Appeal details
Counselvise Citation
[2021] 108 COUNSELVISE.COM (IT) 8293 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-03-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
E
Assessment Year
2014-2015
Appeal Filed On
11-02-2020
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER SA NO.152/DEL/2020 (ASSESSMENT YEAR 2014-15) ITA NO.761/DEL/2020 (ASSESSMENT YEAR 2014-15) SH. MUKESH MITTAL, 138, DEEPALI ENCLAVE, PITAMPURA, NEW DELHI- 110 034 PAN AJGPM 2125D VS. INCOME TAX OFFICER, WARD-41(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH. GAUTAM JAIN, ADV. SH. LALIT MOHAN, CA RESPONDENT BY MS. RAKHI VIMAL, SR. DR DATE OF HEARING 06.01.2021 DATE OF PRONOUNCEMENT 26.03.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THE PRESENT APPEAL IS PREFERRE D BY THE ASSESSEE AGAINST THE ORDER DATED 29.11.2019 PASSED BY THE LD . 2 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO COMMISSIONER OF INCOME TAX (APPEALS)- 14, NEW DELHI {CIT (A)} FOR ASSESSMENT YEAR 2014-15. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT RETURN DECLARING TAXABLE INCOME OF RS. 85,85,510/- WAS FILED ON 30.7. 2014 THROUGH E-FILING AND WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DECLARED INCOME FRO M HOUSE PROPERTY, SHORT TERM CAPITAL GAIN AND OTHER SOURCES . BESIDES THIS, THE ASSESSEE HAS DECLARED INCOME FROM LONG TE RM CAPITAL GAINS TO THE TUNE OF RS. 5,83,61,303/- WHICH HAS BEE N CLAIMED EXEMPT U/S 10(38) OF THE ACT. 2.1 DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAD SOLD 7,50,000 SHARES OF M/S RADFORD GLOBAL LTD. FOR A TOTAL CONSIDERATION OF RS. 5,99,40,819/- AGAINST TH E PURCHASE OF 1,50,000/- SHARES AT RS. 22,50,000/- RESULTING I NTO LONG TERM CAPITAL GAINS OF RS. 5,76,90,819/-. THE ASSES SEE WAS ALLOTTED 1,50,000/- PREFERENTIAL SHARES ON 20.1.201 2 AT A PRICE OF RS. 15/- PER SHARE WHICH INCLUDED PREMIUM OF RS. 5/- PER 3 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO SHARE. SUBSEQUENTLY, THESE SHARES WERE SPLIT AND T HE ASSESSEE WAS ALLOTTED 7,50,000 SHARES OF M/S RADFORD GLOBAL L TD., FORMERLY KNOWN AS M/S P.S. GLOBAL LTD. THESE SHARES WERE SOLD THROUGH M/S VIVEK FINANCIAL FOCUS LTD. IN ADD ITION TO THE ABOVE, THE ASSESSEE ALSO SOLD 55,000 SHARES OF M/S V&K SOFTWARE LTD. (NOW KNOWN AS USG TECH LTD.) FOR A TOTAL CONSIDERATION OF RS. 7,13,384/- WHEREAS THESE SHARES WERE PURCHASED AT A PRICE OF RS. 42,900/- RESULTING INTO LONG TERM CAPITAL GAIN OF RS. 6,70,484/-. 2.2 IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER (AO) NOTED THAT AS PER THE INVESTIGATION REPORT OF PR. D IT (INV.) KOLKATA, THE ASSESSEE WAS ONE AMONG THE BENEFICIARIE S IN THE LIST BY ACCEPTING BOGUS LONG TERM CAPITAL GAIN ENTR IES THROUGH STOCK BROKERS TRADING IN CIRCULAR AND PENNY STOCKS. THE NAME OF THE STOCK WHICH WAS USED FOR THE PURPOSE OF PROVID ING ACCOMMODATION ENTRY HAS BEEN STATED TO BE M/S RADFO RD GLOBAL LTD. (OLD NAME P.S. GLOBAL LTD.) IN THE FORM OF CAPITAL GAINS. TO VERIFY THE ABOVE TRANSACTIONS REPORTED BY THE ASSESSEE FOR CLAIMING LONG TERM CAPITAL GAIN OF RS. 4 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO 5,76,90,819/- CLAIMED AS EXEMPT U/S 10(38) OF THE A CT, THE ASSESSEE WAS ASKED TO FURNISH ALL DETAILS INCLUDING BANK STATEMENT, SHARE BROKERS NOTE, LEDGER ACCOUNT COPIE S, SHARE CERTIFICATES, AND ALL OTHER DOCUMENTARY EVIDENCES I N SUPPORT OF PURCHASE AND SALE OF SHARES AND THE MODE OF PAYMENT AND RECEIPTS OF PROCEEDS. FURTHER, NOTICES U/S 133(6) O F THE ACT DATED 27.9.2016 WERE ISSUED TO M/S RADFORD GLOBAL LT D., SECURITY EXCHANGE BOARD OF INDIA (SEBI) AND THE B ROKER M/S VIVEK FINANCIAL FOCUS LTD. IT IS STATED THAT THE I NVESTIGATION WAS ALSO UNDERTAKEN BY SEBI AND THAT SEBI IN ITS INT ERIM REPORT DATED 19.12.2014, IN EXERCISE OF THE POWERS CONFERRED IN TERMS OF SECTION 19 READ WITH SECTION 11(1), SECTION 11(4) AND SECTION 11B OF THE SEBI ACT, 1992, RESTRAINED 108 PERSONS/ENTITIES INCLUDING THE ASSESSEE FROM ACCESS ING THE SECURITIES MARKET AND BUYING, SELLING OR DEALING IN SECURITIES, EITHER DIRECTLY OR INDIRECTLY, IN ANY MANNER, TILL FURTHER DIRECTIONS. THE NAME OF SHRI MUKESH MITTAL IS STATE D TO APPEAR AT S.NO 36 OF THE SAID LIST. IN THE SAID ORDER IT WAS HELD AS UNDER: 5 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO 26 SINCE PRIOR TO THE TRADING IN ITS SCRIP DURING THE EXAMINATION PERIOD. RADFORD DID NOT HAVE ANY SIGNI FICANT FINANCIAL STANDING IN THE SECURITIES MARKET, IN MY VIEW, THE ONLY WAY IT COULD HAVE INCREASED ITS SHARE VALUE IS BY WAY OF MARKET MANIPULATION. IN THIS CASE, IT IS NOTED THAT THE TRADED VOLUME AND PRICE OF THE SCRIP INCREASED SUBSTANTIALLY ONLY AFTER RADFORD GROUP & SUSPECTED ENTITIES AND ALLOTTEES STARTED TRADING IN THE SCRIP . THE AVERAGE VOLUME INCREASED BY 5,05,066% (5050 TIMES) DURING THE PATCH I, I.E., FROM 98 SHARES PER DAY TO 4,95,063 SHARES PER DAY AND THE PRICE INCREASED BY 74.8% DUR ING THE SAME PERIOD, I.E. FROM RS. 49.2 TO RS. 86. RAD FORD GROUP & SUSPECTED ENTITIES WERE TRADING IN THE SCRI P ABOVE THE LTP AND THEIR TRADES CREATED ARTIFICIAL V OLUMES AND MANIPULATED THE PRICE OF THE SCRIP DURING THE EXAMINATION PERIOD. IT IS FURTHER NOTED THAT ON TH E DAYS WHEN RADFORD GROUP & SUSPECTED ENTITIES WERE NOT TRADING, THE TRADING VOLUMES IN THE SCRIP WERE VERY LOW AND THE SUBSTANTIAL INCREASE IN TRADED VOLUMES AS OBSERVED IN THIS CASE WAS MAINLY DUE TO THEIR TRADI NG. I FURTHER NOTE THAT RADFORD GROUP & SUSPECTED ENTITIE S AND ALLOTTEES TRADED AMONGST THEMSELVES AS SUBSTANTIATE D BY THEIR MATCHING CONTRIBUTION TO NET BUY AND NET SELL IN PATCH I. THERE WAS NO CHANGE IN THE BENEFICIAL OWNERSHIP OF THE SUBSTANTIAL NUMBER OF TRADED SHARES AS THE BUYERS A ND 6 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO SELLERS BOTH WERE PART OF THE COMMON GROUP AND WERE ACTING IN LEAGUE/CONCERT TO PROVIDE LTCG BENEFITS T O THE ALLOTTEES. IN VIEW OF THE ABOVE, I PRIMA FACIE FIN D THAT RADFORD GROUP & SUSPECTED ENTITIES AND ALLOTTEES US ED SECURITIES MARKET SYSTEM TO ARTIFICIALLY INCREASE V OLUME AND PRICE OF THE SCRIP FOR MAKING ILLEGAL GAINS TO AN TO CONVERT ILL GOTTEN GAINS INTO GENUINE ONE. 2.3 A SHOW CAUSE NOTICE DATED 2.12.2016 U/S 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE AND REPLY DATED 1 2.12.2016 WAS FILED WHEREIN THE ASSESSEE CONTENDED AS UNDER: A) THAT THE SAID ORDER ONLY PERTAINED TO SCRIP RAD FORD GLOBALS LTD. AND NOT TO SCRIP V&K SOFTWARE; B) THAT THE SAID ORDER IS NOT FINAL ORDER BUT ONLY AN INTERIM ORDER AND HENCE COULD NOT BE CONSIDERED AS RELIABLE TO FORM ANY ADVERSE INFERENCE IN THE MATTER; C) THAT THE SAID ORDER IS SOLELY BASED ON PRIMA FAC IE OBSERVATION ONLY OF THE SEBI AND NOT ON ANY FINAL O R CONCRETE FINDINGS OF THE SEBI; D) THAT THE TRANSACTIONS SO ENTERED INTO BY THE ASS ESSEE HAVE NOT BEEN CANCELLED OR ANNULLED BY THE SEBI, AS EMPO WERED UNDER SECTION 9 OF SECURITIES CONTRACT (REGULATION) ACT, 1956; 7 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO E) THAT ALL THE TRANSACTION OF SALES HAD BEEN DONE THROUGH SCREEN BASED TRADING ON RECOGNIZED STOCK EXCHANGE. THE ASSESSEE DOESNT HAVE ANY DETAILS ABOUT THE IDENTIT Y OF THE PERSONS TO WHOM HE SOLD THE SHARES; F) THAT IT IS AN UNDISPUTED FACT IN CASE OF SCREEN BASED TRADING, ALL TRADES ARE EXECUTED IN THE OPAQUE SCRE EN WHEREIN PERSON DO NOT GET TO CHOOSE COUNTERPART TO THEIR TRADE. THE AUTOMATED SYSTEMS ITSELF MATCHES ORDERS ON A PRICE TIME PRIORITY BASIS AND HENCE IS NOT POSSIBLE FOR ANYBODY TO HAVE ACCESS OVER THE IDENTITY OF COUNTER PARTY DEALING IN ANY TRANSACTION. SINCE THE COUNTER PART Y IDENTITY IS NOT DISPLAYED, ONE CAN NEVER HAVE ANY C HOICE WITH WHOM IT WANTS TO DEAL OR NOT TO DEAL; G) THAT ASSESSEE MR. MUKESH MITTAL IS A REGULAR INV ESTOR IN THE STOCK MARKET AND ALL OF HIS INVESTMENTS AND INC OME IS DULY ASSESSED TO TAX; H) THAT SEBI HAS NOT PLACED ANY MATERIAL ON RECORD TO SHOW ANY CULPABLE CONDUCT ON THE PART OF THE ASSESSEE EV EN BY DISCHARGE OF THE STANDARD OF PREPONDERANCE OF PROBABILITIES; I) THAT ALL THE DOCUMENTS, WHICH SEBI HAD PROVIDED TO THE ASSESSEE DURING THE COURSE OF PROCEEDINGS DO NOT P ROVE AT ALL THAT MR. MUKESH MITTAL WAS INVOLVED IN FRAUDULE NT TRANSACTION. ON THE CONTRARY, THESE EVIDENCES/DOCU MENTS 8 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO SO PROVIDED BY SEBI HAS ESTABLISHED THAT TRADE TRANSACTION OF MR. MUKESH MITTAL IS GENUINE; J) THAT THE SUMMARY OF TRADE OF SH. MUKESH MITTAL O BTAINED FROM EXTRACTS OF ORDER LOG AND TRADE LOG DRAWN FROM THE DATE PROVIDED TO US IN CD BY SEBI IS AS UNDER: DATE QTY. ORDERED QTY. SOLD TO PERSONS MENTIONED IN TABLE IV OF THE INTERIM ORDER* QTY. SOLD TO OTHERS TOTAL QTY. SOLD QTY. UNSOLD 26.4.2013 150000 87649 62351 150000 ---- 7.5.2013 250000 25000 ---- 25000 ---- 8.5.2013 64691 14691 50000 64691 ---- 20.5.2013 100000 10000 ---- 100000 ---- 20.6.2013 123028 123028 ---- 123028 ---- 26.6.2013 35000 10000 2500 12500 22500 27.6.2013 80000 32000 28000 60000 20000 28.6.2013 50000 12318 16308 28626 21374 2.7.2013 105265 71878 8387 80265 250000 3.7.2013 105890 67940 37950 105890 ---- TOTAL 838874 844504 205496 750000 88874 PERCENTAGE OF TOTAL SHARE SOLD 73% 27% 11.85% *TABLE IV OF THE INTERIM ORDER SPECIFIES THE LIST O F 44 PERSONS ALLEGED AS RELATED PARTY AND SUSPECTED ENTITIES. HEREINAFTER REFERRED TO AS TABLE IV ENTITIES. K) THAT SHARES SOLD BY SH. MUKESH MITTAL WERE PURCH ASED BY DIFFERENT PERSONS THROUGH DIFFERENT STOCK BROKERS T HROUGH ONLINE TRADING PLATFORM OF BOMBAY STOCK EXCHANGE AT DIFFERENT POINT OF TIME; 9 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO L) THAT CONSIDERATION FOR AFORESAID SHARE TRADE WAS RECEIVED BY SH. MUKESH MITTAL THROUGH PROPER BANKING CHANNEL AS PER SEBI AND BSE NORMS; M) THAT SHARES WERE NOT IMMEDIATELY PURCHASED BY TH E BUYERS ON PLACEMENT OF SALE ORDER BY SH. MUKESH MIT TAL. RATHER THERE WAS CONSIDERABLE AMOUNT OF TIME GAP IN PLACEMENT OF SALES ORDER AND PURCHASE OF SHARES BY THE BUYER. THEREFORE, SALES ORDER PLACED BY SH. MUKESH MITTAL AT THE ONLINE TRADING PLATFORM OF BSE, WAS OPEN TO THE OTHER INVESTORS FOR PURCHASE OF THOSE SHARES; N) THAT ONLY 73% OF THE SHARES SOLD BY SH. MUKESH M ITTAL WERE PURCHASED BY PERSONS MENTIONED IN TABLE IV OF THE INTERIM ORDER PASSED BY SEBI. REMAINING 27% SHARES WERE PURCHASED AT SIMILAR PRICE BY OTHER INVESTORS, WHO ARE NOT ALLEGED AS RELATED PARTY AND SUSPECTED ENTI TIES IN THE INTERIM ORDER; O) THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD THAT INVESTMENT MADE BY SH. MUKESH MITTAL IN THE PREFERE NTIAL ALLOTMENT OF SHARES OF RADFORD GLOBAL LIMITED WAS N OT OUT OF HIS OWN FUNDS BUT FUNDED BY RADFORD GROUP OR OTH ER SUSPECTED ENTITIES; P) THAT SIMILARLY NO EVIDENCE HAS BEEN BROUGHT ON R ECORD THAT CONSIDERATION RECEIVED ON SALE OF SHARES OF RADFORD GLOBAL LTD. WAS BLACK MONEY OF SH. MUKESH MITTAL ROUTED TH ROUGH 10 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO RADFORD GROUP OR OTHER SUSPECTED ENTITIES AND CONVE RTED INTO TAX FREE LTCG; Q) THAT SEBI ITSELF HAS ADMITTED THAT THERE WERE PR OPER BOARD RESOLUTIONS IN PLACE FOR ISSUING THE PREFEREN TIAL SHARES. THE COMPANY HAD PROPERLY ISSUED OF PREFERE NTIAL SHARES AFTER TAKING SHAREHOLDER/BOARD APPROVALS. S EBI HAS NOT CONTENDED OR CONTESTED THE VALIDITY OF THE ISSUE OF THE PREFERENTIAL ALLOTMENT AND HENCE THE PREFERENTI AL SHARES ALLOTTED TO THE ASSESSEE WERE UNDER DUE PROC ESS OF LAW; AND R) THAT IN THE ABSENCE OF COGENT MATERIAL NO MUCH PRESUMPTION CAN BE DRAWN THAT ENTIRE PURCHASE AND S ALE TRANSACTIONS OF SH. MUKESH MITTAL WAS A DEVICE FOR THE PURPOSE OF MONEY LAUNDERING BY SH. MUKESH MITTAL AN D TO CONVERT BLACK MONEY INTO TAX FREE LTCG. 2.4 THE AO, HOWEVER, DENIED THE CLAIM OF RS. 5,76,90,819/- BEING NOT TAXABLE U/S 10(38) OF T HE ACT ON SALE OF SHARES OF M/S RADFORD GLOBAL LTD. IN THE OR DER OF ASSESSMENT DATED 27.12.2016 PASSED U/S 143(3) OF TH E ACT. THE AO HELD THAT THE RECEIPT OF RS. 5,76,90,819/- W AS NOTHING BUT UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT TO BE TAXED @ 30% U/S 115BBE OF THE ACT AT THE HANDS OF THE ASSES SEE. 11 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO FURTHERMORE, HE ALSO HELD THAT COMMISSION @ 3% TO 5 % WOULD HAVE BEEN CHARGED FOR PROVIDING ARRANGED CAPITAL GA INS AND SINCE THE ASSESSEE HAS CLAIMED LTCG OF RS. 5,76,90 ,819/, AN AMOUNT OF RS. 17,98,225/- I.E. 3% OF RS. 5,99,40,81 9/- BEING THE TOTAL SALE VALUE OF SHARES OF M/S RADFORD GLOBA L LTD.) WAS TO BE ADDED U/S 69C OF THE ACT AS UNEXPLAINED EXPEN DITURE OF THE ASSESSEE. 2.5 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. FIRST APPELLATE AUTHORITY. THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED IN THE APPELLATE ORDER IN WHICH THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. AND FILED DETAILS OF PURCHASE AND SALE OF SCRIP OF M/S RADFOR D GLOBAL LTD. TO SHOW THAT HE HAD ENTERED INTO GENUINE TRANSA CTION WHICH WAS SUPPORTED BY DOCUMENTARY EVIDENCES. IT WAS FURTHER SUBMITTED THAT THE INTERIM ORDER OF THE SEB I HAD BEEN REVOKED AND THE ASSESSEE HAD BEEN CLEARED FROM ALL THE ALLEGATIONS. THE LD. CIT (A) WAS OF THE OPINION THA T THE EVIDENCES FURNISHED BY THE ASSESSEE WITH RESPECT TO THE LONG TERM CAPITAL GAIN OF RS.5,76,90,819/- COULD NOT BE ACCEPTED AS 12 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO GENUINE AS IT HAD BEEN ESTABLISHED BY THE INVESTIGA TION WING OF THE DEPARTMENT, AFTER MAKING DETAILED ENQUIRIES, THAT THE BROKERS THROUGH WHOM THE ASSESSEE HAD PURCHASED SHAR ES WERE INVOLVED IN BUSINESS OF PROVIDING ACCOMMODATION ENTRIES AND THAT THE SHARES PURCHASED BY THE ASSESSEE WERE I N THE NATURE OF PENNY STOCK. THE LD. CIT (A), DID NOT AC CEPT THE CONTENTION OF ASSESSEE AND FOLLOWING THE RULE OF PRE PONDERANCE OF PROBABILITY DISMISSED THE APPEAL OF ASSESSEE. IT WAS OBSERVED THAT IN THE ORDER OF SEBI DATED 26.8.016, IT HAD DECLINED TO REVOKE THE RESTRAINT IMPOSED UPON THE A SSESSEE. THUS, THE ADDITION OF LTCG OF RS. 5,76,90,819/-, AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT, WAS UPHE LD ALONG WITH THE ADDITION OF RS. 17,98,225/- MADE ON ACCOUNT OF ALLEGED UNEXPLAINED COMMISSION EXPENDITURE U/S 69C OF THE ACT. 2.6 NOW, THE ASSESSEE HAS APPROACHED THIS TRIBUNAL CHALLENGING THE ORDER OF THE LD. CIT (A) A ND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 13 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 14, NEW DELHI HAS ERRED BOTH IN LAW AND O N FACT IN SUSTAINING ADDITION OF RS. 5,94,89,044/- REPRESE NTING LONG TERM ON SALE OF EQUITY SHARE AND 3% COMMISSION ON SALE VLUE OF SHARES THROUGH REGISTERED STOCK EXCHAN GE AND BROUGHT TO TAX U/S 68 OF THE ACT AT THE RATE PROVID ED U/S 115BBE OF THE ACT, THOUGH THE SAME WAS ELIGIBLE FOR EXEMPTION U/S 10(38) OF THE ACT. 1.1 THAT WHILE SUSTAINING THE AFORESAID ADDITION AN D DENYING THE EXEMPTION LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) HAS FAILED TO APPRECIATE THAT, APPELL ANT WAS OWNER OF EQUITY SHARES OF A LISTED COMPANY WHICH HA D BEEN HELD BY IT FOR A PERIOD EXCEEDING 12 MONTHS AN D THE SAME WERE SOLD ON RECOGNIZED STOCK EXCHANGE AFTER PAYMENT OF STT, RESULTING INTO A LONG TERM CAPITAL GAIN AND THEREFORE THE LONG TERM CAPITAL GAIN ACCRUED TO THE ASSESSEE ON TRANSFER OF LONG TERM CAPITAL ASSET W AS NOT INCLUDIBLE IN TOTAL INCOME OF THE ASSESSEE IN VIEW OF SECTION 10(38) OF THE ACT. 1.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THE EVIDENCE TEN DERED BY THE APPELLANT TO SUPPORT THE CALIM OF SALE OF SH ARE AND HENCE, FINDINGS MECHANICALLY RECORDED ON BORROWED INFERENCE IN DISREGARD OF EVIDENCE AND BASED ON IRR ELEVANT AND EXTRANEOUS CONSIDERATIONS ARE MISCONCEIVED AND, MISPLACED. 1.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE ABOVE ADDITION AND DENI AL OF EXEMPTION WITHOUT APPRECIATING THAT NEITHER THE MATERIAL/INVESTIGATION RELIED UPON WAS CONFRONTED T O APPELLANT AND NOR CROSS EXAMINATION OF THE PARTIES ON WHOSE STATEMENTS RELIANCE HAD BEEN PLACED IN IMPUGN ED ORDER OF ASSESSMENT WAS GRANTED AND THEREFORE ORDER SO MADE IN DISREGARD OF PRINCIPLES OF NATURAL JUSTICE WAS VITIATED. 1.4 THAT FURTHER MORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS SUSTAINED THE ADDITION ON MERE 14 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO SPECULATION, GENERALIZED STATEMENTS, THEORETICAL ASSUMPTIONS AND ALLEGATIONS AND ASSERTIONS, WITHOUT THERE BEING ANY SUPPORTING EVIDENCE AND IS THEREFORE NOT IN ACCORDANCE WITH LAW. 1.5 THAT LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS FAILED TO APPRECIATE THAT ONCE THE BROKER OF TH E ASSESSEE M/S VIVEK FINANCIAL FOCUS LTD. HAD NEITHER DENIED AND NOR DISPUTED THE GENUINENESS OF TRANSACT ION, THE CONCLUSION ARRIVED IN THE ORDER IS HIGHLY WHIMS ICAL, ARBITRARY, ILLOGICAL AND WHOLLY UNTENABLE. 1.6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHILE SUSTAINING THE ABOVE ADDITION HAS ARBITRARILY AND, MECHANICALLY REJECTED THE EXPLANAT ION AND EVIDENCE TENDERED BY THE APPELLANT AND MADE THE ADD ITION AND DENIED EXEMPTION BY DRAWING SUBJECTIVE, PREMEDITATED AND PRECONCEIVED INFERENCES THEREFORE THE SAME ARE NOT SUSTAINABLE. 1.7 THAT VARIOUS ADVERSE FINDINGS AND CONCLUSIONS RECORDED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE FACTUALLY INCORRECT AND CONTRARY TO R ECORD, LEGALLY MISCONCEIVED AND UNTENABLE. 1.8 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONCLUDING WITHOUT ANY BASIS THAT ASSESSEE HAS INTRODUCED HIS UNACCOUNTED INCOME IN T HE FORM OF LONG TERM CAPITAL GAIN BY MANIPULATING THE PENNY STOCK. IT IS THEREFORE, PRAYED THAT IT BE HELD THAT EXEMPT ION DENIED AND ADDITION MADE AND SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MAY KINDLY BE DELETED AND APPEAL OF THE APPELLANT BE ALLOWED . 3.0 THE LD. AUTHORIZED REPRESENTATIVE (AR) REITER ATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AN D REFERRED TO PAGES 298-309 OF THE PAPER BOOK WHICH CO NTAINED 15 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO THE FINAL ORDER DATED 20.9.2017 OF THE SEBI IN WHICH SEBI, AFTER DETAILED INVESTIGATION, HAS REVOKED THE INTER IM ORDER AGAINST THE ASSESSEE. IT WAS SUBMITTED THAT THIS WAS THE SOLE REASON FOR REJECTING THE CLAIM OF THE ASSESSEE. IT WAS ARGUED THAT THE AO DID NOT MAKE ANY FURTHER INVESTIGATION INTO THE MATTER. HE CONTENDED THAT THE MATERIAL UPON RELIED BY THE AO WAS NOT PROVIDED TO THE ASSESSEE. NEITHER COPIES OF STATEMENTS OF ALLEGED ENTRY OPERATORS WERE SUPPLIED NOR WAS CRO SS EXAMINATION PROVIDED. IT WAS SUBMITTED THAT THE AO H AS MECHANICALLY LIFTED THE CONCLUSIONS/OBSERVATIONS FR OM THE INTERIM ORDER WITHOUT MAKING ANY INDEPENDENT INQUIRI ES EITHER FROM THE SEBI OR THE STOCK EXCHANGE TO ASCERTAIN GE NUINENESS OF SUCH TRANSACTIONS. HE SUBMITTED THAT THE THEORY OF PREPONDERANCE, HUMAN PROBABILITIES, CIRCUMSTANTIAL EVIDENCE SO CALLED RULES OF SUSPICIOUS TRANSACTIONS ARE NOT APPLICABLE IN RESPECT OF TRANSACTIONS OF LISTED SECURITY WHERE THE TRANSACTIONS ARE SUPPORTED BY EVIDENCES ON RECORD. HE SUBMITTED THAT THE ASSESSEE IS A HABITUAL INVESTOR HAVING PORTFOLIO OF INVESTMENT IN SHARES AND HAS EARNED CA PITAL GAINS 16 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO BOTH IN PRECEDING AND SUCCEEDING YEARS. IT WAS SUBM ITTED THAT THE ALLEGATION THAT THERE WAS AN ASTRONOMICAL I NCREASE IN THE PRICE OF SHARE OF M/S RADFORD GLOBAL LTD. (OLD NAME PS GLOBAL LTD) CANNOT BE A VALID BASIS TO DENY THE LEG ITIMATE CLAIM OF LONG TERM CAPITAL GAIN CLAIMED BY ASSESSEE U/S 10(38) OF THE ACT. HE ALSO REFERRED TO THE FINANCIALS OF M/S RADFORD GLOBAL LTD. FROM ASSESSMENT YEARS 2010-2011 TO 2015 -16 TO PLEAD THAT THIS COMPANY IS NOT PENNY STOCK COMPANY. HE ALSO REFERRED TO THE ORDERS OF ASSESSMENT U/S 153C/153A AND U/S 143(3) OF THE ACT IN THE CASE OF M/S RADFORD GLOBAL LTD. FOR ASSESSMENT YEARS 2013-14 TO 2015-16. THE FINANCIALS FOR THE ASSESSMENT YEAR UNDER APPEAL IN THE CASE OF M/S RAD FORD GLOBAL LTD. ARE REPRODUCED AS UNDER: PARTICULARS ASSESSMENT YEAR 2014 - 15 SHARE CAPITAL 14,06,23,000 RESERVES AND SURPLUS 5,77,67,887 TANGIBLE ASSETS 1,51,839 INVENTORIES 9,17,40,364 TRADE RECEIVABLES 11,18,94,152 CASH AND CASH EQUIVALENTS 3,10,125 REVENUE FROM OPERATIONS 11,03,60,575 OTHER INCOME 87,73,463 PROFIT BEFORE TAX 26,10,120 17 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO 3.1 THE LEARNED AR SUBMITTED THAT IN CASE OF SHRI BRIJ BHUSHAN SINGHAL VS. ACIT, THE TRIBUNAL CONSIDERED A N IDENTICAL ISSUE IN SCRIP OF THE SAME COMPANY M/S RA DFORD GLOBAL LTD. IN THAT CASE ALSO, INTERIM ORDER OF THE SEBI WAS REJECTED AND THE APPEAL OF ASSESSEE HAS BEEN ALLOWE D. HE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE BY THE AFORESAID DECISION. I WAS FURTHER SUBMITTED T HAT A SIMILAR VIEW HAS ALSO BEEN EXPRESSED IN THE CASE OF SH. RIAZ MUNSHI V. ACIT (SUPRA). HE ALSO RELIED UPON THE FO LLOWING DECISIONS IN WHICH SUCH PROPOSITION HAS BEEN HELD IN FAVOUR OF THE ASSESSEE: I) SMT. KARUNAGARG V. ITO ITA NO. 1069/D/2019 DATED 6.8.2018 A.Y. 2014-15 II) SMT. SIMMIVERMA V. ITO ITA NO. 3387/D/2018 DATE D 6.11.2018 A.Y. 2014-15 III) SMT. JYOTI GUPTA ITA NO. 3510/D/2018 DATED 6.1 1.2018 A.Y. 2014-15 4.0 THE LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO BOGUS TRANSACTION AND PUR CHASE 18 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO VALUE IS VERY LESS AND THAT THE SHARES HAVE BEEN SO LD AT A HIGH PRICE. IT WAS SUBMITTED THAT THE LD. CIT (A) HAS RIG HTLY INVOKED THE PRINCIPLE OF PREPONDERANCE OF PROBABILITY AGAIN ST THE ASSESSEE. IT WAS ARGUED THAT THE MODUS OPERANDI WAS EXAMINED BY THE KOLKATA INVESTIGATION WING BECAUSE THERE WAS A RIGGING IN THE PROFIT. IT WAS ALSO CONTENDED THAT THE ORDER DATED 20.9.2017 COULD NOT BE RELIED UPON SINCE THE COMPANY M/S RADFORD GLOBAL LTD. WAS YET A PENNY STOCK COMPAN Y AND HAD NOT BEEN CLEARED BY SEBI. THEREFORE, THE AUTHOR ITIES BELOW HAD CORRECTLY MADE THE ADDITION AGAINST THE ASSESSE E. RELIANCE WAS PLACED UPON THE DECISION OF DELHI BENCH OF ITAT IN THE CASE OF SUMAN PODDAR VS. ITO DATED 25.07.2019, WHICH WAS CONFIRMED BY THE HONBLE DELHI HIGH COURT DISMISSIN G THE APPEAL OF ASSESSEE VIDE ORDER DATED 17.09.2019 IN ITA.NO.841/2019. THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF UDIT KALRA VS., ITO IN ITA.NO.220/20 19 DATED 08.03.2019 IN WHICH SCRIP OF M/S. KAPPAC PHARMA LTD. , HAS BEEN CONSIDERED, WAS ALSO RELIED UPON. 19 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO 5.0 WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE A LSO PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPE CIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND THE CASE LAWS REFERRED HEREINABOVE. THE ASSESSMENT ORDER CLEARLY SHOWS THA T THE AO HAS MERELY REPRODUCED THE MODUS OPERANDI OF THE ENTRY PROVIDERS WHO BOOKED BOGUS LONG TERM CAPITAL GAINS T HROUGH PENNY STOCK COMPANIES. THE SHOW CAUSE NOTICE DATED 2.12.2016 ISSUED BY THE AO DURING THE ASSESSMENT PROCEEDINGS AND THE FINDINGS OF THE AO ARE BASED UP ON INTERIM ORDER OF SEBI DATED 19.12.2014. EVEN THE LD. CIT ( A) HAS RELIED UPON ANOTHER INTERIM ORDER DATED 26.8.2016 C ONFIRMING THE EARLIER INTERIM ORDER DATED 19.12.2014. HOWEVE R, IT IS NOW AN ADMITTED FACT THAT INTERIM ORDERS OF THE SEBI HA VE BEEN LATER ON REVOKED BY THE SEBI. THE INTERIM ORDERS F RAMED BY SEBI DATED 19.12.2014 AND 26.8.2016 WERE REVOKED IN RESPECT OF 82 ENTITIES INCLUDING THE ASSESSEE BY FINAL ORDE R DATED 20.9.2017. IT WAS HELD IN PARA 9 OF THE SAID ORDER AS UNDER: 9 UPON COMPLETION OF INVESTIGATION BY SEBI, INVESTIGATION DID NOT FIND ANY ADVERSE EVIDENCE/ADV ERSE 20 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO FINDINGS IN RESPECT OF VIOLATION OF PROVISIONS OF S EBI (PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTIC ES RELATING TO SECURITIES MARKET) REGULATIONS, 2003 (P FUTP REGULATIONS) IN RESPECT OF FOLLOWING 82 ENTITIES (A GAINST WHOM DIRECTIONS WERE ISSUED VIDE THE INTERIM ORDERS AS CONFIRMED VIDE THE ABOVE SAID CONFIRMATORY ORDERS) WARRANTING CONTINUATION OF ACTION UNDER SECTION 11B R/W/ 11(4) OF SEBI ACT. HOWEVER INVESTIGATION HAS FOUND ADVERSE FINDINGS AGAINST RADFORD WHICH WARRANTS ADJUDICATION PROCEEDINGS. 5.1 THE NAME OF THE ASSESSEE APPEARS AT ITEM 77 OF THE LIST. FURTHER IT WAS HELD IN PARA 10 AS UNDER: 10 CONSIDERING THE FACT THAT THERE ARE NO ADVERSE FINDINGS AGAINST THE AFOREMENTIONED 82 ENTITIES WIT H RESPECT TO THEIR ROLE IN THE MANIPULATION OF THE SC RIPT OF RADFORD, I AM OF THE CONSIDERED VIEW THAT THE DIREC TIONS ISSUED AGAINST THEM VIDE INTERIM ORDERS DATED DECEM BER 19, 2014 AND NOVEMBER 9,2015 WHICH WERE CONFIRMED VIDE ORDERS DATED OCTOBER 12, 2015, MARCH 18, 2016 AND AUGUST 26, 2016 ARE LIABLE TO BE REVOKED. 21 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO 5.2 THE DECISION OF ITAT IN THE CASE OF SHRI BRIJ BHUSHAN SINGHAL VS. ACIT (SUPRA), CONSIDERED THE SC RIP OF M/S RADFORD GLOBAL LTD. ON IDENTICAL FACTS AND HELD AS UNDER: 30. FURTHER, THE ASSESSING OFFICER HAS HEAVILY RE LIED UPON THE VARIOUS ORDERS PASSED BY THE SECURITIES AND EXC HANGE BOARD OF INDIA IN VARIOUS COMPANIES IN WHICH THE ASSESSEE HAS EARNED THE LONG-TERM CAPITAL GAIN AS W ELL AS IN CASE OF THE ASSESSEE. FIRST SUCH ORDER RELIED UP ON IS INTERIM EX PARTE ORDERS DATED 19/12/2014 PASSED IN CASE OF M/S FIRST FINANCIAL SERVICES LTD AND M/S REDFORD GLOBAL LTD. THE LEARNED CIT-A WAS ALSO HEAVILY HARPING UPO N THE ORDERS OF THE SEBI FOR CONFIRMING THE ADDITION. IN INTERIM ORDER IN REDFORD GLOBAL LTD, DATED 19/12/2014 ASSES SEE WAS RESTRICTED TO ACCESS THE SECURITIES MARKET TILL FURTHER DIRECTIONS. SUBSEQUENTLY, ON 20/09/2017, SEBI PASSE D AN ORDER IN THAT COMPANY HOLDING THAT THERE ARE NO ADV ERSE FINDINGS AGAINST THE AFOREMENTIONED 82 ENTITIES, WH ICH INCLUDED THE FAMILY OF THE ASSESSEE, AND THE ASSESS EE HIMSELF WITH RESPECT TO THEIR ROLE IN THE MANIPULAT IONS IN PRICES OF THE SCRIPT OF THE COMPANY. THEREFORE, IT REVOKED THE ORIGINAL ORDER PASSED ON 19/12/2014. .. .. 31. ALMOST SIMILAR ORDERS WERE PASSED IN ALL THE COMPANIES WHEREVER THE INCOME TAX DEPARTMENT ASKED THE 22 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO SEBI TO ENQUIRE. THE ASSESSEE HAS PLACED ALL THESE ORDERS AT PAGE NUMBER 302 419 OF THE PAPER BOOK. FURTHER MORE, THE PARA NUMBER 96 OF THE ABOVE ORDER CLEARLY SHOWS THAT THE INTIMATION IS ALSO GIVEN TO THE DIRECTOR GENERA L OF INCOME TAX INVESTIGATION, NEW DELHI AND THE PRINCIP AL DIRECTOR OF INCOME TAX INVESTIGATION KOLKATA AND CHANDIGARH FOR NECESSARY ACTION. FROM THIS, IT IS A PPARENT THAT RELIANCE ON THE INTERIM ORDER OF SECURITIES EX CHANGE CONTROL BOARD OF INDIA BY THE REVENUE AUTHORITIES I S MISPLACED AS IN EACH OF THESE COMPANIES IN WHICH TH E INCOME TAX DEPARTMENT REQUESTED SEBI TO INVESTIGATE HAS GIVEN A CLEAN CHIT TO THE ASSESSEE AND HIS FAMILY. THEREFORE, RELIANCE ON SEBI INTERIM ORDER WAS MISPL ACED AND EVEN OTHERWISE NOW DO NOT SURVIVE IN VIEW OF SUBSEQUENT FINAL ORDERS OF SEBI. 5.3 SIMILAR VIEW HAS ALSO BEEN EXPRESSED BY THE ITAT IN THE CASE OF SHRI RIAZ MUNSHI WHEREIN IT WAS HELD AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSMENT ORDE R CLEARLY SHOW THAT THE A.O. MERELY REPRODUCED THE MO DUS OPERANDI OF THE ENTRY PROVIDERS WHO BOOKED BOGUS LO NG TERM CAPITAL GAINS THROUGH PENNY STOCK COMPANIES IN WHICH EITHER THERE IS NO BUSINESS OR THEY HAVE 23 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO ACCUMULATED LOSSES OR A COMPANY IS FLOATED ONLY FOR THAT PURPOSE. LEARNED COUNSEL FOR THE ASSESSEE HAS FILED FINANCIALS OF M/S EBFL FROM A.YS. 2011-2012 TO 2017 - 2018 AND FOR THE ASSESSMENT YEAR UNDER APPEAL THE FINANCIALS ARE REPRODUCED ABOVE, WHICH CLEARLY SHOW THAT THIS COMPANY IS DEALING IN ACTUAL BUSINESS ACTIVITI ES. ITS FINANCIALS ARE VERY HEAVY AND AS SUCH THE MODUS OPE RANDI OF THIS TYPE OF PENNY STOCK COMPANIES WOULD NOT BE AVAILABLE IN THE CASE OF M/S EBFL. THE FINDINGS OF THE A.O. ARE ENTIRELY BASED UPON INTERIM ORDER OF SEBI. HOWE VER, IT IS AN ADMITTED FACT THAT INTERIM ORDER OF THE SEBI HAVE BEEN LATER ON REVOKED BY THE SEBI ON ASSESSEE AS WE LL AS M/S EBFL HAVE BEEN CLEARED FROM ALL ALLEGATIONS AND CHARGES. IN THE CASE OF AMAR NATHGOENKA VS. VS., AC IT REPORTED IN 54 CCH 344, THE ITAT, DELHI BENCH CONSI DERED THE SCRIPS OF M/S EBFL ON IDENTICAL FACTS AND HELD AS UNDER: ASSESSEE PLACED SUFFICIENT DOCUMENTARY EVIDENCES B EFORE A.O. TO PROVE GENUINENESS OF THE TRANSACTION. THE A SSESSEE PURCHASED SHARES THROUGH BANKING CHANNEL AND ACTUAL LY GOT THE SHARES TRANSFERRED IN HIS NAME. PURCHASE WA S MADE THROUGH CHEQUE WHICH IS SUPPORTED BY BANK STATEMENT. THE TRANSACTIONS OF SALE HAVE BEEN MADE THROUGH DEMAT ACCOUNT. THE CONTRACT NOTE ALONG WITH OTHER DETAILS WERE PRODUCED TO SHOW THAT PURCHASE AND SAL E OF 24 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO THE SHARES HAVE BEEN MADE THROUGH BANKING CHANNEL THROUGH RECOGNIZED STOCK EXCHANGE THROUGH DEMAT ACCOUNT ON WHICH SECURITY TRANSACTION TAX HAVE ALSO BEEN PAID. THE A.O. DID NOT MAKE ANY ENQUIRY ON THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE. NO MAT ERIAL HAVE BEEN BROUGHT ON RECORD AGAINST THE ASSESSEE TO DISPROVE THE CLAIM OF ASSESSEE. IT IS NOT THE CASE OF THE REVENUE THAT AMOUNT RECEIVED ON SALE OF SHARES IS M ORE THAN WHAT IS DECLARED BY THE ASSESSEE. THE ASSESSEE PLEADED THAT THE INTERIM ORDER OF THE SEBI HAVE BEE N DILUTED BY PASSING FINAL ORDER IN WHICH NO ADVERSE VIEW HAVE BEEN TAKEN AGAINST THE AFORESAID COMPANY. THUS , THE ASSESSEES CLAIM OF PURCHASE AND SALE OF SHARES HAV E BEEN SUPPORTED BY DOCUMENTARY EVIDENCES. THE STATEM ENT OF SHRI SANJAY VOHRA WAS RECORDED BY THE INVESTIGAT ION WING, KOLKATA, BUT, THE SAME WAS NOT CONFRONTED TO THE ASSESSEE AND HIS STATEMENT WAS ALSO NOT SUBJECTED T O CROSSEXAMINATION ON BEHALF OF THE ASSESSEE. THEREFO RE, HIS STATEMENT CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. THE A.O. DID NOT MENTION ANY FACT AS TO H OW THE CLAIM OF ASSESSEE WAS SHAM OR BOGUS. THE ASSESSEE SATISFIED THE CONDITIONS OF SECTION 10(38). THE BRO KER THROUGH WHOM TRANSACTIONS WERE CARRIED-OUT HAVE NOT DENIED THE TRANSACTION CONDUCTED ON BEHALF OF THE ASSESSEE. IT, THEREFORE, APPEARS THAT THE ADDITION IS MERELY 25 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO MADE ON PRESUMPTION AND ASSUMPTIONS OF CERTAIN FACT S WHICH ARE NOT PART OF THE RECORD. THERE IS NO OTHER MATERIAL AVAILABLE ON RECORD TO REBUT THE CLAIM OF ASSESSEE OF EXEMPTION CLAIMED UNDER SECTION 10(38). ISSUE IS DE CIDED IN ASSESSEE S FAVOUR. 6.1. IN THE PRESENT CASE, THE ASSESSEE SUBMITTED SU FFICIENT DOCUMENTARY EVIDENCES BEFORE A.O. TO PROVE GENUINEN ESS OF THE TRANSACTION. THE ASSESSEE PURCHASED THE SHAR ES THROUGH BANKING CHANNEL AND ACTUALLY GOT THE SHARES TRANSFERRED IN HIS NAME. THE PURCHASES ARE SUPPORTE D BY BANK STATEMENTS. THE TRANSACTION OF THE SALE HAVE B EEN MADE THROUGH DEMAT ACCOUNT WHICH IS CORROBORATED BY CONTRACT NOTE AND OTHER DETAILS AND TRANSACTION IS CARRIED OUT THROUGH BANKING CHANNEL THROUGH STOCK EXCHANGE THROUGH DEMAT ACCOUNT ON WHICH SECURITY TRANSACTION TAX HAVE ALSO BEEN PAID. THE A.O. MERELY RELIED UPON IN TERIM ORDER OF THE SEBI TO MAKE ADDITION AGAINST THE ASSE SSEE, OTHERWISE, THERE WERE NO EVIDENCE OR MATERIAL ON RE CORD TO DISPROVE THE CLAIM OF ASSESSEE. SINCE THE INTERIM O RDER OF THE SEBI HAVE BEEN REVOKED AGAINST THE ASSESSEE AND M/S EBFL, THEREFORE, NOTHING SURVIVES IN FAVOUR OF THE A.O. THE A.O. DID NOT MAKE ANY FURTHER INVESTIGATION OR ENQUIRY INTO THE MATTER AND MERELY RELIED UPON THE INTERIM ORDER OF THE SEBI AND INVESTIGATION CARRIED OUT BY THE KOLKA TA WING. FURTHER, IT IS NOT CLEAR FROM THE ASSESSMENT ORDER 26 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO WHETHER INVESTIGATION WING REPORT HAVE BEEN CONFRON TED TO THE ASSESSEE OR ANY RIGHT OF CROSS-EXAMINATION HAVE BEEN ALLOWED TO ANY STATEMENT RECORDED AT THE BACK OF TH E ASSESSEE. THE ASSESSEE ASKED FOR THE CROSS-EXAMINAT ION OF ANY STATEMENT WHICH IS USED AGAINST THE ASSESSEE FO R MAKING THE ADDITION. BUT, THE ASSESSMENT ORDER IS S ILENT ON THIS ASPECT. THEREFORE, THE ABOVE FACTS CLEARLY SHOW THAT ASSESSEE ENTERED INTO THE GENUINE TRANSACTION AND A S SUCH THE PROFIT ON SALE OF SCRIP WAS EXEMPT FROM TAX. TH E LD. D.R. RELIED UPON DECISIONS OF THE ITAT, DELHI BENCH ES, DELHI IN THE CASES OF SUMANPODDAR VS., ITO (SUPRA) AND UDITKALRA VS., ITO (SUPRA), IN WHICH THE FINDINGS O F THE TRIBUNAL HAD BEEN THAT THESE ARE CASES OF PENNY STO CK COMPANIES WHICH FACT IS NOT THERE IN THE PRESENT CA SE. THEREFORE, THESE DECISIONS WOULD NOT SUPPORT THE CA SE OF THE REVENUE AS HAVING DISTINGUISHABLE ON FACTS. THE AUTHORITIES BELOW HAVE NOT REBUTTED THE EXPLANATION OF ASSESSEE THAT HE HAS INDULGED IN DEALING IN SCRIPS IN EARLIER YEAR AS WELL AS IN SUBSEQUENT YEARS. IT WOU LD, THEREFORE, SHOW THAT ASSESSEE IS REGULARLY DEALING IN SCRIPS. THE A.O. HAS NOT BROUGHT ANY ADVERSE MATERI AL AGAINST THE ASSESSEE SO AS TO MAKE THE ABOVE ADDITI ONS. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE AND FINANCIALS OF M/S EBFL AS REPRODUCED A BOVE 27 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO AND OTHER YEARS [PB-76], WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE BOTH THE ADDITIONS. 7 IN THE RESULT, APPEAL OF THE ASSESSEE ALLOWED. 5.4 WE ALSO FIND THAT THE AO HAS HELD THAT MANY S HARE BROKERS AS WELL AS MANY EMPLOYEES OF THESE SHARE BR OKING COMPANIES IN KOLKATA, IN THEIR STATEMENTS RECORDED UNDER SECTION 131 OF THE ACT, HAVE ADMITTED TO THE FACT T HAT THEY HAVE ARTIFICIALLY INFLATED THE PRICES OF THE SHARES OF T HEIR DUMMY COMPANIES TO DELIBERATELY PROVIDE BOGUS ACCOMMODATI ON ENTRIES OF THE LONG TERM CAPITAL GAIN/LOSS, SHORT T ERM CAPITAL GAIN/LOSS TO THE BENEFICIARIES. HOWEVER, NO SUCH ST ATEMENT HAS BEEN CONFRONTED OR SUPPLIED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN FACT NO SPECIFIC STA TEMENT HAS EVEN BEEN REFERRED BY THE AO IN THE ORDER OF ASSESS MENT OR IN THE SHOW CAUSE NOTICE EXTRACTED IN THE ORDER OF ASS ESSMENT. ON THE CONTRARY, THE FACT IS THAT THE ASSESSEE IS A HABITUAL INVESTOR. THE UNDISPUTED DETAILS OF INVESTMENT AND DISINVESTMENT MADE BY THE ASSESSEE AND ACCEPTED BY THE 28 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO REVENUE IN THE EARLIER YEAR, INSTANT YEAR AND SUCCE EDING YEAR IS AS UNDER: SR. NO. ASSESSMENT YEAR PARTICULARS DATE OF SALE SALE PRICE DATE OF PURCHASE PURCHASE PRICE CAPITAL GAIN I) 2012-13 VIKAS GLOBAL LIMITED -- -- -- -- 13,183 (CLAIMED EXEMPT U/S 10(38) II) 2014-15 (OTHER THAN SCRIPT UNDER CONSIDERAT ION) SBI MAGNA INSTA CASH 10.5.2013 45,06,452 2.5.2013 45,00,000 6,452 (SHORT TERM CAPITAL GAIN) SBI PREMIER LIQUID FUND 4.7.2013 2,30,79,18 8 -- 2,30,00,00 0 791,88 (SHORT TERM CAPITAL GAIN) V&K SOFTWARE 21.2.2014 7,13,384 -- 42,900 6,70,484 (CLAIMED EXEMPT U/S 10(38) III) 2015-16 DHRUV GLOBAL LTD. 16.3.2015 12,500 9.9.2002 50,000 (INDEXED COST 1,14,541) -1,02,041 CUBICAL SERVICES 11.6.2014 13,61,908 8.3.2013 4,34,982 9,26,926 (CLAIMED EXEMPT U/S 10(38) IV) 2017-18 PC JEWELLERS 20.2.2017 1,53,02,86 8 21.8.201 3 33,56,119 1,19,46,749 (CLAIMED EXEMPT U/S 10(38) PVR 20.2.2017 1,28,353 8.12.200 7 22,725 105628 (CLAIMED EXEMPT U/S 10(38) V) 2018-19 MOTILALOSWAL 11.5.2017 4,93,675 27.4.201 7 5,00,000 -6325 (SHORT TERM CAPITAL GAIN) VI) 2019-20 OIL & NATURAL GAS CORPORATION 21.2.2019 2,06,700 16.1.201 9 1,93,011 13,689 POLKA RESORTS (P) LTD. 23.3.2019 1,08,00,00 0 23.1.201 7 22,95,082 85,04,918 MOTILALOSWAL 7.9.2018 1,10,37,986 16.5.201 7 98,00,000 12,37,986 5.5 IT IS ALSO SEEN THAT THE ASSESSEE HAS PLACED O N RECORD COMPLETE DOCUMENTS AND EVIDENCES TO SUPPORT PURCHASE AND SALE OF SHARES OF M/S RADFORD GLOBAL L TD. THE 29 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO SALE WAS THROUGH SCREEN BASED TRADING AND STT AND AL L CHARGES WERE DULY PAID. THE CONSIDERATION WAS RECEI VED THROUGH BANKING CHANNELS. IN SUCH CIRCUMSTANCES, TH E AO OUGHT TO HAVE CONDUCTED INDEPENDENT ENQUIRIES AND VERIFICATIONS WITH DUE APPLICATION OF MIND BEFORE DR AWING ANY ADVERSE INFERENCE. THUS, THE APPROACH OF THE ASSES SING AUTHORITY IN MAKING THE ADDITION IS ALSO CONTRARY T O SECTION 142(1) OF THE ACT WHICH PROVIDES THAT FOR THE PURPOS E OF OBTAINING FULL INFORMATION IN RESPECT OF INCOME OR LOSS OF ANY PERSON, THE AO MAY MAKE SUCH ENQUIRY AS HE CONSIDER S NECESSARY. 5.6 MUCH HAS BEEN ARGUED BEFORE US AS TO THE ASTRONOMICAL INCREASE IN PRICE OF SHARES OF M/S RAD FORD GLOBAL LTD. HOWEVER, ISOLATED FACT OF INCREASE IN PRICES O F A SCRIP, WITHOUT EVIDENCE OF ANY INVOLVEMENT OF THE ASSESSEE CANNOT BE THE BASIS TO DENY THE CLAIM MADE BY THE ASSESSEE, P ARTICULARLY WHEN SEBI HAS SPECIFICALLY EXONERATED THE ASSESSEE. THE ADDITION HAS, THUS, BEEN MADE ON SURMISES, CONJECTU RES AND SUSPICION. THE TRANSACTIONS OF THE ASSESSEE ARE PRI OR TO ANY 30 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO ENQUIRY OR ORDER MADE BY SEBI. THUS, WHEN A PERSON WHO HAS BEEN ABSOLVED BY SEBI AND, WHEN THE REVENUE HAS NOT PLACED ANY MATERIAL IN THE SHAPE OF STATEMENT OR OTHERWISE TO PROVE ANY INVOLVEMENT OF THE ASSESSEE IN ALLEGED WRONG DOI NG, THEN THERE REMAINS NO JUSTIFICATION TO HOLD THAT THE AMO UNT CREDITED REPRESENTED UNEXPLAINED CREDITS U/S 68 OF THE ACT. THE DECISION OF THE ITAT IN THE CASE OF KARUNA GARG (SU PRA) ALSO SUPPORTS THE ABOVE WHEREIN IT WAS HELD AS UNDER: 21. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHO WS THAT THE ASSESSING OFFICER WAS CARRIED AWAY BY THE REPOR T OF THE INVESTIGATION WING KOLKATA. IT CAN BE SEEN THAT THE ENTIRE ASSESSMENT HAS BEEN FRAMED BY THE ASSESSING OFFICER WITHOUT CONDUCTING ANY ENQUIRY FROM THE REL EVANT PARTIES OR INDEPENDENT SOURCE OR EVIDENCE BUT HAS M ERELY RELIED UPON THE STATEMENTS RECORDED BY THE INVESTIG ATION WING AS WELL AS INFORMATION RECEIVED FROM THE INVESTIGATION WING. IT IS APPARENT FROM THE ASSESSM ENT ORDER THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ANY INDEPENDENT AND SEPARATE ENQUIRY IN THE CASE OF THE ASSESSEE. EVEN, THE STATEMENT RECORDED BY THE INVESTIGATION WING HAS NOT BEEN GOT CONFIRMED OR 31 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO CORROBORATED BY THE PERSON DURING THE ASSESSMENT PROCEEDINGS. 22. SECTION 142 OF THE ACT CONTAINS THE PROVISIONS RELATING TO ENQUIRY BEFORE ASSESSMENT. 23. IT IS PROVIDED U/S. 142 (2) OF THE ACT THAT FO R THE PURPOSE OF OBTAINING FULL INFORMATION IN RESPECT OF INCOME OR LOSS OF ANY PERSON, THE ASSESSING OFFICER MAY MA KE SUCH ENQUIRY AS HE CONSIDERS NECESSARY. IN OUR CONS IDERED VIEW THE ASSESSING OFFICER OUGHT TO HAVE CONDUCTED A SEPARATE AND INDEPENDENT ENQUIRY AND ANY INFORMATIO N RECEIVED FROM THE INVESTIGATION WING IS REQUIRED TO BE CORROBORATED AND REAFFIRM DURING THE ASSESSMENT BY THE ASSESSING OFFICER BY EXAMINING THE CONCERNED PERSON S WHO CAN AFFIRM THE STATEMENTS ALREADY RECORDED BY A NY OTHER AUTHORITY OF THE DEPARTMENT. FACTS NARRATED A BOVE CLEARLY SHOW THAT THE ASSESSING OFFICER HAS NOT MAD E ANY ENQUIRY AND THE ENTIRE ASSESSMENT ORDER AND THE ORD ER OF THE FIRST APPELLATE AUTHORITY ARE DEVOID OF ANY SUC H ENQUIRY. 24. THE REPORT FROM THE DIRECTORATE INCOME TAX INVESTIGATION WING, KOLKATA IS DATED 27.04.2015 WHE REAS THE IMPUGNED SALES TRANSACTIONS TOOK PLACE IN THE M ONTH OF MARCH, 2014. THE EXPARTE AD INTERIM ORDER OF SEBI I S DATED 29.06.2015 WHEREIN AT PAGE 34 UNDER PARA 50 ( A) M/S. ESTEEM BIO ORGANIC FOOD PROCESSING LTD WAS 32 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO RESTRAINED FROM ACCESSING THE SECURITIES MARKET AND BUYING SELLING AND DEALING IN SECURITIES EITHER DIR ECTLY OR INDIRECTLY IN ANY MANNER TILL FURTHER DIRECTIONS. A LIST OF 239 PERSONS IS ALSO MENTIONED IN SEBI ORDER WHICH ARE A T PAGES 34 TO 42 OF THE ORDER THE NAMES OF THE APPELL ANTS DO NOT FIND PLACE IN THE SAID LIST. AT PAGES 58 AND 59 THE NAMES OF PRE IPO TRANSFEREE IN THE SCRIP OF M/S. ES TEEM BIO ORGANIC FOOD PROCESSING LTD IS GIVEN AND IN THE SAID LIST ALSO THE NAMES OF THE APPELLANTS DO NOT FIND A NY PLACE. AT PAGE 63 OF THE SEBI ORDER-TRADING BY TRADING IN M/S. ESTEEM BIO ORGANIC FOOD PROCESSING LTD - A FURTHER LIST OF 25 PERSONS IS MENTIONED AND ONCE AGAIN THE NAMES OF THE APPELLANTS DO NOT FIND PLACE IN THIS LIST ALSO. 25. AS MENTIONED ELSEWHERE THE BROKERS OF THE ASSE SSEE NAMELY ISG SECURITIES LIMITED AND SMC GLOBAL SECURI TIES LIMITED ARE STATIONED AT NEW DELHI AND THEIR NAMES ALSO DO NOT FIND PLACE IN THE LIST MENTIONED HERE IN ABO VE IN THE SEBI ORDER. THERE IS NOTHING ON RECORD TO SHOW THAT THE BROKERS WERE SUSPENDED BY THE SEBI NOR THERE ANYTHI NG ON RECORD TO SHOW THAT THE TWO BROKERS OF THE APPEL LANTS MENTIONED HERE IN ABOVE WERE INVOLVED IN THE ALLEGE D SCAM. THE ASSESSING OFFICER HAS NOT EVEN CONSIDERED EXAMINING THE BROKERS OF THE APPELLANTS. IT IS A MA TTER OF FACT THAT SEBI LOOKS INTO IRREGULAR MOVEMENTS IN SH ARE PRICES ON RANGE AND WARN INVESTOR AGAINST ANY SUCH 33 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO UNUSUAL INCREASE IN SHARES PRICES. NO SUCH WARNINGS WERE ISSUED BY THE SEBI. 5.7 IN AN IDENTICAL ISSUE, ITAT DELHI BENCH HAD DE LETED ADDITION MADE U/S 68 OF THE ACT IN THE CASE OF ANOT HER ASSESSEE SMT. KRISHNA DEVI. THE DEPARTMENT WENT IN APPEAL BEFORE THE HONBLE DELHI HIGH COURT AGAINST SUCH DE LETION. THE HONBLE DELHI HIGH COURT UPHELD THE ORDER OF THE IT AT IN PCIT AND OTHERS VS. KRISHNA DEVI AND OTHERS REPORTED IN (2021) 431 ITR 0361. THE HONBLE DELHI HIGH COURT OBSERVED THAT ITAT BEING THE LAST FACT FINDING AUTHORITY, ON THE BASIS OF EVIDENCE BROUGHT ON RECORD, HAD RIGHTLY COME TO THE CONCLUSION THAT THE LOWER TAX AUTHORITIES HAD SUSTA INED THE ADDITION WITHOUT ANY COGENT MATERIAL ON RECORD. THE HONBLE DELHI HIGH COURT FOUND NO PERVERSITY IN THE ORDER O F THE TRIBUNAL. THUS, THE SUM AND SUBSTANCE OF THE JUDGME NT OF THE HONBLE DELHI HIGH COURT WAS THAT MERE RELIANCE ON T HE REPORT OF THE INVESTIGATION WING WITHOUT FURTHER CORROBORATI ON DOES NOT JUSTIFY THE CONCLUSION OF TREATING THE TRANSACT ION AS BOGUS AND SHAM. IDENTICAL ARE THE FACTS IN THE PRESENT AP PEAL BEFORE 34 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO US AND THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT AS ABOVE, APPLIES EQUALLY IN THIS CASE ALSO. 5.8 SIMILARLY, THE HON'BLE SUPREME COURT IN THE CA SE OF ADAMINE CONSTRUCTION (P) LTD.99 TAXMANN 45 HAS HELD AS UNDER: WHAT IS EVIDENT IS THAT THE AO WENT BY ONLY THE RE PORT RECEIVED AND DID NOT MAKE THE NECESSARY FURTHER ENQ UIRIES - SUCH AS INTO THE BANK ACCOUNTS OR OTHER PARTICULA RS AVAILABLE WITH HIM BUT RATHER RECEIVED THE ENTIRE F INDINGS ON THE REPORT, WHICH CANNOT BE CONSIDERED AS PRIMAR Y MATERIAL. THE ASSESSEE HAD DISCHARGED THE ONUS INIT IALLY CAST UPON IT BY PROVIDING THE BASIC DETAILS WHICH W ERE NOT SUITABLY ENQUIRED INTO BY THE AO. THE ASSESSEE HAD DISCHARGED THE ONUS INITIALLY CAST UPON IT BY PROVI DING THE BASIC DETAILS WHICH WERE NOT SUITABLY ENQUIRED INTO BY THE AO. 5.9 IN YET ANOTHER CASE OF ODEON BUILDERS (P) LTD 110 TAXMANN.COM 64, THE HON'BLE SUPREME COURT, WHILE DISMISSING THE REVIEW PETITION, HELD AS UNDER: HOWEVER, ON GOING THROUGH THE JUDGMENTS OF THE CIT, ITAT AND THE HIGH COURT, WE FIND THAT ON MERITS A DISALL OWANCE OF RS.19,39,60,866/- WAS BASED SOLELY ON THIRD PART Y 35 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO INFORMATION, WHICH WAS NOT SUBJECTED TO ANY FURTHER SCRUTINY. THUS, THE LD. CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE STATING: THUS, THE ENTIRE DISALLOWANCE IN THIS CASE IS BASE D ON THIRD PARTY INFORMATION GATHERED BY THE INVESTIGATI ON WING OF THE DEPARTMENT, WHICH HAVE NOT BEEN INDEPENDENTL Y SUBJECTED TO FURTHER VERIFICATION BY THE AO WHO HAS NOT PROVIDED THE COPY OF SUCH STATEMENTS TO THE APPELLA NT, THUS DENYING OPPORTUNITY OF CROSS EXAMINATION TO TH E APPELLANT, WHO HAS PRIMA FACIE DISCHARGED THE INITI AL BURDEN OF SUBSTANTIATING THE PURCHASES THROUGH VARI OUS DOCUMENTATION INCLUDING PURCHASE BILLS, TRANSPORTAT ION BILLS, CONFIRMED COPY OF ACCOUNTS AND THE FACT OF P AYMENT THROUGH CHEQUES, & VAT REGISTRATION OF THE SELLERS & THEIR INCOME TAX RETURN. IN VIEW OF THE ABOVE DISCUSSION IN TOTALITY, THE PURCHASES MADE BY THE APPELLANT FROM M/S PADMESH REALTORS PVT. LTD. IS FOUND TO BE ACCEPTABL E AND THE CONSEQUENT DISALLOWANCE RESULTING IN ADDITION T O INCOME MADE FOR RS.19,39,60,866/-, IS DIRECTED TO B E DELETED. 4. THE ITAT BY ITS JUDGMENT DATED 16TH MAY, 2014 RE LIED ON THE SELF-SAME REASONING AND DISMISSED THE APPEAL OF THE REVENUE. LIKEWISE, THE HIGH COURT BY THE IMPUGN ED JUDGMENT DATED 5 TH JULY, 2017, AFFIRMED THE JUDGME NTS OF THE CIT AND ITAT AS CONCURRENT FACTUAL FINDINGS, WH ICH 36 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO HAVE NOT BEEN SHOWN TO BE PERVERSE AND, THEREFORE, DISMISSED THE APPEAL STATING THAT NO SUBSTANTIAL QU ESTION OF LAW ARISES FROM THE IMPUGNED ORDER OF THE ITAT. 5. IN THESE CIRCUMSTANCES, THE REVIEW PETITIONS ARE DISMISSED. 5.10 ON SOMEWHAT IDENTICAL FACTS, THE COORDINATE BENCH OF ITAT DELHI IN THE CASE OF DEEPAK NAGAR 73 ITR (TRIB) 74 ALLOWED THE APPEAL OF ASSESSEE AND HELD AS UNDER : 22. FOR THE SAKE OF REPETITION, THE ENTIRE ASSESSM ENT HAS BEEN FRAMED BY THE ASSESSING OFFICER WITHOUT CONDUC TING ANY ENQUIRY FROM THE RELEVANT PARTIES OR INDEPENDEN T SOURCE OR EVIDENCE BUT HAS MERELY RELIED UPON THE STATEMENTS RECORDED BY THE INV WING AS WELL AS INFORMATION RECEIVED FROM THE INV WING. IT IS APPAR ENT FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ANY INDEPENDENT AND SEPARATE ENQUIRY IN T HIS CASE OF THE ASSESSEE. EVEN THE STATEMENT RECORDED B Y THE INV WING HAS NOT BEEN GOT CONFIRMED OR CORROBORATED BY THE PERSON DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER OUGHT TO HAVE CONDUCTED A SEPARAT E AND INDEPENDENT ENQUIRY AND ANY INFORMATION RECEIVED FR OM THE INV WING IS REQUIRED TO BE CORROBORATED AND REASSERTED/REAFFIRMED DURING THE ASSESSMENT PROCEED INGS 37 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO BY EXAMINING THE CONCERNED PERSONS WHO CAN AFFIRM T HE STATEMENTS ALREADY RECORDED BY ANY OTHER AUTHORITY OF THE DEPARTMENT. 23. THERE IS NO DISPUTE THAT THE STATEMENT WHICH WA S RELIED UPON BY THE ASSESSING OFFICER WAS NOT RECORD ED BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS BUT IT WAS PRE EXISTING STATEMENT RECORDED BY THE INV WING AND THE SAME CANNOT BE THE SOLE BASIS OF ASSESSMENT WIT HOUT CONDUCTING PROPER ENQUIRY AND EXAMINATION DURING TH E ASSESSMENT PROCEEDINGS ITSELF. IN OUR HUMBLE OPINIO N, NEITHER THE ASSESSING OFFICER CONDUCTED ANY ENQUIRY NOR HAS BROUGHT ANY CLINCHING EVIDENCE TO DISPROVE THE EVIDENCES PRODUCED BY THE ASSESSEE. 24. OUR ABOVE VIEW IS FORTIFIED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF FAIR INVEST LTD 357 ITR 146. THE RELEVANT FINDINGS OF THE HON'BLE JURIS DICTIONAL HIGH COURT OF DELHI READ AS UNDER: 6. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF TH E PARTIES. IN THIS CASE THE DISCUSSION BY THE CIT(APP EALS) WOULD REVEAL THAT THE ASSESSEE HAS FILED DOCUMENTS INCLUDING CERTIFIED COPIES ISSUED BY THE REGISTRAR OF COMPANIES IN RELATION TO THE SHARE APPLICATION, AFF IDAVITS OF THE DIRECTORS, FORM 2 FILED WITH THE ROC BY SUCH APPLICANTS CONFIRMATIONS BY THE APPLICANT FOR COMPA NY'S SHARES, CERTIFICATES BY AUDITORS ETC. UNFORTUNATELY , THE 38 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO ASSESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON T HE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF T HE INVESTIGATION REPORT AND THE STATEMENT OF MR. MAHES H GARG. TO ELEVATE THE INFERENCE WHICH CAN BE DRAWN O N THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL CON CLUSIONS WOULD BE IMPROPER, MORE SO WHEN THE ASSESSEE PRODUC ED MATERIAL. THE LEAST THAT THE ASSESSING OFFICER OUGH T TO HAVE DONE WAS TO ENQUIRE INTO THE MATTER BY, IF NECESSAR Y, INVOKING HIS POWERS UNDER SECTION 131 SUMMONING THE SHARE APPLICANTS OR DIRECTORS. NO EFFORT WAS MADE I N THAT REGARD. IN THE ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UNTRUSTWORTHY OR LACKED CRED IBILITY THE ASSESSING OFFICER MERELY CONCLUDED ON THE BASIS OF ENQUIRY REPORT, WHICH COLLECTED CERTAIN FACTS AND T HE STATEMENTS OF MR. MAHESH GARG THAT THE INCOME SOUGH T TO BE ADDED FELL WITHIN THE DESCRIPTION OF SECTION 68. 25. CONSIDERING THE VORTEX OF EVIDENCES, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS SUCCESSFULLY DISCHARGED THE ONUS CAST UPON HIM BY PROVISIONS OF SECTION 68 OF THE ACT AND AS MENTIONED ELSEWHERE, SUCH DISC HARGE OF ONUS IS PURELY A QUESTION OF FACT AND THEREFORE, THE JUDICIAL DECISIONS RELIED UPON BY THE LD. DR WOULD DO NO GOOD ON THE PECULIAR PLETHORA OF EVIDENCES IN RESPE CT OF THE FACTS OF THE CASE IN HAND. WE, ACCORDINGLY, DIRECT THE ASSESSING OFFICER TO ACCEPT THE LTCG OF RS. 39 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO 11,93,55,564/- DECLARED AS SUCH. 26. SINCE WE HAVE ACCEPTED THE GENUINENESS OF THE LTCG, WE DO NOT FIN D ANY MERIT IN THE CONSEQUENTIAL ADDITION OF RS. 6,05,312 /- AND THE SAME IS ALSO DIRECTED TO BE DELETED. 5.11 IN HER WRITTEN SUBMISSIONS, THE LD. DR HAS REF ERRED TO VARIOUS JUDGMENTS AND HEAVILY RELIED UPON THE DE CISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF SUMA N PODDAR ITA NO. 841/2019 AND IN THE CASE OF UDIT KALRA ITA NO. 220/2019 AND SEVERAL OTHER DECISIONS OF THE COORDIN ATE BENCH, WHICH ARE CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE CASE OF APPELLANT, PARTICULARLY HAVING REGARD TO THE FINAL ORDER OF SEBI REVOKING THE INTERIM ORDERS. 5.12 WE ARE, THUS, OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS SUCCESSFULLY DISCHARGED THE ONUS CAST UPON HIM BY PROVISIONS OF SECTION 68 OF THE ACT AND SUCH DIS CHARGE IS PURELY A QUESTION OF FACT. WE, ACCORDINGLY, DIRECT THE ASSESSING OFFICER TO ACCEPT THE LONG TERM CAPITAL GAIN OF RS. 5,76,90,819/- DECLARED AS SUCH AND ALLOW EXEMPTION U /S 10(38) OF THE ACT. IN LIGHT OF THE ABOVE, WE DELET E THE 40 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO IMPUGNED ADDITION MADE OF RS. 5,76,90,819/- ON ACC OUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. SINCE W E HAVE DELETED THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT, WE DO NOT FIND ANY MERIT IN THE CONSEQUENTIAL ADDITION OF RS. 17,98,225/- AND THE S AME IS ALSO DIRECTED TO BE DELETED. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7.0 SINCE, WE HAVE ALREADY ADJUDICATED THE ASSESSEE S APPEAL ON MERITS, THE STAY APPLICATION BECOMES IN FRUCTUOUS AND IS DISMISSED. 8.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESS EE STANDS ALLOWED AND THE STAY APPLICATION IS DISMISSED. ORDER PRONOUNCED ON 26 MARCH,2021 S/D S/D (N.K. BILLAIYA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 /03/2021 *DRAGON* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 41 SA NO.152/DEL/2020 ITA NO.761/DEL/2020 SH. MUKE SH MITTAL VS. ITO 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI
