AMIT H PATEL (HUF), MUMBAI V. DCIT-CC 3((4), MUMBAI, MUMBAI

ITA 5762/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8656 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 06-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV HARITH
• Keywords: Unexplained cash credit; Search and seizure; Cost of acquisition; Accommodation entries; Block assessment; Penny stocks; Documents seized; Capital Gains
• Section: 69C; 143(3); 153A; 14A; 133(6); 143(2); 13; 153; 153C; 68; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NOS.5761, 5762, 5764 & 5765/M/2019 ASSESSMENT YEARS: 2010-11, 2011-12, 2013-14 & 2014- 15 AMIT H. PATEL (HUF) 1/135, PRABHUNIWAS, OPP. SIWS COLLEGE, WADALA, ` MUMBAI - 400031 PAN: AAEHA4171N VS. DCIT-CC 3(4), ROOM NO.1915, 19 TH FLOOR, AIR INDIA BUILDING, MUMBAI - 400021 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NEELKANTH KHANDELWAL, A.R. REVENUE BY : SHRI RAJEEV HARITH, D.R. DATE OF HEARING : 09.06.2021 DATE OF PRONOUNCEMENT : 15.07.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY THE SAME ASSESSEE AGAINST THE ORDERS EVEN DATED 29.12.2019 O F THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2010-11, 2 011-12, 2013-14 & 2014-15. SINCE THE ISSUES INVOLVED ARE CO MMON IN ALL THE APPEALS, THESE BEING DISPOSED OFF BY THIS COMMO N ORDER FOR THE SAKE OF BREVITY AND CONVENIENCE. FIRST, WE WOUL D LIKE TO TAKE ITA NO.5761/M/2019 A.Y. 2010-11. 2. THE GROUNDS TAKEN BY THE ASSESSEE IN AY 2010-11 ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF LD. A.O. I N MAKING ADDITIONS IN THE ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 2 APPELLANTS CASE IN THE ABSENCE OF ANY INCRIMINATIN G MATERIAL FOUND DURING THE COURSE OF SEARCH ACTION, AS PER THE GROUNDS STATED IN THE ORDER OR OTHERWISE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN TREATING THE LONG TERM CAPITAL GAINS EARNED BY THE APPELLANT AS NON-GENUINE AND BO GUS TRANSACTION, AS PER THE GROUNDS STATED IN THE ORDER OR OTHERWISE. 3. ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LD . CIT(A), ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN DISALLOWING THE CLAIM U/S 10(38) OF THE ACT BEING LONG TERM CAPITAL GAIN ON SALE OF SHARES LISTED ON STOCK EXCHANGE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW, LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING AN ADDITION OF RS.10,43,74,444/- BY INVOKING PROVISIONS OF SEC. 68 OF THE INCOME TAX ACT, 1961, BEING THE AMOUNT OF SALE VALUE OF SHARES WITHOUT AL LOWING THE DEDUCTION IN RESPECT OF THE PURCHASES COST AMOUNTING TO RS.77,34,330/-, AS PER THE GROUNDS STATED IN THE ORDER OR OTHERWISE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW, LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING AN ADDITION OF RS.62,62,467/- AS ALLEGED COMMISSION @ 6% PAID ON B OGUS SHARE TRANSACTION, AS PER THE GROUNDS STATED IN THE ORDER OR OTHERWISE. 3. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE JURISDICTION OF THE AO TO FRAME ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. THE ASSESSEE HAS CHALLENG ED BY WAY OF GROUND NO.1 THAT THE ADDITIONS MADE IN ASSESSMENT FRAMED ARE WITHOUT JURISDICTION AS THERE IS NO INCRIMINATING M ATERIAL SEIZED DURING SEARCH AND THEREFORE THE ORDER FRAMED IS BAD IN LAW. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED R ETURN OF INCOME ON 06.09.2010 DECLARING AN INCOME OF RS.24,0 9,303/-. THEREAFTER, A SEARCH ACTION UNDER SECTION 132 OF TH E ACT WAS CONDUCTED ON 09.04.2015 ON THE ASSESSEE AND HIS HUF . DURING THE COURSE OF SEARCH, THE SEARCH TEAM FOUND EVIDENC ES OF ACCOMMODATION ENTRIES IN THE FORM OF BOGUS LONG TER M CAPITAL GAIN ON PENNY STOCKS. POST SEARCH, NOTICE UNDER SE CTION 153A OF THE ACT HAS BEEN ISSUED ON 08.08.2016 WHICH WAS DUL Y SERVED ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 3 UPON THE ASSESSEE AND COMPLIED WITH BY FILING RETUR N OF INCOME ON 31.08.2016 DECLARING TOTAL INCOME AT RS.24,09,30 3/- THE SAME INCOME AS WAS DISCLOSED ORIGINALLY. NOTICE UN DER SECTION 143(2) WAS ALSO ISSUED ON 24.01.2017 AND DULY SERVE D UPON THE ASSESSEE. THE AO CALLED FOR VARIOUS DETAILS AND EXP LANATION FROM THE ASSESSEE QUA THE CAPITAL GAIN ON SALE OF EQUITY SHARES OF RS.9,66,21,425/- WHICH WAS CLAIMED AS EXEMPT UNDER SECTION 10(38) OF THE ACT. THE AO REJECTED THE EXPLANATIONS AND SUBMISSIONS OF THE ASSESSEE FILED DURING THE COURSE OF ASSESSMENT AND FINALLY FRAMED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT ASSESSING THE TOTAL INCOME AT RS. 11,30,46,210/- AS AGAINST THE RETURN OF INCOME OF RS.24,09,303/- BY MAKING TWO ADDITIONS ON ACCOUNT O F UNEXPLAINED CASH CREDITS UNDER SECTION 68 OF THE AC T OF RS.10,43,74,444 /- AND UNEXPLAINED CASH CREDIT UNDE R SECTION 69C OF THE ACT OF RS.62,62,467/-. THE AO ADDED THE ENTIRE SALES PROCEEDS OF SALE OF SHARES OF COMFORT INTECH LTD AL ONG WITH COMMISSIONS @6% TOWARDS ARRANGING BOGUS ENTRIES OF LONG TERM CAPITAL GAIN. 5. THE ASSESSEE CHALLENGED THE JURISDICTIONAL ISSUE BEFORE THE LD. CIT(A) THAT THERE BEING NO INCRIMINATING MATERI ALS FOUND DURING SEARCH AND THIS BEING UNABATED ASSESSMENT ON THE DATE OF SEARCH , THEREFORE NO ADDITION CAN BE MADE WITH SEIZED INCRIMINATING MATERIALS. HOWEVER LD. CIT(A) DISMIS SED THE APPEAL OF THE ASSESSEE ON THIS ISSUE BY HOLDING AND OBSERVING AS UNDER: 5.3 THE ASSESSEE WAS COVERED U/S. 132 ON 09.04.201 5 BY THE INVESTIGATION WING, MUMBAI, AFTER BEING ARMED WITH SUCH HUGE ADVERSE EV IDENCES AGAINST THE ASSESSEE. IT IS ALSO RELEVANT TO NOTE THAT THE ASSESSEE WAS ALLO TTED PREFERENTIAL SHARES WHICH IS NORMALLY ALLOTTED ONLY TO FRIENDS, RELATIVES AND CL OSE ASSOCIATES. IT WOULD HAVE BEEN AN ALTOGETHER DIFFERENT MATTER IF THE ASSESSEE HAD PURCHASED THE SHARES FROM THE ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 4 MARKET AND NOT THROUGH THE PREFERENTIAL ROUTE. IN V IEW OF SUCH A FACTUAL SCENARIO, THE ONUS WAS VERY HEAVY ON THE ASSESSEE TO EXPLAIN ITS CLAIM OF LTCG IN THE SAID SCRIP OF GIL. HOWEVER, THE ASSESSEE COULD NOT EVEN EXPLAI N THE BASIS OF HAVING MADE THE DECISION OF INVESTMENT IN THE SHARES OF THE SAID SC RIP WHERE IT HAS EARNED SUCH IMPROBABLE/UNREALISTIC PROFITS. IT IS RELEVANT TO M ENTION THAT GIL AND FFSL ARE PROMOTED BY ONE SHRI ANIL AGARWAL. IT IS NOTED THAT SEBI HAD CARRIED OUT DETAILED INVESTIGATIONS ON THE ALLEGATION OF MARKET MANIPULA TION IN THE SCRIP OF FFSL AND FOUND THAT ANIL AGARWAL AND ENTITIES OF HIS 'COMFOR T SECURITIES GROUP' INCLUDING COMFORT SECURITIES LTD. AND M/S. CIL TO BE GUILTY O F MARKET MANIPULATION. THE SEBI VIDE ITS FINAL ORDER DATED 02.04.2018 HAS RESTRAINE D/PROHIBITED FSSL, ANIL AGARWAL AND ENTITIES OF HIS 'COMFORT SECURITIES GROUP' INCL UDING M/S. COMFORT SECURITIES LTD. AND M/S. CIL FROM ACCESSING THE MARKET OR TRAD ING FOR A FURTHER PERIOD OF 3 YEARS FROM THE DATE OF THE ORDER. 5.4 IT IS NOTED THAT IN THE STATEMENT RECORDED ON O ATH, AT THE TIME OF THE SEARCH ACTION OF SHRI AMIT PATEL, IT WAS ONLY VAGUELY INFORMED TH AT THIS INVESTMENT DECISION WAS MADE BY HIS LATE FATHER AS PER THE ADVICE RECEIVED FROM FRIENDS, BROKERS, ETC. SIMILARLY, NO EXPLANATION COULD BE GIVEN AS TO HOW THE SCRIP-PRICE ROSE TO SUCH HIGH LEVELS DESPITE WEAK FUNDAMENTALS AND NO POSITIVE CO RPORATE ANNOUNCEMENTS. IT IS NOT ALWAYS THAT A PERSON GETS IMPLICATED FOR BEING IN P OSSESSION OF INCRIMINATING EVIDENCE. A PERSON CAN ALSO GET IMPLICATED FOR NOT BEING IN POSSESSION OF A VALID EXPLANATION OR THE REQUISITE EVIDENCE. THE STATEMEN T GIVEN BY SHRI AMIT PATEL, AT THE TIME OF THE SEARCH ACTION, WHEREIN HE COULD NEITHER EXPLAIN THE BASIS FOR THE INVESTMENT IN THE SAID SCRIP NOR EXPLAIN THE ABNORM AL RISE IN THE PRICE OF THE SAID SCRIP DESPITE WEAK FUNDAMENTALS AND NO POSITIVE COR PORATE ANNOUNCEMENTS, IS MORE THAN SUFFICIENT TO IMPLICATE THE ASSESSEE. 5.5 ON THE ISSUE AS TO WHETHER AN INCRIMINATING STA TEMENT CAN BE CONSIDERED TO BE AN INCRIMINATING EVIDENCE FOR THE PURPOSE OF SEARCH AS SESSMENT, IT WILL BE RELEVANT TO CONSIDER THE DECISION OF THE THE HON'BLE SUPREME CO URT IN THE CASE OF P.R. METRANI V. CIT F20061 287 ITR 209/157 TAXMAN 325 (SO. IT HAS B EEN EXPLAINED BY THE HON'BLE SUPREME COURT THAT THE BOOKS OF ACCOUNTS, DOCUMENTS , MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENTS RECORDED OF THE PERSONS SEARCHED MAY BE USED AS EVIDENCE FOR ANY PROCEEDINGS UNDER T HE ACT. THE RELEVANT PORTION OF THE ORDER OF THE HON'BLE SUPREME COURT IS REPRODUCE D AS UNDER: '18. SECTION132 IS A CODE IN ITSELF. IT PROVIDES FO R THE CONDITIONS UPON WHICH AND THE CIRCUMSTANCES IN WHICH THE WARRANTS OF AUTH ORIZATION CAN BE ISSUED. SUB-SECTION (2) AUTHORIZES THE AUTHORIZED OFFICER T O REQUISITION THE SERVICES OF ANY POLICE OFFICER OR OF ANY OFFICER OF THE CENTRAL GOVERNMENT OR OF BOTH TO ASSIST HIM FOR ALL OR ANY OF THE PURPOSES FOR WHICH THE SEARCH IS CONDUCTED. UNDER SUB-SECTION (4) THE AUTHORIZED OFFICER CAN DU RING THE COURSE OF SEARCH OR SEIZURE EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT M ADE BY SUCH PERSONS DURING; SUCH EXAMINATION MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THE ACT.' 5.6 FURTHER, PROCEEDINGS BEFORE THE INCOME-TAX AUTH ORITIES, AS EXPLAINED BY THE ALLAHABAD HIGH COURT IN GARGI DEVI JWALA PRASAD V. CIT [1974] 96 ITR 97 , ARE CONSIDERED TO BE OF JUDICIAL NATURE WHERE THE ISSUE S ARE DECIDED ON THE BASIS OF EVIDENCES WHICH CAN BE ORAL OR DOCUMENTARY. ORAL EV IDENCES, INTER ALIA, INCLUDE ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 5 STATEMENTS WHICH ARE MADE BEFORE THE INCOME-TAX AUT HORITY IN RELATION TO MATTER OF INQUIRY AND MAY INCLUDE EXAMINATION OF THE ASSESSEE ITSELF. ALSO, THE STATEMENT ON OATH RECORDED IN COURSE OF THE SEARCH ACTION U/S 13 2(4) HAS BEEN HELD TO BE OF EVIDENTIARY VALUE BY THE HON'BLE DELHI HIGH COURT I N THE CASE OF DHINGRA METAL WORKS (328 ITR 384) AND THE HON'BLE KERALA HIGH COU RT IN THE CASE OF PAUL MATHEWS (263 ITR 101)AS AGAINST STATEMENT ON OATH RECORDED U/S 133A. 5.7 IN VIEW OF THE AFORESAID JUDICIAL DECISIONS, TH E STATEMENT ON OATH RECORDED OF SHRI AMIT PATEL WHEREIN HE COULD NEITHER EXPLAIN THE BAS IS FOR THE INVESTMENT IN THE SAID SCRIP NOR EXPLAIN THE ABNORMAL RISE IN THE PRICE OF THE SAID SCRIP DESPITE WEAK FUNDAMENTALS AND NO POSITIVE CORPORATE ANNOUNCEMENT S, HAS TO BE CONSIDERED AS INCRIMINATING EVIDENCE TO IMPLICATE THE ASSESSEE. T HIS IS ALL THE MORE ESSENTIAL CONSIDERING THAT THERE WERE A NUMBER OF DEVELOPMENT S PRIOR TO THE SEARCH ACTION IN THE CASE OF THE ASSESSEE INCLUDING VARIOUS SEARCHES CARRIED OUT BY THE DEPARTMENT EXPOSING THE SCAM OF BOGUS LTCG, THE IN-DEPTH INVES TIGATION CARRIED OUT BY THE SEBI TO ASCERTAIN PRICE RIGGING IN THE SCRIP OF FFS L ETC. IN VIEW OF THESE DEVELOPMENTS, WHICH WERE VERY MUCH IN THE KNOWLEDGE OF THE ASSESSEE, IT IS BUT NATURAL TO ASSUME THAT THE ASSESSEE WOULD HAVE ENSU RED THAT THE INCRIMINATING MATERIAL TO THE EXTENT POSSIBLE IS EITHER HIDDEN OR DESTROYED. 5.8 FURTHER, EARLIER THE SEARCH ASSESSMENTS USED TO BE FINALIZED U/S 158BC/BD WHICH WAS COMMONLY CALLED AS BLOCK ASSESSMENTS. IN THE BL OCK ASSESSMENTS, ADDITIONS COULD ONLY BE MADE IN RESPECT TO ISSUES WHEREIN UND ISCLOSED INCOME WAS DETECTED IN COURSE OF THE SEARCH ACTION ON THE BASIS OF INCRIMI NATING DOCUMENTS. THE ISSUES ARISING FROM THE REGULAR RETURNS OF INCOME WERE TO BE EXAMINED ONLY DURING THE REGULAR ASSESSMENT PROCEEDINGS. NOW, IT IS MORE OR LESS SETTLED BY THE HON'BLE COURTS THAT THE SAME PRINCIPLES ARE ALSO APPLICABLE IN RES PECT OF THE SEARCH ASSESSMENTS FINALISED U/S 153A/C. IT HAS BEEN HELD BY THE HON'B LE COURTS THAT THE NON-ABATED ASSESSMENTS CAN BE DISTURBED ONLY IF THERE IS INCRI MINATING MATERIAL UNEARTHED DURING THE SEARCH ACTION. EARLIER IN THE BLOCK ASSESSMENTS , THE ASSESSEES USED TO CHALLENGE THE ADDITIONS MADE RELATED TO THE TRANSACTIONS FOR WHICH ENTRIES HAD BEEN DULY MADE IN THE REGULAR BOOKS OF ACCOUNTS ON THE GROUND THAT THE TRANSACTIONS HAVE BEEN DULY RECORDED IN THE REGULAR BOOKS AND THEREFORE CANNOT BE TREATED AS UNDISCLOSED TRANSACTIONS. SUCH AN ISSUE CAME UP BEFORE THE HON' BLE ITAT AHMEDABAD IN THE CASE OF N K PROTEINS LTD (83 TTJ AHD 904).THE HON'BLE IT AT AHMEDABAD HELD THAT IT CANNOT BE SAID THAT EVEN IF THE MATERIAL FOUND DURI NG THE COURSE OF SEARCH EXPOSES THE FALSITY OF THE ENTRIES MADE IN THE REGULAR BOOKS OF ACCOUNTS, THE CONSEQUENT CONCEALED INCOME CANNOT BE ASSESSED AS UNDISCLOSED INCOME IN BLOCK ASSESSMENT. THIS DECISION OF THE HON'BLE ITAT AHMEDABAD HAS ALS O BEEN APPROVED BY THE HON'BLE GUJARAT HIGH COURT. IN THE INSTANT CASE, TH E FALSITY OF THE CLAIM OF LTCG WAS EXPOSED IN THE SEARCH ACTION AND THEREFORE, IN PRIN CIPLE THE ACTION OF THE AO OF MAKING THE SAID ADDITIONS WHILE COMPLETING THE ASSE SSMENT U/S 153A RWS 143(3), CANNOT BE FAULTED. 5.9 IN VIEW OF THE ABOVE DETAILED DISCUSSION, NO IN FIRMITY IS FOUND IN THE ACTION OF THE AO IN UNDERTAKING SAID ACTION U/S 153A RWS 143(3) S INCE THERE WAS SUFFICIENT EVIDENCE TO INCRIMINATE THE ASSESSEE IN THE FORM OF STATEMENTS RECORDED OF SHRI AMIT PATEL WHEREIN HE COULD NEITHER EXPLAIN THE BASIS FO R THE INVESTMENT IN THE SAID SCRIP NOR EXPLAIN THE ABNORMAL RISE IN THE PRICE OF THE S AID SCRIP DESPITE WEAK FUNDAMENTALS AND NO POSITIVE CORPORATE ANNOUNCEMENT S. ACCORDINGLY, GROUND NO.1 OF THE APPEAL IS DISMISSED. ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 6 6. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THAT THE ASSESSMENT IN THIS CASE HAS ATTAINED FINALITY ON TH E DATE OF SEARCH AS THE ASSESSMENT RELATED TO A.Y. 2010-11 WH EREAS THE SEARCH WAS CONDUCTED ON 09.04.2015 AND THEREFORE TH E ASSESSMENT WAS UNABATED ON THE DATE OF SEARCH. THE LD. A.R. SUBMITTED THAT IN THE CASE OF UNABATED ASSESSMENT O N THE DATE OF SEARCH, ADDITION CAN ONLY BE MADE IN THE ASSESSM ENT FRAMED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT , IF THERE IS AN INCRIMINATING MATERIAL FOUND DURING THE COURS E OF SEARCH AND NOT OTHERWISE. IN THE PRESENT CASE THE LD. A.R . SUBMITTED THAT DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOUND WITH REGARD TO THE PURCHASE AND SALE OF SHARE S MADE BY THE ASSESSEE AND THEREFORE ADDITION MADE UNDER SECT ION 68 & 69C ARE WITHOUT JURISDICTION AND MAY KINDLY BE DELE TED ON THE JURISDICTIONAL DEFECT ONLY. THE LD. A.R. WHILE TAK ING US THROUGH THE PROVISIONS OF SECTION 153A OF THE ACT SUBMITTED THAT THE PROVISIONS AS REGARDS SEARCH PROCEEDINGS ARE CONTAI NED IN SECTION 153A AND IT IS A COMPLETE CODE BY ITSELF AS THE PROVISIONS OF SECTION 153A PROVIDE THAT THE POWERS OF AO TO FR AME ASSESSMENT IN THE CASE OF UNABATED ASSESSMENT ARE V ERY LIMITED AND ANY ADDITIONS IN THE UNABATED ASSESSMENT YEAR C AN ONLY BE BASED UPON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE LD. A.R. SUBMITTED THAT IN THE PRES ENT CASE THE ASSESSMENT HAD ALREADY ATTAINED FINALITY ON THE DAT E OF SEARCH AND THEREFORE NO ADDITION COULD HAVE BEEN MADE IN A BSENCE OF ANY INCRIMINATING MATERIAL. THE LD. A.R. IN DEFENC E OF HIS ARGUMENT HEAVILY RELIED ON THE DECISION IN THE CASE OF MS. KALPANA RUIA & ORS. ITA NO.6519/M/2019 & ORS. IN WH ICH AN ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 7 IDENTICAL ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH IN FAVOUR OF THE ASSESSEE. 7. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THE ASSESSEE THUS FOUND TO BE ENGAGED IN THE PURCHASE A ND SALE OF PENNY STOCKS AND HAVE MADE BOGUS GAIN ON THE SALE A ND PURCHASE OF THE SAID SHARES. THEREFORE, THE ARGUME NTS OF THE LD. A.R. ARE THAT SUCH ADDITION WITHOUT SEIZED MATERIA LS IS WITHOUT JURISDICTION IS WRONG AND AGAINST THE PROVISIONS OF LAW. THE LD DR REFERRED TO VARIOUS DOCUMENTS SEIZED DURING THE SEARCH SUCH AS LOOSE SHEETS AND VARIOUS OTHER DOCUMENTS AN D SUBMITTED THAT ALL THESE DOCUMENTS PROVED THAT THE GAIN WAS BOGUS AND FICTITIOUS ENTRIES TRANSACTED IN ORDER TO SECURE THE ACCOMMODATION OF ENTRIES TO INTRODUCE ASSESSEES O WN MONEY INTO BOOKS OF ACCOUNTS. THE LD DR ALSO REFERRED TO THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH AND SPECIFICALLY STATED THAT ASSESSEE COULD NOT ANSWER THE QUERIES O F THE SEARCH TEAM. THE LD DR STRESSED THAT THE SEARCH TEAM FOUND MATERIAL DURING SEARCH WHICH IS INCRIMINATING AND THEREFORE THE GROUND RAISED BY THE ASSESSEE THAT ADDITION IS NOT BASED U PON THE SEIZED MATERIALS IS DEVOID OF ANY MERIT. THE LD DR THEREF ORE PRAYED THAT THE GROUND NO. 1 DESERVED TO BE DISMISSED. 8. IN THE REJOINDER LD AR SUBMITTED THAT THE LOOSE SHEET FOUND DURING THE SEARCH ONLY CONTAINED INFORMATION/DETAIL S AS TO THE CAPITAL GAIN ON SALE OF SHARES WHICH HAS ALREADY BE EN DISCLOSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND IN NO W AY INCRIMINATING IN NATURE. ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 8 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR THE INSTANT YEAR ON 06.09.2010 DECLARING AN INCOME OF RS.24,09,303/-. SEARCH AND SEIZURE ACTION WAS COND UCTED ON 09.04.2015 AND THUS ON THE DATE OF SEARCH, THE ASS ESSMENT HAS ATTAINED FINALITY AND IS AN UNABATED ASSESSMENT ON THE DATE OF SEARCH. WE FIND MERIT IN THE ARGUMENTS OF THE LD. A.R. THAT IN THE CASE OF UNABATED ASSESSMENT YEAR, ADDITION CAN ONLY BE MADE ON THE BASIS OF INCRIMINATING MATERIAL FOUND D URING THE COURSE OF SEARCH AND NOT OTHERWISE. IN THE PRESENT CASE, WE HAVE NOTED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH IN RELATION TO THE PURCHASE AND SA LE OF PENNY STOCKS AND THE AUTHORITIES BELOW HAVE RELIED ON THE GENERAL INVESTIGATION THAT ASSESSEE HAS MADE PURCHASE AND S ALE IN PENNY STOCKS ON THE BASIS OF DOCUMENTS WHICH ARE AL READY ON RECORDS AND MADE HUGE ADDITION OF BOGUS LONG TERM C APITAL GAIN. THE AO HAD DISCUSSED THE MODUS OPERANDI OF THE PENN Y STOCK COMPANIES AND OPERATORS INVOLVED IN CARRYING OUT THE PURCHASE AND SALE OF SHARES. HOWEVER, NOWHERE THE AO HAS RE FERRED TO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH IN RELATION TO PURCHASE AND SALE OF SHARES. WE HAVE AL SO EXAMINED THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH BY THE SEARCH TEAM AS FURNISHED BY THE LD DR IN THE FORM OF PAPER BOOK BUT FIND THAT THESE DOCUMENTS ONLY CONTAINED THE DETAIL S OF SALE OF SHARES ONLY. THE CASE OF THE ASSESSEE IS SQUARELY C OVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL S MT. KALPANA MUKESH RUIA VS. DCIT ITA NO.6519/M/2019 A.Y. 2012-1 3 & ORS. ORDER DATED 31.12.2020 WHEREIN AN IDENTICAL IS SUE HAS BEEN ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 9 DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. THE OPERATIVE PART IS REPRODUCED AS UNDE R: 43. IN OUR CONSIDERED OPINION, THE HONOURABLE JURI SDICTIONAL HIGH COURT HAS NEVER MENTIONED THAT IT IS ONLY ASSESSMENT WHICH HAS BEEN COMPLETED UNDER SECTION 143(3) THAT ADDITION UNDER SECTION 153(A) CANNOT BE DONE WITHOUT REFERENCE TO INCRIMINATING SEIZED MATERIAL HONOURABLE JURISDICTI ONAL HIGH COURT HAS CLEARLY MENTIONED THAT IT IS THOSE ASSESSMENTS WHICH ARE UN ABATED, THAT IS NOT PENDING, TO WHICH THE ABOVE SAID RATIO WILL APPLY. ASSESSMENTS WHICH ARE NOT PENDING ARE NOT ONLY THOSE WHICH HAVE BEEN COMPLETED UNDER SECTION 143(3) BUT ALSO THOSE FOR WHICH THE TIME FOR ISSUING NOTICE UNDER SECTION 143 (2) HAVE ALREADY ELAPSED. IN OTHER WORDS THE REFERENCES IS TO THOSE ASSESSMENTS IN WHOSE CASE ASSESSMENT UNDER SECTION 143 (3) CANNOT NOW BE DONE. IT IS NOT AT ALL THE CASE OF THE REVENUE THAT IN THE APPEALS WHICH HAVE BEEN CLAIMED AS UNAB ATED HERE THERE WAS TIME FOR ASSESSMENT UNDER SECTION 143(3). IN THIS VIEW OF TH E MATTER, IN OUR CONSIDERED OPINION, THE SUBMISSION OF THE LEARNED COUNSEL OF T HE ASSESSEE SUCCEEDS THAT ADDITION IN THE CASE OF UNABATED ASSESSMENT WITHOUT REFERENCE TO INCRIMINATING SEIZED MATERIAL FOR ASSESSMENT U/S.!53(A) IS NOT SU STAINABLE ON THE TOUCHSTONE OF ABOVE SAID HONOURABLE JURISDICTIONAL HIGH COURT DEC ISION. THEREFORE, THE LEARNED CIT APPEALS AND THE LEARNED DEPARTMENTAL REPRESENTATIVE PLEA IN TRYING TO DISTINGUISH THE SAME BY REFERENCE TO HON'BLE DELHI HIGH COURT D ECISION AND HONOURABLE SUPREME COURT DECISION IN THE CASE OF RAJESH JHAVER I (SUPRA) DOESN'T SUCCEED. 44. IT MAY NOT BE OUT OF PLACE HERE TO MENTION THAT IT IS SPECIFICALLY PROVIDED IN SECTION 153A 'THAT ASSESSMENT OR REASSESSMENT IF AN Y RELATING TO ANY RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN THIS SUBSEC TION PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132 A AS THE CASE MAY BE SHALL ABATE.' THIS MAKES IT FURT HER ABUNDANTLY CLEAR THAT ONLY THOSE ASSESSMENTS WHICH ARE PENDING ABATE. HENCE SA NGUINE PROVISIONS OF THE ACT READ WITH HONOURABLE JURISDICTIONAL HIGH COURT DECI SION AS ABOVE MAKE IT ABUNDANTLY CLEAR THAT THE ASSESSMENTS WHICH DO NOT ABATE AND ASSESSMENT AND ADDITION UNDER SECTION 153 A WITHOUT REFERENCE TO I NCRIMINATING SEIZED MATERIAL IS NOT SUSTAINABLE. 45. THE JURISPRUDENCE REGARDING JURISDICTIONAL DEFE CT IN ASSESSMENT UNDER SECTION 153A / 153C WITHOUT REFERENCE TO INCRIMINATING SEIZ ED MATERIAL HAS ALSO BEEN EXPOUNDED BY HONOURABLE SUPREME COURT IN THE CASE O F COMMISSIONER OF INCOME TAX VS. SINGHAD TECHNICAL EDUCATION SOCIETY IN CIVI L APPEAL NO. 11080 OF 2017 AND OTHERS. IN THIS REGARD THE HONOURABLE SUPREME COURT IN PARAGRAPH 18 OF THE SAID ORDER OBSERVED THAT :- IN THIS BEHALF IT WAS NOTED BY THE ITAT THAT AS PER PROVISIONS OF SECTION 153C OF THE ACT,, INCRIMINATING MATERIAL WHICH WAS SEIZE D HAD TO PERTAINS TO ASSESSMENT YEARS IN QUESTION AND IT IS AN UNDISPUTE D FACT THAT THE DOCUMENTS WHICH WERE SEIZED DID NOT ESTABLISH ANY C ORRELATION, DOCUMENT - WISE, WITH THESE FOR ASSESSMENT YEARS SINCE THIS RE QUIREMENT UNDER SECTION 153C OF THE ACT IS ESSENTIAL FOR ASSESSMENT UNDER T HE PROVISION IT BECOMES A JURISDICTIONAL DEFECT. WE FIND THIS REASONING TO BE LOGICAL AND VALID HAVING REGARD TO THE PROVISIONS OF SECTION 153C OF THE ACT .' ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 10 46. WE ALSO NOTE THAT THE CO-ORDINATE BENCH OF IT A T IN THE CASE OF SHRI VIJAYRATTAN BALKRISHAN MITTAL (SUPRA) IN SIMILAR SITUATION HELD THAT, DEHORSE INCRIMINATING MATERIAL ASSESSMENT U/S. 153A IS NOT SUSTAINABLE IN THE CASE OF UNABATED ASSESSMENT. WE MAY GAINFULLY REFER TO THE SAID DECI SION AS UNDER: 44. AFTER HEARING BOTH THE PARTIES AND PERUSI NG THE FACTS ON RECORD, WE OBSERVED THAT UNDISPUTABLY THE ASSESSMENT IN THE IN STANT YEAR HAS NOT ABATED ON THE DATE OF SEARCH. WE FURTHER FIND THAT THE EVIDENCES WERE GATHERED AFTER ISSUING NOTICE UNDER SECTION 133(6) THAT ASSESSEE HAS EARNED OUT SYNCHRONIZED TRADES FOR OBTAINING BOGUS LTCG. I N OUR OPINION, THE SAID INFORMATION/DATA IS COLLECTED AFTER THE DATE OF SEA RCH AND DOES NOT CONSTITUTE INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH. KEEPING IN VIEW THE SAID FACTS AND CIRCUMST ANCES, WE ARE OF THE CONSIDERED VIEW THAT ADDITION TO THE INCOME OF THE ASSESSEE CAN ONLY BE MADE ON THE BASIS OF INCRIMINATING RECORD FOUND DUR ING THE COURSE OF SEARCH. IN THE PRESENT CASE, THERE IS NO SUCH INCRI MINATING MATERIAL AND THEREFORE, THE AO HAS NO JURISDICTION TO MAKE ADDIT ION IN THE UNABATED ASSESSMENT. THE CASE OF THE ASSESSEE IS SQUARELY CO VERED BY THE DECISION OF HON'BLE BOMBAY HIGH COURT DECISION IN THE CASE OF C ONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. (SUPRA), WHEREIN THE HON'BLE BOMBAY HIGH COURT HELD AS UNDER. 'A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE ID. CIT(A) WAS JUSTIFIED IN DELETING THE A DDITION OF RS.3,91,55,000/-UNDER SECTION 68 OF THE ACT IN RESP ECT OF SHARE APPLICATION MONEY AND ADDITION OF RS. 11,24,964/- U NDER SECTION 14A MADE BY THE ASSESSING OFFICER, AS IT WAS NOT BASED ON INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. D) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITI ON OF RS.3,91,55,000/- UNDER SECTION 68 OF THE ACT IN RES PECT OF SHARE APPLICATION MONEY AND ADDITION OF RS. 11,24,964/- U NDER SECTION 14A MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THAT THE DECISION OF CONTINENTAL WAREHOUSING CORPORATION & T HE DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS HAVE NOT BEE N ACCEPTED BY THE DEPARTMENT AND AN SLP HAS BEEN FILED IN THE SUPREME COURT IN BOTH THE CASES DECIDED BY THE HIGH COURT I.E. CONTINENTA L WAREHOUSING CORPORATION AS WELL AS ALL CARGO GLOBAL LOGISTICS V IDE APPEAL CIVIL 8546 OF 2015 AND SLP CIVIL 5254-5265 OF 2016 RESPEC TIVELY.' 45. SINCE, THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, WE THEREFORE RESPECTFULLY FOLLOWING THE RAT IO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE ABOVE DECISION, SE T ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION. RE SULTANTLY, THE APPEAL OF THE ASSESSEE ON JURISDICTIONAL ISSUE IS ALLOWED. 47. AS REGARDS THE ISSUE OF SEIZED MATERIAL IT IS C LEAR THAT IN THE APPEALS WHICH HAVE REMAINED UNABATED THE ADDITION IS WITHOUT REFERENCE TO ANY SEIZED MATERIAL. THE MATERIALS REFERRED ARE ONLY THE STATEMENT OBTAINED OF THE ASSESSEE UNDER SECTION ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 11 132 (4). THESE HAVE BEEN DULY RETRACTED. HENCE WITH OUT CORROBORATIVE MATERIAL ADDITION ONLY BASED UPON THE RETRACTED STATEMENT IS NOT SUSTAINABLE. FOR THIS PROPOSITION FOLLOWING CASE LAWS ARE GERMANE: CIT VS. SUNIL AGARWAL (379 ITR 367) CIT VS. NARESH KUMAR AGARWAL (369 ITR 171) DCIT VS. NARENDRA GARG & ASHOK GARG (AOP) (IT A NO. 1531 & 1532 OF 2007 DATED 28.7.2016) DCIT VS. MARATHON FISCAL PVT. LTD. (ITA NO. 5 783 & 5784/MUM/2017 DATED 28.8.2019) TRIBHUVANDAS BHIINJI ZAVERI (ITA 2250 & 2251/MU M/2013 DT. 4.11.2015) 48. IT MAY ALSO BE PERTINENT TO NOTE HERE THAT NO S EIZED MATERIAL SAID TO BE INCRIMINATING WAS PRODUCED BEFORE US. IN LIGHT OF A BOVE SAID CASE LAWS THE OBSERVATION OF LEARNED CIT(A) THAT INCRIMINATING MA TERIAL NEED NOT BE SPECIFIC HAS NO LEGS TO STAND. THIS VERY OBSERVATION BY THE LEAR NED CIT(A) ITSELF IS AN ADMISSION THAT NO SPECIFIC INCRIMINATING MATERIAL HAS BEEN SE IZED AND REFERRED IN THE ASSESSMENT ORDER HENCE, IN ALL CASES OF UNABATED AS SESSMENT THE ASSESSMENT FAILS ON JURISDICTIONAL DEFECT. THUS, ITA NO. 6519/MUM/20 19, 6520/MUM/2019, 6515/MUM/2019, 6516/MUM/2019, 6513/MUM/2019 & 6514/ MUM/2019 ARE DISMISSED ON ACCOUNT OF JURISDICTIONAL DEFECT. 49. AS REGARDS THE ISSUE OF ADDITIONS ON MERITS FOR THE BOGUS LONG-TERM CAPITAL GAIN, WE NOTE THAT THE SAME IS BASED UPON THE MODUS OPERA NDI OF EARNING BOGUS LONG- TERM CAPITAL GAIN IN GENERAL MENTIONED BY THE ASSES SING OFFICER. IT IS FURTHER MORE BASED UPON THE STATEMENTS OBTAINED UPON SURVEY. FUR THERMORE IT IS BASED UPON ASSESSING OFFICER'S ANALYSIS OF THE IMPUGNED COMPAN IES FINANCIALS WHEREIN THE ASSESSING OFFICER IS OF THE OPINION THAT THE. INCRE ASE IN VALUE IS UNJUSTIFIED. FURTHERMORE ASSESSING OFFICER HAS REFERRED TO GENER AL SEBI ACTION IN CASE OF BOGUS LONG-TERM ENTRY OPERATORS. HOWEVER NONE OF THE BROK ERS OR THE PERSONS OR THE COMPANIES DEALT IN THESE APPEALS HAVE BEEN REFERRED IN THE ABOVE SAID SEBI ENQUIRY NOTED BY THE AO IN HIS ORDER. AS REGARDS THE MERITS OF ADDITIONS BASED UPON THE STATEMENT OBTAINED FROM SURVEY FROM 3RD PARTIES THE SAME IS NOT AT ALL SUSTAINABLE WITHOUT ANY CORROBORATIVE MATERIAL. THIS POSITION W AS EXPOUNDED BY THE HONOURABLE SUPREME COURT IN THE CASE OF S. KADER KH AN (SUPRA). THAT THERE IS NO MATERIAL INCREMENTING AVAILABLE IN THIS REGARD IS C LEARLY EVIDENT FROM THE OBSERVATION OF THE ASSESSING OFFICER IN THE ORDER I TSELF. THE ASSESSING OFFICER MENTIONS THAT WHAT IS REAL WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS AT ANY PLACE. HE MENTIONS IN THE ASSESSMENT ORDER THAT NO BOOK EN TRIES TO THE REAL TRANSACTIONS EITHER IN THE BOOKS OF ASSESSEE OR IN THE BOOKS OF THIS ENTRY OPERATORS ARE THERE. THIS CLEARLY SIGNIFIES THAT ASSESSING OFFICER IS NO T REFERRING TO ANY INCRIMINATING MATERIAL SEIZED. AS REGARDS THE OBSERVATION OF THE ASSESSING OFFICER THAT THE SHARE BROKER HAS ACCEPTED THAT HE WAS ACTING ON THE ADVIC E OF SHRI PRAKASH MODI ON BEHALF OF THE ASSESSEE, AGAIN THERE IS NO INCRIMINA TING SEIZED RECORD IN THIS REGARD. THE SAME REMAINS SOLELY STATEMENT UPON SURVEY WHICH IS NOT A CONCLUSIVE EVIDENCE OF ADDITION OF UNDISCLOSED INCOME WITHOUT CORROBORA TIVE MATERIAL. 10. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECIS ION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL WHICH HAS BEEN PASSE D AFTER ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 12 FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. (2015) 374 ITR 645 (BOM) AND VARIOUS OT HER DECISIONS, HOLD THAT THE ADDITION MADE BY THE AO UN DER SECTION 68 & 69 ARE WITHOUT JURISDICTION AND ARE DIRECTED TO BE DELETED ON THE JURISDICTIONAL ISSUE. 11. THE ISSUES RAISED IN GROUND NO.2 ,3 AND 4 ARE O N MERIT CHALLENGING THE ORDER OF LD. CIT(A) CONFIRMING THE ADDITION OF RS. 10,43,74,444/- BY LD. CIT(A) AS MADE BY THE AO UNDE R SECTION 68 OF THE ACT AS UNEXPLAINED CASH CREDIT BY TREATIN G THE SALE PROCEEDS YIELDING LONG TERM CAPITAL GAIN ON SALE OF SHARES AS NON GENUINE. 12. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS CL AIMED THE LONG TERM CAPITAL GAIN ARISING FROM SALE OF SHARES OF COMFORT INTECH LTD AND SPLASH MEDIA & INFRA LTD. AS EXEMPT UNDER SECTION 10(38) OF THE ACT, THE DETAILS WHEREOF IS G IVEN AS UNDER: NAME OF SCRIPT NO. OF EQUITY SHARES DATE OF ACQUISITION COST OF ACQUISITIO N YEAR OF SALE SALE CONSIDERATIO N GAIN/LOSS COMFORT INTECH LTD. 4,77,000 20.05.2008 8,20,670 FY 2009-10 1,42,62,739 1,34,42,069 M/S SPLASH MEDIA & INFRA LTD. 11,59,500 17.04.2009 22,71,817 FY 2010-11 6,34,71,700 6,11,99,883 THE ASSESSEE WAS ALLOTTED WARRANTS ON PREFERENTIAL BASIS FROM M/S COMFORT INTECH LTD. ON 20.05.2008 FOR RS. 4,77,000/- .SHARES WERE ISSUED IN LIEU OF WARRANTS WHICH WERE LISTED ON 21.11.2008 AND LISTED ON THE EXCHANGE SAME DATE. TH EREAFTER ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 13 THE SHARES WERE SPLIT IN THE RATIO OF 1:10 ON 14.10 .2009. SIMILARLY THE ASSESSEE WAS ALLOTTED WARRANTS ON PR EFERENTIAL BASIS BY M/S SPLASH MEDIA & INFRA LTD. AND WERE CONVERTED INTO SHARES AND LISTED ON THE STOCK EXCHANGE ON 29.10.2009. THE REAFTER THERE WAS A BONUS ISSUE IN THE RATIO OF 3:1 FOLLOWED BY S HARES SPLIT IN THE RATIO OF 1:10 ON 27.07.2010. BOTH THESE SHARES WENT UP SPIRALLY OVER A SHORT PERIOD OF TIME ACCORDING TO T HE REVENUE THE SAID TRANSACTIONS ARE SUSPICIOUS AND BOGUS WHICH WA S REVEALED DURING THE COURSE OF SEARCH AND SEIZURE ACTION ON T HE ASSESSEE. THE SEARCH TEAM FOUND THAT THESE TWO COMPANIES M/S. COMFORT INTECH LTD. AND M/S. SPLASH MEDIA & INFRA LTD. WHIC H ARE LISTED ON BOMBAY STOCK EXCHANGE WERE USED FOR PROVIDING ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN/ SH ORT TERM CAPITAL GAIN. THE AO DISCUSSED THE MODUS OPERANDI OF THESE COMPANIES IN GREAT DETAIL IN THE ASSESSMENT ORDER A ND REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE SAID SHORT TERM CAPITAL GAIN SHOULD NOT BE ADDED TO THE INCOME OF THE ASSES SEE WHICH WAS DULY REPLIED BY THE ASSESSEE VIDE WRITTEN SUBMI SSION. THE ASSESSEE ALSO FILED THE PROOF OF PURCHASE AND SALE OF SHARES INCLUDING THE D-MAT ACCOUNT, CONTRACT NOTES ETC. AN D ALSO THE DETAILS OF BROKERS THROUGH WHOM THESE TRANSACTIONS WERE CARRIED OUT. THE AO FINALLY REJECTED THE CLAIM OF THE ASSES SEE UNDER SECTION 10(38) OF THE ACT AND ADDED THE ENTIRE SALE CONSIDERATION REALISED FROM SALE OF SHARES OF THESE TWO COMPANIES VIZ. RS.7,77,34,439/- AS SALE OF SHARES OF BOTH THE COM PANIES UNDER SECTION 68 OF THE ACT AS UNEXPLAINED INVESTME NT IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) READ WITH SE CTION 153A OF THE ACT DATED 27.12.2017. ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 14 13. IN THE APPELLATE PROCEEDINGS ALSO THE LD. CIT(A ) AFFIRMED THE ORDER OF AO BY HOLDING THAT THE LONG TERM CAPIT AL GAIN AS CLAIMED EXEMPT UNDER SECTION 10(38) OF THE ACT ON S ALE OF SHARES OF TWO COMPANIES AS STATED HEREINABOVE ARE BOGUS AN D FICTITIOUS AND WAS RIGHTLY ADDED U/S 68 OF THE ACT BY THE AO. 14. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE HAS EARNED CAP ITAL GAIN OF RS. 7,46,41,952 BY SELLING SHARES OF TWO COMPANIES ON A TOTAL SALE CONSIDERATION OF RS. 7,77,34,439/-. THE ASSES SEE HAS CLAIMED THE SAID GAIN ON THE SALE OF THESE TWO SCRI PS AS EXEMPT UNDER SECTION 10(38) OF THE ACT. WE NOTE THAT ASSE SSEE HAS PURCHASED THESE SHARES THROUGH BOMBAY STOCK EXCHANG E AND THE PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUES AND THE PURCHASE OF SHARES IS DULY EVIDENCED BY SHARES WARR ANTS WHICH WERE CONVERTED INTO EQUITY SHARES AND LISTED ON THE STOCK EXCHANGE AND WERE RECORDED IN THE IN D-MAT ACCOUNT OF THE ASSESSEE. SIMILARLY, THE SALE OF SHARES WAS ALSO M ADE THROUGH REGISTERED BROKER OF BOMBAY STOCK EXCHANGE AND EVID ENCED BY CONTRACT NOTES AND PAYMENTS BY CHEQUES AND PAYMENT OF STT. WE ALSO NOTE THAT ONE OF THE TWO SCRIPS NAMELY M/S. SPLASH MEDIA & INFRA LTD . ON WHICH A CAPITAL GAIN OF RS.6 ,11,99,883/- WAS EARNED HAS BEEN HELD TO BE NOT A PENNY STOCK IN THE CASE OF ANIL KUMAR HUF VS DCIT ITA NO.5512 TO 5516/MUM/2019 ORDER DATED 05.04.2021. THE COORDINATE BENCH HAS H ELD THAT FIRST FINANCIAL SERVICES LTD IS NOT A PENNY STOCK I N THE SAME ORDER AS STATED ABOVE. THIS IS BEING MENTIONED THAT THIS SCRIP IS INVOLVED IN THE SUBSEQUENT ASSESSMENT YEARS WHICH A RE ALSO BEING ADJUDICATED BY US. ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 15 15. THEREFORE, RESPECTFULLY, FOLLOWING THE DECISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL, WE HOLD THAT THE LO NG TERM CAPITAL GAIN ON THE SALE OF SHARES OF M/S. SPLASH MEDIA & INFRA LTD. IS NOT A BOGUS CAPITAL GAIN AS THE AO HAS SOLE LY RELIED ON THE REPORT OF INVESTIGATION/SEARCH TEAM AND HAS NOT CA RRIED OUT ANY FURTHER VERIFICATION ON THE BASIS OF DOCUMENTS FURN ISHED BY THE ASSESSEE. SIMILARLY, THE POSITION OF LONG TERM CAP ITAL GAIN EARNED ON THE SALE OF SHARES OF M/S. COMFORT INTECH LTD. O F RS.1,34,42,069/- IS SAME AS THE ASSESSEE HAS FILED ALL THE NECESSARY EVIDENCES BEFORE THE AO AND AO HAS FAILE D TO CARRY OUT ANY FURTHER INVESTIGATION TO PROVE THAT THE LON G TERM CAPITAL GAIN EARNED BY THE ASSESSEE IS BOGUS AND FICTITIOUS . CONSEQUENTLY, THE APPEAL OF THE ASSESSEE SUCCEEDS O N MERIT ALSO. ACCORDINGLY, THE ISSUE RAISED IN GROUND NO.3 & 4 AR E ALLOWED. 16. THE ISSUE RAISED IN GROUND NO.5 IS AGAINST THE ORDER OF LD. CIT(A) CONFIRMING THE ADDITION OF RS.46,64,066/- BY LD. CIT(A) AS MADE BY THE AO UNDER SECTION 69 OF THE ACT TOWAR DS COMMISSION PAID ON THE ACCOMMODATION ENTRIES. SINC E WE HAVE ALREADY DECIDED THE GROUNDS RAISING LEGAL AS WELL AS MERITS IN FAVOUR OF THE ASSESSEE AND CONSEQUENTLY THE ADDITI ON OF RS.46,64,066/- IS ALSO ORDERED TO BE DELETED AS THI S IS CONSEQUENTIAL ONE. ACCORDINGLY THE GROUND NO.5 IS A LLOWED. 17. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLO WED. ITA NOS. 5762, 5764 & 5765/M/2019, ASSESSMENT YEAR S 2011- 12, 2013-14 & 2014-15 18. THE ISSUES INVOLVED IN THE ABOVE APPEALS ARE IDENTICAL TO THE ONE AS STATED ABOVE IN ITA NO.5761/M/19 FOR A.Y . 2010-11. THEREFORE, OUR FINDINGS IN ITA NO. 5761/M/19 FOR A .Y. 2010-11, ITA NOS.5761, 5762, 5764 & 5765/M/2019 AMIT H. PATEL (HUF) 16 MUTATIS MUTANDIS, WOULD APPLY TO THESE APPEALS AS W ELL. ACCORDINGLY THE APPEALS OF THE ASSESSEE ARE ALLOWED . 19. IN THE RESULT, ALL THE FOUR APPEALS OF THE ASSE SSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.07.2021. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 15.07.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.