, THE CONCLUSION FORMED BY US IN CONNECTION WITH THE TRAN SACTIONS FOR A.Y. 2005-06 APPLIES EQUALLY FOR A.Y. 2006-07 ALSO. ACCORDINGLY , THE GROUND RAISED BY THE REVENUE IS REQUIRED TO BE DISMISSED IN THIS APPEAL ALSO. 14. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 0 9 TH SEPTEMBER 2016. SD/- SD/- (RAM LAL NEGI) (D KARUNAKARA RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED :09 TH SEPTEMBER, 2016. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI