The ACIT, Central Circle-2(4), Ahmedabad V. Chandraben Madanlal Gupta, Ahmedabad

ITSSA 193/AHD/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3823 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-06-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 25-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY PRATAP SINGH
• Keywords: Unexplained cash credit; Unexplained expenditure; Search and seizure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Source of fund; Tangible material; Accommodation entries; Sham transactions; Penny stocks; Set aside
• Section: 131; 68; 132; 69C; 143(3); 133A; 153A; 191; 13

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ C’’ BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And Ms. MADHUMITA ROY, JUDICIAL MEMBER Revenue by : Ms Nupur Shah, A.R Assessee by : Shri Ajay Pratap Singh, CIT. D.R सुनवाई कᳱ तारीख/Date of Hearing : 27/04/2022 घोषणा कᳱ तारीख /Date of Pronouncement: 24/06/2022 Sl. No(s) IT(SS)A No(s)/C.O Asset. Year(s) Appeal(s) by Appellant vs. Respondent Appellant Respondent 1-2 No.193/Ahd/2019 With C.O.No.47Ahd/2021 2013-14 A.C.I.T., Central Circle-2(4), Ahmedabad. Chandraben Madanlal Gupta, Bunglow No.1, 30 Rivera Bunglow Nr. Auda garden, 100ft Ringh Road, Prahladnagar Road, Vejalpur, Ahmedabad-380015. PAN: ABZPG8924F 3-4. No.43/Ahd/2020 With C.O.No.70/Ahd/2020 2013-14 A.C.I.T., Central Circle- 2(4), Ahmedabad. Saraswatiben Talkshibhai Kotak, Flat No.325/17, Satyagraha Chavni, Satellite, Ahmedabad-380015. PAN: ABQPK0614D 5-6 No.32/Ahd/2021 With C.O.No.21/Ahd/2021 2013-14 D.C.I.T., Central Circle- 2(4) Ahmedabad. Kavita jayeshkumar Kotak, 325/17, Satyagraha Chavni Jodhpur Tekra, Satellite, Ahmedabad. PAN:AHPPK2082E (Applicant) (Respondent) IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 2 आदेश/O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER: The captioned appeals and Cross Objection have been filed at the instance of Revenue and the Assessee against the respective orders of the Learned Commissioner of Income Tax (Appeals), Ahmedabad arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in- after referred to as "the Act") relevant to the Assessment Year 2013-14. First, we take up IT(SS)A No. 193/AHD/2019, an appeal by the Revenue for the AY 2013-14 in the case of Smt. Chandraben M. Gupta 2. The Revenue has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,60,24,199/- on account of unexplained income u/s.68of the Act. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition without considering the facts that the activities of the company are not genuine and the scrip of the company had been rigged at BSE platform by market manipulators with a purpose to provide accommodation of bogus LTCG and no evidence of purchase of shares of M/s Sawaca Business Machines Limited was given. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition without considering the facts that the ten members of JP Iscon Group covered in search on 25.02.2016 had no evidence of purchase of shares of SBML, the share of SBML were not recorded in their (audited) books of accounts as well as ledgers of share investment for any of the years and names of these persons also did not appear in the share register impounded during the course of survey u/s 133A at premises of M/s SBML. 4. On the facts and in the circumstances of the case and in law, the Ld. ' CIT(A) has erred in law and on facts in deleting the addition without considering the facts that evidence of purchase of shares in the scrip Sawaca found in 47 pages seized during search action of Shri Shirish Chandrakant Shah worth Rs.14.63 crores and cash payment evidence also prove that the transaction of LTCG were sham & bogus transactions. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition without considering the facts that in the books of accounts of the company, there were accommodation entries from professional entry operators and this fact is also admitted by Director and CFO of company in his deposition dated 25.02.2016. IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 3 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of ?3,06,043/-made u/s.69C of the Act. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 8. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 3. The only effective issue raised by the Revenue is that the learned CIT-A erred in deleting the addition made by the AO under section 68 of the Act for Rs. 1,60,24,199/- on account of bogus long term capital gain and corresponding expenditure of Rs. 3,06,403.00 only. 4. The facts in brief are that the assessee in the present case is an individual and deriving her income from house property, business and capital gain. There was a search and seizure operation under section 132 of the Act dated 25 th February 2016 carried out in the case of JP Iscon Group. The assessee being a part of the group was also subject to the search proceedings. Accordingly, the notice under section 153A of the Act was issued upon the assessee. The assessee in the return filed under section 153A of the Act declared long term capital gain of Rs. 1,53,02,199/- on the sale of shares of M/s Swaca Business Machine Ltd. (hereafter referred as SBML) which was claimed as exempted income under section 10(38) of the Act. During the assessment proceeding, the assessee submitted that the shares of M/s SBML were purchased as on 25 th March 2002 which were dematerialized as on 2 nd April 2012 through a broker namely Monarch Research & Brokerage Private Ltd. Subsequently, the shares were sold during the month of September 2012 which has given rise to the impugned long term capital gain. The assessee in support of sale of shares furnished copy of physical share held by her, copy of statement from broker evidencing on line sale of shares through stock exchange and copy of bank statement showing payment received through banking channel after payment of Securities Transactions Tax. IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 4 5. However, the AO during the assessment proceedings found that evidences for purchase of shares of M/s SBML were not furnished by the assessee. The assessee simply stated that the shares were purchased beyond 7 years and furthermore the assessee is not liable to maintain the books of accounts. Therefore, the question of justifying the purchases based on the books of accounts is outside the jurisdiction. As per the AO, indeed it is the duty of the assessee to produce evidences to establish that the asset sold in question was purchased and owned by her. 5.1 The AO in this regard further found that during the search proceeding, the statements of various individuals of the group including the assessee were recorded but none of them was able to furnish the evidence with respect to investment in the shares of M/s SBML and likewise, none of them was aware how the shares of M/s SBML were acquired. As such, all the individual of the group were shifting/ transferring the responsibility on one another. However, one of the key person of the group namely Shri Jayesh Kotak admitted that he does not remember the name of the broker through whom share were purchased and what was the mode of payment for the purchase of the shares as the shares were purchased by his father. Furthermore, if the statement of Shri Jayesh Kotak is assumed to be true then the shares held by the father, constitutes more than 1% of total paid up shares of the company M/s SBML, therefore as per listing rule name of his father should have been mentioned in the records of MCA/ BSE but no such detail was found. Further, the ledger submitted by the group for their investment in different scripts did not contain the information of the investment in the shares of M/s SBML. Likewise, the search proceeding under section 132 of the Act dated 09-02-2005 was also carried out at the assessee group but no document or material with respect to investment in shares M/s SBML made during F.Y. 2001-02 or 2002-03 was found. Accordingly, the AO was of the view that no share of M/s SBML in true sense was acquired by the assessee and its group. Consequently, the AO opined that until and unless ownership and holding of the share is proved, the question of earning profit on IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 5 occasion sale of such assets does not arise and consequently, the exemption under section 10(38) of the Act is not allowable. 5.2 The AO further found that there was survey proceedings carried out at the premises of M/s SBML dated 25 th February 2016 where it was found that M/s SBML was not engaged in any actual business activity. As such, there was huge sum of money credited in the books of the company i.e. M/s SBML from entry provider namely M/s Jalaram Finserve Limited. There was not any record available of shareholding register being maintained by the company i.e. M/s SBML. The financial of the company (M/s SBML) was very week. Likewise, during the survey proceedings, the statement of the director of the M/s SBML namely Shri Satish Ramanlal Shah was also recorded who categorically accepted that the shares of the company were utilized for providing bogus long term capital gain. 5.3 The AO also found that in the search proceedings carried out at the premises of one Shri Shirish Chandrakant Shah a Mumbai based entry provider, it was found that Shri Shrish Chandrakant Shah in association with other entry providers rigged up/ managed/ controlled the price of the shares of M/s SBML. During the search at Shri Shrish Chandrakant Shah, there were evidences with respect to cash paid by one of the assessee group individual namely Smt. Kavitaben Jayeshbhai Kotak for taking accommodation entry were found. 5.4 Similarly, the AO also found that the SEBI carried out investigation on the management of M/s SBML for their alleged involvement in market manipulation. Accordingly, the SEBI vide order dated 14 th November 2014 restricted the promoter of M/s SBML and the company to enter into stock market in any manner. 5.5 Likewise, the AO was also of the view that it very unlikely that the assessee and its group acquired the share of M/s SBML during the March 2002 and kept the IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 6 same till 2012. Suddenly, the shares were dematerialized and within a period of 3 to 7 months sold the same at BSE platform. 5.6 Thus, the AO in view of the above finding held that the long term capital gain for Rs. 1,60,24,199/- earned by the assessee on the sale of share of M/s SBML are not genuine. Furthermore, the AO also found that the assessee to generate such long term capital gain must have incurred some expenses which were estimated by the AO at Rs. 3,06,043.00 being 2% of Rs. 1,53,02,199.00. Hence the AO added the same to total income of the assessee by treating the same as income from unexplained sources. 6. Aggrieved assessee preferred an appeal before the learned CIT-A. 7. The assessee before the learned CIT-A submitted that the AO wrongly assumed that the purchase of shares of M/s SBML were not established. The assessee claimed that she has furnished copy of share certificate and annual return of M/s SBML filed with Ministry of corporate affairs, where her name appears as shareholder right from the year 2001-02 till the date of sale of share by her. Likewise, the fact that the shares were owned by the assessee can also be established from the confirmation that the shares were dematerialized and sold through BSE which has not been disputed. Thus, the purchase of the shares and ownership was proven beyond doubt. 7.1 Shri Jayesh Kotak in the statement dated 20-06-2016 explained that the dealing for purchase of shares of M/s SBML were made by his father in the year 2002. But the AO wrongly assumed that the assessee group in statement recorded failed to explain the purchase of shares. 7.2 The AO further misunderstood by the fact that the name of father of Shri Jayesh kotak was not appearing in listing record. As such, the shares were IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 7 purchased in the name of different individual of the group and none of them was holding 1% of the total shares individually. Thus, the name was not appearing in the listing document. However, the names of different individuals, holding the shares in the company were very much appearing in annual return as shareholder. The AO observation that no document with regard to purchase of shares was found in the search proceeding under section 132 of the Act carried out during the year 2005 cannot be the basis for drawing any adverse inference. Indeed it was the failure on the part of search team not to detect materials with respect to investment in the shares of M/s SBML. 7.3 The AO’s observation that M/s SBML was having huge transaction with alleged entry provider namely M/s Jalaram Finserve has nothing to do with shares held by the assessee and sold the same through the stock exchange. 7.4 There cannot be drawn any adverse inference based on the materials found during the search at the alleged entry provider namely Shri Shrish Chandrakant Shah for the reason that the shares of M/s SBML were purchased by the assessee in the year 2002 and held for next 10 years and same were sold through stock exchange whereas no such document was found which can establishes that assessee was beneficiary in accommodation transaction or involved in wrong doing. Further, the materials found at the premises of Shri Shirish Chandrakant Shah who is third party cannot be considered as evidence as the same was not provided for rebuttal. The Hon’ble Supreme Court in the case of CBI vs. V. C. Shulkla reported in AIR 1998 SC 1406 has held that any noting and jotting by a third person in a diary or in loose sheets cannot be considered as an evidence to draw any adverse inference. The assessee in this regard placed reliance on various judgments which are incorporated in the ld. CIT (A) order. 7.5 With respect to the admission of the director of M/s SBML during the survey proceeding that the shares were utilized for providing accommodation entries, the IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 8 assessee submitted that the statement was recorded behind the back of the assessee and opportunity of cross examination was not provided. Therefore the same does not carry any evidentiary value. 7.6 The allegation of the AO that the financials of the M/s SBML is week and fundamentally incommensurate with the price of the share is based again on the wrong assumption of fact. As such M/s SBML have shown healthy amount of paid up share capital, reserve & surplus and revenue from operation throughout the period 2011-2017. Further, the price of the share in the market does not depend on the financial performance of the company. Indeed, the price of share is a market driven phenomena affected by the factors such government policy, industrial sector, economic trends etc. 8. The learned CIT (A) after considering the facts in totality deleted the addition made by the AO by observing as under: 6.8 Over and above the detailed discussion of various issues related with the affairs of shares of SBML in various paragraphs in the assessment order, the findings regarding beneficiaries of SBML Shares are summarized by the AO at para 6.7 on pages 30 and 31 of the assessment order. 6.9 From the assessment order it is clearly evident that all the facts and evidences relied upon by the AO for the conclusion drawn by him are mere circumstantial and indirect. There is no mention that during the course of search of the premises of the appellant and her family members any evidence was found which could have led to the conclusion that the shares of SBML were not purchased by the appellant as claimed, and that the sale of those shares were mere sham transactions entered for the purpose of obtaining accommodation entries of Rs.l,60,24,199/- or such other amount in the garb of LTCG and that any commission was paid to Shri Shirish Chandrakant Shah or to any other person for obtaining such accommodation entries. Shri Shirish Chandrakant Shah has not named the appellant for obtaining such accommodation entries. In the background of the submission made by the appellant during the course of assessment proceedings, it is not clear as to why the AO was looking for thy name; of Shri Takshibhai B Kotak in the list of share holders from 01/10/2011 to dale of search on B3E website und in ROC records when those nhnrtis were claimed to be in the name of the appellant herself. There is clear evidence submitted by the appellant that lining holder of 1% of the shares of SDML ehe herself was appearing as such shareholder in various statutory reports and returns of SBML. As the appellant was not maintaining books of accounts and not filing balance sheet along with the return of income, there was no point by the AO in harping that those shares were not disclosed. The observation of the AO that in the list of shares held by the appellant as furnished during the course of search SBML shares were not appearing is plausibly explained by the appellant that the accountant had not brought forward those shares in earlier years. Similarly the shares being not physically found during the course of search and there being no IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 9 statement recorded in relation to those shares cannot be the reasons to construe that the LTCG claimed by the appellant were bogus and mere device to obtain accommodation entry of the said amount. Though during the course of search in the case of Shri Shirish Chandrakant Shah, a Mumbai based entry operator, evidences related to rigging of scripts nf SBML to provide bogus LTCG to various beneficiaries might have been found, there is no mention of incriminating material/statement related to the transaction of shares claimed by the appellant. Similarly Smt Kavitaben J Kotak, one of the associated persons having received pay out from sale, of shares of SRML to Shri Shirish Chandrakant Shah, the statement of Shri Satish Rarnanlal Shah, Director of SBML that the activities of the company were not genuine and the scripts of the company had been rigged at BSE platform by market manipulators and the directors and management of M/s. Swaca Communication Ltd. having been restrained from accessing the securities market and prohibited from buying, selling or otherwise dealing in securities, directly or indirectly in any manner are not establishing that the sale of shares by the appellant as claimed in the return of income was bogus. 6.10 It is seen from the assessment order itself that Shri Jayesh Kotak, one of the key persons of JP Iscon Group in his reply dated 20/06/2016 stated that shares of SBML was acquired by his father in the year- 2002 which were available in physical form and same were got demated subsequently. It is also mentioned in the assessment order that Shri Praven P Kotak had stated in his statement u/s 132(4) that details related to share investment were available in his office. These statements cannot be ignored altogether. 6.11 From the assessment order itself, it is seen that the appellant had been able to refute the findings of the AO. Some such examples are narrated here, it was submitted by the appellant that the Xerox copy of physical shares of SBML dated 25/03/2002 for 72,200 shares were placed before the AO vide submission dated 29/11/2017 and that name of Mrs. Gupta was appearing in the list of share holders as on 30.09.2002 available on ROC data and the sale continued till the appellant sold his investments. List of share holders as on 30.09.2011 available on ROC data was also submitted to the AO. These were primarily evidences that Mrs. Gupta was holding the shares of SBML on 25/03/2002. It was further stated that shares were dematerialized in the demat account of Mrs. Gupta on 02-04.2014 and copy of demat account (with Tradebull Securities Pvt. Ltd.) was also placed before the AO. After dematerializing of the shares, they were sold on the online trading system of the Stock Exchange through registered broker, Monarch Research and Brokerage Pvt. the contract notes of the share broker for sale of shares of SBML and_ evidencing the payment of STT thereon were placed before the AO- The appellant also submitted the amount of paid up share capital of SBML and the revenue from operation for the period from F. Y. 2011 to 2017 and copies of those annual reports of the company were placed before the AO. These also made the assessee to submit that the AO's observation that scripts were thinly traded and highly speculated security vulnerable to manipulation by Stock promoters and there were pump and dump schemes were merely surmises and conjectures of the AO. As to the AO's observation that during the course of survey at the premises of SBML, no books of accounts were found, it is the case of the appellant that the annual reports of the company were already uploaded on BSE and MCA websites before the date -of survey (25/02/2016). It is further case of appellant that SBML is a listed public limited company and if it could not file the annual report within the statutory time limit the scripts could not have been traded in the stock exchange. As to the AO's reliance on statement of Shri Satish R Shall, a director of SBML taken during the course of survey that the LTCG by the appellant were not genuine, the appellant produced the evidences before the AO that various annual reports of the company were already uploaded with BSE and ROC. The appellant has cited various case laws to submit that no reliance can be placed by the AO on the statement of Departmental witness recorded behind the back of the appellant and no adverse inference could be drawn in the case of the appellant. IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 10 6.12 In other words in spite of search conducted in the case of the appellant and searches and surveys conducted in various other per sons/concerns, there is not an iota of direct evidence to show that the shares were not held by the appellant and not sold by the appellant at the stated price as claimed in the return of income. Even if the balance sheet and the activities of SBML were not such that as per the AO the scripts could have commanded the price at which it was sold by the appellant, there is no evidence that the shares were not traded at the stated price on that day and that the shares held by the appellant were not sold in the manner claimed by the appellant. In spite of all the circumstantial evidences gathered by the Department, specially the fact that BSE trade data for the period February 2011 to December 2015 revealed that the persons who did not purchase SBML shares on BSE platform had only sold those shares on BSE platform @ Rs.45 per share or more and that there were 311 beneficiaries identified who had taken pay out of Rs.101.crore out of which 108 persons belonged to Ahmedabad taking LTCG of 69.2 crore out of which 10 beneficiaries were members of JP Iscoii Group having received pay out of Rs.15 crore. Neither during the search nor during post search investigation and assessment proceedings, could the Department gather direct evidence of appellant having obtained accommodation entry. Also no evidence was found/gathered that the appellant had earned unaccounted income which might have been laundered in the garb of LTCG. Neither there was any admission of undisclosed income nor any statement admitting any wrong doing in relation to the LTCG declared and exemption claimed in the return of income. 6.13 Thus denying LTCG and exemption thereof by the AO appears to be based on subjective, premeditated and preconceived inferences and the same cannot be sustained. The claim of the appellant cannot be rejected based on indirect evidences that too when searches and surveys have been conducted in the case of the appellant and other related parties. 6.14 The appellant has stated that she has sold the shares in the range of Rs.170.6580 to Rsl78.6919 per share and after selling them, the price of the shares has even further risen upto Rs.229.85 per share. Thus the share price of the said company continued rising even after the appellant sold her shares and rose up to Rs.198.80 per share on 06.02.2013 i.e. almost a month, after the appellant sold her shares. The transaction was at a rate prevailing in the stock market and there was no evidence discovered about earning of unaccounted money by the appellant and introducing such unaccounted money for accommodation entries by way of LTCG. It is true that several suspicious circumstances have been indicated by the AO but then the finding as ultimately recorded by him about manipulation of share price is based more on presumptions rather than on cogent proof brought on record. The Department has been able to pin point that there was an accommodation of cash getting converted into LTCG. The search team of the Income-tax Department was conversant with the MCA Site, SEBI Site and BSE Site and from there they could have traced out on the date of search on 25.02.2016 whether the company M/s Sawaca Business Machines Ltd uploaded its annual accounts/financial reports for various years, which has not done. The annual returns of M/s Sawaca Business Machines Limited available on official website of ROC are on record of the A.O. wherein name of the appellant is mentioned as a shareholder holding 72,200 shares. Further, other members of the Kotak family as per list mentioned in the order on Page No. 27 and 28 of the order, shareholding of all those members also continued from 2002 till date of sale and the holding of SBML share is also verifiable from the annual returns of the company. 6.15 The AO has not disputed that Sawaca Business Machines Ltd was listed in stock exchange. The AO has also not disputed the prevailing market price of the shares at the time of subscription to shares of SBML as well as at the time of sale of shares. Since this company was listed in the stock exchange there is no hurdle in asserting the prevailing market price of the shares at the point of subscription to shares of SRMI as well as at the IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 11 time of sale of shares uf SDML. The AO has nowhere alleged that (.he subject mentioned transaction was part of penny stock scam. Thus merely because there is huge capital gain earned by the assessee on the transaction, such huge gain cannot be the basis for holding the same as bogus transaction. A transaction is established from the evidence and record which cannot be manipulated as all the entries are part of the bank account of the appellant and the dermat account of the appellant which are independent materials and which cannot be manipulated. Therefore the holding of the shares by the appellant as a share holder investor since 2002 cannot be doubted. .16 Further in support of her claim the appellant has relied on following decision wherein for similar transactions the authorities have considered the claim of LTCG u/s 10(38) as genuine. a. ITAT Ahmedabad 'D' Bench in the case of ACIT Circle 7 Vs. Vineet Sureshchqndr a. Agrawal reported in I.T.A No. l442/Ahd/2013- &—CO-No. 209.Ahd.2013 b, ITAT Kolkata. 'D' Bench in (he case of Dolarriai Hemani Vs. ITO Ward 34(3) reported at LT.A No. 19.Kol.2014 c. ITAT Kolkata 'A' Bench in the case of Surya Parkash Toshniwal vs. ITO Ward 41(3)3 reported at LT.A No. 1213.Kol.2016 d. ITAT Ahmedabad in the case of Sunita Jain. V.s. ITO reported at LT.A No. 501 /502/Ahd/2016 (A.Y.2008-09) e. High Court of Punjab and Harya.no in the case of POT (Central) Vs. Pram Pal Gandhi repotted al I.T.A No. 95-2017 (A. Y.2008-09) f. High Court of Punjab and Ha.rya.na in the case of PCJT (Central) Vs. Hitesh Gandhi reported at LT.A No. 18 of 2017(A.Y.2008-09) g, ITAT Delhi in the case of Mohit Horn (HUF) Vs. ITO reported at I.T.A No.410/Del/20l8 (A.Y.2014-15) h. ITAT Delhi in the case of Nidhi Goel Vs. ITO reported at I.T.A No.6882/Del/2017 (A.Y.2014-15) i. TTAT Jaipur in the case of Shri Meghraj Singh Shekhawat Vs. The DC1T reported at I.TA No. 443 &444/JP/2017 (A.Y.2013-14 and 2014-15) j. High Court of Bombay in the case of C1T- 13 Vs. Shyam R. Pawar reported at I.T.A No. 1568 to 1571 of 2012 k. ITAT Ahmedabad in the case of ACIT, Circle 7Vr.. Bhavik Bharatbhm Padia reported at 1. T. Appeal Nos. 14440 & 1441 {AHD)of2013 I TTAT Mumbai in the case of ITO- 24(3)(l)Vs. M/s Indravadan Jain HUP reported at I. T. Appeal Nos. 4861&5168/ Mum of 2014 m. ITAT Mumbai in the case of Ms. Fatrah Marker Vs. Income Tax Officer 19(3)(1) lReported at I. T. Appeal Nos. 3801/ Mum of 2011 n. ITAT Mumbai in the case of Mr. Arvind Asmal Mehta Vs. Income Tax Officer 16(2)(2) reported at I. -T. Appeal Nos. 2799/ Mum of 2015 IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 12 6.17 From the appellant's submission and the evidences furnished in the paper books, it is established that 72,200 shares of SBML were held by the appellant since 2002 and her name was appearing in the list of share holders as on 30/09/2002 and on 30/09/2011 as available on ROC data, and that those shares were dematerialized in the demat account 02/04/2012 through M/s. Trade Bull Securities Pvt. Ltd. and that those shares were sold on online platform of BSE and payment of STT (Securities Transaction Tax) were duly made. The sales were as per the rates that day. There is reasonable force in the contention of the appellant that the fact that those shares held by the appellant were not brought in the books of accounts in March 2002 cannot negate the fact of holding the shares otherwise those shares could not have been dematerialized in April 2012. This gets further strength that no incriminating materiaL such as alleged bogus LTCG by the appellant was found during the search in the JP Iscon Group of cases. The appellant has relied upon host of Court judgment (already reproduced before as part of appellant's submissions) to emphasize that when the transactions were off market transactions there is no relevance in seeking details of share transactions from stock exchange, that just because the share broker did not appear before the AO in response to summons u/s 131(1), it cannot be automatically concluded that transactions of the assessee with the broker were bogus and sham, even if the share brokers and the management of the company whose share was traded have been alleged for some illegal unethical actions/manipulation the same cannot be construed to deny the transaction routed through the stock exchange to which the STT has been paid. 6.18 From the perusal of the catena of case laws relied upon by the appellant, it is seen that various governing principles emerge and if those conditions are satisfied by an assessee, no adverse inference can be drawn against the appellant merely on the basis of holding the shares to be penny stock and the gain there from as accommodation entries. Some those governing principles are as below; > Consideration was paid when the shares were purchased, the shares were thereafter sent to the company for the transfer of name and the company transferred the shares in the name of the assesses. There is nothing on record which could suggest that the shares were never transferred in the name of the assessee or never with the assessee. > The books of account maintained by the assessee for relevant years clearly reflected the purchase of those shares and the shares are reflected in the balance sheets filed by the assessee along with the returns of income for the assessment years. These are prima facie evidence that the purchases of shares have been contemporaneously entered into the books of accounts of the assessee. > The assessee has been declaring agricultural income in the returns of income and such agricultural income has been considered in the respective assessments. Therefore, the contention of the AO that the assessee had no sufficient resourcefulness to make investments in the shares is unfounded. > Purchase arid sale of shares outside the floor of Stock Exchange is not an unlawful activity. It is always possible for the parties to enter into transactions even without the help of brokers. Therefore, it is not possible to hold that the transactions reported by the assessee were quite sham on the proposition that off-market transactions are not permissible. > When the transactions were off-market transactions, there is no relevance in seeking/ details of share transactions from Stock Exchanges. Such attempts would he futile. Stock Exchanges cannot give details of transactions entered into between the parties outside their floor. Therefore, the reliance placed by the AO on the communications received from the Stock Exchanges that the particulars of share transactions entered into by the assessee were not available in their records, is out of place. IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 13 > The explanations of the assessee cannot be rejected by the AO mere on the ground of presumption than on factual ground that comparatively a small amount of investment made by the assessee during the earlier year have grow into a very sizable amount ultimately yielding a fabulous return as an assessment has to be completed on the basis of records and materials available before the AO. > It is a bald statement that the subject mentioned transaction is part of penny stock, scam that cropped up in a place in connivance with few brokers or some stock exchanges. > There is no evidence on record to show that any action or enquiry was carried out either by the SEBI or the Stock Exchange in respect of the alleged manipulation or propping up of the price rate movement of the 'said shares' of a company listed on the Stock Exchange and that the sale transaction of the 'said shares' by the assessee is at the rate quoted on the date of sale has been confirmed both by the Stock Exchange and the concerned stock broker. ...... The assessee has discharged the onus required u/s 68 of the Act as she has established the identity of the payer, source of funds received on sale of the same shares and the genuineness of the transaction. 6.19 In the present case under consideration the appellant had duly submitted the documentary evidences for purchase and sale transactions some of which are: .a) Statutory reports and returns of SBML where the appellant is listed as major share holder. b) Contract Note for sale of shares through a registered stock broker with a registered Stock Exchange c) Demat account reflecting the inflow of shares in demats account and outflow thereon pursuant to sale. d) Payment of sale consideration received by the assessee through account payee cheque. e) Shares duly transferred from the demat account of the assessee to the demat account of the broker /the buyer of the shares through a recognized stock exchange. f) STT(Securities Transaction Tax] duly suffered on the sale transaction g) The Broker confirming transactions before the AO by furnishing a letter in writing in response to summons issued to him u/s 131 of the Act. 6.20 Reliance is placed un the decision of Honourable ITAT Ahmedabad in case of Pratik Suryakant Shah 60 Others (ITA No. 810 to 815/Ahd/2015 dated 21.10.2016 wherein the exemption claimed u/s. 10(38} for LTCG on sale of shares has been allowed and the same case has been upheld by the Hon'ble Gujarat High Court as the appeal filed by the Department has been dismissed by the Court (Tax Appeal no. 674, -983 & 984 of 2017 dated 12.09.2017 and 13.12.2017). Further reliance can be placed on the decision of Hon'ble ITAT Delhi SMC Bench in Arun Kumar V ACIT {ITA No. 457/Del/2018) dated 05.11,2018 wherein the exemption claimed u/s. 10(38) for LTCG on sale of shares has been allowed. 6.21 If the AO doubted the impugned transaction of sale of shares of SBML, then it was open for the AO to conduct independent inquiry and form an independent belief which is absent in the present case. The AO has relied upon information received from search operation at premises of Shri Shirish Chandrakant Shah regarding the company, M/s Sawaca Business Machines Ltd and the statement of Director of the company, M/s Sawaca Business Machines Ltd. The oral statement given u/s. 131 of the Act by any person does not have any evidential value as held by the Hon'ble Supreme Court in the case of CIT vs. S. Khader IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 14 Khan Son 25 taxmann.com 413 -42012], Paul Mathews & Sons vs. CIT 263 ITR 101(Ker.) and Hon'ble ITAT, Ahmedabad, "C" Bench in the case of Ashok Manilal Thakkar vs. ACIT 97 ITD 361. The decision of the Hon'ble ITAT, Ahmedabad, "C" Bench in the case of Ashok Manilal Thakkar vs. ACIT, cited supra has been upheld by the Hon'ble Gujarat High Court as well as the Hon'ble Supreme Court as the SLP filed by the Department has been dismissed by the Hon'ble Supreme Court. 6.22 The appellant had requested for the opportunity of cross examination of the aforesaid Directors of company. Without granting the opportunity of cross examination of the persons, whose statements have been recorded behind the back of the appellant will not be justified by the Department under the principle of natural justice and equity in view of the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise, followed by the Hon'ble Gujarat High Court in the case of CIT vs. Ramanbhai B. Patel. The appellant has also relied upon the decision of the Hon'ble High Court of Judicature for Rajasthan Bench at Jaipur in the case of CIT, Central vs. Smt. Sunita Dhadda and Others (Income tax Appeal No. 197/2012) dated 01.07.2017 and the SLP filed against the said judgment has been dismissed by the Hon'ble Supreme Court in Special Leave Petition (CIVIL) Diary No (s). 9432 / 2018. 6.23 Though the A.Y.2013-14 is an elapsed/unabated assessment year and as per various case laws including those of Jurisdiction al ITAT of Ahmedabad and jurisdictional High Court of Gujarat in Saumya Construction and other cases, no addition can be made in the re- assessment u/s 153A if there is no relevant incriminating material found during the search. However, the appellant has not challenged the legality of proceedings and the assessment u/s 153A on this ground. From the above it clearly transpires that in the facts and circumstances of the appellant, the AO is not correct in arriving at the findings as at Para 6- 9 on page 33 and 36 of the assessment order and in making the additions by denying exempt LTCG on sale of shares and assuming commission payment in relation to the accommodation entries of those LTCG and accordingly the additions of Rs.1,60,24,199/- and Rs.3,06,043/- cannot be sustained. The AO is directed to delete the additions. The related grounds are allowed. 9. Aggrieved by the order of the learned CIT-A the assessee is in appeal before us. 10. The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained in the assessment order which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. 11. On the other hand learned AR before us filed a paper book running from pages 1 to 1624 and has elaborately brought out before the bench that the assessee has made in the investment in the shares more than a decade ago which can be verified from the annual report of the company i.e. M/s SBML which are available in IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 15 the paper book. The learned AR before us vehemently reiterated the findings contained in the order ld. CIT-A. The learned AR before us vehemently supported the stand of the ld. CIT-A. 12. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case the long term capital gain declared by the assessee on sale shares M/s SBML for ₹ 1,53,02,199/- was treated as bogus and manipulated, leading to the addition by the AO under section 68 of the Act. The view of the AO was based on certain factors which have been elaborated in the preceding paragraph. Subsequently, the learned CIT (A) deleted the addition made by the AO for the reasons elaborated in the preceding paragraph. The facts of the case are not in dispute and therefore we are not inclined to repeat the same for the sake of brevity and convenience. 12.1 The first controversy arises for our adjudication whether the assessee has ownership of the shares of the company namely M/s SBML. In this connection, we note one undisputed fact that the name of the assessee was very much appearing in the shareholder list of the company namely M/s SBML. This fact can be verified from the annual report of the assessee right from the assessment year 2002-03 till the shares are disposed of by the assessee. In other words the name of the assessee as shareholder was very much appearing in the annual report of the company. These annual reports of the company of different assessment years are placed on pages 191 to 969 of the paper book. This fact carries a lot of weight and therefore the same cannot be ignored merely on the basis that the assessee did not record such investment in the books of accounts. Admittedly, in the absence of the relevant entry in the books of accounts of the assessee, certainly, it creates suspicion but this suspicion cannot supersede the annual report of the company namely M/s SBML which is a piece of evidence filed with the government authorities. Furthermore, the revenue has not carried out necessary examination from the company namely M/s IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 16 SBML with respect to the shareholding of the assessee. Thus we are of the view that there cannot be any doubt on the ownership of the shares of the assessee. 12.2 It is equally important to note that the shares were dematerialized in the year of April 2002 as evident from the DEMAT account of the assessee placed on pages 77 of the paper book. Had the assessee not been the owner of the shares, then it was not possible for the assessee to dematerialize the shares in her name. Likewise, the assessee has also submitted the share certificate dated 25 th of March 2002 placed on page 75 of the paper book. Thus all these cumulative information cannot give rise to draw any inference against the assessee until and unless it is not based on any tangible materials. 12.3 Coming to next allegation of the revenue that the capital gain on the sale of share of M/s SBML was not genuine and representing bogus accommodation entry. The AO alleged that there was survey proceeding under section 133A of the Act carried out at the premises of the company M/s SBML and it was found that its activity was not genuine as the company was showing bogus turnover and director of the company M/s SBML admitted to have manipulated the price of the share and provided accommodation entry in form of LTCG. In this regard we note that the bogus turnover shown by the company or the company carried out transaction with entry provider have nothing to do with share held and sold by the assessee on BSE. As the assessee was holding less than 1 % share of the company and having no control over the business of the company. Coming to the admission by the director, on careful perusal of the statement of the director reproduced by the AO in his order, we find that the director stated that promoter of the company wanted to sale the company therefore in order to get suitable price, they manipulated the price of the share in the process of providing accommodation entry in the form of LTCG. Nowhere the director in his statement stated that he has provided accommodation entry to the assessee on hand. No evidence either brought by the AO to establish that the assessee was involved in price manipulation or was the beneficiary of IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 17 accommodation entry. The AO referred the investigation carried out by the SEBI for alleged involvement of promoter of the company M/s SBML in market manipulation and SEBI barred the promoters form entry in the market. Again, it was directors and promoters of the company M/s SBML who were alleged to be involved in wrong doing and nowhere it is alleged by the SEBI that the assessee was involved in any rigging up the price of share or the capital gain earned by the assessee was not genuine. Further, the statement may appear to be very relevant to dig out the truth but the same cannot be used to draw any inference against the assessee after giving the opportunity of a hearing to the other party. In other words the statement taken during the survey proceedings cannot be taken as the basis of treating the long- term capital gain of the assessee as unexplained credit under threat 68 of the Act. In simple words it is mandatory to provide the opportunity of cross-examination if the revenue wishes to believe the statement of the director of the company until and unless some clinching evidences are found to draw an inference against the assessee. In holding so we draw support and guidance from the judgment of Hon’ble Supreme court in case of Andaman Timber Industries vs. CIT reported in 62 taxmann.com 3 the relevant observation is extracted here as under: Not allowing the assessee to cross-examine the witnesses by the AdjudicatingAuthoritythough the statements of thosewitnesseswere made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. 12.4 It also important to highlight that the statement of the director of the M/s SBML was recorded on the survey proceeding and it settled position of law that the statement furnished during survey does not carry evidentiary value. 12.5 The AO based on the statement furnished by the director alleged that the company M/s SBML was not maintaining such as shareholder register, share transfer record etc. In this regard we are of the view that record not maintained by the company cannot be basis for doubting the genuineness of the capital gain earned by the assessee as it was not the duty of the assessee. Further, it is important to IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 18 highlight that the company M/s SBML is a listed company which has to comply with several requirement under different laws and regulation for which it necessary to maintain such records. Indeed the assessee on hand submitted the copy of the annual report of the company filed with ministry of corporate affairs where shareholder register was duly submitted. Thus, it appears that the AO’s observation was based on wrong assumption of facts. 12.6 The next observation of the AO was that in search proceeding at one of the entry provider based in Mumbai namely Shri Shrish Chandrakan Shah, where evidences with regard to purchase of shares of M/s SBML at exorbitant price by the paper company floated by the Shri Shrish Chandrakant Shah was found. Again, there was no direct evidence brought by the AO which stands against the assessee. There was no evidence on record establishing any linkage of assessee with the company floated by the alleged entry provider Shri Shirish chandrakant Shah. There was no information available on record whether the name of the assessee was appearing in the document or paper found in search carried out at Shri Shrish Chandrakant Shah. It was also not brought any material that those broker or entry provider have taken the name of the assessee or provided their services either to the assessee or assessee broker. 12.7 The alleged scam might have taken place in Kolkata on generating LTCG to avoid the payment of tax. But it has to be established in each case, by the party alleging so, that this assessee in question was part of this arrangement. The chain of events and the live link of the assessee’s action that he was involved in such rigging up the price should be established based on cogent materials. The allegation as discussed above implies that there was cash exchanged for taking exempted income by of long term capital gain by way of cheque through banking channels. This allegation that cash had exchanged hands, has to be proved with evidence, by the Revenue. Likewise there cannot be any adverse inference against the assessee based on the statement materials discovered from the premises of the party namely IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 19 Shri Shirish Chandrakant Shah until and unless the same are provided to the assessee for rebuttal. The documents on which the AO has placed reliance was not provided to the assessee and therefore no adverse inference against the assessee can be drawn. 12.8 It is also important to note that the assessee was holding 72,200 shares M/s SBML and same was hold for more than 10 year in physical form. Thus the conduct of the assessee suggests that she was not involved in rigging up the price or any wrongdoing. The case laws relied by the authorities below are distinguishable from the present facts of the case in so far that there was SEBI enquiry conducted and found guilty of wrong practices but it is not so in the case on hand. 12.9 In our view, the income generated by the assessee cannot be held bogus only one basis the modus operandi, generalisation, and surmise and conjecture. In order to hold income earned by the assessee is bogus, specific evidence has to be brought on record by the revenue to prove that the assessee was involved in the collusion with the entry operator/ stock brokers for such an arrangements. In the absence of such finding, it is not justifiable to link the fact or finding unearthed in the case of some third party or parties with the transactions carried out by the assessee. Further the case laws relied by the AO are with regard to test of human probabilities which may be of greater impact but the same cannot used blindly to dispose of the evidence forwarded by the assessee especially without bringing any evidences from independent enquiry to corroborate the allegation. In holding so we draw support and guidance from the judgment of Hon’ble Delhi High court in case of Pr. CIT vs. Smt. Krishna Devi reported in 126 taxmann.com 80 where it was held as under: 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 20 is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income-tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent's unaccounted money, but he did not dig deeper. Notices issued under sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that "There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. 12.10 Respectfully following the judgment of Hon’ble Delhi High Court (Supra), we hold that in absence of any specific finding against the assessee, the assessee cannot be held to be guilty or linked to the wrong acts of the promoters as far as long term capital earned on sale of share of M/s SBML is concern. In view of the IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 21 above discussion we hold that the capital gain earned by the assessee cannot held bogus merely on the basis of some report finding unearth in case of third party/parties unless cogent materials are brought against particular assessee. Once the addition made by the AO on account of bogus long term capital gain is deleted, the addition of corresponding expenses of Rs. 3,06,043.00 is not sustainable. Therefore, we do not find any reason to interfere in the finding of the learned CIT(A). Hence the grounds of revenue appeal is hereby dismissed. 12.11 In the result, the appeal of the Revenue is hereby dismissed. Coming to CO. No. 47/Ahd/2021, filed by the assessee i.e. Smt. Chandraben Madanlal Gupta. 13. At the outset, we note that the assessee in the CO filed by her has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous. 13.1 In the result CO raised by the assessee is dismissed. Coming to IT(SS)A No. 43/Ahd/2020, for A.Y. 2013-14 filed by the Revenue in case of Smt. Saraswatiben Talkshibhai Kotak. 14. The Revenue has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s.132(1) of the Act, even though, there is no stipulation in sec. 153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec. 153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 22 searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id, CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.lSSA and sec.lSSBI specifically states that the provisions of Chapter-XIV-B, under which sec. 158BB falls, would not be applied where a search was initiated u/s.132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s.132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature 5. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in ignoring the statement of Shri Satish R Shah, director of M/s Sawaca Business Machines Ltd. taken under oath as per provisions of section 132(4) of the Act wherein he had clearly accepted that the activities of the company are not genuine and the scrip of the company is rigged at BSE platform by market manipulators with a purpose to provide accommodation of bogus LTCG and as such the finding of the Ld. CIT(A) that there was no incriminating material found during the course of search is not correct, because statement u/s 132(4) of the Act is regarded as evidence. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.1,19,82,770/- made by the A.O. u/s 68 of the Act, disallowing the claim of LTCG u/s 10(38) of the Act treating the transaction in the shares of M/s Sawaca Business Machines Limited as bogus and sham transaction as the activities of the company are not genuine and the scrip of the company is rigged at BSE platform by market manipulators with a purpose to provide accommodation of bogus LTCG. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.2,39,600/- made on account of unexplained expenditure u/s 69C of the Act. 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 9. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 10. This case is covered under exception as per CBDT's Circular No.23 of 2019 dated 06.09.2019 read with Office Memorandum dated 16.09.2019 vide F.No.279/Misc./M- 93/2018-ITJ(Pt.). 15. The only effective issue raised by the Revenue is that the learned CIT-A erred in deleting the addition made by the AO under section 68 of the Act for Rs. 1,19,82,770/- on account of bogus long term capital gain. IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 23 16. At the outset, we note that the issues raised by the revenue in its grounds of appeal are identical to the issues raised by the Revenue in case of Chandraben Madanlal Gupta bearing IT(SS)A No. 193/AHD/2019 for the assessment year 2013-14. Therefore, the findings given in IT(SS)A No. 193/AHD/2019 shall also be applicable for the issues raised by the Revenue in this appeal. The appeal of the Revenue for the 193/AHD/2019 has been decided by us vide paragraph No. 12 to 12.11 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the 193/AHD/2019 shall also be applied for the appeal on hand i.e. IT(SS)A No. 43/Ahd/2020 for A.Y. 2013-14. Hence, the grounds of appeal filed by the Revenue is hereby dismissed. 16.1 In the result appeal of Revenue is dismissed. Coming to CO No. 70/Ahd/2020, raised by the assessee Saraswatiben Talkshibhai Kotak. 17. At the outset we note that the assessee in the CO filed by her has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous. 17.1 In the result, the CO filed by the assessee is dismissed. Coming to IT(SS)A No. 43/Ahd/2020, for A.Y. 2013-14 filed by the Revenue in case of Kavita Jayeshkumar Kotak. 18. The Revenue has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 24 incriminating material found during the course of search u/s.132(1) of the Act, even though, there is no such stipulation in sec. 153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id, CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s.132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s.132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature.- Further, it is trite law that AO is duty bound to assess the correct income of the assessee. 5. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in ignoring the statement of Shri Satish R Shah, director of M/s Sawaca Business Machines Ltd. taken under oath as per provisions of section 132(4) of the Act wherein he had clearly accepted that the activities of the company are not genuine and (he scrip of the company is rigged at BSE platform by market manipulators with a purpose to provide accommodation of bogus LTCG and as such the finding of the Ld. CIT(A) that there was no incriminating material found during the course of search is not correct, because statement u/s 132(4) of the Act is regarded as evidence. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.1,57,64,582/- made by the A.O. u/s 68 of the Act, disallowing the claim of LTCG u/s 10{38) of the Act treating the transaction in the shares of M/s Sawaca Business Machines Limited as bogus and sham transaction as the activities of the company are not genuine and the scrip of the company is rigged at BSE platform by market manipulators with a purpose to provide accommodation of bogus LTCG. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.3,15,290/- made on account of unexplained expenditure u/s 69C of the Act. 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 9. It is therefore, prayed that the order of the Ld.CIT(A) be set aside and that of the A.O be restored to the above extent. IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 25 10. This case is covered under exception as per CBDT’s Circular No.23 of 2019 dated 06.09.2019 read with Office Memorandum dated 16.09.2019 vide F.No.279/Misc./M- 93/2018-ITJ(Pt.) and monetary limits for filling appeal in Hon’ble ITAT is no applicable. 19. The only effective issue raised by the Revenue is that the learned CIT-A erred in deleting the addition made by the AO under section 68 of the Act for Rs. 1,57,64,582/- on account of bogus long term capital gain. 20. At the outset, we note that the issues raised by the revenue in its grounds of appeal are identical to the issues raised by the Revenue in case of Chandraben Madanlal Gupta bearing IT(SS)A No. 193/AHD/2019 for the assessment year 2013- 14. Therefore, the findings given in IT(SS)A No. 193/AHD/2019 shall also be applicable for the issues raised by the Revenue in this appeal. The appeal of the Revenue for the 193/AHD/2019 has been decided by us vide paragraph No. 12 to 12.11 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the 193/AHD/2019 shall also be applied for the appeal on hand i.e. IT(SS)A No. 32/Ahd/2021 for A.Y. 2013-14. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 20.1 In the result appeal of Revenue is dismissed. Coming to CO No. 21/Ahd/2021, raised by the assessee Kavita Jayeshkumar Kotak. 21. At the outset we note that the assessee in the CO filed by her has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous. IT(SS)A No.193/AHD/2019 with C.O No. 47/Ahd/2021 with 4 others Asstt. Year 2013-14 26 21.1 In the result, the CO filed by the assessee is dismissed. 22. In the combined results, all the appeals filed by the Revenue are dismissed and the CO filed by the different assessee are also dismissed as infructuous. Order pronounced in the Court on 24/06/2022 at Ahmedabad. Sd/- Sd/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 24/06/2022 Manish