DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3, JAIPUR V. SHRI GHANSHYAM AGRAWAL, JAIPUR

ITA 532/JPR/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5844 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 16-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Fair market value; Corroborative evidences; Accommodation entries; Tax effect; Sham transactions
• Section: 133A; 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH A, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 532/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2014-15. DY. COMMISSIONER OF INCOME - TAX, CIRCLE-3, JAIPUR. CUKE VS. SHRI GHANSHYAM AGARWAL, D-552, KAILASH MARG, BANK PARK, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AATPA 5121 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05.08.2019 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 08.08.2019 VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 4 TH JANUARY, 2019 OF LD. CIT (APPEALS), KOTA FOR THE ASSESSMENT YEAR 2014-15. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN DELETING T HE ADDITION MADE BY THE AO COMPLETELY IGNORING THE FACTS BROUGH T ON RECORD BY THE INVESTIGATION WING OF THE DEPARTMENT WHEREIN IT IS REVEALED THAT THROUGH A WELL THOUGHT OUT PLANNING O F THE ENTRY PROVIDERS UNDECLARED INCOME OF THE ASSESSEE HAS BEE N ROUTED IN BOOKS OF ACCOUNTS THROUGH A SET-OF COLORABLE ACTION GIVING THE COLOR OF THE GENUINENESS OF BOGUS TRANSACTION ? 2 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN DELETING T HE ADDITIONS MADE ON THE BASIS OF CORROBORATIVE INFORMATION RECE IVED FROM INVESTIGATION WING, KOLKATA WHICH IS A LAW ENFORCEM ENT AGENCY UNDER THE MINISTRY OF FINANCE AND ACCORDINGLY THE C ASE FALLS UNDER EXCEPTION CLAUSE 10(E) OF CIRCULAR 03 OF 2018 DATED 20.08.2018 ? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN DELETING T HE ADDITIONS OF RS. 9,00,340/- BEING COMMISSION IN ACQUIRING CASH ACCOMMODATION ENTRY ? THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR AD D TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. 2. SINCE THE TAX EFFECT IN THE APPEAL OF THE REVENU E IS MORE THAN RS.20,00,000/-, THEREFORE, THE GROUND NO. 2 OF THE REVENUES APPEAL IS IRRELEVANT AND NON EST AND, THEREFORE, THE SAME IS DISMISSED AS NOT ARISING FRO M THE FACTS OF THE PRESENT CASE AND IMPUGNED ORDER. GROUND NO. 1 IS REGARDING THE ADDITION MADE BY THE AO IN RESPECT OF LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE ON SALE OF SHARES OF M/S. TRINITY TRADELINK LIMITED TREATING THE SAME AS BOGU S TRANSACTION WHICH WAS DELETED BY THE LD. CIT (APPEALS). 3. THE ASSESSEE IS AN INDIVIDUAL AND PARTNER IN FIR M M/S. TOTARAM BANWARI LAL AS WELL AS HOTEL RAJDOOT. THE ASSESSEE FILED HIS RETU RN OF INCOME ON 29 TH OCTOBER, 2014 DECLARING TOTAL INCOME OF RS. 21,09,000/-. THE ASS ESSEE HAS ALSO DECLARED LONG TERM CAPITAL GAIN OF RS. 1,48,50,672/- ON SALE OF SHARES OF M/S. TRINITY TRADELINK LTD AND CLAIMED THE SAME AS EXEMPT UNDER SECTION 10(38) OF THE IT ACT. DURING THE SCRUTINY ASSESSMENT, THE AO ISSUED A SHOW CAUSE NOTICE TO TH E ASSESSEE AS TO WHY IN VIEW OF SEARCH AND SEIZURE ACTION CARRIED OUT BY THE DEPART MENT IN CASES OF DIFFERENT ENTITIES 3 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. WHICH HAS RESULTED UNEARTHING OF HUGE LONG TERM CAP ITAL GAIN SCAM INVOLVING SYNDICATE OF OPERATORS PROVIDING BOGUS ACCOMMODATIO N ENTRIES, THE CAPITAL GAINS DECLARED BY THE ASSESSEE SHALL NOT BE TREATED AS BO GUS TRANSACTION. THE AO HAS ALSO MADE REFERENCE TO THE STATEMENT OF ONE SHRI VIKRANT KAYAN RECORDED UNDER SECTION 133A ON 09.06.2014 BY THE INVESTIGATION WING, KOLKA TA AND POINTED OUT THAT SHRI VIKRANT KAYAN HAS ADMITTED HIS INVOLVEMENT IN PROVI DING ACCOMMODATION ENTRIES TO DIFFERENT PARTIES THROUGH VARIOUS ENTITIES AND SHAR ES OF VARIOUS COMPANIES INCLUDING M/S. TRINITY TRADELINK LTD. THE ASSESSEE CONTESTED THE SHOW CAUSE NOTICE AND SUBMITTED BEFORE THE AO THAT IT HAS PURCHASED THE S HARES OF M/S. TRINITY TRADELINK LTD. PRIOR TO ITS MERGER WITH M/S. OMNITECH PETROLE UM LTD. FORMERLY KNOWN AS SHARP TRADING & FINANCE LTD. WHICH WAS A LISTED COMPANY A ND, THEREFORE, THE SHARES OF M/S. TRINITY TRADELINK LTD. PURCHASED BY THE ASSESS EE WERE PRIOR TO THE LISTING OF THE SAID COMPANY IN THE SAID NAME. THE ASSESSEE PRODUC ED THE RELEVANT RECORD IN SUPPORT OF THE CLAIM THAT THE ASSESSEE HAS PURCHASE D THE SHARES AGAINST THE CONSIDERATION THROUGH THE BROKERS NOTE/BILL AND ALS O PRODUCED THE DEMAT ACCOUNT TO SHOW THAT THE SHARES WERE DEMATERIALIZED IN THE DEM AT ACCOUNT OF THE ASSESSEE AND SOLD FROM THE DEMAT ACCOUNT. THUS ON THE BASIS OF V ARIOUS DOCUMENTS THE ASSESSEE CONTENDED THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES ARE GENUINE. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND T REATED THE TRANSACTION AS BOGUS AND CONSEQUENTLY MADE THE ADDITION OF RS. 1,48,50,6 72/- UNDER SECTION 68 AS UNEXPLAINED CASH CREDIT. THE AO HAS ALSO MADE THE ADDITION OF NOTIONAL COMMISSION @ 6% OF THE SAID AMOUNT WHICH COMES TO RS. 9,00,340 /-. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) THAT TH E ASSESSEE HAS PRODUCED ALL RELEVANT SUPPORTING EVIDENCES TO SHOW THAT THE PURC HASE AND SALE TRANSACTION IS 4 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. GENUINE. THE PURCHASE CONSIDERATION WAS PAID AS AC KNOWLEDGED BY THE BROKER AND THE TRANSACTION ALSO SUFFERED STT, THEREFORE, THE A SSESSEE DISCHARGED THE INITIAL BURDEN OF PROVE BY PRODUCING THE DOCUMENT WHICH WAS NOT FOUND TO BE FALSE OR FABRICATED BY THE AO. THE ASSESSEE ALSO RELIED ON A SERIES OF DECISIONS ON THIS POINT. THE LD. CIT (A) ACCEPTED THE CLAIM OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE AO. 4. BEFORE US, THE LD. D/R HAS POINTED OUT THAT THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED 20,000 SHARES OF M/S. TRINITY TRADELINK L TD. ON 07.10.2012 @ RS. 10/- EACH AND STATED TO HAVE SOLD THE SHARES BETWEEN 25 TH FEBRUARY, 2014 TO 14 TH MARCH, 2014 FOR A TOTAL CONSIDERATION OF RS. 1,50,05,672/- RESULTING LONG TERM CAPITAL GAIN OF RS. 1,48,50,672/-. THUS THERE IS AN UNBELIEVABLE S PURT IN THE SALE PRICE WITHIN A SHORT PERIOD OF ONE YEAR WHICH CLEARLY SHOWS THAT I T IS NOT A NORMAL GENUINE TRANSACTION OF PURCHASE AND SALE OF SHARES BUT THE ASSESSEE HAS AVAILED THE BOGUS ENTRIES OF LONG TERM CAPITAL GAIN FROM THE PERSONS WHO WERE INVOLVED IN PROVIDING THESE BOGUS ENTRIES AGAINST CASH. THEREFORE, THE A SSESSEES OWN UNACCOUNTED INCOME HAS BEEN ROUTED BACK IN THE FORM OF EXEMPT I NCOME UNDER SECTION 10(38) OF THE ACT. THE LD. D/R HAS REFERRED TO THE ASSESSMEN T ORDER AND SUBMITTED THAT THE AO HAS REFERRED THE STATEMENT OF ONE SHRI VIKRANT K AYAN RECORDED BY THE DEPARTMENT AT KOLKATA DURING THE SURVEY CONDUCTED O N 09.06.2014. IN HIS STATEMENT SHRI VIKRANT KAYAN CLEARLY EXPLAINED THE MODUS OPER ANDI OF PROVIDING THE ACCOMMODATION ENTRIES OF BOGUS BILL, SHARE CAPITAL, LONG TERM CAPITAL GAIN ETC. HE HAS ALSO GIVEN THE NAMES OF VARIOUS CONCERNS WHICH WERE MANAGED AND THE ACCOMMODATION ENTRIES IN THE SHARES OF THOSE CONCER NS WERE BEING PROVIDED. THUS M/S. TRINITY TRADELINK LTD. IS ONE OF THE ENTITIES AS ADMITTED BY SHRI VIKRANT KAYAN, 5 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. SHARES OF WHICH THE ASSESSEE HAS CLAIMED TO HAVE PU RCHASED AND SOLD. THE LD. D/R HAS ALSO REFERRED TO THE PRICE CHART OF THE SHARES OF M/S. TRINITY TRADELINK LTD. AS REPRODUCED BY THE AO AND SUBMITTED THAT HOW THE ASS ESSEE CAN PURCHASE A SHARE AT THE PRICE OF RS. 10/- EACH WHEN THE SAME WAS SOLD A ROUND ABOUT RS. 1,000/- EACH WITHIN A SHORT PERIOD OF ONE YEAR. THEREFORE, HAVIN G REGARD TO THE SURROUNDING CIRCUMSTANCES AS WELL AS OUTCOME OF THE INVESTIGATI ON CONDUCTED BY THE DEPARTMENT AT DIFFERENT PLACES, THE AO HAS ESTABLISHED THE FAC T THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES BY THE ASSESSEE OF M/S. TRINITY TRADELINK LTD. IS A BOGUS TRANSACTION BEING ACCOMMODATION ENTRY OF LONG TERM CAPITAL GAIN WHICH IS CLAIMED AS EXEMPT. THUS THE ASSESSEES OWN UNACCOUNTED INCOME HAS BEEN ROUTED BACK IN THE SHAPE OF LONG TERM CAPITAL GAIN WHICH IS EXEMPT. HE HAS RELIED UPON THE ORDER OF THE AO. THE LD. D/R HAS ALSO RELIED UPON THE DECIS ION OF HONBLE DELHI HIGH COURT DATED 8 TH MARCH, 2019 IN CASE OF UDIT KALRA VS. ITO IN ITA N O. 220/2019 & CM NO. 10774/2019 WHEREIN THE HONBLE HIGH COURT HAS DISMI SSED THE APPEAL FILED BY THE ASSESSEE AGAINST THE DECISION OF THE TRIBUNAL HOLDI NG THAT THE CLAIM OF LONG TERM CAPITAL GAIN IN SHARES OF M/S. KAPPAC PHARMA LTD. I S FOUND TO BE BOGUS. THE LD. D/R HAS ALSO RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT DATED 10 TH APRIL, 2017 IN CASE OF SANJAY BIMALCHAND JAIN VS. PCIT IN ITA NO. 18/2017. THUS THE LD. D/R HAS SUBMITTED THAT IN BOTH THE CASES THE FINDIN G OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE HIGH COURTS WHICH SHOWS THAT THE CLA IM OF LONG TERM CAPITAL GAIN EXEMPT UNDER SECTION 10(38) WAS NOT FOUND TO BE GEN UINE. 5. ON THE OTHER HAND, THE LD. A/R HAS SUBMITTED THA T THE ASSESSEE IS REGULARLY INVESTING IN THE SHARES OF VARIOUS COMPANIES AS EVI DENT FROM THE DEMAT ACCOUNT OF THE ASSESSEE. HE HAS POINTED OUT THAT THE ASSESSEE PURCHASED THE SHARES OF M/S. 6 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. TRINITY TRADELINK LTD. FROM M/S. AMARKANTAK PROCON PVT. LTD. @ RS. 10/- PER SHARE AGAINST THE PURCHASE CONSIDERATION PAID VIDE ACCOUN T PAYEE CHEQUE NO. 788408 ON 31 ST OCTOBER, 2012. THE LD. A/R HAS REFERRED TO THE SH ARE CERTIFICATE TRANSFERRED IN THE NAME OF THE ASSESSEE AS WELL AS THE APPLICATION FOR DEMAT. HE HAS REFERRED THE DEMAT ACCOUNT OF THE ASSESSEE AND SUBMITTED THAT TH E SHARES WERE REFLECTED IN THE DEMAT ACCOUNT AND SOLD THROUGH STOCK EXCHANGE FROM THE DEMAT ACCOUNT OF THE ASSESSEE AFTER PAYING STT. THEREFORE, THE HOLDING O F THE SHARES IN THE DEMAT ACCOUNT OF THE ASSESSEE CANNOT BE DISPUTED. SIMILA RLY, THE SALE OF SHARES FROM DEMAT ACCOUNT THROUGH STOCK EXCHANGE IS ALSO NOT IN DISPUTE. THE AO HAS DOUBTED THE TRANSACTION ONLY ON THE BASIS OF THE INFORMATIO N RECEIVED FROM THE INVESTIGATION WING KOLKATA. HOWEVER, THERE IS NOTHING IN THE SAI D REPORT AGAINST THE ASSESSEE. THUS THE FINDING OF THE AO IS BASED ONLY ON SUSPICI ON WITHOUT BRINGING ANY EVIDENCE TO SHOW THAT THE ASSESSEES OWN UNACCOUNTED INCOME HAS BEEN ROUTED BACK IN THE SHAPE OF LONG TERM CAPITAL GAIN. THE LD. A/R HAS F URTHER SUBMITTED THAT THE COMPANY M/S. TRINITY TRADELINK LTD WAS EARLIER A PRIVATE LI MITED COMPANY AND SUBSEQUENTLY IT WAS CONVERTED INTO A PUBLIC LIMITED COMPANY. AFTER THE SHARES PURCHASED BY THE ASSESSEE, THE SAID COMPANY WAS AMALGAMATED WITH ONE M/S. OMNITECH PETROLEUM LTD. (FORMERLY KNOWN AS SHARP TRADING & FINANCE LTD .) VIDE APPROVAL OF AMALGAMATION BY THE HONBLE BOMBAY HIGH COURT DATED 10 TH JANUARY, 2014 WITH EFFECT FROM 01.04.2012. THE LD. A/R HAS REFERRED TO THE DECISION OF HONBLE HIGH COURT AND SUBMITTED THAT THE TRANSFEROR COMPANY WAS INCORPORATED AS PRIVATE LIMITED COMPANY WITH THE NAME M/S. TRINITY TRADELINK ON 1 ST MAY, 2007. THEREAFTER THE SAID COMPANY WAS CONVERTED INTO PUBLIC LIMITED COMPANY A ND ACCORDINGLY THE NAME OF THE COMPANY WAS CHANGED TO M/S. TRINITY TRADELINK L TD. WITH EFFECT FROM 23 RD 7 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. DECEMBER, 2011. THE TRANSFEREE COMPANY WAS INCORPOR ATED AS M/S. SHARP TRADING & FINANCE LTD. ON 30 TH MARCH, 1985 AS A PUBLIC LIMITED COMPANY. THEREAFTE R, THE NAME OF THE COMPANY WAS CHANGED FROM M/S. SHARP TRADING & FINANCE LTD. TO M/S. OMNITECH PETROLEUM LTD. ON 19 TH APRIL, 2011. ON AMALGAMATION OF M/S. TRINITY TRADELINK LTD. WITH M/S. OMNITECH PETROLEUM LTD. TH E SHARES OF TRANSFEREE COMPANY WERE ISSUED IN THE RATIO OF 1:1 TO THE SHAREHOLDERS OF TRANSFEROR COMPANY. THUS THE ASSESSEE RECEIVED THE EQUAL NUMBER OF SHARES OF M/S . OMNITECH PETROLEUM LTD. IN LIEU OF THE SHARES OF M/S. TRINITY TRADELINK LTD. B Y VIRTUE OF AMALGAMATION. THE LD. A/R THEN POINTED OUT THAT THE NAME OF M/S. OMNITECH PETROLEUM LTD. WAS AGAIN CHANGED TO M/S. TRINITY TRADELINK LTD. THUS THE CO MPANY M/S. TRINITY TRADELINK LTD. WHOSE SHARES WERE PURCHASED BY THE ASSESSEE IS A DI FFERENT COMPANY THAN A COMPANY M/S. OMNITECH PETROLEUM LTD. CHANGED ITS NA ME TO M/S. TRINITY TRADELINK LTD. HE HAS REFERRED THE ISIN NUMBER OF THESE TWO COMPANIES WHICH ARE DIFFERENT AND, THEREFORE, THE AO HAS CONSIDERED SHARE PRICE O F M/S. TRINITY TRADELINK LTD. POST AMALGAMATION AND NOT THE PRE-AMALGAMATION COMPANY W HOSE SHARES WERE PURCHASED BY THE ASSESSEE. AFTER THE AMALGAMATION AND CHANGE OF NAME, THE ENTIRE RECORDS ON STOCK EXCHANGE AS WELL AS ISIN DATABASE IS SHOWING THE NAME OF ONE COMPANY, THEREFORE, THE SHARE PRICE REFERRED BY THE AO IN THE ASSESSMENT ORDER WAS IN RESPECT OF M/S. SHARP TRADING & FINANCE LTD. NAM E OF WHICH WAS CHANGED TO M/S. OMNITECH PETROLEUM LTD. BUT AFTER AMALGAMATION THE NAME WAS AGAIN CHANGED TO M/S. TRINITY TRADELINK LTD. THEREFORE, THE DATABASE IN THE STOCK EXCHANGE AS WELL AS ISIN ARE AVAILABLE ONLY IN THE NAME OF M/S. TRINITY TRADELINK LTD. ONCE THE ASSESSEE HAS PRODUCED ALL THE SUPPORTING DOCUMENTS TO PROVE THE GENUINENESS OF THE PURCHASE TRANSACTION, PAYMENT OF PURCHASE CONSIDERA TION THROUGH BANKING CHANNEL, 8 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. DEMATERIALIZATION OF THE SHARES IN THE DEMAT ACCOUN T AND SALE OF THE SHARES FROM THE DEMAT ACCOUNT THROUGH STOCK EXCHANGE WITHOUT ES TABLISHING THE DOCUMENTARY EVIDENCE BROUGHT BY THE ASSESSEE AS BOGUS TREATING THE TRANSACTION BY THE AO AS ACCOMMODATION BASED ON SUSPICION IS NOT JUSTIFIED. HE HAS RELIED UPON THE DECISION OF MUMBAI SPECIAL BENCH IN CASE OF GTC INDUSTRIES V S. ACIT, 164 ITD 1 AND SUBMITTED THAT THE SPECIAL BENCH HAS HELD THAT SUSP ICION HOW SO EVER STRONG MAY BE BUT CANNOT BE THE BASIS OF ADDITION EXCEPT FOR SOME MATERIAL EVIDENCE ON RECORD. THE THEORY OF PREPONDERANCE OF PROBABILITY IS APP LIED TO WEIGH THE EVIDENCES OF EITHER SIDE AND DRAW A CONCLUSION IN FAVOUR OF A PA RTY WHICH HAS MORE FAVOURABLE FACTORS IN HIS SIDE. THUS IN THE ABSENCE OF ANY MA TERIAL OR DIRECT EVIDENCE BROUGHT ON RECORD BY THE AO TO SHOW THAT THE ASSESSEE INTRO DUCED HIS OWN UNACCOUNTED INCOME BY WAY OF BOGUS LONG TERM CAPITAL GAIN, THE TREATMENT OF LONG TERM CAPITAL GAIN AS BOGUS IS NOT SUSTAINABLE IN LAW. HE HAS A LSO RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT DATED 11.09.2017 IN CASE OF CIT VS. POOJA AGARWAL IN DB IT APPEAL NO.385/2011. HE HAS ALSO RELIED U PON THE ORDER OF THIS TRIBUNAL DATED 31 ST JANUARY, 2018 IN CASE OF SHRI PRAMOD JAIN VS. DCIT IN ITA NO. 368/JP/2017. THE LD. A/R HAS REFERRED A SERIES OF DECISIONS OF THIS TRIBUNAL AS WELL AS COORDINATE BENCHES OF THE TRIBUNAL WHEREIN THE L ONG TERM CAPITAL GAIN TREATED AS BOGUS ACCOMMODATION TRANSACTION BY THE AO HAS BEEN HELD AS GENUINE TRANSACTION AS THE ASSESSEE HAS PRODUCED ALL THE SUPPORTING EVI DENCES. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE PURCHASED 20,000 SHARES OF M/ S. TRINITY TRADELINK LTD. @ RS. 10/- EACH FOR A TOTAL CONSIDERATION OF RS. 2,00,000 /-. THE ASSESSEE HAS PRODUCED THE SHARE CERTIFICATE OF THE SHARES WHEREBY THE SHARES WERE INITIALLY ISSUED IN THE NAME 9 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. OF M/S. AMARKANTAK PROCON PVT. LTD. AND WERE TRANSF ERRED IN THE NAME OF THE ASSESSEE VIDE ENDORSEMENT DATED 31 ST OCTOBER, 2012. AS PER THE SALE BILL DATED 07.10.2012 THE PAYMENT OF PURCHASE CONSIDERATION HA S BEEN ACKNOWLEDGED BY THE SELLER. EVEN OTHERWISE, THE SAID PAYMENT WAS REFLEC TED IN THE BANK ACCOUNT OF THE ASSESSEE THROUGH CLEARANCE OF CHEQUE NO. 788048 ON 31 ST OCTOBER, 2012. THIS PAYMENT OF RS. 2,00,000/- PAID TO M/S. AMARKANTAK P ROCON PVT. LTD. IS DULY REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE AND, THEREFORE, THE SAID EVIDENCE WHICH CAN BE INDEPENDENTLY VERIFIED CANNOT BE DISPUTED IN THE AB SENCE OF ANY MATERIAL BROUGHT ON RECORD TO SHOW THAT THE PAYMENT WAS NOT IN RESPECT OF PURCHASE OF SHARES BUT FOR SOME OTHER TRANSACTION. THE ASSESSEE HAS PRODUCED T HE SALE BILL, CERTIFICATE OF TRANSFER OF SHARES IN THE NAME OF THE ASSESSEE. TH ESE DOCUMENTS ALONG WITH THE BANK STATEMENT OF THE ASSESSEE CLEARLY ESTABLISHED THE FACT THAT THE ASSESSEE HAS MADE THE PAYMENT OF PURCHASE CONSIDERATION THROUGH BANKING CHANNEL ON 31 ST OCTOBER, 2012. ONCE THE PAYMENT OF CONSIDERATION I S NOT IN DISPUTE AND SHARES WERE TRANSFERRED IN THE NAME OF THE ASSESSEE AS REF LECTED IN THE DEMAT ACCOUNT OF THE ASSESSEE, THEN THE ASSESSEE HAS ESTABLISHED THE PURCHASE OF THE SHARES AND HOLDING IN THE DEMAT ACCOUNT SINCE 31 ST OCTOBER, 2012. THE ASSESSEE IS HAVING DEMAT ACCOUNT WITH IDBI BANK AND ON PERUSAL OF THE DEMAT ACCOUNT IT REVEALED THAT THE ASSESSEE HAS BEEN A REGULAR TRADER/INVESTOR IN THE SHARES OF VARIOUS COMPANIES INCLUDING VARIOUS PUBLIC SECTOR UNDERTAKINGS. THUS IT IS NOT AN ISOLATED TRANSACTION BUT IT IS ONE OF THE HUNDREDS OF TRANSACTIONS IN TH E DEMAT ACCOUNT OF THE ASSESSEE. OUT OF THESE 20,000 SHARES, THE ASSESSEE HAS SOLD 1 5,500 SHARES AFTER ONE YEAR WHEREAS THE BALANCE 4500 SHARES WERE SOLD PRIOR TO ONE YEAR AND OFFERED SHORT TERM CAPITAL GAIN TO TAX WHICH HAS NOT BEEN DISPUTED BY THE AO. THUS OUT OF A LOT OF 10 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. 20,000 SHARES OF M/S. TRINITY TRADELINK LTD., THE S HARES SOLD BY THE ASSESSEE PRIOR TO ONE YEAR WERE NOT DISPUTED BY THE AO AS THE SHORT T ERM CAPITAL GAIN WAS OFFERED TO TAX BY THE ASSESSEE. THE AO HAS DISPUTED THE TRANS ACTION OF PURCHASE AND SALE ONLY TO THE EXTENT OF THE SHARES WHICH WERE SOLD AFTER O NE YEAR AND THEREBY THE ASSESSEE CLAIMED LONG TERM CAPITAL GAIN AS EXEMPT UNDER SECT ION 10(38) OF THE IT ACT. WE FURTHER NOTE THAT THE AO HAS GIVEN THE DETAILS OF T HE PREVAILING PRICE OF SHARES OF M/S. TRINITY TRADELINK LTD. AT STOCK EXCHANGE IN TH E YEARS 2012, 2013 AND 2014. HOWEVER, IT IS PERTINENT TO NOTE THAT THE ASSESSEE PURCHASED THE SHARES OF M/S. TRINITY TRADELINK LTD. WHICH WAS NOT LISTED IN THE STOCK EXCHANGE IN THE YEAR 2012 BUT ONLY AFTER AMALGAMATION OF THE SAID COMPANY WIT H M/S. OMNITECH PETROLEUM LTD. (FORMERLY KNOWN AS SHARP TRADING & FINANCE LTD.) AS PER THE APPROVAL OF AMALGAMATION BY THE HONBLE BOMBAY HIGH COURT VIDE DECISION DATED 10 TH JANUARY, 2014, THE AMALGAMATED COMPANY SHARES GOT LISTED BY VIRTUE OF AMALGAMATION. AT THE TIME OF AMALGAMATION, M/S. TRINITY TRADELINK LT D. AMALGAMATED IN M/S. OMNITECH PETROLEUM LTD. BUT SUBSEQUENTLY THE SAID COMPANY AL SO CHANGED ITS NAME TO M/S. TRINITY TRADELINK LTD. WHICH HAS RESULTED THIS CONF USION OF PREVAILING SHARE PRICE IN THE STOCK EXCHANGE IN THE YEARS 2012 TO 2014. THUS WE FIND THAT THE SAID COMPARISON OF THE AO OF THE PREVAILING PRICE IN TH E YEAR 2012 WITH THE PRICE OF THE SHARES OF AMALGAMATED COMPANY IN THE YEAR 2014 IS M ISCONCEIVED. THE AO HAS NOT CONDUCTED ANY INDEPENDENT ENQUIRY OR INVESTIGATION TO VERIFY THE GENUINENESS OF THE TRANSACTION BUT HAS REFERRED THE INVESTIGATION COND UCTED BY THE DEPARTMENT AND A REPORT RECEIVED BY THE AO. IT IS PERTINENT TO NOTE THAT THE SAID REPORT AS REFERRED BY THE AO AND REPRODUCED IN THE ASSESSMENT ORDER IS NO THING BUT A NARRATION OF MODUS OPERANDI OF THE VARIOUS ENTRY OPERATORS INVOLVED IN PROVIDING THE BOGUS 11 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN, ET C. THE STATEMENT AS REFERRED BY THE AO OF SHRI VIKRANT KAYAN RECORDED UNDER SECTION 133A ON 09.06.2014 IS SUBSEQUENT TO THE SALE OF SHARES BY THE ASSESSEE AN D, THEREFORE THE SAID STATEMENT DOES NOT REFER TO THE TRANSACTION OF SHARES OF M/S. TRINITY TRADELINK LTD. PRIOR TO ITS AMALGAMATION AND LISTING. THE SAID STATEMENT AT TH E MOST CAN RELATE TO THE TRANSACTION AFTER THE AMALGAMATION OF THE UNLISTED COMPANY WITH M/S. OMNITECH PETROLEUM LTD. AND SUBSEQUENTLY CHANGING THE SAME T O M/S. TRINITY TRADELINK LTD. AS A LISTED COMPANY. THEREFORE, THE TRANSACTION OF AL LEGED ACCOMMODATION ENTRY STATED BY SHRI VIKRANT KAYAN PRIMA FACIE RELATES TO THE CO MPANY AFTER THE AMALGAMATION AND CHANGE OF NAME WHICH IS A LISTED COMPANY WHEREA S THE ASSESSEE HAS PURCHASED THE SHARES OF AN UNLISTED COMPANY, NAMELY M/S. TRIN ITY TRADELINK LTD. FURTHER, THE QUESTION NO. 8 WAS VERY SPECIFIC AND IN ANSWER TO T HE SAID QUESTION, SHRI VIKRANT KAYAN HAS STATED AS REPRODUCED BY THE AO AT PAGE 8 OF THE ASSESSMENT ORDER AS UNDER :- Q.8. PLEASE TELL THE NAME OF THE PARTIES TO WHOM YOU HAVE PROVIDED BOGUS BILLING ? ANS. SIR, I HAVE PROVIDED ACCOMMODATION ENTRY IN TH E FORM OF BOGUS BILLING TO MANY COMPANIES, SOME OF THEM ARE BINANI CEMENT LTD., BINANI ZINC LTD., MERIT PLAZA PVT. LTD., VANS UDHARA INFRA DEVELOPERS PVT. LTD., SWIS MERCANTILE PVT. LTD., CO NSUMER MARKETING INDIA PVT. LTD., PAESS INDUSTRIAL ENGINEE RS LTD., DARASHAW & CO. PVT. LTD. AND VOLTAS LTD. THUS IN RESPONSE TO THE QUESTION TO TELL THE NAMES OF THE PARTIES TO WHOM HE PROVIDED BOGUS BILLING, HE REPLIED THE NAMES OF VAR IOUS PARTIES AND, THEREFORE, THERE IS NO ALLEGATION AGAINST THE ASSESSEE OR THE ASSESS EES PARTNERSHIP FIRM BY SHRI VIKRANT KAYAN. THE AO BASED ON THE REPORT OF INVES TIGATION AND THE STATEMENT HAS 12 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. TREATED THE TRANSACTION AS BOGUS WHEREAS THE ASSESS EE PRODUCED ALL THE RELEVANT DIRECT EVIDENCES TO ESTABLISH THE PURCHASE OF SHARE S BY PAYING THE PURCHASE CONSIDERATION THROUGH BANKING CHANNEL. THE EVIDENC E PRODUCED BY THE ASSESSEE IS INDEPENDENTLY VERIFIABLE AS THE BANK ACCOUNT WHEREI N THE PAYMENT IS REFLECTED CANNOT BE MANIPULATED BY THE ASSESSEE. FURTHER THE SHARES WERE DEMATERIALIZED AND HOLDING OF THE SHARES IN THE DEMAT ACCOUNT IS ALSO INDEPENDENTLY VERIFIABLE AND CANNOT BE DISPUTED IN THE ABSENCE OF ANY CONTRARY M ATERIAL TO SHOW THAT THE DEMAT ACCOUNT PRODUCED BY THE ASSESSEE ITSELF IS BOGUS. WE FURTHER NOTE THAT THIS IS NOT A CASE OF PURCHASE OF PENNY STOCK OF A COMPANY AND WI THIN A SHORT PERIOD THERE IS AN UNPRECEDENTED HIKE IN THE SALE PRICE OF THE SHARES, BUT IN CASE THE ASSESSEE PURCHASED THE SHARES OF UNLISTED COMPANY WHICH WAS SUBSEQUENTLY AMALGAMATED WITH A LISTED COMPANY AND, THEREFORE, THE VALUE OF THE AMALGAMATED ENTITY IS CERTAINLY VERY HIGHER THAN THE VALUE OF SHARE OF UN LISTED COMPANY THOUGH THERE CAN BE A QUESTION ABOUT THE SWEEP RATIO OF THE SHARES. HOWEVER, THE SAME HAS NOT BEEN DOUBTED BY ANY AUTHORITY AND THE SCHEME OF AMALGAMA TION WAS DULY APPROVED BY THE HONBLE HIGH COURT. THUS THERE IS AN EXTRAORDI NARY EVENT IN THIS CASE OF AMALGAMATION OF UNLISTED COMPANY WITH A LISTED COMP ANY AND CONSEQUENTLY THERE IS A SUDDEN INCREASE IN THE PRICE OF THE SHARES OF AMA LGAMATED ENTITY. THE LD. D/R HAS RELIED UPON THE DECISIONS OF HONBLE DELHI HIGH COU RT AS WELL AS HONBLE BOMBAY HIGH COURT. IN CASE OF UDIT KALRA VS. ITO (SUPRA), THE SHARES OF ONE M/S. KAPPAC PHARMA LTD. WERE PURCHASED BY THE ASSESSEE AT RS. 1 2/- PER SHARE WHICH WAS SOLD SUBSEQUENTLY AT RS. 720/-. IN THE SAID CASE THERE W AS NO EXTRAORDINARY EVENT OF AMALGAMATION AND IT WAS A TRANSACTION IN THE SHARES OF A COMPANY WHICH HAS NO CONNECTION WITH THE SHARES OF COMPANY IN HAND. AS REGARDS THE DECISION OF HONBLE 13 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. BOMBAY HIGH COURT IN CASE OF SANJAY BIMALCHAND JAIN VS. PCIT (SUPRA), THE TRIBUNAL HAS CONFIRMED THE ORDERS OF THE AUTHORITIES BELOW O N THE BASIS OF SPECIFIC FACTS THAT THE PURCHASE CONSIDERATION WAS CLAIMED TO HAVE BEEN PAID IN CASH FOR PURCHASE OF PENNY STOCK @ RS. 5.50 PER SHARE AND RS. 4/- PER SH ARE OF TWO COMPANIES AND SUBSEQUENTLY THOSE SHARES WERE SOLD @ 486.55 AND RS . 485.65 PER SHARE OF EACH COMPANY. THEREFORE, WHEN THE TRANSACTIONS WERE FOU ND DUBIOUS AND NOT PROVED BY ANY TANGIBLE EVIDENCE, THEN THE SAID DECISION WILL NOT HELP THE CASE OF THE REVENUE. ON THE CONTRARY, WE NOTE THAT THIS TRIBUNAL AS WELL AS THE HONBLE JURISDICTIONAL HIGH COURT HAS CONSIDERED THIS ISSUE IN VARIOUS DECISION S. IN CASE OF SHRI PRAMOD JAIN VS. DCIT (SUPRA), THE TRIBUNAL HAS CONSIDERED AN IDENTI CAL ISSUE AS UNDER :- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE PURCHASES 800 EQUITY SHARE S M/S GRAVITY BARTER LTD. FOR A CONSIDERATION OF RS. 4 LACS THE ASSESSEE HAS PRODUCED THE PURCHASE BILL OF THE SHARES PURCHASE FROM M/S WINALL VINIMAY PVT. LTD. WHICH SHOWS THAT THE ASSESSEE PURCHASE 800 EQUITY SHARES HAVING FACE VALUE OF RS. 10/- EACH M/S GRAVITY BARTER PVT. LTD. IN ALLOTS OF 400 EACH FOR A CONSIDERATION OF RS. 2 LACS EACH TOTAL AMOUNT TO RS. 4 LACS @ RS. 500 PER SHARES. THE PURCHASE PRICE OF RS. 500 PER SHARE ITSELF SHOWS THAT IT WAS NOT A TRANSACTION OF PURCHASE OF PENNY STOCK. THESE SHARES WERE DULY REF LECTED IN THE BALANCE SHEET AS 31.03.2011. THE PAYMENT OF THE PURCHASE C ONSIDERATION WAS MADE BY THE ASSESSEE VIDE CHEQUE ON 17.05.2011 WHICH IS EVIDENT FROM THE BANK ACCOUNT OF THE ASSESSEE AT PAGE 40 OF THE PAPER BO OK. IN THE MEAN TIME THE SAID M/S GRAVITY BARTER PVT. LTD. CHANGED ITS STATU S FROM PRIVATE LIMITED TO A PUBLIC LIMITED AND FRESH CERTIFICATE WAS ISSUED BY THE REGISTRAR OF COMPANY ON 05.02.2011 WHICH IS PLACED AT PAGE 43 OF THE PAPER BOOK. THEREFORE, THERE IS NO REASON TO DISBELIEF THE FACT OF FRESH CERTIFICAT E ISSUED BY THE REGISTRAR OF COMPANIES ON 05.02.2011 AND HENCE, THE DATE MENTION ED IN THE ORDER OF THE HONBLE KOLKATA HIGH COURT AS 18.04.2011 APPEARS TO BE TYPOGRAPHICAL MISTAKE. EVEN OTHERWISE THESE TWO DATES DO NOT HAVE ANY EFFECT ON THE 14 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. GENUINENESS OF THE TRANSACTIONS OF PURCHASE OF EQUI TY SHARES BY THE ASSESSEE OF M/S GRAVITY BARTER PVT. LTD. THE ASSESSEE THOUGH PRODUCED ALL THE RELEVANT RECORDS AND EVIDENCES RIGHT FROM THE PURCHASE BILLS , CERTIFICATE ISSUED BY THE REGISTRAR ABOUT THE CHANGE OF NAME, THE COMMUNICATI ON BETWEEN THE ASSESSEE AND THE SELLER OF THE SHARES AND THEREAFTE R, THE AMALGAMATION OF M/S GRAVITY BARTER LTD. WITH M/S OASIS CINE COMMUNI CATION LTD. WHICH WAS DULY APPROVED BY THE HONBLE HIGH COURT VIDE ORDER DATED 28.8.2011. THE ASSESSEE IN THE MEAN TIME GOT THE PHYSICAL SHARE CE RTIFICATE DEMATERIALIZED INTO DEMAT ACCOUNT ON 16.02.2012. THERE IS NO REASO N TO DOUBT THE ALLOTMENT OF THE SHARES TO THE ASSESSEE AFTER AMALGAMATION TO OK PLACE BETWEEN M/S GRAVITY BARTER LTD. AND M/S OASIS CINE COMMUNICATIO N LTD. AND SUBSEQUENT TO AMALGAMATION THE ASSESSEE WAS ALLOTTED SHARES OF M/S OASIS CINE COMMUNICATION LTD. ON 04.02.2012. HENCE, THE ALLOTM ENT OF 35,200 EQUITY SHARES OF M/S OASIS CINE COMMUNICATION LTD. CANNOT BE DOUBTED OR DISPUTED AS THESE SHARES WERE ISSUED POST AMALGAMATION AND B Y A LISTED COMPANY. IT IS ALSO NOT IN DISPUTE THAT THESE SHARES OF M/S OAS IS CINE COMMUNICATION LTD. WERE ISSUED IN EXCHANGE OF THE SHARES HELD BY THE A SSESSEE OF M/S GRAVITY BARTER LTD. THEREFORE, ONCE THE SHARES ISSUED BY M/ S OASIS CINE COMMUNICATION LTD. CANNOT BE DOUBTED THEN THE HOLDI NG OF THE SHARES OF THE M/S GRAVITY BARTER LTD. BY THE ASSESSEE CORRESPONDI NGLY CANNOT BE DOUBTED BECAUSE OF THE REASONS THAT THE SHARES OF M/S OASIS CINE COMMUNICATION LTD. COULD BE ALLOTTED ONLY IN EXCHANGE OF SHARES OF M/S GRAVITY BARTER LTD. THE HOLDING THE SHARES OF M/S GRAVITY BARTER LTD. AND T HE ALLOTMENT OF SHARES M/S OASIS CINE COMMUNICATION LTD. ARE DIRECTLY INTERCON NECTED. IN THE ABSENCE OF HOLDING OF SHARES M/S GRAVITY BARTER LTD. THE SHARE S OF THE M/S OASIS CINE COMMUNICATION LTD. COULD NOT BE ISSUED OR ALLOTTED TO THE ASSESSEE. THEREFORE, HOLDING OF THE SHARES BY THE ASSESSEE AT LEAST AT TIME OF AMALGAMATION TOOK PLACE AND SHARES OF THE M/S OASIS CINE COMMUNICATION LTD. ON 04.02.2012 CANNOT BE DOUBTED. MOREOVER, THE SE SHARES WERE DEMATERIALIZED BY THE ASSESSEE IN THE DEMAT ACCOUNT , THEREFORE, ON THE DATE OF ALLOTMENT OF SHARE OF M/S OASIS CINE COMMUNICATI ON LTD THE ASSESSEE WAS HOLDING THESE SHARES AND PRIOR TO THAT THE ASSESSE E WAS HOLDING THE SHARES OF M/S GRAVITY BARTER LTD. ON EXCHANGE OF THE SAME THE SHARES OF M/S OASIS CINE COMMUNICATION LTD. WERE ISSUED TO THE ASSESSEE . THE ASSESSING OFFICER 15 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. HAS DOUBTED THE GENUINENESS OF THE TRANSACTIONS HOW EVER, ONCE THE HOLDING OF SHARES OF THE ASSESSEE AT THE TIME OF THE SAME W ERE ISSUED BY M/S OASIS CINE COMMUNICATION LTD. IS NOT IN DISPUTE THEN THE HOLDING OF SHARES OF M/S GRAVITY BARTER LTD. ALSO CANNOT BE DISPUTE BECAUSE OF THE FACT THAT WITHOUT HOLDING OF THE SAME THE SHARES OF M/S OASIS CINE CO MMUNICATION LTD. COULD NOT BE ISSUED TO THE ASSESSEE. ONCE, THE SHARES WER E HELD BY THE ASSESSEE THEN, THE QUESTION OF GENUINENESS OF THE TRANSACTIO N DOES NOT ARISE HOWEVER, THE PURCHASE CONSIDERATION CAN BE DOUBTED BY THE AO IF THE SHARES WERE CLAIMED TO HAVE BEEN PURCHASED AGAINST CONSIDERATIO N PAID IN CASH WHICH IS NOT IN CASE OF THE ASSESSEE. THE ASSESSEE HAS PAID PURCHASE CONSIDERATION THROUGH CHEQUE AND THEREFORE, EVEN IF THE SAID CONS IDERATION IS FOUND TO BE VERY LESS IN COMPARISON TO THE SALE PRICE AT THE TI ME OF SALE OF SHARES IN THE ABSENCE OF ANY MATERIAL OR OTHER FACTS DETECTED OR BROUGHT ON RECORD BY THE AO THAT THE ASSESSEE HAS BROUGHT BACK HIS OWN UNACC OUNTED MONEY IN THE SHAPE OF LONG TERM CAPITAL GAIN AND HAS USED THE SA ME AS A DEVICE TO AVOID TAX, THE PURCHASE CONSIDERATION PAID BY THE ASSESSE E CANNOT BE DOUBTED IN THE ABSENCE OF ANY CORROBORATING EVIDENCE. THE ASSE SSING OFFICER HAS NOT DISPUTED THAT THE FAIR MARKET VALUE OF THE SHARES O F M/S GRAVITY BARTER LTD. WAS MORE THAN THE PURCHASE PRICE CLAIMED BY THE ASS ESSEE. IT MAY BE A CASE THAT ENSURING MERGER/AMALGAMATION OF THE SAID COMPA NY WITH M/S OASIS CINE COMMUNICATION LTD. THE ASSESSEE MIGHT HAVE ANTICIPA NT THE EXCEPTIONAL APPRECIATION IN THE SHARE PRICE DUE TO EXTRAORDINAR Y EVENT OF MERGER/ AMALGAMATION. HOWEVER, THE SAME CANNOT BE A REASON FOR DOUBTING GENUINENESS OF THE TRANSACTION IF THE MOTIVE OF PUR CHASE OF THE SHARE IS TO EARN AN EXTRAORDINARY GAIN BECAUSE OF SOME INTERNAL INFORMATION AVAILABLE TO THE ASSESSEE. 7. IN CASE OF EQUITY SHARES M/S PARIDHI PROPERTIES LTD. THE ASSESSEE PURCHASE 50,000 EQUITY SHARE ON 26.03.2011 BY PAYIN G SHARE APPLICATION MONEY OF RS. 5 LACS WHICH IS DULY REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE AS PAID ON 28.03.2011. THEREFORE, THE PAYM ENT OF SHARE APPLICATION MONEY HAS BEEN DULY ESTABLISHED BY THE ASSESSEE THR OUGH HIS BANK ACCOUNT FOR ALLOTMENT OF SHARES OF 50,000 EQUITY SHARES OF M/S PARIDHI PROPERTIES LTD. THE SHARE ALLOTTED IN PRIVATE PLACEMENT AS PER OF R S. 10/- CANNOT BE TERMED AS PENNY STOCK. THE AO DOUBTED THAT THE ENTIRE PROC ESS OF APPLICATION AND 16 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. ALLOTMENT OF SHARES AS IT HAVE BEEN COMPLETED WITHI N A SHORT DURATION OF 5 DAYS, WHICH IN THE OPINION OF THE AO IS NOT POSSIBL E IN ORDINARY COURSE. HOWEVER, WHEN THE ASSESSEE HAS PRODUCED THE RECORD INCLUDING THE SHARE APPLICATION, PAYMENT OF SHARE APPLICATION MONEY, AL LOTMENT OF SHARE THEN MERELY BECAUSE OF A SHORT PERIOD OF TIME WILL NOT B E A SUFFICIENT REASON TO HOLD THAT THE TRANSACTION IS BOGUS. THE SHARES ALLO TTED TO THE ASSESSEE VIDE SHARE CERTIFICATE DATED 31.03.2011 WERE DEMATERIALI ZED ON 21.10.2011, THEREFORE, ON THE DATE OF DEMATERIALIZATION OF THE SHARES THE HOLDING OF THE SHARES OF THE ASSESSEE CANNOT BE DOUBTED AND HENCE THE ACQUISITION OF THE SHARES OF THE ASSESSEE CANNOT BE TREATED AS A BOGUS TRANSACTION. NOBODY CAN HAVE THE SHARES IN HIS OWN NAME IN DEMANT ACCOUNT W ITHOUT ACQUIRING OR ALLOTMENT THROUGH DUE PROCESS HENCE, EXCEPT THE PUR CHASE CONSIDERATION PAID BY THE ASSESSEE HOLDING OF SHARES CANNOT BE DOUBTED WHEN THE ASSESSEE HAS PRODUCED ALL THE RELEVANT RECORD OF ISSUING OF ALLO TMENT OF SHARES, PAYMENT OF SHARE APPLICATION MONEY THROUGH BANK, SHARE CERTIFI CATE AND DEMAT ACCOUNT SHOWING THE SHARES CREDITED IN THE DEMAT ACCOUNT OF THE ASSESSEE ON DEMATERIALIZATION. THE SAID COMPANY M/S PARIDHI PRO PERTIES LTD. WAS SUBSEQUENTLY MERGED WITH M/S LUMINAIRE TECHNOLOGIES LTD. VIDE SCHEME APPROVED BY THE HONBLE BOMBAY HIGH COURT ORDER DAT ED 27.07.2012. HENCE, THE ASSESSEE GOT ALLOTTED THE EQUITY SHARES OF M/S LUMINAIRE TECHNOLOGIES LTD. AS PER SWAP RATIO APPROVED IN THE SCHEME AND C ONSEQUENTLY THE ASSESSEE WAS ALLOTTED 5 LACS SHARE OF RS. 1/- EACH ON M/S LUMINAIRE TECHNOLOGIES LTD. THE EVIDENCE PRODUCED BY THE ASSE SSEE LEAVE NO SCOPE OF ANY DOUBT ABOUT THE HOLDING OF THE SHARES BY THE AS SESSEE. 8. AS REGARDS THE PURCHASE CONSIDERATION WHEN THE A SSESSEE HAS SHOWN THE SHARE APPLICATION MONEY PAID THROUGH HIS BANK A CCOUNT AND THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT APA RT FROM THE SHARE APPLICATION MONEY PAID THROUGH BANK ACCOUNT THE ASS ESSEE HAS BROUGHT HIS OWN UNACCOUNTED MONEY BACK AS LONG TERM CAPITAL GAI N. IT IS ALSO PERTINENT TO NOTE THAT THE SHARES OF M/S OASIS CINE COMMUNICATIO N LTD. ARE STILL HELD BY THE ASSESSEE IN ITS DEMAT ACCOUNT TO THE EXTENT OF 17,200 SHARES AND THEREFORE, THE HOLDING OF THE SHARES BY ANY PARAMET ER OR STRETCH OF IMAGINATION CANNOT BE DOUBTED. THE AO HAS PASSED TH E ASSESSMENT YEAR BASED ON THE STATEMENT OF SHRI DEEPAK PATWARI RECOR DED BY THE 17 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. INVESTIGATION WING OF KOLKATA HOWEVER, THE ASSESSEE HAS SPECIFICALLY DEMANDED THE CROSS EXAMINATION OF SHRI DEEPAK PATW ARI VIDE LETTER DATED 15.03.2016 SPECIFICALLY IN PARAS 3 AND 4 AS REPRODU CED BY THE AO AT PAGE NO. 7 OF THE ASSESSMENT ORDER AS UNDER:- 3. SINCE, THE SHARES WERE ALLOTTED BY THE COMPANY THROUGH PRIVATE PLACEMENT AFTER COMPLETING THE FORMALITIES OF ROC A ND WERE SOLD THROUGH THE RECOGNIZED BOMBAY STOCK EXCHAGE (BSE) T HERE IS NO QUESTION OF KNOWING INDIVIDUAL PERSONS OR COMPANY O FFICIAL PERSONALLY IN THE WHOLE PROCESS, SO THE ASSESSEE IS NOT IN POS ITION TO PRODUCE ANY ONE FOR CROSS EXAMINATION BEFORE YOUR GOOD SELF. SI NCE YOUR GOOD SELF HAS GOT THE AUTHORITY, WE HUMBLY REQUEST YOU TO KIN DLY ISSUE THE NOTICE U/S 131 OF THE INCOME TAX ACT 1961 TO THE CO NCERNED INDIVIDUAL PERSONS OR COMPANY OFFICIALS FOR CROSS EXAMINATION. PLEASE NOTE THAT THE ASSESSEE IS READY TO BEAR THE COST OF THEIR TRA VELLING IN THIS REGARDS. 4. AS REGARD YOUR OPPORTUNITY GIVEN TO US TO READ T HE RECORDED STATEMENT OF SHRI DEEPAK PATWARI AND TO PRODUCE HIM FROM THE CROSS EXAMINATION BEFORE YOUR GOOD SELF, WE HAVE TO SUBMI T THAT FROM THE READING OF THE STATEMENTS OF SHRI DEEPAK PATWARI IT IS CLEAR THAT HE HAS NEVER TAKEN THE NAME OF THE ASSESSEE, NOR THE A SSESSEE IS AWARE OF ANY SHRI DEEPAK PATWARI NEITHER HE HAS MADE ANY TRANSACTION WITH HIM, SO IN WHAT CAPACITY HE CAN CALL HIM FOR CROSS EXAMINATION BEFORE YOUR GOOD SELF. SINCE YOUR GOOD SELF HAS GOT THE AU THORITY, WE HUMBLY REQUEST YOUTO KINDLY ISSUE THE NOTICE U/S 131 OF TH E INCOME TAX ACT 1961 TO HIM ALSO FOR CROSS EXAMINATION. WE ALSO REQ UEST YOUR GOOD SELF TO KINGLY PROVIDE US THE COPY OF STATEMENTS OF SHRI DEEPAK PATWARI ALONG WITH THE OTHER RELEVANT DOCUMENTS. PL EASE NOTE THAT THE ASSESSEE IS READY TO BEAR THE COST OF HIS TRAVELLIN G IN THIS REGARD. IT IS MANIFEST FROM THE ASSESSEES REPLY TO SHOW CA USE NOTICE THAT THE ASSESSEE HAD SPECIFICALLY DEMANDED THE CROSS EXAMIN ATION OF SHRI DEEPAK PATWARI HOWEVER, THE ASSESSING OFFICER DID NOT OFFE R THE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SHRI DEEPAK PATWARI. FURT HER, THE AO ASKED THE ASSESSEE TO PRODUCE THE PRINCIPAL OFFICERS OF THE M /S GRAVITY BARTER LTD. AND M/S PARIDHI PROPERTIES LTD. HOWEVER, IN OUR VIEW IF THE ASSESSING OFFICER WANTED TO EXAMINE THE PRINCIPAL OFFICERS OF THOSE C OMPANIES HE WAS HAVING THE AUTHORITY TO SUMMON THEM AND RECORD THEIR STATE MENTS INSTEAD OF SHIFTING BURDEN ON THE ASSESSEE. IT IS NOT EXPECTED FROM THE ASSESSEE INDIVIDUAL TO PRODUCE THE PRINCIPAL OFFICERS OF THE COMPANIES RAT HER THE AO OUGHT TO HAVE 18 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. SUMMONED THEM IF THE EXAMINATION OF THE OFFICERS WE RE CONSIDERED AS NECESSARY BY THE AO. HENCE, IT WAS IMPROPER AND UNJ USTIFIED ON THE PART OF THE AO TO ASKED THE ASSESSEE TO PRODUCE THE PRINCIP AL OFFICERS OF THOSE COMPANIES. AS REGARDS THE NON GRANT OF OPPORTUNITY TO CROSS EXAMINE, THE HONBLE SUPREME COURT IN CASE OF ANDAMAN TIMBER IND USTRIES VS. CCE (SUPRA) WHILE DEALING WITH THE ISSUE HAS HELD IN PA RA 5 TO 8 AS UNDER: 5. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, AND MR. K. RADHAKRISHNAN, LEARNED SENIOR COUNSEL WHO APPEARED FOR THE REVENUE. 6. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND T HAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJ UDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASS ESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONE D THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS N OT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUN AL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENAB LE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DE ALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. 7. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUT HORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO D ETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRI CE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUB JECT MATTER OF CROSS- EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICA TING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER O F THE CROSS- 19 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE . WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATT ER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS F OR ACCEPTING OR REJECTING THE SUBMISSIONS. 8. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MA TERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY I TS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ON LY BASIS OF ISSUING THE SHOW CAUSE NOTICE. THEREFORE, THE STATEMENT OF WITNESS CANNOT BE SOLE BASIS OF THE ASSESSMENT WITHOUT GIVEN AN OPPORTUNITY OF CROSS EXAMINATION A ND CONSEQUENTLY IT IS A SERIOUS FLAW WHICH RENDERS THE ORDER A NULLITY. THE MUMBAI SPECIAL OF THE TRIBUNAL IN CASE OF GTC INDUSTRIES VS. ACIT (SUPRA) HAD THE OCCASION TO CONSIDER THE ADDITION MADE BY THE AO ON THE BASIS OF SUSPICION AND SURMISES AND OBSERVED IN PAR 46 AS UNDER:- 46. IN SITUATIONS LIKE THIS CASE, ONE MAY FALL INTO REALM OF 'PREPONDERANCE OF PROBABILITY' WHERE THERE ARE MANY PROBABLE FACTORS, SOME IN FAVOUR OF THE ASSESSEE AND SOME MAY GO AGAI NST THE ASSESSEE. BUT THE PROBABLE FACTORS HAVE TO BE WEIGH ED ON MATERIAL FACTS SO COLLECTED. HERE IN THIS CASE THE MATERIAL FACTS STRONGLY INDICATE A PROBABILITY THAT THE WHOLESALE BUYERS HAD COLLECT ED THE PREMIUM MONEY FOR SPENDING IT ON ADVERTISEMENT AND OTHER EX PENSES AND IT WAS THEIR LIABILITY AS PER THEIR MUTUAL UNDERSTANDI NG WITH THE ASEESSEE. ANOTHER VERY STRONG PROBABLE FACTOR IS TH AT THE ENTIRE SCHEME OF 'TWIN BRANDING' AND COLLECTION OF PREMIUM WAS SO DESIGNED THAT ASSESSEE-COMPANY NEED NOT INCUR ADVERTISEMENT EXPENSES AND THE RESPONSIBILITY FOR SALES PROMOTION AND ADVERTIS EMENT LIES WHOLLY UPON WHOLESALE BUYERS WHO WILL BORNE OUT THESE EXPE NSES FROM ALLEGED COLLECTION OF PREMIUM. THE PROBABLE FACTORS COULD HAVE GONE AGAINST THE ASSESSEE ONLY IF THERE WOULD HAVE BEEN SOME EVIDENCE FOUND FROM SEVERAL SEARCHES EITHER CONDUCTED BY DRI OR BY THE DEPARTMENT THAT ASSESSEE-COMPANY WAS BENEFICIARY OF ANY SUCH ACCOUNTS. AT LEAST SOMETHING WOULD HAVE BEEN UNEART HED FROM SUCH GLOBAL LEVEL INVESTIGATION BY TWO CENTRAL GOVERNMEN T AUTHORITIES. IN CASE OF CERTAIN DONATIONS GIVEN TO A CHURCH, ORIGIN ATING THROUGH THESE BENAMI BANK ACCOUNTS ON THE BEHEST OF ONE OF THE EM PLOYEES OF THE ASSESSEE COMPANY, DOES NOT IMPLICATE THAT GTC AS A CORPORATE ENTITY WAS HAVING THE CONTROL OF THESE BANK ACCOUNTS COMPL ETELY. WITHOUT GOING INTO THE AUTHENTICITY AND VERACITY OF THE STA TEMENTS OF THE 20 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. WITNESSES SMT. NIRMALA SUNDARAM, WE ARE OF THE OPIN ION THAT THIS ONE INCIDENT OF DONATION THROUGH BANK ACCOUNTS AT THE D IRECTION OF ONE OF THE EMPLOYEE OF THE COMPANY DOES NOT IMPLICATE THAT THE ENTIRE PREMIUM COLLECTED ALL THROUGHOUT THE COUNTRY AND DE POSITED IN BENAMI BANK ACCOUNTS ACTUALLY BELONGS TO THE ASSESSEE-COMP ANY OR THE ASSESSEE-COMPANY HAD DIRECT CONTROL ON THESE BANK A CCOUNTS. ULTIMATELY, THE ENTIRE CASE OF THE REVENUE HINGES U PON THE PRESUMPTION THAT ASSESSEE IS BOUND TO HAVE SOME LAR GE SHARE IN SO- CALLED SECRET MONEY IN THE FORM OF PREMIUM AND ITS CIRCULATION. HOWEVER, THIS PRESUMPTION OR SUSPICION HOW STRONG I T MAY APPEAR TO BE TRUE, BUT NEEDS TO BE CORROBORATED BY SOME EVIDE NCE TO ESTABLISH A LINK THAT GTC ACTUALLY HAD SOME KIND OF A SHARE IN SUCH SECRET MONEY. IT IS QUITE A TRITE LAW THAT SUSPICION HOWSOEVER ST RONG MAY BE BUT CANNOT BE THE BASIS OF ADDITION EXCEPT FOR SOME MAT ERIAL EVIDENCE ON RECORD. THE THEORY OF 'PREPONDERANCE OF PROBABILITY ' IS APPLIED TO WEIGH THE EVIDENCES OF EITHER SIDE AND DRAW A CONCL USION IN FAVOUR OF A PARTY WHICH HAS MORE FAVOURABLE FACTORS IN HIS SI DE. THE CONCLUSIONS HAVE TO BE DRAWN ON THE BASIS OF CERTAIN ADMITTED F ACTS AND MATERIALS AND NOT ON THE BASIS OF PRESUMPTION OF FACTS THAT M IGHT GO AGAINST ASSESSEE. ONCE NOTHING HAS BEEN PROVED AGAINST THE ASSESSEE WITH AID OF ANY DIRECT MATERIAL ESPECIALLY WHEN VARIOUS ROUNDS OF INVESTIGATION HAVE BEEN CARRIED OUT, THEN NOTHING C AN BE IMPLICATED AGAINST THE ASSESSEE. THEREFORE, WHEN THE ASSESSING OFFICER HAS NOT BROUG HT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PAID OVER AND ABOVE THE PURCHASE CONSIDERATION AS CLAIMED AND EVIDENT FROM THE BANK ACCOUNT THEN, IN THE ABSENCE OF ANY EVIDENCE IT CANNOT BE HELD THAT THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED MONEY BY WAY OF BOGUS LONG TERM CAPITAL GAIN. THE HONBLE JURISDICTION HIGH COURT IN CASE OF CIT VS. SMT. POOJA AGRAWAL (SUPRA) HAS UPHELD THE FINDING OF THE TRIBUNAL ON THIS ISSU E IN PARA 12 AS UNDER:- 12. HOWEVER, COUNSEL FOR THE RESPONDENT HAS TAKEN US TO THE ORDER OF CIT(A) AND ALSO TO THE ORDER OF TRIBUNAL AND CONTEN DED THAT IN VIEW OF THE FINDING REACHED, WHICH WAS DONE THROUGH STOCK E XCHANGE AND TAKING INTO CONSIDERATION THE REVENUE TRANSACTIONS, THE ADDITION MADE WAS DELETED BY THE TRIBUNAL OBSERVING AS UNDER:- 'CONTENTION OF THE AR IS CONSIDERED. ONE OF THE MAI N REASONS FOR NOT ACCEPTING THE GENUINENESS OF THE TRANSACTIONS DECLA RED BY THE APPELLANT THAT AT THE TIME OF SURVEY THE APPELLANT IN HIS STATEMENT DENIED HAVING MADE ANY TRANSACTIONS IN SHARES. HOWE VER, 21 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. SUBSEQUENTLY THE FACTS CAME ON RECORD THAT THE APPE LLANT HAD TRANSACTED NOT ONLY IN THE SHARES WHICH ARE DISPUTE D BUT SHARES OF VARIOUS OTHER COMPANIES LIKE SATYAM COMPUTERS, HCL, IPC L, BPCL AND TATA TEA ETC. REGARDING THE TRANSACTIONS IN QUESTIO N VARIOUS DETAILS LIKE COPY OF CONTRACT NOTE REGARDING PURCHASE AND S ALE OF SHARES OF LIMTEX AND KONARK COMMERCE & IND. LTD., ASSESSEE'S ACCOUNT WITH P.K. AGARWAL & CO. SHARE BROKER, COMPANY'S MASTER D ETAILS FROM REGISTRAR OF COMPANIES, KOLKATA WERE FILED. COPY OF DEPOSITORY A/C OR DEMAT ACCOUNT WITH ALANKR IT ASSIGNMENT LTD., A SUBSIDIARY OF NSDL WAS ALSO FILED WHICH SHO WS THAT THE TRANSACTIONS WERE MADE THROUGH DEMAT A/C. WHEN THE RELEVANT DOCUMENTS ARE AVAILABLE THE FACT OF TRANSACTIONS EN TERED INTO CANNOT BE DENIED SIMPLY ON THE GROUND THAT IN HIS STATEMEN T THE APPELLANT DENIED HAVING MADE ANY TRANSACTIONS IN SHARES. THE PAYMENTS AND RECEIPTS ARE MADE THROUGH A/C PAYEE CHEQUES AND THE TRANSACTIONS ARE ROUTED THROUGH KOLKATA STOCK EXCHANGE. THERE IS NO EVIDENCE THAT THE CASH HAS GONE BACK IN APPELLANTS'S ACCOUNT. PRI MA FACIE THE TRANSACTION WHICH ARE SUPPORTED BY DOCUMENTS APPEAR TO BE GENUINE TRANSACTIONS. THE AO HAS DISCUSSED MODUS OPERANDI I N SOME SHAM TRANSACTIONS WHICH WERE DETECTED IN THE SEARCH CASE OF B.C. PUROHIT GROUP. THE AO HAS ALSO STATED IN THE ASSESSMENT ORD ER ITSELF WHILE DISCUSSING THE MODUS OPERANDI THAT ACCOMMODATION EN TRIES OF LONG TERM CAPITAL GAIN WERE PURCHASED AS LONG TERM CAPIT AL GAIN EITHER WAS EXEMPTED FROM TAX OR WAS TAXABLE AT A LOWER RATE. A S THE APPELLANT'S CASE IS OF SHORT TERM CAPITAL GAIN, IT DOES NOT EXA CTLY FALL UNDER THAT CATEGORY OF ACCOMMODATION TRANSACTIONS. FURTHER AS PER THE REPORT OF DCIT, CENTRAL CIRCLE-3 SH. P.K. AGARWAL WAS FOUND T O BE AN ENTRY PROVIDER AS STATED BY SH. PAWAN PUROHIT OF B.C. PUR IHIT AND CO. GROUP. THE AR MADE SUBMISSION BEFORE THE AO THAT THE FACT WAS NOT CORRECT AS IN THE STATEMENT OF SH. PAWAN PUROHIT THERE IS N O MENTION OF SH. P. K. AGARWAL. IT WAS ALSO SUBMITTED THAT THERE WAS NO MENTION OF SH. P. K. AGARWAL IN THE ORDER OF SETTLEMENT COMMISSION IN THE CASE OF SH. SUSHIL KUMAR PUROHIT. COPY OF THE ORDER OF SETTLEME NT COMMISSION WAS SUBMITTED. THE AO HAS FAILED TO COUNTER THE OBJECTI ONS RAISED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS. SIMPLY MENTIONING THAT THESE FINDINGS ARE IN THE APPRAISAL REPORT AND APPR AISAL REPORT IS MADE BY THE INVESTING WING AFTER CONSIDERING ALL THEMATE RIAL FACTS AVAILABLE ON RECORD DOES NOT HELP MUCH. THE AO HAS FAILED TO PROVE THROUGH ANY INDEPENDENT INQUIRY OR RELYING ON SOME MATERIAL THAT THE TRANSACTIONS MADE BY THE APPELLANT THROUGH SHARE BR OKER P.K. AGARWAL WERE NON-GENUINE OR THERE WAS ANY ADVERSE MENTION A BOUT THE TRANSACTION IN QUESTION IN STATEMENT OF SH. PAWAN P UROHI. SIMPLY BECAUSE IN THE SHAM TRANSACTIONS BANK A/C WERE OPEN ED WITH HDFC 22 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. BANK AND THE APPELLANT HAS ALSO RECEIVED SHORT TERM CAPITAL GAIN IN HIS ACCOUNT WITH HDFC BANK DOES NOT ESTABLISH THAT THE TRANSACTION MADE BY THE APPELLANT WERE NON GENUINE. CONSIDERING ALL THESE FACTS THE SHARE TRANSACTIONS MADE THROUGH SHRI P.K. AGARWAL C ANNOT BE HELD AS NON-GENUINE. CONSEQUENTLY DENYING THE CLAIM OF SHOR T TERM CAPITAL GAIN (6 OF 6) [ ITA-385/2011] MADE BY THE APPELLANT BEFORE THE AO IS NOT APPROVED. THE AO IS THEREFORE, DIRECTED TO ACCE PT CLAIM OF SHORT TERM CAPITAL GAIN AS SHOWN BY THE APPELLANT.' IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AO IS BASED ON MERE SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO SHOW THAT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN. ON THE OTHER HAND, THE ASSESSEE HAS B ROUGHT ALL THE RELEVANT MATERIAL TO SUBSTANTIATE ITS CLAIM THAT TRANSACTION S OF THE PURCHASE AND SALE OF SHARES ARE GENUINE. EVEN OTHERWISE THE HOLDING OF T HE SHARES BY THE ASSESSEE AT THE TIME OF ALLOTMENT SUBSEQUENT TO THE AMALGAMA TION/MERGER IS NOT IN DOUBT, THEREFORE, THE TRANSACTION CANNOT BE HELD AS BOGUS. ACCORDINGLY WE DELETE THE ADDITION MADE BY THE AO ON THIS ACCOUNT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WHEN T HE ASSESSEE HAS PRODUCED ALL THE SUPPORTING EVIDENCES WHICH HAS NOT BEEN CONTROV ERTED OR DISPUTED BY THE AO, THEN WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE LD. CIT (A) QUA THIS ISSUE. GROUND NO. 3 IS REGARDING THE ADDITION ON ACCOUNT O F NOTIONAL COMMISSION. 7. WE HAVE HEARD THE LD. D/R AS WELL AS THE LD. A/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THIS ADDITION IS CONSEQUENTIAL TO THE ADDITION MADE BY THE AO BY TREATING THE LONG TERM CAPITAL GAIN AS BOGUS ACCOMM ODATION ENTRY. IN VIEW OF OUR FINDING ON THE GROUND NO. 1, THE GROUND NO. 3 OF TH E REVENUES APPEAL STANDS 23 ITA NO. 532/JP/2019 SHRI GHANSHYAM AGARWAL, JAIPUR. DISPOSED OFF IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE ORDER OF THE LD. CIT (A) IS UPHELD. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 08/08/2019. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKWO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08/08/2019. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-THE DCIT CIRCLE-3, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT-SHRI GHANSHYAM AGARWAL, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 532/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR