Appeal Details
Counselvise Citation
[2019] 116 COUNSELVISE.COM (IT) 6180 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
07-08-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
22-07-2019
Assessment Year
2014-2015
Appeal Filed On
22-04-2019
Judgement Text
1 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. , SMC , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: K OLKATA . . , ) [BEFORE SHRI A. T. VARKEY, JM] ITA NO.416/KOL/2019 ARUN KUMAR MAHESHWARI (PAN: AJIPM7109D) C/O RADHA KISHAN ASHOK KUMAR, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.417/KOL/2019 ARUN MAHESHWARI (HUF) (PAN: AADHA1689Q) C/O RADHA KISHAN ASHOK KUMAR, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.418/KOL/2019 ANAND KUMAR MAHESWARI (PAN:ADSPM5078K) C/O RADHA KISHAN ASHOK KUMAR, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.419/KOL/2019 ANAND MAHESWARI (HUF) (PAN: AACHA1773N) C/O PRABHUDAYAL MAHESWARI, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.420/KOL/2019 ASHOK KUMAR MAHESWARI (PAN: ADPPM4668J) C/O RADHA KISHAN ASHOK KUMAR, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.421/KOL/2019 ASHOK MAHESWARI (HUF) (PAN: AACHA1772P) C/O GANPATI TRADERS, DHARMSALA ROAD, DINBAZAR, JALPAIGURI- 735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.422/KOL/2019 ANIRUDH MAHESWARI (PAN: BBEPM4010L) C/O RADHA KISHAN ASHOK KUMAR, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.856/KOL/2019 ANIRUDH MAHESWARI (PAN: BBEPM4010L) C/O RADHA KISHAN ASHOK KUMAR, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.857/KOL/2019 ASHOK MAHESWARI (HUF) (PAN: AACHA1772P) C/O GANPATI TRADERS, VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI 2 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. DHARMSALA ROAD, DINBAZAR, JALPAIGURI-735101 ITA NO.858/KOL/2019 ASHOK KUMAR MAHESWARI (PAN:ADPPM4668J) C/O RADHA KISHAN ASHOK KUMAR, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.859/KOL/2019 ARUN MAHESHWARI (HUF) (PAN: AADHA1689Q) C/O RADHA KISHAN ASHOK KUMAR, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.860/KOL/2019 ARUN KUMAR MAHESHWARI (PAN: AJIPM7109D) C/O RADHA KISHAN ASHOK KUMAR, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.861/KOL/2019 ANAND MAHESWARI (HUF) (PAN: AACHA1773N) C/O PRABHUDAYAL MAHESWARI, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI ITA NO.862/KOL/2019 ANAND KUMAR MAHESWARI (PAN:ADSPM5078K) C/O RADHA KISHAN ASHOK KUMAR, DINBAZAR, JALPAIGURI-735101 VS INCOME-TAX OFFICER, WD-1(1) JALPAIGURI APPELLANTS RESPONDENTS DATE OF HEARING DATE OF PRONOUNCEMENT 22.07.2019 .08.2019 FOR THE APPELLANTS SHRI DHIRAJ LAKHOTIA, AR FOR THE RESPONDENT SHRI P. K. MONDAL, ADDL. CIT, S R. DR ORDER PER SHRI A.T.VARKEY, JM ALL THESE APPEALS PREFERRED BY DIFFERENT ASSESSEES ARE AGAINST THE SEPARATE ORDERS OF LD. CIT(A). SINCE THE ASSESSEES ARE FROM THE SAME FAMILY AND TRANSACTIONS IN QUESTION ARE IDENTICAL IN NATURE AND GROUNDS ARE COMMON AND FACT S ARE SIMILAR, WE DISPOSE OF ALL THESE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE BY TAKING THE APPEAL FOR AY 3 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. 2014-15 IN I.T.A. NO. 416/KOL/2019 IN THE CASE OF S HRI ARUN KUMAR MAHESWARI AS THE LEAD CASE AND THE RESULT OF WHICH WILL BE FOLLOWED FOR O THER CASES ALSO. 2. AGAINST THE LD. CIT(A)S IMPUGNED ORDERS, THE AS SESSEES (7) SEVEN IN NUMBERS HAD PREFERRED SEVEN APPEALS BEFORE THIS TRIBUNAL. HOWE VER, THE REGISTRY POINTED OUT SOME DEFECTS IN THOSE APPEALS (ITA NOS. 416-422/KOL/2019 ). BUT THE ASSESSEES WITHOUT TRYING TO CURE THE DEFECTS, HAD FILED ANOTHER NEW SET OF APPE ALS (SEVEN IN NUMBERS) WHICH WAS NUMBERED AS ITA NOS. 856-862/KOL/2019. THOUGH THER E OUGHT TO HAVE BEEN ONLY SEVEN APPEALS, DUE TO THE AFORESAID ACTION SEVEN MORE APP EALS HAVE BEEN FILED WHICH MEANS FOURTEEN APPEALS ARE ALTOGETHER LISTED AND HEARD TO GETHER. SINCE THE LATER FILED APPEALS I.E. ITA NOS. 856-862/KOL/2019 HAVE BEEN FOUND TO BE MIS TAKENLY FILED, SO THEY ARE ALLOWED TO BE WITHDRAWN. 3. COMING TO THE LEAD CASE, I.E. IN RESPECT OF ITA NO. 416/KOL/2019 IN ARUN KUMAR MAHESWARI VS. ITO FOR AY 2014-15 THE FACTS AS NOTED BY THE AO ARE THAT IN THIS YEAR, THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL GAINS OF RS. 6,21,030/- ON SALE OF SHARES OF M/S. ESSAR INDIA LIMITED (M/S. EIL) AND CLAIMED ALSO THAT THIS AMOUNT IS EXEMPT U/S. 10(38) OF THE ACT. THE AO NOTED THAT THE ASSESSEE HAD PURCHASED 15,000 SHARES OF M/S. EIL ON 23.03.2012 @ RS.10.80 PER SHARE FOR A CONSIDERATION OF RS.1,62,1 50/- AND SOLD THE SAID SHARES FOR A GROSS SALE CONSIDERATION OF RS.15,66,360/- THROUGH TRANSA CTIONS ON VARIOUS DATES. THE AO ISSUED NOTICE U/S. 133(6) TO THE PR. OFFICER, ESSAR INDIA LTD. AND OBTAINED AUDIT REPORT/AUDITED ACCOUNTS OF LAST FIVE YEARS. ACCORDING TO AO, THE FINANCIALS OF THIS COMPANY WAS NOT AT ALL GOOD. AFTER TAKING NOTE OF THESE FACTS THE ASSESSEE WAS REQUESTED TO EXPLAIN AS TO WHY SUSPICIOUS GAIN OCCURRED FROM THE SALE OF SHARES OF M/S. EIL OF RS.6.,21,030/- SHOULD NOT BE TREATED AS INCOME AND ADDED TO THE TOTAL INCOME. IN EXPLANATION, THE ASSESSEE REPLIED THAT THE GAIN WAS HIS NORMAL LONG TERM CAPITAL GAIN AND SHOULD BE ALLOWED AS EXEMPT INCOME. HE FURTHER EMPHASIZED THAT THE PAYMENT WAS MADE THR OUGH BANK, AND TRANSACTION WAS MADE THROUGH REGISTERED MEMBER OF BSE AND CONTRACT NOTE WAS ISSUED, HENCE THE TRANSACTION SHOULD BE TREATED AS GENUINE. BUT THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTABLE TO THE AO. ACCORDING TO AO, THE SCRIP OF M/S. EIL WAS IN THE LIST OF SUSPICIOUS TRANSACTION AND ONE OF THE REASONS FOR SCRUTINY SELECTION WAS TO EX AMINE THE SUSPICIOUS TRANSACTION IN PENNY 4 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. STOCK, THE NATURE AND THE CIRCUMSTANCE OF THE TRANS ACTION WAS TO BE EXAMINED. FURTHER, THE AO FOUND THAT THE ASSESSEE HAS SOLD SCRIPS OF M/S. EIL AT PRE-DETERMINED PRICE, AT PRE- DETERMINED TIME TO PRE-DETERMINED PARTIES WHO WERE SEEKING GAIN WHICH IS EXEMPT FROM TAX; OR LOSS FOR SETTING OFF GENUINE CAPITAL GAIN WITH T HE HELP OF DIFFERENT OPERATORS, MEMBERS OF BSE, SHARE BROKERS AND SUB-BROKERS. THE AO ALSO RE LIED UPON THE INVESTIGATION REPORT OF THE DIRECTORATE OF INVESTIGATION, KOLKATA. THE AO REFERRED EXTENSIVELY ON THE INVESTIGATION REPORT OF THE DIRECTORATE OF INVESTIGATION, KOLKATA , WHICH WAS PREPARED BY THE DIRECTORATE OF INVESTIGATION, KOLKATA AFTER CARRYING OUT COUNTRY-W IDE INVESTIGATION TO UNEARTH THE ORGANIZED RACKET OF GENERATING BOGUS ENTRIES OF LTCG WHICH IS EXEMPT FROM TAX AS PER THE PROVISIONS OF SECTION 10(38) OF ACT. FROM THE AFORESAID REPOR T, THE AO NOTED THAT THE MODUS OPERANDI ADOPTED BY THE OPERATORS WAS TO MAKE THE BENEFICIAR Y BUY SOME SHARES OF A PRE-DETERMINED PENNY STOCK COMPANIES CONTROLLED BY THEM. THESE SHA RES ARE TRANSFERRED TO THE BENEFICIARY AT A VERY NOMINAL PRICE MOSTLY OFF-LINE THROUGH PRE FERENTIAL ALLOTMENT OR OFF-LINE SALE TO SAVE SECURITY TRANSACTION TAX. THE BENEFICIARY (MOSTLY I NDIVIDUALS) HOLDS THE SHARE FOR ONE YEAR (WHICH IS MINIMUM STATUTORY PERIOD OF HOLDING REQUI RED TO CLAIM LTCG THEN ONLY IT IS EXEMPT UNDER SECTION 10(38) OF THE ACT). THEREAFTE R, OPERATORS RIG THE PRICE OF THE STOCK AND IT GRADUALLY RAISES (PRICE MANY TIME) OFTEN IT GOES 500 TO 1000 TIMES. THIS IS DONE THROUGH LOW VOLUME TRANSACTION INDULGED IN BY THE DUMMIES O F THE OPERATOR AT A PRE-DETERMINED PRICE. WHEN THE PRICE REACHES THE DESIRED LEVEL, TH E BENEFICIARY WHO BOUGHT THE SHARES AT A NOMINAL PRICE ARE MADE TO SELL IT TO A DUMMY COMPAN Y OF THE OPERATOR. FOR THIS, UNACCOUNTED CASH IS PROVIDED BY THE BENEFICIARY, WH ICH IS ROUTED THROUGH A FEW LAYERS OF PAPER COMPANIES BY THE OPERATOR AND FINALLY IS PARK ED WITH THE DUMMY PAPER COMPANY THAT WILL BUY THE SHARES. ACCORDING TO AO, THE DIRECTORA TE OF INVESTIGATION, KOLKATA INVESTIGATED TRANSACTIONS IN 84 (EIGHTY FOUR) SUCH PENNY STOCK L ISTED ON BSE AND EXAMINED ON OATH A LARGE NUMBER OF BROKERS, DIRECTORS OF COMPANIES THA T FINALLY PURCHASED THE SHARES, THE PROMOTERS OF PENNY STOCK COMPANIES, THE ENTRY OPERA TORS WHO MANAGED THE DUMMY COMPANIES INVOLVED IN PRICE RIGGING. ACCORDING TO A O, THE DIRECTOR OF INVESTIGATION EXAMINED THE MONEY TRAILS OF THE TRANSACTIONS AND I N A LARGE NUMBER OF TRANSACTIONS TRAIL RIGHT FROM CASH DEPOSIT ACCOUNT TO THE BENEFICIARIE S ACCOUNT WAS UNEARTHED. THE A.O. HAS FURTHER STATED THAT ASSESSEE HAS ALSO TAKEN ACCOMMO DATION ENTRIES IN THE FORM OF 'PRE- 5 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. DETERMINED BOGUS LTCG OR STCL' IN THE PENNY STOCKS OF THE COMPANIES NAMED ESAAR INDIA LIMITED DURING THE F.Y. 2013-14 TO RELEVANT A .Y. 2014-15. THEREFORE, ACCORDING TO AO, THE FACTS OF THE CASE SHOULD NOT BE VIEWED I N ISOLATION BUT AS ONE OF THE BENEFICIARIES IN THE LARGER SCHEME OF THINGS AND THESE ARE THE AS SESSEES PRE-FIXED TRANSACTIONS. IT WAS CLEARLY MENTIONED IN THE ORDER THAT THE SCRIP OF ES AAR INDIA LIMITED IS AMONGST THE 84 PENNY STOCKS WHERE ARTIFICIAL RIGGING OF PRICES WER E MADE FOR THE DESIRED PURPOSE. THE A.O. FURTHER STATED THAT ON PERUSAL OF THE FINANCIAL RES ULTS FOR THE LAST FEW YEARS INCLUDING YEARS ON WHICH PURCHASE AND SALE OCCURRED, THE AO NOTES THAT THE FINANCIAL HEALTH OF THE COMPANY HAD BEEN DETERIORATING CONTINUOUSLY OR NOT INCREASE D SIGNIFICANTLY. HOWEVER, THE SHARE PRICE AND MARKET CAPITALIZATION OF THE SCRIP WAS SHOOTING UP ALMOST VERTICALLY. ACCORDING TO AO, ALL THE BLUE CHIP COMPANIES WHICH ARE PRESENT IN TH E SENSEX, THE SENSITIVE INDEX OF THE BSE, WHICH HAVE BULK MARKET SHARE IN TERMS OF MARKET CAP ITALIZATION AND BUSINESS SUCH AS RELIANCE INDUSTRIES LTD., LARSEN & TURBO LTD, TATA CONSULTANCY SERVICES LTD. & COAL INDIA LTD, WERE ABLE TO DOUBLE THEIR PRICE IN THE MARKET DURING THE SAME PERIOD. ON THE OTHER HAND, M/S. EIL WHICH HAS ALMOST ZERO FUNDAMENTALS HAS SHO T UP THAN 5.39 TIMES IN A SHORT SPAN OF TIME. THIS IS BECAUSE, ACCORDING TO AO, THE PARALLE L FORCES OF ACCOMMODATION ENTRY PROVIDERS WERE ACTIVELY PARTICIPATING WITH THEIR PR E-SETTLED GAME PLAN. THE A.O. HAS ALSO NOTED FROM THE TRANSACTION DETAILS THAT IN THE SCRI P OF M/S. EIL, THE COUNTER PARTY MEMBER AND COUNTER PARTY CLIENT ARE THOSE WHO WERE INVOLVE D IN PROVIDING ACCOMMODATION ENTRY FOR LTCG AND STCL TO DIFFERENT BENEFICIARIES. THE AO NO TED THAT ASSESSEE PURCHASED SHARE OF ESSAR INDIA LTD. AT A MARKET PRICE OF RS. 10.80/- P ER SHARE. ACCORDING TO AO, THE ASSESSEE WAITED TILL THE COMPLETION OF ONE YEAR FOR QUALIFYI NG THE GAIN AS EXEMPTED INCOME. THEREAFTER WHEN THE PRICE REACHED THE OPTIMUM LEVEL , THE ASSESSEE SOLD THESE SHARES TO THE PRE-ARRANGED BUYERS AT PRE-SETTLED PRICE. THEREFORE , ACCORDING TO AO, IT IS A FACT THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRY OF RS.6,21,0 30/- BY SELLING LISTED PENNY STOCK OF ESAAR INDIA LIMITED THROUGH THE PRE-SETTLED TRANSAC TIONS UNDER THE CARPET. THEREFORE, ACCORDING TO AO, THE CLAIM OF LTCG OF RS. 6,21,030/ - IS BOGUS AND PRE-ARRANGED. SO, THE AO DID NOT ACCEPT THE ASSESSEES CLAIM OF LTCG AND EXEMPTION THEREOF CLAIMED BY THE ASSESSEE. THEREAFTER, THE AO TREATED THE SAME AS C ASH CREDIT U/S 68 OF THE ACT AND ADDED THE ENTIRE LTCG TO THE INCOME OF THE ASSESSEE AS UNEXPL AINED INCOME. ON FIRST APPEAL, THE LD. 6 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. CIT(A) DISMISSED THE GROUNDS RAISED BY THE ASSESSEE AGAINST HIS CLAIM OF EXEMPTION U/S 10(38) OF THE ACT AND ALSO CONFIRMED THE ADDITIONS MADE BY THE AO UNDER SECTION 68 OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE TH IS TRIBUNAL. 4. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOTED THAT THE ORDER OF LD. CIT(A) IS AN EX PARTE ORDER. HOWEVER, THE LD. AR OF THE ASSESSEE POINTED OUT THAT THE SCRIPS ON WHICH L TCG WAS DERIVED BY THE ASSESSEE WAS FROM THE PURCHASE AND SALE OF SCRIPS KNOWN AS M/S. ESSAR INDIA LTD. WHICH SCRIP HAS BEEN FOUND TO BE GENUINE BY THIS TRIBUNAL VIDE ITS ORDER IN ITA NO. 604/KOL/2018 FOR AY 2014- 15 IN THE CASE OF JAGMOHAN AGARWAL VS. ACIT DATED 0 5.09.2018. THEREFORE, THERE IS NO WORTHWHILE REASON TO SEND THESE APPEALS BACK TO TH E LD. CIT(A) WHICH WILL BE AN ABUSE OF THE PROCESS OF LAW. AFTER HEARING BOTH THE SIDES, I WOULD LIKE TO LOOK INTO THE MERITS OF THE APPEAL OF THE ASSESSEE. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST THE ACTION OF THE LOWER AUTHORITIES IN NOT ALLOWING THE CLAIM OF THE ASSES SEE OF LTCG FROM SALE OF SCRIPS KNOWN AS M/S. ESSAR INDIA LTD. AND THE CLAIM FOR EXEMPTION U/S. 10(38) OF THE ACT. THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHOR ITIES AND URGED BEFORE THE BENCH TO CONFIRM THE ORDERS OF THE LOWER AUTHORITIES. HE AL SO RELIED ON 23 JUDICIAL PRONOUNCEMENTS IN HIS SUPPORT. I NOTE THAT THE SAID JUDICIAL PRONOUNC EMENTS ARE ALL DISTINGUISHABLE ON FACTS AS WELL AS ON LAW. THE SAID DECISIONS ARE DEALT WITH HEREIN BELOW IN SERIATIM AS UNDER: 1. RATNAKAR M. PUJARI VS. ASSESSEE -ITA NO.995/MUM/201 2, ORDER DT. 3RD AUGUST, 2016 [AY 2006-07] -ITAT MUMBAI IN THIS CASE THE ITAT, MUMBAI BENCH WERE CONSIDERIN G A CASE WHERE THE PURCHASES OF SHARES WERE TREATED AS BOGUS AND SHAM TRANSACTIO NS BY THE REVENUE IN THE IMMEDIATELY PRECEDING FINANCIAL YEAR 2005-06 AND TH E SAID FINDINGS OF THE AO WITH RESPECT TO BOGUS AND SHAM PURCHASES WERE NOT CHALLE NGED BY THE ASSESSEE. IN SUCH FACTS OF THE CASE THE TRIBUNAL HAD TREATED THE EXEM PT LONG TERM CAPITAL GAINS ARISING ON SALES OF SHARES AS BOGUS AND SHAM. HOWEVER, THER E IS NO SUCH FINDING OF FACT IN THE INSTANT CASE AND THUS THE FACTS IN THE INSTANT CASE ARE DISTINGUISHABLE. IT WAS BROUGHT TO MY NOTICE THAT THE AFORESAID ORDE R OF ITAT, MUMBAI, INTER-ALIA, HAD BEEN DISTINGUISHED BY CO-ORDINATE BENCHES OF THE TR IBUNAL IN THE FOLLOWING CASES: 7 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. A. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KO/2018, O RDER DT. 03.06.2019 (KOL, ITAT)] B. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) 2. RITU SANJAY MANTRY VS. ITO - ITA NO.2003/MUM/2017, ORDER DT. 9TH FEBRUARY, 2018 - ITAT MUMBAI IN THIS CASE IS THAT WAS REOPENED BY THE AO ON THE BASIS OF INFORMATION RECEIVED FROM OFFICE OF DGIT (C&IB), NEW DELHI THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRY FROM M/S. MAGASAGAR SECURITIES PVT. LTD. (A COMPAN Y IN THE MAHASAGAR SECURITIES PVT. LTD. GROUP SHARE SCAM CASE) OF RS.10,32,289/-. SUBSEQUENTLY THE ASSESSMENT WAS COMPLETED U/S. 147 R.W.S. 143(3) OF THE ACT AFTER M AKING AN ADDITION OF RS.10,39,289/- ON ACCOUNT OF BOGUS SHARE TRANSACTIO NS AND RS.20,786/- BEING COMMISSION PAID TO THE BROKER FOR ARRANGING ACCOMMO DATION ENTRIES IN THE FORM OF SHARE TRANSACTIONS. THE AO HAD GIVEN A FINDING THAT THE ASSESSEE HAD TAKEN ENTRIES FROM MAHASAGAR SECURITIES PVT. LTD. INVOLVED IN THE SHARES SCAM CASE FOR RS.10,39,289/- FOR BOGUS SPECULATION PROFIT DURING THE FINANCIAL YEAR 2007 -08. IT WAS FURTHER FOUND BY THE AO THAT THE ASSESSEE HAS PAID CASH OF EQUIVALENT AMOUNT AND RECEIVED BACK BY CHEQUE AND BOGUS CONTRACT NOTES AN D BILLS FOR THE TRANSACTIONS NOT ACTUALLY ROOTED THROUGH STOCK EXCHANGE. IT IS NOTE D THAT THE ITAT, MUMBAI HAD RELIED UPON AND FOLLOWED THE JUDGMENT OF HON'BLE BO MBAY HIGH COURT IN SANJAY BIMALCHAND JAIN V. PCIT, ORDER DATED 10.04.2017 (BO M.), BEING JUDGMENT OF JURISDICTIONAL HIGH COURT. HOWEVER, IN THIS CASE, THE AO OBSERVED THAT THE ASSESSEE HAD TAKEN ENTRIES AND PAID CASH OF EQUIVALENT AMOUN T AND RECEIVED BACK BY CHEQUE. AND ON THE BASIS OF SUCH ADVERSE INFERENCE, THE TRI BUNAL CONFIRMED THE ADDITION MADE BY THE AO. HOWEVER, IN THE PRESENT CASE IN HAN D, THERE IS NO SUCH FINDING MADE BY THE AO. FURTHER. IT IS NOTED THAT THE ABOVEMENTIONED JUDGME NT OF ITAT, MUMBAI BENCH HAS BEEN CONSIDERED AND DISTINGUISHED BY THE ITAT, KOLK ATA BENCHES AND OTHER BENCHES OF THE TRIBUNAL, INTER-ALIA, IN THE FOLLOWING CASES : A. SATYANARAYAN SARIA VS. ITO [ITA NO.1224/KOIL2016 , ORDER DT. 28.06.2019 (KOL ITAT)] 8 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. B. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOIL2018, ORDER DT. 03.06.2019 (KOL, ITAT)] C. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) REFERENCE IS ALSO MADE TO THE RECENT JUDGMENT DATED 01.07.2019 RENDERED BY THIS TRIBUNAL IN THE CASE OF APARNA MISRA VS. ITO (ITA N O. 161/KOL/2019) WHEREIN THE TRIBUNAL HAD RELIED UPON THE FOLLOWING JURISDICTION AL CALCUTTA HIGH COURT JUDGMENTS TO DECIDE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. I) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 O F 2012] II) CIT VS. LAKSHMANGARH ESTATE & TRADING CO. LIMIT ED [2013] 40 TAXMANN.COM 439 (CAL) III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012 ] IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 105 OF 2016] V) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] VI) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-3473 8-ITA NO. 22 OF 2009, ORDER DT. 29.4.09] 3) COMING TO THE CASE OF ITO VS. SHAMIM M. BHARWANI (2016) 69 TAXMANN.COM (MUM ITAT), ORDER DT. 27.03.2015 OF MUMBAI TRIABUNA L, THE BRIEF FACTS IN THIS CASE WAS THAT THE ASSESSEE PURCHASED 2500 SHARES OF EMR ALD COMMERCIAL LTD. (ECL). THE PURCHASE WAS IN CASH. ACCORDING TO THE AO SINCE THE PURCHASE WAS MADE IN CASH, THE SAME WAS NOT VERIFIABLE. FURTHER, THE A.O. FOUND TH AT SAID TRANSACTION WAS NOT THROUGH THE STOCK EXCHANGE. THE SHARES WERE IN A NO NDESCRIPT COMPANY, WITH NO FINANCIAL AND/OR PHYSICAL ASSETS OF VALUE OR REPORT ED EARNINGS. THE SHARES, PURCHASED AT AN AVERAGE RATE OF RS. 21.70 PER SHARE IN MAY 20 04, WENT UP TO AS MUCH AS FROM RS. 465 TO RS. 489 IN JULY, 2005, I.E., JUST OVER Y EARS' TIME. EACH OF THESE INCIDENTS MATCHED WITH THAT WHICH COULD BE EXPECTED IN A CASE OF A TRANSACTION IN A PENNY STOCK, THE MODUS OPERANDI OF THE TRANSACTIONS IN WH ICH WAS ALSO LISTED BY THE AO. ACCORDINGLY, RELYING ON THE DECISIONS BY THE APEX C OURT IN THE CASE OF SUMATI DAYAL V. CIT [1995] 214 ITR 801/80 TAXMAN 89 (SC); DURGA PRASAD MORE V. CIT [1971] 182 ITR 540 (SC) AND MC. DOWELL & CO. LTD. V. CTO [ 1985] 154 ITR 148/22 TAXMAN 11 (SC), BESIDES BY THE TRIBUNAL IN THE CASE OF ASSTT. CIT V. SOM NATH 9 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. MAINI [2006] 7 SOT 202 (CHD.), HE ASSESSED THE IMPU GNED CREDIT OF RS. 12.15 LACS AS UNEXPLAINED INCOME U/S. 68 OF THE ACT. THE TRIBUNAL CONFIRMED THE ADDITION OBSERVING THAT THE PURCHASE OF SHARES WAS OFF MARKE T PURCHASE NOT REPORTED IN THE STOCK EXCHANGE. FURTHER, IT WAS OBSERVED BY THE TRI BUNAL THAT THE PURCHASE WAS THROUGH A BACK DATE CONTRACT NOTE IN CASH AND, THER E WAS NO TRAIL. THUS IT IS NOTED THAT TRIBUNAL IN THIS CASE CONFIRMED THE ADDITION O N A FACTUAL FINDING THAT THE PURCHASE WAS THROUGH A BACK DATED CONTRACT NOTE IN CASH AND, THERE WAS NO TRAIL. THIS FACT IS NOT APPLICABLE IN THE PRESENT CASE. FURTHER, IT IS NOTED THAT THE ABOVEMENTIONED JUDGME NT OF TRIBUNAL, MUMBAI BENCH WAS CONSIDERED/DISTINGUISHED BY THE MUMBAI ITAT IN ITS FOLLOWING JUDGMENTS WHILE ALLOWING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE: A. DCIT VS. ANIL KAINYA [ ITA NOS.4077 & 4078/MUM/2 013, ORDER DT. 22.03.16 MUM ITAT)] B. ANJALI PANDIT VS. ACIT [2017] 88 TAXMANN.COM 657 (MUMBAI - TRIB.) FURTHER, IT IS NOTED THAT LTHE SAID JUDGMENT HAS BE EN CONSIDERED/DISTINGUISHED BY THE KOLKATA AND OTHER BENCHES OF THE TRIBUNAL, INTER-AL IA, IN THE FOLLOWING CASES WHILE ALLOWING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. A. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOL ITAT)] B. ANUPAMA GARG VS. ITO [ITA NO.5971/0EL/2018, ORDE R DT. 12.12.2018 (DEL, ITAT)] C. RADHIKA GARG. VS. ITO [ITA NO.4738/0EL/2018, ORD ER DT. 01.01.2019 (DEL-TRIB) 4. COMING TO THE CASE OF VIDYA REDDY - ITA NO.126/CHNY /2017 - CHENNAI ITAT HAD DISALLOWED THE CLAIM OF EXEMPT LTCG AND HAD CON FIRMED THE ADDITION MADE ON THE GROUND THAT THE ASSESSEE HAS NOT PLACED ANY MAT ERIAL BEFORE THE LOWER AUTHORITIES TO PROVE THAT HER TRANSACTIONS ARE GENUINE. THE TR IBUNAL OBSERVED SHE HAS ALSO NOT PLACED ANY MATERIAL TO PROVE THAT HER CLAIM OF EXEM PTION U/S. 10(38) IS GENUINE AND VALID. HOWEVER, IN THE CASE OF THE ASSESSEE COMPAN Y ALL RELEVANT DOCUMENTS WERE FURNISHED TO SUPPORT PURCHASES AS WELL AS SALE OF S HARES. FURTHER, THE CHENNAI TRIBUNAL HAD RELIED UPON AND FOLLOWED THE JUDGMENT OF HONBLE BOMBAY HIGH COURT 10 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. IN SANJAY BIMALCHAND JAIN VS. PCIT, ORDER DATED 10. 04.2017, WHICH JUDGMENT HAS BEEN CONSIDERED AND DISTINGUISHED BY KOLKATA AND OT HER BENCHES OF THE TRIBUNAL, INTER-ALIA, IN THE FOLLOWING CASES: A. SATYANARAYAN SARIA VS. ITO [ITA NO.1224/KOL/2016 , ORDER DT. 28.06.2019 (KOL ITAT)] B. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOL, ITAT)] C. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) REFERENCE IS ALSO MADE TO THE RECENT JUDGMENT DATED 1ST JULY, 2019 RENDERED BY THE TRIBUNAL IN THE CASE OF APARNA MISRA VS. ITO [ITA N O.161/KOIL2019] WHEREIN THE TRIBUNAL HAD RELIED UPON THE JURISDICTIONAL CALCUTT A HIGH COURT JUDGMENTS, AS MENTIONED HEREINABOVE. 5. M. K. RAJESHWARI VS. ITO [2018] 99 TAXMANN.COM 339 THE BANGALORE TRIBUNAL NOTED THE ACTS IN THIS CASE AS THE ASSESSE E EARNED LONG-TERM CAPITAL GAIN ON SALE OF SHARES OF MARL AND CLAIMED EXEMPTION ON IT UNDER SECTION 10(38). THE ASSESSING OFFICER RELYING UPON THE REPORT OF THE IN VESTIGATION WING, SEBI REPORT AND FINDINGS/OBSERVATIONS OF THE SIT, CONCLUDED THAT EX EMPTION UNDER SECTION 10(38) CLAIMED BY THE ASSESSEE WAS NOT ACCEPTABLE AND THE ACT OF THE ASSESSEE IN PURCHASING THE PENNY STOCK SHARES AND SALE OF FEE WITHIN THE A MBIT OF ADVENTURE IN THE NATURE OF TRADE. CONSEQUENTLY, AMOUNT IN QUESTION WAS LIABLE TO BE TAXED UNDER THE HEAD 'BUSINESS INCOME'. THE TRIBUNAL CONFIRMED THE ADDIT ION BY OBSERVING THAT THE DEPARTMENT HAD BROUGHT SUFFICIENT MATERIAL ON RECOR D TO DEMONSTRATE THAT UNACCOUNTED MONEY WAS INTRODUCED IN THE BOOKS OF AC COUNT THROUGH LONG-TERM CAPITAL GAIN BY ADOPTING SUCH METHOD. IT IS NOTED THAT IN THE AFORESAID CASE, THE TRIBUNA L CONFIRMED THE ADDITION ON A FACTUA1 FINDING THAT THE DEPARTMENT HAD BROUGHT SUFFICIENT MATERIAL ON RECORD TO DEMONSTRATE THAT UNACCOUNTED MONEY WAS INTRODUCED IN THE BOOKS OF ACCOUNT THROUGH LONG-TERM CAPITAL GAIN BY ADOPTING SUCH METHOD. THIS FACT IS NOT APPLICABLE IN THE PRESENT CASE. 11 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. FURTHER, THE ABOVEMENTIONED JUDGMENT HAS BEEN CONSI DERED/DISTINGUISHED BY THIS TRIBUNAL, INTER-ALIA, IN THE FOLLOWING CASES WHILE ALLOWING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE: A. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOI ITAT)] B. YOGESH DALMIA VS. ACIT [ITA NO.113/KOL/2018, ORD ER DT. 03.06.2019 (KOI ITAT)] C. NAVIN KUMAR KAJARIA VS. ACIT [ITA NO.1254-55/KOL /2018, ORDER DT. 03.04.2019 (KOL- TRIB) D. SOUMITRA CHOUDHURY VS. ACIT [ITA NO.256/KOL/2019 , ORDER DT. 15.03.2019 (KOL ITAT)] 6. COMING TO THE CASE OF ABHIMANYU SOIN [2018-TIOL-733 -ITAT-CHD THE CHANDIGARH BENCH OF TRIBUNAL HAD CONFIRMED THE ADDI TION MADE BY AO AFTER OBSERVING THAT '11. THE ASSESSEE HAS FAILED TO PROVE THAT THE PURC HASE AND SALE TRANSACTIONS ARE GENUINE AND COULD NOT EVEN FURNISH AND IOTA OF EVID ENCE REGARDING THE SALE OF SHARES .............. HOWEVER, IN THE CASE OF THE ASSESSE E COMPANY ALL RELEVANT DOCUMENTS WERE FURNISHED TO SUPPORT, AND PROVE BEYOND ALL DOU BTS, PURCHASES AND AS WELL AS SALE OF SHARES, WHICH WAS EVIDENTLY ABSENT IN THAT CASE, SO IS NOT APPLICABLE TO CASE IN HAND. 7. COMING TO THE CASE OF BALBIR CHAND MAINI VS. CIT (2011) 12 TAXMANN.COM 276 (P&H) THE HONBLE PUNJAB & HARYANA HIGH COURT HAD CONFIRMED T HE ADDITION MADE BY ASSESSING OFFICER ON THE BASIS OF FINDING O F FACT BY THE TRIBUNAL: 10. THE TRIBUNAL WHILE ADJUDICATING THE ISSUE AGAI NST THE ASSESSEE HAD RECORDED A FINDING OF FACT THAT THE TRANSACTION OF SALE AND PU RCHASE OF SHARES OF M/S. ANKUR INTERNATIONAL LTD., WAS NOT A GENUINE TRANSACTION, A PART WHERE OF RELEVANT TO THE PRESENT ISSUE, MENTIONED IN PARA NOS. 27 AND 28 OF THE ORDER, READS AS UNDER .... HOWEVER, IN THE CASE OF THE ASSESSEE COMPANY ALL RE LEVANT DOCUMENTS WERE FURNISHED TO SUPPORT, AND PROVE BEYOND ALL DOUBTS, PURCHASES AND AS WELL AS SALE OF SHARES. 12 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. FURTHER THIS JUDGMENT HAS BEEN CONSIDERED AND DISTI NGUISHED BY THIS TRIBUNAL AND OTHER BENCHES OF THE TRIBUNAL, INTER-ALIA, IN THE F OLLOWING CASES WHILE ALLOWING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE: A. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOL ITAT)] B. KAMAL SINGH KUNDALIA VS. ITO [ITA NO.2359/KOL/20 17, ORDER DT. 08.05.2019 (KOL ITAT)] C. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) 8. COMING TO THE CASE OF CHANDAN GUPTA VS. CIT (2015) 54 TAXMANN.COM 10 (P&H ) THE HON'BLE PUNJAB & HARYANA HIGH COURT HAD CON FIRMED THE ADDITION MADE BY ASSESSING OFFICER ON THE BASIS OF FINDING O F FACT BY THE TRIBUNAL THAT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION OF SALE AND PURCHASE OF SHARES. THE RELEVANT OBSERVATION IS AS UNDER: ' ..... ON APPRECIATION OF THE EVIDENCE, THE TRIBUNAL HELD THAT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION OF SALE AN D PURCHASE OF SHARES. ONCE THE TRANSACTION OF PURCHASE AND SALE WAS FOUND TO BE BO GUS THEN THE SALE PROCEEDS HAD TO BE ADDED AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT BECAUSE THE MONEY RECEIVED ON THE BASIS OF BOGUS TRANSACTION HAD BEEN CREDITED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT WHICH REMAINED UNEXPLAINED. 9. IN VIEW OF THE FINDINGS OF FACT RECORDED BY THE AUTHORITIES BELOW WHICH COULD NOT BE DEMONSTRATED TO BE ERRONEOUS OR PERVERSE IN ANY MAN NER, NO INTERFERENCE IS CALLED FOR. ' HOWEVER, IN THE INSTANT CASE OF THE ASSESSEE COMPAN Y ALL RELEVANT DOCUMENTS WERE FURNISHED TO SUPPORT AND PROVE BEYOND ALL DOUBTS, P URCHASES AS WELL AS SALE OF SHARES. FURTHER THIS JUDGMENT HAS BEEN CONSIDERED AND DISTI NGUISHED BY THIS TRIBUNAL AND OTHER BENCHES OF THE TRIBUNAL, INTER-ALIA, IN THE F OLLOWING CASES WHILE ALLOWING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE: A. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOL, ITAT)] B. KAMAL SINGH KUNDALIA VS. ITO [ITA NO.2359/KOL/20 17, ORDER DT. 08.05.2019 (KOL ITAT)] C. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) 9. COMING TO THE CASE OF CIT VS. SUNITA DHADDA (HONBL E SUPREME COURT JUDGMENT DATED 06.06.2018), IT IS NOTED THAT THIS JUDGMENT RELIED UPON BY THE 13 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. DEPARTMENT HAS NO APPLICATION IN THE FACTS OF THE I NSTANT CASE. THE CONTENTION OF LD. DR THAT MATTER SHOULD BE SET ASIDE TO AO FOR SUPPLY ING THE ASSESSEE WITH INVESTIGATION WING REPORT AND STATEMENTS OF PARTIES RELIED UPON CANNOT BE APPLIED IN EACH AND EVERY CASE. THE ASSESSEE COMPANY HAD IN T HE CASE IN HAND DISCHARGED THE ONUS CASTED UPON IT TO PROVE THE CLAIM OF LTCG/STCL , THEN IT WAS THE BOUNDEN DUTY OF THE AO TO BRING OUT THE FALSITY/FABRICATION/WRON G DOING IF ANY ON THE PART OF ASSESSEE OR CONFRONT THE ASSESSEE WITH ANY MATERIAL WHICH IS ADVERSE AGAINST THE ASSESSEE AND TO PROCEED IN ACCORDANCE TO LAW I.E. I N CONFRONTING WITH PRINCIPLE OF NATURAL JUSTICE WITHOUT DOING SO, AND WHEN ASSESSEE PLACED ALL DOCUMENTARY EVIDENCES BEFORE THE AO/LD. CIT(A), THE ASSESSEE CA NNOT BE AGAIN SENT BACK BEFORE AO AND THE DECISION TO SEND BACK TO AO IS DECIDED W HEN PROPER OPPORTUNITY HAS NOT BEEN GIVEN BY AO DURING ASSESSMENT STAGE AND THAT I S NOT THE CASE HERE IN THE CASE IN HAND. 10. COMING TO THE FOLLOWING CASES. I NOTE THAT IN THESE CASES GIVEN BELOW MAHENDRA KUMAR BHANDARI VS. ITO [ORDER DT. 06.04.20 18] ARAVIND KUMAR, CHENNAI VS. ITO [ORDER DT. 08.11.201 8] VIKRAM DUGHAR, CHENNAI VS. ITO [ORDER DT. 13.11.201 8] SADHANA, BANGALORE VS. ITO [ORDER DT. 26.05.2017] ARUN KUMAR BHAIYA, NEW DELHI VS. ITO [ORDER DT. 30. 08.2018] NATTI SINGH HUF, JAIPUR VS. ACIT [ORDER DT. 31.10.2 018] VINOD J. SHARMA, THANE [ORDER DT. 28.10.2015] ALL THE MATTERS WERE SET ASIDE TO THE FILE OF THE A O FOR FRESH CONSIDERATION AND/OR TO CONFRONT THE ASSESSEE WITH THE ADVERSE MATERIALS US ED AGAINST HIM. THE MATTERS IN EACH OF THE SAID CASES WERE SET ASIDE IN THE SPECIF IC FACTS AND CIRCUMSTANCES OF EACH OF THE CASES WERE SET ASIDE IN THE SPECIFIC FACTS AND CIRCUMSTANCES OF EACH OF THE CASES WHEREIN ALL FACTS WERE NOT AVAILABLE ON RECOR D AND/OR WHERE IN THE WORDS OF THE D/R THE AO HAS BOTCHED UP ENQUIRY. HOWEVER, IN THE CASE IN HAND THERE IS NO OCCASION FOR SETTING ASIDE THE MATTER IN AS MUCH AS THE ASSESSEE HAD FURNISHED ALL RELEVANT DOC UMENTS, MATERIALS AND/OR EVIDENCE TO SUPPORT ITS TRANSACTIONS OF PURCHASE AND AS WELL AS SALE OF SHARES AND THE AO HAD 14 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. FAILED TO POINT OUT ANY DEFECT AND/OR LACUNA IN THE SAID DOCUMENTS, MATERIALS AND/OR EVIDENCE. FURTHER, THIS TRIBUNAL IN ITS ORDERS HAD DECIDED SI MILAR ISSUE IN FAVOUR OF THE ASSESSEE BY RELYING ON BINDING JUDICIAL PRONOUNCEMENTS. REF ERENCE IS ALSO MADE TO THE RECENT JUDGMENT DATED 1 ST JULY, 2019 RENDERED BY THE TRIBUNAL IN THE CASE OF APARNA MIWSRA, SUPRA WHEREIN THE TRIBUNAL HAD RELIED UPON THE FOLL OWING JURISDICTIONAL CALCUTTA HIGH COURT JUDGMENTS TO DECIDE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. I) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 2012] II)CIT VS. LAKSHMANGARH ESTATE & TRADING CO. LIMITE D [2013] 40 TAXMANN.COM 439 (CAL) III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA N O. 105 OF 2016] V) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA N O. 721 OF 2008] VI) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 -ITA NO. 22 OF 2009, ORDER DT. 29.4.09] 11. COMING TO THE CASES GIVEN BELOW PREM JAIN VS. ITO [ITAT, DELHI, ORDER DT. 22.03.201 8] SANJAY BIMALCHAND JAIN VS. PCIT [2018] 89 TAXMANN.C OM 196 (BOM) THE DECISIONS OF THESE CASES HAD BEEN RELIED UPON B Y D/R TO CONTEND THAT GAINS FROM SALE OF SHARES SHOULD BE ASSESSED AS 'BUSINESS INCO ME' AND NOT UNDER THE HEAD 'CAPITAL GAINS'. IT IS NOTED THAT THE LEARNED D/R I S TRYING TO PUT FORWARD A COMPLETELY NEW ARGUMENT WHICH DO NOT EMANATE OUT OF THE ORDERS OF THE LOWER AUTHORITIES AND ALSO FROM THE RECORDS OF THE CASE A ND THUS IS NOT PERMISSIBLE TO BE RAISED AS THIS STAGE. EVEN OTHERWISE, THE ITAT, DELHI BENCH IN PREM JAIN (SUPRA) HAD HELD WHEN THE FACTS OF THE CASE WAS THAT THE ASSESSEE HAD CLAIMED THE I NCOME FROM SALE OF SHARES TO BE ASSESSED AT BUSINESS PROFITS AND NOT CAPITAL GAINS WHERE THERE WAS SHORT DURATION OF HOLDING OF SHARES AND LACK OF CLARITY IN ACCOUNT BO OKS, SALE AND PURCHASE OF SHARES. IN SUCH FACTS OF THE CASE, IT WAS HELD THAT PROFITS FR OM SALE OF SHARES WOULD AMOUNT TO 15 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. BUSINESS INCOME AND NOT SHORT TERM CAPITAL GAIN. HO WEVER, NO SUCH CASE HAD BEEN MADE OUT BY THE ASSESSING OFFICER IN THE INSTANT CA SES. THE AFORESAID ORDER HAS BEEN CONSIDERED BY THIS TRI BUNAL WHILE DECIDING SIMILAR ISSUE IN FAVOUR OF AN ASSESSEE IN THE CASE OF KAUSHALYA A GARWAL VS. ITO (ITA NO. 194/KOL/2018, ORDER DATED 03.06.2019 (ITAT, KOL). MORE PARTICULARLY, THE JUDGMENT OF HONBLE BOMBAY H IGH COURT IN SANJAY BIMALCHAND JAIN V. PCIUT, ORDER DATED 10.04.2017 (B OM HC) HAD BEEN CONSIDERED AND DISTINGUISHED BY THIS TRIBUNAL AND OTHER BENCHE S OF THE TRIBUNAL, INTER-ALIA, IN THE FOLLOWING CASES: A. SATYANARAYAN SARIA VS. ITO [ITA NO.1224/KOL/2016 , ORDER DT. 28.06.2019 (KOL ITAT)] B. KAUSHALYA AGARWAL VS. ITO [ITA NO.194/KOL/2018, ORDER DT. 03.06.2019 (KOL, ITAT)] C. MEENU GOEL VS. ITO [2018] 94 TAXMANN.COM 158 (DE L-TRIB) 12. COMING TO THE CASES GIVEN BELOW: ACIT VS. MADHURI SUNIL KOTECHA [ITAT, PUNE, ORDER D T. 28.03.2018] CHARU AGARWAL, MEERUT VS. ITO [ITAT, DELHI, ORDER D T. 10.09.2018] DAYARAM KHANDELWAL VS. PCIT [MP HIGH COURT, ORDER D T. 01.03.2018] SOURABH KHANDELWAL VS. PCIT [MP HIGH COURT, ORDER D T. 01.03.2018] IT IS NOTED THAT IN ALL OF THESE CASES RELATES TO I MPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THE FACTS WHERE THE ASSESSE E HAD WITHDRAWN/SURRENDERED HIS/HER CLAIM OF EXEMPT L TCG U/S. 10(38) OF THE AC T AND PAID TAXES ON THE GAINS ARISING FROM SALE OF SHARES. ALL THESE JUDGMENTS AR E IRRELEVANT AND HAS NO APPLICATION TO THE FACTS OF THE INSTANT CASE BEFORE THE TRIBUN AL. 13. COMING TO THE CASE OF SEBI V. RAKHI TRADING P. LTD [CIVIL APPEAL NO.1969 OF 2011, JUDGMENT DATED 8TH FEBRUARY, 2018 (OF THE HON BLE SUPREME COURT ) IT IS NOTED THAT THE HON'BLE SUPREME COURT WAS CONCERNED WITH A CASE WHERE SEBI HAD INITIATED ACTIONS AGAINST FEW TRADERS AND BROKERS FOR VIOLATI ON OF REGULATIONS 3(A), (B) AND (C) AND 4 (1), (2)(A) AND (B) OF THE SECURITIES AND EXC HANGE BOARD OF INDIA (PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICES RELATING T O SECURITIES MARKET) REGULATIONS, 2003 ('THE PFUTP REGULATIONS'). IN THE SAID CASE, T HE HON'BLE APEX COURT UPHELD 16 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. THE ACTION INITIATED IN THE CASE OF TRADERS AS THE SAID TRADERS HAVE ADMITTED OF BEING INVOLVED IN SYNCHRONIZED TRADE TO MANIPULATE THE PR ICES OF SHARES. THERE IS NO SUCH ADMISSION BY THE ASSESSEE IN THE INSTANT CASE THAT IT HAS INVOLVED IN ANY PRICE MANIPULATION AND/OR ANY DUBIOUS TAX PLANNING. MOREO VER, THE HON'BLE APEX COURT HAD SET ASIDE THE ACTION INITIATED BY SEBI IN THE C ASE OF BROKERS AS THERE WAS NO EVIDENCE ON RECORD TO SHOW INVOLVEMENT OF THE SAID BROKERS. SIMILARLY IN THE INSTANT CASES THE DEPARTMENT HAD FAILED TO BRING ON RECORD ANY EVIDENCE WHATSOEVER TO SHOW THAT THE ASSESSEE WAS INVOLVED IN ANY PRICE MANIPUL ATIONS. THUS THE JUDGMENT OF THE HON'BLE SUPREME COURT IS CLEARLY DISTINGUISHABLE ON FACTS. THE SAID JUDGMENT HAD BEEN HELD TO BE DISTINGUISHABLE BY THE ITAT, KOLKAT A BENCHES IN THE FOLLOWING JUDGMENTS:- I. SUMAN SARAF V. ITO IN ITA NO.1395/KOI/2018, ORDE R DATED 05.10.2018. II. JIGNESH DESAI V. ITO IN ITA NO.1394/KOI/2018, O RDER DATED 05.10.2018. III. RISHAB JAIN V. ITO IN ITA NO.1392/KOI/2018, OR DER DATED 05.10.2018. IV. REKHA DEVI V. ITO IN ITA NO.1269/KOI/2018, ORDE R DATED 05.10.2018. V. SUNITA DEVI V. ITO IN ITA NO. 1268/KO1/2018, ORD ER DATED 05.10.2018. VI. JAGAT LAL JAIN V.ITO IN ITA NO.1226/KOI/2018, O RDER DATED 05.10.2018. VII. SNEHA CHOUDHARY V. ITO IN ITA NO.1218/KOI/2018 , ORDER DATED 05.10.2018. VIII. U.C.CHOUDHARY & ORS (HUF) V. ITO IN ITA NO.12 17/KOI/2018, ORDER DATED 05.10.2018. IX. VIRENDARA BARMECHA V. ITO IN ITA NO.1201/KOI/20 18, ORDER DATED 05.10.2018. X. TARUNA DEVI BARMECHA V. ITO IN ITA NO.1199/KOI/2 018, ORDER DT. 05.10.2018. XI. PREMLATA AGARWAL VS. ITO IN ITA NO.874/KOI/2018 , ORDER DT. 05.10.2018. XII. SUNIL KUMAR LADHA VS. ITO IN ITA NO.851/KOI/20 18, ORDER DT.05.10.2018. XIII. BALRAM GUPTA VS. ITO IN ITA NO.817/KOI/2018, ORDER DT.05.10.2018. XIV. ALKA CHANGOIWALA VS. ITO IN ITA NO.634/KOI/201 8, ORDER DT.05.10.2018. XV. SANTOSH CHORARIA VS. ITO IN ITA NO.521/KOI/2018 , ORDER DT.05.10.2018. XVI. SONAL BAJAJ VS. ITO IN ITA NO.239/KOI/2018, OR DER DT.05.10.2018. XVII. SUDHA KHANDELWAL V. ITO IN ITA NO.86/KOI/2018 , ORDER DT. 05.10.2018. XVIII. BINA AGARWAL VS. ITO IN ITA NO.1403/KOI/2018 , ORDER DT.05.1 0.2018. 17 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. XIX. HARISH JAIN VS. ITO IN ITA NO. 1404/KO1/2018, ORDER DT.05.10.2018. THUS, IT IS NOTED THAT AFORESAID DECISION OF THE HO NBLE SUPREME COURT, HONBLE BOMBAY HIGH COURT AND TRIBUNAL ARE DISTINGUISHABLE AND SO THE RATIO IS NOT APPLICABLE TO THE CASE/CASES IN HAND. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND HAVING GON E THROUGH THE RECORDS OF THE CASE, I NOTE THAT ASSESSEE AN INDIVIDUAL HAD PURCHASED 15 000 SHARES OF M/S. EIL @ RS.10.80 PER SHARE. IT IS NOTED THAT THE TRANSACTION HAS BEEN M ADE ON LINE THROUGH REGISTERED BROKER NAMELY, M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. THE CONTRACT NOTE IS FOUND PLACED AT PAGE 15 OF THE PAPER BOOK. THE ASSESSEE HAS MADE PAYMENT THROUGH BANKING CHANNEL THROUGH REGISTERED BROKER M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. WHICH IS EVIDENT FROM PAGE 7 OF THE PAPER BOOK WHEREIN AN AMOUNT OF RS.1,62,496/- HAS BEEN PAID TO M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. IT IS ALSO NOTED THAT THE SHARES WERE DULY DE-MATERIALIZED IN THE ASSESSEES ACCOUNT WITH THE REGISTERED BROKER IS FOUND PLACED AT PAGE 14 OF THE PAPER BOOK WHEREIN ENTRY DATED IS ST ATED TO BE 27.03.2012. IT IS ALSO NOTED THAT THE ASSESSEE HAD SOLD ALL THE ABOVE SHARES FOR A TOTAL CONSIDERATION OF RS. 9 LAKHS ON TWO OCCASIONS, FIRST ON 09.12.2013 @ RS.45.50 PER SHARE OF 8000 SHARES AND ON 20.01.2014 OF 7000 SHARES @ RS.60/- PER SHARE. CONTRACT NOTE EVID ENCING SALE IS FOUND PLACED AT PAGE 16 OF THE PAPER BOOK. THE BANK STATEMENT EVIDENCING T RANSFER OF SALE CONSIDERATION IS FOUND PLACED AT PAGE 9 OF THE PAPER BOOK. THE ASSESSEE H AVING FULFILLED THE CONDITIONS REQUIRED TO CLAIM LTCG THUS CLAIMED LTCG OF RS.6,21,030/- AFTER DULY REMITTING STT. IT IS NOTED THAT THE ASSESSEE HAS PURCHASED AND SOLD THE SHARES OF M /S. EIL THROUGH ON LINE PLATFORM OF STOCK EXCHANGE. IT IS NOTED THAT THE AO HAS DISALLOWED T HE LTCG CLAIM OF ASSESSEE ON THE REASON OF CERTAIN INVESTIGATION REPORT AS WELL AS THAT OF STATEMENT OF CERTAIN BROKERS. HOWEVER, IT WAS BROUGHT TO MY NOTICE THAT DESPITE ASSESSEE ASKI NG FOR THE NAME OF THE PERSONS WHO HAS ALLEGEDLY CONFESSED THEIR WRONG DOING/MODUS OPERAND I TO LAUNDER THE ASSESSEES OWN MONEY, THE AO HAS NOT BOTHERED TO DISCLOSE THE NAME OF ANY OF THOSE PERSONS WHOSE STATEMENT HE RELIED UPON TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE. I HAVE ALSO BEEN MADE TO UNDERSTAND THAT NO STATEMENT OF ANY OF THES E INDIVIDUALS WHO HAS MADE THE PURPORTED ALLEGATION AGAINST THE ASSESSEE HAS BEEN FURNISHED TO THE ASSESSEE. THE ASSESSEES 18 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. REQUEST TO CROSS EXAMINATION OF SUCH PERSONS HAS AL SO NOT BEEN HEEDED TO BY THE AO. IN SUCH A SCENARIO, THE THIRD PARTYS STATEMENT COULD NOT H AVE BEEN RELIED UPON BY THE AO TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE. FOR THAT, I RELY ON THE DECISION OF HONBLE SUPREME COURT IN ANDAMAN TIMBER INDUSTRIES IN CIVIL APPEAL NO. 4228 OF 2006. IN THE LIGHT OF THE ABOVE DISCUSSION AND IN VIEW OF THE AFORESAID FACTS AND DOCUMENTS FURNISHED BY THE ASSESSEE AND THE AO HAVING NOT FOUND ANY DEFECTS IN THE DOCU MENTS, I AM OF THE VIEW THAT ASSESSEE HAS DISCHARGED THE ONUS UPON HIM TO MAKE THE CLAIM OF LTCG ON THE SALE OF SCRIP OF M/S. EIL. I NOTE THAT ASSESSEE AFTER PURCHASE OF SHARES HAVE KEPT THE SAME IN THE DEMATERIALIZED FORMAT FOR MORE THAN ONE YEAR AND TRANSACTIONS HAPP ENED THROUGH BANKING CHANNEL AND BOTH THE PURCHASE AND SALE HAPPENED THROUGH ON LINE AND THE STT HAVING BEEN PAID DURING PURCHASE AS WELL AS THE SALE OF THE SCRIP, THE QUES TION OF DENYING EXEMPTION U/S. 10(38) DOES NOT ARISE. MOREOVER, I NOTE THAT A SIMILAR ISSUE I N RESPECT OF SALE OF M/S. EIL CAME UP BEFORE THE TRIBUNAL IN THE CASE OF JAGMOHAN AGARWAL VS. AC IT (SUPRA) WHEREIN WHILE ALLOWING THE CLAIM OF ASSESSEE THE TRIBUNAL HAS HELD AS UNDER: 3. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS AN INDIVIDUAL AND HAD FILED HIS RETURN OF INCOME FOR THE A.Y.2014-15, SHOWING TOTAL INCOME OF RS.2,38,420/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS AND ACCORDINGLY AO ISSUED NOTICES U/S L43(2) AND 142(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT). THE AO NOTES THAT IN RESPONSE TO THE SAID NOTICES, THE LD. AR OF THE ASSESSEE APPEAR ED AND FILED REQUIRED DETAILS AND DOCUMENTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A. O. OBSERVED THAT THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAIN ON SALE OF SCRIPS OF M/S. ES AAR INDIA LTD., WHICH WERE EXEMPT U/S L0(38) OF THE ACT. FURTHER, IT WAS NOTED BY THE AO THAT TH E EARNING IN THE SAID SCRIPS HAS BEEN REPORTED AS SUSPICIOUS BY INVESTIGATION WING AND ACCORDINGLY TH E CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. ON THE BASIS OF DOCUMENTS SUBMITTED DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS AND THE DATA AVAILABLE ON VARIOUS STOCK MARKET WEBSITE IN RESPECT OF THE SAID SCRIP, THE AO ANALYSED THE FUNDAMENTALS, GRAPHS AND THE PRICE MOVEMENT OF THE SAID SCRIP DURING THE PERIOD UNDER CONSIDERATION. WHILE ANALYSING THE STOCK OF M/S. ES AAR INDIA LTD. WITH BENCHMARK INDEX, VIZ., SENSEX, THE A.O. DISCUSSED ABOUT ABNORMAL PRICE RIS E OF SHARES OF M/S. UNNO INDUSTRIES AND HAD ALSO AT VARIOUS PLACES REFERRED TO THE SHARE OF M/S KAILASH AUTO. TAKING NOTE OF THESE CASES ALSO THE AO CONCLUDED THE FACT THAT THE TRANSACTIONS BY THE ASSESSEE IN THE SCRIP TRANSACTION WERE RIGGED. THE AO HAD ALSO STATED THAT HE HAD OBTAINED INFORMATION U/S 133(6) ABOUT 'EXIT PROVIDERS' OR 'COUNTER PARTIES' FROM BOMBAY STOCK EXCHANGE (BS E), WHICH CORRESPONDS TO THE PURCHASE AND SALE TRANSACTIONS OF THE ASSESSEE IN THE SAID SCRIP . ACCORDING TO AO, THE SAID INFORMATION CONTAINED THE NAMES OF 'M/S. EAST INDIA SECURITIES LTD.' AND 'M/S. GCM SECURITIES LTD.' AS COUNTER PARTY MEMBER, AGAINST WHOM SHRI L.K. AGARWAL AND SH RI GOUTAM BOSE, ENTRY OPERATORS, HAD GIVEN STATEMENT. FURTHER, DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, REFERENCE TO STATEMENT OF ONE SHRI S. DOKANIA WAS ALSO MADE. FURTHER, THE AO HAD REPRODUCED THE ENTIRE MODUS OPERANDI OF BOGUS LTCG, WHICH HAS BEEN STATED BY SEBI IN ITS VA RIOUS ORDERS. AFTER CONSIDERING THE ABOVEMENTIONED FACTS AND DOCUMENTS, THE AO ISSUED A SHOW CAUSE NOTICE ON THE ASSESSEE IN RESPECT OF LTCG TRANSACTIONS IN THE SCRIPS OF M/S. ESSAR INDIA LTD. AND IN RESPONSE TO THE SAID NOTICE THE APPELLANT STATED THAT THE SAID TRANSACTI ONS WERE CARRIED OUT THROUGH BSE AND BANKING CHANNELS AND COULD BE VERIFIED BY AO THE ASSESSEE F URTHER STATED THAT STT WERE DEDUCTED ON THE 19 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. SALE OF SAID SCRIPS. HOWEVER, THE AO WAS NOT CONVIN CED WITH THE ASSESSEES CONTENTION. INSTEAD THE AO RELIED ON HIS FUNDAMENTAL ANALYSIS, HUMAN CO NDUCT AND PREPONDERANCE OF PROBABILITIES, AND CONCLUDED THE SAID TRANSACTIONS TO BE SHAM AND BOGUS. THE A.O AFTER PLACING RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS, ADDED BACK THE ENT IRE AMOUNT OF SALE PROCEEDS OF RS.11,49,425/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. AGGRI EVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHICH WAS DISMISSED. AGGRIEVED, THE ASSESSEE IS BEFORE US. 4. THE LD. AR ASSAILING THE ACTION OF LD. CIT(A) /A O SUBMITTED THAT THE APPELLANT IS A REGULAR INVESTOR AND HE KEEPS ON INVESTING IN VARIO US OTHER SCRIPS BASED ON THE FUNDAMENTALS OF THE COMPANY AND MARKET INFORMATION. SIMILARLY, THE APPELLANT HAD PURCHASED THE SHARES OF M/S. ESAAR INDIA LTD. AFTER ANALYZING THE FINANCIALS OF THE COMPANY FOR THE QUARTER ENDED 3LST DECEMBER 2012 (COPY ENCLOSED), THE APPELLANT OBSERV ED THAT THE COMPANY HAD REPORTED A PROFIT OF RS.24.97 LACS AS AGAINST A MEAGRE PROFIT OF RS. 0.3 4 LACS FOR QUARTER ENDED 3LST DECEMBER 2011. NOW HAVING REGARD TO THE GROWTH OF THE COMPANY AND THE FUTURE PROSPECT, THE APPELLANT WAS OF THE VIEW THAT THE PURCHASE OF THE 25000 SHARES OF THE S AID COMPANY AT A PRICE OF RS.10.83 PER SHARE WAS A GOOD BARGAIN AND ACCORDINGLY PURCHASED THE SH ARES OF THE SAID COMPANY FOR RS 2,70,750/-. LATER ON, THE APPELLANT SOLD THE SHARES OF THE SAID COMPANY AT A REASONABLE PROFIT OF RS.35.18 PER SHARE (RS46.00 - 10.83) AND THUS MADE A GAIN OF RS 8,78,675/-. HOWEVER, THE AO DISBELIEVED THE CLAIM OF LTCG AND HELD IT TO BE A BOGUS TRANSACTION AND ADDED BACK THE ENTIRE AMOUNT OF SALE PROCEEDS OF RS. 11 ,49,4251-[ RS 46 PER SHARE FOR 2 5000] AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. IT WAS POINTED OUT TO US BY THE LD. AR THAT H AD THERE BEEN AN INVOLVEMENT OF THE APPELLANT IN SUCH SCAM, THEN THE APPELLANT SHOULD HAVE SOLD IT A PRICE OF RS.67.95 PER SHARE (ON 21.08.2014), BEING THE HIGHEST PRICE OF WHICH THE SHARES OF THE SAID COMPANY WAS TRADED, SO THE THEORY OF COLLUSION AND SUSPICIOUS TRANSACTION FAILS. 5. FURTHER ACCORDING TO LD AR, IN THE SHOW CAUSE NO TICES AND THE ASSESSMENT ORDER, THE AO HAD STATED THE FACT THAT THE INFORMATION PREPARED B Y THE DIT (INV.) WERE BASED ON VARIOUS ENQUIRIES MADE BY IT AND VARIOUS STATEMENTS RECORDE D BY INVESTIGATION TEAM UNDER OATH. HOWEVER, THE LD. AR POINTED OUT THAT THE AO HAD FAILED TO PR OVIDE THE COPIES OF THE SAME TO THE ASSESSEE. FURTHER, ACCORDING TO LD. AR, THE AO HAD NOT BROUGH T ON RECORD ANY MATERIAL/EVIDENCE AGAINST THE ASSESSEE BASED ON WHICH HE WAS OF THE VIEW THAT THE AMOUNT OF LTCG EARNED BY THE APPELLANT WERE ALL BOGUS. THE LD. AR DREW OUR ATTENTION TO TH E FOLLOWING JUDICIAL DECISIONS, WHEREIN IT HAD BEEN HELD THAT THE AO IS BOUND TO PROVIDE THE COPIE S OF INFORMATION WHICH WERE COLLECTED BEHIND THE BACK OF THE ASSESSEE. FURTHER, ACCORDING TO LD. AR, THE AO IS ALSO BOUND TO PROVIDE AN OPPORTUNITY OF CROSS EXAMINATION IN RESPECT OF STAT EMENTS ADVERSE TO HIM, WHICH WERE RECORDED BEHIND THE BACK OF THE ASSESSEE AND WHICH WERE RELI ED UPON BEFORE TAKING ANY ADVERSE VIEW AGAINST THE ASSESSEE:- 6. THE LD. AR DREW OUR ATTENTION TO THE CASE OF KAL RA GLASS FACTORY VS SALES TAX TRIBUNAL SUPREME COURT 167 ITR 488 OF 1987 WH EREIN IT HAS BEEN HELD THAT THE ELEMENTARY PRINCIPLE OF NATURAL JUSTICE AS APPLIED TO INCOME TAX PROCEEDINGS, IS THAT THE ASSESSEE SHOULD HAVE THE KNOWLEDGE OF THE MATERIAL THAT IS G OING TO BE BASED AGAINST HIM SO THAT HE MAY BE ABLE TO MEET IT WHERE FOR INSTANCE THE STATEMENT OF A PERSON IS RECORDED BEHIND THE BACK OF THE ASSESSEE, BUT NOT TESTED BY CROSS EXAMINATION, SUCH A STATEMENT CANNOT BE ALLOWED TO BE USED TO THE PREJUDICE OF THE ASSESSEE. ALSO HON'BLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. VS. C.LT. (25 ITR 775) HAS EMPHAS IZED THE ISSUE OF APPLICABILITY OF 'THE PRINCIPLE OF NATURAL JUSTICE'. IN THAT CASE SLP WAS FILED BY THE ASSESSEE UNDER THE PROVISIONS OF ARTICLE-136 OF THE CONSTITUTION, CONTENDED THAT, TH E ASSESSMENT ORDER WHICH WAS PASSED U/S. 23 (3) OF THE INCOME TAX ACT WAS MADE IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. THE HONBLE APEX COURT OBSERVED AS UNDER: 'IT IS .. SURPRISING THAT THE TRIBUNAL TOOK FROM T HE REPRESENTATIVE OF THE DEPARTMENT STATEMENT OF GROSS PROFIT RATES OF OTHER COTTON MILLS WITHOUT SH OWING THE STATEMENT TO THE ASSESSEE AND WITHOUT 20 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. GIVING HIM AN OPPORTUNITY TO SHOW THAT THAT STATEME NT HAD NO RELEVANCY WHATSOEVER TO THE CASE OF THE MILL IN QUESTION.' THE LD. AR SUBMITTED THAT SIMILAR VIEWS HAVE BEEN TAKEN IN FOLLOWING CASES:- LAXMANBHAI S. PATEL V. CIT ITR NO. 41 OF 1997 ALOK AGRAWAL V. DCIT, 67 TTJ 109 CIT VS EASTERN COMMERCIAL ENTERPRISES 210 ITR 103 ( CAL) KISHINCHANDCHELLARAM VS CIT (1980) 125 ITR 0713 (SC ) CIT VS PRADEEP KR GUPTA 303 ITR 95 CIT VS SMC SHARE BROKERS LTD 288 ITR 435 7. ACCORDING TO LD. AR, IN THE ABSENCE OF ANY MATER IAL/EVIDENCES PROVING THE INVOLVEMENT OF THE APPELLANT IN CIRCULAR TRADING, IT CAN BE CON CLUDED THAT THE ADDITIONS MADE BY THE AO WERE MERELY ON THE BASIS OF SUSPICION AND SURMISE, WHICH RESULTED FROM PURPORTED GENERALIZED INFORMATION RECEIVED FROM INVESTIGATION WING. IN TH IS REGARD, LD AR PLACED RELIANCE ON FOLLOWING JUDICIAL PRONOUNCEMENTS WHEREIN IT WAS STATED THAT ADDITION CANNOT BE MADE MERELY ON THE BASIS OF PRESUMPTION, ASSUMPTION AND SUSPICION WHICH CANN OT TAKE THE SHAPE OF PROOF:- 8. THE LD. AR DREW OUR ATTENTION TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF K.P. VARGHESE V. INCOME TAX OFFICER (SC) (1981) 131 ITR 0597 WHEREIN THE HON'BLE APEX COURT HELD THAT - 'THE CONSIDERATION ACTUALLY RECEIVED BY THE ASSESSE E IS MORE THAN WHAT IS DECLARED OR DISCLOSED BY HIM AND THE BURDEN OF PROVING SUCH ON UNDERSTATEMEN T OR CONCEALMENT IS ON THE REVENUE. THIS BURDEN MAY BE DISCHARGED BY THE REVENUE BY ESTABLIS HING FACTS AND CIRCUMSTANCES FROM WHICH A REASONABLE INFERENCE CAN BE DROWN THAT THE ASSESSEE HAS NOT CORRECTLY DECLARED OR DISCLOSED THE CONSIDERATION RECEIVED BY HIM AND THERE IS ON UNDER STATEMENT OR CONCEALMENT OF THE CONSIDERATION IN RESPECT OF THE TRANSFER. SUB-SECTI ON (2) HAS NO APPLICATION IN THE CASE OF AN HONEST AND BONA FIDE TRANSACTION WHERE THE CONSIDER ATION RECEIVED BY THE ASSESSEE HAS BEEN CORRECTLY DECLARED OR DISCLOSED BY HIM, AND THERE I S NO CONCEALMENT OR SUPPRESSION OF THE CONSIDERATION.' 9. FURTHER RELIANCE FOR THIS PROPOSITION IS ALSO PL ACED ON THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF UMA CHARAN SHAW & BROS, CO, VS , CIT (37 ITR 271) . IT HAS BEEN FURTHER HELD IN THE FOLLOWING CASES THAT SUSPICION HOWSOEVER STR ONG CANNOT TAKE THE PLACE OF PROOF: A) 37 ITR 151 (SC) OMAR SALAY MOHAMMAD SALT VS CIT B) 26 ITR 736 (SC) DHIRAJLAL GIRDHARILAL VS CIT C) 26 ITR 775 (SC) DHAKESHWARI COTTON MILLS LTD. VS CIT D) 37 ITR 288 (SC) LAL CHAND BHAGAT AMBICA RAM VS C IT 10. FURTHER, IN THE CASE OF RAJ KUMAR AGARWAL (ITA NO. 1330/K/07), RELIANCE WAS PLACED ON HONBLE CALCUTTA HIGH COURT'S DECISION IN THE CA SE OF CABRO INDUSTRIAL HOLDINGS LTD. (244 ITR 422) WHEREIN IT WAS HELD THAT THE CLAIM OF THE ASSE SSEE SHOULD NOT BE DENIED ON MERE SUSPICION. 11. ACCORDING TO THE LD. AR, DURING THE COURSE OF A SSESSMENT PROCEEDINGS DESPITE ASKING FOR INFORMATION AND DOCUMENTS, THE AO FAILED TO PRO VIDE THE COPIES OF INFORMATION AND STATEMENTS WHICH WERE SUPPOSED TO HAVE BEEN COLLECTED BEHIND THE BACK OF THE ASSESSEE, THEREBY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE AS LAID DOWN IN F OLLOWING CASES:- KALRA GLASS FACTORY VS SALES TAX TRIBUNAL SUPREME COURT 167 ITR 488 OF 1987 DHAKESWARI COTTON MILLS LTD. VS CIT (26 ITR 775) LAXMANBHAI S. PATEL V. CIT ITR NO. 41 OF 1997 ALOK AGARWAL V. DCIT, 67 TTJ 109 21 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. CIT VS EASTERN COMMERCIAL ENTERPRISES 210 ITR 103 ( CAL) KISHINCHAND CHELLARAM VS CIT (1980) 125 ITR 0713 (S C) CIT VS PRAKEEP KR GUPTA 303 ITR 95 CIT VS SMC SHARE BROKERS LTD 288 ITR 435 12. IN THE AFORESAID BACK GROUND, ACCORDING TO LD. AR, IT APPEARS THAT THE ADDITIONS WERE MADE BY THE A.O, WERE STEREOTYPE IN NATURE AND WERE BASED ON SURMISES AND WERE NOT ON THE BASIS OF MATERIAL RELATING TO THE CASE OF APPELLANT. THER EFORE, IN THE AFORESAID BASIC GROUND, IT CAN BE CONCLUDED THAT THE ADDITIONS MADE BY THE AO WERE ME RELY ON THE BASIS OF SUSPICION, WHICH CANNOT TAKE THE SHAPE OF PROOF. IN THIS REGARD WE WOULD AG AIN LIKE TO PLACE RELIANCE ON THE FOLLOWING CASES:- 13. IN THE CASE OF K.P. VARGHESE V. INCOME TAX OFFI CER (SC) (1981) 131 ITR 0597 THE HON'BLE APEX COURT HELD THAT - ' THE CONSIDERATION ACTUALLY RECEIVED BY THE ASSESSEE IS MORE THAN WHAT IS DECLARED OR DISCLOSED BY HIM AND THE BURDEN OF PROVING SUCH AN UNDERSTATEMEN T OR CONCEALMENT IS ON THE REVENUE. THIS BURDEN MAY BE DISCHARGED BY THE REVENUE BY ESTABLIS HING FACTS AND CIRCUMSTANCES FROM WHICH A REASONABLE INFERENCE CAN BE DRAWN THAT THE ASSESSEE HAS NOT CORRECTLY DECLARED OR DISCLOSED THE CONSIDERATION RECEIVED BY HIM AND THERE IS AN UNDER STATEMENT OR CONCEALMENT OF THE CONSIDERATION IN RESPECT OF THE TRANSFER. SUB-SECTI ON (2) HAS NO APPLICATION IN THE CASE OF AN HONEST AND BONA FIDE TRANSACTION WHERE THE CONSIDER ATION RECEIVED BY THE ASSESSEE HAS BEEN CORRECTLY DECLARED OR DISCLOSED BY HIM AND THERE IS NO CONCEALMENT OR SUPPRESSION OF THE CONSIDERATION. 14. THE LD. AR DREW OUR ATTENTION TO THE DECISION O F THE TRIBUNAL IN THE CASE OF MANISH KUMAR BAID, MAHENDRA KUMAR BAID VS ACIT (ITA NO. 12 36/1237/KOL/2017 DATED 18.08.2017) (A.Y. 2014-15) WHEREIN IT HAS BEEN HELD THAT:- WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LD. AR THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SUR ROUNDING CIRCUMSTANCES, HUMAN CONDUCT AND PREPONDERANCE OF PROBABILITY WITHOUT BRINGING ON RE CORD ANY LEGAL EVIDENCE AGAINST THE ASSESSEE. WE RELY ON THE JUDGEMENT OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF GTC INDUSTRIES LTD. (SUPRA) FOR THE PROPOSITION. THE VARIOUS FACET S OF THE ARGUMENTS OF THE LD AR SUPRA, WITH REGARD TO IMPLEADING THE ASSESSEE FOR DRAWING ADVER SE INFERENCE WHICH REMAIN UNPROVED BASED ON THE EVIDENCES AVAILABLE ON RECORD ARE NOT REITER ATED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOUS CASE LAWS RELIED UPON BY THE LD AR ARE ALSO NOT REITERATED FOR THE SAKE OF BREVITY . 15. IT HAS ALSO BEEN HELD IN THE SAID ORDER THAT- HENCE WE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE M ATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGATIONS LEVELLED BY THE AO AGAINST THE ASSESSEE WHICH IN OUR CONSIDERED OPINION, HAS NO LEGS TO STAND IN THE EYE S OF LAW 16. ACCORDING TO LD. AR, THE INSTANT CASE IS SIMILA R TO THE CASE OF MANISH KUMAR BAID AND MAHENDRA KUMAR BAID, AS THE AO HAD NOT BROUGHT ON R ECORD NEITHER ANY MATERIAL NOR CONCLUSIVE EVIDENCE IN SUPPORT OF HIS ALLEGATIONS AND, THEREFO RE, NO ADDITIONS SHOULD HAVE BEEN MADE AGAINST THE ASSESSEE. 17. IT WAS URGED BEFORE US BY THE LD. AR THAT THE A PPELLANT HAD DISCHARGED HIS ONUS OF PROVING THE GENUINITY OF THE SAID TRANSACTIONS BY S UBMITTING ALL THE DOCUMENTS EVIDENCING PURCHASE AND SALE AND ALL THE RELEVANT BANK STATEME NTS. THEREFORE, ACCORDING TO LD. AR, THE ONUS WAS ON THE AO TO VERIFY THE SAID PURCHASES AND SALE S TRANSACTIONS BY ISSUING VARIOUS NOTICES U/S 13L OR 133(6) OF THE ACT. HOWEVER, THE AO WITHOUT V ERIFYING THE SAID TRANSACTIONS CONCLUDED THE FACT THAT THE SAID LTCG WERE BOGUS AND IN SUPPORT O F HIS CONTENTION HE PLACED RELIANCE ON SOME 22 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. GENERAL MODUS OPERANDI WHICH PROVED NOTHING OF ASSE SSEES INVOLVEMENT IN ANY SCAM AND WAS OF A GENERALIZED NATURE AND NOTHING TO DO WITH THE ASS ESSEE. 18. THE LD. AR SUBMITTED THAT IN THE ASSESSMENT ORD ER THE AO HAS STATED THAT HE HAD ENQUIRED INTO THE MATTER BY ISSUING NOTICE U/S 133( 6) TO BSE ASKING IT TO FURNISH THE DETAILS OF COUNTER PARTIES, THEIR ADDRESSES, CONTACT NUMBERS A ND PAN. HOWEVER, THE AO HAD FAILED (I) TO GIVE A COPY OF THE INFORMATION BSE GAVE TO AO PURSU ANT TO HIS NOTICE, (II) NO MATERIAL FROM BSE WAS POINTED TO DRAW ADVERSE INFERENCE AGAINST THE A SSESSEE, (III) NO MATERIAL WAS BASED BY AO TO PROVE THAT THE ASSESSEE WAS IN ANY WAY INVOLVED IN CIRCULAR TRADING TO RIG THE VALUE OF SHARES. THE ONLY THING THE AO HAD DONE IS REPRODUCE THE EXTRACT OF GENERAL DETAILS RECEIVED FROM BSE. FURTHER, THE AO WAS ALSO IN POSSESSION OF STATEMENT OF OPERATORS OF COUNTER PARTY MEMBER WHO HAD ACCEPTED THEIR ROLE IN MANAGED AND SYNCHRONIZED TRANSACTIONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NEITHER APPRISED THE APPELLANT OF SUCH INFORMATION COLLECTED U/S 133(6) NOR PROVIDED THE COPIES OF THE SAME FOR REBU TTAL. FURTHER, THE COPIES OF STATEMENT AND AN OPPORTUNITY FOR CROSS EXAMINATION WERE ALSO NOT GRA NTED TO THE APPELLANT, THEREBY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. IT WAS POINTED OUT BY THE LD. AR THAT THE ASSESSEE HAD NOTHING TO DO WITH SHARE TRANSACTION OF M/S. KAILASH AUTO AND M/S . UNNO INDUSTRIES. ACCORDING TO LD. AR, THE AO HAD REFERRED TO THESE TWO COMPANIES SHARE TRANS ACTIONS WHICH ARE IRRELEVANT IN THE CASE OF ASSESSEE AND WAS ONLY TO CREATE SUSPICION AND REFER ENCE OF THESE COMPANIES EXPOSES NON- APPLICATION OF MIND OF AO. LIKEWISE, THE NAMES OF TWO OPERATORS ARE MENTIONED AT PAGE 9 OF THE ORDER OF AO I.E. OF SHRI L. K. AGARWAL AND SHRI GAU TAM BOSE WHOSE STATEMENTS HAVE BEEN PURPORTEDLY RECORDED BY THE DEPARTMENT ARE REFERRED TO DRAW ADVERSE VIEW. ON THIS FACT IT WAS POINTED OUT BY THE LD. AR THAT THESE TWO PERSONS AR E IN NO WAY CONNECTED WITH THE ASSESSEE AND HAD NO WHERE MADE ANY INCRIMINATING STATEMENT AGAIN ST THE ASSESSEE TO THE EFFECT THAT ASSESSEE HAD INVOLVED IN RIGGING. NOT ONLY THAT THE AO FAIL ED TO GIVE COPIES OF THESE TWO PERSONS STATEMENT REFERRED TO BY AO AND THAT OF SHRI S. DH OKANI WHOSE STATEMENT WAS ALSO REFERRED TO BY AO TO JUSTIFY THE SUSPICION AGAINST THE APPELLANT, MAKES THE ORDER BAD FOR VIOLATION OF NATURAL JUSTICE. ACCORDING TO LD. AR, NO STATEMENT AGAINST ASSESSEE CAN BE USED BY AO TO DRAW ADVERSE INFERENCE UNLESS A COPY IS GIVEN TO ASSESSEE AND OP PORTUNITY TO CROSS EXAMINE IS ALLOWED. 19. ACCORDING TO LD. AR, THE TRANSACTIONS IN THE SC RIPS WERE LEGALLY ENTERED INTO BY THE APPELLANT THROUGH ITS REGISTERED BROKER AND ALL THE PAYMENTS WERE MADE AND RECEIVED THROUGH BANKING CHANNELS. THE COPIES OF CONTRACT NOTES, DE- MAT STATEMENT AND BANK STATEMENTS HAVE BEEN SUBMITTED TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. AR DREW OUR ATTENTION TO THE FOLLOWING CASES WHEREIN IT HAS BEEN HELD THA T WHEN THE PURCHASE AND SALE OF SHARES WERE SUPPORTED BY PROPER CONTRACT NOTES, DELIVERIES OF S HARES WERE RECEIVED THROUGH DE-MAT ACCOUNTS, THE SHARES WERE PURCHASED AND SOLD THROUGH RECOGNIZ ED BROKER AND THE SALE CONSIDERATION WERE RECEIVED THROUGH BANKING MODE, THE TRANSACTIONS CAN NOT BE TREATED AS BOGUS . 20. IN THIS REGARD THE LD. AR PLACED RELIANCE ON TH E CASE OF SURYA PRAKASH TOSHNIWAL HUF VS, LTO WD-41(3), KOL. ( LTA, NO. L2L3/KOL/20L6) (P RONOUNCED ON 11.01.2017), WHEREIN THE TRIBUNAL HAD HELD AS UNDER: 'THE ASSESSEE IN THE INSTANT CASE HAS MADE THE TRAN SACTIONS FOR THE SALE AND PURCHASE OF THE SHARES THROUGH A VALID STOCK BROKER WHO WAS IN EXIS TENCE AT THE RELEVANT TIME WITH THE STOCK EXCHANGE AND THIS FACT HAS NOT BEEN DOUBTED BY THE LOWER AUTHORITIES. IN VIEW OF THE ABOVE WE HOLD THAT THE LOWER AUTHORITIES HAD NOT BROUGHT ON RECORD SUFFICIENT REASONS FOR DISALLOWING THE CLAIM OF THE ASSESSEE. IN THIS CONNECTION WE RELY I N THE CASE OF CIT VERSUS CARBO INDUSTRIAL HOLDINGS LIMITED REPORTED IN 116 TAXMAN159 WHERE TH E HON'BLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: 'LF THE SHARE BROKER, EVEN AFTER ISSUE OF SUMMONS D OES NOT APPEAR, FOR THAT REASON, THE CLAIM OF THE ASSESSEE SHOULD NOT BE DENIED, SPECIALLY IN THE CASES WHEN THE EXISTENCE OF BROKER IS NOT IN DISPUTE, NOR THE PAYMENT IS IN DISPUTE. MERELY BECA USE SOME BROKER FAILED TO APPEAR, ASSESSEE 23 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. SHOULD NOT BE PUNISHED FOR THE DEFAULT OF A BROKER AND ON MERE SUSPICION THE CLAIM OF ASSESSEE SHOULD NOT BE DENIED,' SIMILARLY WE ALSO FIND GUIDANCE AND SUPPORT FROM TH E JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. EMERALD COMMERCIAL LTD . REPORTED IN 120 TAXMAN 282 WHEREBY IT WAS OBSERVED AS UNDER : 'BUSINESS INCOME-BUSINESS LOSS-LOSS ON SALE OF SHAR ES-DETAILS OF PURCHASE AND SALE OF SHARES FURNISHED-PAYMENT AND RECEIPTS WERE THROUGH ACCOUNT PAYEE CHEQUE-IDENTITY OF SELLER AND PURCHASER NOT DISPUTED-CLAIM FOR LOSS COULD NOT BE DISALLOWED ON THE MERE GROUND THAT THE ASSESSEE FAILED TO PRODUCE THE BROKERS FOR VERIFICA TION OF THE TRANSACTION-FINDING OF THE TRIBUNAL THAT THE LOSS INCURRED BY THE ASSESSEE IN THE SHARE DEALINGS IS GENUINE AND IS ALLOWABLE WAS BASED ON MATERIAL AND WAS NOT PERVERSE-CLT VS. CARBO INDU STRIAL HOLDINGS LTD.(2000) 161 CTR (CAL) 282 : (2000) 244 LTR 422 (CAL) FOLLOWED' RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENTS WE F IND THAT THE PROPOSITION LAID DOWN BY THE HON'BLE COURTS ARE APPLICABLE TO THE INSTANT CASE O N HAND, THE ADDITION WAS MADE BY THE LOWER AUTHORITIES ON SEVERAL GROUNDS AS DISCUSSED ABOVE B UT ON ANALYSIS OF THE FACT WE FIND THAT THERE WAS NO FAULT ON THE PART OF THE ASSESSEE. THEREFORE WE ARE INCLINED TO REVERSE THE ORDER OF LOWER AUTHORITIES. HENCE THIS GROUND OF APPEAL OF THE ASS ESSEE IS ALLOWED.' 21. FURTHER, OUR ATTENTION WAS DRAWN TO THE CASE OF ITO VS ARVIND KUMAR JAIN HUF (ITA NO. 4862/MUM/2014) (PRONOUNCED ON 18.09.2017), THE TRIBUNAL (MUMBAI) HAD HELD THAT IF THE DMAT ACCOUNT AND CONTRACT NOTE SHOW DETAILS OF THE SHARE TRANSACTIONS AND THE AO HAS NOT PROVED THE TRANSACTIONS TO BE BOGUS, THE CAPITAL GA INS EARNED ON THE SAID TRANSACTIONS CANNOT BE TREATED AS UNACCOUNTED INCOME U/S 68, THE FACT THAT THE BROKER WAS TAINTED AND VIOLATED SEBI REGULATIONS WOULD NOT MAKE ASSESSEES TRANSACTIONS BOGUS ,' 22. FURTHER, OUR ATTENTION WAS DRAWN TO THE CASE OF KIRAN KOTHARI HUF VS LTO. WD - 35(3) KOL. (LTA NO. 443/KOL/20L7), PRONOUNCED ON 15.11.20 17, THE TRIBUNAL HAD HELD AS UNDER: ' AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDEN CE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF S HARES RESULTING IN LONG TERM CAPITAL GAIN, NEITHER THESE EVIDENCES WERE FOUND BY THE A0 NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SU PPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESS EE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSE E THAT LTCG IS EXEMPTED U/S 10(35) OF THE ACT ON THE BASIS OF SUSPICION SURMISES AND CONJECTURES, IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRONG, CANNOT PARTAKE THE CHARACTER OF LEGAL EVIDE NCE. IN THE AFORESAID FACTS AND CIRCUMSTANCE, FOR ALLOWING THE APPEAL WE RELY ON THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALPINE INVESTMENTS IN ITA NO. 620 OF 2008 DATE D 26TH AUGUST 2008 WHEREIN THE HIGH COURT HELD AS FOLLOWS : 'IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCK BROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECEIVED FROM THE SHARE BROKER T HROUGH ACCOUNT PAYEE WHICH ARE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT K APPEARS FROM THE F ACTS AND MATERIALS PLACED BEFORE THE TRIBUNAL AND AFTER EXAMINING THE SAME, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESSEE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANSACTIONS CANNOT B E BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER IT WAS HELD THAT THE TRANSACTIONS OF THE SH ARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS NO SUBSTA NTIAL QUESTION OF LAW HELD IN THIS MATTER. HENCE THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED.' 9.4. WE NOTE THAT THE ID. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY BEEN INCO RPORATED IN THE SUBMISSIONS OF THE LD, AR 24 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. (SUPRA) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSION, THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DE CISION OF THE LD CIT(A)/A.O. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT T HE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLO SED INCOME OF THE ASSESSEE U/S 68 OF THE ACT, WE THEREFORE DIRECT THE A0 TO DELETE THE ADDITION,' FURTHER, WE WOULD ALSO LIKE TO PLACE RELIANCE ON TH E CASE OF DOLARRAL HEMANI, ITO (ITA NO. 19/KOL/2014) (AY 2005-06) DT. OF PRONOUNCEMENT 02.1 2.2016) WHEREIN TRIBUNAL HAS HELD: 'WE FIND THAT THE SIMILAR ISSUE HAD BEEN ADJUDICATE D BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT YS SUNITA KHEMKA IN ITA NOS, 714 T O 718/KOL/2011 DATED 28.10,2015 AND IN THE CASE OF ITO VS RAJKUMAR AGARWAL IN ITA NO, 1330 (KO L) OF 2007 DATED 10.8.2007 WHEREIN IT WAS HELD THAT, WHEN PURCHASE AND SALE OF SHARES WERE SU PPORTED BY PROPER CONTRACT NOTES, DELIVERIES OF SHARES WERE RECEIVED THROUGH DEMAT ACCOUNT MAINT AINED WITH VARIOUS AGENCIES, THE SHARES WERE PURCHASED AND SOLD THROUGH RECOGNIZED BROKER A ND THE SALE CONSIDERATIONS WERE RECEIVED BY ACCOUNT PAYEE CHEQUES. THE TRANSACTIONS CANNOT BE T REATED AS BOGUS AND THE INCOME SO DISCLOSED WAS ASSESSABLE AS LTCG. WE FIND THAT IN THE INSTANT CASE, THE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF THE SUSPICION THAT THE DIFFERENCE IN PURCH ASE AND SALE PRICE OF THESE SHARES IS UNUSUALLY HIGH. THE REVENUE HAD NOT BROUGHT ANY MATERIAL ON R ECORD TO SUPPORT ITS FINDING THAT THERE HAS BEEN COLLUSION / CONNIVANCE BETWEEN THE BROKER AND THE ASSESSEE FOR THE INTRODUCTION OF ITS UNACCOUNTED MONEY. 23. ALSO IN THE CASE OF SURYA PRAKASH TOSHNIWAL HUF VS ITO (ITA NO. 1213/KOL/2016) (AY 2005-06) (DATE OF PRONOUNCEMENT 11.01.2017), TH E TRIBUNAL WHILE ALLOWING THE APPEAL OF THE ASSESSEE HAS OBSERVED AS UNDER:- THE ASSESSEE IN THE INSTANT CASE HAS MADE THE TRAN SACTIONS FOR THE SALE AND PURCHASE OF THE SHARES THROUGH A VALID STOCK BROKER WHO WAS IN EXIS TENCE AT THE RELEVANT TIME WITH THE STOCK EXCHANGE AND THIS FACT HAS NOT BEEN DOUBTED BY THE LOWER AUTHORITIES. IN VIEW OF THE ABOVE WE HOLD THAT THE LOWER AUTHORITIES HAD NOT BROUGHT ON RECORD SUFFICIENT REASONS BY DISALLOWING THE CLAIM OF THE ASSESSEE 24. RELIANCE WAS ALSO PLACED ON THE CASE OF MANISH KUMAR BAID, MAHENDRA KUMAR BAID (SUPRA) WHEREIN IT HAS BEEN HELD BY THE TRIBUNAL TH AT- IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE HA S FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BANK ACCOU NTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO PURCHASE AND SALE OF SHARE S RESULTING IN LTCG. THESE EVIDENCES WERE NEITHER FOUND TO BY THE AO TO BE FALSE OR FABRICATE D. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THEREFOR E THE AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. WE ALSO FIND THAT THE VARIOUS CASE LAWS OF HONBLE JURISDICTIONAL HIGH COURT RELIED UP ON BY THE LD AR AND FINDINGS GIVEN THEREON WOULD APPLY TO THE FACTS OF THE INSTANT CASE. THE L D. DR WAS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFECT. HENCE WE HOLD THAT THE A.O. W AS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF KAFL, AS UNDISCLOSED INCOME OF THE ASSESS EE U/S 68 OF THE ACT. WE ACCORDINGLY HOLD THAT THE REFRAMED QUESTION NO 1 RAISED HEREINABOVE IS DECIDED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. IT IS RELEVANT TO RELY ON THE DECISION OF THE CALCU TTA HIGH COURT IN THE CASE OF CIT VS ALPINE INVESTMENT (ITA NO. 620 OF 26.08.2008). IN THIS CAS E THE SHARES WERE TRANSACTED THROUGH RECOGNIZED STOCK BROKERS AND THROUGH REGULAR BANK C HANNEL AND SUPPORTED BY CONTRACT NOTES AND BILLS. THE STOCK BROKER ALSO APPEARED AND ACCEPTED THE TRANSACTIONS TO BE GENUINE. THE A.O. HOWEVER RELIED SOLELY ON THE STATEMENT OF SHRI ROOP ANI AT THE TIME OF SEARCH WITHOUT TAKING COGNIZANCE OF CROSS EXAMINATION AND DOCUMENTS PRODU CED AND DISALLOWED THE LOSS TREATING IT TO BE BOGUS. THE CIT(A) UPHELD THE DISALLOWANCE WHICH WAS DELETED BY THE TRIBUNAL. WHILE DISMISSING THE REVENUES APPEAL U/S 260A THE CALCUT TA HIGH COURT OBSERVED AS IT APPEARS THAT 25 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. THE SHARE LOSS AND THE WHOLE TRANSACTIONS WERE SUPP ORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED THROUGH RECOGNIZED STOCK BROKER AND ALL THE PAYMENTS RECEIVED FROM STOCK BROKER THROUGH PAYEE INSTRUMENTS WHICH WERE ALSO FILED IN ACCORDAN CE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME THE TRIBUNAL CAME TO THE CONCLUSION AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. IN DOING SO, THE TRIBUNAL HELD THAT THE TRANSACTION FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCES COULD NOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES, HOWEVER, I T WAS HELD THAT THE TRANSACTIONS OF SHARE ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS ANY SUBSTANTIAL QUESTION OF LAW INVOLVED IN THIS MATTER. HENCE, THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. ' 25. THE LD. AR FURTHER RELIED ON THE JUDGEMENT OF H ON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS LAVANYA LAND PVT. LTD. (2017) 83 TAXMANN. COM 161 (BOM) TO CONTEND THAT THERE WAS NO EVIDENCE WHATSOEVER TO ALLEGE THAT MONEY CHANGED HANDS BETWEEN THE ASSESSEE AND THE BROKER OR ANY OTHER PERSON INCLUDING THE ALLEGED EXIT PROV IDER WHATSOEVER TO CONVERT UNACCOUNTED MONEY FOR GETTING BENEFIT OF LTCG AS ALLEGED. IN THE SAID CASE, THE HONBLE HIGH COURT AT PARA 21 HELD THAT IN ABSENCE OF ANY MATERIAL TO SHOW THAT HUGE C ASH WAS TRANSFERRED FROM ONE SIDE TO ANOTHER, ADDITION CANNOT BE SUSTAINED. 26. THE FOLLOWING JUDGMENTS WERE ALSO BROUGHT TO OU R NOTICE BY THE LD. AR:- M/S. CLASSIC GROWERS LTD. VS CIT (ITA NO. 129 OF 20 12) (CAL HC) :- IN THIS CASE THE A.O. FOUND THAT THE FORMAL EVIDENCES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE ST AGE MANAGED. THE HON'BLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPRESSED BY THE AO BUT HE MISERABLY FAILED TO SUBS TANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING PRICE AND THERE FORE THE SUSPICION OF THE LD AO WAS MISPLACED AND NOT SUBSTANTIATED. CIT VS SHREYASHI GANGULI (ITA NO. (CAL HC) : 196 OF 2012) IN THIS CASE THE HON'BLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBI'S ACTION. HOWEVER THE TRANSACTION S WERE AS PER NORMS AND SUFFERED STT, BROKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. CIT VS RUNATA PROPERTIES PVT. LTD. (ITA NO. 105 OF 2016) (CAL HC):- IN THIS CASE THE HON'BLE CALCUTTA HIGH COURT AFFIRMED THE DECISION OF THIS T RIBUNAL, WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHERE THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBU NAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON THE BASIS OF SOME INFORMA TION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT THE AO'S CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. 27. THE LD AR FURTHER SUBMITTED BEFORE US THAT ONC E THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AG NIHOTRI VS. THE STATE OF MADHYA PRADESH [1977] 1 SCC 816 (SC) . IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNER ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFINITE CHARA CTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND RE ASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT IS NOT ENOU GH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BA SIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. AS PER THE LD AR THE AO/ CIT(A) WAS NOT JUSTIFIED IN INVOKING THE 26 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. PROVISIONS OF SECTION 68 OF THE ACT TO HOLD THAT TH E SALE PROCEEDS OF SHARES. THERE IS NO EVIDENCE ON RECORD TO DISBELIEVE THAT THE ASSESSEE SOLD SHAR ES THROUGH REGISTERED SHARE AND STOCK BROKER WITH BSE. THE ASSESSEE PRODUCED ALL EVIDENCES TO EX PLAIN THE SOURCE OF THE AMOUNTS RECEIVED BY THE ASSESSEE FROM THE BROKERS. THE AO WAS NOT JUSTI FIED IN ASSESSING THE SALE PROCEEDS OF SHARES AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 28. ON THE OTHER HAND, THE LD. DR VEHEMENTLY OPPOS ED THE PLEA OF THE LD. AR AND RELIED ON THE DECISION OF THE LD CIT(A) AND THE AO AND URG ED BEFORE THE BENCH NOT TO INTERFERE WITH THE ORDER OF THE LD CIT (A). 29. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS. WE NOTE THAT IN THE PRESENT CASE, THE ASSESSEE HAD PURCHASED 25000 SHAR ES OF M/S. ESSAR INDIA PRIVATE LIMITED ON 22.03.2012 FROM A RECOGNIZED STOCK BROKER M/S. R. L. AGARWALA CAPITAL MARKET LTD. THROUGH THE BSE. THESE SHARES WERE HELD IN THE DE-MAT ACCOUNT O F THE ASSESSEE PLACED AT PAGES 13 AND 14 OF PAPER BOOK AND ULTIMATELY THESE SHARES WERE SOLD TH ROUGH M/S. R. L. AGARWALA CAPITAL MARKET LTD. THROUGH THE BSE AND ON SUCH SALE, SECURITY TRA NSACTION TAX WAS DULY PAID. PAYMENTS WERE DULY RECEIVED IN THE BANK ACCOUNT OF THE ASSESSEE. THE TRANSACTIONS WERE ALL THROUGH A REGISTERED BROKER AND THROUGH BSE SINCE THE SCRIPS OF M/S. ESS AR INDIA PVT. LTD. WAS A LISTED COMPANY IN BSE BACKED BY A CONTRACT NOTE (PAGE 2 AND 8&9 OF TH E PAPER BOOK) AND SHARES WERE CREDITED IN THE DE-MAT ACCOUNTS (PAGE 13 AND 14 OF THE PAPER BO OK) AND DULY REFLECTED IN THE BOOKS OF ACCOUNT. IN THE LIGHT OF THESE EVIDENCES ON RECORD WE ARE OF THE OPINION THAT THE PURCHASE AND SALE OF SHARES PER-SE CANNOT BE HELD TO BE BAD. 30. WE NOTE THAT THE LD. CIT(A) HAS DISBELIEVED OR DISCARDED THE EVIDENCE PRODUCED BY THE ASSESSEE TO SUBSTANTIATE THAT THE PURCHASE AND SALE OF SHARES OF M/S. ESSAR INDIA PVT. LTD. THROUGH THE BSE, THROUGH RECOGNIZED STOCK BROKER AND THROUG H BANKING CHANNEL WAS GENUINE BY OBSERVING AS UNDER: I ALSO FIND THAT ALL THE SUBMISSIONS MADE BY THE APPELLANT DURING THE COURSE OF THE APPEAL POINT TOWARDS THE ELABORATE DOCUMENTATION, MEANING THEREB Y THAT THE APPELLANT HAS PRODUCED PAPERS RELATING TO APPLICATION FOR THE SHARES, THE ALLOTME NT OF THE SHARES, THE SHARE CERTIFICATES, PAYMENTS BY CHEQUE AND THE NECESSARY PAPERS FILED BEFORE THE REGISTRAR OF COMPANIES, WHERE THE NAME OF THE ASSESSEE HAS BEEN REFLECTED AS A SHAREHOLDER. T HE APPELLANT HAS ALSO FILED PROOF OF AMALGAMATION OF THE COMPANIES WHEREIN THE SHAREHOLD ING HAS CHANGED HANDS. IT IS ALSO THE CONTENTION OF THE APPELLANT THAT IT HAS PROVIDED CO PIES OF THE BANK STATEMENT, BANK CONTRACT NOTES AND DELIVERY INSTRUCTIONS TO THE BROKER BY WAY OF P ROOF THAT ALL THESE TRANSACTIONS WERE GENUINE. HOWEVER, IN MY CONSIDERED VIEW OF THE MATTER, IT IS PRECISELY THIS ELABORATE PAPERWORK THAT STRENGTHENS THE MATTER RELATING TO THE BOGUS BENEFI T OF THE LTCG, WHICH CLEARLY HAS BEEN SCHEMED, PREPLANNED AND EXECUTED WITH MALAFIDE INTE LLIGENCE AND PRECISION. THEREFORE ALL THESE PAPERS ARE MERE DOCUMENTS AND NOT ANY EVIDENCE. THE WHOLE GAMUT OF TRANSACTIONS ARE UNNATURAL AND HIGHLY SUSPICIOUS, AND THEREFORE THE RULES OF S USPICIOUS TRANSACTIONS OUGHT TO APPLY IN THE INSTANT CASE. THERE ARE GRAVE DOUBTS IN THE STORY PROPOUNDED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. NONE OF THE MATERIAL PRODUCED BE FORE THE LD. AO BY THE ASSESSEE-APPELLANT ARE ENOUGH TO JUSTIFY THE HUMONGOUS GAINS ACCRUING TO T HE ASSESSEE BY WAY OF CAPITAL GAINS. IN MY CONSIDERED VIEW THE BANKING DOCUMENTS ARE MERE SELF SERVING RECITALS. 31. WE NOTE THAT THE ASSESSEE HAS PRODUCED BEFORE T HE LD. CIT(A) (I) PAPER RELATING TO THE APPLICATION FOR SHARES, (II) ALLOTMENT OF THE SHARE S, (III) SHARE CERTIFICATES, (IV) PAYMENT BY CHEQUE , (V) NECESSARY PAPERS FILED BEFORE THE REGISTRAR OF COMPANIES, (VI) THE NAME OF THE ASSESSEE HAS BEEN REFLECTED AS A SHAREHOLDER, (VII) THE PROOF OF AMALGAMATION OF THE COMPANIES WHEREIN THE SHAREHOLDING HAS CHANGED, (VIII) BANK STATEMENT, (I X) BANK CONTRACT NOTES AND DELIVERY INSTRUCTION TO THE BROKER TO PROVE THE GENUINENESS OF THE TRANS ACTIONS WHICH HAS BEEN DISBELIEVED ON THE SPECIES PLEA THAT PRODUCTION OF THESE DOCUMENTS STR ENGTHENS THE SUSPICIOUS TRANSACTION OF BOGUS TRANSACTION CANNOT BE ACCEPTED AT ALL. THE LD CIT (A) OUGHT NOT TO HAVE BRUSHED ASIDE THESE DOCUMENTS WITHOUT POINTING OUT ANY DEFECTS AND THER EFORE THE IMPUGNED ACTION OF LD CIT(A) 27 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. CANNOT BE COUNTENANCED. MOREOVER THE AO HAS REFERRE D IN HIS ASSESSMENT ORDER THE NAME OF M/S. KAILASH AUTO AND M/S. UNNO INDUSTRIES AND ALSO STAT EMENTS OF SHRI L.K. AGARWAL AND SHRI GOUTAM BOSE AND SHRI S. DOKANIA. HOWEVER THESE PER SONS STATEMENTS HAVE NEITHER BEEN REPRODUCED IN THE ASSESSMENT ORDER NOR THE ASSESSEE GIVEN A COPY OF THE STATEMENTS TO REBUT. SO THE ACTION OF BOTH AO AND LD CIT(A) REFERRING TO ST ATEMENTS WHICH WERE PURPORTEDLY RECORDED UNDER OATH BY THE INVESTIGATION WING CANNOT BE MAD E THE BASIS FOR DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE. THUS THE ACTION OF AO TO RE FER TO CERTAIN PURPORTED STATEMENTS OF THE THREE INDIVIDUALS WITHOUT ESTABLISHING ANY NEXUS WITH THE ASSESSEE CAN AT BEST MISLEAD OR CREATE SUSPICION AND REFERENCE TO IRRELEVANT MATERIAL ITSE LF MAKES THE ORDER BAD. NOT ONLY THAT THE AO HAS NOT EVEN BOTHERED TO GIVE A COPY OF THE SAME TO THE ASSESSEE AND DID NOT GIVE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THOSE PERSONS ITSELF VITIATES THE ACTION OF THE AO AND THE ORDER PASSED BY HIM IS THEREFORE FRAGILE FOR VIOLATION OF NATURAL JUSTICE AND NULL IN THE EYES OF LAW AS HELD BY THE HONBLE SUPREME COURT IN ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE IN CIVIL APPEAL NO. 4228 OF 2006 DATED 16.11 .2015. THESE PURPORTED STATEMENT THOUGH THE CONTENTS OF WHICH NEITHER WE ARE AWARE NOR THE APPELLANT ASSESSEE, CANNOT BE THE BASIS FOR DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE IN T HE LIGHT OF DOCUMENTS PRODUCED BEFORE AO/CIT(A) AND THIS TRIBUNAL. 32. WE FIND THAT THE TRANSACTIONS OF CAPITAL GAINS AS CLAIMED BY THE ASSESSEE WAS DULY BACKED BY RELEVANT FACTS AND DOCUMENTARY EVIDENCES WHICH INCLUDE THE FOLLOWING :- A. DOCUMENTS/FACTS SUPPORTING PURCHASE OF S HARES IN QUESTION :- I) THE ASSESSEE PURCHASED THE 25000 SHARES ON 22.03 .2012 THROUGH BOMBAY STOCK EXCHANGE. II) THE SHARES HAVE BEEN PURCHASED AGAINST SALE OF ANOTHER SHARE AND THE BALANCE PAYMENT HAS BEEN MADE THROUGH A/C PAYEE CHEQUE. III) THE RELEVANT COPY OF BANK STATEMENT SHOWING TH E BALANCE PAYMENT WAS PRODUCED BEFORE US AND CIT(A)/AO. IV) THE SHARES WERE NOT ALLOTTED THROUGH A PUBLIC O FFER BUT WERE PURCHASED IN SECONDARY MARKET THROUGH A RECOGNIZED STOCK EXCHANGE. V) THE CONTRACT NOTES FOR PURCHASE OF AFORESAID SHA RES IS ENCLOSED (PAGE 2 OF PAPER BOOK) VI) THE COMPLETE DETAILS OF THE BROKER IS AS FOLLOW S: NAME: R L AGARWALA CAPITAL MARKETS LTD. PAN: AABCR8 213Q ADDRESS: MARTIN BUM HOUSE, 2ND FLOOR, SUITE NO. 207 , 1, R. N. MUKHERJEE RD, KOLKATA - 1 CONTACT NO. (033) 2248-2458 VII) THE SHARES WERE PURCHASED IN DE MAT FORM. VIII) THE DE MAT A/C WAS OPENED IN 2006. THE NAME O F DP IS EAST INDIA SECURITIES LTD.& DPID BEING IN300327. ITS ADDRESS IS AS FOLLOWS: DA-14, SECTOR-1, SALT LAKE CITY, KOLKATA-700 064 IX) THE DE MAT STATEMENT FOR THE YEAR 01/04/2011 TO 30/06/2016 WAS PRODUCED BEFORE US AND CIT(A)/AO (PAGE 13 & 14 OF PAPER BOOK) X) THE SHARES WERE CREDITED TO APPELLENT DE MAT A/C ON 28.03.2012. B. DOCUMENTS/FACTS SUPPORTING SALE OF SHARES IN QUE STION : I) THE SHARES WERE LISTED IN BOMBAY STOCK EXCHANGE. II) THE COMPLETE DETAILS OF THE BROKER IS AS FOLLOWS: NAME : R L AGARWALA CAPITAL MARKETS LTD. PAN : AABC R8213Q ADDRESS: MARTIN BURN HOUSE, 2ND FLR, SUITE 207, 1, R. N. MUKHERJEE ROAD, KOLKATA - 1 CONTACT NO. (033) 2248-2458 III) THE CONTRACT NOTES FOR SALE OF AFORESAID SHARES WAS PRODUCED BEFORE US AND CIT(A)/AO (PAGE 8 & 9 OF PAPER BOOK) IV) THE DE MAT STATEMENT REFLECTING THE DEBIT OF SHARES FROM THE ACCOUNT IS ENCLOSED. (PAGE 13 & 14 OF PAPER BOOK) 28 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. V) THE LEDGER FROM THE BROKER FOR MY TRANSACTIONS IN S HARES OF ESSAR INDIA LTD. IS ENCLOSED(PAGES 10 AND 11 OF PAPER BOOK) VI) THE RELEVANT COPY OF BANK STATEMENT REFLECTING THE RECEIPTS FROM SUCH SALE WAS PRODUCED BEFORE US AND CIT(A)/AO. VII) THE FUNDS ON SALE PROCEEDS WERE UTILIZED FOR PURCHA SE OF 10,000 SHARES OF MANGALORE CHEMICALS & FERTILIZERS LTD., IN IPO APPLICATION OF POWER GRI D LTD. AND OTHER INVESTMENT IN SHARES. 33. WE FIND FORCE IN THE CONTENTIONS OF THE LD. AR THAT THE AO AND CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SUSPICIOUS TRANSACTIONS SURROUNDING CIRCUMSTANCE, HUMAN CONDUCT AND PREPONDERANCE OF PR OBABILITY WITHOUT BRINGING ON RECORD ANY RELEVANT MATERIAL OR LEGALLY ADMISSIBLE EVIDENCE AG AINST THE ASSESSEE. FOR THE SAID PROPOSITION WE RELY ON THE JUDGMENT OF THE SPECIAL BENCH OF MUMBAI BENCH IN THE CASE OF GTC INDUSTRIES LTD. (SUPRA). THE VARIOUS FACETS OF THE CONTENTION OF TH E AO, TO ROPE IN THE ASSESSEE FOR DRAWING ADVERSE INFERENCES WHICH REMAIN UNPROVED BASED ON T HE EVIDENCE AVAILABLE ON RECORD ARE NOT REITERATED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOUS CASE LAWS RELIED UPON BY THE LD. AR ARE ALSO NOT REITERATED FOR THE SAKE OF BRE VITY. WE FURTHER FIND THAT NEITHER THE REPORTS RELIED ON BY THE AO HAS NOT BEEN BROUGHT ON RECORD NOR IS THERE ANY REFERENCE OF FINDING OF SUCH REPORT TO IMPUTE THE ASSESSEE IS THERE ON RECORD. T HE AO HAS MERELY CARVED OUT CERTAIN FEATURES/MODUS- OPERANDI OF COMPANIES INDULGING IN PRACTICES NOT SANCTIONED BY LAW AND AS MENTIONED IN SUCH REPORT. HOWEVER, WE NOTE THAT NEI THER ANY INVESTIGATION WAS CARRIED OUT AGAINST THE ASSESSEE NOR AGAINST THE BROKERS TO WHOM THE AS SESSEE DEALT WITH THE PURCHASE AND SALE OF SHARES IN QUESTION. THUS THE AO HAS FAILED TO BRING ON RECORD ANY MATERIAL CONTAINED IN THE PURPORTED REPORTS WHICH ARE HAVING SO CALLED ADVERS E IMPACT ON THE ASSESSEE. WE FURTHER NOTE THAT THE COMPANY UNDER SCANNER AS RECORDED BY THE AO AT PAGE 4 OF HIS ORDER WAS HAVING SHAREHOLDER FUND AS ON 31.03.2014 OF RS.21.82 CRORES AND WAS HA VING ASSETS WORTH RS.41.50 CRORES AND A TURN- OVER OF RS.15.72 CRORES AND PROFIT OF RS.10 LACS. T HUS THE ALLEGATION THAT THESE COMPANIES DID NOT HAVE FINANCIAL CREDENTIALS AT THE TIME OF PURCHASE OF SHARES OR SALE OF SHARES IS NOT CORRECT AND SO IS PERVERSE AND THEREFORE WE DO NOT SUBSCRIBE TO TH E SAID FINDING. 34. AT THE COST OF REPETITION, WE FIND THAT THE TRA NSACTIONS OF SALE OF SHARES BY THE ASSESSEE WAS DULY BACKED UP BY MATERIAL/EVIDENCE INCLUDING C ONTRACT NOTES, DEMAT STATEMENT, BANK ACCOUNT REFLECTING TRANSACTIONS, THE SHARES HAVING BEEN SOL D ON THE ONLINE PLATFORM OF THE STOCK EXCHANGE AND EACH TRADE OF SALE OF SHARES WERE HAVING UNIQUE TRADE NUMBER AND TRADE TIME. IT IS NOT THE CASE OF THE AO THAT THE SHARES WHICH WERE SOLD ON THE DA TE MENTIONED IN THE CONTRACT NOTE WERE NOT THE TRADED PRICE ON THAT PARTICULAR DATE. THE AO DOUBTE D THE TRANSACTIONS DUE TO THE RISE IN THE STOCK PRICE (THE ASSESSEE PURCHASED FOR A SHARE AT RS.10. 82 AND SOLD IT FOR RS.46/- PER SHARE AFTER 20 MONTHS FOR A PROFIT OF RS. 36/- PER SHARE) AND FOR THAT THE ASSESSEE CANNOT BE BLAMED UNLESS THERE WAS ANY MATERIAL/EVIDENCE TO PROVE THAT THE ASSESSE E OR ANY ONE ON HIS BEHALF HAS RIGGED THE STOCK PRICE. IT SHOULD BE NOTED THAT THE STOCK EXCHANGE A ND SEBI ARE THE STATUTORY AUTHORITIES APPOINTED BY THE GOVT. OF INDIA TO ENSURE THAT THERE IS NO ST OCK RIGGING OR MANIPULATION. THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT THESE A GENCIES HAVE ALLEGED ANY STOCK MANIPULATION AGAINST THE ASSESSEE OR THE BROKERS OR THE COMPANY IN QUESTION. IN ABSENCE OF ANY EVIDENCE TO BACK THE CONCLUSION OF AO/CIT(A), IT CANNOT BE SAID THAT MERELY BECAUSE THE STOCK PRICE MOVED SHARPLY, THE ASSESSEE WAS TO BE BLAMED FOR BOGUS TR ANSITIONS. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE HAS PURCHASED THE STOCKS THROUGH BSE AND T HROUGH REGISTERED BROKERS AND THEREAFTER THE ASSESSEE HAS SOLD THE SHARES THROUGH THE REGISTERE D SHARE/STOCK BROKERS WITH BOMBAY STOCK EXCHANGE, AND IS SUPPORTED BY VALID CONTRACT NOTES AS PER LAW; AND IN SIMILAR CASE, THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL CIT VS RUNGTA PROPERTIES IN ITA NO.105 OF 2016 DATED 08 MAY, 2017 WHEREIN IT WAS HELD THAT ON THE LAST POINT, THE TRIBUNAL HELD THAT THE AO HA D NOT BROUGHT RELEVANT MATERIAL TO SHOW THAT THE TRANSACTIONS IN SHARES OF THE COMPANY INVOLVED WERE FALSE OR FICTITIOUS. IT IS THE FINDING OF THE AO THAT THE SCRIPTS OF THIS COMPANY WAS EXECUTED BY A BROKER AND THE BROKER WAS SUSPENDED FOR SOME TIME. IT IS THE ASSESSEES CONTENTION THAT EVE N THOUGH THERE ARE ALLEGATIONS AGAINST THE 29 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. BROKER, AND FOR THAT REASON THE ASSESSEE CANNOT BE HELD LIABLE ON THIS POINT, THE TRIBUNAL HELD THAT AS A MATTER OF FACT THE AO DOUBTED THE INTEGRITY O F THE BROKER AND THE BROKER FIRM AND ALSO AO OBSERVED THAT THE ASSESSEE HAD NOT FURNISHED ANY EX PLANATION IN RESPECT OF ANY DISCUSSION OF TRADING OF SHARES. THE AO RELIED THE LOSS OF RS.25, 30,396/- ONLY ON THE BASIS OF INFORMATION SUBMITTED BY STOCK AS FICTITIOUS. THE AO HAS ALSO N OT DOUBTED THE GENUINENESS OF THE DOCUMENTS PLACED BY THE ASSESSEE ON RECORD. THE AOS OBSERVAT ION AND CONCLUSION ARE MERELY BASED ON INFORMATION. THEREFORE ON SUCH BASIS, NO DISALLOWAN CE CAN BE MADE AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS R IGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. THIS GROUND NO.1 OF THE REVENUE IS DISMISSED. WE AGREE WITH THE REASONING OF THE TRIBUNAL ON THIS POINT ALSO. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. THE SUGGESTED QU ESTION, IN OUR OPINION DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. 35. IN THE LIGHT OF THE DOCUMENTS STATED IN PARA 30 AT PAGE14(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASS ESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAND AND THEREFO RE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS WHICH ARE SUPPORTED WITH MATERIAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT THE ALLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOL VED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE CONSEQUENTLY FAIL. AT THE COST OF REPETIT ION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NO TES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. NEITHER THESE EVIDENCES WERE FOU ND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS NOR THE AO HAD ISSUED ANY NO TICE TO THE BROKERS FOR CONFIRMATION. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVID ENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE EXEMPTED U/S 10 (38) OF THE ACT ON THE BASIS OF SUSPICION, SURMISES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRONG, CANNOT PARTAKE THE CHARACTER OF LEGAL EVIDENCE. IN THE AFO RESAID FACTS AND CIRCUMSTANCE, FOR ALLOWING THE APPEAL WE RELY ON THE DECISION OF THE HONBLE CALCU TTA HIGH COURT IN THE CASE OF M/S. ALIPINE INVESTMENTS IN ITA NO.620 OF 2008 DATED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOWS : IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCK BROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECEIVED FROM THE SHARE BROKER T HROUGH ACCOUNT PAYEE WHICH ARE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESSEE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANSACTIONS CANNOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER IT WAS HELD THAT THE TRANSACTIONS OF THE SHARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THER E IS NO SUBSTANTIAL QUESTION OF LAW HELD IN THIS MATTER. HENCE THE APPEAL BEING ITA NO.620 OF 2008 I S DISMISSED. 36. WE NOTE THAT THE LD. AR CITED PLETHORA OF THE C ASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DE CISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT T HE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE 30 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLO SED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. 6. RESPECTFULLY FOLLOWING THE RATIO OF THE AFORESAID D ECISION AND TAKING INTO CONSIDERATION THE DOCUMENTS AND CIRCUMSTANCES OF TH E TRANSACTION WHICH ARE DISCUSSED IN DETAIL AT PARA 5 (SUPRA), I AM INCLINED TO ALLOW TH E CLAIM OF LTCG AND CONSEQUENTLY THE CLAIM OF THAT AMOUNT AS EXEMPT U/S. 10(38) OF THE A CT. 7. COMING TO OTHER SIX APPEALS (ITA NOS. 417 TO 422/KO L/2019, I NOTE THAT ALL OTHER ASSESSEES ARE FAMILY MEMBERS/RELATIVES AND THE APP EALS PREFERRED BY THEM DEALS WITH THE SAME SCRIP OF M/S. EIL AND IT IS NOTED BY ME THAT I N ALL THE APPEALS, THE TRANSACTIONS HAVE TAKEN PLACE THROUGH THE SAME BROKER AND ONLY THE DI FFERENCE IS THAT OF DATES AND FIGURES. I FIND THAT THE SALE AND PURCHASE OF THE SCRIP OF M/S . EIL HAS TAKEN THROUGH ON LINE PLATFORM AND PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL AND AFTER THE PURCHASE OF SCRIPS OF M/S. EIL IT HAS BEEN DEMATERIALIZED AND HELD BY THE RESPECTIVE ASSESSEES FOR MORE THAN ONE YEAR AND THE STT HAVING BEEN PAID AT THE TIME OF PU RCHASE AND SALE. THEREFORE, THE LTCG CLAIM OUGHT TO HAVE BEEN ALLOWED AND THE EXEMPTION CLAIMED U/S. 10(38) OF THE ACT SHOULD HAVE BEEN ALSO ALLOWED. I, THEREFORE, ALLOW ALL TH E ASSESSEES CLAIM OF LTCG ON THE SCRIP OF M/S. EIL FOR THE SAME REASONING AS GIVEN IN THE CAS E OF ARUN KUMAR MAHESWARI (SUPRA) AND THE DOCUMENTS FILED TO PROVE THE TRANSACTIONS. 8. IN THE RESULT, ALL APPEALS OF THE ASSESSEE ARE A LLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 7TH AUGUST, 2019 SD/- (A. T. VARKEY) JUDICIAL MEMBER DATED: 7TH AUGUST, 2019 JD. (SR. PS) 31 ITA NOS. 416-422/KOL/2019 & , ITA NOS. 856-862/KOL/2019, AY 2014-15. COPY OF THE ORDER FORWARDED TO: 1 APPELLANT ASSESSEES. 2 RESPONDENT ITO, WARD-1(1), JALPAIGURI 3 4 5 CIT(A) JALPAIGURI (SENT THROUGH E-MAIL) CIT , JALPAIGURI DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES
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