Mina Mehta, Kolkata V. ITO, Ward - 35(4), Kolkata , Kolkata

ITA 911/KOL/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7204 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 07-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR CITSR
• Assessee Lawyers: MRS SASWATI MITRA DUTTA
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Transactions in derivatives; Earning of tax free income; Question of law; Accommodation entries; Scheme of amalgamation; Onus to prove; Penny stocks
• Section: 143(3); 14A; 260A; 68

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 911 / KOL / 20 18 ASSESSMENT YEAR :2014-15 MINA MEHTA 29/1C BENTICK STREET, KOLKATA-700001 [ PAN NO.AESPM 5579 C ] V/S . INCOME TAX OFFICER WARD-35(4), AAYAKAR BHAWAN POORVA, 8 TH FLOOR 110, SHANTI PALLY, KOLKATA-107 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SOUMITRA CHOWDHURY, ADVOCATE SHRI ANIKESH BANERJEE, ADVOCATE & MRS. SASWATI MITRA (DUTTA) ADVOCATE /BY RESPONDENT SHRI SAURABH KUMAR, ADDL. CIT-SR- DR /DATE OF HEARING 09-07-2018 /DATE OF PRONOUNCEMENT 28-09-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-10- KOLKATAS ORDER DATED 15.03.2018, PASSED IN CASE NO.549/CIT(A)-10/C-35(4)/2014-15, AF FIRMING THE ASSESSING OFFICERS ACTION TREATING HER LONG TERM CAPITAL GAI NS (LTCG FOR SHORT) ARISING FROM SALE OF SHARES M/S UNNO INDUSTRIES LTD. & SHAR P TRADING FINANCE LTD. AMOUNTING TO 95,06,050/- TO BE BOGUS FOLLOWED BY 5% COMMISSION DISALLOWANCE THEREUPON OF 465,896/- AS WELL AS SEC. 14A RULE 8D DISALLOWANCE OF 45,893/- (NOT PRESSED DURING THE COURSE OF HEARING) RESPECTIVELY, INVOLVING PROCEEDINGS U/S 143(3) OF T HE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 2 HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE THAT R EMAINS TO BE ADJUDICATED IN THE INSTANT APPEAL IS THAT OF CORREC TNESS OF BOTH THE LOWER AUTHORITIES ACTION TREATING HER LTCG OF 95,06,050/- AS BOGUS THEREFORE LIABLE TO ADD U/S 68 OF THE ACT. THERE IS NO DISPUTE ABOUT THE SOME BASIC FACTS EMERGING FROM THE INSTANT CASE FILE. THE ASSESSEE D ECLARED HER LTCG IN QUESTION IN CASE OF TWO SCRIPS TO M/S UNNO INDUSTRI ES LTD AND SHARP TRADING FINANCE LTD. SHE HAD INVESTED 1 LAKH AND 70,000/-; RESPECTIVELY TO ACQUIRE THE SHARES IN QUESTION ON 03.03.2011 AND 21.03.2012 IN M/S. BASUKINATH REALESTATE PVT. LTD AND TRINITY TRADEMARK LTD. AS A MALGAMATED IN THE ABOVE TWO ENTITIES. THE ASSESSEE THEREAFTER SOLD HER INVE STMENTS IN THE RELEVANT PREVIOUS YEAR GIVING RISE TO LTCG OF 93,17,930/- AS PER RELEVANT FIGURES EMERGING FROM THE ASSESSMENT ORDER COMPRISING OF CO RRESPONDING SUMS OF 25,91,050/- AND 69,15,000/-; RESPECTIVELY. THE ASSESSING OFFICER WA S OF THE VIEW THAT THE ABOVE APPRECIATION IN HER INVESTMENTS IN THE TWO ENTITIES @ 2481- AND 9,766/- REQUIRED A DEEPER ANALYSIS OF THE TWO ENTIT IES IN LIGHT OF THE SHARE MARKET TRENDS IN THE RELEVANT HOLDING PER IOD. SHE UNDERTOOK A DETAILED EXERCISE AS TO WHETHER THESE INVESTMENT TR ANSACTIONS WERE IN FACT GENUINE OR SHAM ADOPTED AS A CAMOUFLAGE DEVICE ONLY TO CONVERT THE UNACCOUNTED CASH INTO TAX EXEMPT INCOME U/S 10(38) OF THE ACT. IT EMERGES FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICE R TOOK INTO CONSIDERATION THE DIT(INV) REPORT(S) AS WELL FOR UNEARTHING SUCH BOGUS LTCG DERIVED FROM VARIOUS SCRIPS WITHIN THE HELP OF ENTRY OPERATORS. 3. WE COME TO RELEVANT FINDINGS IN ASSESSMENT ORDER DATED 28.12.2016 NOW. THE ASSESSING OFFICER CAME ACROSS THE ABOVE EN TITIES HISTORY SINCE IN CORPORATION, BUSINESS ACTIVITIES (TERMED AS DUBIOUS IN VIEW OF CHANGE IN BUSINESS), BALANCE-SHEET, APPLICATION OF FUNDS, ALL ASSETS, PROFIT AND LOSS ACCOUNTS FROM MARCH 2010 TO MARCH 2014 & CORRESPOND ING PROFITS TO CONCLUDE THAT THE ABOVE ASTRONOMICAL PRICE RISE IN THEIR SHA RE PRICES HAD REASONS OTHER ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 3 THAN THOSE STATED AT THE ASSESSEES BEYOND IMAGINAT ION. THE ASSESSING OFFICER THEREAFTER PREPARED A PICTORICAL GRAPH OF T HE TWO ENTITIES SHARE PRICES DURING THE RELEVANT HOLDING PERIOD(S) AS WELL AS TH E ALLEGED PRE-ARRANGED TRADING PATTERN, COMPARED VIS--VIS THE RELEVANT SE NSEX TRENDS DURING THEIR RELEVANT PERIOD(S). HE CONCLUDED IN VIEW OF ALL THE SE FACTS THAT THE ASSESSEES LTCG ARISING FROM SHARES OF HER PENNY STOCK WAS C ONTROLLED BY A GROUP OF ENTRY OPERATORS. THE IMPUGNED LTCG STOOD TREATED AS BOGUS THEREFORE BY INVOKING SEC. 68 OF THE ACT. THE ASSESSING OFFICER ADDED IMPUGNED SUM OF 95,06,050/- AS WELL AS 5% COMMISSION THEREUPON OF 4,65,896/- AS UNEXPLAINED CASH UNITS / INVESTMENTS RESPECTIVELY A DDITIONS IN ASSESSMENT ORDER. 4. THE CIT(A) CONFIRMS ASSESSING OFFICERS ACTION A S FOLLOWS:- 09. FINDINGS & DECISION: [GROUNDS 4 TO 9] 1. I HAVE CAREFULLY CONSIDERED THE ACTION OF THE LD . AO IN MAKING AN ADDITION OF RS.95,06,050/- AS UNEXPLAINED CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. AFTER AN EXHAUSTIVE DISCUSSION AND ELABORATING THE FACTUAL A ND LEGAL MATRIX, I FIND THAT THE LD. AO HAS HELD THAT THE CLAIM OF LONG TERM CAPITAL GAI N U/S 10(38) WAS TO BE DENIED TO THE ASSESSEE-INDIVIDUAL, AND WAS TO BE ASSESSED AS UNEXPLAINED CASH CREDIT U/S 68 ACT. THE LD. AO HAS PLACED ON RECORD THE ENTIRE GAM UT OF FINDINGS, AND THERE IS, IN MY CONSIDERED VIEW NO FURTHER REQUIREMENT FOR ELABO RATION FROM THIS FORUM. IN MY VIEW OF THE FACTS THERE ARE ELABORATE AND DIRECT EV IDENCE TO CLEARLY INDICATE THAT THE ENTIRE TRANSACTIONS UNDERTAKEN BY THE APPELLANT WER E MERELY ACCOMMODATION ENTRIES TAKEN FOR THE PURPOSE OF SUCH BOGUS LONG TERM CAPI TAL GAIN MADE BY THE ASSESSEE DURING THE PREVIOUS YEAR. IT IS APPARENT THAT, IN THE GRAB OF ALLEGED LTCG, THE ASSESSEE EARNED EXEMPT INCOME OF RS.95,06,050/- AND HUGE AMOUNT B ROUGHT INTO THE BOOKS WITHOUT PAYING- A SINGLE RUPEE OF TAX. T HE LD. AO HAS VERY CAREFULLY ANALYZED THE INFORMATION RECEIVED FROM THE INVESTIG ATION WING, AND HAS RECORDED THE NOTEWORTHY FEATURES OF THE COMPANY WHOSE SHARES WER E PURCHASED/ SOLD BY THE ASSESSEE-INDIVIDUAL. THE ECONOMIC PARAMETERS OF THE SAID COMPANY OVER THE IMPUGNED PERIOD HAS ALSO BEEN BROUGHT ON RECORD, IN THE ANALYSIS. THE RISE AND FALL OF THE PRICES AS RECORDED HAD BEEN BROUGHT OUT BY T HE LD. AO TO BE ARTIFICIAL AND NOT COMMENSURATE WITH THE NORMAL MARKET, AS THE COMPANY HAD NO BUSINESS AT ALL. THE LD. AO HAS ALSO BROUGHT FORTH INFORMATION THAT THE REGULATORY AUTHORITY SEBI HAS ALSO AFTER INVESTIGATING SUCH ABNORMAL PRICE INCREA SE OF CERTAIN STOCKS INVESTIGATED THE MATTER AND SUSPENDED TRADING IN CERTAIN SCRIPTS . IT IS VERY CLEAR THAT THE PRICES OF THESE SCRIPTS FELL SHARPLY AFTER THE OFFLOADING OF THESE SCRIPTS BY PRE-ARRANGED AND MANIPULATED TRANSACTIONS. THE ENTIRE TRANSACTIONS W ERE CARRIED OUT ON THE STOCK EXCHANGE TO GIVE IT A CALOR OF REAL TRANSACTIONS. 2. I ALSO FIND THAT ALL THE SUBMISSIONS MADE BY THE APPELLANT DURING THE COURSE OF THE APPEAL POINT TOWARDS THE ELABORATE DOCUMENTATION, M EANING THEREBY THAT THE APPELLANT HAS PRODUCED PAPERS RELATING TO APPLICATI ON FOR THE SHARES, THE ALLOTMENT OF THE SHARES, THE SHARE CERTIFICATES, PAYMENTS BY CHE QUE AND THE NECESSARY PAPERS FILED BEFORE THE REGISTRAR OF COMPANIES, WHERE THE NAME OF THE ASSESSEE HAS BEEN ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 4 REFLECTED AS A SHAREHOLDER. THE APPELLANT HAS ALSO FILED PROOF OF AMALGAMATION OF THE COMPANIES WHEREIN THE SHAREHOLDING HAS CHANGED HAND S. IT IS ALSO THE CONTENTION OF THE APPELLANT THAT IT HAS PROVIDED COPIES OF THE BA NK 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 MATT ER, IT IS PRECISELY THIS ELABORATE PAPERWORK THAT STRENGTHENS THE MATTER RELATING TO T HE BOGUS BENEFIT OF THE LTCG, WHICH CLEARLY HAS BEEN SCHEMED, PREPLANNED AND EXEC UTED WITH MALA FIDE INTELLIGENCE AND PRECISION. THEREFORE ALL THESE PAP ERS ARE MERE DOCUMENTS AND NOT ANY EVIDENCE. THE WHOLE GAMUT OF TRANSACTIONS ARE U NNATURAL AND HIGHLY SUSPICIOUS, AND THEREFORE THE RULES OF SUSPICIOUS TRANSACTIONS OUGHT TO APPLY IN THE INSTANT CASE. THERE ARE GRAVE DOUBTS IN THE STORY P ROPOUNDED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. NONE OF THE MATERIAL PRODUCE D BEFORE THE LD. AO BY THE ASSESSEE-APPELLANT ARE ENOUGH TO JUSTIFY THE HUMONG OUS GAINS ACCRUING TO THE ASSESSEE BY WAY OF CAPITAL GAINS. IN MY CONSIDERED VIEW THE BANKING DOCUMENTS ARE MERE SELF SERVING RECITALS. THE LAW IN THE MATT ER OF SELF-SERVING RECITALS HAS BEEN LONG ESTABLISHED BY THE HON'BLE APEX COURT. IN THE CASE OF CIT VS P.MOHANKALA 291 ITR 278, THE HON'BLE SUPREME COURT HELD THAT ' THE MONEY CAME BY WAY OF BANK CHEQUE AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTIONS WAS NOT' BY ITSELF OF ANY CONSEQUENCES. ' THE BURDEN OF PROOF IS ON THE ASSESSEE IN THE MAT TER OF JUSTIFICATION OF RECEIPTS WHICH ARE OF SUSPICIOU S AND DUBIOUS NATURE. IN THE CASE OF CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC), T HEIR LORDSHIPS LAYING DOWN THE SIGNIFICANCE OF HUMAN PROBABILITIES HELD AS UNDER: ' IN A CASE WHERE A PARTY RELIED ON SELF SERVING RECITALS IN DOCUMENTS, IT WAS FOR T HAT PARTY TO ESTABLISH THE TRUTH OF THOSE RECITALS: THE TAXING AUTHORITIES WERE ENTI TLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F SUCH RECITALS. ' SIMILARLY IN THE CASE OF SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC), THEIR LORDSHIPS HELD AS UNDER: ' IN VIEW OF SECTION 68 OF THE ACT, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE SA ME MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSES OF THAT PR EVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATUR E AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACT ORY. IN SUCH A CASE, THERE IS PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE VIZ. THE RECEIPT OF MONEY, AND IF HE FAILS -TO REBUT, THE SAID EVIDENCE BEING ON-REBUTTE D, CAN BE USED AGAINST HIM BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME NATURE. ' IN THE CASE OF SAJJAN DAS & SONS VS. CIT (2003) 264 ITR 435 (DELHI), THEIR LORD SHIPS OF THE HIGH COURT OF DELHI, WHILE CONSIDERING A CASE IN WHICH GIFTS WERE RECEIV ED BY THE ASSESSEE THROUGH BANKING CHANNELS LAID IMPORTANCE ON THE CAPACITY OF THE DONOR FOR MAKING THE GIFT AND HIS IDENTITY AS WELL AS IMPORTANCE OF RELATIONSHIP BETWEEN THE DONOR AND DONEE IN DETERMINATION OF GENUINENESS OF GIFT HELD AS UNDER: 'THAT A MERE IDENTIFICATION OF THE DONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOUNT T HROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT . SINCE THE CLAIM OF THE GIFT WAS MADE BY THE ASSESSEE, THE ONUS LAY ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING THE GIFT BUT ALSO HIS CAPACITY TO MAK E A GIFT AND THAT IT HAD ACTUALLY BEEN RECEIVED AS A GIFT FROM THE DONOR. 'IN MY CONS IDERED VIEW WHEREVER DOCUMENTS ARE RELIED UPON THEY SHOULD PASS THE TEST OF NORMAL BEHAVIOR OF THE ASSESSEE IN THE COURSE OF BUSINESS VIZ., HUMAN CONDUCT, PREPONDERAN CE OF PROBABILITY AND SURROUNDING CIRCUMSTANCES. IN MY CONSIDERED VIEW, E VEN IF DOCUMENTARY EVIDENCE IS PRODUCED, THE SAME MUST PASS THE TEST OF HUMAN PROB ABILITIES AND SURROUNDING CIRCUMSTANCES IF THEY DO NOT, THEN ADDITION JUSTIFI ED. RELIANCE ON SUCH MATTERS IS PLACED ON THE CASE OF SMT PHOOLWATI DEVI 314 ITR (A T) 1 (DEL.) 3. IT MUST ALSO BE STATED HERE THAT IN COMMISSIONER OF INCOME TAX VS NR PORTFOLIO PVT LTD ON 22 NOVEMBER, 2013, THE HON'BLE DELHI HIG H COURT HAS HELD 'THE ASSESSING OFFICER IS BOTH AN INVESTIGATOR AND AN ADJUDICATOR. WHEN A FACT IS ALLEGED AND STATED BEFORE THE ASSESSING OFF ICER BY AN ASSESSEE, HE ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 5 MUST AND SHOULD EXAMINE AND VERIFY, WHEN IN DOUBT O R WHEN THE ASSERTION IS DEBATABLE. NORMALLY A FACTUAL ASSERTION MADE SHOULD BE ACCEPTED BY THE ASSESSING OFFICER UNLESS FOR JUSTIFICATION AND REAS ONS THE ASSESSING OFFICER FEELS THAT HE NEEDS/REQUIRES A DEEPER AND DETAILED VERIFICATION OF THE FACTS ALLEGED. THE ASSESSEE IN SUCH CIRCUMSTANCES SHOULD COOPERATE AND FURNISH PAPERS, DETAILS AND PARTICULARS. THIS MAY ENTAIL IS SUE OF NOTICES TO THIRD PARTIES TO FURNISH AND SUPPLY INFORMATION OR CONFIRM FACTS OR EVEN ATTEND AS WITNESSES. THE ASSESSING OFFICER CAN ALSO REFER TO INCRIMINATING MATERIAL OR EVIDENCE AVAILABLE WITH HIM AND CALL UPON THE ASSES SEE TO FILE THEIR RESPONSE. WE CANNOT LAY DOWN OR STATE A GENERAL OR UNIVERSAL PROCEDURE OR METHOD WHICH SHOULD BE ADOPTED BY THE ASSESSING OFFICER WH EN VERIFICATION OF FACTS IS REQUIRED. THE MANNER AND MODE OF CONDUCTING ASSESSM ENT PROCEEDINGS HAS TO BE LEFT TO THE DISCRETION OF THE ASSESSING OFFIC ER, AND THE SAME SHOULD BE JUST, FAIR AND SHOULD NOT CAUSE ANY HARASSMENT TO T HE ASSESSEE OR THIRD PERSONS FORM WHOM CONFIRMATION OR VERIFICATION IS R EQUIRED. THE VERIFICATION AND INVESTIGATION SHOULD BE ONE WITH THE LEAST AMOU NT OF INTRUSION, INCONVENIENCE OR HARASSMENT ESPECIALLY TO THIRD PAR TIES, WHO MAY HAVE ENTERED INTO TRANSACTIONS WITH THE ASSESSEE. THE UL TIMATE FINDING OF THE ASSESSING OFFICER SHOULD REFLECT DUE APPLICATION OR MIND ON THE RELEVANT FACTS AND THE DECISION SHOULD TAKE INTO CONSIDERATION THE ENTIRE MATERIAL, WHICH IS GERMANE AND WHICH SHOULD NOT BE IGNORED AND EXCLUDE THAT WHICH IS IRRELEVANT. CERTAIN FACTS OR ASPECTS MAY BE NEUTRAL AND SHOULD BE NOTED. THESE SHOULD NOT BE IGNORED BUT THEY CANNOT BECOME THE BEDROCK OR SUBSTRATUM OF THE CONCLUSION. THE PROVISIONS OF EVI DENCE ACT ARE NOT APPLICABLE, BUT THE ASSESSING OFFICER BEING A QUASI JUDICIAL AUTHORITY, MUST TAKE CARE AND CAUTION TO ENSURE THAT THE DECISION IS REA SONABLE AND SATISFIES THE CANONS OF EQUITY, FAIRNESS AND JUSTICE. THE EVIDENC E SHOULD BE IMPARTIALLY AND OBJECTIVELY ANALYZED TO ENSURE THAT THE ADVERSE FIN DINGS AGAINST THE ASSESSEE WHEN RECORDED ARE ADEQUATELY AND DULY SUPPORTED BY MATERIAL AND EVIDENCE AND CAN WITHSTAND THE CHALLENGE IN APPELLATE PROCEE DINGS. PRINCIPLE OF PREPONDERANCE OF PROBABILITIES APPLIES. WHAT IS STA TED AND THE SAID STANDARD, EQUALLY APPLY TO THE TRIBUNAL AND INDEED THIS COURT . THE REASONING AND THE GROUNDS GIVEN IN ANY DECISION OR PRONOUNCEMENT WHIL E DEALING WITH THE CONTENTIONS AND ISSUES SHOULD REFLECT APPLICATION O F MIND ON THE RELEVANT ASPECTS. WHEN AN ASSESSEE DOES NOT PRODUCE EVIDENCE OR TRIES TO AVOID APPEARANCE BEFORE THE ASSESSING OFFICER, IT NECESSA RILY CREATES DIFFICULTIES AND PREVENTS ASCERTAINMENT OF TRUE AND CORRECT FACT S AS THE ASSESSING OFFICER IS DENIED ADVANTAGE OF THE CONTENTION OR FACTUAL AS SERTION BY THE ASSESSEE BEFORE HIM. IN CASE AN ASSESSEE DELIBERATELY AND IN TENTIONALLY FAILS TO PRODUCE EVIDENCE BEFORE THE ASSESSING OFFICER WITH THE DESI RE TO PREVENT INQUIRY OR INVESTIGATION, AN ADVERSE VIEW SHOULD BE TAKEN'. 4. IN THIS CONNECTION, I WOULD ALSO WISH TO REFER T O THE DECISION OF THE HON'BLE ITAT BOMBAY BENCH 'B' (ITA NO.614/BOM/87 A.Y. 1983-84) I N THE CASE OF M/S. MONT BLANE PROPERTIES AND INDUSTRIES PVT. LTD., WHICH WAS UPHE LD BY THE HON'BLE SUPREME COURT. THE HON'BLE TRIBUNAL HELD THAT THE WORD ' EVIDENCE ' AS USED IN SEC. 143(3) COVERED CIRCUMSTANTIAL EVIDENCE ALSO. THE WORD ' EVIDENCE ' AS USED IN SEC.143 (3) OBVIOUSLY COULD NOT BE CONFINED TO DIRECT EVIDENCE. THE WORD ' EVIDENCE ' WAS COMPREHENSIVE ENOUGH TO COVER THE CIRCUMSTANTIAL EVIDENCE ALSO. U NDER THE TAX JURISPRUDENCE, THE WORD ' EVIDENCE ' HAD MUCH WIDER CONNOTATIONS. WHILE THE WORD ' EVIDENCE ' MIGHT RECALL THE ORAL AND DOCUMENTARY EVIDENCE AS MAY BE ADMISSIBLE UNDER THE INDIAN EVIDENCE ACT THE USE OF WORD 'MATERIAL' IN SEC.143( 3) SHOWED THAT THE ASSESSING OFFICER, NOT BEING A COURT COULD RELY UPON MATERIAL , WHICH MIGHT NOT STRICTLY BE EVIDENCE ADMISSIBLE UNDER THE INDIAN EVIDENCE ACT F OR THE PURPOSE OF MAKING AN ORDER OF ASSESSMENT. COURT OFTEN TOOK JUDICIAL NOTI CE OF CERTAIN FACTS WHICH NEED NOT ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 6 BE PROVED BEFORE THEM. THE PLAIN READING OF SECTION 142 AND 143 CLEARLY SUGGESTS THAT THE ASSESSING OFFICER MAY ALSO ACT ON THE MATE RIAL GATHERED BY HIM. THE WARD 'MATERIAL' CLEARLY SHOWS THAT THE ASSESSING OFFICER IS NOT FETTERED BY THE TECHNICAL RULES OF EVIDENCE AND THE LIKE, AND THAT HE MAY ACT ON MA TERIAL WHICH MAY NOT STRICTLY SPEAKING BE ACCEPTED EVIDENCE IN COURT OF LAW. 5. THE HON'BLE SUPREME COURT IN CIT V. DURGA PRASAD MORE[1971] 82 ITR 540 AT PAGES 545-547 MADE A REFERENCE TO THE TEST OF HUMAN PROBABILITIES IN THE FOLLOWING FACT SITUATION :- ' ..... IT IS TRUE THAT AN APPARENT MUST BE CONSIDE RED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS N OT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A D EED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS. OTHERWISE IT WILL BE VERY EASY T O MAKE SELF- SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS T O EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOR THEN THE DOOR WILL BE LEFT WIDE-OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS N OT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WH ILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS . 6. IT IS A WELL SETTLED PRINCIPLE OF LAW AS DECLARE D BY THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS,CIT'(214 ITR 801)(SC) THAT THE TRUE NATURE OF TRANSACTION HAVE TO BE ASCERTAINED IN THE LIGHT OF SURROUNDING CIRCUMSTANCES. IT NEEDS TO BE EMPHASIZED THAT STANDARD OF PROOF BEYOND REASONABLE DOUBT HAS NO APPLICABILITY IN DETERMINATION OF MATTERS UNDER TAXING STATUTES. IN THE PRESENT CASE, IT IS CLEAR THAT APPARENT IS NOT THE REAL AS EVIDENCED FROM THE INVE STIGATION REPORT. FURTHER, THE HON'BLE SUPREME COURT, IN THE CASE OF CHUHAR MAL V CIT (1988) 172 ITR 250, HIGHLIGHTED THE FACT THAT THE PRINCIPLE OF EVIDENCE LAW ARE NOT TO BE IGNORED BY THE AUTHORITIES, BUT AT THE SAME TIME, HUMAN PROBABILIT Y HAS TO BE THE GUIDING PRINCIPLE, SINCE THE AO IS NOT FETTERED, BY TECHNICAL RULES OF EVIDENCE, AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MIL LS V CIT (1954) 261 TR 775. THE HON'BLE SUPREME COURT, IN THE CASE OF CHUHAR MA L V CIT (SUPRA) HELD THAT WHAT WAS MEANT BY SAYING THAT EVIDENCE ACT DID NOT APPLY TO THE PROCEEDINGS UNDER INCOME-TAX ACT,1961, WAS THAT THE RIGORS OF RULES O F EVIDENCE, CONTAINED IN THE EVIDENCE ACT WAS NOT APPLICABLE; BUT THAT DID NOT M EAN THAT WHEN THE TAXING AUTHORITIES WERE DESIROUS OF INVOKING THE PRINCIPLE S OF EVIDENCE ACT, IN PROCEEDINGS BEFORE THEM, THEY WERE PREVENTED FROM DOING SO. IT WAS FURTHER HELD BY THE HON'BLE APEX COURT THAT ALL THAT SECTION 110 OF THE EVIDENC E ACT, 1872 DID, WAS TO EMBODY A SALUTARY PRINCIPLE OF COMMON LAW, JURISPRUDENCE VIZ , WHERE A PERSON WAS FOUND IN POSSESSING OF ANYTHING, THE ONUS OF PROVING THAT HE WAS NOT ITS OWNER, WAS ON THAT PERSON. THUS, THIS PRINCIPLE COULD BE ATTRACTED TO CIRCUMSTANCES THAT SATISFIES ITS CONDITIONS AND WAS APPLICABLE TO TAXING PROCEEDINGS . 7. I AM IN AGREEMENT WITH THE LD. AO THAT THE TRANS ACTIONS RELATING TO THE CLAIM OF LTCG MADE BY THE LD. AO COME WITHIN THE AMBIT OF ' SUSPICIOUS TRANSACTIONS ', AND THEREFORE THE RULES OF SUSPICIOUS TRANSACTIONS WOUL D APPLY TO THE CASE. PAYMENT THROUGH BANKS, PERFORMANCE THROUGH STOCK EXCHANGE A ND OTHER SUCH FEATURES ARE ONLY APPARENT FEATURES. THE REAL FEATURES ARE THE M ANIPULATED AND ABNORMAL PRICE OF OFFLOAD AND THE SUDDEN DIP THEREAFTER. THEREFORE, I HAVE TO REACH THE INEVITABLE CONCLUSION THAT THE TRANSACTIONS AS DISCUSSED BY TH E LD.AO FALL IN THE REALM OF ' SUSPICIOUS ' AND ' DUBIOUS ' TRANSACTIONS. THE LD. AO HAS THEREFORE NECESSARIL Y TO CONSIDER THE SURROUNDING CIRCUMSTANCES, WHICH HE IN DEED HAS DONE IN A VERY ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 7 METICULOUS AND CAREFUL MANNER. IN THE CASE OF WIN C HADHA VS CIT (INTERNATIONAL TAXATION) IN ITA NO.3088 & 3107/DEL/200S, THE HON'B LE DELHI ITAT 'B'-BENCH HAS OBSERVED, ON 31.12.2010 AS UNDER : 'SUSPICIOUS AND DIBIOUS TRASANCTION HOW TO BE DEAL T WITH: 6.11. THE TAX LIABILITY IN THE CASES OF SUSPICIOUS TRANSACTIONS, IS TO BE ASSESSED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD, SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT, PREPONDERANCE OF PROB ABILITIES AND NATURE OF INCRIMINATING INFORMATION/ EVIDENCE AVAILABLE WITH AO. 6.12. IN THE CASE OF SUMATI DAYAL V. CIT (1995) 80 TAXMAN 89 (SC), THE HON'BLE SUPREME COURT HAS DEALT WITH THE RELEVANCE OF HUMAN CONDUCT, PREPONDERANCE OF PROBABILITIES AND SURROUNDING CIRC UMSTANCE, BURDEN OF PROOF AND ITS SHIFTING ON THE DEPARTMENT IN CASES OF SUSP ICIOUS CIRCUMSTANCES, BY FOLLOWING OBSERVATIONS: ' ..... IT IS, NO DOUBT, TRUE THAT IN ALL CASES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES ON THE DEPARTME NT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION AND IF A RECEIPT IS IN THE NATURE OF INCOME, THE BURDEN OF PROVING THAT IT IS NOT TAXABLE BECAUS E IT FALLS WITHIN EXEMPTION PROVIDED BY THE ACT LIES UPON THE ASSESSE E. BUT IN VIEW OF SECTION 68, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE SAME MAY BE CHA RGED TO INCOME- TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATUR E AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER , NOT SATISFACTORY. IN SUCH CASE THERE IS PRIMA FACIE EVIDENCE AGAINST THE ASSESSEE, VIZ., THE RECEIPT OF MONEY, AND IF HE FAILS TO REBUT THE SAME , THE SAID EVIDENCE BEING UN-REBUTTED, CAN BE USED AGAINST HIM BY HOLDI NG THAT IT IS A RECEIPT OF AN INCOME NATURE. WHILE CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE DEPARTMENT CANNOT, HOWEVER, ACT UNREA SONABLY. ........... HAVING REGARD TO THE CONDUCT OF THE APP ELLANT AS DISCLOSED IN HER SWORN STATEMENT AS WELL AS OTHER MATERIAL ON TH E RECORD, AN INFERENCE COULD REASONABLY BE DRAWN THAT THE WINNIN G TICKETS WERE PURCHASED BY THE APPELLANT AFTER THE EVENT. THE MAJ ORITY OPINION AFTER CONSIDERING SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAD RIGHTLY CONCLUDED THAT THE APPELLANT'S CLAIM ABOUT THE AMOUNT BEING HER WINNING FROM RACES, WAS NOT GENUINE. IT COULD NOT BE SAID THAT THE EXPLANATION OFFERED BY T HE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAD BEEN REJECTED UNREA SONABLY AND THAT THE FINDING THAT THE SAID AMOUNTS WERE INCOME OF TH E APPELLANT FROM OTHER SOURCES WAS NOT BASED ON EVIDENCE. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. CASE FILE AS WELL AS THE RELEVANT COMPILATION OF JUDICIA L PRECEDENTS STAND PERUSED. LEARNED DEPARTMENTAL REPRESENTATIVE EMPHASISES TIME AND AGAIN THAT THE INSTANT ISSUE OF BOGUS LTCG HAS RIGHTLY BEEN DECIDE D AGAINST THE ASSESSEE IN BOTH ASSESSMENT AS WELL AS LOWER APPELLATE PROCEEDI NGS RAISED PERTAINING TO ARTIFICIAL MANIPULATION OF SHARE PRICES IN BOTH M/S UNNO INDUSTRIES LTD. & SHARP TRADING FINANCE LTD. WE FIND NO FORCE IN REVENUES INSTANT ARGUMENT. THIS ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 8 TRIBUNAL CO-ORDINATE BENCHS DECISION IN ITA 2394/K OL/2017 PRAKASH CHAND BHUTORIA VS. ITO DECIDED ON 27.06.2018 FOR AY 2014-15 ITSELF UPHOLD S SUCH A SHARE PRICES INCREASE TO BE GENUINE QUA THE ABOVE FORMER ENTITY AS UNDER:- 5. IN RESPONSE TO THE QUERIES RAISED BY THE ASSESSI NG OFFICER ON THE ISSUE OF THE FACT THAT THE ASSESSEE RECEIVED RS. 31,62,372/- FROM SAL E OF ONCE SCRIPS I.E. UNNO INDUSTRIES LTD. THE ASSESSEE SUBMITTED THE FOLLOWI NG FACTS: DETAILS OF PURCHASE OF SHARE FOR LONG TERM CAPITA L GAIN F.Y.2013-14 (A.Y.2014- 15): 1. I STATE THAT I HAD PURCHASED 100 EQUITY SHARES OF PINNACLE VINTRADE LTD. ON 20.01.2012 FROM UNIGLORY DEVELOPERS PVT. LTD. PINNA CLE VINTRADE LTD. WAS MERGED WITH UNNO INDUSTRIES LTD. AND THERE WAS CHAN GE OF MANAGEMENT AND CONTROL OF UNNO INDUSTRIES LTD. PURSUANT TO SCHEME OF ARRANGEMENT SANCTIONED BY THE HONBLE HIGH COURT AT BOMBAY. 2. PAYMENT FOR THE PURCHASE OF AFORESAID 100 EQUITY OF PINNACLE VINTRADE LTD. WAS MADE BY ACCOUNT PAYEE TAMILNAD MERCANTILE LTD. BAN K CHEQUE NO. 736027. 3. BANK STATEMENT OF TAMILNAD MERCANTILE LTD. BANK REFLECTING PAYMENT (CHEQUE NO. 736027) FOR PURCHASE OF THE SAID INVESTMENT IN EQUI TY SHARES OF PINNACLE VINTRADE LTD. IS ENCLOSED (HIGHLIGHTING THE SAID ENTRY). ANNEXURE-I. 4. THE EQUITY SHARES OF UNNO INDUSTRIES LTD. WERE A LLOTTED PURSUANT UPON MERGER OF PINNACLE VINTRADE LTD. WITH UNNO INDUSTRIES LTD. PU RSUANT TO SANCTION OF SCHEME OF ARRANGEMENT BY THE HONBLE HIGH COURT AT BOMBAY, I WAS ISSUED 91000 EQUITY SHARES OF UNNO INDUSTRIES LTD. IN LIEU OF MY SHAREH OLDING IN PINNACLE VINTRADE LTD. THE RELEVANT GIST OF THE SCHEME OF ARRANGEMENT SANC TIONED BY THE HONBLE HIGH COURT WAS COMMUNICATED BY THE COMPANY TO THE BOMBAY STOCK EXCHANGE VIDE LETTER DATED 12 TH FEBRUARY, 2013. A COPY OF THE SAID LETTER DOWNLOAD ED FROM BSE WEBSITE IS ENCLOSED FOR YOUR READY REFERENCE. I ALS O ENCLOSE UNNO INDUSTRIES LTD. LETTER DATED 12 TH FEBRUARY, 2013 AND 7 TH MARCH, 2013 COMMUNICATING THE ISSUANCE OF SHARES IN LIEU SHARES OF PINNACLE VINTRADE LTD. UPON SANCTION OF SCHEME OF ARRANGEMENT BY THE HONBLE COURT. ANNEXURE II 5. AS THE EQUITY SHARES OF PINNACLE VINTRADE LTD. P URCHASED WERE NOT LISTED, HENCE NO CONTRACT NOTES WERE ISSUED. HOWEVER, COPY OF BIL L INDICATING PURCHASE OF SAID EQUITY SHARES IS ENCLOSED. ANNEXURE III 6. EQUITY SHARES OF PINNACLE VINTRADE LTD., WERE DI RECTLY PURCHASED FROM UNIGLORY DEVELOPERS PVT. LTD. 209, VIRESHWAR CHAMBERS, M.G. ROAD, NERA SHAN TALKIES VILE PARLE (E), MUMBAI, MAHARASHTRA-400057. 7. EQUITY SHARES OF PINNACLE VINTRADE LTD. WERE PUR CHASED IN PHYSICAL FORM. 8. I HAVE THREE DEMAT ACCOUNTS AS FOLLOWS- A) NAME OF DP- ASHIKA STOCK BROKING LTD. (DP ID NO. 12034500) DEMAT ACCOUNT NO. 1203450000003128 ADDRESS OF DP-TRINITY, 7 TH FLOOR, 226/1, A.J.C. BOSE ROAD, KOLKATA-700020. DP ACCOUNT OPENED ON-31.08.2004 B) NAME OF DP- GUINESS SECURITIES LTD. (DP ID NO. IN302898) DEMAT ACCOUNT NO. 10350406 ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 9 ADDRESS OF DP-GUINESS HOUSE, 18, DESHPRIYA PARK ROA D, KOLKATA-700026. DP A/C OPENED ON-25.05.2013 C) NAME OF DP- TAMILNAD MERCANTILE BANK LTD. (DP ID NO. IN303069) DEMAT ACCOUNT NO. 10051996 ADDRESS OF DP-PEARL TOWERS DPS CELL, AC 16, III FLO OR, II AVENUE, ANNA NAGAR WEST, CHENNAI-600040. 9. DEMAT STATEMENTS OF M/S ASHIKA STOCK BROKING LTD. A ND GUINESS SECURITIES LTD. FOR F.Y. 2013-14 AND 2014-15 IN RESPECT OF LONG TER M CAPITAL GAINS ARE ENCLOSED. ANNEXURE IV. 10. THE EQUITY SHARES OF M/S UNNO INDUSTRIES LTD. W ERE SUBMITTED FOR DEMATERIALIZATION ON 01.04.2013 AND CREDITED TO MY DEMAT A/C NO. 1203450000003128 WITH M/S ASHIKA STOCK BROKING LTD. (DP ID NO. 12034500) ON 12.04.2013 (91000 SHARES). DETAILS OF SALE OF SHARE FOR LONG TERM CAPITAL GAIN FINANCIAL YEAR 2013- 14(A.Y.2014-15): 1. THE EQUITY SHARES OF M/S UNNO INDUSTRIES LTD. AR E LISTED AT BOMBAY STOCK EXCHANGE (BSE), A RECOGNIZED STOCK EXCHANGE OF INDI A SINCE LAST SO MANY YEARS AND EVEN DURING THE TIME OF SALE BY ME. THE S ECURITY CODE OF THE SAID EQUITY SHARES AT BSE IS 519273 AND ISIN NO. IS INE 142N01023. 2. EQUITY SHARES OF UNNO INDUSTRIES LTD. WERE SOLD ON BOMBAY STOCK EXCHANGE THROUGH SEBI REGISTERED STOCK BROKER ASHIKA STOCK B ROKING LTD. AND GUINESS SECURITIES LTD. WHOSE DETAILS ARE AS UNDER: A) NAME: ASHIKA STOCK BROKING LTD. ADDRESS: TRINITY, 7 TH FLOOR, 226/1, A.J.C. BOSE ROAD, KOLKATA-700020. CONTACT NO. 033 22839952. B) NAME: GUINESS SECURITIES LTD. ADDRESS: GUINESS HOUSE, 18, DESHPRIYA PARK ROAD, KO LKATA-700026 CONTACT NO. 033 30015555. 3. CONTRACT NOTES ISSUED REGARDING SALE OF EQUITY S HARES OF UNNO INDUSTRIES LTD. ON BOMBAY STOCK EXCHANGE BY SEBI REGISTERED BROKERS - ASHIKA STOCK BROKING LTD. AND GUINESS SECURITIES LTD. ARE ENCLOS ED. ANNEXURE V. 4. THE RELEVANT DEMAT ACCOUNT STATEMENTS OF ASHIKA STOCK BROKING LTD. AND GUINESS SECURITIES LTD. REFLECTING THE DEBIT OF SHA RES OF UNNO INDUSTRIES LTD. UPON SALE ARE ENCLOSED. (ENTRIES HIGHLIGHTED). ANNEXURE VI . 5. THE LEDGER OF THE BROKERS OF ASHIKA STOCK BROKIN G LTD. AND GUINESS SECURITIES LTD. FOR THE FINANCIAL YEAR 2013-14 ARE ENCLOSED. ANNEXURE VII. 6. TAMILNAD MERCANTILE LTD. BANK STATEMENT REFLECTI NG THE RECEIPTS OF SALE CONSIDERATION FROM THE SEBI REGISTERED STOCK BROKER S (HIGHLIGHTING THE SAID ENTRIES) IS ENCLOSED. ANNEXURE VIII. 7. OUT OF SALE CONSIDERATION MONEY OF RS. 3151423.0 0 FROM UNNO INDUSTRIES LTD. A SUM OF RS. 3150000.00 HAS BEEN INVESTED IN EQUITY SHARES OF GLOW DIAM DESIGNS PVT. LTD. ALL THE EVIDENCES WERE ATTACHED AS ANNEXURES AS STA TED ABOVE. ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 10 6. THE ASSESSING OFFICER IN HIS ORDER DID NOT REFER TO ANY OF THESE EVIDENCES. INSTEAD AT PARA 6 AND 7 HE CONCLUDED HELD AS FOLLOWS: 6. THE DETAILS OF PURCHASE AND SALE OF THIS PARTIC ULAR SCRIP I.E. UNNO INDUSTRIES LTD. (HEREINAFTER REFERRED AS THE SCRIP ) WERE EXAMINED IN WHICH SHARES WERE SOLD IN JUNE/AUGUST, 2013 AT THE PRICE OF RS. 31,62,379/- AND PURCHASED RS. 1,00,000/- I.E. A HUMONGOUS RISE OF O VER 3100% OVER A VERY SHORT PERIOD OF JUST 24 MONTHS. THESE FACTS DEMANDE D A DEEPER STUDY OF THE PRICE MOVEMENTS AND SHARE MARKET BEHAVIOR OF THE EN TITIES INVOLVED IN TRADE, OF THE SCRIP AS THE SHARE PRICE MOVEMENTS AND THE P ROFIT EARNED BY THE BENEFICIARIES WERE BEYOND HUMAN PROBABILITIES. THUS A DEEPER STUDY WAS NEEDED TO ASCERTAIN WHETHER THE TRANSACTIONS WERE G ENUINE INVESTMENT TRANSACTION OF SHAM ONES AND COLORABLE DEVICE ONLY TO CONVERT THE UNACCOUNTED CASH INTO TAX EXEMPT. 7. APART FROM THIS, THE DIRECTORATE OF INCOME TAX, KOLKATA VARIOUS ENQUIRIES HAVE BEEN MADE ON PROJECT BASIS, WHICH HAS RESULTED INTO THE UNEARTHING OF HUGE SYNDICATE OF ENTRY OPERATORS, SHARE BROKERS AN D MONEY LENDER INVOLVED IN PROVIDING BOGUS ACCOMMODATION ENTRIES OF LONG TE RM CAPITAL GAIN AND SHORT TERM CAPITAL LOSS. IT HAS COME TO THE LIGHT T HAT LARGE SCALE MANIPULATION HAS BEEN DONE IN MARKET PRICE OF SHOWN OF CERTAIN C OMPANIES LISTED IN THE BSE BY CERTAIN BENEFICIARY IS UTILIZED TO PURCHASE SHARES OF SUCH COMPANY AT A VERY HIGH ARTIFICIALLY INFLATED MARKET PRICE. SOM E OF THE LISTED COMPANIES DIRECTLY OR IN DIRECTLY OWNED BY OPERATORS AND WHOS E SHARES PRICE HAVE BEEN APPARENTLY MANIPULATED BY THE SYNDICATE OF OPERATOR S. OUT OF THE ABOVE ENQUIRY MADE BY DIT(INV.), KOLKATA HAS ESTABLISHED THAT ONE OF THE MAIN MANIPULATED COMPANY WHICH YOU HAD AVAILED IS ALSO U NDER THIS SYNDICATE. HENCE, IT IS CRYSTAL CLEAR THAT SHARP TRADING COMPA NY IS ONE OF THE MAIN MANIPULATED COMPANY (PENNY LISTED) TO CONVERT UNACC OUNTED CASH OF BENEFICIARY THROUGH LONG TERM CAPITAL GAIN WITH CLA IM A CERTAIN PERCENTAGE OF COMMISSION. 7. THEREAFTER THE AO MADE AN ADDITION UNDER 68 OF T HE ACT. AGGRIEVED THE ASSESSEE CARRIED THE MATTER AN APPEAL. THE LD. FIRST APPELLA TE AUTHORITY CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT, THE TRANSACTION IN QUEST ION COMES WITHIN THE AMBIT OF SUSPICIOUS TRANSACTION AND THEREFORE, THE RULES O F SUSPICIOUS TRANSACTION WOULD APPLY TO THE CASE. HE FURTHER STATED THAT THE PAYME NTS THROUGH BANK OF PROCESSING OF TRANSACTION THROUGH STOCK EXCHANGE AND OTHER SUCH F EATURES ARE ONLY APPARENT FEATURES AND THAT THE REAL FEATURE ARE THE MANIPULA TION AND ABNORMAL PRICE RAISE AND THE SUDDEN DIP THEREAFTER. BASED ON SURROUNDING CIR CUMSTANCES AND CIRCUMSTANTIAL EVIDENCE AND THE ORDER OF THE TRIBUNAL IN THE CASE OF BHAG CHAND CHABRA (HUF) VS. ITO, IN I.T.A. NO. 3088& 3107/2007 DATED 31.12.201 0, THE ADDITION MADE BY THE AO WAS CONFIRMED. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 8. A PERUSAL OF THE ORDER OF THE AO DEMONSTRATES T HAT THIS ADDITION WAS MADE MERELY ON SUSPICION AND IN A ROUTINE AND MECHANICAL MANN ER. THIS IS CLEAR FROM THE FACT THAT THE AO REFERS TO SOME SHARP TRADING COMPANY A S ONE OF THE MAIN ,MANIPULATED COMPANY AND WHEREAS THE ASSESSEE SOLD SCRIPS IN UNN O INDUSTRIES LTD. THE AO REFERS TO VARIOUS ENQUIRIES MADE BY THE DIRECTORS OF INCOME TAX, KOLKATA ON PROJECT BASIS AND THAT THIS RESULTED INTO UNEARTHING OF A H UGE SYNDICATE OF ENTRY OPERATORS AND SHARE BROKERS AND MONEY LENDERS INVOLVED IN PRO VIDING OF BOGUS ACCOMMODATION ENTRIES. THE REPORT AS THE SO-CALLED PROJECT AND TH E EVIDENCE COLLECTED BY THE DIT (INV.), KOLKATA ETC HAVE NOT BEEN BROUGHT ON RECORD . IT IS WELL SETTLED THAT ANY DOCUMENT RELIED UPON BY THE AO FOR MAKING AN ADDITI ON HAS TO BE SUPPLIED TO THE ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 11 ASSESSEE AND AN OPPORTUNITY SHOULD BE PROVIDED TO T HE ASSESSEE TO REBUT THE SAME. IN THIS CASE, GENERAL STATEMENTS HAVE BEEN MADE BY THE AO AND THE ADDITION IS MADE BASED ON SUCH GENERALIZATIONS. THE ASSESSEE HAS NOT BEEN CONFRONTED WITH ANY OF THE EVIDENCE COLLECTED IN THE INVESTIGATION DONE BY THE DIT(INV.), KOLKATA. EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USED AGAINST THE ASSESSEE WITHOUT GIVING A COPY OF THE SAME TO THE ASSESSEE AND THEREAFTER GIV ING HIM AN OPPORTUNITY TO REBUT THE SAME. 9. THE AO FURTHER RELIES ON THE SHOP INCREASE OF 3 1000% OF THE VALUE OF SHARES OVER THE PERIOD OF 2 YEARS. THOUGH THIS IS HIGHLY SUSPIC IOUS, IT CANNOT TAKE THE PLACE OF EVIDENCE. THE HON'BLE SUPREME COURT HAS STATED THAT SUSPICION HOWEVER STRONG CANNOT BE THE BASIS FOR MAKING AN ADDITION. THE EVI DENCE PRODUCED BY THE ASSESSEE LISTED ABOVE PROVES HIS CASE AND THE AO COULD NOT C ONTROVERT THE SAME BY BRINGING ON RECORD ANY EVIDENCE. THE EVIDENCE SAID TO HAVE B EEN COLLECTED BY THE DIT (INV.), KOLKATA AND THE REPORT IS NOT PRODUCED BEFORE THIS BENCH. 10. I NOW DISCUSS THE CASE LAW ON THE SUBJECT. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT, KOLKATA-III VS. SMT. SHREYASHI GANGULI REPORTED IN [2012] (9) TMI 1113 HELD AS FOLLOWS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE ORDER OF THE LD.. TRIBUNAL IS PERVERSE IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT U NDER SECTION 68 OF THE INCOME TAX ACT, 1961, BY IGNORING THE FACTS ON RECO RD. THE LD. TRIBUNAL AFTER CONSIDERING THE MATERIAL AND HEARING CAME TO A FACT FINDING WHICH IS AS FOLLOWS: THE ASSESSING OFFICER HAS DOUBTED THE TRANSACTION S INCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER, THE DEMAT ACCOUNT GIVEN THE STATEMENT OF TRANSACTIONS FROM 01.04.2004 TO 31.03.2005 I.E. RELEVANT FOR THE ASSESSMENT YEAR UNDER APPEAL (2005 -06) ARE BEFORE US. THERE CANNOT BE ANY DOUBT ABOUT THE TRANSACTION AS HAS BEEN OBSERVED BY THE ASSESSING OFFICER. THE TRANSACTIONS WERE AS PER NORMS UNDER CONTROLLED BY THE SECURITIES TRANSACTIO N TAX, BROKERAGE SERVICE TAX AND CESS, WHICH WERE ALREADY PAID. THEY WERE COMPLIED WITH. ALL THE TRANSACTIONS WERE THROUGH BANK. THERE IS NO IOTA OF EVIDENCE OVER THE ABOVE TRANSACTIONS AS IT WERE THR OUGH DEMAT FORMAT. HENCE, WE AGREE WITH THE GIVEN FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN ACCEPTING T HE TRANSACTIONS AS GENUINE TOO. IN VIEW OF THE FACT FINDINGS WE CANNOT REAPPRECIATE , RECORDING IS SUCH, CANNOT BE SAID TO BE PERVERSE AS IT IS NOT FACT FIN DING OF THE LD. TRIBUNAL ALONE. THE COMMISSIONER OF INCOME TAX CAME TO THE S AME FACT FINDING. CONCURRENT FACT FINDING ITSELF MAKES THE S TORY OF PERVERSITY, UNBELIEVABLE. THE D BENCH OF THE KOLKATA TRIBUNAL IN THE CASE O F GAUTAM KUMAR PINCHA VS. ITO, IN I.T.A. NO. 569/KOL/2017 DATED 15.11.2017 AT PARA 19 ONWARDS HELD AS FOLLOWS: (I) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDEN CES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRAN SACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERATED A SIZ EABLE AMOUNT OF LOSS OUT ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 12 OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUA NTUM OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPRESSED BY THE LD A O BUT HE MISERABLY FAILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING PRICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. (II) CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITED [2 013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG I T IS NOT POSSIBLE TO RECORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER HELD THAT IN ABSENCE OF ANY E VIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANS ACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTE D TO WITH ULTERIOR MOTIVE. (III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSES SING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT , BROKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRA NSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. (IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM ED THE DECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE A PPEAL OF THE ASSESSEE WHERE THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSES SEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON TH E BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT TH E AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSES SEE. THE TRIBUNAL HELD THAT THE AOS CONCLUSIONS ARE MERELY BASED ON THE I NFORMATION RECEIVED BY HIM. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. ( V) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIR MED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSE SSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGES T THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. (VI) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCOME FROM LONG TERM CAPITAL GAINS. HOWEVER, TH E AO, BASED ON THE INFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXC HANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFOR E HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUM ENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PR ODUCED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SH OWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THE SE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED BY HIGH COURT. 8.4. IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I T O XIV) IN PARA 6(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASSESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAND AND THE REFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS SUPP ORTED WITH MATERIAL EVIDENCES WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT IN THE ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 13 ABSENCE OF MATERIAL/EVIDENCE THE ALLEGATIONS THAT T HE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE ALSO FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVAN T EVIDENCE 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. THESE EVIDENCES WERE NEITHER FOUND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE 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 THAT INCOME FROM LTCG IS EXEMPTED U/S 10(3 8) OF THE ACT. FOR COMING TO SUCH A CONCLUSION WE RELY ON THE DECISION OF THE HO NBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INVESTMENTS IN ITA NO.620 OF 2 008 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 RECE IVED FROM THE SHARE BROKER THROUGH ACCOUNT PAYEE WHICH ARE ALSO FILED IN ACCOR DANCE 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 TH E TRANSACTIONS OF THE SHARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS NO SUBSTANTIAL QUESTION OF LAW HELD IN THIS MATTER. HE NCE THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. 8.5. WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY B EEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED BY US TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE L AWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FAC TS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOL DING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/ S 68 OF THE ACT. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITION. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. THE A BENCH OF THE KOLKATA TRIBUNAL IN THE CASE O F ITO VS. SHALEEN KHEMANI IN I.T.A. NO. 1945/KOL/2014 DATED 18.10.2017 AT PARA 9.1. TO 9.4 HELD AS FOLLOWS: 9.1 WE FURTHER FIND THAT THE TRANSACTION OF SALE OF SHARES BY THE ASSESSEE WAS DULY BACKED BY ALL EVIDENCES INCLUDING CONTRACT NOTES, DEMAT STATEMENT, BANK ACCOUNT REFLECTING THE TRANSACTIONS, THE STOCK BROKERS HAVE CONFIRMED THE TRANSACTIONS, THE STOCK EXCHANGE HAS CONFIRMED THE TRANSACTIONS, THE SHARES HAVE BEEN SOLD ON THE ONLINE PLATFORM OF THE STOCK EXCHANGE AND EACH TRADE OF SALE OF SHARES WERE HAVING UNIQUE TRA DE NO. AND TRADE TIME. IT IS NOT THE CASE THAT THE SHARES WHICH WERE SOLD ON THE DATE MENTIONED IN THE CONTRACT NOTE WERE NOT TRADED PRICE ON THAT PARTICU LAR DATE. THE LD AO DOUBTED THE TRANSACTIONS DUE TO THE HIGH RISE IN THE STOCK PRICE BUT FOR THAT, THE ASSESSEE COULD NOT BE BLAMED AND THERE WAS NO EVIDE NCE TO PROVE THAT THE ASSESSEE OR ANY ONE ON HIS BEHALF WAS MANIPULATING THE STOCK PRICES. THE STOCK EXCHANGE AND SEBI ARE THE AUTHORITIES APPOINT ED BY THE GOVERNMENT OF INDIA TO ENSURE THAT THERE IS NO STOCK RIGGING OR M ANIPULATION. THE LD AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT THE SE AGENCIES HAVE ALLEGED ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 14 ANY STOCK MANIPULATION AGAINST THE ASSESSEE AND OR THE BROKERS AND OR THE COMPANY. IN ABSENCE OF ANY EVIDENCES IT CANNOT BE S AID THAT MERELY BECAUSE THE STOCK PRICE MOVED SHARPLY, THE ASSESSEE WAS TO BE BLAMED FOR BOGUS TRANSACTIONS. IT IS ALSO TO BE SEEN THAT IN THIS CA SE, THE SHARES WERE HELD BY THE DONORS FROM 2003 AND SOLD IN 2010 THUS THERE WA S A HOLDING PERIOD OF 7 YEARS AS PER SECTION 49 OF THE ACT AND IT CANNOT BE SAID THAT THE ASSESSEE AND THE DONORS WERE MAKING SUCH PLANS FOR THE LAST 7 YE ARS TO RIG THE STOCK PRICE TO GENERATE BOGUS CAPITAL GAINS THAT TOO WITHOUT AN Y EVIDENCES WHATSOEVER. 9.2 IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSE E AND / OR THE STOCK BROKER M/S P DIDWANIA & CO AND TOSHITH SECURITIES P LTD., BOTH REGISTERED SHARE AND STOCK BROKERS WITH CALCUTTA STOCK EXCHANGE HAD CONF IRMED THE TRANSACTION AND HAVE ISSUED LEGALLY VALID CONTRACT NOTES UNDER THE LAW AND SUCH CONTRACT NOTES ARE AVAILABLE IN PAGES 41-52 OF THE PAPER BOO K. WE FIND THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PR CIT V S RUNGTA PROPERTIES PRIVATE LIMITED ITAT NO 105 OF 2016 DATED 8 TH MAY 2017 IN A SIMILAR ISSUE DISMISSED THE APPEAL OF THE DEPARTMENT BY MAKING TH E FOLLOWING OBSERVATIONS: (11) ON THE LAST POINT, THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT BROUGHT ON RECORDS ANY MATERIAL TO SHOW THAT THE TR ANSACTIONS IN SHARES OF THE COMPANY INVOLVED WERE FALSE OR FICTITIOUS. IT IS FI NDING OF THE ASSESSING OFFICER THAT THE SCRIPS OF THIS COMPANY WAS EXECUTED BY A B ROKER THROUGH CROSS DEALS AND THE BROKER WAS SUSPENDED FOR SOME TIME. IT IS A SSESSEES CONTENTION ON THE OTHER THAT EVEN THOUGH THERE ARE ALLEGATIONS AG AINST THE BROKER, BUT FOR THAT REASON ALONE THE ASSESSEE CANNOT BE HELD LIABL E. ON THIS POINT THE TRIBUNAL HELD AS A MATTER OF FACT THE AO DOUBTED THE INTEGRITY O F THE BROKER OR THE MANNER IN WHICH THE BROKER OPERATION AS PER THE STA TEMENT OF ONE OF THE DIRECTORS OF THE BROKER FIRM AND ALSO AO OBSERV ED THAT ASSESSEE HAD NOT FURNISHED ANY EXPLANATION IN RESPECT OF THE INTENTION OF SHOWING TRADING OF SHARES ONLY IN THREE PENNY STOCK S. AO RELIED THE LOSS OF RS.25,30,396/- ONLY ON THE BASIS OF INFORMA TION SUBMITTED BY THE STOCK FICTITIOUS. AO HAS ALSO NOT DOUBTED THE G ENUINENESS OF THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE. AOS OB SERVATION AND CONCLUSION ARE MERELY BASED ON THE INFORMATION REPR ESENTATIVE. THEREFORE ON SUCH BASIS NO DISALLOWANCE CAN BE MADE AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF LD . CIT(A), WHO HAS RIGHTLY ALLOWED THE CLAIM OF ASSESSEE. THUS 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. TH E SUGGESTED QUESTIONS, IN OUR OPINION DO NOT RAISE ANY SUBSTANTIAL QUESTION O F LAW. 9.3. WE THEREFORE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALL EGATIONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OP INION, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR C OULD NOT CONTROVERT THE ARGUMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDE NCES ON RECORD AND MERELY RELIED ON THE ORDERS OF THE LD AO. WE FIND THAT THE ALLEGATION THAT THE ASSESSEE AND / OR BROKERS GETTING INVOLVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BAN K ACCOUNTS TO PROVE THE ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 15 GENUINENESS OF THE TRANSACTIONS RELATING TO PURCHAS E AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEITHER FOU ND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE AS SESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONA FIDE AND GEN UINE AND THEREFORE THE LD AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CL AIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. WE ALSO FIND THAT THE LD CITA RIGHTLY RELIED ON THE DECISION OF THE HONBLE HIGH COURT AT CALCUTTA IN T HE CASE OF ALPINE INVESTMENTS IN ITA NO. 620 OF 2008 DATED 26 TH AUGUST 2008 WHEREIN THE HONBLE COURT HELD AS FOLLOWS: IT APPEARS THAT THE SHARE LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCKBROKER OF THE CALCUTTA STOCK EXCHAN GE AND ALL THE PAYMENTS MADE TO THE STOCKBROKER AND ALL THE PAYMEN TS RECEIVED FROM STOCKBROKER THROUGH ACCOUNT PAYEE INSTRUMENTS, WHIC H WERE 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 CAME TO THE C ONCLUSION AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. IN DOING SO, THE TRIBUNAL HELD THAT THE TRANSACTION FULLY SUPPORTED BY THE DO CUMENTARY EVIDENCES COULD NOT BE BRUSHED ASIDE ON SUSPICION A ND SURMISES. HOWEVER, IT 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 MA TTER. HENCE, THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. 9.4. WE ALSO FIND THAT THE VARIOUS OTHER CASE LAWS OF HONBLE JURISDICTIONAL HIGH COURT AND OTHER CASE LAWS ALSO RELIED UPON BY THE LD AR AND FINDINGS GIVEN THEREON WOULD APPLY TO THE FACTS OF THE INSTA NT CASE. THE LD DR WAS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFECT. HENCE WE HOLD THAT THE LD AO WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF SOICL AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE AC T AND THEREFORE WE UPHOLD THE ORDER OF THE LD CITA AND DISMISS THE APPEAL OF THE REVENUE. ACCORDINGLY THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. APPLYING THE PROPOSITION OF LAW LAID DOWN IN ALL TH E ABOVE REFERRED CASES, THE FACTS OF THIS CASE, I FIND FORCE IN THE SUBMISSION OF THE AS SESSEE AND THERE ARE BACKED BY EVIDENCE. I ALSO FIND THAT THE REVENUE HAS NOT BASE D ITS FINDING ON IN ANY EVIDENCE. IN VIEW OF THE ABOVE DISCUSSION THE ADDITION MADE U/S 68 OF THE ACT IS HEREBY DELETED. 6. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY C ONTENDS AT THIS STAGE THAT THE DIT(INV) HAS CARRIED OUT A DETAILED INVESTIGATION IN VARIOUS ENTRY OPERATORS CASES. THEY HAVE BEEN FOUND TO HAVE RIGGE D SUCH KIND OF SCRIPS PRICES. THERE IS NOT EVEN A SINGLE MATERIAL DURING THE COURSE OF HEARING WHICH COULD SUGGEST THE ASSESSEE TO HAVE ENGAGED IN ANY K IND OF FOUL PLAY. THIS TRIBUNALS ANOTHER CO-ORDINATE BENCH DECISION IN I TA NO.2281/KOL/2017 ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 16 NAVNEET AGARWAL VS. ITO DECIDED ON 20.07.2018 HAS REJECTED REVENUES ALL THESE ARGUMENTS AS FOLLOWS: 9. THE LD. DR ON THE OTHER HAND, RELIED ON THE ORDE R OF THE ASSESSING OFFICER AND REITERATED THE FINDINGS MADE THEREIN AND SUBMITTED THAT THE SAME BE UPHELD. HE VEHEMENTLY ARGUED THAT MERELY BECAUSE THE ASSESSEE HAS PRODUCED ALL THE EVIDENCES REQUIRED TO PROVE HIS CLAIM, THE SAME CAN NOT BE ACCEPTED AS THESE ARE ORGANIZED AND MANAGED TRANSACTIONS. HE TOOK THI S BENCH THROUGH THE MODUS OPERANDI MENTIONED BY THE AO AND SUBMITTED THAT IN ALL CASES WHERE THE SHARES OF THESE COMPANIES ARE PURCHASED AND SOLD, ADDITION S HAVE TO BE MADE, IRRESPECTIVE OF THE EVIDENCE PRODUCED AS THERE ARE CASES WHERE MANIPULATION HAS TAKEN PLACE. HE REITERATED EACH AND EVERY OBSER VATION AND FINDING OF THE LD. AO AS WELL AS THE LD. CIT(A) AND PRAYED THAT THE SA ME BE UPHELD. 10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMI SSIONS, PERUSAL OF THE PAPERS ON RECORD AND ORDER OF THE LOWERS AUTHORITIES BELOW, A S WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS. 11. THE ASSESSEE IN THIS CASE HAS STATED THE FOLLOW ING FACTS AND PRODUCED THE FOLLOWING DOCUMENTS AS EVIDENCES: 1. THE ASSESSEE HAD MADE AN APPLICATION FOR ALLOTME NT OF 50000 EQUITY SHARES OF SMART CHAMPS IT AND INFRA LTD. AND SHE WAS ALLOTT ED THE SHARE ON 3 RD DECEMBER 2011 (COPY OF APPLICATION FORM, INTIMATION OF ALLOT MENT AND SHARE CERTIFICATE PAPER BOOK AT PAGE 8 TO 10). 2. THE PAYMENT FOR THE ALLOTMENT OF SHARES WAS MADE THROUGH AN ACCOUNT PAYEE CHEQUE (COPY OF THE BANK STATEMENT EVIDENCING THE S OURCE OF MONEY AND PAYMENT MADE TO SMART CHAMPS IT & INFRA LTD. FOR SUCH SHARES ALLOTTED IS PLACED IN THE PAPER BOOK AT PAGE NO. 11). 3. ANNUAL RETURN NO. 20B WAS FILED WITH REGISTRAR O F COMPANIES BY SMART CHAMPS IT & INFRA LTD SHOWING THE ASSESSEES NAME AS SHAR EHOLDER (COPY OF ANNUAL RETURN NO. 20B FILED WITH REGISTRAR OF COMPANIES BY SMART CHAMPS IT & INFRA LTD. IS PLACED IN THE PAPER BOOK AT PAGE NO. 12 TO 18.) 4. THE ASSESSEE LODGED THE SAID SHARES WITH THE DEP OSITORY M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. WITH A DEMAT REQUEST ON 11 TH FEBRUARY, 2012. THE SAID SHARES WERE DEMATERIALIZED ON 31 ST MARCH, 2012 (COPY OF DEMAT REQUEST SLIP ALONG WITH THE TRANSACTION STATEMENT IS PLACED IN T HE PAPER BOOK AT PAGE NO. 19 TO 21). 5. ON 24.01.2013, THE HONBLE BOMBAY HIGH COURT APP ROVED THE SCHEME OF AMALGAMATION OF SMART CHAMPS IT AND INFRA LTD. WI TH CRESSANDA SOLUTIONS LTD. IN ACCORDANCE WITH THE SAID SCHEME OF AMALGAM ATION, THE ASSESSEE WAS ALLOTTED 50000 EQUITY SHARES OF M/S. CRESSANDA SOL UTIONS LTD. THE DEMAT SHARES ARE REFLECTED IN THE TRANSACTION STATEMENT O F THE PERIOD FROM 1 ST NOVEMBER 2011 TO 31 ST DECEMBER, 2013 (A COPY OF THE SCHEME OF AMALGAMATI ON ALONGWITH COPY OF ORDER OF THE HONBLE BOMBAY HIGH COURT AND A COPY OF THE LETTER TO THIS EFFECT SUBMITTED BY CRESSANDA SOLUTIONS LTD. TO B OMBAY STOCK EXCHANGE IS PLACED IN THE PAPER BOOK AT PAGE NO 22 TO 43.) 6. THE ASSESSEE SOLD 50000 SHARES COSTING RS. 50000 0/- THROUGH HER BROKER SKP STOCK BROKING PVT. LTD WHICH WAS A SEBI REGISTERED BROKER AND EARNED A LONG TERM CAPITAL GAIN OF RS. 2,18,13,072/-. (COPY OF TH E BANK STATEMENT, BROKERS CONTRACT NOTE TOGETHER WITH THE DELIVERY INSTRUCTIO NS GIVEN TO THE DP AND BROKERS CONFIRMATION IS ALSO PLACED IN THE PAPER BOOK AT PA GE NO 44 TO 65). ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 17 7. COPY OF FORM NO. 10DB ISSUED BY THE BROKER, IN S UPPORT OF CHARGING OF S.T.T. IN RESPECT OF THE TRANSACTIONS APPEARING IN THE LEDGER IS PLACED IN THE PAPER BOOK AT PAGE NO. 66. 8. THE HOLDING PERIOD OF THE SAID SCRIP IS MORE THA N ONE YEAR (ABOVE 500 DAYS) THROUGH IN ORDER TO GET THE BENEFIT OF CLAIM OF LON G TERM CAPITAL GAIN THE HOLDING PERIOD IS REQUIRED TO BE 365 DAYS. 12.THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAVE REJECTED THESE EVIDENCES FILED BY THE ASSESSEE BY REFERRING TO MODUS OPERANDI OF PERSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH HIS EXEMPT FROM INCOME TAX . ALL THESE OBSERVATIONS ARE GENERAL IN NATURE AND ARE APPLIED ACROSS THE BOARD TO ALL THE 60,000 OR MORE ASSESSEES WHO FALL IN THIS CATEGORY. SPECIFIC EVIDE NCES PRODUCED BY THE ASSESSEE ARE NOT CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVIDENCE COLLECTED FROM THIRD PARTIES IS CONFRONTED TO THE ASSESSES. NO OPPORTUNI TY OF CROSS-EXAMINATION OF PERSONS, ON WHOSE STATEMENTS THE REVENUE RELIES TO MAKE THE ADDITION, IS PROVIDED TO THE ASSESSEE. THE ADDITION IS MADE BASED ON A REPOR T FROM THE INVESTIGATION WING. 13. THE ISSUE FOR CONSIDERATION BEFORE US IS WHETHE R, IN SUCH CASES, THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUIDE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILI TIES, HUMAN BEHAVIOR AND DISCOVERY OF THE MODUS OPERANDI ADOPTED IN EARNING ALLEGED BOGUS LTCG AND STCG, THAT HAVE SURFACED DURING INVESTIGATIONS SHOULD GUI DE THE AUTHORITIES IN ARRIVING AT A CONCLUSION AS TO WHETHER THE CLAIM IN GENUINE OR NO T. AN ALLEGED SCAM MIGHT HAVE TAKEN PLACE ON LTCG ETC. BUT IT HAS TO BE ESTABLISH ED IN EACH CASE, BY THE PARTY ALLEGING SO, THAT THIS ASSESSEE IN QUESTION WAS PAR T OF THIS SCAM. THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESSEES ACTION GIVING H ER INVOLVEMENT IN THE SCAM SHOULD BE ESTABLISHED. THE ALLEGATION IMPLY THAT CASH WAS PAID BY THE ASSESSEE AND IN RETURN THE ASSESSEE RECEIVED LTCG, WHICH IS INCOME EXEMPT FROM INCOME TAX, BY WAY OF CHEQUE THROUGH BANKING CHANNELS. THIS ALLEGA TION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVEN UE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIGATIONS OFFICE BY WAY OF STATEMEN TS RECORDED ETC. HAS TO ALSO BE BROUGHT ON RECORDING EACH CASE, WHEN SUCH A STATEME NT, EVIDENCE ETC. IS RELIED UPON BY THE REVENUE TO MAKE ANY ADDITIONS. OPPORTUN ITY OF CROSS EXAMINATION HAS TO BE PROVIDED TO THE ASSESSEE, IF THE AO RELIES ON AN Y STATEMENTS OR THIRD PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATERIAL OR EV IDENCE IS SOUGHT TO BE RELIED UPON BY THE AO, HE HAS TO CONFRONT THE ASSESSEE WITH SUC H MATERIAL. THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED BASED ON MERE CONJECTUR ES UNVERIFIED BY EVIDENCE UNDER THE PRETENTIOUS GARB OF PREPONDERANCE OF HUMA N PROBABILITIES AND THEORY OF HUMAN BEHAVIOR BY THE DEPARTMENT. 14. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PUT BEFORE HIM AND HE IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CASE, THE AO RELIE S ONLY ON A REPORT AS THE BASIS FOR THE ADDITION. THE EVIDENCE BASED ON WHICH THE DDIT REPORT IS PREPARED IS NOT BROUGHT ON RECORD BY THE AO NOR IS IT PUT BEFORE THE ASSESS EE. THE SUBMISSION OF THE ASSESSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RE CEIVED SOME TIPS AND SHE CHOSE TO INVEST BASED ON THESE MARKET TIPS AND HAD TAKEN A C ALCULATED RISK AND HAD GAINED IN THE PROCESS AND THAT SHE IS NOT PARTY TO THE SCAM E TC., HAS TO BE CONTROVERTED BY THE REVENUE WITH EVIDENCE. WHEN A PERSON CLAIMS THAT SH E HAS DONE THESE TRANSACTIONS IN A BONA FIDE AND GENUINE MANNER AND WAS BENEFITTE D, ONE CANNOT REJECT THIS SUBMISSION BASED ON SURMISES AND CONJECTURES. AS TH E REPORT OF INVESTIGATION WING SUGGESTS, THERE ARE MORE THAN 60,000 BENEFICIARIES OF LTCG. EACH CASE HAS TO BE ASSESSED BASED ON LEGAL PRINCIPLES OF LEGAL IMPORT LAID DOWN BY THE COURTS OF LAW. ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 18 15. IN OUR VIEW, JUST THE MODUS OPERANDI, GENERALIS ATION, PREPONDERANCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTIN G THE CLAIM OF THE ASSESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CONTROVER T THE VALIDITY AND CORRECTNESS OF THE DOCUMENTARY EVIDENCES PRODUCED, THE SAME CANNOT BE REJECTED BY THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF OMAR SALAV MOHAMED SAIT REPORTED IN (1959) 37 ITR 151 (S C) HAD HELD THAT NO ADDITION C AN BE MADE ON THE BASIS OF SURMISES, SUSPICION AND CONJECTURES. IN THE CASE OF CIT(CENTRAL), KOLKATA VS. DAULAT RAM RAWATMULL REPORTED IN 87 ITR 349, THE HON'BLE S UPREME 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 PROV E THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNERRINGLY AND REASONABLY RA ISING AN INTERFERENCE TO THAT EFFECT. THE HON'BLE SUPREME COURT IN THE CASE OF UM ACHARAN SHAH & BROS. VS. CIT 37 ITR 271 HELD THAT SUSPICION HOWEVER STRONG, CANN OT TAKE THE PLACE OF EVIDENCE. IN THIS CONNECTION WE REFER TO THE GENERAL VIEW ON THE TOPIC OF CONVEYANCE OF IMMOVABLE PROPERTIES. THE RATES/SALE PRICE ARE AT VARIANCE W ITH THE CIRCLE RATES FIXED BY THE REGISTRATION AUTHORITIES OF THE GOVERNMENT IN MOST CASES AND THE GENERAL IMPRESSION IS THAT CASH WOULD HAVE CHANGED HANDS. THE COURTS H AVE LAID DOWN THAT JUDICIAL NOTICE OF SUCH NOTORIOUS FACTS CANNOT BE TAKEN BASE D ON GENERALISATIONS. COURTS OF LAW ARE BOUND TO GO BY EVIDENCE. 16. WE FIND THAT THE ASSESSING OFFICER AS WELL AS THE L D. CIT(A) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER, WE DO NOT FIND THAT THE ASSE SSING OFFICER AS WELL AS THE LD. CIT(A), HAVE BROUGHT OUT ANY PART OF THE INVESTIGAT ION WING REPORT IN WHICH THE ASSESSEE HAS BEEN INVESTIGATED AND /OR FOUND TO BE A PART OF ANY ARRANGEMENT FOR THE PURPOSE OF GENERATING BOGUS LONG TERM CAPITAL G AINS. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PERSONS INVESTIGATED, IN CLUDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASSESSEE WAS IN COLLUS ION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LINK THEIR WRONG DOINGS WITH THE ASSESSEE. IN FACT, THE INVESTIGATION WING IS A SEPARATE DEPARTMENT WHI CH HAS NOT BEEN ASSIGNED ASSESSMENT WORK AND HAS BEEN DELEGATED THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VESTED WIDEST POWERS ON THIS WING. IT IS TH E DUTY OF THE INVESTIGATION WING TO CONDUCT PROPER AND DETAILED INQUIRY IN ANY MATTER W HERE THERE IS ALLEGATION OF TAX EVASION AND AFTER MAKING PROPER INQUIRY AND COLLECT ING PROPER EVIDENCES THE MATTER SHOULD BE SENT TO THE ASSESSMENT WING TO ASSESS THE INCOME AS PER LAW. WE FIND NO SUCH ACTION EXECUTED BY INVESTIGATION WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALLY AGAINST THE ASSESSEE IN THE IN VESTIGATION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUILTY OR LINKED TO T HE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CASE, IN OUR VIEW, THE ASSESS ING OFFICER AT BEST COULD HAVE CONSIDERED THE INVESTIGATION REPORT AS A STARTING P OINT OF INVESTIGATION. THE REPORT ONLY INFORMED THE ASSESSING OFFICER THAT SOME PERSONS MA Y HAVE MISUSED THE SCRIPT FOR THE PURPOSE OF COLLUSIVE TRANSACTION. THE ASSESSING OFFICER WAS DUTY BOUND TO MAKE INQUIRY FROM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION AND THEN TO COLLECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. WE, HOWEVER, FIND THAT THE ASSESSING O FFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT THE TRANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHERWISE SUPPORTED BY PROPER THIRD PARTY DOCUMENTS ARE COLLUSIVE TRANSACTIONS. 17. THE HONBLE SUPREME COURT WAY BACK IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT [1959] 37 ITR 288 (SC) HELD THAT ASSESS MENT COULD NOT BE BASED ON BACKGROUND OF SUSPICION AND IN ABSENCE OF ANY EVIDE NCE TO SUPPORT THE SAME. THE HONBLE COURT HELD: ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 19 ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGH ED WITH THE INCOME-TAX OFFICER WE MAY OBSERVE THAT THE NOTORIETY FOR SMUGG LING FOOD GRAINS AND OTHER COMMODITIES TO BENGAL BY COUNTRY BOATS ACQUIRED BY SAHIBGUNJ AND THE NOTORIETY ACHIEVED BY DHULIAN AS A GREAT RECEIVING CENTRE FOR SUCH COMMODITIES WERE MERELY A BACKGROUND OF SUSPICION A ND THE APPELLANT COULD NOT BE TARRED WITH THE SAME BRUSH AS EVERY ARHATDAR AND GRAIN MERCHANT WHO MIGHT HAVE BEEN INDULGING IN SMUGGLING OPERATIONS, WITHOUT AN IOTA OF EVIDENCE IN THAT BEHALF. THE CANCELLATION OF THE FO OD GRAIN LICENCE AT NAWGACHIA AND THE PROSECUTION OF THE APPELLANT UNDE R THE DEFENCE OF INDIA RULES WAS ALSO OF NO CONSEQUENCE INASMUCH AS THE AP PELLANT WAS ACQUITTED OF THE OFFENCE WITH WHICH IT HAD BEEN CHARGED AND I TS LICENCE ALSO WAS RESTORED. THE MERE POSSIBILITY OF THE APPELLANT EAR NING CONSIDERABLE AMOUNTS IN THE YEAR UNDER CONSIDERATION WAS A PURE CONJECTU RE ON THE PART OF THE INCOME-TAX OFFICER AND THE FACT THAT THE APPELLANT INDULGED IN SPECULATION (IN KALAI ACCOUNT) COULD NOT LEGITIMATELY LEAD TO THE I NFERENCE THAT THE PROFIT IN A SINGLE TRANSACTION OR IN A CHAIN OF TRANSACTIONS CO ULD EXCEED THE AMOUNTS, INVOLVED IN THE HIGH DENOMINATION NOTES,---THIS ALS O WAS A PURE CONJECTURE OR SURMISE ON THE PART OF THE INCOME-TAX OFFICER. AS R EGARDS THE DISCLOSED VOLUME OF BUSINESS IN THE YEAR UNDER CONSIDERATION IN THE HEAD OFFICE AND IN BRANCHES THE INCOME-TAX OFFICER INDULGED IN SPECULA TION WHEN HE TALKED OF THE POSSIBILITY OF THE APPELLANT EARNING A CONSIDERABLE SUM AS AGAINST WHICH IT SHOWED A NET LOSS OF ABOUT RS.45,000. THE INCOME-TA X OFFICER INDICATED THE PROBABLE SOURCE OR SOURCES FROM WHICH THE APPELLANT COULD HAVE EARNED A LARGE AMOUNT IN THE SUM OF RS.2,91,000 BUT THE CONC LUSION WHICH HE ARRIVED AT IN REGARD TO THE APPELLANT HAVING EARNED THIS LA RGE AMOUNT DURING THE YEAR AND WHICH ACCORDING TO HIM REPRESENTED THE SECRETED PROFITS OF THE APPELLANT IN ITS BUSINESS WAS THE RESULT OF PURE CONJECTURES AND SURMISES ON HIS PART AND HAD NO FOUNDATION IN FACT AND WAS NOT PROVED AG AINST THE APPELLANT ON THE RECORD OF THE PROCEEDINGS. IF THE CONCLUSION OF THE INCOME-TAX OFFICER WAS THUS EITHER PERVERSE OR VITIATED BY SUSPICIONS, CON JECTURES OR SURMISES, THE FINDING OF THE TRIBUNAL WAS EQUALLY PERVERSE OR VIT IATED IF THE TRIBUNAL TOOK COUNT OF ALL THESE PROBABILITIES AND WITHOUT ANY RH YME OR REASON AND MERELY BY A RULE OF THUMB, AS IT WERE, CAME TO THE CONCLUS ION THAT THE POSSESSION OF 150 HIGH DENOMINATION NOTES OF RS. 1,000 EACH WAS S ATISFACTORILY EXPLAINED BY THE APPELLANT BUT NOT THAT OF THE BALANCE OF 141 HIGH DENOMINATION NOTES OF RS. 1,000 EACH. THE OBSERVATIONS OF THE HONBLE APEX COURT ARE EQUA LLY APPLICABLE TO THE CASE OF THE ASSESSEE. IN OUR VIEW, THE ASSESSING OFFICER HAVING FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE TRANSACTION OF THE ASSES SEE WAS A COLLUSIVE TRANSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN FACT, IN THIS CASE NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AI D OF ANY DIRECT EVIDENCES OR MATERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BE ING INVESTIGATED BY VARIOUS WINGS OF THE INCOME TAX DEPARTMENT HENCE IN OUR VIEW UNDE R THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE. 18. WE NOW CONSIDER THE VARIOUS PROPOSITIONS OF LAW LAID DOWN BY THE COURTS OF LAW. THAT CROSS-EXAMINATION IS ONE PART OF THE PRINCIPLE S OF NATURAL JUSTICE HAS BEEN LAID DOWN IN THE FOLLOWING JUDGMENTS: A) AYAAUBKHAN NOORKHAN PATHAN VS. THE STATE OF MAHA RASHTRA AND ORS. 23. A CONSTITUTION BENCH OF THIS COURT IN STATE OF M.P.V. CHINTAMAN SADASHIVA VAISHAMPAYAN AIR 1961 SC1623, HELD THAT T HE RULES OF NATURAL JUSTICE, REQUIRE THAT A PARTY MUST BE GIVEN THE OPP ORTUNITY TO ADDUCE ALL ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 20 RELEVANT EVIDENCE UPON WHICH HE RELIES, AND FURTHER THAT, THE EVIDENCE OF THE OPPOSITE PARTY SHOULD BE TAKEN IN HIS PRESENCE, AND THAT HE SHOULD BE GIVEN THE OPPORTUNITY OF CROSS-EXAMINING THE WITNESSES EX AMINED BY THAT PARTY. NOT PROVIDING THE SAID OPPORTUNITY TO CROSS-EXAMINE WIT NESSES, WOULD VIOLATE THE PRINCIPLES OF NATURAL JUSTICE. (SEE ALSO: UNION OF INDIA V. T.R. VARMA, AIR 1957 SC 882; MEENGLAS TEA ESTATE V. WORKMEN, AIR 1963 SC 1719; M/S. KESORAM COTTON MILLS LTD. V. GANGADHAR AND ORS. ,AI R 1964 SC708; NEW INDIA ASSURANCE CO. LTD. V. NUSLI NEVILLE WADIA AND ANR. AIR 2008 SC 876; RACHPAL SINGH AND ORS. V. GURMIT SINGH AND ORS. AIR 2009 SC 2448;BIECCO LAWRIE AND ANR. V. STATE OF WEST BENGAL AND ANR. AI R 2010 SC 142; AND STATE OF UTTAR PRADESH V.SAROJ KUMAR SINHA AIR 2010 SC 3131). 24. IN LAKSHMAN EXPORTS LTD. V. COLLECTOR OF CENTRA L EXCISE (2005) 10 SCC 634, THIS COURT, WHILE DEALING WITH A CASE UNDER TH E CENTRAL EXCISE ACT, 1944,CONSIDERED A SIMILAR ISSUE I.E. PERMISSION WIT H RESPECT TO THE CROSS- EXAMINATION OF A WITNESS. IN THE SAID CASE, THE ASS ESSEE HAD SPECIFICALLY ASKED TO BE ALLOWED TO CROSS-EXAMINE THE REPRESENTA TIVES OF THE FIRMS CONCERN, TO ESTABLISH THAT THE GOODS IN QUESTION HA D BEEN ACCOUNTED FOR IN THEIR BOOKS OF ACCOUNTS, AND THAT EXCISE DUTY HAD B EEN PAID. THE COURT HELD THAT SUCH A REQUEST COULD NOT BE TURNED DOWN, AS TH E DENIAL OF THE RIGHT TO CROSS-EXAMINE, WOULD AMOUNT TO ADENIAL OF THE RIGHT TO BE HEARD I.E. AUDI ALTERAMPARTEM. 28. THE MEANING OF PROVIDING A REASONABLE OPPORTUNI TY TO SHOW CAUSE AGAINST AN ACTION PROPOSED TO BE TAKEN BY THE GOVERNMENT, IS T HAT THE GOVERNMENT SERVANT IS AFFORDED A REASONABLE OPPORTUNITY TO DEFEND HIMSELF AGAINST THE CHARGES, ON THE BASIS OF WHICH AN INQUIRY IS HELD. THE GOVERNMENT S ERVANT SHOULD BE GIVEN AN OPPORTUNITY TO DENY HIS GUILT AND ESTABLISH HIS INN OCENCE. HE CAN DO SO ONLY WHEN HE IS TOLD WHAT THE CHARGES AGAINST HIM ARE. HE CAN TH EREFORE, DO SO BY CROSS-EXAMINING THE WITNESSES PRODUCED AGAINST HIM. THE OBJECT OF S UPPLYING STATEMENTS IS THAT, THE GOVERNMENT SERVANT WILL BE ABLE TO REFER TO THE PRE VIOUS STATEMENTS OF THE WITNESSES PROPOSED TO BE EXAMINED AGAINST HIM. UNLESS THE SAI D STATEMENTS ARE PROVIDED TO THE GOVERNMENT SERVANT, HE WILL NOT BE ABLE TO COND UCT AN EFFECTIVE AND USEFUL CROSS- EXAMINATION. 29. IN RAJIV ARORA V. UNION OF INDIA AND ORS. AIR 2 009SC 1100, THIS COURT HELD: EFFECTIVE CROSS-EXAMINATION COULD HAVE BEEN DONE AS REGARDS THE CORRECTNESS OR OTHERWISE OF THE REPORT, IF THE CONTENTS OF THEM WE RE PROVED. THE PRINCIPLES ANALOGOUS TO THE PROVISIONS OF THE INDIAN EVIDENCE ACT AS ALSO THE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT THE MAKER OF THE REPORT SHOULD BE EXAMINED, SAVE AND EXCEPT IN CASES WHERE THE FACTS ARE ADMITTED OR THE WITNESSES ARE NOT AVAILABLE FOR CROSS-EXAMINATION OR SIMILAR SITUATION. THE HIGH CO URT IN ITS IMPUGNED JUDGMENT PROCEEDED TO CONSIDER THE ISSUE ON A TECHNICAL PLEA , NAMELY, NO PREJUDICE HAS BEEN CAUSED TO THE APPELLANT BY SUCH NON-EXAMINATION. IF THE BASIC PRINCIPLES OF LAW HAVE NOT BEEN COMPLIED WITH OR THERE HAS BEEN A GROSS VI OLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE HIGH COURT SHOULD HAVE EXERCISED ITS J URISDICTION OF JUDICIAL REVIEW. 30. THE AFORESAID DISCUSSION MAKES IT EVIDENT THAT, NOT ONLY SHOULD THE OPPORTUNITY OF CROSS-EXAMINATION BE MADE AVAILABLE, BUT IT SHOULD BE ONE OF EFFECTIVE CROSS- EXAMINATION, SO AS TO MEET THE REQUIREMENT OF THE P RINCIPLES OF NATURAL JUSTICE. IN THE ABSENCE OF SUCH AN OPPORTUNITY, IT CANNOT BE HELD T HAT THE MATTER HAS BEEN DECIDED IN ACCORDANCE WITH LAW, AS CROSS-EXAMINATION IS AN INT EGRAL PART AND PARCEL OF THE PRINCIPLES OF NATURAL JUSTICE. B) ANDAMAN TIMBER INDUSTRIES VS .COMMISSIONER OF C. EX., KOLKATA-II WHEREIN IT WAS HELD THAT: ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 21 4. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, AND MR. K.RADHAKRISHNAN, LEARNED SENIOR C OUNSEL WHO APPEARED FOR THE REVENUE. 5. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS F LAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WA S BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EV EN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANT ED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PAS SED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH A N OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS G RANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDI CATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION O F THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROS S-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHI CH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN A S TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL T O HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. 6. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPO N THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED I N THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFO RE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COU LD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS ME NTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17-3-2005[2005 (187) E.L.T. A33 (S.C.)] WAS PASSED REMITTING THE CASE BA CK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. 7. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WIT H THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CA USE NOTICE. 19. ON SIMILAR FACTS WHERE THE REVENUE HAS ALLEGED THAT THE ASSESSEE HAS DECLARED BOGUS LTCG, IT WAS HELD AS FOLLOWS: A) THE CALCUTTA HIGH COURT IN THE CASE OF BLBCABLES & CONDUCTORS [ITA NO. 78 OF2017] DATED19.06.2018. THE HIGH COURT HELD VIDE PARA 4.1: WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER H AS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 22 AS BOGUS, THERE HAS TO BE SOME CONCRETE EVIDENCE WH ERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. HERE IN THE CASE THE TRANSACTIONS OF THE COMMODITY EXCHANGED HAVE NOT ON LY BEEN EXPLAINED BUT ALSO SUBSTANTIATED FROM THE CONFIRMATION OF THE PAR TY. BOTH THE PARTIES ARE CONFIRMING THE TRANSACTIONS WHICH HAVE BEEN DULY SU PPORTED WITH THE BOOKS OF ACCOUNTS AND BANK TRANSACTIONS. THE LD. AR HAS ALSO SUBMITTED THE BOARD RESOLUTION FOR THE TRADING OF COMMODITY TRANSACTION . THE BROKER WAS EXPELLED FROM THE COMMODITY EXCHANGE CANNOT BE THE CRITERIA TO HOLD THE TRANSACTION AS BOGUS. IN VIEW OF ABOVE, WE REVERSE THE ORDER OF TH E LOWER AUTHORITIES AND ALLOW THE COMMON GROUNDS OF ASSESSEES APPEAL. [QU OTED VERBATIM] THIS IS ESSENTIALLY A FINDING OF THE TRIBUNAL ON FA CT. NO MATERIAL HAS BEEN SHOWN TO US WHO WOULD NEGATE THE TRIBUNALS FINDIN G THAT OFF MARKET TRANSACTIONS ARE NOT PROHIBITED. AS REGARDS VERACIT Y OF THE TRANSACTIONS, THE TRIBUNAL HAS COME TO ITS CONCLUSION ON ANALYSIS OF RELEVANT MATERIALS. THAT BEING THE POSITION, TRIBUNAL HAVING ANALYZED THE SE T OFF ACTS IN COMING TO ITS FINDING, WE DO NOT THINK THERE IS ANY SCOPE OF INTE RFERENCE WITH THE ORDER OF THE TRIBUNAL IN EXERCISE OF OUR JURISDICTION UNDER SECT ION 260A OF THE INCOME TAX ACT, 1961. NO SUBSTANTIAL QUESTION OF LAW IS INVOLV ED IN THIS APPEAL. THE APPEAL AND THE STAY PETITION, ACCORDINGLY, SHALL ST AND DISMISSED. B) THE JAIPURITAT IN THE CASE OF VIVEKAGARWAL[ITA NO.292/JP/2017]ORDER DATED 06.04.2018 HELD AS UNDER VIDE PAGE 9 PARA 3: WE HOLD THAT THE ADDITION MADE BY THE AO IS MERELY BASED ON SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO CONTROVERT THE EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF THE CLAIM. FURTHER, THE ASSE SSING OFFICER HAS ALSO FAILED TO ESTABLISH THAT THE ASSESSEE HAS BROUGHT B ACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN. HENC E WE DELETE THE ADDITION MADE BY THE AO ON THIS ACCOUNT. C) THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PREMPAL GANDHI[ITA-95-2017(O&M)] DATED18.01.2018 AT VIDE PA GE 3 PARA 4 HELD AS UNDER: .. THE ASSESSING OFFICER IN BOTH THE CASES ADDED THE APPRECIATION TO THE ASSESSEES INCOME ON THE SUSPICION THAT THESE WERE FICTITIOUS TRANSACTIONS AND THAT THE APPRECIATION ACTUALLY REPRESENTED THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. IN ITA-18-2017 ALSO THE CIT (A PPEALS) AND THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT PRODUCED AN Y EVIDENCE WHATSOEVER IN SUPPORT OF THE SUSPICION. ON THE OTHER HAND, ALTHOU GH THE APPRECIATION IS VERY HIGH, THE SHARES WERE TRADED ON THE NATIONAL STOCK EXCHANGE AND THE PAYMENTS AND RECEIPTS WERE ROUTED THROUGH THE BANK. THERE WAS NO EVIDENCE TO INDICATE FOR INSTANCE THAT THIS WAS A CLOSELY HE LD COMPANY AND THAT THE TRADING ON THE NATIONAL STOCK EXCHANGE WAS MANIPULA TED IN ANY MANNER. THE COURT ALSO HELD THE FOLLOWING VIDE PAGE 3 PARA 5 THE FOLLOWING: QUESTION (IV) HAS BEEN DEALT WITH IN DETAIL BY THE CIT (APPEALS) AND THE TRIBUNAL. FIRSTLY, THE DOCUMENTS ON WHICH THE ASSES SING OFFICER RELIED UPON IN THE APPEAL WERE NOT PUT TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE CIT (APPEALS) NEVERTHELESS CONSIDERED THEM IN D ETAIL AND FOUND THAT THERE WAS NO CO-RELATION BETWEEN THE AMOUNTS SOUGHT TO BE ADDED AND THE ENTRIES IN THOSE DOCUMENTS. THIS WAS ON AN APPRECIA TION OF FACTS. THERE IS NOTHING TO INDICATE THAT THE SAME WAS PERVERSE OR I RRATIONAL. ACCORDINGLY, NO QUESTION OF LAW ARISES. ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 23 D) THE BENCH D OF KOLKATAITAT IN THE CASE OF GAUT AM PINCHA [ITA NO.569/KOL/2017]ORDER DATED 15.11.2017 HELD AS UNDE R VIDE PAGE 12 PARA 8.1: IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I TO XI V) IN PARA 6(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICAT E THE ASSESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE ASSESSING OFFICER AGAINST THE ASSESSEE, WHICH IN OU R CONSIDERED OPINION HAS NO LEGS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS SUPPORTED WITH MATERIAL EV IDENCES WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/ CIT (A). WE NOTE THAT IN THE ABSENCE OF MATERIAL/EVIDENCE THE ALLEGATIONS TH AT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICERIGGING/MANIPULATION OF SHARES MUST THEREFORE ALSO FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE H AD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMA T STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTION S RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL G AIN. THESE EVIDENCES WERE NEITHER FOUND BY THE AO NOR BY THE LD. CIT (A) TO B E 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 ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE THAT INCOME FROM LTCG IS EXEMPTED U/S 10(38) OF THE ACT. FURTHER IN PAGE 15 PARA 8.5 OF THE JUDGMENT, IT HEL D: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALR EADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED BY US TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRIN G TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CI T (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 ADDITION OF SALE PROCEED S OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE AC T. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITION. E) THE BENCH D OF KOLKATA ITAT IN THE CASE OF KI RAN KOTHARI HUF [ITA NO. 443/KOL/2017] ORDER DATED 15.11.2017 HELD VIDE PARA 9.3 HELD AS UNDER: .. WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE M ATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANT ED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSID ERED OPINION HAS NO LEGS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE TH AT THE LD. DR COULD NOT CONTROVERT THE FACTS WHICH ARE SUPPORTED WITH MATER IAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND COULD ONLY REL Y ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT THE ALLEGATIONS THAT THE AS SESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MU ST THEREFORE CONSEQUENTLY FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE A SSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NO TES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSA CTIONS RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. NEITHER THESE EVIDENCES WERE FOUND BY THE AO NOR BY THE LD. CIT(A ) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE 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 TH E ACT ON THE BASIS OF ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 24 SUSPICION, SURMISES AND CONJECTURES. IT IS TO BE KE PT IN MIND THAT SUSPICION HOW SO EVER STRONG, CANNOT PARTAKE THE CHARACTER OF LEGAL EVIDENCE. IT FURTHER HELD AS FOLLOWS: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALR EADY 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 OU R NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHAR ES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIR ECT THE AO TO DELETE THE ADDITION. F) THE BENCH AOF KOLKATAITAT IN THE CASE OF SHAL EENKHEMANI [ITA NO.1945/KOL/2014]ORDER DATED 18.10.2017 HELD AS UND ER VIDE PAGE 24 PARA 9.3: WE THEREFORE HOLD THAT THERE IS ABSOLUTELY NO ADVE RSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALL EGATIONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OP INION, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR CO ULD NOT CONTROVERT THE ARGUMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDE NCES ON RECORD AND MERELY RELIED ON THE ORDERS OF THE LD AO. WE FIND T HAT THE ALLEGATION THAT THE ASSESSEE AND / OR BROKERS GETTING INVOLVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECORD THAT THE ASSES SEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO PURCHASE AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEIT HER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AN D THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF TH E ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONA FIDE AND GEN UINE AND THEREFORE THE LD AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CL AIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. G) THE BENCH H OF MUMBAI ITAT IN THE CASE OF ARV INDKUMAR JAINHUF[ITA NO.4682/MUM/2014]ORDER DATED 18.09.2017 HELD AS UND ER VIDE PAGE 6 PARA 8: WE FOUND THAT AS FAR AS INITIATION OF INVESTIGAT ION OF BROKER IS CONCERNED, THE ASSESSEE IS NO WAY CONCERNED WITH THE ACTIVITY OF THE BROKER. DETAILED FINDING HAS BEEN RECORDED BY CIT (A) TO THE EFFECT THAT ASSESSEE HAS MADE INVESTMENT IN SHARES WHICH WAS PURCHASED ON THE FLO OR OF STOCK EXCHANGE AND NOT FROM M/S BASANT PERIWAL AND CO. AGAINST PUR CHASES PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE, DELIVERY OF SHAR ES WERE TAKEN, CONTRACT OF SALE WAS ALSO COMPLETE AS PER THE CONTRACT ACT, THEREFORE, THE ASSESSEE IS NOT CONCERNED WITH ANY WAY OF THE BROKER. NOWHERE T HE AO HAS ALLEGED THAT THE TRANSACTION BY THE ASSESSEE WITH THESE PARTICUL AR BROKER OR SHARE WAS BOGUS, MERELY BECAUSE THE INVESTIGATION WAS DONE BY SEBI AGAINST BROKER OR HIS ACTIVITY, ASSESSEE CANNOT BE SAID TO HAVE ENTER ED INTO INGENUINE TRANSACTION, INSOFAR AS ASSESSEE IS NOT CONCERNED W ITH THE ACTIVITY OF THE BROKER AND HAVE NO CONTROL OVER THE SAME. WE FOUND THAT M/S BASANT PERIWAL AND CO. NEVER STATED ANY OF THE AUTHORITY THAT TRAN SACTIONS IN M/S RAMKRISHNA FINCAP PVT. LTD. ON THE FLOOR OF THE STOCK EXCHANGE ARE INGENUINE OR MERE ACCOMMODATION ENTRIES. THE CIT (A) AFTER RELYING ON THE VARIOUS DECISION OF ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 25 THE COORDINATE BENCH, WHEREIN ON SIMILAR FACTS AND CIRCUMSTANCES, ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, CAME TO THE CONC LUSION THAT TRANSACTION ENTERED BY THE ASSESSEE WAS GENUINE. DETAILED FINDI NG RECORDED BY CIT (A) AT PARA 3 TO 5 HAS NOT BEEN CONTROVERTED BY THE DEPART MENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF CIT (A). H)THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VIVEK MEHTA [ITA NO. 894 OF2010] ORDER DATED 14.11.2011 VIDE PAGE 2 PARA 3 HELD AS UNDER: ON THE BASIS OF THE DOCUMENTS PRODUCED BY THE ASSE SSEE IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEAL) RECORDED A FIND ING OF FACT THAT THERE WAS A GENUINE TRANSACTION OF PURCHASE OF SHARES BY THE ASSESSEE ON 16.3.2001 AND SALE THEREOF ON 21.3.2002. THE TRANSA CTIONS OF SALE AND PURCHASE WERE AS PER THE VALUATION PREVALENT IN THE STOCKS EXCHANGE. SUCH FINDING OF FACT HAS BEEN RECORDED ON THE BASIS OF E VIDENCE PRODUCED ON RECORD. THE TRIBUNAL HAS AFFIRMED SUCH FINDING. SUC H FINDING OF FACT IS SOUGHT TO BE DISPUTED IN THE PRESENT APPEAL. WE DO NOT FIN D THAT THE FINDING OF FACT RECORDED BY THE COMMISSIONER OF INCOME TAX IN APPEA L, GIVES GIVE RISE TO ANY QUESTION(S) OF LAW AS SOUGHT TO BE RAISED IN THE PR ESENT APPEAL. HENCE, THE PRESENT APPEAL IS DISMISSED. I) THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT I N THE CASE OF CIT VS. BHAGWATI PRASAD AGARWAL IN I.T.A. NO. 22/KOL/2009 DATED 29.0 4.2009 AT PARA 2 HELD AS FOLLOWS: THE TRIBUNAL FOUND THAT THE CHAIN OF TRANSACTION E NTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUP PORTED BY EVIDENCE. THE ASSESSEE PRODUCED BEFORE THE COMMISSIONER OF IN COME TAX (APPEAL) THE CONTRACT NOTES, DETAILS OF HIS DEMAT ACCOUNT AN D, ALSO, PRODUCED DOCUMENTS SHOWING THAT ALL PAYMENTS WERE RECEIVED B Y THE ASSESSEE THROUGH BANK. J) THE HONBLE SUPREME COURT IN THE CASE OF PCIT VS . TEJU ROHIT KUMAR KAPADIA ORDER DATED 04.05.2018 UPHELD THE FOLLOWING PROPOSI TION OF LAW LAID DOWN BY THE HONBLE GUJRAT HIGH COURT AS UNDER: IT CAN THUS BE SEEN THAT THE APPELLATE AUTHORITY A S WELL AS THE TRIBUNAL CAME TO CONCURRENT CONCLUSION THAT THE PURCHASES ALREADY MADE BY THE ASSESSEE FROM RAJ IMPEX WERE DULY SUPPORTED BY BILLS AND PAY MENTS WERE MADE BY ACCOUNT PAYEE CHEQUE. RAJ IMPACTS ALSO CONFIRMED TH E TRANSACTIONS. THERE WAS NO EVIDENCE TO SHOW THAT THE AMOUNT WAS RECYCLE D BACK TO THE ASSESSEE. PARTICULARLY, WHEN IT WAS FOUND THAT THE ASSESSEE T HE TRADER HAD ALSO SHOWN SALES OUT OF PURCHASES MADE FROM RAJ IMPEX WHICH WE RE ALSO ACCEPTED BY THE REVENUE, NO QUESTION OF LAW ARISES. 20. APPLYING THE PROPOSITION OF LAW AS LAID DOWN IN THE ABOVE-MENTIONED JUDGMENTS TO THE FACTS OF THIS CASE WE ARE BOUND TO CONSIDER AND RELY ON THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM AND BASE OU R DECISION ON SUCH EVIDENCE AND NOT ON SUSPICION OR PREPONDERANCE OF PROBABILITIES. NO MATERIAL WAS BROUGHT ON RECORD BY THE AO TO CONTROVERT THE EVIDENCE FURNISH ED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, WE ACCEPT THE EVIDENCE FILED BY THE ASSESSEE AND ALLOW THE CLAIM THAT THE INCOME IN QUESTION IS A BONA FIDE LONG TER M CAPITAL GAINARISING FROM THE SALE OF SHARES AND HENCE EXEMPT FROM INCOME TAX. ITA NO.911/KOL/2018 A.Y. 2014 -15 MINA MEHTA VS. ITO SD-35(4) KO L. PAGE 26 21. UNDER THE CIRCUMSTANCES AND IN VIEW OF THE ABOV E DISCUSSION, WE UPHOLD THE CONTENTIONS OF THE ASSESSEE AND DELETE THE ADDITION IN QUESTION. 7. WE ADOPT ALL THIS REASONING MUTATIS MUTANDIS TO CONCLUDE IN THIS FACTUAL BACKDROPS THAT BOTH THE LOWER AUTHORITIES HAVE ERRE D IN TREATING ASSESSEES LTCG TO BE BOGUS. THE IMPUGNED ADDITION(S) OF 95,06,050/- AND 4,65,896/- ARE DELETED. 8. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT 28/09/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 28 / 09 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-MINA MEHTA, 29/1C BENTICK STREET, KOLKAT A-001 2. /RESPONDENT-ITO WARD-35(4), AAYAKAR BHAWAN POORVA, 8 TH FLOOR, 110, SHANTI PALLY, KOLKATA -107 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,