Smt. Rita Devi, Kolkata V. DCIT, Central Circle - VI, Kolkata, Kolkata

ITSSA 22/KOL/2011

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8197 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-07-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 31-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 04-03-2011
• Court: TRIBUNAL
• Department Lawyers: D R SINDHAL
• Keywords: Unexplained cash credit; Unexplained expenditure; Income from undisclosed sources; Corroborative evidences; Accommodation entries; Penny stocks
• Section: 142(1); 133A; 153A; 132; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A , KOLKATA [ , ,, , . .. . . .. . , , , , ! ] [BEFORE SHRI MAHAVIR SINGH , JUDICIAL MEMBER & SRI C.D.RAO , ACCOUNTANT MEMBER] ' ' ' ' / IT(SS)A NOS. 22-26/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2003-04 TO 2007-08 SMT.RITA DEVI, KOLKATA . (PAN-ACXPD 9986 F) D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA ()* / APPELLANT ) - # - VERSUS - (-.)*/ RESPONDENT ) ' ' ' ' / IT(SS)A NOS. 27-30/ (KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2003-2004 TO 2005-6 & 2007-08 SHRI PRAHLAD RAI AGARWALLA, KOLKATA . (PAN-ACMPA 9299 D) D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA ()* / APPELLANT ) - # - VERSUS - (-.)*/ RESPONDENT ) ' ' ' ' / IT(SS)A NOS. 31-33/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2005-06 TO 2007-08 SHRI SUBODH AGARWALLA, KOLKATA . (PAN-ACMPA 9296 N) D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA ()* / APPELLANT ) # - VERSUS - (-.)*/ RESPONDENT ) ' ' ' ' / ITA NOS. 35-38/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2003-04 TO 2005-06 & 2007-08 SMT.SARITA DEVI, KOLKATA . (PAN-ACXPD 9988 M) D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA ()* / APPELLANT ) # - VERSUS - (-.)*/ RESPONDENT ) ' ' ' ' / ITA NOS. 39-41/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2003-04, 2005-06, & 2007-08 SHRI SUDHANSHU AGARWALLA, KOLKATA . (PAN-ACMPA 9309 E) D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA ()* / APPELLANT ) # - VERSUS - (-.)*/ RESPONDENT ) 2 ' ' ' ' / ITA NOS. 42-44/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2003-04, 2005-06, & 2007-08 SMT. SHEELA DEVI AGARWALLA, KOLKATA . (PAN-ACMPA 9298 C) D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA ()* / APPELLANT ) # - VERSUS - (-.)*/ RESPONDENT ) ' ' ' ' / ITA NOS. 45-47/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2003-04, 2005-06, & 2007-08 SHRI SUBHAS CHANDRA AGARWALLA, KOLKATA . (PAN-ACMPA 9305 J) D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA ()* / APPELLANT ) # - VERSUS - (-.)*/ RESPONDENT ) ' ' ' ' / ITA NOS. 48-50/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2005-06, 2006-07 & 2007-08 SHRI AVINASH AGARWALLA, KOLKATA . (PAN-ACMPA 9308 F) D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA ()* / APPELLANT ) # - VERSUS - (-.)*/ RESPONDENT ) )* / 0 / FOR THE APPELLANTS: / SHRI RAVI TULSIYAN -.)* / 0 / FOR THE RESPONDENT: / SRI D.R.SINDHAL 1 / ORDER ( (( ( 234 234 234 234) )) ), , , , PER BENCH THESE TWENTY EIGHT APPEALS FILED BY EIGHT ASSESSEES MENTIONED ABOVE, ARE AGAINST SEPARATE ORDERS OF THE C.I.T.(A), CENTRAL-I , KOLKATA, ALL DATED 03.12.2010 RELATING TO ASSESSMENT YEARS 2003-04, 2004-05, 2005 -06, 2006-07 AND 2007-08. SINCE THE FACTS OF THE CASE AND GROUNDS OF APPEAL IN ALL THESE APPEALS ARE IDENTICAL AND SIMILAR IN NATURE, ALL THE TWENTY EIGHT APPEALS ARE DISPOSE D OF BY A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THEREFORE, WE DEAL WITH APPEAL FILED BY THE ASSESSEE IN ITA NOS.22/KOL/2011FOR ASSESSMENT YEAR 2003-04 IN THE C ASE OF SMT.RITA DEVI. 3 2. THE GROUNDS TAKEN IN THIS APPEAL ARE AS UNDER :- 1. THE ORDERS PASSED BY THE LOWER AUTHORITIES ARE ARBITRARY, ERRONEOUS, WITHOUT PROPER REASONS INVALID AND BAD IN LAW. 2.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN LAW IN UPHOLDING INITIATION OF PROCEEDINGS U/S 153A OF THE INCOME-TAX ACT, 1961, IN THE CASE OF THE APPELLANT WHEN NEITHE R THE ASSESSMENT FOR THE YEAR UNDER APPEAL WAS PENDING NOR WAS THERE ANY MATERIAL FOUND DURING THE SEARCH IN THE CASE OF THE APPELLANT AND SPECIFIC TO THE AS SESSMENT IN THE CASE OF THE APPELLANT WHICH COULD HAVE LED TO THE CONCLUSION OF ANY UNDER-ASSESSMENT IN THE CASE OF THE APPELLANT. 2.(B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN NOT HOLDING THAT THE ASSESSMENT ORDER PASS ED BY THE A.O. U/S 153A OF THE ACT WAS BEYOND HIS JURISDICTION AND HENCE, ILLE GAL AND INVALID. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O. IN FULLY RELYIN G ON THE ALLEGED CONFESSIONARY STATEMENTS OF THIRD PARTIES WITHOUT AFFORDING THE A PPELLANT PROPER OPPORTUNITY TO EXAMINE THEM AND IN CONCLUDING, SOLELY ON THAT B ASIS, THAT THE APPELLANT HAD SHOWN BOGUS LONG-TERM CAPITAL GAINS IN TRANSACTIONS OF SHARES OF M/S GLOBE STOCKS AND SECURITIES LTD. BY TAKING ACCOMMODATION ENTRIES AND, IN THAT VIEW, IN ADDING BACK AN AMOUNT OF RS.11,11,263/- AS UNDIS CLOSED INCOME OF THE APPELLANT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS.11,11,263/- AS UNDI SCLOSED INCOME OF THE APPELLANT. 5. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, MODI FY, ADD TO, ABRIDGE AND/OR RESCIND ANY OR ALL OF THE ABOVE GROUNDS. 2.1. FOR OTHER ASSESSMENT YEARS THE AMOUNTS OF CAPI TAL GAIN AS MENTIONED IN GROUND NO.3 IS VARYING. SIMILARLY IN ALL OTHER CASES THE G ROUNDS ARE COMMON BUT THE FIGURES ALLEGED ARE DIFFERENT FOR DIFFERENT ASSESSMENT YEAR S. 3. THE BRIEF FACTS OF THE CASE ARE THAT WHILE PASSI NG THE ORDER U/S 153A OF THE IT ACT IN THE CASE OF ALL THE ASSESSES FOR ALL THE IMP UGNED ASSESSMENT YEARS THE AO HAS TREATED THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE FOR ALL THE ASSESSMENT YEARS AS INCOME FROM UNDISCLOSED SOURCES AND AGAIN AN AMOUNT OF COMMISSION OF 2% ON THE LONG TERM CAPITAL GAIN HAS ALSO BEEN TREATED AS INCOME FROM UNDISCLOSED SOURCES BY OBSERVING THAT :- IN THIS CASE A SEARCH & SEIZURE OPERATION WAS CARR IED OUT IN DIFFERENT BUSINESS AS WELL AS RESIDENTIAL PREMISES OF M/S. MAITHAN GRO UP OF CASES ON 20.09.2007 AND ON SUBSEQUENT DATES. THE ASSESSEE BELONGS TO TH IS GROUP. HER LOCKER NO.7193 WITH CALCUTTA SAFE DEPOSIT VOLT, WAS SEARCH ED AND JEWELLERIES WORTH 4 RS.12,10,734/- WAS FOUND. ACCORDINGLY, NOTICE U/S 1 53A OF THE I.T.ACT WAS SERVED UPON THE ASSESSEE. THE ASSESSEE FILED RETURN U/S 153A DT. 10.10.2008 SHOWING SAME INCOME AS FILED U/S 139 DT. 26.9.2003. NOTICE U/S 143(2) & 142(1) WERE SERVED UPON THE ASSESSEE. IN RESPONSE T O THE SAID NOTICES SRI S.K.KEJRIWAL, A/R OF THE ASSESSEE APPEARED FROM TIM E TO TIME EXPLAINED THE RETURN AND FURNISHED THE REQUIRED PARTICULARS AS AS KED FOR. THE ASSESSEE HAS SHOWN LTCG ON SALE OF 20,500 SHAR ES OF M/S. GLOBE STOCK & SECURITIES LTD. AT RS.10,86,490/-. SHE SUFF ERED LTC LOSS IN CASE OF THEIR FAMILY COMPANY M/S. MAITHAN ALLOYS LTD. & M/S. THE BEHAR POTTERIES LTD. THUS NET LTCG AT RS.9,59,560/- WAS SHOWN INCOME OF THE A SSESSEE. THE ASSESSEE PURCHASES 25000 SHARES OF M/S. GLOBE STOCK & SECURITIES LTD. @ RS.5.02 PER SHARE AT A COST OF RS.1,25,500/- ON 6.2.2002 FROM SUNIL KEDIA OUT OF WHICH 20,500 SHARES WERE SOLD AT RS.11 ,92,400/- AT ABOUT RS.60 PER SHARE ON DIFFERENT DATES IN MARCH, 2003 THROUGH BROKER ASHISH STOCK BROKING PVT. LTD. A SEARCH & SEIZURE OPERATION WAS CARRIED OUT IN DI FFERENT BUSINESS AS WELL AS RESIDENTIAL PREMIES OF MAITHAN GROUP OF CAS ES ON 20.9.2007 AND ON SUBSEQUENT DATES. ONE OF THE ALLEGATIONS LEAD TO SE ARCH WAS UNACCOUNTED INCOME OF THE GROUP IS BROUGHT BACK IN THE BOOKS OF A/C IN THE FORM OF BOGUS LTCG. ON VERIFICATION IT WAS DETECTED THAT SEBI IMP OSED BAN ON TRADING OF SCRIP OF M/S. GLOBE STOCK & SECURITIES LTD. ON ALLE GATION THAT THIS SMALL CAP COMPANY USED TO MANIPULATE ITS SHARE PRICE WITH THE HELP OF GROUP OF BROKERS NAMELY SUNIL KEDIA AND ASHISH STOCK BROOKING BY COM MON MODUS OPERANDI OF MATCHED TRANSACTION BETWEEN THE ABOVE NAMED TWO BRO KERS WHO DO NOT SUBMIT THE REQUIRED REPORT ETC. TO THE SEBI. M/S. GLOBE ST OCK & SECURITIES LTD. DOES NOT DO BUSINESS SINCERELY. IT HAS NEITHER LUCRATIVE PROFIT NOR PROSPECT OF HIGH PROFIT IN NEAR FUTURE. THERE IS NO SUFFICIENT REASO N FOR RISE OF PRICE OF ITS SHARE. THE SEBI VIDE ITS ORDER DT. 30.11.05 SUSPENDED THE TRADING IN SHARES OF M/S. GLOBE STOCK & SECURITIES LTD. AND ALSO SUSPENDED TH E CONCERN BROKERS NAMELY ASHISH STOCK BROKING & SUNIL KEDIA AND SANJOO KABRA . THE SEBI OBSERVED THAT PRIMARILY TWO BROKERS TRADED IN THE SCRIP OF M /S. GLOBE STOCK & SECURITIES LTD. NAMELY SUNIL KEDIA AND ASHISH STOCK BROKING LT D. THE BROKERS HAD MATCHING TRANSACTIONS BETWEEN THEM AND HAD CREATED AN ARTIFICIAL MARKET IN SHARES OF THE COMPANY BY EXECUTING LARGE VOLUME OF TRANSACTIONS. IT WAS FURTHER OBSERVED THAT THE SHARE PRICE OF THE COMPANY INCREA SED BY 307% FROM THE PERIOD FROM APRIL, 2005 TO NOVEMBER, 2005. SUBSEQUE NTLY THOUGH THE BAN ON TRADING ON THE SCRIP WAS REVOKED, THE SEBI DID NOT ABSOLVE THE SAID TWO BROKERS FROM THE CHARGES FRAMED AGAINST THEM. THIS TWO BROK ERS AS WELL AS THE COMPANY WAS ENGAGED IN MANIPULATING OF THE SHARE PR ICE SINCE LONG BACK THOUGH THE MATTER CAUGHT ATTENTION OF THE SEBI IN T HE MONTH OF APRIL, 2005. IN REPLY THE ASSESSEE HAS QUOTED THE FOLLOWING CAS E LAWS. 1) HONBLE KOLKATA HIGH COURT IN THE CASE OF CIT V S KORLAY TRADING CO. LTD. (1998) 232 ITR 820 (CAL). 2) HONBLE ITAT IN THE CASE OF ACIT VS CLARIDGES IN VESTMENT & FINANCE PVT LTD. (2007) 18 SOT 390 (MUM) 5 3) HONBLE KOLKATA BENCH OF THE ITAT IN THE CASE OF ANUP KUMAR JAYASWAL IN ITA NOS. 1678/KOL./2004 & 1679/KOL/2004 FOR A.Y. 20 01-02. 4) EASTERN COMMERCIAL ENTERPRISE, (1994) 210 ITR 10 3 (CAL) 5) C.VASANTILAL & CO. (1962) 45 ITR 206 (SC). NONE OF THE CASE LAWS HAVE ORDERED TO ACCEPT THE TR ADING RESULT OF THE SCRIP BANNED BY SEBI AND SUSPENDED THE CONCERNED BR OKERS ON THE ALLEGATION OF MANIPULATING PRICE OF THE SCRIP. HONBLE KOLKATA HIGH COURT IN THE CASE OF KORLAY TRADING CO.LTD. (1998) 232 ITR 820 (CAL) HAS ORDERED THAT THE TRANSACTION COULD NOT BE DOUBTED FOR NO FAULT OF TH E ASSESSEE. HERE IN THIS CASE THE ASSESSEE CANNOT BE SAID TO HA VE NO FAULT. THE BROKERS HAVE CREATED SUCH ARTIFICIAL TRANSACTION FOR HIGH/EXTRA COMMISSION PAID BY THE ASSESEE. THE ASSESSEE IN OTHER CASES OF THE GROUP H AS FILED AFFIDAVIT BEFORE THE NOTARY PUBLIC KOLKATA STATING THAT WORDS WERE ACTU ALLY PUT INTO MY MOUTH AND THUS CERTAIN PORTION OF RECORDED STATEMENT VIRT UALLY MONITORED/EXTRACTED FROM MY MOUTH E.G., IN QUESTION NO.4 & 5QUESTION NO.6.. THUS SRI SUBHAS CHANDRA AGARWALLA HAS RETREATED THE STAT EMENT RECORDED BY HIM U/S 132(4) OF THE ACT IN HIS OWN FASHION WITHOUT APPLYI NG FOR THE SAME BEFORE THE DEPARTMENT. SHRI ARUN KUMER KHEMKA ONE OF SUCH BROKE R AS WELL AS DIRECOR OF M/S. GLOBE STOCK & SECURITIES LTD. VIDE HIS STATEMENT U. /S 132(4) RECORDED IN COURSE OF SEARCH HAS ADMITTED THAT HE HAD RECEIVED CASH FR OM MAITHAN GROUP AND SENT CHEQUES IN THE GRAB OF CAPITAL GAIN FOR A COMMISSIO N OF 2% INCLUDING EXPENSES AND THE STT. THE LIST OF CASES RECORDED BY HIM INCL UDES THE NAME OF THE ASSESSEE. SRI SUBHAS CHANDRA AGARWALLA BY A STATEME NT U/S 132(4) ACCEPTED THE STATEMENT OF SHRI ARUN KUMAR KHEMKA (A BROKER H AVING 40 COMPANIES) AND ALSO ACCEPTED THE PAYMENT OF COMMISSION OF 2% FOR C REATING BOGUS LTCG. IT IS, THEREFORE, CLEAR THAT THE ASSESSEE PURCHASED LTCG A MOUNTING TO RS.10,89,474/-. THE SAID AMOUNT OF RS.10,89,474/- A ND COMMISSION @ 2% RS.21,789/- TOTALING RS.11,11,263/- WAS PAID BY THE ASSESSEE BY CASH OUT OF HIS UNDISCLOSED INCOME THEREFORE THE SAID AMOUNT OF RS. 11,11,263/- IS ADDED BACK AS HER INCOME FROM UNDISCLOSED SOURCES. 3.1. ON APPEAL THE LD. CIT(A) HAS CONFIRMED THE SAM E AFTER TAKING INTO CONSIDERATION THE VARIOUS SUBMISSIONS MADE BY THE A SSESSEE. THE LD. CIT(A) IN ORDER TO REACH A REASONABLE CONCLUSION EXAMINED THE DETAI LS OF SHARE TRANSACTIONS CARRIED OUT BY THE ASSESSEE AND HIS FAMILY MEMBERS IN THE CASE OF M/S. GLOBE STOCKS AND SECURITIES LTD, M/S. OFFSHORE FINVEST LTD. AND M/S. NIDHI TRADING CO.LTD. FOR THE VARIOUS ASSESSMENT YEARS INVOLVED AND AFTER ANALYZI NG THE TRANSACTIONS OF ALL THE ASSESSES WHICH ARE TABULATED AS UNDER :- 6 M/S GLOBE STOCKS & SECURITIES LTD. NAME OF THE ASSESSEE NO.OF SHARES/DATE OF PURCHASE NO.OF SHARES/@ DATE OF SALE L.T.C.G./A/Y SHRI PRAHALAD RAI AGGARWALA 40,500/ RS.5 TO RS.5.5 6.2.2002 TO 8.2.2002 27,000/ RS.42 TO RS.75.90 12.03.2003 TO 22.03.2003 13,500/ RS.31 TO RS.32.80 11.04.2003 TO 4.04.2003 RS.15,19,695/- 2003-04 RS.3,63,295/- 2004-05 -D0- 18,000/ RS.10.45 TO RS.12.05 1.10.03 TO 14.10.2003 18,000/ RS.178 TO RS.189/- 15.10.2004 TO 19.11.2004 RS.30,88,400/- 2005-06 SMT.RITA DEVI 40,000/ RS.5 TO RS.5.05 6.02.2002 20,500/ RS.43 TO RS.74.90 20.03.2003 TO 26.03.2003 19,500/ RS.30 TO RS.31.50 08.04.2003 TO 10.04.2003 RS.10,89,474/- 2003-04 RS.5,04,640/ 2004-05 -DO- 18,500/RS.10.45TO RS.12.05 30.9.03 TO 1.12.2003 18,500/RS.178 TO RS.188.50 15.10.04 TO 2.11.2004 RS.31,82,115/- 2005-06 SMT.SARITA DEVI 37,000/ RS.5 TO RS.5.05 6.02.2002 27,000/RS.39.50 TO RS.74.90 24.03.03 TO 28.03.2003 10,000/ RS.32 11.04.03 TO 15.04.2003 RS.12,65,830/- 2003-04 R.2,69,100/ 2004-05 -DO- 18,500/RS.10.45 TO RS.13 30.09.03 TO 23.10.03 18,500/ RS.177 TO RS.188 28.10.04 TO 09.11.04 RS.32,70,685/- 2005-06 SMT.SHEELA DEVI 39,000/ RS.5.02 TO RS.5.5 6.02.02 TO 08.02.2002 39,000/ RS.39.50 TO RS.74 12.03.03 TO 27.03.2003 RS.17,49,500/ 2003-04 -DO- 9,500/RS.3.70 TO RS.13 9.10.03 & 23.10.03 9,500/RS.156 TO RS.190 5.12.04 TO RS.16,93,995/- 2005-06 7 10.12.2004 SRI SUDHANSU AGARWALLA 30,000/ RS.5.05 6.02.2002 30,000/- RS.40 TO RS.59.3 20.03.03 TO 27.03.03 RS.13,27,320/- 2003-04 -DO- 19000/RS.10.45 TO RS.11.40 10.10.03 & 30.10.03 19000/RS.175 TO RS.190 18.10.04 TO 7.12.04 RS.32,69,940/- 2005-06 SHRI SUBASH CHANDRA AGARWALLA 38000/RS.5 TO RS.5.5 6.02.2002 TO 8.2.2002 38000/ RS.39.50 TO RS.74.90 12.03.03 TO 24.3.2003 RS.18,66,520/ 2003-04 -DO- 18500/ RS.10.45 TO RS.13 30.9.2003 TO 23.10.2003 18500/ RS.146.30 TO RS.187.60 12.10.04 TO 21.12.2004 RS.30,21,605/- 2005-06 SHRI SUBODH AGARWALLA 18000/ RS.10.45 TO RS.13/ 10.10.03 23.10.2003 18000/ RS.184 TO RS.189/ 14.12.2004 TO 21.12.2004 RS.32,72,530/- 2005-06 SRI AVINASH AGARWALLA 19000/ RS.10.45 TO RS.11.25 9.10.03 TO 14.10.03 19000/ RS.188 3.11.04 TO 5.11.04 RS.33,64,540/- 2005-06 M/S OFF-SHORE FINVEST LTD. NAME OF THE ASSESSEE NO.OF SHARES/DATE OF PURCHASE NO.OF SHARES/@ DATE OF SALE L.T.C.G./A/Y SHRI PRAHALAD RAI AGGARWALA 10,000/ RS.10.10 TO 01.12.2003 10,000/ RS.165 TO RS.166 24.12.2004 TO 27.12.2004 RS.15,60,100/- 2005-06 SMT.RITA DEVI 8,000/ RS.3.70 TO RS.10.29 31.10.03 TO 1.12.03 8000/- RS.158/ 15.12.04 RS.12,14,860/- 2005-06 SMT.SARITA DEVI 8,000/ RS.4.05 TO RS.10.30 03.11.03 TO 1.12.2003 8000/ RS.161.40 TO 168.60 19.11.04 TO 17.01.05 RS.12,56,005/- 2005-06 SMT.SHEELA DEVI 8,000/ RS.3.70 TO RS.10.30 31.10.03 TO 1.12.03 8,000/ RS.156 TO RS.167 22.11.04TO 15.12.04 RS.12,29,380/ 2005-06 SRI SOBODH 9,000/ RS3.20 TO RS.8.20/ 9,000/- RS.159.80 TO RS.166/ RS.14,07,765/ 2005-06 8 AGARWALLA 29.10.3 TO 25.11.03 18.11.04 TO 28.12.04 20.03.03 TO 27.03.03 SHRI AVINASH AGARWALA 9000/ RS.3.20 TO RS.7.50 29.10.03 TO 24.11.03 9000/ RS.157.80 TO RS.168.60 10.12.04 TO 17.01.05 RS.14,06,990/- 2005-06 SHRI SUDHANSU AGARWALLA 9000/ RS.3.40 TO RS.10.20 30.10.03 TO 1.12.2003 9000/ RS.160 TO RS.166 29.11.04 TO 04.01.2005 RS.14,15,654/- 2005-06 SRI SUBASH CHANDRA AGARWALLA 12,000/ RS.4.40 TO RS.10.40 05.11.03 TO 1.12.2003 12,000/RS.159.70 TO RS.162.50 2.12.04 TO 3.12.2004 RS.18,32,390/ 2005-06 M/S NIDHI TRADING CO. LTD. NAME OF THE ASSESSEE NO.OF SHARES/DATE OF PURCHASE NO.OF SHARES/@ DATE OF SALE L.T.C.G./A/Y SHRI PRAHALAD RAI AGGARWALA 6,000/ RS.6 16.11.2004 6000/ RS.158.95 TO RS,.159 18.12.2006 TO 20.12.2006 RS.9,16,602/ 2007-08 SMT.RITA DEVI 5000/ RS.6 16.11.2004 5000/ RS.160.40 28.11.05 RS.7,71,050/- 2006-07 -DO- 5000/ RS.20.20 TO RS.30.58 16.12.04 TO 24.12.04 5000/ RS.158.95 16.11.06 TO 4.01.07 RS.6,61,820/- 2007-08 SMT.SARITA DEVI 8000/ RS.6 TO RS.30.25 16.11.04 TO 27.12.04 8000/ RS.158 TO RS.159 17.11.06 TO 02.01.2007 RS.11,47,825/- 2007-08 SMT.SHEELA DEVI 8500/ RS.6.15 TO RS.30.30 17.11.04 TO 27.12.04 8500/ RS.158.95 TO RS.159.95 6.12.06 TO 2.3.07 RS.12,58,090/- 2007-08 SMT. SUBODH AGARWALLA 5000/ RS.6.30 17.11.2004 5000/- RS.160.20 30.11.05 RS.7,68,550/ 2006-07 -DO- 5,500/RS.20.15 TO RS.30.05 16.12.04 TO 5,500/ RS.158.90 18.11.06 TO 24.01.07 RS.7,27,001/ 2007-08 9 22.12.04 SHRI AVINASH AGARWALLA 5000/ RS.6 16.11.04 5000/ RS.160.20 TO RS.160.50/ 28.11.05 TO 30.11.05 RS.7,71,250/ 2006-07 -DO- 4500/ RS.30.10 RS.30.50 27.12.2004 4500/ RS.158.95 TO RS.159 20.12.06 TO 04.01.07 RS.5,78,132/- 2007-08 SHRI SUDHANSU AGARWALLA 8200/ RS.6 TO RS.22.80 16.11.04 TO 16.12.04 7000/ RS.158 TO RS.159 15.11.06 TO 06.03.07 RS.10,53,710/ 2007-08 SHRI SUBASH CHANDRA AGARWALLA 6000/ RS.6 16.11.04 6000/ RS.159 29.11.06 TO 11.12.06 RS.9,15,305/- 2007-08 SONAM AGARWALLA 6,500/ RS.6 16.12.04 6,500/ RS.159 22.11.06 TO 27.11.06 R9,01,328/- 2007-08. 3.2. KEEPING IN VIEW OF THE ABOVE TRANSACTIONS HE F INALLY BASED ON THE SEBI REPORT AND BY APPLYING THE SUPREME COURTS CASE LAW IN RES PECT OF SUMATI DAYAL VS CIT 214 ITR 810 THE LD. CIT(A) CONCLUDED BY OBSERVING AS UN DER :- 4.8. IN THE ABOVE CYCLE OF RISE AND FALL OF SHARE PRICES, THE ASSESSEE AND HIS FAMILY MEMBERS WERE ALWAYS A WINNER. IT IS TOTALLY AGAINST THE HUMAN PROBABILITIES AND REALITIES OF HUMAN LIFE . MORE OV ER THE UNUSUAL INCREASE SHARE PRICES OF SHARES OF CERTAIN COMPANIES WERE VERIFIED BY SEBI AND IT WAS FOUND THAT THE BROKERS SHRI SUNIL KEDIA AND SRI ASHISH ST OCK BROKING PVT. LTD WERE MAINLY INVOLVED IN JACKING UP THE PRICES OF THE SCR IPTS IN QUESTION . ACCORDINGLY SHRI SUNIL KEDIA AND M/S ASHISH STOCK BROKING PVT. LTD WERE SUSPENDED FROM TRADING BY INTERIM ORDER DATED 30.11.2005 AND SUBSE QUENTLY THE SAME WAS CONFIRMED AFTER AFFORDING OPPORTUNITY OF HEARING VI DE SEBI ORDERS DATED 31.05.2006. IN THE SAID ORDERS THE MODUS OPERANDI F OLLOWED BY THE BROKERS AND PROMOTERS OF THE COMPANY TO INCREASE THE SHARE PRIC ES AND MOTIVE BEHIND IT WERE DISCUSSED AS UNDER : SECURITIES AND EXCHANGE BOARD OF INDIA (HEREINAFTE R REFERRED TO AS SEBI) NOTICED SHARP PRICE VARIATION IN THE SHARES OF VARI OUS COMPANIES (WITH LOW MARKET CAPITALIZATION) INCLUDING GLOBE STOCKS AND S ECURITIES LIMITED (HEREINAFTER REFERRED TO AS THE COMPANY) LISTED ON CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. (CSE), DURING APRIL 2005 TO NOVEMB ER 2005. IN THE WAKE OF SUCH UNUSUAL PRICE MOVEMENT, SEBI CONDUCTED A PRELI MINARY ANALYSIS OF TRADING DATA IN RESPECT OF BUYING, SELLING, DEALING IN THE SHARES OF SUCH COMPANIES AND IT WAS INTER ALIA FOUND THAT THE SHAR E PRICE OF THE COMPANY INCREASED FROM RS. 19.10/ TO RS.77.65/. IT WAS FU RTHER FOUND THAT TWO STOCK 10 BROKERS NAMELY, ASHISH STOCK BROKING PRIVATE LIMITE D AND MR. SUNL KEDIA EXECUTED SUBSTANTIAL TRADES IN THE SHARES OF THE CO MPANY AT CSE AND THAT THEIR CUMULATIVE TRADES ACCOUNTED FOR APPROXIMATELY 63% O F THE ENTIRE TRADES IN THE SHARES OF THE COMPANY AT CSE DURING THE RELEVANT TI ME. ASHISH STOCK BROKING PRIVATE LIMITED IS HEREINAFTER REFERRED TO AS THE B ROKER FOR THE SAKE OF BREVITY. THE BROKER EXECUTED MATCHED TRADES IN THE SHARES OF THE COMPANY. BESIDES, IT WAS OBSERVED THAT THE ABOVE MENTIONED STOCK BROKERS HAD EXECUTED SIMILAR TRADES IN THE SHARES, OF GOENKA BUSINESS AND FINANC E LIMITED AT CSE DURING THE SAME PERIOD. THUS, IT WAS INTER ALIA OBSERVED T HAT THE BROKER PRIMA FCIE VIOLATED THE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICES RELATING T O SECURITIES MARKET) REGULATIONS, 2003 (HEREINAFTER REFERRED TO AS THE F UTP REGULATIONS) AND THE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDI A (STOCK BROKERS AND SUB- BROKERS) REGULATIONS. THE CIRCUMSTANCES SUCH AS COMMON ADDRESS, COMMON D IRECTORS ETC. WOULD FORTIFY THE INFERENCE THAT THERE WAS CLOSE NEXUS AM ONGST THE BROKER, MR. SUNIL KEDIA AND SOME OF THE CLIENTS DURING THE RELEVANT P ERIOD AND THE TRADES WERE EXECUTED IN THE SAID BACKGROUND. THE TOTALITY OF THE FACTS OF THE CASE AND THE MODUS OPERANDI UNDER WHICH THE SAID MATCHED TRADES WERE EXECUTED, WOULD ONLY LEAD TO THE CONCLUSION THAT THE SAID TRADES WERE THE CULMINATION OF A PRE-DETERMINE D AND WELL EXECUTED PLAN OF ACTION. THE BROKER EXECUTED MATCHED TRADES IN THE S HARES OF THE COMPANY SUFFICIENTLY FOR A LONGER PERIOD, IN THE PROCESS, H E ALLOWED HIS CLIENTS SUBSTANTIALLY IN THE SHARES OF THE COMPANY WHICH UL TIMATELY RESULTED IN THE CREATION OF MISLEADING APPEARANCE OF TRADING IN THE SECURITIES MARKET. THE SAID TRADES ALSO CREATED MANIPULATION IN THE SHARE PRICE OF THE COMPANY. VARIOUS INSTANCES OF SYNCHRONIZED TRADES EXECUTED BY THE BR OKER INTER ALIA WOULD PROVE THAT THE BROKER WAS A NECESSARY PARTY TO THE TRANSA CTIONS WHICH ULTIMATELY RESULTED IN THE CREATION OF MISLEADING APPEARANCE O F TRADING IN THE SECURITIES MARKET. THE ABOVE FACTS AND CIRCUMSTANCES ESTABLISH THE FULL AND ACTIVE INVOLVEMENT OF THE BROKER. IT IS ALREADY ESTABLISH ED THAT THE TRADES OF THE BROKER IN THE SHARES OF THE COMPANY INTER ALIA CREA TED A MISLEADING APPEARANCE OF TRADING IN THE SECURITIES MARKET AND THEREBY, VIOLATED THE PROVISIONS OF FUTP REGULATIONS AS MENTIONED ABOVE I N THIS ORDER, IT IS SUFFICIENTLY OBVIOUS THAT THE BROKER HAD FAILED TO COMPLY WITH HIS DUTIES AS EXPECTED OF A SEBI REGISTERED INTERMEDIARY AND INST EAD BECAME A PARTY TO THE MANIPULATION IN THE SHARES OF THE COMPANY TO THE D ETRIMENT OF GENUINE INVESTORS. 4.9. IN THE SAID ORDERS OF SEB1 THE MODUS OPER ANDI FOLLOWED BY THE BORKERS TO INCREASE THE SHARE PRICES OF M/S GLOBE STOCKS & SECURITIES LTD WERE ILLUSTRATED AS UNDER- 2.16 GLOBE STOCKS & SECURITIES LTD. IS ANOTHER OF THE SMALL CAP LISTED COMPANIES AT CSE WHICH WITNESSED A SIGNIFICANT PRIC E INCREASE DURING THE PERIOD UNDER SCRUTINY. THE SHARE PRICE OF THE COMPA NY INCREASED FROM RS. 19. 11 10 TO RS. 77.65, I.E. A RISE OF 307% INCREASE IN 4 MONTHS 10 DAYS. THE SHARES OF THE COMPANY ARE ALSO LISTED ON MAGADH STOCK EXCHANG E, UTTAR PRADESH STOCK EXCHANGE, BHUBANESHWAR STOCK EXCHANGE, COCHIN STOCK EXCHANGE AND LUDHIANA STOCK EXCHANGE. 2.17 IT IS OBSERVED FROM THE LATEST ANNUAL REPORT OF THE COMPANY SENT BY CSE THAT IN THE YEAR 200405 THE SHARE CAPITAL OF THE C OMPANY WAS RS. 10.50 CRORE AGAINST WHICH THE COMPANY GROSSED RECEIPTS OF RS.87 LAKH WHICH LARGELY ACCOUNTED FOR MEETING ITS EXPENDITURE (RS.33 LAKH) AND CONSEQUENTLY ITS NET PROFIT (PAT) FOR THE YEAR WAS ONLY RS.45 LAKH. DURI NG THE PREVIOUS YEAR THE COMPANY HAD INCURRED A LOSS OF RS.8.58 LAKH. THE CO MPANY HAS AN ACCUMULATED LOSS OF RS.32 LAKH AT THE END OF FINANC IAL YEAR 2004-05. 2.18 AS PER THE LATEST COMPLIANCE REPORT OBTAINED F ROM CSE, THE COMPANY HAS NOT SUBMITTED THE FOLLOWING DOCUMENTS/REPORTS WITH THE EXCHANGE: A) SHARE-HOLDING PATTERN IN RESPECT OF 1 ST AND 3 RD QUARTER FOR THE YEAR 2002-03 AND 2 ND QUARTER FOR THE YEAR 2005-06. B) UNAUDITED QUARTERLY RESULTS IN RESPECT OF THE 1 ST , 2 ND AND 3 RD QUARTER FOR THE YEAR 2002-03, 3 RD QUARTER FOR THE YEAR 2003-04 AND 2 ND QUARTER FOR THE YEAR 2005-06. THE COMPANY HAS NOT SHOWN ANY INTEREST IN FILING QU ARTERLY RESULTS WITH THE COMPANY SINCE 2002-03. 2.19. ANALYSIS OF THE TRADING DATA REVEALED THAT PRIMARILY TWO BROKERS HAVE TRADED IN THE SCRIPT, THE DETAILS OF WHICH ARE GIVE N BELOW :- SL.NO. MEMBER NAME TOTAL VOLUME % TO SCRIP TOTAL 1. ASHISH STOCK BROKING D498 3533910 31.10 2. SUNIL KEDIA D712 3539800 31.25 2.20 A FURTHER ANALYSIS OF THE TRADING DATA REVEALE D THAT THE ABOVE MEMBERS HAVE MATCHING TRANSACTIONS AMONG THEMSELVES. THE EX TENT OF SUCH TRANSACTIONS IS GIVEN IN THE FOLLOWING TABLE: TABLE 7 : TRADING DATA OF TWO BROKERS MATCHED TRA NSACTIONS SL.NO. NAME OF THE MEMBER ASHISH % SUNIL KEDIA % SANJU KABRA % 1. ASHISH STOCK BROKING- D498 0 0.00 3484800 98.92 10000 0.28 2. SUNIL KEDIA D712 3484800 0 98.45 0 0.00 0 0.00 12 (THE PERCENTAGE MENTIONED IN THE TABLE IS WITH RESP ECT TO THEIR TOTAL TRADES IN THE SCRIP DURING THE RELEVANT PERIOD (SIGNIFICANT P ERCENTAGES SHOWN IN BOLD) 2.21. IT IS CLEARLY EVIDENT FROM THE ABOVE TABLES T HAT THE TWO STOCK BROKERS VIZ. ASHISH STOCK BROKING AND SUNIL KEDIA HAVE BEEN ABLE TO CREATE AN ARTIFICIAL MARKET IN THE SHARES OF THE COMPANY BY EXECUTING LA RGE VOLUME OF TRANSACTIONS AMONG THEMSELVES. 4.10 THE ABOVE FACTS AND FIGURE MAKES IT CRYSTAL CL EAR THAT THE TRADING VOLUMES IN THE SHARES OF THESE COMPANIES HAVE INVARIABLY BE EN CREATED BY A FEW BROKERS TRADING AMONG THEMSELVES AND THROUGH MATCHED TRANSA CTIONS (I.E.CLIENTS ALLOWED TO PLACE SIMULTANEOUSLY BOTH BUY AND SALE O RDERS OF SAME QUANTITY AT THE SAME PRICE IN THE SELECTED SHARES), OFTEN EXECU TED ON A SINGLE TERMINAL OF THE BROKER. CLEARLY, THE ULTIMATE OBJECTIVE BEHIND THE CREATION OF A FALSE MARKET IN THESE SHARES, WAS TO LEGITIMIZING THE GAI NS OF CERTAIN CLIENTS. THE SEBI ALSO AFTER MAKING THROUGH VERIFICATION AND ANA LYSIS CAME ON SAME CONCLUSION AS UNDER - IN SUM, IT IS EVIDENT FROM THE ABOVE ANALYSIS OF TH E FIVE COMPANIES., ALL OF WHICH ARE LISTED IN CSE, THAT THE BROKERS HAVE FOLL OWED A COMMON MODUS OPERANDI OF ARTIFICIALLY INFLATING THE PRICE AND CR EATING FALSE VOLUMES THROUGH CONTINUOUS SELF DEALS EXECUTED ON THE SAME TERMINAL AND CROSS DEALS AMONGST THEMSELVES, THEREBY NOT ONLY ENRICHING THEMSELVES B UT ALSO AIDING AND ABETTING THE PROCESS OF LEGITIMIZING THE GAINS. 4.11. THE SUBMISSION OF THE ASSEESEE THAT IT HAS NOTHING TO DO WITH THE ROLE PLAYED BY CERTAIN PERSONS IN ARTIFICIALLY INFLATING THE PRICE OF THE SHARE IN QUESTIONS AND HE/ SHE WAS A INNOCENT GAINER OF THE MANIPULATIVE GAME PLAYED BY THIRD PARTIES WAS CONSIDERED AND FOUND TO BE UNA CCEPTABLE IN THE BACKGROUND OF THE SURROUNDING CIRCUMSTANCES . IT IS A UNDISPUTED FACT THAT FROM THE LEAKING TAP A BUCKET CAN BE FILLED AND NOT THE TANK. IN THE WHOLE PROCESS OF MANIPULATIVE GAME THE ASSESSEE AND HIS FAMILY MEMBE RS ARE THE MAIN BENEFICIARIES. TOTAL CAPITAL GAIN OF RS. 5,59,12,98 1/ HAS HEN EARNED BY THE ASSESSEE AND HIS FAMILY MEMBERS IN SHARE TRANSACTIO NS OF ABOVE THREE PENNY STOCKS COMPANIES . THE BROKERS/PROMOTERS OF THE TA INTED COMPANIES ARE NOT MANIPULATING THE PRICES OF THE SHARES FOR CHARITY P URPOSES. THE SAID MANIPULATION HAVE BEEN DONE WITH A SPECIFIC PURPOSE S OF AIDING AND ABETTING THE INTERESTED PARTIES IN LEGITIMIZING THE CAPITAL GAIN . IT IS A ESTABLISHED RULE THAT WHERE IT IS NOT POSSIBLE TO OBTAIN EVIDENCE WH ICH CONCLUSIVELY ESTABLISH THE DUBIOUS TRANSACTION , THE CASE MUST BE DEALT WITH O N REASONABLE PROBABILITIES AND LEGAL AND FACTUAL INFERENCES DRAWN FROM THE PR OVED FACTS. THE HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL V.CIT [19 95] 214 ITR 810 HAS HELD THAT THE GENUINENESS OF THE TRANSACTION IS TO BE DETERMINED ON THE BASIS OF SURROUNDING CIRCUMSTANCES, HUMAN PROBABILITIES AND THE CONDUCT OF THE CONNECTED PARTIES. A TRANSACTION DOES NOT BECOME GE NUINE MERELY BECAUSE A PAPER TRAIL HAS BEEN CREATED. IN THE CASE UNDER CO NSIDERATION, THE ASSESSEE, 13 HAVING FAILED TO TEST OF HUMAN PROBABILITIES, WAS U NABLE TO PROVE THE GENUINENESS OF THE SHARE TRANSACTIONS. CONSIDERING THE FACTS OF THE CASE , THE SURROUNDING CIRCUMSTANCES AS DISCUSSED ABOVE, AND O N A PREPONDERANCE OF PROBABILITIES NO OTHER CONCLUSION COULD BE DRAWN BU T THAT THE HUGE CAPITAL GAINS EARNED BY THE ASSESSEE WAS NOT A NATURAL WIND FALL BUT A METICULOUSLY PLANNED SHOWER FOR WHICH THE ASSESSEE HAS PAID PRIC E MORE AND ABOVE THE DISCLOSED CONSIDERATION. ACCORDINGLY THE CONCLUSION OF THE AO, THAT THE ASSESSEE HAS MADE UNACCOUNTED EXPENDITURE IN ORDER TO OBTAIN THE CAPITAL GAIN IS HELD TO BE CORRECT. ACCORDINGLY THE ADDITION OF RS 11,11,263/- MADE BY THE AO IS CONFIRMED AND GROUND NO 2 & 3 TAKEN BY THE A PPELLANT IS DISMISSED. 3.3. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. 4. AT THE TIME OF HEARING THE LD. AR APPEARING ON B EHALF OF THE ASSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES AND FURTHER SUBMITTED THAT 6. A.O. HAS MADE THE ABOVE-MENTIONED ADDITIONS IN THE HAND OF THE ASSESSEE RELYING ON THE FOLIOWING EVIDENCES. (A) THE DEPOSITION OF SRI SUBHAS CHANDER AGARWALA, THE ALLEGED KEY FIGURE OF M/S MAITHAN GROUP MADE U/S.132(4) OF THE I.T. ACT I N WHICH HE ALLEGEDLY ADMITTED TO HAVE INTRODUCED UNACCOUNTED INCOME IN T HE FORM OF LTCG. (B) THE STATEMENT OF SRI ARUN KHEMKA, DIRECTOR OF M /S GLOBE STOCK AND SECURITIES LTD. WHO REPORTEDLY CLAIMED THAT HE ARRA NGED ACCOMMODATION ENTRIES IN THE FORM OF BOGUS LTCG TO THE MEMBERS OF MAITHAN GROUP WHICH INCLUDED THE ASSESSEE. (C) THE ASSESSEE DISCLOSED LONG-TERM CAPITAL GAIN O N THE SALE OF HER SHARE OF M/S GLOBE STOCK AND SECURITIES LTD. IN ASSTT. YEARS 2003-04 TO 2006-07 AND ALSO ON THE SALE OF SHARES OF M/S SHREE NIDHI TRADI NG CO. LTD. IN ASSTT. YEARS 2007-08. THE LD. A.O. POINTED OUT THAT THE VALUE OF SHARES OF THESE COMPANIES HAD INCREASED ENORMOUSLY OVER A SHORT PERIOD E.G. T HE SHARE OF M/S GLOBE STOCK AND SECURITIES LTD. WAS SOLD @ RS.5.02 PER SH ARE ON 06.2.02 WHEN THE ASSESSEE PURCHASED IT FROM SRI SUNIL KEDIA. THESE S HARES WERE SOLD @RS.60 PER SHARE IN THE MONTH OF MARCH 2003 THROUGH BROKER M/S ASHISH STOCK BROKING PVT. LTD. THE LD. A.O. HAS OBSERVED THAT THE SHARES OF THESE COMPANIES WERE PUSHED UP THROUGH THE MANIPULATION OF TWO SHARE BRO KERS I.E. SRI SUNIL KEDIA AND M/S ASHISH STOCK BROKING PVT. LTD. WHO MADE MAT CHING TRANSACTIONS OF HIGH VOLUME AMONG THEMSELVES WHICH CREATED AN ARTIF ICIAL HIGH PRICE OF THESE SHARES. THE LD. A.O. HAS CLAIMED IN THE ASSTT. ORDE R THAT SEBI BY ITS ORDER DT.30.1 1.05 SUSPENDED THE TRADING IN SHARES OF M/S GLOBE STOCK AND SECURITIES LTD. AND ALSO SUSPENDED THE CONCERNED BROKERS VIZ. ASHISH STOCK BROKING PVT. LTD., SUNIL KEDIA AND SANJOO KABRA. EXCEPT THE EVIDENCES AS STATED ABOVE, THE LD. A.O. HAS NOT MENTIONED ANY OTHER EVIDENCE EITHER DIRECT OR CIRCUMSTANTIAL IN HIS ASS TT. ORDER FOR ASSESSING THE ASSESSEES L.T. CAPITAL GAIN AS HER INCOME FROM UND ISCLOSED SOURCE. 14 7. BEFORE THE LD. CIT(A) THE A.R. OF THE APPELLANT SUBMITTED THE DETAILS OF LTCG ALONG WITH ALL SUPPORTING EVIDENCES I.E. CONTR ACT NOTE SUPPORTING PURCHASE / SALE OF SHARES, BANK STATEMENT REFLECTIN G THE TRANSACTIONS, DEMAT STATEMENTS ETC. BEFORE THE LD. A.O. BUT THE LD. A.O . DISREGARDED ALL THESE EVIDENCES FILED BEFORE HIM AND TREATED THE LONG-TER M CAPITAL GAIN AS THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES RELYING ON THE STATEMENTS OF SRI ARUN KHEMKA AND SRI SUBHAS CHANDER AGARWALA WHICH W ERE SUBSEQUENTLY RETRACTED BY THEM. IT WAS ALSO SUBMITTED BY THE A.R . OF THE ASSESSEE THAT DURING THE COURSE OF SEARCH CONDUCTED BY THE DEPTT. IN HER RESIDENTIAL / OFFICE PREMISES NO MATERIAL WHATSOEVER WAS FOUND RELATING TO THE SH ARE TRANSACTIONS OR ANY UNDISCLOSED INCOME OF ANY NATURE. THE A.R. OF THE A PPELLANT ALSO POINTED OUT THAT AS PER THE CBDT INSTRUCTIONS IN F NO. 286/2/20 03/TT(INV) DT. 11 .3.03 THE CONFESSIONAL STATEMENT RECORDED IN THE COURSE OF TH E SEARCH HAS VERY LITTLE EVIDENTIARY VALUE UNLESS IT IS SUPPORTED BY OTHER D OCUMENTARY EVIDENCES. IT WAS FURTHER SUBMITTED THAT AN ASSESSEE HAD RIGHT TO RET RACT FROM HIS STATEMENT RECORDED U/S. 132(4) OF THE I.T. ACT PROVIDED HE CA N PROVE THAT THE STATEMENT SO GIVEN WAS NOT THE CORRECT STATEMENT OR IT WAS NOT A VOLUNTARY STATEMENT. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE RELIED ON SEVERAL CASE LAWS. AS REGARDS THE ADMISSION BY SRI SUBHAS CHANDER AGARWALA, IT WA S POINTED OUT THAT HIS STATEMENT WAS RETRACTED AND WAS THEREFORE NOT VALID . EVEN OTHERWISE, IT WAS CLAIMED THAT SUCH ADMISSION MAY BE APPLICABLE IN TH E CASE OF SRI SUBHAS CHANDER AGARWALA HIMSELF BUT IS NOT AT ALL BINDING ON THE ASSESSEE. BUT THE LD. CIT(A) DISREGARDED ALL THESE SUBMISSIONS OF THE A.R . AND DISMISSED THE ASSESSEES ALL THE FIVE APPEALS. THE ASSESSEE IS NO W IN SECOND APPEALS BEFORE THE HONBLE TRIBUNAL. 8. THE ASSESSEE MAKES THE FOLLOWING SUBMISSIONS AG AINST THE EVIDENCES ON THE BASIS OF WHICH THE LD. A.O./CIT(A) HAVE TREATED THE ASSESSEES LONG-TERM CAPITAL GAIN AS HER UNDISCLOSED INCOME. (A) A COPY OF DEPOSITION OF SRI SUBHAS CHANDER AGAR WALA MADE U/S. 132(4) OF THE I.T. ACT WAS NOT PROVIDED TO THE ASSESEE AND TH E ASSESSEE WAS NOT GIVEN AN OPPORTUNITY OF CROSS-EXAMINING HIM. ON THIS GROUND ALONE, THIS EVIDENCE CANNOT BE USED AGAINST HER. THE LD. A.O. HAS DESCRI BED HIM AS THE KEY PERSON OF M/S MAITHAN GROUP WHICH HAD NO BASIS AT ALL. AGAIN, SRI AGARWALA WAS NOT AUTHORIZED BY THE ASSESSEE TO MAKE ANY ADMISSION / CONFESSION ON HER BEHALF. IN THE ABOVE CIRCUMSTANCES, THE ALLEGED DEPOSITION OF SRI AGARWALA CANNOT BE USED AS EVIDENCE AGAINST THE ASSESSEE. EVEN ASSUMIN G BUT NOT ADMITTING THAT SRI AGARWALA MADE ANY ADMISSION, ON A PERUSAL OF THE OR DERS OF THE LD. A.O./CIT(A), IT MAY KINDLY BE SEEN THAT SRI AGARWAL A MADE AN ADMISSION IN GENERAL TERM HE HAS NOT MADE ANY SPECIFIC ADMISSI ON IN RESPECT OF THE ASSESSEE. IN THE ABSENCE OF ANY SPECIFIC DISCLOSURE IN THE NAME OF THE ASSESSEE, IT CANNOT BE ACCEPTED AS AN EVIDENCE AGAINST HER. F INALLY, SRI AGARWALA APPEARS TO HAVE RETRACTED HIS CONFESSION AND HE HAS HIMSELF NOT DISCLOSED ANY UNACCOUNTED INCOME IN HIS OWN RETURN. TAKING INTO A CCOUNT ALL THESE FACTS, THE ALLEGED DEPOSITION U/S.132(4) OF THE I.T. ACT REPOR TEDLY MADE BY SRI AGARWALA CANNOT BE USED AGAINST THE ASSESSEE. 15 (B) THE LD. A.O. / CIT(A) HAVE ALSO CLAIMED THAT IN THE COURSE OF A SURVEY (NOT SEARCH), SRI ARUN KHEMKA CONFIRMED THAT HE PROVIDED ACCOMMODATION ENTRIES IN THE FORM OF LTCG TO VARIOUS PARTIES INCLUDING TH E FAMILY MEMBERS OF MAITHAN GROUP ON CHARGING COMMISSION @ 2%. A COPY O F THE ALLEGED DEPOSITION OF SRI KHEMKA WAS NOT GIVEN TO THE ASESS EE NOR THE ASSESEE WAS GIVEN AN OPPORTUNITY TO CROSS-EXAMINE HIM. ON THIS GROUND ALONE, THE DEPOSITION OF SRI KHEMKA CANNOT BE USED AGAINST THE ASSESSEE. SECONDLY, IT MAY PLEASE BE NOTED THAT THIS DEPOSITION OF SRI KHERNKA WAS RECORDED NOT IN THE COURSE OF SEARCH U/S. 132 BUT WHILE MAKING A SURVEY U/S. 133A OF THE I.T. ACT. HENCE, THE STATEMENT OF SRI KHEMKA HAS NOT THE LEGA L SANCTION AS IN THE CASE OF DEPOSITION U/S.132(4) OF THE I.T. ACT. IT MAY BE ME NTIONED THAT AS PER SEC.292C OF THE I.T. ACT, THE LAW ALLOWS THE DEPTT. TO MAKE PRESUMPTIONS AS TO ASSETS, BOOKS OF ACCOUNTS ETC. FOUND IN THE COURSE OF NOT O NLY SEARCH U/S.132 BUT ALSO SURVEY U/S. 133A. BUT THIS LEGAL PRESUMPTION HAS NO T BEEN EXTENDED IN RESPECT OF DEPOSITION RECORDED U/S.133A. HENCE THE DEPOSITI ON RECORDED U/S.133A HAS NOT IN THE SAME LEGAL BACKING AS IN THE CASE DEPOSI TION MADE U/S. 132(4) OF THE I.T. ACT. EVEN OTHERWISE, AS DISCUSSED IN THE ASSTT . ORDER / APPELLATE ORDER SRI KHEMKA REPORTEDLY PROVIDED ACCOMMODATION ENTRIES TO THE MEMBERS OF MAITHAN GROUP. THIS WAS A GENERAL STATEMENT AND NOT SPECIFIC IN RESPECT OF THE ASSESSEE. CONSEQUENTLY, THE STATEMENT OF SRI KHEMKA CANNOT ALSO BE UTILIZED WHILE FRAMING THE ASSESSMENT ORDER OF THE ASSESSEE. IT MAY ALSO BE NOTED THAT SRI KHEMKA WAS A DIRECTOR OF M/S GLOBE STOCK AND SE CURITIES LTD. BUT THE ASSESSEE NOT ONLY PURCHASED / SOLD THE SHARES OF M/ S GLOBE STOCK & SECURITIES LTD. BUT ALSO THE SHARES OF M/S OFF SHORE FINVEST L TD. AND M/S SHREE NIDHI TRADING CO. LTD. WITH WHICH SRI KHEMKA WAS NOT CONN ECTED. CONSEQUENTLY, HIS STATEMENT CANNOT BE TAKEN INTO EV IDENCE IN RESPECT OF ASSESSEES LTCG ARISING ON THE SALE OF SHARES OF TH ESE TWO COMPANIES. (C) THE LD. A.O. HAS ALSO RELIED ON THE ALLEGED ORD ER OF SEBI DT.30. 11 .05. IN THIS CASE ALSO, A COPY OF THE ORDER WAS NOT FURNISH ED TO THE ASSESSEE. AGAIN, EVEN ASSUMING BUT NOT ADMITTING THAT SEBI TOOK LEGA L STEPS AGAINST THE SHARE BROKERS M/S ASHISH STOCK BROKING PVT. LTD., SUNIL K EDIA AND SANJOO KABRA FOR MANIPULATION IN SHARE PRICES, UNLESS IT IS PROVED T HAT THE ASSESSEE ALSO CONSPIRED WITH THESE PERSONS, IT CANNOT BE SAID THA T SHE WAS A PARTY FOR ARTIFICIAL INCREASE IN THE PRICES OF THE SHARES. IN THE ASSTT. ORDER, THE LD. A.O. HAS NOWHERE GIVEN EVEN A HINT THAT THE ASSESSEE CON SPIRED WITH THE SHARE BROKERS FOR SELLING HER SHARES OF THE THREE COMPANI ES ON THE SALE OF WHICH SHE DERIVED LTCG AS DISCLOSED BY HER. IF SO, NO ADVERSE INFERENCE COULD BE DRAWN AGAINST HER FOR GETTING A GOOD PRICE ON THE SALE OF HER SHARES RESULTING IN LONG- TERM CAPITAL GAIN DISCLOSED IN HER RETURNS. 9. IN THIS CONNECTION ATTENTION OF THE HONBLE BENC H IS INVITED TO A COPY OF THE CONSOLIDATED ORDER PASSED BY C-BENCH, KOLKATA IN IT A NO.1210 TO 1213(KOL)/2009 DT.13.L 1.09 IN THE CASE OF DCIT CIR . -8, KOLKATA VS M/S OCTAL CREDIT CAPITAL LTD. AND THREE OTHER COMPANIES. IN T HESE CASES, THE ASSESSEES INCURRED LOSSES IN TRADING OF SHARES OF M/S BAKRA P RATHISTAN LTD. SOLD THROUGH CALCUTTA STOCK EXCHANGE. THE LD. A.O. TREATED THE L OSS AS BOGUS MAINLY ON THE GROUND THAT THE SEBI SUSPENDED THE BROKERS PROMOD K UMAR KOTHARI AND M/S 16 D.B. & CO. FOR PRICE RIGGING AND MANIPULATION OF SH ARES. BUT THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEES RELYING ON THE D OCUMENTARY EVIDENCES E.G. CONTRACT NOTES SHOWING SALES AND PURCHASES OF THE S HARES, THEIR DEMAT ACCOUNTS, BANK STATEMENT ETC. HE OBSERVED THAT THE ASSESSING OFFICER COULD NOT PRODUCE ANY EVIDENCE TO SHOW THAT THE ASSESSEES AS INVESTORS WERE PARTY TO MANIPULATION AND PRICE RIGGING OF SHARES IN THE CAL CUTTA STOCK EXCHANGE AND THE FACT THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEES WERE NOT CANCELLED BY CALCUTTA STOCK EXCHANGE IN VIEW OF SUSPENSION OF THE SHARE BROKERS BY SEBI. AGAINST THE ORDERS OF THE LD. CIT(A) ALLOWING RELIE F TO THE ASSESSEE, THE DEPTT. FILED APPEALS BEFORE THE HONBLE TRIBUNAL. WHILE DI SMISSING THE REVENUES APPEALS, THE TRIBUNAL OBSERVED THAT THE ASSESSEES F ILED DETAILED REPLY AND EVIDENCES AND MATERIALS BEFORE THE A.O. SUPPORTED B Y COPIES OF PURCHASE BILLS AND CONTRACT NOTES, COPIES OF RELEVANT TRANSACTION STATEMENTS, COPIES OF BANK STATEMENTS, EVIDENCE OF PAYMENTS AND THE A.O. HAS N OT DOUBTED ANY OF THE DOCUMENTARY EVIDENCES SUBMITTED BEFORE HIM BY THE A SSESSEES. THE A.O. ALSO HAD NOT MADE ANY INVESTIGATION FROM THE CONCERNED P ARTIES FROM WHOM SALES AND PURCHASES OF THE SHARES WERE MADE. THE HONBLE TRIBUNAL HAS POINTED OUT THAT THE SHARE TRANSACTIONS WERE ROUTED THROUGH THE BROKERS WHO WERE AUTHORIZED AT THE RELEVANT TIME TO TRADE IN THE SHA RES AND POINTED OUT THAT IF ANY BROKER IS SUSPENDED FROM TRADING IN SHARES SUBSEQUE NTLY THE ASSESSEES CANNOT BE FAULTED FOR THE SAME. IN THE INSTANT CASE ALSO, THE ASSESSEE PRODUCED DOC UMENTARY EVIDENCES FOR PURCHASE / SALE OF HER SHARES BY WAY OF CONTRAC T NOTES, DEMAT ACCOUNT ETC. THE PURCHASES / SALES WERE MADE THROUGH BANKING CHA NNELS FOR WHICH BANK STATEMENTS WERE ALSO FURNISHED BEIBRE THE LD. A.O. MERELY BECAUSE SEBI CONDUCTED INVESTIGATION AGAINST THE SHARE BROKERS F OR PRICE MANIPULATION AND SUBSEQUENTLY SUSPENDED THEM, THE LD. A.O. WAS NOT J USTIFIED IN HOLDING THAT THE ASSESSEES SHARE TRANSACTIONS WERE COLOURABLE DEVIC E TO INTRODUCE HER UNDISCLOSED INCOME IN THE FORM OF LTCG. 10. THE ASSESSEE ALSO INVITES THE KIND ATTENTION O F THE HONBLE BENCH TO A COPY OF ORDER IN THE CASE OF DCIT VS JAGDISH PRASAD GOEL IN ITA NO.542/KOL/201 0 DT. 13.4.11. IN THIS CASE, THE LD. A.O. FOUND THAT THE ASSESSEE DISCLOSED LTCG ON SALE OF SHARES OF M/S BOLTON PROP ERTIES LTD. AND M/S BLUECHIP. THE A.O. COLLECTED A CD FROM KOLKATA STOC K EXCHANGE AND AFTER COMPARING IT WITH THE CONTRACT NOTES ISSUED BY SHAR E BROKER M/S BUBNA STOCK BROKING SERVICES LTD. FOUND SOME DISCREPANCIES IN T HE NUMBERS OF SHARES SOLD AND ALSO THE DATE OF SALE OF THESE SHARES. HE THERE FORE TREATED THE LTCG AS UNEXPLAINED CASH CREDITS IN THE HAND OF THE ASSESSE E ON THE GROUND THAT THE TRANSACTIONS WERE NOT GENUINE AND THE ASSESSEE USED COLOURABLE DEVICE IN CONNIVANCE WITH THE STOCK BROKERS TO INTRODUCE HIS UNDISCLOSED INCOME IN THE GUISE OF SHARE TRANSACTIONS IN THESE SHARES. BUT ON APPEAL, THE LD. CIT(A) DELETED THE ADDITIONS AND ACCEPTED THE ASSESSEES C LAIM OF LTCG ON THE BASIS OF DOCUMENTARY EVIDENCES E.G. CONTRACT NOTES REGARD ING PURCHASE / SALE OF SHARES, DEMAT ACCOUNT OF THE ASSESSEE. THE LD. CIT( A) POINTED OUT THAT THE ADVERSE INFORMATION COLLECTED BY THE A.O. THROUGH C ALCUTTA STOCK EXCHANGE 17 WAS NOT PRESENTED TO THE ASSESSEE NOR HE WAS GIVEN AN OPPORTUNITY OF CROSS EXAMINING. ON THIS ISSUES HE RELIED ON THE MADRAS H IGH COURT DECISION IN THE CASE OF THANJAI MARASU REPORTED IN 247-ITR-465 WHER EIN IT WAS HELD THAT IT IS PROPER FOR THE A.O. TO ALLOW THE APPELLANT THE O PPORTUNITY TO EXAMINE THE WITNESS AND THEN CROSS EXAMINE THEM TO ASCERTAIN TH E VERACITY OF THEIR DIFFERENT AVERMENTS AT DIFFERENT STAGES. IN THE INSTANT CASE ALSO, THE ASSESSEE HAS PRODUCED NECESSARY DOCUMENTARY EVIDENCES IN SUPPORT OF HER SHARE TRANS ACTIONS BY WAY OF CONTRACT NOTES / BILLS, BANK STATEMENTS, DEMAT STATEMENT, TH E GENUINENESS OF WHICH HAVE NOT BEEN DISPUTED BY THE LD. A.O. THE ASSESSEE WAS ALSO NOT GIVEN COPIES OF DEPOSITION RECORDED FROM SRI SUBHAS CHANDER AGARWAL A OR SRI ARUN KHEMKA NOR SHE WAS GIVEN ANY OPPORTUNITY OF CROSS EXAMININ G THEM. IT MAY BE MENTIONED THAT IN HIS REMAND REPORT TO THE LD. CIT( A), THE LD. A.O. CLAIMED THAT COPIES OF DEPOSITIONS OF SHRI AGARWALLA AND KH EMKA WERE FURNISHED TO THE ASSESSEE. BUT IN HIS REPLY TO THE REMAND REPORT, TH E A/R OF THE ASSESSEE STOUTLY DENIED IT AND REQUESTED THE LD. A.O. TO PRODUCE EVI DENCE OF SUPPLYING COPIES OF THE DEPOSITIONS. 11. FROM THE DISCUSSION ABOVE, IT IS CLEAR THAT THE RETRACTED DEPOSITIONS OF SRI SUBHAS CHANDER AGARWALA AND SRI ARUN KHEMKA MAY CRE ATE ONLY A SUSPICION BUT THESE ARE NOT ENOUGH EVIDENCE FOR HOLDING THAT THE LTCG DISCLOSED BY THE ASSESSEE WAS NOT GENUINE. THE LD. A.O./CIT(A) HAVE ALSO REFERRED TO THE SEBIS ORDER AGAINST THE SHARE BROKERS FOR ALLEGED MANIPULATION IN SHARE PRICES. A SIMILAR ISSUE CAME UP IN THE CASE OF DCIT -VS-M/S OCTAL CREDIT CAPITAL CO. LTD. REFERRED TO ABOVE. BUT THE HONBLE C BENCH KOLKATA DID NOT ACCEPT IT AS SUFFICIENT REASON FOR TREATING THE SHARE TRANSACTION AS NOT GENUINE. THE DEPTT. ALSO FAILED TO PROVE THAT THE ASSESSEE CONSPIRED WITH THEM IN CREATING A N ARTIFICIAL HIGH PRICE. IT MAY HE THAT THE ASSESSEE HAS TAKEN ADVANTAGE OF THE HIGH PRICE OF THESE SHARES PREVAILING IN THE OPEN MARKET AND SOLD THE SHARES A T THAT TIME AS A PRUDENT INVESTOR AND EARNED A HIGH CAPITAL GAIN. IN THE LIGHT OF ABOVE SUBMISSION AND KEEPING IN VIE W THE HONBLE TRIBUNAL DECISION IN THE TWO SIMILAR CASES REFERRED TO ABOVE , IT IS PRAYED THAT ORDERS OF THE LOWER AUTHORITIES MAY KINDLY BE REVERSED AND TH E ADDITIONS MADE AS THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES IN ALL T HE FIVE ASSTT. YEARS MAY KINDLY BE DELETED. 4.1. IN ADDITION TO THIS HE FURTHER FILED THE CALCU TTA STOCK EXCHANGE QUOTATIONS IN RESPECT OF ALL THE TRANSACTIONS ENTERED BY ALL THE ASSESSES FOR ALL THE ASSESSMENT YEARS. 5. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND REITERATED THE FINDINGS WHICH WERE ALREADY RECORDED BY US IN THE PRECEDING PARAGRAPHS AND CONTENDED THAT THE LD. CIT(A) 18 HAS PROPERLY ANALYSED THE FACTS BY APPLYING THE RAT IO OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF SUMATI DAYAL VS CIT (SUPR A). THEREFORE, HE REQUESTED TO UPHELD THE SAME. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, WE CONSIDER FIT TO ANALYSE THE TRANSACTIONS ENTERED BY ALL THE ASSESSES IN RESPECT OF ALL THE SHARES AS SUPPLIED B Y THE ASSESSEE WHICH ARE AS UNDER :- AS PER THE DETAILS FILED BY THE ASSESSEE OBTAINED F ROM CALCUTTA STOCK EXCHANGE IN RESPECT OF GLOBE STOCKS AND SECURITIES LTD. THE FOL LOWING INFORMATION IS AVAILABLE. SMT.RITA DEVI M/S.GLOBE STOCKS AND SECURITIES AND SECURITIES LTD. DATE OF TRANSACTION VOLUME TRADERS OPENING RATE HIGH RATE LOW RATE CLOSING RATE 06.2.2002 168350 26 4.85 5.25 4.85 5.00 12.03.2003 216254 101 64.70 75.90 64.70 70.50 20.03.2003 322420 116 60.00 61.45 52.45 52.45 22.03.2003 214009 132 61.00 61.00 52.00 52.00 26.03.2003 192301 27 40.60 47.60 40.60 40.60 08.04.2003 15000 3 30.20 31.50 30.20 31.50 09.04.2003 5400 5 29.00 30.00 29.00 30.00 10.04.2003 40477 10 32.00 32.35 31.50 32.35 01.10.2003 30100 4 10.50 10.50 10.50 10.50 22.10.2003 28603 14 12.10 12.10 10.50 12.05 01.12.2003 46001 13 8.00 9.00 8.00 9.00 15.10.2004 42001 17 178.00 185.00 170.00 170.00 01.11.2004 43000 24 188.00 189.00 188.00 188.00 02.11.2004 31000 25 189.00 189.00 188.50 189.00 M/S. SHREE NIDHI TRADING CO.LTD. 16.11.2004 81100 17 6.00 6.00 6.00 6.00 16.12.2004 45850 18 20.00 22.80 19.90 22.80 22.12.2004 30000 10 30.20 30.20 30.00 30.20 19 24.12.2004 19200 13 30.40 30.55 30.00 30.00 27.12.2004 77000 15 31.00 31.00 30.05 30.05 28.11.2005 21550 17 160.75 160.75 160.40 160.60 16.11.2006 8000 11 159.00 159.00 158.85 158.90 22.11.2006 9400 17 158.95 158.95 158.90 158.95 04.01.2007 9300 14 158.95 159.00 158.95 159.00 M/S. OFFSHORE FINVEST LTD. 31.10.2003 5000 1 3.70 3.70 3.70 3.70 15.12.2004 33500 23 166.80 174.00 165.50 167.00 SHRI PRAHLAD RAI AGARWALLA M/S.GLOBE STOCKS AND SECURITIES AND SECURITIES LTD. DATE OF TRANSACTION VOLUME TRADERS OPENING RATE HIGH RATE LOW RATE CLOSING RATE 06.02.2002 168350 26 4.85 5.25 4.85 5.00 15.02.2002 56775 28 10.70 10.70 7.25 7.25 12.03.2003 216254 101 64.70 75.90 64.70 70.50 20.03.2003 322420 116 60.00 61.45 52.45 52.45 22.03.2003 214009 132 61.00 61.00 52.00 52.00 26.03.2003 192301 27 40.60 47.60 40.60 40.60 04.04.2003 07.04.2003 48350 25020 25 14 31.10 38.40 36.40 38.40 31.10 32.80 35.60 32.80 11.04.2003 15000 3 30.50 31.00 30.50 31.00 01.10.2003 30100 4 10.50 10.50 10.50 10.50 14.10.2003 39000 13 11.25 11.25 11.25 11.25 22.10.2003 28603 14 12.10 12.10 10.50 12.05 15.10.2004 42001 17 178.00 185.00 170.00 170.00 18.11.2004 35500 13 188.50 189.00 188.50 189.00 19.11.2004 6000 3 178.50 178.50 178.50 178.50 M/S.SHREE NIDHI TRADING CO.LTD. 16.11.2004* 81100 17 6.00 6.00 6.00 6.00 20 16.12.2004* 45850 18 20.00 22.80 19.90 22.80 22.12.2004* 30000 10 30.20 30.20 30.00 30.20 18.12.2006* 13600 18 158.95 159.00 158.95 158.95 21.12.2006* 4700 10 158.95 159.00 158.95 159.00 M/S. OFFSHORE FINVEST LTD. 01.12.2003 55000 6 10.10 10.50 10.10 10.50 24.12.2004 47700 23 166.00 166.00 165.00 165.80 27.12.2004 31100 19 165.90 166.00 165.90 166.00 SHRI SUBODH AGARWALLA M/S.GLOBE STOCKS AND SECURITIES AND SECURITIES LTD. DATE OF TRANSACTION VOLUME TRADERS OPENING RATE HIGH RATE LOW RATE CLOSING RATE 10.10.2003 27500 6 10.45 10.45 10.45 10.45 14.10.2003 39000 13 11.25 11.25 11.25 11.25 23.10.2003 28603 14 12.10 12.10 10.50 12.05 14.12.2004 71300 44 191.00 191.00 187.25 187.25 16.12.2004 58300 32 188.25 189.60 188.25 189.00 17.12.2004 44000 23 188.90 189.45 188.00 189.45 21.12.2004 45065 20 185.00 185.00 180.00 184.00 M/S.NIDHI TRADING CO.LTD. 17.11.2004 20000 4 6.15 6.55 6.15 6.55 16.12.2004 22.12.2004 45850 30000 18 10 20.00 30.20 22.80 30.20 19.90 30.00 22.80 30.20 30.11.2005 30000 23 160.15 160.30 160.15 160.20 09.01.2007 8500 10 158.90 159.00 158.90 159.00 24.01.2007 8000 10 158.90 159.00 158.85 158.90 25.01.2007 10000 13 158.90 159.00 158.90 158.95 M/S.OFFSHORE FINVEST LTD. 31.10.2003 5000 1 3.70 3.70 3.70 3.70 27.11.2003 7000 1 9.00 9.00 9.00 9.00 21 19.11.2004 38800 17 165.00 165.00 160.50 161.40 28.12.2004 7500 7 166.00 166.00 166.00 166.00 SMT.SARITA DEVI M/S.GLOBE STOCKS AND SECURITIES AND SECURITIES LTD. DATE OF TRANSACTION VOLUME TRADERS OPENING RATE HIGH RATE LOW RATE CLOSING RATE 06.02.2002 168350 26 4.85 5.25 4.85 5.00 12.03.2003 216254 101 64.70 75.90 64.70 70.50 24.03.2003 241900 58 56.15 56.15 47.90 47.90 23.10.2003 28603 14 12.10 12.10 10.50 12.05 27.03.2003 200400 48 37.40 43.60 37.40 37.40 15.04.2003 15000 3 32.00 32.00 31.50 32.00 09.10.2003 41000 5 9.00 10.45 9.00 10.45 14.10.2003 39000 13 11.25 11.25 11.25 11.25 28.10.2004 35500 12 188.50 189.00 188.00 188.65 29.10.2004 14500 12 188.00 188.00 187.35 187.35 09.11.2004 22400 8 188.00 190.00 180.00 189.00 M/S.SHREE NIDHI TRADING CO.LTD. 16.11.2004 81100 17 6.00 6.00 6.00 6.00 27.12.2004 77000 15 31.00 31.00 30.05 30.05 21.12.2006 4700 10 158.95 159.00 158.95 159.00 26.12.2006 10000 15 159.00 159.00 158.95 159.00 27.12.2006 13700 24 159.00 159.00 158.95 159.00 29.12.2006 9100 12 158.95 159.00 158.95 158.95 02.01.2007 7200 10 158.95 159.00 158.95 159.00 03.01.2007 8000 11 159.00 159.00 159.00 159.00 M/S. OFFSHORE FINVEST LTD. 19.11.2004 38800 17 165.00 165.00 160.50 161.40 17.01.2005 47000 35 169.00 169.10 161.00 168.60 22 SHRI SUDHANSHU AGARWALLA M/S.GLOBE STOCKS AND SECURITIES AND SECURITIES LTD. DATE OF TRANSACTION VOLUME TRADERS OPENING RATE HIGH RATE LOW RATE CLOSING RATE 06.02.2002 168350 26 4.85 5.25 4.85 5.00 20.03.2003 322420 116 60.00 61.45 52.45 52.45 26.03.2003 192301 27 40.60 47.60 40.60 40.60 27.03.2003 200400 48 37.40 43.60 37.40 37.40 10.10.2003 27500 6 10.45 10.45 10.45 10.45 18.10.2004 22850 8 186.50 186.50 175.00 175.00 19.10.2004 21200 9 188.00 188.00 175.00 175.00 02.12.2004 17800 8 190.00 190.00 190.00 190.00 07.12.2004 21700 17 189.35 189.65 189.00 189.65 M/S. SHREE NIDHI TRADING CO.LTD. 16.11.2004 81100 17 6.00 6.00 6.00 6.00 16.12.2004 45850 18 20.00 22.80 19.90 22.80 24.12.2004 19200 13 30.40 30.35 30.00 30.00 27.12.2004 77000 15 31.00 31.00 30.05 30.05 15.11.2006 13200 23 159.00 159.00 158.85 158.95 07.02.2007 9700 19 159.00 159.00 158.95 158.95 08.02.2007 11000 15 158.95 159.00 158.95 159.00 09.02.2007 10000 18 159.00 159.00 158.95 158.95 12.02.2007 12100 21 158.90 159.00 158.90 158.95 06.03.2007 6000 10 159.10 159.10 159.05 159.05 M/S.OFFSHORE FINVEST LTD. 30.10.2003 5000 1 3.40 3.40 3.40 3.40 13.11.2003 5000 1 6.20 6.20 6.20 6.20 25.11.2003** 5000 1 8.20 8.20 8.20 8.20 01.12.2003** 55000 6 10.10 10.50 10.10 10.50 29.11.2004** 23500 25 160.00 160.00 159.40 159.50 04.01.2005** 21500 15 166.20 166.30 166.10 166.30 23 SMT.SHEELA DEVI AGARWALLA M/S.GLOBE STOCKS AND SECURITIES AND SECURITIES LTD. DATE OF TRANSACTION VOLUME TRADERS OPENING RATE HIGH RATE LOW RATE CLOSING RATE 15.02.2002 56775 28 10.70 10.70 7.25 7.25 12.03.2003 216254 101 64.70 75.90 64.70 70.50 20.03.2003 322420 116 60.00 61.45 52.45 52.45 22.03.2003 214009 132 61.00 61.00 52.00 52.00 26.03.2003 192301 27 40.60 47.60 40.60 40.60 27.03.2003 200400 48 37.40 43.60 37.40 37.40 09.10.2003 41000 5 9.00 10.45 9.00 10.45 06.12.2004 17800 8 190.00 190.00 190.00 190.00 08.12.2004 41400 21 189.50 190.00 187.85 189.50 10.12.2004 36000 19 189.60 190.00 187.65 187.65 M/S. SHREE NIDHI TRADING CO.LTD. 17.11.2004 20000 4 6.15 6.55 6.15 6.55 16.12.2004 45850 18 20.00 22.80 19.90 22.80 27.12.2004 77000 15 31.00 31.00 30.05 30.05 07.12.2004 9100 12 158.95 159.00 158.90 158.90 11.12.2006 12600 20 158.95 159.00 158.95 159.00 09.02.2007 10000 18 159.00 159.00 158.95 158.95 23.02.2007 5800 11 158.95 159.00 158.95 159.00 02.03.2007 5500 9 158.95 159.00 158.95 159.00 M/S. OFFSHORE FINVEST LTD. 22.11.2004 35400 32 153.50 161.10 153.50 156.60 15.12.2004 33500 23 166.80 174.00 165.50 167.00 SHRI SUBHAS CHANDRA AGARWALLA M/S.GLOBE STOCKS AND SECURITIES AND SECURITIES LTD. DATE OF TRANSACTION VOLUME TRADERS OPENING RATE HIGH RATE LOW RATE CLOSING RATE 06.02.2002 168350 26 4.85 5.25 4.85 5.00 24 13.02.2002 7150 6 5.70 8.50 5.70 8.40 12.03.2003 216254 101 64.70 75.90 64.70 70.50 20.03.2003 322420 116 60.00 61.45 52.45 52.45 24.03.2003 241900 58 56.15 56.15 47.90 47.90 27.03.2003 200400 48 37.40 43.60 37.40 37.40 10.10.2003 27500 6 10.45 10.45 10.45 10.45 23.10.2003 28603 14 12.10 12.10 10.50 12.05 12.10.2004 15000 8 162.50 163.00 162.50 162.50 14.10.2004 27000 8 178.50 178.70 146.30 178.00 25.11.2004 9800 4 187.60 187.60 187.60 187.60 20.12.2004 44000 23 188.90 189.45 188.00 189.45 M/S. SHREE NIDHI TRADING CO.LTD. 16.11.2004 81100 17 6.00 6.00 6.00 6.00 29.11.2006 10700 15 159.00 159.00 158.95 159.00 07.12.2006 9000 12 158.95 159.00 158.90 158.90 11.12.2006 12600 20 158.95 159.00 158.95 159.00 M/S. OFFSHORE FINVEST LTD. 05.11.2003 5000 1 4.40 4.40 4.40 4.40 06.11.2003 12500 3 4.00 4.80 4.00 4.80 02.12.2004 30000 33 162.50 162.50 159.20 159.20 SHRI AVINASH AGARWALLA M/S.GLOBE STOCKS AND SECURITIES AND SECURITIES LTD. DATE OF TRANSACTION VOLUME TRADERS OPENING RATE HIGH RATE LOW RATE CLOSING RATE 09.10.2003 41000 5 9.00 10.45 9.00 10.45 14.10.2003 39000 13 11.25 11.25 11.25 11.25 03.11.2004 26750 7 189.00 189.00 188.00 188.50 04.11.2004 34500 10 188.00 190.00 187.50 190.00 05.11.2004 34500 10 188.00 190.00 187.50 190.00 M/S. SHREE NIDHI TRADING CO. LTD. 22.12.2004 30000 10 30.20 30.20 30.00 30.20 25 27.12.2004 77000 15 31.00 31.00 30.05 30.05 28.11.2005 21550 17 160.75 160.75 160.40 160.60 30.11.2005 30000 23 160.15 160.30 160.15 160.20 20.12.2006 17800 28 158.95 159.05 158.90 159.00 26.12.2006 10000 15 159.00 159.00 158.95 159.00 27.12.2006 13700 24 159.00 159.00 158.95 159.00 04.01.2007 9300 14 158.95 159.00 158.95 159.00 M/S. OFFSHORE FINVEST LTD. 31.10.2003 5000 1 3.70 3.70 3.70 3.70 10.12.2004 55000 37 165.00 165.30 157.80 157.80 17.01.2005 47000 35 169.00 169.10 161.00 168.60 ON COMPARISON OF THE ABOVE TABLE WITH THAT OF THE O NE WHICH WERE ANALYSED BY THE LD. CIT(A) AND THE SEBI REPORT WHICH WAS RECORDED IN TH E IMPUGNED ORDER BY THE LD. CIT(A), IT IS OBSERVED THAT THE SEBI HAS ANALYSED THE TRANS ACTIONS FOR THE PERIOD APRIL, 2005 TO NOVEMBER, 2005 IN RESPECT OF M/S. GL OBE STOCKS AND SECURITIES LTD. ONLY AND NOWHERE THEY HAVE MENTIONED IN RESPECT OF SHAR E TRANSACTIONS OF M/S.NIDHI TRADING CO. LTD. AND M/S. OFFSHORE FINVEST LTD.. BU T HOWEVER, IN THE CASE OF THE ASSESSES THE REVENUE HAS DISBELIEVED THE LONG TERM CAPITAL GAIN GAINED BY THE ASSESSEE AS WELL AS FAMILY MEMBERS OF THE ASSESSEE. IN RESPE CT OF M/S. NIDHI TRADING LTD. AND M/S. OFFSHORE FINVEST LTD ALONG WITH M/S.GLOBE STOC KS AND SECURITIES LTD. AS REGARDING M/S. GLOBE STOCKS AND SECURITIES LTD. ALS O THE PERIOD OF INVESTIGATION BY THE SEBI IS FOR THE PERIOD APRIL, 2005 TO NOVEMBER, 200 5 WHEREAS THE ASSESSEE AND HER FAMILY MEMBERS HAS MADE THE TRANSACTIONS IN THE SHA RES OF M/S. GLOBE STOCKS AND SECURITIES LTD. MUCH PRIOR TO APRIL, 2005 WHICH IS EVIDENT FROM THE ABOVE TABLE AS WELL AS THE LD. CIT(A)S ANALYSIS. FROM THIS FACT IT IS EVIDENT THAT THE OBSERVATIONS MADE BY THE LD. CIT(A) IN THE IMPUGNED ORDER AT PARA NOS. 4 .6 TO 4.10 ARE MISPLACED BY THE REVENUE. SINCE IN OUR CONSIDERED OPINION THE SEBI O N WHICH THE REVENUE PLACED RELIANCE IS NOT APPLICABLE TO THE FACTS OF THE PRES ENT CASE. ON THE OTHER HAND, THE UNDISPUTED FACTS WHICH WAS ADMITTED BY THE REVENUE ARE THAT THE ASSESSEE HAS 26 SUBMITTED THE REQUISITE DETAILS AND EVIDENCES INCLU DING COPIES OF CONTRACT NOTES, DEMAT ACCOUNT, BANK STATEMENTS ETC. WHICH WAS FILED BEFOR E THE AO TO SUBSTANTIATE THE GENUINENESS OF THE LONG TERM CAPITAL GAIN WHICH WAS DIS-REGARDED BY THE AO SIMPLY BASED ON THE STATEMENT OF SHRI ARUN KHEMKA AND SHRI SUBHASH CHANDRA AGARWALA (WHICH WERE SUBSEQUENTLY RETRACTED BY THEM) BY LINK ING WITH THE SEBIS REPORT (WHICH IS NOT RELEVANT IN OUR OPINION). IT IS FURTHER OBSE RVED THAT THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO THE EFFECT THAT NEITHER T HE ASSESSEE NOR THE FAMILY MEMBERS OF THE ASSESSEE ARE RESPONSIBLE FOR INFLATION/DEFLA TION OF THE SHARE MARKET WHICH IS EVIDENT FROM THE SHARE TRANSACTIONS RECORDED IN THE CALCUTTA STOCK EXCHANGE SUBMITTED BY THE ASSESSEE IN THE PAPER BOOK. IT IS FURTHER OBSERVED THAT THE AO HAS SIMPLY ADDED THE LONG TERM CAPITAL GAIN AND 2% ON A CCOUNT OF COMMISSION IGNORING THE EVIDENCES WHICH WAS ALREADY AVAILABLE WITH THE REVENUE AUTHORITIES. 6.1. KEEPING IN VIEW OF THE ABOVE FACTS WE ARE OF THE CONSIDERED VIEW THAT THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF SUMATI DAYAL VS CIT (SUPRA) ON WHICH THE REVENUE HAS RELIED IS NOT AT ALL APPLICAB LE TO THE PRESENT FACTS. THEREFORE WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES CON SIDERING THAT ALL THE TRANSACTIONS MADE BY THESE ASSESSES ARE GENUINE AND SUPPORTED BY DOCUMENTARY EVIDENCES. ON THE OTHER HAND, THE REVENUES PRESUMPTION IS BASED ON S USPICION, CAPRICIOUS AND PROBABILITIES AND WITHOUT ANY CONTRADICTORY MATERIA L AGAINST THE ONE SUBMITTED BY THE ASSESSEE IN RESPECT OF GENUINENESS OF THE TRANSACTI ONS. 7. IN THE RESULT THE APPEALS OF THE ASSESSES ARE A LLOWED. ORDER PRONOUNCED IN THE COURT ON _14.07.2011. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . . .. . , ,, , ! ! ! ! , C.D.RAO, ACCOUNTANT MEMBER. ( (( (! ! ! !) )) ) DATE: 14.07.2011. R.G.(.P.S.) 27 1 / -5 6 5%7- COPY OF THE ORDER FORWARDED TO: 1. SMT.RITA DEVI, F-3, CIRCULAR MANSION, 222, A.J.C .BOSE ROAD, KOLKATA-700017. 2..SHRI PRAHLAD RAI AGARWALLA, F-3, CIRCULAR MANSIO N, 222, A.J.C.BOSE ROAD, KOLKATA-700017. 3. SHRI SUBODH AGARWALLA, F-3, CIRCULAR MANSION, 22 2, A.J.C.BOSE ROAD, KOLKATA- 700017. 4. SMT. SARITA DEVI,F-3, CIRCULAR MANSION, 222, A.J .C.BOSE ROAD, KOLKATA-700017. 5. SHRI SUDHANSU AGARWALLA, F-3, CIRCULAR MANSION , 222, A.J.C.BOSE ROAD, KOLKATA- 700017. 6. SMT. SHEELA DEVI AGARWALLA, F-3, CIRCULAR MANSIO N, 222, A.J.C.BOSE ROAD, KOLKATA-700017. 7. SHRI SUBHAS CHANDRA AGARWALLA, F-3, CIRCULAR MAN SION, 222, A.J.C.BOSE ROAD, KOLKATA-700017. 8.SHRI AVINASH AGARWALLA, F-3, CIRCULAR MANSION, 22 2, A.J.C.BOSE ROAD, KOLKATA- 700017. 9. D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA 10. CIT. 11. CIT(A)-CENTRAL-I, KOLKATA 11. DR, KOLKATA BENCHES, KOLKATA .5 -/ TRUE COPY, 1#8/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES