Shri Deepak Kumar Agarwal , Kolkata V. ACIT, Central Circle - 3(1), , Kolkata

ITSSA 125/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4383 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S JHAJHARIA
• Keywords: Unexplained expenditure; Capital asset; Income from undisclosed sources; Search and seizure; Opportunity of cross examination; Transactions in derivatives; Question of law; Accommodation entries; Scheme of amalgamation; Block assessment; Benefit of exemption; Retraction; Penny stocks
• Section: 69C; 143(3); 153A; 143(1); 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S. S. GODARA, JM &DR. A.L.SAINI, AM ./IT(SS)A NOS.125 & 126/KOL/2018 ( / ASSESSMENT YEARS:2013-14& 2014-15) SHRI DEEPAK KUMAR AGARWAL C/O, SALARPURIAJAJODIA&CO. , 7, C.R. AVENUE, KOLKATA-700072 VS. ACIT, CC-3(1), KOLKATA ./ ./PAN/GIR NO.: ABSPA 2276 K (ASSESSEE) .. (REVENUE) ASSESSEE BY :SHRI S. JHAJHARIA, AR & SHRI SUJOY SE N, AR RESPONDENT BY : SHRI A.K. SINGH, CIT DR / DATE OF HEARING : 18/04/2019 /DATE OF PRONOUNCEMENT : 10/05/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED TWO APPEALS FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEARS 2013-14 AND 2014-15, ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-21, KO LKATA, (IN SHORT THE LD. CIT(A)], WHICH IN TURN ARISE OUT OF SEPARATE ASSE SSMENT ORDERS PASSED BY THE ASSESSING OFFICER U/S 153A / 143(3) OF THE INCOME T AX ACT, 1961 ( IN SHORT THE ACT). 2. SINCE THESE TWO APPEALS PERTAIN TO THE SAME ASSE SSEE, IDENTICAL AND COMMON ISSUES ARE INVOLVED THEREFORE, THESE HAVE BEEN CLUB BED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. ASSESSEES APPEAL IN I.T.(SS).A. NO. 125/KOL/2018, FOR ASSESSMENT YEAR 2013-14, IS TAKEN AS LEAD CASE. SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 2 3. IN THIS APPEAL, ALTHOUGH ASSESSEE HAS RAISED A M ULTIPLE GROUNDS OF APPEAL, BUT AT THE TIME OF HEARING WE HAVE CAREFULLY PERUSED ALL T HE GROUNDS RAISED BY THE ASSESSEE. MOST OF THE GROUNDS RAISED BY THE ASSESSE E, ARE EITHER ACADEMIC IN NATURE OR CONTENTIOUS IN NATURE. HOWEVER, TO MEET T HE END OF JUSTICE, WE CONFINE OURSELVES TO THE CORE OF THE CONTROVERSY AND MAIN G RIEVANCES OF THE ASSESSEE. WITH THIS BACKGROUND, WE SUMMARIZE AND CONCISE THE GROUN DS RAISED BY THEASSESSEE AS FOLLOWS: ALL THE GROUNDS OF APPEAL EMANATE FROM THE ACTION OF THE LD A.O. IN TREATING THE CLAIM OF LONG TERM CAPITAL GAIN OF RS. 3,39,46,071/ - AS BOGUS AND LD CIT(A) CONFIRMED THE SAME. THE LD AO HAD MADE A FURTHER AD DITION OF RS.1,69,730/-, AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE AC T FOR COMMISSION PAID TO PROCURE THE IMPUGNED LONG TERM CAPITAL GAIN AND LD CIT(A) CONFIRMED THE SAME. THE ASSESSEE HAS ALSO CHALLENGED THAT IN ABSENCE OF INCRIMINATING MATERIAL NO ADDITION CAN BE MADE IN THE ORDER U/S 153A OF THE A CT IN CASE OF UNABATED ASSESSMENT. 4. BRIEF FACTS QUA THE ISSUE ARE THAT ASEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT, WAS CARRIED OUT IN THE RESIDENTIAL AND BUSINES S PREMISES OF GAGAN GROUP SITUATED AT VARIOUS LOCATIONS ON 03.03.2015. THE AS SESSEE, SHRI DEEPAK KUMAR AGARWAL BELONGS TO THIS GROUP. THE ASSESSING OFFICE R, ACCORDINGLY, ISSUED NOTICE U/S 153A OF THE ACT ON 22.01.2016, CALLING FOR RETU RN FOR THE ASSESSMENT YEAR 2013-14. IN RESPONSE TO NOTICE U/S 153A, THE ASSESS EE FILED HIS RETURN OF INCOME ON 29.01.2016, DECLARING TOTAL INCOME AT RS.18,29,180/ -. IT WAS OBSERVED BY AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT AS SESSEE HAS CLAIMED LONG TERM CAPITAL GAIN TO THE TUNE OF RS.3,39,46,071/- BY SAL E OF SHARES OF SULABH ENGINEERS ON VARIOUS DATES. THE SHARES OF SULABH ENGINEERS WERE PURCHASED AT THE PRICE OF RS. 14,00,000/- AND THE SAME WERE SOLD AT RS. 3,53,46,071/-. THUS, AO NOTICED THAT THE ASSESSEE HAS RECEIVED A GAIN OF AROUND 2400% IN ABOUT 2 YEARS OF SHARE HOLDING AND THIS SEEMS TO BE INFLATED AND UNREALISTIC. SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 3 33 3 THE ASSESSING OFFICER ALSO MENTIONED IN HIS ASSESSM ENT ORDER, THE BASIC DETAILS OF THE LARGE SCALE OF SCAM OF PRE- ARRANGED BOGUS LTCG AND ITS MODUS OPERANDI FOR A BETTER UNDERSTANDING, WHICH IS MENTIONED IN BRIEF A S FOLLOWS: THE DIRECTORATE INVESTIGATION, KOLKATA ON THE BASI S OF SEVERAL INFORMATION AND ACTIONS UNEARTHED THE LARGE SCALE RACKET, OPERATING THROUGH CLOSE NEXUS OF BROKERS, ENTRY OPERATORS, PROMOTERS THUS FACILITATING VARIOUS INDI VIDUALS TO BROUGHT THEIR UNACCOUNTED MONEY TO REGULAR BOOKS IN THE FORM OF LTCG IN QUOTE D SHARES [EXEMPTED U/S 10(38) OF THE INCOME TAX ACT, 1961] WITHOUT ANY TAX IMPLICATI ONS. THE MODUS OPERANDI OF THIS PRE-ARRANGED BOGUS LONG TERM CAPITAL GAIN IS ALSO MENTION BY AO IN HIS ORDER WHICH IS NOT BEING REPRO DUCED HERE FOR THE SAKE OF BREVITY. 5. ASSESSING OFFICER NOTICED THAT DURING THE SEARCH AND SEIZURE, IN ITS DISCLOSURE PETITION U/S 132(4) DATED 08.06.2015, MR. DEEPAK KU MAR AGARWAL (ON BEHALF OF GROUP & SELF) IN POINT NO. 12 & 13 DULY ACCEPTED TH AT PRE-ARRANGED BOGUS LONG TERM CAPITAL GAIN WERE AVAILED BY HIM AND FAMILY ME MBERS AND THUS THE SAME ARE BEING OFFERED FOR TAXATION. THE AO NOTED THAT THE S CRIP OF SULABH ENGINEERS WAS WIDELY USED FOR PRE- ARRANGED BOGUS LONG TERM CAPIT AL GAIN PURPOSE. ASSESSEE ALSO HAS AVAILED THE SAME FACILITY AND TAKEN AN AMOUNT O F RS.3,39,46,071/- IN A.Y. 2013-14 AS PRE- ARRANGED BOGUS LONG TERM CAPITAL GA IN IN HIS BOOKS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THE REPLY TO JUSTIFY THE GENUINENESS OF LTCG, HOWEVER, THE ASSESSING OFFICER REJECTED T HE CONTENTION OF THE ASSESSEE AND MADE AN ADDITION OF RS.3,39,46,071/-. THE ASSES SING OFFICERHAS ALSO MADE ADDITION U/S 69C @ 0.5% OF COMMISSION OF FINAL ENTR Y PROVIDER OF RS. 1,69,730/-. 6.AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD . CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 7. LD COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ENTIRE PURCHASE OF 70,000 EQUITY SHARES AND SALE OF 4,16,680 EQUITY SH ARES (31480 SHARE AT FACE VALUE SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 4 44 4 OF RS.10/- EACH PLUS 385200 SHARE AT FACE VALUE OF RS. 1/- EACH) OF M/S SULABH ENGINEERS & SERVICES LTD, WERE MADE THROUGH REGISTE RED STOCK BROKERS COMPANY M/S. CONSORTIUM SECURITIES PVT. LTD AS PER THE CONT RACT NOTES ISSUED BY THE REGISTERED BROKERS. THE PAYMENT OF THE PURCHASE PRI CE AND THE RECEIPT OF THE SALE PROCEEDS WERE MADE THROUGH BANKING CHANNEL AND DULY REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH HDFC BANK, DURGAPUR BRANCH. ALL THE RELEVANT PARTICULARS AND DOCUMENTS ALONG WITH WRITT EN SUBMISSIONS WERE FILED BY THE ASSESSEE. BOTH THE PURCHASE AND SALE TRANSACTIO NS WERE VALID AND GENUINE AND NO IOTA OF DOUBT CAN BE CAST ON IT. THE LD COUNSEL ALSO SUBMITTED THAT IN THE ASSESSEE` S CASE UNDER CONSIDERATION, A SEARCH AND SEIZURE WAS CONDUCTED BY THE DEPARTMENT ON 03.03.2015. THE ASSESSMENT YEAR FOR THE SEARCH IS A.Y. 2015-16, WHE REAS ASSESSEE`S BOTH APPEALS PERTAIN TO ASSESSMENT YEAR 2013-14 AND 2014-15 WHIC H ARE UNABATED ASSESSMENT YEARS. IN THE CASE OF UNABATED ASSESSMENT YEARS, TH E ADDITION CAN NOT BE MADE WITHOUT INCRIMINATING MATERIAL. THE SEARCH TEAM DID NOT FIND ANY INCRIMINATING MATERIAL, HENCE ADDITION SHOULD NOT BE MADE. 8.ON THE OTHER HAND,THE LD. DR FOR THE REVENUE SUBM ITTED THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/S 132 OF THE INCOME TAX ACT, 1961, IN THE CASE OF GAGAN GROUP ON 03.03.2015. THE ASSESSEE, BEING TH E KEY PERSON OF THE GROUP WAS ALSO COVERED IN THE SAID SEARCH. THE PANCHANAMA WAS DRAWN IN THE NAME OF ASSESSEE. IN THE COURSE OF SEARCH, A STATEMENT OF S HRI DEEPAK KUMAR AGARWAL WAS RECORDED UNDER SECTION 131 OF THE INCOME TAX ACT, 1 961 IN THE OFFICE PREMISE OF GAGAN GROUP AT DIAMOND PRESTIDGE, 41A, A J C BOSE ROAD, 8TH FLOOR, ROOM NO.801, KOLKATA-700017, WHEREIN HE ADMITTED TO HAVE BOOKED BOGUS LONG TERM CAPITAL GAIN ON THE SCRIPTS OF NIKKI GLOBAL FINANCE LTD AND SULABH ENGINEERS &. SERVICES LTD, THROUGH HIS SHARE BROKER M/S. CONSORT IUM SECURITIES PRIVATE LIMITED. HE ALSO ADMITTED THAT HE AND HIS FAMILY MEMBERS BOO KED BOGUS LTCG IN CONNIVANCE WITH M/S. CONSORTIUM SECURITIES PRIVATE LIMITED AND ASHOK KAYAN& CO. [KINDLY SEE Q-17 TO Q-19 'OF THE STATEMENT DT.0 3.03.2015, INCORPORATED IN THE ASSESSMENT ORDER AT PP-21-22]. SHRI HARSHVARDHAN KA YAN, (S/O SHRI ASHOK KAYAN), THE DIRECTOR OF KAYAN SECURITIES LTD IN HIS STATEMENT RECORDED U/S.133A OF SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 5 55 5 THE ACT ON 27.01.2015 HAD ADMITTED THAT M/S. KAYAN SECURITIES (P) LTD WAS ENGAGED IN THE BUSINESS OF PROVIDING BOGUS LTCG. [K INDLY SEE Q-14 & Q-21 OF THE STATEMENT DT.27.01.2015, INCORPORATED IN THE AS SESSMENT ORDER AT PP-15-17] . ON 02.05.2015, A STATEMENT OF SHRI DEEPAK KUMAR AGA RWAL WAS AGAIN RECORDED U/S.132(4) OF THE INCOME TAX ACT, 1961 AT DIAMOND P RESTIDGE, 41A, A J C BOSE ROAD, 8TH FLOOR, ROOM NO.801, KOLKATA-700017 DURING THE REVOCATION OF THEPROHIBITORY ORDER IMPOSED U/ S. 132(3) OF THE AC T WHEREIN HE CONFIRMED HIS EARLIER STATEMENT (RECORDED IN THE COURSE OF SEARCH ) AND REITERATED THAT HE HAD TAKEN ACCOMMODATION ENTRIES IN HIS DIFFERENT GROUP CONCER NS TO BRING BACK UNACCOUNTED INCOME INTO THE REGULAR BOOKS OF ACCOUNT OF THE GRO UP THROUGH DIFFERENT JAMAKHARCHI COMPANIES. [KINDLY SEE Q-6 & 7 OF THE S TATEMENT DT.02.05.2015 AT PAGE.61 TO 64 OF THE PAPER-BOOK] ON 05.06.2015, ANOTHER STATEMENT OF SHRI DEEPAK KUM AR AGARWAL WAS RECORDED U/S.131 OF THE INCOME TAX ACT, 1961 IN THE OFFICE O F DY. DIRECTOR OF INCOME TAX (INV), UNIT-2(2), KOLKATA AT 5TH FLOOR, ROOM NO.5/3 , AAYAKAR BHAWAN (ANNEXE), P-13, CHOWRINGHEE SQUARE, KOLKATA-700069, WHEREIN H E CONFIRMED THAT THE SHARES OF NIKKI GLOBAL FINANCE LTD AND SULABH ENGINEERS & SERVICES LTD WERE PURCHASED THROUGH SHRI BIPLAB CHOWDHURY, THE ENTRY OPERATOR A ND THE BRANCH HEAD OF M/ S. CONSORTIUM SECURITIES PRIVATE LIMITED FOR THE PURPO SE OF INTRODUCING THE UNACCOUNTED FUND GENERATED DUE TO OUT OF BOOKS TRAD ING INTO THE INDIVIDUAL FILES IN THE FORM OF LTCG TO AVAIL THE TAX EXEMPTION BENEFIT . [KINDLY SEE Q-4 TO Q-20 OF THE STATEMENT DT.05.06.2015, INCORPORATED IN THE AS SESSMENT ORDER AT PP-23-25] STATEMENT OF SHRI BIPLAB CHOWDHURY WAS RECORDED U/S .131 OF THE INCOME TAX ACT, 1961 IN THE OFFICE OF DY. DIRECTOR OF INCOME TAX (I NV), UNIT-2(2), KOLKATA AT 5TH FLOOR, ROOM NO.5/3, AAYAKAR BHAWAN (ANNEXE), P-13, CHOWRINGHEE SQUARE, KOLKATA-700069 ON 05.06.2015 WHEREIN HE CONFIRMED T HAT HE ARRANGED BOGUS LTCG FOR SHRI DEEPAK KUMAR AGARWAL & HIS FAMILY. [K INDLY SEE Q-5 TO Q-11 OF THE STATEMENT DT.05.06.2015, INCORPORATED IN THE AS SESSMENT ORDER AT PP-26- 27] MR. VINAY KUMAR AGARWAL AND THE OTHER INDIVIDUAL BE NEFICIARIES OF THE GROUP FILED SEPARATE AFFIDAVITS DT.08.06.2015 BEFORE THE DEPART MENT AFFIRMING THAT THE LTCG CLAIMED BY THE INDIVIDUALS RELATED TO THE GROUP WAS BOGUS. SHRI VINAY KUMAR SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 6 66 6 AGARWAL STATED THAT SHRI BIPLAB CHOWDHURY ARRANGED BOGUS LTCG FOR A SUM OF RS.53,80,90,944/- IN AGGREGATE FOR DEEPAK KUMAR AGA RWAL (RS.18,69,30,822/-), SUMAN AGARWAL (RS.2,86,69,983), SWATI AGARWAL (RS.6 ,29,73,572/-) &. VINAY KUMAR AGARWAL (RS.25,95,16,567/-) THROUGH M/S. ANJA NEY STOCK BROKING LTD, M/S. BONANZA PORTFOLIO LTD, M/S. CONSORTIUM SECURIT IES LTD & M/S. EUREKA STOCK & SHARE BROKING SERVICES LTD. THE AFFIDAVIT, IN THI S REGARD, SWORN BY MR. VINAY KUMAR AGARWAL BEFORE THE NOTARY PUBLIC ON 08.06.201 5 HAS BEEN EXTRACTED BY THE AO IN THE ASSESSMENT ORDER AT PP-27-28. THEREFORE, LD DR SUBMITTED BEFORE BENCH THAT BASED ON THE STATEMENT RECORDED IT IS CLEARLY EVIDENT THAT ASSESSEE`S LONG TERM CAPITAL G AIN IS PRE-ARRANGED AND HENCE ADDITION MADE BY AO SHOULD BE CONFIRMED. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE SUBMITTED BEFORE US THE C OPY OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (VIDE PB-53 TO 71), COPY OF AFFID AVIT DATED 29.06.2015 IN RESPECT OF RETRACTION OF STATEMENT MADE U/S 131 OF THE ACT (VIDE PB-72 TO 77). THE ASSESSEE SUBMITTED BEFORE US THE COPY OF LEDGER ACC OUNTS OF BROKER M/S CONSORTIUM SECURITIES PVT. LTD. ALONG WITH COPY OF BILLS (PB-78 TO 99). THE ASSESSEE HAS SUBMITTED THE COPY OF BANK STATEMENT O F ALLAHABAD BANK (PB-100 TO 102), COPY OF HDFC BANK (PB-104 TO 114), COPY OF O RIENTAL BANK OF COMMERCE (PB-115-116) AGAIN COPY OF ORIENTAL BANK OF COMMERC E (PB-117 TO 119) AND COPY OF PUNJAB NATIONAL BANK (PB-120 TO 124). THE A SSESSEE ALSO SUBMITTED THE COPY OF DEMAT STATEMENT ACCOUNTS VIDE PB 122 TO 153 . THEREFORE, THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE ASSESSME NT PROCEEDINGS THE ASSESSEE SUBMITTED ALL THE REQUIRED DOCUMENTS AND TRANSACTIO NS WHICH WERE DONE THROUGH BANKING CHANNELS AND WHICH ARE GETTING REFLECTED IN THE DEMAT STATEMENT ACCOUNTS ALSO. THE COUNSEL ALSO STATED THAT THE PRICE OF SCR IP WAS DETERMINED BY THE MARKET FORCES AND THERE IS NO ANY HUMAN INTERVENTION. BY S UBMITTING THIS PLETHORA DOCUMENTS AND STATEMENTS, THE LD. COUNSEL CLAIMED T HAT THE LONG TERM CAPITAL GAIN GENERATED BY THE ASSESSEE IS GENUINE. SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 7 77 7 WE NOTE THAT IN THE ORIGINAL RETURN OF INCOME AND T HE COMPUTATION OF TOTAL INCOME THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAIN ( L TCG) OF RS.3,39,46,071/- EARNED ON SALE OF SHARES AS EXEMPT FROM TAX U/S 10( 38) OF THE INCOME TAX ACT. THE ASSESSEE`S RETURN WAS PROCESSED U/S 143(1) OF THE A CT ON DATED 26.03.2015 ACCEPTING THE RETURNED INCOME. LATER ON, A SEARCH A ND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT WAS CONDUCTED ON 03.03.2015 AT V ARIOUS RESIDENTIAL AND BUSINESS PREMISES OF GAGAN GROUP. THE ASSESSEE BE LONGS TO THIS GAGAN GROUP. CONSEQUENT UPON THE SEARCH, NOTICE U/S 153A WAS ISS UED ON 22.01.2016 CALLING FOR THE RETURN OF INCOME FOR THE A. Y. 2013-14. IN RESP ONSE TO THAT NOTICE, THE ASSESSEEFILED RETURN OF INCOME ON 29.01.2016 DECLAR ING SAME TOTAL INCOME OF RS.18,29,180/- AS WAS DECLARED IN THE ORIGINAL RETU RN. 10. WE NOTE THAT IT IS NOT DISPUTED THAT IN THE AS SESSEE`S CASE UNDER CONSIDERATION, A SEARCH AND SEIZURE ACTION WAS CONDUCTED BY THE DE PARTMENT ON 03.03.2015. THAT IS, SEARCH AND SEIZURE WAS CONDUCTED IN THE PREVIOU S YEAR 01.04.2014 TO 31.03.2015, HENCE THE ASSESSMENT YEAR FOR THE SEARC H IS A.Y. 2015-16, WHEREAS ASSESSEE`S BOTH APPEALS UNDER CONSIDERATION PERTAIN TO ASSESSMENT YEARS 2013-14 AND 2014-15, WHICH ARE UNABATED ASSESSMENT YEARS. I N THE CASE OF UNABATED ASSESSMENT YEARS, THE ADDITION CAN NOT BE MADE WITH OUT INCRIMINATING MATERIAL. WE NOTE THAT THE SEARCH TEAM DID NOT FIND ANY INCRI MINATING MATERIAL, HENCE ADDITION SHOULD NOT BE MADE IN CASE OF UNABATED ASS ESSMENTYEARS (THAT IS, CONCLUDED PROCEEDING). WE ARE OF THE VIEWTHAT IT WOULD BE NECESSARY TO ADD RESS THIS PRELIMINARY ISSUE OF WHETHER THE ADDITION COULD BE FRAMED U/S 153A OF TH E ACT IN RESPECT OF A CONCLUDED PROCEEDING WITHOUT THE EXISTENCE OF ANY I NCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH. THE SCHEME OF THE ACT PR OVIDES FOR ABATEMENT OF PENDING PROCEEDINGS AS ON THE DATE OF SEARCH. IT IS NOT IN DISPUTE THAT THE ASSESSMENT FOR THE ASSESSMENTYEARS 2013-14 & 2014-15WERE ORIGINALLY CO MPLETED U/S 143(1)/143(3) OF THE ACT AND THE TIME LIMIT FOR ISSUANCE OF NOTIC E U/S 143(2) OF THE ACT HAD EXPIRED AND HENCE IT FALLS UNDER CONCLUDED PROCEEDI NG, AS ON THE DATE OF SEARCH ON 03.03.2015. WE HOLD THAT THE LEGISLATURE DOES NOT DIFFERENTIATE WHETHER THE ASSESSMENTS ORIGINALLY WERE FRAMED U/S 143(1) OR 14 3(3) OR 147 OF THE ACT. HENCE SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 8 88 8 UNLESS THERE IS ANY INCRIMINATING MATERIAL FOUND DU RING THE COURSE OF SEARCH RELATABLE TO SUCH CONCLUDED YEAR, THE STATUTE DOES NOT CONFER ANY POWER ON THE LDASSESSING OFFICER, TO DISTURB THE FINDINGS GIVEN THEREON AND INCOME DETERMINED THEREON, AS FINALITY HAD ALREADY BEEN REACHED THERE ON, AND SUCH PROCEEDING WAS NOT PENDING ON THE DATE OF SEARCH TO GET ITSELF ABA TED. THE PROVISIONS OF SECTION 153A OF THE ACT ARE REPRODUCED HEREUNDER FOR THE SA KE OF CONVENIENCE :- '[ASSESSMENT IN CASE OF SEARCH OR REQUISITION 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN S ECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BO OKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SEC TION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNIS H WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOM E IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMEN T YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIB ED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SU CH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN S UCH SIX ASSESSMENT YEARS:' WE FIND THAT THE CO-ORDINATE BENCH OF DELHI TRIBUNA L IN THE CASE OF DY. CIT V. AGGARWAL ENTERTAINMENT (P.) LTD REPORTED IN [2016] 72 TAXMANN.COM 340 (DELHI - TRIB.) HAD ADDRESSED THIS ASPECT. THE RELEVANT HEADNOTES IS REPRODUCED BELOW: 'SECTION 153A, READ WITH SECTION 143, OF THE INCOME -TAX ACT, 1961-SEARCH AND SEIZURE - ASSESSMENT IN CASE OF (IN CASE OF SECTION 143(1) ASSESSMENT)- ASSESSMENT YEAR 2004-05- WHETHER ASSESSMENT IN RESP ECT OF WHICH RETURN HAS BEEN PROCESSED UNDER SECTION 143(1), CANNOT BE REGA RDED AS PENDING FOR PURPOSE OF SECTION 153A AS ASSESSING OFFICER IS NOT REQUIRED TO DO ANYTHING FURTHER ABOUT SUCH A RETURN AND, THUS, SAID ASSESSM ENT CANNOT BE REOPENED IN EXERCISE OF POWER OF SECTION 153A-HELD YES (PARAS 1 0 AND 12) (IN FAVOUR OF ASSESSEE).' SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 9 99 9 WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9.12.2015 REPORTED IN 2016-TIOL-167-ITAT-KOL HAD EXPLAINED THE AFORESAID PROVISIONS AS BELOW:- '6.4 IN OUR OPINION, THE SCHEME OF ASSESSMENT PROCE EDINGS SHOULD BE UNDERSTOOD IN THE FOLLOWING MANNER PURSUANT TO THE SEARCH CONDUCTED U/S. 132 OF THE ACT :- (A) NOTICE U/S. 153A OF THE ACT WOULD BE ISSUED ON THE PERSON ON WHOM THE WARRANT OF AUTHORIZATION U/S. 132 OF THE ACT WAS ISSUED FOR THE SIX ASSESSMENT YEARS PRECEDING THE YEAR OF SEARCH AND ASSESSMENTS THEREON WOULD BE COMPLETED U/S. 153A OF THE ACT FOR THOSE SIX ASSESS MENT YEARS. (B ) IN RESPECT OF THE YEAR OF SEARCH, NOTICE U/S. 143 (2) OF THE ACT WOULD BE ISSUED AND ASSESSMENT THEREON WOULD BE COMPLETED U/S. 143( 3) OF THE ACT. (C) IN RESPECT OF CONCLUDED ASSESSMENTS PRIOR TO THE YE AR OF SEARCH, NO ADDITION COULD BE MADE IN THE RELEVANT ASSESSMENT YEAR UNLES S ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE RELEVANT ASSESSMENT YEAR. (D) PURSUANT TO THE SEARCH U/S. 132 OF THE ACT, THE PEN DING PROCEEDINGS WOULD GET ABATED. IN RESPECT OF ABATED ASSESSMENTS, THE TOTAL INCOME NEEDS TO BE DETERMINED AFRESH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A AND OTHER PROVISIONS OF THE ACT. 6.4.1 THE CONCLUDED ASSESSMENTS FOR THE PURPOSE OF SECTION 153A OF THE ACT SHALL BE - (I) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMP LETED U/S. 143(1) AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) OF TH E ACT HAS EXPIRED OR; (II) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMP LETED U/S 143(3) OF THE ACT ; UNLESS THEY ARE REOPENED U/S 147 OF THE ACT FOR SOM E OTHER PURPOSE IN BOTH THE SCENARIOS STATED ABOVE. 6.4.2 THE SCHEME OF ASSESSMENT PROCEEDINGS CONTEMPL ATED U/S 153A OF THE ACT ARE TOTALLY DIFFERENT AND DISTINCT FROM THE PROCEED INGS CONTEMPLATED U/S. 147 OF THE ACT AND THESE PROCEDURES OF ASSESSMENT OPERA TE IN DIFFERENT FIELDS AND HAVE DIFFERENT PURPOSES TO BE FULFILLED ALTOGETHER. 6.4.3 THE EXPRESSION 'ASSESS OR REASSESS' STATED IN SECTION 153A(1)(B) HAS TO BE UNDERSTOOD AS BELOW:- 'ASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF ABATED ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER THERE ARE ANY INCR IMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO RELEVAN T ASSESSMENT YEARS ; SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 'REASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPEC T OF CONCLUDED ASSESSMENT YEARS WHERE INCRIMINATING MATERIALS WERE FOUND DURI NG THE COURSE OF SEARCH IN RESPECT OF THE RELEVANT ASSESSMENT YEAR.' WE ALSO FIND THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABU L CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HELD AS UNDER:- '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE P ERSON SEA RCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDI NG THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE LD AOS AS A FRESH EXERCISE. (III) THE LD AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPEC T OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAK ES PLACE. THE LD AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX Y EARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EAC H OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS S HOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE LD AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMEN T 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL.' (V) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DAT E OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETE AS SESSMENT PROCEEDINGS. (VI) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXIST ING OR BROUGHT ON THE RECORD OF THE LD AO. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY T HE LD AO WHILE MAKING THE ASSESSMENT UNDER SECTION 1 53A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR R EQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN TH E COURSE OF ORIGINAL ASSESSMENT.' WE NOTE THAT BASED ON THE ABOVE CITED LEGAL POSITIO N, THE PRESENT APPEALS CONCERN AYS 2013-14 AND 2014-15, ON THE DATE OF TH E SEARCH (03.03.2015) THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 11. NOW COMING TO THE MERITS OF THE CASE, WE NOTE T HAT THE ASSESSEE HAD PURCHASED 70,000 EQUITY SHARES OF M/S. SULABH ENGINEERS & SER VICES LTD. (HEREINAFTER REFERRED TO AS M/S. SULABH) ON 16.03.2011 IN THE F. Y. 2010-11 RELEVANT TO THE A. Y.2011-12 AT TOTAL COST OF RS.L4,00,000/- @ RS.20/- EACH. THE PURCHASE PRICE WAS PAID BY THE ASSESSEE THROUGH HIS BANK ACCOUNT MAINT AINED WITH HDFC BANK, DURGAPUR BRANCH. THE SHARES WERE RECEIVED AND RECOR DED IN THE DEMAT ACCOUNT. OUT OF THOSE 70,000 EQUITY SHARES 38520 EQUITY SHAR ES OF M/S. SULABH WERE SUBSEQUENTLY SPLIT ON 04.02.2013 IN THE RATIO OF 1: 10. THUS AFTER SPLIT UP THE ASSESSEE HAD 385200 SHARES HAVING FACE VALUE OF RS. 1/- PER SHARE. THE ENTIRE LOT OF THOSE 4,16,680 EQUITY SHARES (31480 SHARE AT FACE V ALUE OF RS.L0/- EACH PLUS 385200 SHARES AT FACE VALUE OF RS.1/- EACH) OF M/S SULABH ENGINEERS WERE SOLD BY THE ASSESSEE ON DIFFERENT DATES DURING THE FINANCIA L YEAR 2012-13 RELEVANT TO THE AY. 2013-14 FOR TOTAL CONSIDERATION OF RS.3,53,46,0 71/- AT DIFFERENT RATES VARYING FROM RS.17.68 TO RS.59.69 PER SHARE THROUGH THE REG ISTERED STOCK BROKING COMPANY M/S CONSORTIUM SECURITIES PVT. LTD. VIDE SE PARATE CONTRACT NOTES ISSUED ON DIFFERENT DATES BY THE REGISTERED STOCK BROKING COMPANY. THE SHARES WERE SOLD AS PER THE SHARE PRICE RATE REFLECTED IN THE CONCER NED STOCK EXCHANGE ON THE RESPECTIVE DATES OF SALE. THE OUTFLOW OF THE QUANTI TY OF SHARES ON THEIR SALE WERE DULY REFLECTED IN THE DEMAT ACCOUNT. THE SALE PROCE EDS RECEIVED WERE CREDITED IN HIS AFORESAID BANK ACCOUNT MAINTAINED WITH HDFC BAN K, DURGAPUR BRANCH. THE AFORESAID 416680 EQUITY SHARES OF M/S. SULABHEN GINEERS, WERE LONG TERM, CAPITAL ASSETS HELD BY THE ASSESSEE FOR MORE THAN A YEAR PRIOR TO THEIR SALE DURING THE F.Y. 2012- 13. ON SALE OF THOSE SHARES OF M/S S ULABH ENGINEERS, THE SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 1 11 12 22 2 ASSESSEEHAD EARNED LONG TERM CAPITAL GAIN (IN SHORT LTCG) OF RS. 3,39,46,071/- (SALE PRICE RS.3,53,46,071/- LESS PURCHASE PRICE RS .14,00,000/-). THE SALE OF THOSE SHARES WERE ALSO SUBJECTED TO SECURITIES TRANSACTIO N TAX (IN SHORT STT) WHICH WERE PAID AS SPECIFIED IN THE CONTRACT NOTES. IN ORDER TO PROVE THE GENUINENESS AND BONA FIDE OF TRANSACTIONS OF PURCHASE AND SALE OF THOSE 4,16,680 EQUITY SHARES OFM/S. SULABH ENGINEERS, THE COPY OF THE CONTRACT NOTES, DEMAT ACCOUNT STATEMENT, RELEVANT B ANK STATEMENTS AND LEDGER ACCOUNTS WITH THE REGISTERED SHARE BROKER COMPANY W ERE FILED BEFORE THE ASSESSING OFFICER. WE NOTE THAT ASSESSING OFFICER D ID NOT FIND ANY MISTAKE OR IRREGULARITY IN THESE DOCUMENTS THEREFORE, THE CLAI M OF THE ASSESSEE SHOULD BE ACCEPTED. 12. WE NOTE THAT IN THE ASSESSMENT THE A.O. BLINDL Y RELIED ON A GENERAL REPORT OF THE INVESTIGATION WING, KOLKATA, ALLEGING TAX EVASI ON IN RESPECT OF THE TRANSACTIONS OF SHARES OF CERTAIN PENNY STOCK COMPANIES OWING TO ALLEGED PRICE RIGGING THROUGH ENTRY OPERATORS/PROMOTERS / BROKERS CAUSING BENEFIT TO CERTAIN ASSESSEE TO INTRODUCE UNACCOUNTED MONEY IN THEIR BOOKS OF ACCOUNT IN THE FORM OF LTCG WITHOUT PAYMENT OF TAX BECAUSE OF EXEMPTION U/S 10(38) OF T HE INCOME TAX ACT. WE NOTE THAT PLACING RELIANCE ON SUCH REPORT OF THE INVESTI GATION WING, THE AO TREATED THE ASSESSEE TRANSACTION IN THE SHARES OF M/S SULABH EN GINEERS AS BOGUS, COLOURED AND NOT GENUINE. WE NOTE THAT THE ENTIRE PURCHASE OF 70,000 EQUITY S HARES AND SALE OF 4,16,680 EQUITY SHARES (31480 SHARE AT FACE VALUE OF RS.L0/- EACH PLUS 385200 SHARE AT FACE VALUE OF RS.1/- EACH) OF M/S SULABH ENGINEERS WERE MADE THROUGH REGISTERED STOCK BROKERS COMPANY M/S. CONSORTIUM SECURITIES PV T. LTD. AS PER THE CONTRACT NOTES ISSUED BY THE REGISTERED BROKERS. THE PAYMENT OF THE PURCHASE PRICE AND THE RECEIPT OF THE SALE PROCEEDS WERE MADE THROUGH BANKING CHANNEL DULY REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WIT H HDFC BANK, DURGAPUR BRANCH. IT IS TOTALLY DENIED THAT IN THE ABOVE SALE TRANSA CTIONS OF SHARES OF M/S SULABH ENGINEERS BY THE ASSESSEE THERE WAS INVOLVEMENT OF ANY ENTRY OPERATOR OR PROMOTER OR BROKER WHO HAD ALLEGEDLY INDULGED IN RI GGING AND / OR SURGING THE SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 1 11 13 33 3 PRICE OF SHARES OF M/S SULABH ENGINEERS UPWARDS / D OWNWARDS DURING THE YEAR UNDER ASSESSMENT AND THAT THEY HAD PROVIDED ANY ACC OMMODATION ENTRY TO THE ASSESSEE TO MAKE HIM UNLAWFULLY EARN LONG TERM CAPI TAL GAIN. WE NOTE THAT THE COMPANY,M/S. SULABH ENGINEERS & S ERVICES LTD. CANNOT BRANDED AS A PENNY STOCK COMPANY WITHOUT ANY JUSTIF IED AND VALID REASON. BESIDES HAVING OTHER ACTIVITIES, THE ASSESSEE IS NOT A REGU LAR INVESTOR OF SHARES OF COMPANIES AS CAN BE SEEN FROM THE AUDITED ACCOUNTS AND THE BALANCE SHEET. THE SHARE MARKET DOES NOT ALWAYS RUN STRICTLY ON THE FI NANCIAL STATUS AND BACKGROUND OF A COMPANY LISTED IN A STOCK EXCHANGE. IN A STOCK MA RKET VARIOUS FACTORS COME INTO PLAY FOR THE UPWARD / DOWNWARD TREND OF SHARES OF C OMPANIES EVEN IF THE FINANCIAL CONDITION OF THE COMPANIES IS THAT FAVOURABLE OR NO T OR THAT THERE IS SOME TEMPORARY UP RISE OR SET BACK IN THE GROWTH OF THE COMPANY. TRULY THESE CANNOT BE ANY DEFINITE YARDSTICK OR HARD & FAST RULE OR STAND ARD FORMULA TO JUDGE A COMPANY'S STANDING IN THE STOCK MARKET AND TO DETERMINE OR CO NTROL ITS SHARE PRICE FROM DAY TO DAY OR PERIODICALLY. THE SHARE MARKET IS ALWAYS VOL ATILE AND NO PRIOR PREDICTION CAN BE MADE BY AN AVERAGE INVESTOR,WHO IS NOT CONVE RSANT WITH THE DAILY AFFAIRS OF THE STOCK MARKET, THAT WHAT MAY BE THE PRICE OF SHA RE OF A PARTICULAR COMPANY IN A DISTANT FUTURE. THEREFORE, IN THE INSTANT CASE THE AO MADE ADDITION SOLELY ON SUSPICION, WHICH IS NOT ACCEPTABLE. 13. WE NOTE THAT AO ACCEPTED THE REPORT OF THE INV ESTIGATION WING, BUT AO DID NOT MAKE ANY INDEPENDENT INQUIRY AND INVESTIGATION ON HIS OWN TO VERIFY AND ASCERTAIN THE VERACITY AND GENUINENESS OF THE SALE TRANSACTION MADE BY THE ASSESSEE IN THE SHARES OF M/S SULABH ENGINEERS DURING THE YE AR. THE REGISTERED SHARE BROKER COMPANIES THROUGH WHOM THE ASSESSEE HAD SOLD THE LONG TERM SHARES OF M/S SULABH ENGINEERS WERE NEVER CALLED FOR THROUGH ANY NOTICE OR OTHERWISE TO PROVE THE AUTHENTICITY OF THE SAID TRANSACTIONS. TH EREFORE, ANY OBSERVATION, FINDING AND CONCLUSION DRAWN BY THE AO MERELY ON THE BASIS OF THE REPORT OF THE INVESTIGATION WING WITHOUT ANY APPLICATION OF MIND AND BEHIND THE BACK OF THE ASSESSEE WAS WHOLLY WRONG AND UNJUSTIFIED. SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 1 11 14 44 4 WE NOTE THAT THE ASSESSEE HAS PURCHASED THE SHARES FROM THE RECOGNIZED STOCK EXCHANGE THROUGH HIS BROKER ON VARIOUS DATES. THE A SSESSEE SUBMITTED CONTRACT NOTES. THIS TRANSACTION IS NOT THROUGH ANY PREFEREN TIAL ALLOTMENT OR OFFLINE SALE. ALL THE TRANSACTIONS ARE MADE THROUGH PROPER BANKING CH ANNELS. THE SHARES WERE SOLD THROUGH REGISTERED SHARE BROKER.IN THE COURSE OF AS SESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED ALL THE DETAILS AND DOCUMENT S THAT WERE NECESSARY FOR ALLOWING THE CLAIM OF THE ASSESSEE. IN THE ASSESSME NT ORDER U/S.153A/ 143(3), LD. AO HAS STATED THAT THERE WAS INFLOW OF SOME INFORMA TION FROM THE INVESTIGATION WING ALLEGING THAT THE ASSESSEE WAS INVOLVED IN SEL LING OF SO CALLED 'PENNY STOCK'. IN THIS REGARD IT WAS SUBMITTED BY THE ASSESSEE BE FORE THE ASSESSING OFFICER AS FOLLOWS: I) THE SHARES WERE PURCHASED AND SOLD THROUGH A REG ISTERED BROKER. II) THE SHARES WERE PURCHASED AND SOLD BASED ON THE PREVAILING MARKET CONDITION. III) THE PURCHASE AND SALE OF SHARES ARE SUPPORTED BY CONTRACT NOTES. THE PAYMENTS WERE RECEIVED THROUGH PROPER BANKING CHANNEL. IV) THE PURCHASE AND SALE TRANSACTIONS WERE SUBJECT ED TO SECURITY TRANSACTION TAX, SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. V) THE SHARE PURCHASE AND SALE TRANSACTIONS ARE REF LECTED IN THE D-MAT ACCOUNT. VI) THESE FACTS ARE VERIFIABLE FROM THE REGULAR BOO KS OF ACCOUNTS. VII) THE TRANSACTIONS CAN ALSO BE VERIFIED FROM THE STOCK EXCHANGE. THEREFORE, WE NOTE THAT SO FAR THIS ALLEGATION OF T HE ASSESSING OFFICER IS CONCERNED, THE ASSESSEE HAS PROVED BEYOND ANY DOUBT THAT THE S HARES WERE PURCHASED AND SOLD THROUGH A REGISTERED BROKER. THE SHARES WERE PURCHA SED AND SOLD BASED ON THE PREVAILING MARKET CONDITION. THE PAYMENTS WERE RECE IVED THROUGH PROPER BANKING CHANNEL. THE PURCHASE AND SALE TRANSACTIONS WERE SU BJECTED TO SECURITY TRANSACTION TAX, SERVICE TAX, BROKERAGE CHARGES AND STAMP DUTY. THE SHARE PURCHASE AND SALE TRANSACTIONS ARE GETTING REFLECTE D IN THE D-MAT ACCOUNT. THESE FACTS ARE VERIFIABLE FROM THE REGULAR BOOKS OF ACCO UNTS. THE TRANSACTIONS CAN ALSO SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 1 11 15 55 5 BE VERIFIED FROM THE STOCK EXCHANGE. THEREFORE, WE DO NOT AGREE WITH THE ASSESSING OFFICER AND HENCE THE ADDITION MADE BY AS SESSING OFFICER IS NOT JUSTIFIED. 14. WE NOTE THAT ASSESSING OFFICER MAINLY MADE ADDI TION BASED ON THEORY OF 'SUSPICIOUS TRANSACTIONS, ON THE BASIS OF REPORT O F INVESTIGATION WING. WE NOTE THAT THE LD. A.O. WAS REQUIRED TO CONVERT THE SUSPI CION INTO THE LEGAL EVIDENCE BY WAY OF BRINGING CONCRETE AND CONCLUSIVE FINDINGS AN D MATERIAL ONRECORDS. SINCE, THE LD A.O. TOOK NO STEP WHATSOEVER THE SUSPICION R EMAINS INTACT ANDSUSPICION WHATSOEVER STRONG CANNOT TAKE THE POSITION OF LEGAL EVIDENCES. WE NOTE THAT THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER (APPE ALS) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESP ECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER, THE ASSESSING OFFICER AS WEL L AS THE COMMISSIONER (APPEALS), HAVE NOT BROUGHT OUT ANY PART OF THE INV ESTIGATION 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 CAPIT AL GAINS. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PERSONS INVESTIG ATED, INCLUDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASSESSEE WAS IN COLLUSION 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 SEPA RATE DEPARTMENT WHICH HAS NOT BEEN ASSIGNED ASSESSMENT WORK AND HAS BEEN DELEGATE D THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VESTED WIDEST POWERS ON THIS WING. IT IS THE DUTY OF THE INVESTIGATION WING TO CONDUCT PROPER AND DETAILED I NQUIRY IN ANY MATTER WHERE THERE IS ALLEGATION OF TAX EVASION AND AFTER MAKING PROPER INQUIRY AND COLLECTING PROPER EVIDENCES THE MATTER SHOULD BE SENT TO THE A SSESSMENT WING TO ASSESS THE INCOME AS PER LAW. NO SUCH ACTION EXECUTED BY INVES TIGATION WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALLY AG AINST THE ASSESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE H ELD TO BE GUILTY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CAS E, THE ASSESSING OFFICER AT BEST COULD HAVE CONSIDERED THE INVESTIGATION REPORT AS A STARTING POINT OF INVESTIGATION. THE REPORT ONLY INFORMED THE ASSESSING OFFICER THAT SOME PERSONS MAY HAVE MISUSED THE SCRIPT FOR THE PURPOSE OF COLLUSIVE TRA NSACTION. THE ASSESSING OFFICER WAS DUTY BOUND TO MAKE INQUIRY FROM ALL CONCERNED P ARTIES RELATING TO THE SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 1 11 16 66 6 TRANSACTION AND THEN TO COLLECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. HOWEVER, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT THE TR ANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHERWISE SUPPORTED BY PROPER TH IRD PARTY DOCUMENTS ARE COLLUSIVE TRANSACTIONS. WE NOTE THAT THE ASSESSING OFFICER HAVING FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE TRANSACTION OF THE ASSESSEE WAS A CO LLUSIVE TRANSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESS EE. IN FACT, IN THIS CASE NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT EVIDENCES OR MATERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BEING INVES TIGATED BY VARIOUS WINGS OF THE INCOME TAX DEPARTMENT HENCE UNDER THESE CIRCUMSTANC ES NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE. 15. NOW WE DEAL WITH STATEMENT OF MR. DEEPAK KUMAR AGARWAL. WE NOTE THAT MR.DEEPAK KUMAR AGARWAL HAS RETRACTED FROM HIS STAT EMENT WHICH WAS TAKEN BY THE DDIT (INV). WING KOLKATA ON 05.06.2015, BY FILI NG THE FOLLOWING AFFIDAVIT. THE IMPORTANT CONTENT OF THE SAID AFFIDAVIT IS REPR ODUCED BELOW FOR READY REFERENCE: 2. ON 05.06.2015, I WAS CALLED UPON BY DDIT(INV), U NIT 2(2), KOLKATA, AT INVESTIGATION WING, CHOWRINGHEE SQUARE, TO CLARIFY ON CERTAIN ISS UES RAISED BY HIM ON 04.06.2015. ON THE SAID DATE MY DEPOSITION UNDER SECTION 131 OF TH E INCOME TAX ACT, 1961 WAS DONE AND BEGAN QUESTIONING ABOUT THE DETAILS OF INCOME EARNE D FROM LONG TERM CAPITAL GAIN. IN THE COURSE OF QUESTIONING, QUERIES WERE RAISE FOR L ONG TERM CAPITAL GAIN BOOKED BY VARIOUS INDIVIDUALS IN THE PAST, IRRESPECTIVE OF TH E FACT THAT I WAS NOT RESPONSIBLE OR ANSWERABLE, DIRECTLY OR INDIRECTLY, FOR THE INDIVID UALS' TAX AFFAIRS. 3. THAT ON 02/05/2015 IN THE COURSE OF REVOKING TEC HNICAL PROHIBITORY ORDER, STATEMENT FOR LTCG WAS GIVEN AND AGAIN WAS FORCED TO GIVE STA TEMENT ON SAME SUBJECT. 4. MY STATEMENT WAS RECORDED BY DDIT (INV), UNIT 2( 1), KOLKATA, MR. PANKAJ DWIVEDI AFTER WAITING OF PROLONGED 6-8 HRS, WHICH CAUSED ME NTAL TORTURE, AGONY, AND HARASSMENT. I WAS THREATENED TO GIVE THE STATEMENT AS REQUIRED BY HIM OTHERWISE I WOULD HAVE TO FACE THE DIRE CONSEQUENCES. AFTER THIS I WAS EXTREMELY N ERVOUS AND AFRAID AND TO SAVE MY FAMILY REPUTATION, BUSINESS, AND THE SOLE INTEREST OF MY FAMILY, 1 GAVE MY STATEMENT FOR WHICH L WAS NOT WILLINGLY READY. DDIT(INV) ALSO ASK ED ME TO PROVIDE AFFIDAVIT, AS PER WRITE-UP PROVIDED BY HIM FOR MR. VINAY KUMAR,AGARWA L MS. SWATI AGARWAL, MS. SUMAN SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 1 11 17 77 7 AGARWAL. THE STATEMENT WAS RECORDED UNDER THREAT, C OERCION AND UNDUE INFLUENCE, WHICH IS NOT PERMISSIBLE UNDER ANY LAW. 5. SO FAR AS THE ISSUE OF THE GENUINENESS OF CERTA IN LONG TERM CAPITAL GAIN IS CONCERNED, THIS IS MY HONEST SUBMISSION BEFORE YOUR LORDSHIP T HAT ALL THE TRANSACTION ARE GENUINE AND WERE MADE AS PER THE LAND OF LAW. IN THE STOCK EXCH ANGE WHEN THE TRANSACTION IS ENTERED INTO, I AM NOT SUPPOSED TO KNOW ABOUT THE DETAILS O F BUYER OF THE SHARES SOLD BY ME. I ENTERED INTO VALID TRANSACTION ONLY THROUGH A REGIS TERED STOCK / SHARE BROKER IN ONLINE PORTAL. WITH REGARDS TO PRICING THE EXCHANGES HAVE A LIMIT AT THE LOWER END AND AT THE HIGHEST END WITHIN WHICH THE ORDER PRICE COULD BE P LACED. THE ORDERS ARE FED IN THE EXCHANGE TRADING PLATFORM AND THE TRADES ARE MARCHE D IN THE EXCHANGE WHEN THE ORDER PRICE MATCHES A COUNTER PARTY. THEREFORE, CONTENTIO N OF FICTITIOUS BUYER CANNOT BE THE BASIS TO ASCERTAIN THE TRANSACTION TO BE NON-GENUIN E, ONE. THERE IS NOTHING WRONG IN MY OPINION TO DEAL IN PENNY STOCK AND THIS IS A USUAL PRACTICE IN THE BUSINESS TO TAKE RISK FOR WINDFALL GAIN. FROM THE ENTIRE APPRECIATION OF THE FACT, AS A INVESTOR I HAD ACQUIRED THE SHARES, THE PURCHASE OF WHICH WAS DULY DECLARED IN THE BOOKS OF ACCOUNTS WHICH STAND ACCEPTED BY THE LAW. THE SHARES ARE SOLD THROUGH ST OCK BROKERS WHO WERE REGISTERED WITH THE STOCK EXCHANGE. SHARES WERE, SOLD AT THE PRICES QUOTED AT THE STOCK EXCHANGE AT THE RELEVANT TIME. THE PAYMENT OF SALE CONSIDERATION AL SO FLOWN FROM THE BANK ACCOUNT AS PER THE SETTLED RULE/PRINCIPLE OR STOCK EXCHANGE AND SE BI.NOTHING WAS BROUGHT AS SUFFICIENT EVIDENCES AND MATERIAL TO PROVE THAT WE/OUR ENTITY WERE INVOLVED IN BOGUS, FALSE OR FABRICATED LONG TERM CAPITAL GAIN. WE NOTE THAT STATEMENT RECORDED UNDER SECTION 132(4 ) OF THE ACT CAN FORM BASIS FOR AN ASSESSMENT ONLY IF SUCH STATEMENT RELATES TO ANY INCRIMINATING EVIDENCE OF UNDISCLOSED INCOME UNEARTHED DURING SEARCH. WE NOTE THAT IN ASSESSEE`S CASE UNDER CONSIDERATION, THE SEARCH TEAM DID NOT FIND ANY INC RIMINATING MATERIAL THEREFORE, ADDITION MERELY ON THE STATEMENT RECORDED UNDER SEC TION 132(4) OF THE ACT SHOULD NOT BE MADE, FOR THAT WE RELY ON THE FOLLOWING JUDG MENTS: 1.HON`ABLE ANDHRA PRADESH, HIGH COURT IN THE CASE O F CIT VS. NARESH KUMAR AGARWAL,[2015] 53 TAXMANN.COM 306 (AP-HC) HELD THAT WHERE IN ABSENCE OF ANY INCRIMINATING MATERIAL ETC, FOUND FR OM PREMISES OF ASSESSEE DURING COURSE OF SEARCH, STATEMENT OF ASSESSEE RECORDED UN DER SECTION 132 (4) WOULD NOT HAVE ANY EVIDENTIARY VALUE. SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 1 11 18 88 8 2. HON`ABLE DELHI, HIGH COURT IN THE CASE OF CIT V S. HARJEEV AGGARWAL [2016] 70 TAXMANN .COM 95 (DEL) , HELD THAT A STATEMENT RECORDED UNDER SECTION 132(4) CAN FORM BASIS FOR A BLOCK ASSESSMENT ONLY I F SUCH STATEMENT RELATES TO ANY INCRIMINATING EVIDENCE OF UNDISCLOSED INCOME UNEART HED DURING SEARCH. 3. HON`ABLE GUJARAT, HIGH COURT IN THE CASE OF CIT VS. CHANDRAKUMAR JETHMAL KOCHAR [2015] 55 TAXMANN .COM 292 (GUJARAT) , HELD THAT MERELY ON BASIS OF ADMISSION THAT FEW BENAMI CONCERNS WERE BE ING RUN BY ASSESSEE, ASSESSEE COULD NOT BE SUBJECTED TO ADDITION WHEN ASSESSEE RE TRACTED FROM SUCH ADMISSION AND REVENUE COULD NOT FURNISH ANY CORROBORATIVE EVI DENCE IN SUPPORT OF SUCH ADMISSION. 16. WE NOTE THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. LA VANYA LAND PVT. LTD. [2017] 83TAXMANN.COM 161 (BOM) HELD THAT THERE WAS NO EVIDENCE WHATSOEVER TOALLEGE THAT MONEY CHANGED HANDS BETWEE N THE ASSESSEE AND THE BROKER OR ANY OTHER PERSON INCLUDING THE ALLEGED EX IT PROVIDER WHATSOEVER TO CONVERT UNACCOUNTED MONEY FOR GETTING BENEFIT OF LT CG AS ALLEGED. IN THE SAID CASE, THE HONBLE HIGH COURT AT PARA 21 HELD THAT I N ABSENCE OF ANY MATERIAL TO SHOW THAT HUGE CASH WAS TRANSFERRED FROM ONE SIDE T O ANOTHER, ADDITION CANNOT BE SUSTAINED. 17. WE NOTE THAT ALL THE OBSERVATIONS, CONCLUSIONS AND FINDINGS OF THE LOWER AUTHORITIES ARE BASED ON SUSPICION, SURMISES AND RU MOR. IT IS TRITE LAW THAT THE SUSPICION HOWSOEVER STRONG CANNOT PARTAKE THE CHARA CTER OF LEGAL EVIDENCE. REFERENCE WAS MADE TO THE JUDGEMENT OF HONBLE SUPR EME COURT IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT (1959) 37ITR 288 (SC, UMACHARAN SHAW 37 ITR 271 AND OMAR SALAY MOHAMED SAIT 37ITR 151. W E NOTE THAT THE ENTIRE CASE OF THE REVENUE IS BASED UPON THE PRESUMPTION T HAT THE ASSESSEE HAS PLOUGHED BACK HIS OWN UNACCOUNTED MONEY IN THE FORM OF BOGUS LTCG. HOWEVER, THIS PRESUMPTION OR SUSPICION HOWSOEVER STRONG IT MAY AP PEAR TO BE, BUT NEEDS TO BE CORROBORATED BY SOME EVIDENCE TO ESTABLISH A LINK T HAT THE ASSESSEE HAD BROUGHT BACK HIS UNACCOUNTED INCOME IN THE FORM OF LTCG. SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 1 11 19 99 9 18. WE NOTE THAT SINCE THE PURCHASE AND SALE TRA NSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENT S AND BANK STATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WER E ACCEPTED BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOG US SIMPLY ON THE BASIS OF SOME REPORTS OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMI SSIONS, THE LD COUNSEL, IN ADDITION TO THE AFORESAID JUDGEMENTS, HAS REFERRED TO AND RE LIED ON THE FOLLOWING CASES:- (I) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (II) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (IV) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (V) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VI) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (VII) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (IX) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (X) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XI) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XII) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XIII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XIV) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XVI) GANESHMULLBIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 20 00 0 (XVII) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XVIII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XIX) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 19. THE LD COUNSEL ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENE SS 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 AGNIHOTRI 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 AS SERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLIS H CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HON BLE APEX COURT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BASIS OF SUSPICION. IT H AS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTED THAT S IMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RE LATING TO EXEMPTION CLAIMED BY THE ASSESSEE ON LTCG ON ALLEGED PENNY SOCKS. (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITA NO. 32/AGR/2007 (A GRA ITAT) 20. MOREOVER IT WAS SUBMITTED BEFORE US BY LD COUNS EL THAT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASS ESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING . IT WAS SUBMITTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REP ORT OF THE INVESTIGATION WING TO THE EFFECT THAT THE ASSESSEE, THE COMPANIES DEALT I N AND/OR HIS BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN BSE/C SE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SUPPORT OF THIS CONTENTION W HEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 21 11 1 UNDER SECTION 10(38) OF THE ACT AND TO ASSESS THE S ALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS.AMITA AGARWAL & OTHERS - ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 21. WE NOTE THAT THE LD. D.R. FOR THE REVENUE HAD H EAVILY RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF BIMALCHAND JAIN IN TAX APPEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RE LIED UPON BY THE LD. D.R, WE FIND THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MADE BY THE ASSESSEE IN CA SH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF THE COMPANI ES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WAS INCIDENTAL LY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOWN AS CAPI TAL GAINS WHICH WAS NOT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREATING THE SALES OF THE SHARES WITHIN THE AMBI T OF ADVENTURE IN NATURE OF TRADE. THUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UP ON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARNED ON SALE OF SHARES WAS CAP ITAL GAINS OR BUSINESS PROFIT. 22. WE NOTE THAT W HEN THE TRANSACTIONS WERE AS PER NORMS PRESCRIBED BY SEBI A ND CONCERNED STOCK EXCHANGE AND SUFFERED STT, BROKERAG E, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. AO DID NOT DOUBT THE GENUINENESS OF THE DO CUMENTS SUBMITTED BY ASSESSEE. THE LD AO FAILED TO BRING ON RECORD ANY E VIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. THE ASS ESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUM ENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. IN THE SE CIRCUMSTANCES, THE LONG TERM CAPITAL GAIN (LTCG) EARNED BY THE ASSESSEE SHOULD N OT BE TREATED AS BOGUS, AS HELD SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 22 22 2 BY THE JURISDICTIONAL HON`BLE CALCUTTA HIGH COURT I N VARIOUS CASES, AS MENTIONED BELOW: (I) . CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CA L- HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER W AS SUBJECTED TO SEBIS ACTION. HOWEVER, THE TRANSACTIONS WERE AS PER NORMS AND SUF FERED STT, BROKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER TH E TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE W AS DISMISSED. (II) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 105 OF 2016] (CAL- HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIR MED THE DECISION OF THIS TRIBUNAL, WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASS ESSEE WHERE THE LD AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE LD AO DIS ALLOWED THE LOSS ON TRADING OF PENNY STOCK ON THE BASIS OF SOME INFORMATION RECEIV ED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE LD AO DID NOT DOUBT THE GENUINE NESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT T HE LD AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. TH E APPEAL FILED BY THE REVENUE WASDISMISSED. (III) CIT V. ANDAMAN TIMBERS INDUSTRIES LTD [ITA NO . 721OF 2008] (CAL-HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM ED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOW ED SINCE THE LD AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SA LE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. (IV) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34 738 (CAL- HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE LD AO, BASED ON THE INFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 23 33 3 THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. TH E HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREI N IT WAS FOUND THAT THE CLAIM OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO F OUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOU NTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED B Y HIGH COURT. (V)..THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF ALPINE INVESTMENTS ITA 620 OF 2008, DATED 26 TH AUGUST 2008, 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 EXCHANGE AND ALL THE PAYMENTS MADE T O THE STOCKBROKER AND ALL THE PAYMENTS RECEIVEDFROM STOCKBROKER THROUGH ACCOUNT P AYEE INSTRUMENTS, WHICH 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 CONCLUS ION AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. IN DOING SO, THE TRIBUNAL HE LD THAT THE TRANSACTION FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCES COULD NOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER, IT WAS HELD THAT THE TRANSAC TIONS 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. (VI) THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME VS M/S. BLB CABLES AND CONDUCTORS ; ITAT NO.78 OF 2017, GA NO.747 OF 2017; DT. 19 JUNE, 2018, HAD UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS FOLLOWS:- '4. WE HAVE HEARD BOTH THE SIDE AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE LD. AR SUBMITTED TWO PAPERS BOOKS. FIRST BOOK I S RUNNING IN PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEF ORE US THE LD. AR SUBMITTED THAT THE ORDER OF THE AO IS SILENT ABOUT THE DATE F ROM WHICH THE BROKER WAS EXPELLED. THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF BOTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUE S. THE LD. AR HAS ALSO SUBMITTED THE IT RETURN, LEDGER COPY, LETTER TO AO AND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM WHICH IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTRACTS NOTES WHI CH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REG ISTERS WERE ALSO SUBMITTED IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. THE BOARD SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 24 44 4 RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIO NS IN COMMODITY WAS PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER HAND, TH E LD. DR RELIED IN THE ORDER OF THE LOWER AUTHORITIES. 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD SUCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME L OSS WAS ALSO CONFIRMED BY THE LD. CIT(A). HOWEVER, WE FIND THAT ALL THE TRANSACTI ONS THROUGH THE BROKER WERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BRO KER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME CONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. (VII).M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 2012] (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 TRANSACTIONS 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 SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGH T HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY FAILED TO SUBSTANTIAT E THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING PRICE AND T HEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. (VIII)CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMI TED [2013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RECORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TA KE THE PLACE OF PROOF. IT WAS FURTHER HELD THAT IN ABSENCE OF ANY EVIDENCE ON REC ORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANSACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTED TO WITH UL TERIOR MOTIVE. WE NOTE THAT ABOVE MENTIONED JUDGMENTS OF HON`BLE C ALCUTTA HIGH COURT, BY AND LARGE HELD THAT WHERE THE WHOLE TRANSACTIONS WERE S UPPORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCK BROKER OF STOCK EXCHANGE AND ALL THE PAYMENTS MADE TO THE STOCKBROKER AND ALL TH E PAYMENTS RECEIVED FROM STOCKBROKER THROUGH ACCOUNT PAYEE CHEQUES, THEN IN THESE FACTS AND CIRCUMSTANCES ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF BO GUS LONG TERM CAPITAL GAIN SHOULD BE DELETED. WE NOTE THAT UNLESS AND UNTIL TH E ORDER OF JURISDICTIONAL HON`BLE SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 25 55 5 HIGH COURT IS REVERSED BY HON`BLE SUPREME COURT, TH E SAME HAS TO BE GIVEN DUE EFFECT. JUDICIAL DISCIPLINE DEMANDS THAT ONCE AN OR DER HAS BEEN PASSED IN THE ASSESSEES OWN CASE, BY THE JURISDICTIONAL HIGH COU RT, THE TRIBUNAL IS DUTY BOUND TO ACT IN ACCORDANCE WITH THE SAME. WE NOTE THAT IN THE CASE OF UNION OF INDIA V. RAGHUBIR SINGH (1989) 178 ITR 548 (SC), THE SUPREME COURT HELD THAT THE DOCTRINE OF BINDING PRECEDENT HAS MERIT OF PROMOTING CERTAINTY AND CONSISTENCY IN JUD ICIAL DECISIONS. AS PER THE DOCTRINE OF PRECEDENT, ALL LOWER COURTS, TRIBUNALS AND AUTHORITIES EXERCISING JUDICIAL OR QUASI-JUDICIAL FUNCTIONS ARE BOUND BY T HE DECISIONS OF THE HIGH COURT WITHIN WHOSE TERRITORIAL JURISDICTION THESE COURTS, TRIBUNALS &AUTHORITIES FUNCTIONS. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE JURISDICTIONAL, HON`BLE HIGH COURT OF CALCUTTA, ON SIMILAR AND IDENTICAL FA CTS, THE ADDITION MADE BY ASSESSING OFFICER SHOULD BE DELETED. 23. WE NOTE THAT W HEN THE TRANSACTIONS WERE AS PER NORMS PRESCRIBED BY SEBI AND CONCERNED STOCK EXCHANGE AND SUFFERED STT,BROKERAGE , SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THETRANSACTIONS A S IT WERE REFLECTED IN DEMAT ACCOUNT. AO DID NOT DOUBT THE GENUINENESS OF THE DO CUMENTS SUBMITTED BY ASSESSEE. THE LD AO FAILED TO BRING ON RECORD ANY E VIDENCE TO SUGGESTTHAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. THE ASS ESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUM ENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. IN THE SE CIRCUMSTANCES, THE LONG TERM CAPITAL GAIN (LTCG) EARNED BY THE ASSESSEE SHOULD N OT BE TREATED AS BOGUS, AS HELD BY THE COORDINATE BENCHES OF ITAT KOLKATA, IN THE F OLLOWING CASES: (I). MR. SANJIV SHROFF, I.T.A. NO. 1197/KOL/2018, A SSESSMENT YEAR: 2014-15, ORDER DATED, 02.01.2019 28. WE NOTE THAT SINCE THE PURCHASE AND SALE TR ANSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENT S AND BANK STATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTE D BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BA SIS OF SOME REPORTS OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAID JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLOWING CASES:- SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 26 66 6 (XX) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (XXI) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (XXII) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (XXIII) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (XXIV) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (XXV) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (XXVI) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (XXVII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (XXVIII) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (XXIX) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XXX) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XXXI) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XXXII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XXXIII) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XXXIV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XXXV) GANESHMULLBIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XXXVI) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XXXVII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XXXVIII) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 29. THE LD AR ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRAN SACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADH YA 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 B URDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFINITE CHARACTER 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 I S NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANN OT DECIDE ON THE BASIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISH ED BY EVIDENCE. THE LD AR SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING J UDGMENTS WHILE DECIDING THE ISSUE RELATING TO EXEMPTION CLAIMED BY THE ASSESSEE ON LT CG ON ALLEGED PENNY SOCKS. (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (IV) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 30. MOREOVER, IT WAS SUBMITTED BEFORE US BY LD AR T HAT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SUBMI TTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INV ESTIGATION WING TO THE EFFECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HIS BRO KER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN CSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SUPPORT OF THIS CONTENTION WHEREIN UND ER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO A LLOW THE BENEFIT UNDER SECTION 10(38) SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 27 77 7 OF THE ACT AND TO ASSESS THE SALE PROCEEDS OF SHARE S AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (V) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 (AGRA ITAT) (VI) ACIT VS.AMITA AGARWAL & OTHERS - ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (VII) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (VIII) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 31. WE NOTE THAT THE LD. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMALCHAND JAIN IN TAX APPEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R , WE FIND THAT THE FACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THA T CASE, THE PURCHASES WERE MADE BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF C OMPANIES AND THE PURCHASE OF SHARES OF THE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WAS INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PR OFIT EARNED BY THE ASSESSEE WAS SHOWN AS CAPITAL GAINS WHICH WAS NOT ACCEPTED BY TH E A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREAT ING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTURE IN NATURE OF TRADE. THUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UPON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PRO FIT EARNED ON SALE OF SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT. 32.IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG ON SALE OF SHARES OF M/S KAFL. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, AND SE T ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL A S BOGUS AND DELETE THE CONSEQUENTIAL ADDITION. (II) JAGMOHAN AGARWAL VS. ACIT, ITA NO.604/KOL/2018 , ORDER DATED 05.09.2018. 35.IN THE LIGHT OF THE DOCUMENTS STATED IN PARA 30 AT PAGE14(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMP LICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS L EVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS N O LEGS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTROVERT THE FACTS WHICH ARE SUPPORTED WITH MATERIAL EVIDENCES F URNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDE RS OF THE AO/CIT(A). WE NOTE THAT THE ALLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE CONSE QUENTLY FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNIS HED ALL RELEVANT 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 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 FICT ITIOUS OR BOGUS NOR THE AO HAD ISSUED ANY NOTICE TO THE BROKERS FOR CONFIRMATI ON. 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 TH E CLAIM OF THE ASSESSEE EXEMPTED U/S 10(38) OF THE ACT ON THE BASIS OF SUSP ICION, SURMISES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICIO N HOW SO EVER STRONG, CANNOT SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 28 88 8 PARTAKE THE CHARACTER OF LEGAL EVIDENCE. IN THE AFO RESAID FACTS AND CIRCUMSTANCE, FOR ALLOWING THE APPEAL WE RELY ON TH E DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INV ESTMENTS IN ITA NO.620 OF 2008 DATED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOW S : 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. 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 H AS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPR A) 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 DECISI ON 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 SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDIT ION. (III).NAVNEET AGARWAL, ITA NO.2281/KOL/ 2017, ORDER DATED 05.09.2018 THE ASSESSEE IN THIS CASE HAD STATED THAT THE ASSE SSEE WAS ALLOTTED OF 50000 EQUITY SHARES OF SCITIL. THE PAYMENT FOR THE ALLOTM ENT OF SHARES WAS MADE THROUGH AN ACCOUNT PAYEE CHEQUE (COPY OF THE BANK S TATEMENT EVIDENCING THE SOURCE OF MONEY). ANNUAL RETURN NO. 20B WAS FILED W ITH REGISTRAR OF COMPANIES BY SCITIL SHOWING THE ASSESSEE'S NAME AS SHAREHOLDER. THE ASSESSEE LODGED THE SAID SHARES WITH THE DEPOSITORY ESSBSL WITH A DEMAT REQU EST. THE SAID SHARES WERE DEMATERIALIZED AND COPY OF DEMAT REQUEST SLIP ALONG WITH THE TRANSACTION STATEMENT IS PLACED ON RECORD. LATER ON, THE HIGH C OURT APPROVED THE SCHEME OF AMALGAMATION OF SCITIL WITH CSL. IN ACCORDANCE WITH THE SAID SCHEME OF AMALGAMATION, THE ASSESSEE WAS ALLOTTED 50000 EQUIT Y SHARES OF CSL. THE DEMAT SHARES ARE REFLECTED IN THE TRANSACTION STATEMENT O F THE PERIOD FROM 1-11-2011 TO 31-12-2013. THE ASSESSEE SOLD 50000 SHARES THROUGH HER BROKER SKP WHICH WAS A SEBI REGISTERED BROKER AND EARNED A LONG TERM CAPIT AL GAIN. COPY OF FORM NO. 10DB ISSUED BY THE BROKER, IN SUPPORT OF CHARGING O F S.T.T. IN RESPECT OF THE TRANSACTIONS APPEARING IN THE LEDGER IS PLACED ON R ECORD. THE HOLDING PERIOD OF THE SAID SCRIP IS MORE THAN ONE YEAR (ABOVE 500 DAY S) THROUGH IN ORDER TO GET THE BENEFIT OF CLAIM OF LONG TERM CAPITAL GAIN THE HOLD ING PERIOD IS REQUIRED TO BE 365 DAYS THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER ( APPEALS) HAVE REJECTED THESE EVIDENCES FILED BY THE ASSESSEE BY REFERRING TO 'MO DUS OPERANDI' OF PERSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH IS EXEMPT FRO M INCOME TAX. ALL THESE SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 2 22 29 99 9 OBSERVATIONS OF INVESTIGATION WING WERE GENERAL IN NATURE AND WERE APPLIED ACROSS THE BOARD TO ALL THE 60,000 OR MORE ASSESSEE S WHO FALL IN THIS CATEGORY. SPECIFIC EVIDENCES PRODUCED BY THE ASSESSEE WERE NO T CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVIDENCE COLLECTED FROM THIRD PARTI ES WAS CONFRONTED TO THE ASSESSEES. NO OPPORTUNITY OF CROSS-EXAMINATION OF P ERSONS, ON WHOSE STATEMENTS THE REVENUE RELIED TO MAKE THE ADDITION, WAS PROVID ED TO THE ASSESSEE. THE ADDITION IS MADE BASED ON A REPORT FROM THE INVESTI GATION WING. THE ISSUE FOR CONSIDERATION IS WHETHER, IN SUCH CAS ES, THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUIDE DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILITIES, HUMAN BEHAVIOUR AND DISCOVERY OF THE MODUS OPERANDI ADOPTED IN EARNING ALLEGED BOGUS LTCG AND STCG, THAT HAVE SURFACED DURING INVESTIGATIONS, SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCLUSION AS TO WHETHER THE CLAIM IS GENUINE OR NOT. AN ALLEGED SCAM MIGHT HAVE TAKEN PLACE ON LTCG ETC. BUT IT HAS TO BE ESTABLISHED IN EACH C ASE, BY THE PARTY ALLEGING SO, THAT THIS ASSESSEE IN QUESTION WAS PART OF THIS SCA M. THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESSEE'S ACTION GIVING HER INVOL VEMENT IN THE SCAM SHOULD BE ESTABLISHED. THE ALLEGATION IMPLY THAT CASH WAS PAI D 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 ALLEGATION TH AT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVENUE. EVI DENCE GATHERED BY THE DIRECTOR INVESTIGATION'S OFFICE BY WAY OF STATEMENTS RECORDE D ETC. HAS TO ALSO BE BROUGHT ON RECORD IN EACH CASE, WHEN SUCH A STATEMENT, EVIDENC E ETC. IS RELIED UPON BY THE REVENUE TO MAKE ANY ADDITIONS. OPPORTUNITY OF CROSS EXAMINATION HAS TO BE PROVIDED TO THE ASSESSEE, IF THE ASSESSING OFFICER RELIES ON ANY STATEMENTS OR THIRD PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATER IAL OR EVIDENCE WAS SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER, HE HAS TO CONFRONT THE ASSESSEE WITH SUCH MATERIAL. THE CLAIM OF THE ASSESSEE CANNOT BE REJEC TED BASED ON MERE CONJECTURES UNVERIFIED BY EVIDENCE UNDER THE PRETENTIOUS GARB O F PREPONDERANCE OF HUMAN PROBABILITIES AND THEORY OF HUMAN BEHAVIOUR BY THE DEPARTMENT. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THI RD 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 ASSES SING OFFICER RELIED ONLY ON A REPORT AS THE BASIS FOR THE ADDITION. THE EVIDENCE BASED ON WHICH THE DDIT REPORT WAS PREPARED IS NOT BROUGHT ON RECORD BY THE ASSESS ING OFFICER NOR IS IT PUT BEFORE THE ASSESSEE. THE SUBMISSION OF THE ASSESSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RECEIVED SOME TIPS AND SHE CHOSE TO INVEST B ASED ON THESE MARKET TIPS AND HAD TAKEN A CALCULATED RISK AND HAD GAINED IN THE P ROCESS AND THAT SHE IS NOT PARTY TO THE SCAM ETC., HAS TO BE CONTROVERTED BY T HE REVENUE WITH EVIDENCE. WHEN A PERSON CLAIMS THAT SHE HAS DONE THESE TRANSACTION S IN A BONA FIDE AND GENUINE MANNER AND WAS BENEFITTED, ONE CANNOT REJECT THIS S UBMISSION BASED ON SURMISES AND CONJECTURES. AS THE REPORT OF INVESTIGATION WIN G SUGGESTS, THERE ARE MORE THAN 60,000 BENEFICIARIES OF LTCG. EACH CASE HAS TO BE A SSESSED BASED ON LEGAL PRINCIPLES OF LEGAL IMPORT LAID DOWN BY THE COURTS OF LAW JUST THE MODUS OPERANDI, GENERALISATION, PREPONDERA NCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTING THE CLAIM OF THE ASSESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CONTROVERT THE VAL IDITY AND CORRECTNESS OF THE DOCUMENTARY EVIDENCES PRODUCED, THE SAME CANNOT BE REJECTED BY THE ASSESSEE. 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 SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 3 33 30 00 0 ESTABLISH CIRCUMSTANCE UNERRINGLY AND REASONABLY RA ISING AN INTERFERENCE TO THAT EFFECT. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER ( APPEALS) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER, THE ASSESSING OFFICER AS WEL L AS THE COMMISSIONER (APPEALS), HAVE BROUGHT OUT ANY PART OF THE INVESTI GATION 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 INVESTIG ATED, INCLUDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASS ESSEE WAS IN COLLUSION 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 WHICH HAS NOT BEEN ASSIGNED ASSESSMENT WORK AND HAS BEEN DELE GATED THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VESTED WIDEST POW ERS ON THIS WING. IT IS THE DUTY OF THE INVESTIGATION WING TO CONDUCT PROPER AND DET AILED INQUIRY IN ANY MATTER WHERE THERE IS ALLEGATION OF TAX EVASION AND AFTER MAKING PROPER INQUIRY AND COLLECTING PROPER EVIDENCES THE MATTER SHOULD BE SE NT TO THE ASSESSMENT WING TO ASSESS THE INCOME AS PER LAW. NO SUCH ACTION EXECUT ED BY INVESTIGATION WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPE CIFICALLY AGAINST THE ASSESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUILTY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CASE, THE ASSESSING OFFICER AT BEST COULD HAVE CONSIDERED THE INVESTIGATION REPORT AS A STARTING POINT OF INVESTIGATION. THE REPORT ONLY INFORMED THE ASSESSI NG OFFICER THAT SOME PERSONS MAY HAVE MISUSED THE SCRIPT FOR THE PURPOSE OF COLL USIVE TRANSACTION. THE ASSESSING OFFICER WAS DUTY BOUND TO MAKE INQUIRY FR OM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION AND THEN TO COLLECT EVI DENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE T RANSACTION. HOWEVER, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVI DENCE TO PROVE THAT THE TRANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHE RWISE SUPPORTED BY PROPER THIRD PARTY DOCUMENTS ARE COLLUSIVE TRANSACTIONS. THE ASSESSING OFFICER HAVING FAILED TO BRING ON REC ORD ANY MATERIAL TO PROVE THAT THE TRANSACTION OF THE ASSESSEE WAS A COLLUSIVE TRA NSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN FACT, I N THIS CASE NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT E VIDENCES OR MATERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BEING INVESTIGATED BY V ARIOUS WINGS OF THE INCOME TAX DEPARTMENT HENCE UNDER THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE ONE IS BOUND TO CONSIDER AND RELY ON THE EVIDENCE P RODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM AND BASE DECISION ON SUCH EVID ENCE AND NOT ON SUSPICION OR PREPONDERANCE OF PROBABILITIES NO MATERIAL WAS BROU GHT ON RECORD BY THE ASSESSING OFFICER TO CONTROVERT THE EVIDENCE FURNIS HED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, THE EVIDENCE FILED BY THE ASSE SSEE IS ACCEPTED AND THE CLAIM THAT THE INCOME IN QUESTION IS A BONA FIDE LONG TER M CAPITAL GAIN ARISING FROM THE SALE OF SHARES IS ALLOWED AND HENCE EXEMPT FROM INCOME TAX. [PARA 20] 24. TO CONCLUDE, WE NOTE THAT THE ASSESSEE SUBMITTE D BEFORE US THE COPY OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (VIDE PB-53 TO 7 1), COPY OF AFFIDAVIT DATED SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 3 33 31 11 1 29.06.2015 IN RESPECT OF RETRACTION OF STATEMENT MA DE U/S 131 OF THE ACT (VIDE PB- 72 TO 77). THE ASSESSEE SUBMITTED BEFORE US THE COP Y OF LEDGER ACCOUNTS OF BROKER M/S CONSORTIUM SECURITIES PVT. LTD. ALONG WITH COPY OF BILLS (PB-78 TO 99). THE ASSESSEE HAS SUBMITTED THE COPY OF BANK STATEMENT O F ALLAHABAD BANK (PB-100 TO 102), COPY OF HDFC BANK (PB-104 TO 114), COPY OF O RIENTAL BANK OF COMMERCE (PB-115-116) AGAIN COPY OF ORIENTAL BANK OF COMMERC E (PB-117 TO 119) AND COPY OF PUNJAB NATIONAL BANK (PB-120 TO 124). THE A SSESSEE ALSO SUBMITTED THE COPY OF DEMAT STATEMENT ACCOUNTS VIDE PB 122 TO 153 . THEREFORE, WE NOTE THAT THE REQUIRED DOCUMENTS WERE SUBMITTED AND TRANSACTIONS WHICH WERE DONE THROUGH BANKING CHANNELS AND WHICH ARE GETTING REFLECTED IN THE DEMAT STATEMENT ACCOUNTS ALSO. THE PRICE OF SCRIP WAS DETERMINED BY THE MARK ET FORCES AND THERE IS NO ANY HUMAN INTERVENTION. BY SUBMITTING THIS PLETHORA DOC UMENTS AND STATEMENTS, THE LD. COUNSEL CLAIMED THAT THE LONG TERM CAPITAL GAIN GEN ERATED BY THE ASSESSEE IS GENUINE. WE NOTE THAT IN THE ASSESSEE`S CASE UNDER CONSIDERATION, A SEARCH AND SEIZURE ACTION WAS CONDUCTED BY THE DEPARTMENT ON 0 3.03.2015. THAT IS, SEARCH AND SEIZURE WAS CONDUCTED IN THE PREVIOUS YEAR 01.04.20 14 TO 31.03.2015, HENCE THE ASSESSMENT YEAR FOR THE SEARCH IS A.Y. 2015-16, WHE REAS ASSESSEE`S BOTH APPEALS UNDER CONSIDERATION PERTAIN TO ASSESSMENT YEAR 2013 -14 AND 2014-15, WHICH ARE UNABATED ASSESSMENT YEARS. IN THE CASE OF UNABATED ASSESSMENT YEARS, THE ADDITION CAN NOT BE MADE WITHOUT INCRIMINATING MATERIAL. WE NOTE THAT THE SEARCH TEAM DID NOT FIND ANY INCRIMINATING MATERIAL, HENCE ADDITION SHOULD NOT BE MADE IN CASE OF UNABATED ASSESSMENT YEARS (THAT IS, CONCLUDED PROCE EDING).WE NOTE THAT ASSESSING OFFICER MAINLY MADE ADDITION BASED ON THEORY OF 'SU SPICIOUS TRANSACTIONS, ON THE BASIS OF REPORT OF INVESTIGATION WING. WE NOTE THAT THE LD. A.O. WAS REQUIRED TO CONVERT THE SUSPICION INTO THE LEGAL EVIDENCE BY WA Y OF BRINGING CONCRETE AND CONCLUSIVE FINDINGS AND MATERIAL ON RECORDS. SINCE, THE LD A.O. TOOK NO STEP WHATSOEVER THE SUSPICION REMAINS INTACT AND SUSPICI ON WHATSOEVER STRONG CANNOT TAKE THE POSITION OF LEGAL EVIDENCES. WE NOTE THAT THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER (APPEALS) HAS BEEN GUIDED BY THE R EPORT OF THE INVESTIGATION WING PREPARED WITH RESPECT TO BOGUS CAPITAL GAINS T RANSACTIONS. HOWEVER, THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER (APPE ALS), HAVE NOT BROUGHT OUT ANY PART OF THE INVESTIGATION WING REPORT IN WHICH THE ASSESSEE HAS BEEN SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 3 33 32 22 2 INVESTIGATED AND /OR FOUND TO BE A PART OF ANY ARRA NGEMENT FOR THE PURPOSE OF GENERATING BOGUS LONG TERM CAPITAL GAINS.WE NOTE TH AT MR. DEEPAK KUMAR AGARWAL HAS RETRACTED FROM HIS STATEMENT WHICH WAS TAKEN BY THE DDIT (INV). WING KOLKATA ON 05.06.2015, BY FILING AN AFFIDAVIT. WE NOTE THAT STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT CAN FORM B ASIS FOR AN ASSESSMENT ONLY IF SUCH STATEMENT RELATES TO ANY INCRIMINATING EVIDENC E OF UNDISCLOSED INCOME UNEARTHED DURING SEARCH. WE NOTE THAT IN ASSESSEE`S CASE UNDER CONSIDERATION, THE SEARCH TEAM DID NOT FIND ANY INCRIMINATING MATERIAL THEREFORE, ADDITION MERELY ON THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT SHOULD NOT BE MADE. THEREFORE, BASED ON THE ABOVE FACTS AND CIRCUMSTANC ES, WE DELETE THE ADDITION OF RS.3,39,46,071/- 25.THE NEXT ISSUE IS IN RELATION TO CONFIRMING THE ADDITION OF RS.1,69,730/- AS UNEXPLAINED EXPENDITURE TOWARDS COMMISSION CHARGES OF SALE OF SUCH SHARES BY THE OPERATOR. WE HAVE ALREADY HELD THAT THE TRANSACTION S RELATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODATION ENTRIES AS ALLEGE D BY THE AO. CONSEQUENTLY, THE ADDITION OF RS.1,69,730/- IS HEREBY DIRECTED TO BE DELETED. WE ACCORDINGLY HOLD THAT THE ISSUE IS ALLOWED IN FAVOUR OF THE ASS ESSEE. 26. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE IT(SS) A NOS.125 &126/K/2018 ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10.05.2019 SD/- ( S.S. GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 10/05/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. SHRI DEEPAK KUMAR AGARWAL 2. ACIT, CC-3(1), KOLKATA SHRI DEEPAK KUMAR AGARWAL IT(SS)A NOS.125 & 126/KOL/2018 ASSESSMENT YEARS:2013-14& 2014-15 P PP PA AA AG GG GE EE E | || | 3 33 33 33 3 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES