Shri Mukesh Nanubhai Desai, Surat V. The Assistant Commissioner of Income Tax, Circle-1(1)(2), Surat

ITA 781/SRT/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5525 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 26-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Assessee Lawyers: RASESH SHAH
• Keywords: Income from undisclosed sources; Share purchase agreement; Transactions in derivatives; Earning of tax free income; Cost of acquisition; Speculation loss; Wrong claim; Onus to prove
• Section: 143(3); 142(1); 13; 22

Judgement Text

INCOME TAX APPELLATE TRIBUNAL,SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBERAND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER (VIRTUAL HEARING ) I.T.A NO.781/SRT/2018ASSESSMENT YEAR: 2012-13 SHRI MUKESH NANUBHAI DESAI, 01, SHRI DARSHAN SOCIETY, JAMNA NAGAR BUS STAND, GHODDOD ROAD, SURAT. [PAN: AATPD 0728 R] VS THE ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-1(1)(2), SURAT. APPELLANT RESPONDENT ASSESSEE BY SH RI RASESH SHAH CA REVENUE BY SHRI O.P.VAISHNAV CIT - DR DATE OF HEARING: 25 .0 3 .2021 P RONOUNCEMENT ON: 06 .0 5 .2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, SURAT, HEREINAFTER REFERRED AS LD.CIT(A) DATED 05.10.2018 FOR THE A.Y.2012-13. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE EXEMPTION OF RS. 8,66,13,252/- CLAIMED BY ASSESSEE U/S. 10(38) ON ACCOUNT OF LONG-TERM CAPITAL GAIN AND TREATING IT AS THE INCOME OF ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE EXEMPTION OF RS. 1,66,406/- CLAIMED BY ASSESSEE U/S. 10(2A) ON SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 2 ACCOUNT OF SHARE OF PROFIT OF FIRM AND TREATING IT AS THE INCOME OF ASSESSEE. 3. IT IS THEREFORE PRAYED THAT THE ABOVE ADDITION MADE BY THE ASSESSING OFFICER MAY PLEASE BE DELETED. 4. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DURING THE RELEVANT FINANCIAL YEAR 2001-12, THE ASSESSEE WAS ALLEGEDLY ENGAGED IN THE BUSINESS OF BROKERAGE OF LAND. THE ASSESSEE FILED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR 2012-13ON 31.03.2013 DECLARING INCOME OF RS.65,60,220/-. IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS SHOWN INCOME FROM HOUSE PROPERTY AND OTHER SOURCES. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT, ON VERIFICATION OF RETURN OF INCOME, THE ASSESSING OFFICER (AO) NOTED THAT ASSESSEE HAS CLAIMED EXEMPT INCOME OF RS.8,67,79,658/-, WHICH CONSIST OF LONG TERM CAPITAL GAIN (LTCG) FROM SHARE TRANSACTIONS ON WHICH SECURITIES TRANSACTION WAS PAID RS.8,66,13,252/- AND SHARE IN THE FORM OF PROFIT FROM FIRM/ASSOCIATION OF PERSONS (AOP) OF RS.1,66,406/-, THEREBY TOTAL OF RS.8,67,79,658/-. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH COPY OF DEMAT ACCOUNT, COPY OF ACCOUNT OF MULTI COMMODITY TRANSACTION DURING THE YEAR, COMPLETE DETAILS OF CAPITAL GAIN, WHETHER SHORT SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 3 TERM OR LONG TERM, ANY EXPENSES INCURRED, IF ANY AND COMPLETE DETAILS EXEMPTED INCOME ALONG WITH FULL DETAILS AND EVIDENCE. 3. THE ASSESSEE FILED ITS REPLY DATED 17.03.2015 ALONG WITH REPLY, THE ASSESSEE FURNISHED THE COPY OF DEMAT ACCOUNT WITH NIRMAL BANG SECURITIES PVT. LTD., AND STOCK HOLDING CORPORATION FOR TRANSACTION WITH KOTAK COMMODITIES SERVICES LTD. THE ASSESSEE FURNISHED THE COPY OF LEDGER ACCOUNT FOR THE PERIOD FROM 01.04.2011 TO 31.03.2012, THE COPY OF KOTAK COMMODITIES PVT. LTD., SHOWING OPENING BALANCE AS ON 01.04.2011 AND STATED THAT THERE IS DIFFERENCE BECAUSE TRANSACTION AS RECORDED IN THE ACCOUNTS BOOK OF KOTAK COMMODITIES SERVICES LTD WERE NOT RECORDED IN HIS ACCOUNT RELATING TO THE PROFIT AND LOSS ACCOUNT CHARGED TO BE PAID ON THE TRANSACTION. THESE ENTRIES COULD NOT BE MADE IN ABSENCE OF RELEVANT DETAILS FOR THE ENDING ON 31.03.2012 AND MADE IN THE SUBSEQUENT YEAR. 4. THE ASSESSEE ALSO STATED THAT HE INCURRED SPECULATION LOSS OF RS.1.06 LAKHS AS PER STATEMENT PREPARED BY KOTAK COMMODITY SERVICES, WHICH REQUIRED TO BE CARRY FORWARD. THE ASSESSEE FURNISHED THE STATEMENT OF LONG TERM CAPITAL GAIN ON LISTED SECURITIES IN THE FOLLOWING MANNER: SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 4 NAME OF THE COMPANY SALE PRICE/YEAR PURCHASE COST/YEAR TRANSFER EXPENSES EXEMPTED U/S 10(38) NIMBUS INDUSTRIES 30,32,140.00 (2,0/01/2012) 50,100.00/- (05/04/2010) 0.00 29,82,040.00 REGENCY TRUST LTD 9,72,81,212/- (06/04/2011) 1,36,50,000/- (06/01/2010) 0.00 8,36,31,212.00 TOTAL 10,03,13,352/- 1,37,00,100.00 0.00 8,66,13,252.00 5. THE ASSESSEE ALSO FURNISHED THE COPY OF TRANSACTION STATEMENT I.E. LEDGER AND CONTRACT NOTICE OF LTCG AND COPY OF INCOME TAX RETURN OF FIRM (AOP) ALONG WITH COMPUTATION OF INCOME AND PARTNERS ACCOUNT. THE ASSESSING OFFICER AFTER GOING THROUGH THE EVIDENCES FURNISHED BY THE ASSESSEE HELD THAT ON VERIFICATION OF ACCOUNT OF BROKER NAMELY NIRMAL BANG SECURITIES PVT. LTD., AND KRISHI SECURITIES, IT IS SEEN THAT NO TRANSACTION IS REFLECTED FOR SALE OF SECURITIES AMOUNTING TO RS.30,32,140/- AS ON 20.01.2012 AND RS.9,72,81,212/- IN RESPECT OF NIMBUS INDUSTRIES AND REGENCY TRUST. THE CONTRACT NOTICE OF NIRMAL BANG SECURITIES PVT. LTD., ALSO DOES NOT REFLECT THE SALE OF LISTED SECURITIES OF THE AFORESAID AMOUNT. THE ASSESSING OFFICER TOOK HIS VIEW THAT IN ABSENCE OF ANY DOCUMENTARY EVIDENCE SHOWING EXEMPT LTCG, THE ASSESSEE FAILED TO PROVE THAT CAPITAL GAIN IS EXEMPTED AS PER SECTION 10(38) OF THE ACT. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF RS.8.67 CRORE, WHICH INCLUDES THE INCOME FROM FIRM/AOP (DESAI GAS AGENCY). AGGRIEVED BY THE ADDITIONS/ DISALLOWANCES IN THE ASSESSMENT ORDER, THE ASSESSEE FILED SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 5 APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE FURNISHED DETAILED WRITTEN SUBMISSION AS RECORDED BY THE LD.CIT(A) IN PARA 6 ONWARD. IN THE WRITTEN SUBMISSIONS THE ASSESSEE STATED THAT THE ASSESSEE FURNISHED ALL THE DETAILS TO THE ASSESSING OFFICER WITH REGARDS TO LTCG, WHICH CONSIST OF BOOKS OF ACCOUNTS OF ASSESSEE AS ON 31.03.2012 SHOWING THE CREDITS OF SALE CONSIDERATIONS OF SHARES OF NIMBUS INDUSTRIES AND REGENCY TRUST LTD. COMPLETE DETAILS OF PURCHASE AND SALES OF THESE SHARES WERE PROVIDED TO THE ASSESSING OFFICER. IT WAS ALSO STATED THAT THERE IS NO TRUTH IN THE FINDING OF THE ASSESSING OFFICER THAT IN THE LEDGER ACCOUNTS OF THE BROKERS NAMELY NIRMAL BANG SECURITIES PVT LTD AND KRISHVI SECURITIES, NO SUCH TRANSACTIONS ARE REFLECTED. THE ASSESSEE ALSO FURNISHED THE DETAILS OF VARIOUS SCRIPS OF THE SHARES WITH THEIR DATE OF PURCHASE AND ITS SALES. 6. ON THE SUBMISSION OF ASSESSEE, THE LD.CIT(A) VIDE HIS ORDER DATED 14.10.2016 DIRECTED THE ASSESSING OFFICER TO EXAMINE THE DETAILS AND FURNISHED HIS REMAND REPORT WHETHER THE CONTRACT NOTICE / LEDGER ACCOUNTS PRODUCED BY ASSESSEE ARE GENUINE AND WHETHER THE TRANSACTION REFLECTED IN THE CONTRACT NOTE AND LEDGER ACCOUNTS WERE GENUINE OR NOT. THE LD.CIT(A) GRANTED LIBERTY TO THE ASSESSING OFFICER TO CALL THE REQUISITE DETAILS FROM THE STOCK EXCHANGE FOR VERIFICATION OF TRANSACTION SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 6 AS SHOWN BY ASSESSEE THROUGH CONCERNED BROKER. THE LD. CIT(A) IN PARA 7.3 OF HIS ORDER NOTED THAT VARIOUS REMINDERS LETTER DATED 12/07/2017 , 24/11/2017, 15/01/2018 AND 15/02/2018 WERE ISSUED TO THE ASSESSING OFFICER TO FURNISH HIS REMAND REPORT. 7. THE ASSESSING OFFICER FURNISHED HIS REMAND REPORT DATED 15.03.2018. IN THE SAID REMAND REPORT, THE ASSESSING OFFICER STATED THAT CONTRACT NOTICE/LEDGER ACCOUNTS FURNISHED BY ASSESSEE ARE MATCHING WITH THE DATA FURNISHED BY THE STOCK EXCHANGE. HOWEVER, THE ASSESSING OFFICER FURTHER VIDE HIS LETTER DATED 28.02.2018 FURNISHED BEFORE LD.CIT(A) SUBMITTED THAT BHARAT BACHUBHAI MERCHANT, DIRECTOR OF NIMBUS INDUSTRIES LTD., WAS BANNED FROM TRADING BY SECURITY AND EXCHANGE BOARD OF INDIA (SEBI) VIDE ITS ORDER DATED 30.09.2012 FOR MARKET MANIPULATION DURING THE INITIAL PUBLIC OFFERING (IPO) OF P. G. ELECTROPLAST LTD. THE ASSESSING OFFICER ALSO STATED THAT M. R. SHAH, DIRECTOR OF REGENCY TRUST LTD WAS ALSO BANNED FROM TRADING BY SEBI VIDE ORDER DATED 14.08.2014 FOR MARKET MANIPULATION THROUGH ARTIFICIAL INCREASING THE SALE PRICE. ON THE BASIS OF AFORESAID VIEW, THE ASSESSING OFFICER CONCLUDED THAT BOTH COMPANIES [SHARE OF WHICH WERE TRADED BY ASSESSEE] WERE NOT HAVING POTENTIAL, SO THAT ASSESSEE COULD EARN ENORMOUS CAPITAL GAIN. SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 7 8. ON RECEIPT OF REMAND REPORT, THE ASSESSEE FILED HIS OBJECTION/ REJOINDER DATED 28.03.2018. IN THE OBJECTION/SUBMISSION 28.03.2018, THE ASSESSEE INTER-ALIA STATED THAT THE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF THE SHARE TRANSACTION OF BOTH THE SCRIPS, INCLUDING THE PERIODS OF HOLDING, SHARE TRANSACTION TAX (STT) WAS PAID ON THE TRANSACTIONS, TRANSACTIONS WERE MADE THROUGH STOCK EXCHANGE, PAYMENTS WERE MADE THROUGH BANKING CHANNELS, WHICH HAS BEEN CONFIRMED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ACCEPTED THE TRANSACTION OF BOTH THE SCRIPS. NO ADVERSE FINDINGS ON THE EVIDENCES FURNISHED BY THE ASSESSEE WERE GIVEN BY THE ASSESSING OFFICER. IT WAS ALSO STATED THAT THE ASSESSING OFFICER HAS GIVEN DIFFERENT REPORT TO MISLEAD. THE ASSESSEE IS INVESTOR AND IN CASE THE BROKER WAS INDULGING IN MALPRACTICE OF SOME OTHER TRANSACTION, THE INVESTORS INVESTMENT CANNOT BE TREATED AS NON-GENUINE. THE ASSESSEE ALSO RELIED ON CERTAIN CASE LAWS. 9. THE LD.CIT(A) AFTER CONSIDERING THE REMAND REPORT OF ASSESSING OFFICER AND THE OBJECTION/REJOINDER FILED BY THE ASSESSEE CONFIRMED THE ADDITION BY TAKING VIEW THAT ALTHOUGH THE BASIS FOR MAKING THE ADDITION DID NOT SURVIVE, BUT THERE IS A PROBABILITY THAT ALLOTMENT OF SHARE AND THEIR EVENTUAL SALE IS A PREPLANNED TO SCHEME TO CONVERT UNACCOUNTED INCOME INTO SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 8 EXEMPT INCOME. FURTHER AGGRIEVED, THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE THIS TRIBUNAL. 10. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. COMMISSIONER OF INCOME TAX- DEPARTMENTAL REPRESENTATIVE (CIT-DR) FOR THE REVENUE AND WITH THEIR ASSISTANCE HAVE GONE THROUGH THE ORDER OF LOWER AUTHORITIES. GROUND NO.1 RELATES TO DISALLOWANCE OF EXEMPT OF RS.8.66 CRORE CLAIMED BY ASSESSEE UNDER SECTION 10(38) OF THE ACT ON ACCOUNT OF LTCG. THE LD.AR OF THE ASSESSEE SUBMITS THAT ASSESSING OFFICER MADE ADDITION ON THE GROUND THAT TRANSACTIONS WERE NOT GENUINE. HOWEVER, THE ASSESSING OFFICER BY WAY OF FACTUAL REPORT / REMAND REPORT DATED 15.03.2018, FURNISHED BEFORE THE LD. CIT(A) ADMITTED THAT TRANSACTIONS WERE GENUINE. THE LD.CIT(A) ALSO HELD THAT BASIS FOR MAKING ADDITION DID NOT SURVIVE. THE LD.CIT(A) DESPITE TAKING VIEW THAT ADDITION DID NOT SURVIVE, CONFIRMED THE ADDITION ON THE BASIS OF PROBABILITY THAT ASSESSING OFFICER DID NOT MAKE ANY VERIFICATION OR COLLECT THE DETAILS AND THAT THE TRANSACTIONS WERE SHAME AND OR PREARRANGED TO CLAIM THE EXEMPT CAPITAL GAIN. NONE OF THE LOWER AUTHORITIES BROUGHT EVEN SINGLE EVIDENCE ON RECORD TO PROVE THAT THE TRANSACTIONS WERE SHAME OR PREARRANGED FOR MAKING WRONG CLAIM OF EXEMPT INCOME. SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 9 11. ON THE OBJECTION OF ASSESSING OFFICER ABOUT THE ORDER OF THE SEBI IN CASE OF P.G. ELECTROPLAST LTD., THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE SEBI TOOK THE ACTION ON THE GROUND THAT THE PROCEEDS OF THE IPO WERE SIPHON OFF BY P.G. ELECTROPLAST LTD. HOWEVER, ONLY THE DIRECTOR SHRI BHARAT BACHUBHAI MERCHANT WAS COMMON IN CASE OF P.G. ELECTROPLAST LTD. & NIMBUS INDUSTRIES LTD. SHRI BHARAT BACHUBHAI MERCHANT WAS INDEPENDENT DIRECTOR AND SEBI DIDNT TAKE ANY ACTION FOR PRICE RIGGING OR MANIPULATION IN CASE OF NIMBUS INDUSTRIES LTD. REGARDING INTERIM ORDER OF SEBI IN CASE OF REGENCY TRUST LTD., IT IS SUBMITTED THAT THIS ORDER AS REFERRED BY ASSESSING OFFICER WAS NOT IN RESPECT OF REGENCY TRUST LTD. BUT IT WAS IN RESPECT OF KELVIN FINCAP LTD. WHEREBY THE COMMON DIRECTOR SHRI M.R. SHAH WAS BANNED FOR TRADING ON THE GROUND OF ALLEGATION OF THE PRICE RIGGING IN CASE OF KELVIN FINCAP LTD. 12. THE LD. AR FOR THE ASSESSEE THUS, SUBMITS THAT THE OBJECTION OF THE ASSESSING OFFICER, ON THE BASIS OF INTERIM ORDER OF THE SEBI WERE NOT PROPER AS BOTH THE COMPANIES IN WHICH ASSESSEE TRANSACTED WERE NOT ALLEGED TO BE INVOLVED IN PRICE RIGGING OR MANIPULATION. HENCE, IT IS CLEAR THAT BOTH THE LOWER AUTHORITIES FAILED TO PROVE THAT EITHER OF THE COMPANIES OR THE DIRECTORS OR SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 10 THE BROKERS IS INVOLVED IN PRICE RIGGING OR MANIPULATION IN CASE OF BOTH THE SCRIPS. NO IOTA OF THE EVIDENCE WAS BROUGHT ON RECORD BY LOWER AUTHORITIES TO PROVE THAT THE FUNDAMENTALS OF ANY OF THE COMPANIES IN WHICH ASSESSEE TRANSACTED WERE WEAK. IT IS SUBMITTED THAT BOTH THE COMPANIES ARE LISTED COMPANIES EVEN AT PRESENT AND THEY ARE MARKED AS ACTIVE AS PER THE LATEST MINISTRY OF CORPORATE AFFAIRS (MCA) MASTER DATA. 13. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT IT IS TO BE NOTED THAT THE ADDITIONS IN THIS CASE IS NOT BASED ON INVESTIGATION REPORT OF EITHER INCOME TAX DEPARTMENT OR OTHER AUTHORITY OR ON THE STATEMENT OF ENTRY PROVIDER. FURTHER AS SUBMITTED ABOVE SEBI HAS NOT TAKEN ANY ACTION AGAINST ALLEGED TWO COMPANIES OR THEIR DIRECTORS OR CONCERN BROKERS FOR ANY MANIPULATION OF PRICES PREVAILING IN THE STOCK EXCHANGE. THE RELIANCE IS PLACED ON FOLLOWING DECISION OF HONBLE GUJARAT HIGH COURT: CIT VS MAHESH CHANDRA G. VAKIL [220 TAXMAN 166 (GUJARAT HC)] CIT VS HIMANI M. VAKIL [10 TAXMANN.COM 326 (GUJ HC)] PCIT VS RAMNIVAS RAMJIVAN KASAT [82 TAXMANN.COM 458 (GUJARAT HC)] PCIT VS DHWANI M. SHAH [TAX APPEAL NO. 674 OF 2017 ] (GUJARAT HC ) SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 11 14. THE LD AR FOR THE ASSESSEE FURTHER SUBMITS THAT THE DECISION IN CASE OF RAMNIVAS KASAT (SUPRA) IS DIRECTLY COVERS THE ISSUE WHEREIN IT WAS HELD THAT WHEN THE INVESTMENT OF THE ASSESSEE IN ALLEGED TWO COMPANIES WERE ACCEPTED BY ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSED UNDER SCRUTINY UNDER SECTION 143(3). THE ASSESSEE HAS SHOWN PURCHASES OF BOTH THE SHARES SCRIPS IN PRECEDING YEARS THAT IS ASSESSMENT YEAR 2010-11 & 2011-12 AND THE ASSESSMENT FOR BOTH THE YEARS WERE COMPLETED UNDER SECTION 143(3), WHEREIN THE PURCHASES OF SHARES WERE ACCEPTED. ONCE THE DEPARTMENT ACCEPTED THE PURCHASES, HOW, THE SALES OF SIMILAR SHARES CAN BE DOUBTED. FURTHER, EVEN THE SALE OF THE SHARES MADE BY THE ASSESSEE IN CASE OF REGENCY TRUST LTD. WERE ACCEPTED AS GENUINE BY ALLOWING ASSESSEES EXEMPTION FROM LONG TERM CAPITAL GAIN IN A.Y. 2011-12. THIS ALSO SHOWS THAT THE SHARE PRICES OF BOTH THE COMPANIES GRADUALLY INCREASED OVER THE PERIOD AND IT IS NOT THE CASE THAT THE PRICES OF THE SHARES ARE MANIPULATED DURING THE PARTICULAR PERIOD. EVEN OTHERWISE, THE ADDITION MADE BY ASSESSING OFFICER WAS SUSTAINED ON ALTOGETHER DIFFERENT GROUND WITHOUT MAKING ANY INQUIRY AND WITHOUT BRINGING ON RECORD ANY EVIDENCE. EVEN THE LD. CIT(A) ACCEPTED THAT THE ADDITION WAS CONFIRMED ON THE BASIS OF PROBABILITY. THE RELIANCE IS ALSO PLACED ON THE DECISION OF HONBLE SUPREME SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 12 COURT IN THE CASE OF OMAR SALAV MOHAMED SAIT [37 ITR 151 (SC)], WHERE IT WAS HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF SURMISES, SUSPICION AND CONJECTURES. FURTHER IN CASE OF CIT VS DAULAT RAM RAWATMAL (87 ITR 349 SC), THE HONBLE SUPREME COURT HELD THAT THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO. THE BURDEN OF PROVING A TRANSACTION TO BE BOGUS HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNERRINGLY AND REASONABLY RAISING INTERFERENCE TO THAT EFFECT. THE HONBLE SUPREME COURT IN UMACHARAN SHAH & BROS. VS CIT (37 ITR 271 SC) HELD THAT SUSPICION HOWEVER STRONG, CANNOT TAKE THE PLACE OF EVIDENCE. 15. THE LD AR FOR THE ASSESSEE AGAIN RETREATED THAT ASSESSEE EARNED CAPITAL GAIN OF RS. 8,36,31,212/- FROM THE SALE OF SCRIPS REGENCY TRUST LTD. OUT OF THE TOTAL CAPITAL GAIN OF RS. 8,66,13,252/-.THE CHENNAI TRIBUNAL IN CASE OF VANDANA S. BHANDARI VS ITO [ITA NO. 2854/CHNY/2019], ALLOWED THE LONG TERM CAPITAL GAIN MADE ON THE SALES OF SCRIPS OF REGENCY TRUST LTD. 16. THE LD AR FOR THE ASSESSEE FURTHER MADE RELIANCE ON THE OTHER DECISIONS OF THE VARIOUS HIGH COURTS WHERE THE ADDITION ON SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 13 ACCOUNT OF CAPITAL GAIN DERIVED IN CASE OF PENNY STOCK SCRIPS WAS NOT SUSTAINED : M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 2012] (CAL HC) CIT VS. LAKSHMANGARH ESTATE & TRADING CO. LIMITED [40 TAXMANN.COM 439 (CAL HC)] CIT VS. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CAL HC) CIT VS. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 105 OF 2016] (CAL HC) CIT VS. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) CIT VS. BHAGWATI PRASAD AGARWAL [ITA NO. 22 OF 2009 (CAL HC) ] CIT VS. SHYAM R. PAWAR [229 TAXMAN 256 (BOM HC)] CIT VS. SMT JAMNA DEV AGARWAL [328 ITR 656 (BOM HC)] PR. CIT VS. PREM PAL GANDHI [ITA NO. 95 OF 2017 (P & J HC) CIT VS. VIVEK MEHTA [204 TAXMANN 177 (P & J HC)] PCIT VS. HITESH GANDHI [ITA NO. 18 OF 2017 (P&J HC)] CIT VS. SMT. SUMITRA DEVI [49 TAXMANN.COM 37 (RAJ HC)] CIT VS. MUKESH R MAROLIYA [80 CCH 0407 (MUM HC)] CIT VS UDIT NARAIN AGRAWAL [(2013) 31 TAXMANN.COM 76 (ALL)] CIT, JAMSHEDPUR VERSUS ARUN KUMAR AGARWAL [TAX APPEAL NO. 4 OF 2011(JHAR HC)] CIT VS. SUNITA DHADDA [ITA NO. 197/2012 (RAJ)] CIT VS. POOJA AGARWAL [99 TAXMANN.COM 451 ] ( RAJ. HC ) 17. THE ASSESSEE HAS ALSO PLACED ON RECORD THE FOLLOWING DOCUMENTS; SR.NO . PARTICULARS OF THE DOCUMENTS DATE PAGE NO. 1. WRITTEN SUBMISSION FILED BEFORE CIT(A) 28.03.2018 1-2 2. WRITTEN SUBMISSION FILED BEFORE CIT(A) - 3-16 3. FACTUAL REPORT ISSUED BY ASSESSING OFFICER 15.03.2018 17 4. FACTUAL REPORT ISSUED BY ASSESSING OFFICER 28.02.2018 18-21 SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 14 5. LETTER FILED BEFORE ASSESSING OFFICER IN THE COURSE OF REMAND PROCEEDINGS 13.02.2018 22-23 6. WRITTEN SUBMISSION FILED BEFORE CIT(A) 14.12.2016 24-35 7. LETTER ISSUED BY CIT(A) TO AO CALLING FOR FACTUAL REPORT 14.10.2016 36-37 8. WRITTEN SUBMISSION FILED BEFORE CIT(A) 27.09.2016 38-42 9. WRITTEN SUBMISSION FILED BEFORE CIT(A) 05.05.2016 43-50 10. WRITTEN SUBMISSION FILED BEFORE CIT(A) 18.04.2016 51-55 11. WRITTEN SUBMISSION FILED BEFORE CIT(A) 13.04.2016 56 12. WRITTEN SUBMISSION FILED BEFORE CIT(A) 16.03.2016 57-70 13. LETTER FILED BEFORE ASSESSING OFFICER 23.11.2015 71-72 14. ORDER SHEET FROM THE FILE OF ASSESSMENT PROCEEDINGS RECEIVED UNDER RTI 28.10.2015 73-74 15. CORRIGENDUM ORDER 09.10.2015 75 16. SECOND ASSESSMENT ORDER 31.03.2015 76-80 17. FIRST ASSESSMENT ORDER 31.03.2015 81-90 18. LETTER FILED BEFORE ASSESSING OFFICER 17.03.2015 91-107 19. SHOW CAUSE NOTICE ISSUED BY ASSESSING OFFICER 09.03.2015 108- 115 20. NOTICE ISSUED U/S 142(1) 25.02.2015 116 21. LETTER FILED BEFORE ASSESSING OFFICER 07.01.2015 117- 121 22. SHOW CAUSE NOTICE ISSUED BY ASSESSING OFFICER 09.09.2014 122- 126 23. ACKNOWLEDGEMENT OF RETURN OF INCOME ALONG WITH COMPUTATION OF TOTAL INCOME FOR A.Y.2012-13 31.03.2013 127- 131 DISALLOWANCE OF EXEMPTION OF RS 1,66,406/- BEING SHARE OF PROFITS FROM M/S.DESAI GAS AGENCY. --- 24. ACKNOWLEDGEMENT OF RETURN OF INCOME ALONG WITH COMPUTATION OF TOTAL INCOME FOR A.Y 2012-13 OF M/S. DESAI GAS STATION --- 132- 136 25. PROFIT AND LOSS ACCOUNT OF M/S. DESAI GAS STATION --- 137 26. BALANCE SHEET OF M/S. DESAI GAS STATION --- 138 SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 15 27. ASSESSEE'S CAPITAL ACCOUNT IN THE BOOKS OF DESAI GAS STATION --- 139 DISALLOWANCE OF EXEMPTION OF RS. 8,66,13,252/- CLAIMED BY ASSESSEE U/S 10(38) ON ACCOUNT OF LONG TERM CAPITAL GAIN --- 28. LEDGER OF LONG TERM CAPITAL GAIN --- 140 29. LEDGER ACCOUNT OF REGENCY TRUST LTD FOR THE PERIOD OF 01.04.2011 TO 31.03.2012 --- 141 30. LEDGER ACCOUNT OF NIMBUS INDUSTRIES LTD FOR THE PERIOD OF 01.04.2011 TO 31.03.2012 --- 142 31. LEDGER ACCOUNT OF NIRMAL BANG SECURITIES PVT. LTD FOR THE PERIOD OF 01.04.2011 TO 31.03.2012 --- 143- 145 32. LEDGER ACCOUNT OF ASSESSEE IN THE BOOKS OF BROKER NIRMAL BANG SECURITIES PVT. LTD. --- 146- 147 33. DATE-WISE, CONTRACT-WISE AND SCRIPTWISE CALCULATION OF LONG TERM CAPITAL GAIN --- 148 34. CONTRACT NOTES OF BROKER NIRMAL BANG SECURITIES PVT. LTD. --- 149- 212 35. DEMAT ACCOUNT WITH NIRMAL BANG SECURITIES LTD FOR THE PERIOD OF 01.04.2011 TO 31.03.2012 --- 213- 216 36. BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2011 --- 217- 219 37. LEDGER OF REGENCY TRUST LTD FOR THE PERIOD OF 01.04.2010 TO 31.03.2011 --- 220 38. LEDGER ACCOUNT OF NIMBUS INDUSTRIES LTD FOR THE PERIOD OF 01.04.2010 TO 31.03.2011 --- 221 39. SHARE CERTIFICATE REGARDING PURCHASE OF SHARES REGENCY TRUST LTD. 19.01.2010 222- 234 40. SHARE APPLICATION FORM REGARDING PURCHASE OF SHARES REGENCY TRUST LTD. 01.01.2010 235- 238 41. MEMORANDUM OF TRANSFER OF SHARES OF NIMBUS INDUSTRIES LTD. 30.06.2010 239- 245 42. LETTER ISSUED BY NIMBUS INDUSTRIES LTD. FOR TRANSFER OF SHARES 30.06.2010 246 43. SHARE TRANSFER FORM REGARDING SHARES OF NIMBUS INDUSTRIES LTD. 30.06.2010 247- 248 44. REQUEST FOR REGISTRATION OF TRANSFER OF SHARES OF NIMBUS INDUSTRIES LTD. 15.05.2010 249 45. SHARE CERTIFICATE REGARDING PURCHASE OF 14.11.2009 250- SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 16 SHARES NIMBUS INDUSTRIES LTD. 256 46. DEMAT ACCOUNT WITH NIRMAL BANG SECURITIES PVT. LTD FOR THE PERIOD OF 01.04.2010 TO 26.02.2011 --- 257- 261 47. ASSESSMENT ORDER PASSED U/S 143(3) FOR A.Y 2011-12 31.03.2014 262- 275 48. ASSESSMENT ORDER PASSED U/S 143(3) FOR A.Y 2010-11 29.03.2013 276- 283 18. ON THE OTHER HAND THE LD. CIT-DR FOR THE REVENUE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. THE LD. DR FOR THE REVENUE FURTHER SUBMITS THAT THE TRIBUNAL IS THE LAST FACT FINDING AUTHORITY AND THE FACTS OF THE ISSUE UNDER CONSIDERATION MAY BE SEEN FROM ALL THE ANGELS AND THE CIRCUMSTANCES. THE GOVERNMENT OF INDIA HAS ENACTED SEVERAL LAW TO CURB SUCH TRANSACTIONS. THE COST OF THE SHARES WERE INCREASED IN MANY FOLDS WITH IN A VERY SHORT SPAN OF TIMES. THE VALUE OF SHARES OF NIMBUS WAS INCREASED TO TWENTY TIMES AND THE VALUE OF REGENCY TRUST WAS INCREASED TO FIVE TIMES. ON THE CONTENTIONS OF THE LD. AR FOR THE ASSESSEE THAT THE PURCHASES OF THE SHARES WERE ACCEPTED, THE LD. DR FOR THE REVENUE SUBMITS THAT EACH YEAR IS SEPARATE AND INDEPENDENT YEAR FOR THE PURPOSE OF ASSESSMENT. THE ASSESSING OFFICER RIGHTLY DOUBTED THE DRASTIC INCREASE IN THE VALUES OF THE SHARES TRANSACTED BY THE ASSESSEE. THE LD. DR FOR THE REVENUE FURTHER SUBMITS THAT THE SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 17 CLEAN IMAGE PERSON CANNOT BE EQUATED WITH THE TAINTED PERSONALITY. THE LD. DR FOR THE REVENUE SUBMITS THAT THE DECISION OF SUMAN PODDAR VS ITO REPORTED VIZ; (112 TAXMANN.COM 328 DELHI) IS IN FAVOUR OF THE ASSESSEE. THE LD. DR FOR THE REVENUE FINALLY SUBMITS THAT THIS ISSUE MAY BE RESTORED TO THE FILE OF ASSESSING OFFICER FOR DEEP INVESTIGATION AND EXAMINATION OF THE EVIDENCES FURNISHED BY THE ASSESSEE. 19. IN THE REJOINDER SUBMISSIONS THE LD. AR FOR THE ASSESSEE SUBMITS THAT CHENNAI TRIBUNAL IN CASE OF VANDANA S. BHANDARI VS ITO [ITA NO. 2854/CHNY/2019], ALLOWED THE LONG TERM CAPITAL GAIN MADE ON THE SALES OF SCRIPS OF REGENCY TRUST LTD. THE LD. AR FOR THE ASSESSEE AGAIN RETREATED THAT ASSESSEE EARNED CAPITAL GAIN OF RS. 8,36,31,212/- FROM THE SALE OF SCRIPS REGENCY TRUST LTD. OUT OF THE TOTAL CAPITAL GAIN OF RS. 8,66,13,252/-. ON THE DECISION OF DELHI HIGH COURT IN SUMAN PODDAR VS ITO (SUPRA), THE LD. AR FOR THE ASSESSEE SUBMITS THAT IN SAID CASE THE ASSESSING OFFICER HAD BROUGHT ON RECORD THAT THE FUNDAMENTALS OF THE CRESSANDA SOLUTIONS LTD. WAS NOT PROPER SO AS TO INCREASE IN SHARE PRICE BY FIFTY TIMES OVER A SHORT PERIOD OF FIVE MONTHS. IN SAID CASE EMPLOYEE PENSIONS SCHEME (EPS) WAS JUST 0.01 IN MARCH 2016 WHICH WAS IN NEGATIVE IN MARCH 2015 & MARCH 2014. FURTHER, IT WAS FOUND SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 18 IN THAT CASE THAT NO EVIDENCE OF ACTUAL SALE EXCEPT FOR CONTRACT NOTES ISSUED BY BROKER WERE PRODUCED BY THE ASSESSEE. FURTHER, IN THAT CASE THE ADDITION WAS ALSO BASED ON THE STATEMENT OF ENTRY PROVIDER AND INVESTIGATION REPORT. THE LD. AR MADE RELIANCE ON THE LATEST DECISION OF DELHI HIGH COURT IN CASE OF PCIT VS KRISHNADEVI IN ITA NO. 125/2020 DATED 15.01.2021 WHERE IT WAS HELD THAT LASTLY, RELIANCE PLACED BY THE REVENUE ON SUMAN PODDAR V. ITO (SUPRA) AND SUMATI DAYAL VS CIT (SUPRA) IS OF NO ASSISTANCE . 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO DELIBERATED ON VARIOUS CASE LAWS RELIED BY THE LD. AR FOR THE ASSESSEE AND THE LD. DR FOR THE REVENUE AND THE LD. CIT(A). WE HAVE ALSO GONE THROUGH ALL THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE. THE ASSESSING OFFICER MADE THE ADDITION OF RS.8.67 CRORE, WHICH INCLUDES THE INCOME FROM FIRM/AOP (DESAI GAS AGENCY) BY TAKING HIS VIEW THAT THE ASSESSEE FAILED TO PROVE THAT CAPITAL GAIN IS EXEMPTED AS PER SECTION 10(38) OF THE ACT IN ABSENCE OF ANY DOCUMENTARY EVIDENCE SHOWING EXEMPT LTCG. AS NOTED ABOVE, BEFORE LD CIT(A) THE ASSESSEE FILED DETAILED WRITTEN SUBMISSIONS ON VARIOUS DATES WHICH HAS BEEN EXTRACTED IN THE IMPUGNED SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 19 ORDER. THE ASSESSEE ALSO FILED NUMEROUS DOCUMENTARY EVIDENCES BEFORE LD. CIT(A), COPIES OF WHICH IS ALSO PLACED BEFORE THIS TRIBUNAL. IN THE WRITTEN SUBMISSIONS THE ASSESSEE SPECIFICALLY AVERRED THAT THE ASSESSEE FURNISHED ALL THE DETAILS TO THE ASSESSING OFFICER WITH REGARDS TO LTCG, WHICH CONSIST OF BOOKS OF ACCOUNTS OF ASSESSEE AS ON 31.03.2012 SHOWING THE CREDITS OF SALE CONSIDERATIONS OF SHARES OF NIMBUS INDUSTRIES AND REGENCY TRUST LTD. COMPLETE DETAILS OF PURCHASE AND SALES OF THESE SHARES WERE PROVIDED TO THE ASSESSING OFFICER. THE FINDING OF THE ASSESSING OFFICER THAT IN THE LEDGER ACCOUNTS OF THE BROKERS NAMELY NIRMAL BANG SECURITIES PVT LTD AND KRISHVI SECURITIES, NO SUCH TRANSACTIONS ARE REFLECTED ARE FAR FROM TRUTH AND FURNISHED THE DETAILS OF VARIOUS SCRIPS OF THE SHARES WITH THEIR DATE OF PURCHASE AND ITS SALES. IT WAS ALSO AVERRED THAT THE PURCHASES OF THE SHARES WERE ACCEPTED IN THE EARLIER YEARS IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3). ON THE SUBMISSIONS AND THE EVIDENCES FURNISHED BY THE ASSESSEE, THE LD.CIT(A) VIDE HIS ORDER DATED 14.10.2016 DIRECTED THE ASSESSING OFFICER TO EXAMINE THE DETAILS AND FURNISHED HIS REMAND REPORT WHETHER THE CONTRACT NOTICE / LEDGER ACCOUNTS PRODUCED BY ASSESSEE ARE GENUINE AND WHETHER THE TRANSACTION REFLECTED IN THE CONTRACT NOTE AND LEDGER ACCOUNTS WERE GENUINE OR NOT. THE LD.CIT(A) GRANTED LIBERTY TO THE SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 20 ASSESSING OFFICER TO CALL THE REQUISITE DETAILS FROM THE STOCK EXCHANGE FOR VERIFICATION OF TRANSACTION AS SHOWN BY ASSESSEE THROUGH CONCERNED BROKER. 21. ON REPEATED DIRECTIONS OF THE LD. CIT(A), THE ASSESSING OFFICER FURNISHED HIS REMAND REPORT DATED 15.03.2018, WHEREIN THE ASSESSING OFFICER ACCEPTED THAT CONTRACT NOTE AND EDGER ACCOUNTS FURNISHED BY ASSESSEE ARE MATCHING WITH THE DATA FURNISHED BY THE STOCK EXCHANGE. 22. WE HAVE FURTHER SEEN THAT THE ASSESSING OFFICER FURTHER VIDE HIS ANOTHER REPORT FURNISHED VIDE LETTER DATED 28.02.2018 TO LD.CIT(A), STATED THAT BHARAT BACHUBHAI MERCHANT, DIRECTOR OF NIMBUS INDUSTRIES LTD., WAS BANNED FROM TRADING BY SECURITY AND EXCHANGE BOARD OF INDIA (SEBI) VIDE ITS ORDER DATED 30.09.2012 FOR MARKET MANIPULATION DURING THE INITIAL PUBLIC OFFERING (IPO) OF P. G. ELECTROPLAST LTD. THE ASSESSING OFFICER ALSO STATED THAT M. R. SHAH, DIRECTOR OF REGENCY TRUST LTD WAS ALSO BANNED FROM TRADING BY SEBI VIDE ORDER DATED 14.08.2014 FOR MARKET MANIPULATION THROUGH ARTIFICIAL INCREASING THE SALE PRICE AND CONCLUDED THAT BOTH COMPANIES [SHARE OF WHICH WERE TRADED BY ASSESSEE] WERE NOT HAVING POTENTIAL, SO THAT ASSESSEE COULD EARN ENORMOUS CAPITAL GAIN. ON THE BASIS OF THE SECOND REPORT OF THE ASSESSING OFFICER THE LD. CIT(A) HELD THAT ALTHOUGH SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 21 THE BASIS FOR MAKING THE ADDITION DID NOT SURVIVE, BUT THERE IS A PROBABILITY THAT ALLOTMENT OF SHARE AND THEIR EVENTUAL SALE IS A PRE-PLANNED TO SCHEME TO CONVERT UNACCOUNTED INCOME INTO EXEMPT INCOME. THE CONCLUSION DRAWN BY LD CIT(A) IS BASED ON MARE PRESUMPTION. IN OUR VIEW, ONCE IT IS ACCEPTED BY THE ASSESSING OFFICER IN HIS REMAND REPORT THAT ALL THE TRANSACTION OF THE ASSESSEE THAT IS CONTRACT NOTICE/LEDGER ACCOUNTS FURNISHED BY ASSESSEE ARE MATCHING WITH THE DATA FURNISHED BY THE STOCK EXCHANGE. AND THE LD. CIT(A) THE ALSO TOOK HIS VIEW THAT THE BASIS FOR MAKING THE ADDITION DID NOT SURVIVE, THE ADDITIONS CANNOT BE SUSTAINED. THE LD. CIT(A) SUSTAINED THE ADDITIONS MERELY ON THE BASIS OF SUSPICION. THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRY OR BENEFICIARY OF PENNY STOCK. 23. SO FAR AS THE ALLEGATION OF THE ASSESSING OFFICER IN HIS SECOND REPORT DATED 28.02.2018 IS WITH REGARDS TO BAN ON TRADING OF BHARAT BACHUBHAI MERCHANT, DIRECTOR OF NIMBUS INDUSTRIES LTD., BY SEBI VIDE ITS ORDER DATED 30.09.2012 FOR MARKET MANIPULATION DURING THE INITIAL PUBLIC OFFERING (IPO) OF P. G. ELECTROPLAST LTD., AND M. R. SHAH, DIRECTOR OF REGENCY TRUST LTD IS CONCERNED, THE ASSESSEE HAS PURCHASED SHARES MUCH PRIOR TO THE ORDERS OF SEBI. MOREOVER, THERE IS NO LIVE LINK IN SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 22 THE ORDER OF SEBI ABOUT THE TRANSACTIONS OF SHARES OF ASSESSEE UNDER SCRUTINY, SO SUCH ORDER CANNOT BE READ AGAINST THE ASSESSEE IN ABSENCE OF ANT CORROBORATIVE EVIDENCE. IN FACT THERE IS NO EVIDENCE ON RECORD THAT THE ASSESSEE MADE ANY PREARRANGED TRANSACTIONS. THUS, WE DO NOT FIND MERIT IN THE ORDER OF LD. CIT(A) IN SUSTAINING THE ADDITIONS ON MERE PROBABILITY. 24. THE HONBLE SUPREME COURT IN UMACHARAN SHAH & BROTHERS VS CIT (37 ITR 271) HELD THAT SUSPICION HOWSOEVER STRONG, MAY BE CANNOT SUBSTITUTE THE PLACE OF EVIDENCE. SIMILARLY THE HONBLE SUPREME COURT CASE OF OMAR SALAV MOHAMMAD SAIT ( 37 ITR 151 SC) ALSO HELD THAT NO ADDITIONS CAN BE MADE ON THE BASIS OF SURMISES, SUSPICION AND CONJECTURE. 25. THE RATIO IN CASE LAW RELIED BY LD. DR FOR THE REVENUE IN SUMAN PODDAR VS ITO (SUPRA) IS NOT APPLICABLE AS THE FACTS OF THE SAID CASE ARE AT VARIANCE. IN THE SAID CASE THE ASSESSING OFFICER HAD BROUGHT ON RECORD THAT THE FUNDAMENTALS OF THE CRESSANDA SOLUTIONS LTD. WAS NOT PROPER SO AS TO INCREASE IN SHARE PRICE BY FIFTY TIMES OVER A SHORT PERIOD OF FIVE MONTHS. THERE WAS NO EVIDENCE OF ACTUAL SALE EXCEPT FOR CONTRACT NOTES ISSUED BY BROKER WERE PRODUCED BY THE ASSESSEE AND THE ADDITION WAS ALSO BASED ON THE STATEMENT OF ENTRY PROVIDER SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 23 AND INVESTIGATION REPORT. HOWEVER, THERE IS NO IOTA OF EVEN A SINGLE ALLEGATION IN THE PRESENT CASE AS IN CASE OF SUMAN PODDAR (SUPRA). 26. HENCE, THE GROUND NO. 1 OF THE APPEAL IS ALLOWED. 27. IN THE RESULT GROUND NO. 1 OF THE APPEAL IS ALLOWED. 28. GROUND NO. 2 RELATES TO DISALLOWANCE OF RS. 1,66,406 CLAIMED AS EXEMPTED UNDER SECTION 10(38). THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER HAS NOT ALLOWED THE EXEMPTION UNDER SECTION 10(2A) IN RESPECT OF SHARE OF PROFIT FROM THE FIRM NAMELY DESAI GAS AGENCY, IN WHICH THE ASSESSEE IS ONE OF THE PARTNER. THE ASSESSEE RECEIVED INCOME OF RS. 2,56,485/- AS REMUNERATION, RS. 3,90,852/- AS INTEREST AND RS. 1,66,406/- AS SHARE OF PROFIT FROM FIRM. OUT OF THIS, THE AMOUNT OF SHARE OF PROFIT OF RS. 1,66,406/- IS ALLOWABLE AS EXEMPTION UNDER SECTION 10(2A). THE ASSESSING OFFICER CLUBBED THIS EXEMPT INCOME WITH THE LTCG. THE LD CIT(A) ALSO NOT APPRECIATED THE FACTS AND CONFIRMED THE ACTION OF THE ASSESSING OFFICER. BEFORE THE LOWER AUTHORITIES THE ASSESSEE FILED THE DETAILS OF FIRMS, CONSISTING THE DETAILS OF PARTNERS THEIR PAN, COPY OF RETURN OF INCOME OF FIRM WITH COMPUTATION OF INCOME. THE LOWER AUTHORITIES EVEN NOT BOTHERED TO SEE THE DOCUMENTS AND THE NATURE OF EXEMPT INCOME. THE LD. AR FOR SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 24 THE ASSESSEE SUBMITS THAT THE ASSESSEE HAS AGAIN FILED ALL THE DOCUMENTARY EVIDENCES WITH REGARDS TO THE INCOME RECEIVED FROM FIRM, THEREFORE, THIS GROUND OF APPEAL MAY BE ALLOWED. 29. IN ALTERNATIVE SUBMISSIONS THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER MAY BE DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE AND ALLOW RELIEF TO THE ASSESSEE. 30. ON THE OTHER HAND THE LD. CIT-DR FOR THE REVENUE AFTER GOING THROUGH THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER MAY BE DIRECTED TO VERIFY THE DOCUMENTARY EVIDENCE AND TO PASS THE ORDER IN ACCORDANCE WITH LAW. 31. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE SEEN THE ORDER OF THE LOWER AUTHORITIES. WE HAVE SEEN THAT THE ASSESSEE IN THE COMPUTATION OF INCOME HAS CLAIMED EXEMPT INCOME OF RS. 1,66,406/- IS ALLOWABLE AS EXEMPTED UNDER SECTION 10(2A), BEING INCOME OF SHARE RECEIVED FROM FIRM DESAI GAS AGENCY. THE ASSESSING OFFICER INSTEAD OF EXAMINING THE FACTS AND THE EVIDENCES FURNISHED BY THE ASSESSEE CLUBBED THIS INCOME WITH THE EXEMPTED LTCG CLAIMED BY THE ASSESSEE. THE LD CIT(A) ALSO IGNORED THE SIMILAR FACTS AND UPHELD THE ACTION OF ASSESSING OFFICER. WE HAVE SEEN THAT THE AMOUNT OF RS. 1,66,406/- IS SEPARATE AND INDEPENDENT INCOME SHRI MUKESHNANUBHAIDESAI VSACIT, ITA NO.781/SRT/2018 FOR A.Y.2012-13 25 COMPONENT, EARNED BY THE ASSESSEE WHICH IS CLAIMED AS EXEMPTED UNDER SECTION 10(2A). FURTHER WE HAVE SEEN THAT THE ASSESSEE HAS FURNISHED ALL DETAILS PARTICULARS OF THE FIRM INCLUDING THE RETURN OF INCOME OF FIRM, DETAILS OF PARTNERS, THEIR PAN, AND CIRCLE OF ASSESSMENT OF PARTNERS. 32. AFTER CONSIDERING THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE, WE FIND THAT ALL THE EVIDENCES FILED BY THE ASSESSEE ARE IN ORDER AND THAT THE ASSESSEE HAS EARNED EXEMPTED INCOME OF RS.1,66,406/-, FORM THE PROFIT OF FIRM, WHICH IS ALLOWABLE AS EXEMPT INCOME UNDER SECTION 10(2A) OF THE ACT. AND AFTER CONSIDERING THE EVIDENCE IN ORDER WE ARE NOT INCLINED TO RESTORE THE ISSUE TO THE FILE OF ASSESSING OFFICER. HENCE, WE DIRECT THE ASSESSING OFFICER TO ALLOW FULL RELIEF TO THE ASSESSEE. IN THE RESULT, THIS GROUND OF APPEAL IS ALLOWED. 33. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 06.05.2021 BY PLACING RESULT ON NOTICE BOARD. SD/- SD/- (DR. ARJUN LAL SAINI) (PAWAN SINGH) ( /ACCOUNTANT MEMBER /JUDICIAL MEMBER) / SURAT, DATED : 6 TH MAY, 2021 # SGR COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) ITAT (DR)/GUARD FILE OF ITAT. BY ORDER // TRUE COPY // / / TRUE COPY / /////// ASSISTANT REGISTRAR, SURAT