Smt. Urmila Devi Saraogi , Kolkata V. DCIT, Central Circle - 3(4), Kolkata , Kolkata

ITSSA 42/KOL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6274 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 27-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S M SURANA SHRI P K
• Keywords: Unexplained cash credit; Unexplained expenditure; Income from undisclosed sources; Search and seizure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Transactions in derivatives; Earning of tax free income; Question of law; Accommodation entries; Block assessment; Onus to prove; Sham transactions; Penny stocks
• Section: 69C; 133A; 153A; 133(6); 143(1); 205; 131; 68; 6; 132; 15

Judgement Text

1 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.(SS).A. NO. 46/KOL/2018 ASSESSMENT YEAR: 2014-15 & I.T.(SS).A. NO. 47/KOL/2018 ASSESSMENT YEAR: 2015-16 SHRI NARENDRA KUMAR SARAOGI (PAN: AJFPS9830G) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3(4), KOLKATA. APPELLANT RESPONDENT & I.T.(SS).A. NO. 50/KOL/2018 ASSESSMENT YEAR: 2010-11 & I.T.(SS).A. NO. 51/KOL/2018 ASSESSMENT YEAR: 2013-14 SHRI ROBIN SARAOGI (PAN: AJHPS9368R) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3(4), KOLKATA. APPELLANT RESPONDENT & I.T.(SS).A. NO. 42/KOL/2018 ASSESSMENT YEAR: 2013-14 & I.T.(SS).A. NO. 43/KOL/2018 ASSESSMENT YEAR: 2014-15 SMT. URMILA DEVI SARAOGI (PAN: AJUPS9120J) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3(4), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 20.11.2018 DATE OF PRONOUNCEMENT 25.01.2019 FOR THE APPELLANT FOR THE RESPONDENT SHRI S. M. SURANA, ADVOCATE SHRI P. K. SRIHARI, CIT, DR 2 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 ORDER PER SHRI A.T.VARKEY, JM ALL THESE APPEALS HAVE BEEN FILED BY THE ASSESSEES ARE AGAINST THE SEPARATE ORDERS OF LD. CIT(A)-21, KOLKATA DATED 25.05.2018, 25.05.2018 AND 14.06.2018 FOR [AYS. 2014-15 & 2015-16], [AYS. 2013-14 AND 2014-15] AND [AYS. 2010 -11 AND 2013-14] RESPECTIVELY. AT THE OUTSET ITSELF, WE NOTE THAT THERE WAS A SEARCH IN THE PREMISE OF SARAOGI GROUP ON 15.12.2015 AND THESE APPEALS ARE OF A FAMILY WHOSE HEAD IS SHRI N. K. SARAOGI (FATHER/HUSBAND), MRS. URMILA SARAOGI (MOTHER/WIFE) AND SHRI ROBIN SARAOGI (SON). SINCE THE MATTER PERTAINS TO THE SEARCH U/S. 132 OF THE A CT, AND ADDITION BASED ON THE LTCG CLAIMS ON VARIOUS SCRIPS MADE BY THE ASSESSEES ARE UNDER APPEAL AND THE ADDITIONS BEING MADE ON FACTS WHICH ARE SIMILAR/IDENTICAL IN NATURE, WE PRO POSE TO ADJUDICATE ALL THE APPEALS TOGETHER BY THIS CONSOLIDATED ORDER. 2. IN THE CASE OF SHRI N. K. SARAOGI, THE APPEALS P ERTAIN TO AYS. 2014-15 AND 2015-16. IN RESPECT OF MRS. URMILA SARAOGI IT IS PERTAINING TO AYS 2013-14 AND 2014-15 AND FOR SHRI ROBIN SARAOGI IT IS PERTAINING TO AYS. 2010-11 AND 2013-14. SINCE THE ASSESSMENT YEARS BEFORE US HAVE BOTH ABATED PROCEEDINGS AND UNABATED PROCEEDINGS, WE WOULD LIKE TO FIRST LOOK INTO THE ABATED PROCEEDINGS, SO THAT THE INCRI MINATING EVIDENCE EVEN IF IS EXISTING CAN BE IDENTIFIED AND UNDERSTOOD PROPERLY. THEREFORE, WE TAKE UP FIRST THE ASSESSMENT OF SHRI N. K. SARAOGI FOR AY 2015-16 WHICH IS ADMITTEDLY THE O NLY ABATED PROCEEDING BEFORE US OUT OF SIX ASSESSMENT YEARS IN APPEAL.\ IT(SS)A NO. 47/KOL/2018 FOR AY 2015-16 IN RESPECT O F SHRI N. K. SARAOGI 3. SO, WE TAKE UP SHRI N. K. SARAOGIS CASE FOR AY 2015-16 AS LEAD CASE. BRIEF FACTS AS NOTED BY AO IS THAT SHRI N. K. SARAOGI FILED HIS RE TURN OF INCOME ON 26.03.2016 DECLARING A TOTAL INCOME OF RS.29,89,390/-. A SEARCH WAS CONDU CTED ON 15.12.2015 U/S. 132 OF THE ACT AT THE RESIDENCE AND BUSINESS PREMISES OF THE ASSES SEE. MR. N. K. SARAOGI IS A DIRECTOR OF (I) M/S. ANUSHREE TEXTILES PVT. LTD., (II) M/S. TIRUPAT I EMPIRE PVT. LTD. AND (III) M/S. ANJANI 3 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 FASHION PVT. LTD. HE IS ALSO THE PARTNER IN M/S. A . U EXPORTS AND THE MAIN BUSINESS OF HIS GROUP CONCERN IS MANUFACTURING AND TRADING OF SAREE S. THE AO TOOK NOTE THAT WHILE SEARCH WAS GOING ON HIS STATEMENT WAS RECORDED ON 16.12.20 15 U/S. 132(4) OF THE ACT AND FOR QUESTION NO. 23 TO GIVE THE DETAILS OF BROKER/SUB-B ROKER THROUGH WHOM SHARE INVESTMENTS IS MADE BY THE INDIVIDUALS OF HIS FAMILY, THE ASSESSEE (SHRI N. K. SARAOGI) HAD REPLIED THAT HIS SUB-BROKERS ARE M/S. MOTILAL OSOWAL SECURITIES LTD. (OWNER MR. SURESH SARAF), M/S. JALAN & CO. (OWNER SUREKSH KUMAR JALAN) AND HE HAS ALSO ANS WERED TO QUESTION NO. 25 THAT HE WAS THE DECISION MAKER ON BEHALF OF FAMILY FOR MAKING T HE INVESTMENT IN TRADING IN SHARES. THE AO NOTES THAT THE ASSESSEE HAS PURCHASED SHARES OF M/S. LIFELINE DRUGS & PHARMA LTD. ON 26.09.2012 SHARES OF 25000 IN NUMBER FOR A VALUE OF RS. 15 LACS AND SOLD ON 09.04.2014 AT A VALUE OF RS.3,62,75,935/- MAKING A GAIN OF RS.3,53, 56,735/-. ACCORDING TO AO, THE DIRECTOR OF INCOME-TAX (INVESTIGATION), KOLKATA AFT ER CONDUCTING VARIOUS SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT AND SURVEY OPERATION U/S. 133A OF THE ACT IN CERTAIN CASES HAS FOUND OUT THAT A LARGE NUMBER OF ENTRY OPERATORS WE RE IN HAND IN GLOVE WITH SHARE BROKERS AND WERE INVOLVED IN MONEY LAUNDERING BY PROVIDING BOGUS ACCOMMODATION ENTRIES IN THE GARB OF LTCG WHICH WAS EXEMPT INCOME; SHORT TERM CA PITAL LOSS, BUSINESS LOSS ETC. FROM THE INVESTIGATION REPORT, IT ALSO CAME TO LIGHT THA T LARGE SCALE MANIPULATION HAS BEEN DONE IN MARKET PRICE OF SHARES OF CERTAIN COMPANIES WHICH W ERE LISTED ON THE BOMBAY STOCK EXCHANGE (BSE) BY THESE PERSONS WORKING AS A SYNDIC ATE TO PROVIDE ENTRIES OF BOGUS EXEMPT GAINS OR LOSSES FOR A LARGE NUMBER OF PERSON S. FROM THE REPORT, IT WAS DISCERNED THAT THIS RACKET WAS WITH THE OBJECTIVE TO ACCOUNT FOR UNDISCLOSED MONEY/CASH WITHOUT PAYING INCOME TAX AND THE MECHANISM WAS ALSO USED T O BOOK LOSS ON SCRIPS AND THEREBY AVOID TAX ILLEGALLY THROUGH FALSE/BOGUS BUSINESS LO SS OR SHORT TERM CAPITAL LOSS (STCL) BY DIMINUTION IN THE VALUE OF STOCK OF SHARES. FROM T HE INVESTIGATION REPORT THE AO NOTED THAT 84 OF SUCH STOCKS WERE IDENTIFIED WHICH WERE LISTED IN STOCK EXCHANGE AND ACCORDING TO THAT REPORT A NUMBER OF SHARE BROKING ENTITIES HAVE ACCE PTED BEFORE THE DEPARTMENT THAT THEY WERE INVOLVED IN THESE UNSCRUPULOUS/ NEFARIOUS ACTI VITIES. IN ALL THE ASSESSMENT ORDERS 4 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 BEFORE US, THE AO DISCUSSES FROM PAGES 2 TO 5, THE GENERAL OBSERVATIONS IN RESPECT OF BOGUS/ACCOMMODATION ENTRY PROVIDERS, THEIR MODUS OP ERANDI ETC. ACCORDING TO AO, THE SURVEY OF ENTRY PROVIDERS HAS RESULTED IN THEM, CON FESSING ABOUT THEIR DUBIOUS ROLE IN THE WHOLE RACKET. ACCORDING TO THE INVESTIGATION REPOR T, THE BENEFICIARY IN ORDER TO BRING HIS UNACCOUNTED MONEY INTO HIS REGULAR BOOKS USED THIS ROUTE AND AT THE SAME TIME WANTS TO AVOID PAYING INCOME TAX. ACCORDING TO AO, THE OPER ATORS MAINTAIN COMPLEX NET WORK AND HAVE NEXUS WITH THE PAPER COMPANIES AND HAVE CONTRO L OVER SOME PENNY STOCK COMPANIES TO DO THIS MONEY LAUNDERING FOR THE BENEFICIARY AND TH E AO TAKING NOTE OF THE ASTRONOMICAL RISE IN PRICE OF SHARES, HE WAS OF THE OPINION THAT THER E WAS MANIPULATION ON THE TRADING ACTIVITY AND RIGGING OF PRICES SO ACCORDING TO HIM, THE HUMA N PROBABILITIES DOES NOT ALLOW HIM TO ACCEPT THE CLAIM OF THE ASSESSEE. THE AO ACKNOWLEDG ES THAT THE TRANSACTIONS THOUGH HAPPENING IN THE APPROVED STOCK EXCHANGE AND THROUG H RECOGNIZED BROKERS AND PAYMENTS ARE MADE THROUGH BANKING CHANNELS BUT INFACT ALL AR E EYE WASH TO GIVE COLOUR OF GENUINENESS. 4. THE AO NOTES THAT THE SEARCH HAPPENED ON 15.12.2 015, AND ON 16.12.2015 THE STATEMENT OF MR. NARENDRA KR. SARAOGI (THE PRESENT APPELLANT) WAS TAKEN U/S. 132(4) OF THE ACT AND HE HAS ACCEPTED THAT HE TAKES THE DECISION OF INVESTMENT IN SHARES IN RESPECT TO HIS FAMILY MEMBERS AND THAT HIS SUB BROKERS THROUGH WHO M HE DEALS WITH THE PURCHASE AND SALE OF SHARES WERE M/S. MOTILAL OSWALS SECURITIES LTD. (OWNER MR. SURESH SARAF) AND M/S. JALAN & CO. (OWNER SURESH KUMAR JALAN) AND HAS SOLD SHARE S OF M/S. LIFE LINE DRUGS & PHARMA LTD. THROUGH M/S. MOTILAL OSWAL AND CLAIMED TO HAVE EARNED LTCG WHICH IS EXEMPT U/S. 10(38) OF THE ACT. THIS ACCORDING TO AO, THOUGH HA PPENED IN THE ELECTRONIC PLATFORM OF BSE IS AN EYE WASH. FOR SAYING SO, THE AO RELIES O N THE STATEMENT RECORDED BY THE DEPARTMENT OF ACCOMMODATION PROVIDER SHRI DEVESH UP ADHYAY U/S. 131 ON 04.03.2016 AND (BEFORE AND AFTER THE SEARCH CONDUCTED AT ASSESSEE S PREMISES) ON VARIOUS OTHER DATES (03.01.2014, 24.01.2014, 02.03.2015, 22.09.2017 AND 01.05.2015) WHEREIN HE HAS ACCEPTED 5 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 HIS ROLE THAT HE IS/WAS AN ACCOMMODATION ENTRY OPER ATOR AND HE DOES IT THROUGH PREARRANGED SALE OF SHARES THROUGH HIS SHELL COMPANIES CONTROLL ED DIRECTLY BY HIM AND HE PROVIDED THE LIST OF JAMMA KHARCHI/SHELL COMPANIES WHICH WERE CO NTROLLED BY HIM WHICH WERE ANNEXED AS ANNEXURE A TO THE STATEMENT RECORDED BY THE DEPAR TMENT. THE AO RECORDS THAT THE STATEMENT OF MR. DEVESH UPADHYAY WAS GIVEN TO THE A SSESSEE AND THEREAFTER HE ACKNOWLEDGES THAT THE ASSESSEE REQUESTED FOR CROSS EXAMINATION OF SHRI DEVESH UPADHAYAY AS WELL AS THE OWNERS OF SUB-BROKERS M/S. MOTILAL O SWAL AND M/S. JALAN & CO. THROUGH WHOM ASSESSEE BOUGHT AND SOLD THE SCRIPS IN QUESTIO N. THEREAFTER, THE AO ACKNOWLEDGES IN THE ASSESSMENT ORDER THAT HE DENIED CROSS EXAMINATI ON OF SHRI DEVESH UPADHYAY AND THE BROKERS OF OWNER OF M/S. MOTILAL OSOWAL AS WELL AS M/S. JALAN & CO., ON THE REASON THAT THE FACTS DISCUSSED IN THE ASSESSMENT ORDER IS SUFFICIE NT AND IT WAS NOT NECESSARY TO GRANT OPPORTUNITY TO CROSS SHRI DEVESH. AT PAGE 19 OF AS SESSMENT ORDER FOR AY 2015-16 THE AO FOR DENYING CROSS EXAMINATION IN HIS OWN WORDS OBSE RVED SINCE THE STATEMENT OF SHRI DEVESH UPADHYAY IS SECONDARY EVIDENCE AND THE ASSES SEE CANNOT ABSOLVE HIMSELF FROM ALL THE FACTS BROUGHT OUT IN THE ORDER . WAS PLEASED TO DENY THE CROSS EXAMINATION OF THE PERSONS. HOWEVER, INTERESTINGLY, THE AO HAD GIVEN OPPORTUNITY TO ASSESSEE TO BRING THE WITNESSES WHOMEVER HE WISHED TO CROSS EXAMINE AND T HEREAFTER, THE AO WAS OF THE OPINION THAT THE ASSESSEE FAILED TO DISCHARGE HIS ONUS U/S. 68 OF THE ACT IN RESPECT TO THE AMOUNT OF RS.3,53,56,735/- WHICH WAS ADDED TO THE TOTAL INCOM E. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO CO NFIRM THE SAME. AGGRIEVED, THE ASSESSEE IS BEFORE US. 5. ASSAILING THE ACTION OF LD. CIT(A)/AO, THE LD. A R BROUGHT TO OUR NOTICE THAT OUT OF THE SIX APPEALS, ONLY THE APPEAL RELATING TO SHRI N . K. SARAOGI FOR AY 2015-16 WHICH WAS PENDING BEFORE THE AO ON THE DATE OF SEARCH ON 15.1 2.2015, SO THE ASSESSMENT FOR AY 2015- 16 IS ABATED IN THE EYES OF LAW. HOWEVER, ALL OTHE R ASSESSMENTS PERTAINING TO THE ASSESSEES HEREIN WERE NOT PENDING BEFORE THE AO ON THE DATE O F SEARCH ON 15.12.2015 AND SO ACCORDING TO HIM, THE AO HAS TO REITERATE THE RETUR N ACCEPTED BY THE DEPARTMENT U/S. 6 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 143(1)/143(3) OF THE ACT AND CANNOT VENTURE TO MAKE ANY ADDITION /DISALLOWANCE U/S. 153A WITHOUT INCRIMINATING MATERIAL UNEARTHED BY THE DEP ARTMENT DURING THE SEARCH QUA THOSE ASSESSMENT YEARS. FOR BUTTERING THIS SUBMISSION, T HE LD. AR DREW OUR ATTENTION TO HONBLE DELHI HIGH COURT IN CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL.), WHEREIN THE HONBLE DELHI HIGH COURT HELD AS UNDER: SUMMARY OF LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DE CISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHE D REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN S EPARATE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE D ISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS S ECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO O NE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATI NG MATERIAL UNEARTHED DURING THE COURSE OF PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 7 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 6. ACCORDING TO LD. AR, THE AFORESAID RATIO WAS UPH ELD BY THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT IN ITA NO. 661 OF 2008 COMMISSI ONER OF INCOME TAX VS.VEERPRABHU MARKETING LTD., WHEREIN THE HONBLE HIGH COURT HELD AS UNDER: WE AGREE WITH THE VIEW EXPRESSED BY THE KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS PRE- REQUISITE BEFORE POWER COULD HAVE BEEN EXERCISED U/ S 153(C) R.W SECTION 153(A). IN THE CASE BEFORE US, THE AO HAS MADE A DISALLOWANCE OF THE EXPENDITURE, WHICH WAS HELD DISCLOSED, FOR ONE REASON OR THE OTHER, BUT SUCH DISALLOWANCES MADE BY THE AO WERE U PHELD BY THE LD.CIT(A) BUT THE LD. TRIBUNAL DELETED THESE DISALLOWANCE. WE FIND NO INFIRMITY IN THE AFO RESAID ACT OF THE LD. TRIBUNAL. THE APPEAL IS, THER EFORE, DISMISSED. 7. ACCORDING TO LD. AR, IN A SIMILAR CASE M/S. KURE LE PAPER MILLS PVT. LTD. ADDITION WAS MADE BY THE AO (IN SEC. 153A PROCEEDINGS) WITHO UT INCRIMINATING MATERIAL UNEARTHED DURING SEARCH, THE SHARE CAPITAL RECEIVED BY THE A SSESSEE WAS ADDED U/S. 68 OF THE ACT, WHICH WAS DELETED BY THE TRIBUNAL, AND THIS ORDER O F TRIBUNAL WAS BEEN UPHELD BY HONBLE DELHI HIGH COURT IN PR. CIT VS. KURELE PAPER MILLS PVT. LTD. (2016) 380 ITR 571 (DEL) WHICH DECISION HAS BEEN UPHELD BY HONBLE SUPREME C OURT (2016) 380 ITR (ST.) 69-ED. SO, ACCORDING TO HIM, SINCE THERE IS NO INCRIMINATING M ATERIAL AND SINCE THE ASSESSEE HAD DISCLOSED THE EXEMPT INCOME U/S. 10(38) OF THE ACT WHICH WAS FROM LTCG OF SALE OF SCRIPS IN BSE THROUGH REGISTERED BROKER SUPPORTED BY EVIDE NCE CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE AND WANT US TO DELETE THE ADDITION MADE ON THIS COUNT. AND EVEN FOR AY 2015-16, THERE IS NO INCRIMINATING MATERIAL AGAINST THE ASSE SSEE, SO ACCORDING TO HIM, NO ADDITION IS LEGALLY TENABLE AND SO ADDITION NEEDS TO BE DELETED . 8. ON THE OTHER HAND, THE LD. DR COUNTERING THE L D. ARS SUBMISSION THAT SINCE NO INCRIMINATING MATERIAL WERE SEIZED BY THE DEPARTMEN T DURING SEARCH, SO NO ADDITION CAN BE MADE, THE LD. CIT, DR DREW OUR ATTENTION TO THE PAG E NO. 13 TO 15 WHEREIN THE AO HAS TAKEN NOTE OF THE STATEMENT OF SHRI DEBESH UPADHYAY WHICH ACCORDING TO LD. CIT DR, WAS THE STATEMENT RECORDED BEFORE THE DEPARTMENT U/S. 1 31 OF THE ACT AN ADMISSION ON THE PART OF SHRI DEBESH UPADHYAY THAT THE SCRIPS SOLD BY THE AS SESSEE TO EARN LTCG WAS BOGUS AND PRE-ARRANGED TRANSACTION TO CLAIM EXEMPT INCOME FOR THE ASSESSEE. THEREFORE, ACCORDING TO 8 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 LD. CIT, DR THERE WAS INCRIMINATING MATERIAL TO SUG GEST THAT ASSESSEE HAS BROUGHT HIS UNACCOUNTED MONEY IN THE FORM OF LTCG EXEMPT INCOME ON SALE OF SHARES OF KAILASH FINANCIAL LTD. LD. CIT-DR HAS FILED WRITTEN SUBMISS IONS IN SUPPORT OF BOTH THE LOWER AUTHORITYS ACTION. HIS CASE IS THAT THE SEARCH IN QUESTION WAS CONDUCTED IN M/S. ANUSHREE TEXTILE GROUP OF CASES WHICH LED TO THE DEPARTMENT FINDING THAT THESE THREE ASSESSEES TO HAVE CLAIMED BOGUS EXEMPT INCOME IN THE GUISE OF BO GUS LTCG ON SALE OF SCRIPS WHICH WAS RIGHTLY ADDED AS UNEXPLAINED CASH CREDIT. ACCORDIN G TO HIM, THE HON'BLE APEX COURTS DECISION IN CIT VS. S. AJIT KUMAR IN CIVIL APPEAL N O.10164 OF 2010 UPHELD THE BLOCK ASSESSMENT IN LIGHT OF SECTION 158BB OF THE ACT ON THE BASIS OF EVIDENCE FOUND IN SEARCH AS WELL AS OF OTHER DOCUMENTS AND SUCH MATERIALS AVAIL ABLE TO ASSESSING OFFICER RELATABLE THERETO. HE ALSO SUBMITTED THAT THE HONBLE KERALA HIGH COURT DECISION IN E.N. GOPA KUMAR VS. CIT (2016) 75 TAXMANN.COM 215 (KERALA) TO OK THE SAME VIEW. AND HE RELIED ON THE FOLLOWING DECISIONS:- I) PCIT, DELHI-2 VS. BEST INFRASTRUCTURE INDIA PVT . LTD. (2018) 94 TAXMANN.COM 115(SC); II) ITAT MUMBAI BENCH DECISION IN M/S. PRIYANKA CH OPRA VS. DCIT (2018) 89 TAXMANN.COM 288 (MUM. TRIB.) . THE LD CIT DR MR. SHRIHARI ACCORDINGLY SEEKS TO VAL IDATE THE IMPUGNED ASSESSMENT IN ALL THESE THREE ASSESSEES CASE. 9. APART FROM THE ABOVE, THE ID DR VEHEMENTLY ARGU ED THAT THE HONBLE SUPREME COURT THOUGH HAD ADMITTED THE SPECIAL LEAVE PETITION FILE D BY THE ASSESSEE IN THE CASE OF DAYAWANTHI GUPTA AGAINST THE DECISION RENDERED BY T HE HON'BLE DELHI HIGH COURT IN THE CASE OF DAYAWANTHI GUPTA REPORTED IN 390 ITR 486 (D EL) WHICH WAS IN FAVOUR OF REVENUE WHEREIN THE TRIBUNAL ON THE BASIS OF STATEMENT U/S. 132(4) HAS SUSTAINED THE ADDITION MADE BY AO. HE ALSO POINTED OUT THAT SLP HAS BEEN ADMITT ED BY THE HONBLE SUPREME COURT AGAINST THE DECISION RENDERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL 9 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 WAREHOUSING. ACCORDING TO HIM, BOTH THESE SLPS WERE ADMITTED ON THE MAIN QUESTION AS TO WHETHER THE EXISTENCE OF AN INCRIMINATING MATERIAL IS RELEVANT FOR MAKING AN ADDITION IN SECTION 153A ASSESSMENT IN RESPECT OF CONCLUDED ASS ESSMENTS AS ON THE DATE OF SEARCH. ACCORDINGLY, HE REQUESTED FOR KEEPING THE APPEALS I N ABEYANCE TILL THE MATTER ATTAINS FINALITY FROM THE HONBLE SUPREME COURT IN THIS REGARD. 10. THE LD. DR ALSO RELIED ON THE RECENT DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OR E. GOPAKUMAR VS CIT REPORTED IN (2016) 75 TAXMANN.COM 215 (KERALA) IN SUPPORT OF HIS CONTENTIONS AND CONTENDED THAT THE D ECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HAS BEEN DULY CONSIDERED AND THE DECISIONS OF' CIT VS ANIL KUMAR BHATIA REPORTED IN (2013) 352 ITR 493 (DEL) WHILE ACCEPTING THE STAND OF REVENUE. HE ALS O REFERRED TO THE FOLLOWING DECISIONS; I) CIT VS CHETAN DAS LACHMAN DAS REPORTED IN (2012) 2 11 TAXMAN 61 (DEL); II) MADUGULA VENU VS DIT REPORTED IN (2013) 215 TAXMAN 298 (DEL HC); III) CANARA HOUSING DEVELOPMENT CO. VS DCIT REPORTED IN (2014) 49 TAXMANN.COM 98 (KAR HC); IV) FILATEX INDIA LTD VS CIT REPORTED IN (2014) 229 TA XMAN 555 (DEL HC); V) JAI STEEL (INDIA) VS ACIT REPORTED IN (2013) 219 T AXMAN 223 (DEL HC) ; VI) CIT VS MURLI AGRO PRODUCTS LTD REPORTED IN (2014) 49 TAXMANN.COM 172 (BOM HC); VII) CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. REPORTED IN (2015) 374 ITR 645 (BOM HC) AND VIII) ALL CARGO GLOBAL LOGISTICS LTD VS. DCIT REPORTED IN (2012) 137 ITD 287 (MUM ITAT)(SB). 10 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 11. SUPPLEMENTING HIS ARGUMENT IN THE ABOVE SET OF CASES, FOLLOWING WRITTEN SUBMISSIONS WERE MADE ON THE ISSUE OF CROSS-EXAMINATION. HE RE LIED ON THE ORDER OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GTC INDUSTRIES VS. ASSISTANT COMMISSIONER OF INCOME TAX [(1998) 60 TTJ MUMBAI 308] WHEREIN THE HON'BLE HIGH COURT HAS MADE SOME OBSERVATIONS, EXERPTS OF WHICH ARE AS HEREINUNDER: 'IN OUR OPINION, RIGHT TO CROSS-EXAMINE THE WITNESS WHO MADE ADVERSE REPORT, IS NOT AN INVARIABLE ATTRIBUTE OF THE REQUIREMENT OF T HE DICTUM, AUDI ALTERAM PARTEM. FORMAL CROSS-EXAMINATION IS A PART OF PROCE DURAL JUSTICE. IT IS GOVERNED BY THE RULES OF EVIDENCE, AND IS THE CREAT ION OF COURT. IT IS PART OF LEGAL AND STATUTORY JUSTICE, AND NOT A PART OF NATU RAL JUSTICE, THEREFORE, IT CANNOT BE LAID DOWN AS A GENERAL PROPOSITION OF LAW THAT T HE REVENUE CANNOT RELY ON ANY EVIDENCE WHICH HAS NOT BEEN SUBJECTED TO CROSS- EXAMINATION .' 12. THE LD. CIT, DR DREW OUR ATTENTION TO HON'BLE C ALCUTTA HIGH COURT DECISION IN THE CASE OF MANINDRA NATH CHATTERJEE VS. COLLECTOR OF C ENTRAL EXCISE & ANOTHER [1977 TLR 1754(CI.)] IS 'WHETHER IN A PARTICULAR CASE THE PAR TICULAR PARTY SHOULD HAVE THE RIGHT TO CROSS-EXAMINE OR NOT DEPENDS UPON THE FACTS AND CIR CUMSTANCES OF A PARTICULAR CASE. THIS IS SO, BECAUSE THE RIGHT TO CROSS-EXAMINE IS NOT NECES SARILY A PART OF REASONABLE OPPORTUNITY.' 13. SIMILAR JUDGEMENTS ACCORDING TO LD. CIT, DR WER E ALSO PRONOUNCED BY THE HON'BLE KERALA HIGH COURT IN THE CASE OF M.K. THOMAS VS. ST ATE OF KERALA [ 40 S.T.C. 278] IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CAS E OF K.T. SHADULL VS. STATE OF KERALA [39 S.T.C. 478 S.C.]. 14. AND ACCORDING TO HIM, ALL THESE JUDGEMENTS/DECI SIONS LEAD TO ONE CONCLUSION THAT RIGHT TO CROSS-EXAMINE THE WITNESS, WHO MADE ADVERS E REPORTS, IS NOT AN INVARIABLE ATTRIBUTE OF THE REQUIREMENT OF THE DICTUM, 'AUDI ALTERAM PAR TEM' AND SO, ACCORDING TO LD. CIT, DR HE DOES NOT WANT US TO INTERFERE IN THE ORDER OF TH E LD. CIT(A). 11 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 15. IN HIS REJOINDER, THE LD. AR TOOK US THROUGH TH E STATEMENT OF SHRI DEBESH UPADHYAY WHICH HAS BEEN HEAVILY RELIED UPON BY AO TO MAKE AD DITION AND SUBMITTED THAT THERE WAS NO SPECIFIC AVERMENT AGAINST ANY OF THE ASSESSEES INV OLVEMENT IN ANY MISCONDUCT OR WRONGFUL ACTS AND SO, ACCORDING TO LD. AR, THE SO CALLED STA TEMENT RECORDED BEHIND THE BACK OF ASSESSEE CANNOT BE TREATED IN ANY MANNER AS INCRIMI NATING MATERIAL QUA THE ASSESSEES IN THE APPEALS BEFORE US. AND EVEN IF FOR ARGUMENT SA KE IT IS TREATED AS INCRIMINATING MATERIAL, IT CANNOT BE USED AGAINST THE ASSESSEE, BECAUSE THE AO DID NOT SUMMON THEM FOR CROSS- EXAMINATION OF ASSESSEES THOUGH THEY MADE SPECIFIC REQUEST FOR IT WHICH FACT HAS BEEN ADMITTED AND RECORDED IN HIS ORDER BY THE AO. FOR T HE SAID PROPOSITION, THE LD. AR, RELIED ON THE DECISION OF HONBLE SUPREME COURT IN ANDAMAN TIMBER INDUSTRIES (SUPRA), WHEREIN THE HONBLE SUPREME COURT HELD THAT WITHOUT CROSS E XAMINATION OF THE THIRD PARTIES BY ASSESSEE, THE TESTIMONY MADE BY THIRD PARTIES CANNO T BE RELIED UPON BY AO AND IF HE DOES IT IS NULLITY IN THE EYES OF LAW AND IN THE AFORESAID BACK GROUND, ACCORDING TO LD. AR, IT APPEARS THAT THE ADDITIONS WERE MADE BY THE A.O, WE RE STEREOTYPE IN NATURE AND WERE BASED ON SURMISES AND THE AO IGNORED THE SUPPORTING DOCUM ENTS IN SUPPORT OF APPELLANTS LAWFUL CLAIM. IN THIS REGARD THE LD AR PLACED RELIANCE ON THE FOLLOWING CASES:- 16. IN THE CASE OF K.P. VARGHESE V. INCOME TAX OFFI CER (SC) (1981) 131 ITR 0597 THE HON'BLE APEX COURT HELD THAT - ' THE CONSIDERATION ACTUALLY RECEIVED BY THE ASSESSEE IS MORE THAN WHAT IS DECLARED OR DISCLOSED BY HIM AND THE BURDEN OF PROVING SUCH AN UNDERSTATEMENT OR CONCEALMENT IS ON THE REVENUE. THIS BURDEN MAY BE DISCHARGED BY THE REVENUE BY ESTABLISHING FACTS AND CIRCUMSTANCES FROM WHICH A REASONABLE INF ERENCE CAN BE DRAWN THAT THE ASSESSEE HAS NOT CORRECTLY DECLARED OR DISCLOSED TH E CONSIDERATION RECEIVED BY HIM AND THERE IS AN UNDERSTATEMENT OR CONCEALMENT OF TH E CONSIDERATION IN RESPECT OF THE TRANSFER. SUB-SECTION (2) HAS NO APPLICATION IN THE CASE OF AN HONEST AND BONA FIDE TRANSACTION WHERE THE CONSIDERATION RECEIVED BY THE ASSESSEE HAS BEEN CORRECTLY DECLARED OR DISCLOSED BY HIM AND THERE IS NO CONCEA LMENT OR SUPPRESSION OF THE CONSIDERATION. 12 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 17. THE LD. AR DREW OUR ATTENTION TO THE DECISION O F THE TRIBUNAL IN THE CASE OF MANISH KUMAR BAID, MAHENDRA KUMAR BAID VS ACIT (ITA NO. 12 36/1237/KOL/2017 DATED 18.08.2017) (A.Y. 2014-15) WHEREIN IT HAS BEEN HELD THAT:- WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LD. AR THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT AND PREPONDERANCE OF P ROBABILITY WITHOUT BRINGING ON RECORD ANY LEGAL EVIDENCE AGAINST THE ASSESSEE. WE RELY ON THE JUDGEMENT OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF GTC INDUSTR IES LTD. (SUPRA) FOR THE PROPOSITION. THE VARIOUS FACETS OF THE ARGUMENTS OF THE LD AR SUPRA, WITH REGARD TO IMPLEADING THE ASSESSEE FOR DRAWING ADVERSE INFEREN CE WHICH REMAIN UNPROVED BASED ON THE EVIDENCES AVAILABLE ON RECORD ARE NOT REITER ATED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOUS CASE LAWS RELIED UP ON BY THE LD AR ARE ALSO NOT REITERATED FOR THE SAKE OF BREVITY . 18. IT HAS ALSO BEEN HELD IN THE SAID ORDER THAT- HENCE WE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE M ATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGATIONS LEVE LLED BY THE AO AGAINST THE ASSESSEE WHICH IN OUR CONSIDERED OPINION, HAS NO LEGS TO STA ND IN THE EYES OF LAW 19. ACCORDING TO LD. AR, THE INSTANT CASE IS SIMILA R TO THE CASE OF MANISH KUMAR BAID AND MAHENDRA KUMAR BAID, AS THE AO HAD NOT BROUGHT ON RECORD NEITHER ANY MATERIAL NOR CONCLUSIVE EVIDENCE IN SUPPORT OF HIS ALLEGATIONS A ND, THEREFORE, NO ADDITIONS SHOULD HAVE BEEN MADE AGAINST THE ASSESSEE. 20. IT WAS URGED BEFORE US BY THE LD. AR THAT THE A PPELLANT HAD DISCHARGED HIS ONUS OF PROVING THE GENUINITY OF THE SAID TRANSACTIONS BY S UBMITTING ALL THE DOCUMENTS EVIDENCING PURCHASE AND SALE AND ALL THE RELEVANT BANK STATEME NTS. THEREFORE, ACCORDING TO LD. AR, THE ONUS WAS ON THE AO TO VERIFY THE SAID PURCHASES AND SALES TRANSACTIONS BY ISSUING VARIOUS NOTICES U/S 13L OR 133(6) OF THE ACT. HOWEVER, THE AO WITHOUT VERIFYING THE SAID TRANSACTIONS CONCLUDED THE FACT THAT THE SAID LTCG WERE BOGUS AND IN SUPPORT OF HIS CONTENTION HE PLACED RELIANCE ON SOME GENERAL MODUS OPERANDI WHICH PROVED NOTHING OF ASSESSEES INVOLVEMENT IN ANY SCAM AND WAS OF A GEN ERALIZED NATURE AND NOTHING TO DO WITH 13 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 THE ASSESSEE. SO, ACCORDING TO HIM, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION WHICH NEEDS TO BE DELETED AND CLAIM OF ASSESSEES ALLOWED . 21 WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY GO NE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT A SEARCH W AS CONDUCTED U/S. 132 OF THE ACT IN THE CASE OF M/S. ANUSHREE TEXTILE GROUP OF COMPANIES AN D THE STATEMENT OF MR. N. K. SARAOGI WHO IS A DIRECTOR OF M/S. ANUSHREE TEXTILES PVT. LT D., M/S. TIRUPATI EMPIRE PVT. LTD. AND M/S. ANJANI FASHION PVT. LTD WAS RECORDED ON 16.12. 2015 U/S. 132(4) OF THE ACT WHEREIN HE HAS ANSWERED TO QUESTION NO. 25 THAT HE WAS THE DEC ISION MAKER IN HIS FAMILY REGARDING INVESTMENT IN TRADING OF SHARES. FOR QUESTION NO. 23, HE HAS GIVEN THE DETAILS OF BROKERS/SUB- BROKERS THROUGH WHICH SHARE INVESTMENTS HAVE BEEN M ADE BY THE INDIVIDUALS OF HIS FAMILY AND HE STATED THAT THE SUB-BROKERS ARE M/S. MOTILAL OSWAL SECURITIES LTD. (OWNER MR. SURESH SARAF) AND M/S. JALAN & CO. (OWNER SHRI SURE SH KR. JALAN). TO THE SPECIFIC QUESTION NO. 29 AS TO WHETHER HE KNEW THE DIRECTOR OF M/S. T UNNI TEXTILES AND M/S. SRK INDUSTRIES, WHO (THE DIRECTORS OF THESE TWO COMPANIES) HAD IN T URN STATED THAT THEIR COMPANIES WERE SHELL/ BOGUS AND ARE INVOLVED IN ACCOMMODATION ENTR IES, THE ASSESSEE ANSWERED IN THE NEGATIVE THAT HE DOES NOT KNOW THE DIRECTORS OF M/S . TUNI TEXTILES LTD. AND M/S. SRK INDUSTRIES. TO THE SPECIFIC QUESTION NO. 30 AS TO WHETHER HE KNEW THE DIRECTORS OF M/S. LIFE LINE DRUG & PHARMA LTD. HE SAID THAT HE DOES NOT KN OW THEM ALSO. 22. WE NOTE THAT THE AO HAS HEAVILY RELIED UPON THE STATEMENT OF SHRI DEVESH UPADHYAY WHOSE STATEMENT WAS RECORDED U/S. 131 OF THE ACT BY THE INVESTIGATION WING OF THE DEPARTMENT ON VARIOUS DATES BEFORE AND AFTER SEARCH OF ASSESSEES PREMISES I.E. 04.03.2016, 01.05.2015, 03.01.2014, 24.01.2014, 02.03.2015 AND 22.09.2017. ACCORDING TO AO, SHRI DEVESH UPADHYAY HAS ACCEPTED TO QUESTION NO. 6 (REC ORDED ON 04.03.2016) THAT HE IS AN ACCOMMODATION ENTRY PROVIDER WHO DOES IT DIRECTLY T HROUGH HIS PAPER /SHELL COMPANIES (LIST REFERRED TO AS ANNEXURE A). FOR QUESTION NO. 9, HE HAS STATED THAT HE DIRECTLY CONTROLLED 14 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 CERTAIN COMPANYS (NAME WHICH ARE IN ANNEXURE A) THROUGH WHICH HE PURCHASES PENNY STOCK SHARES AND THAT FOR QUESTION NO. 13 HE ANSWER ED THAT HE HAD PURCHASED THROUGH HIS PAPER COMPANIES SHARES OF M/S. LIFE LINE DRUGS & P HARMA LTD., M/S. TUNNI TEXTILES, M/S. SRK INDUSTRIES ETC. BASED ON THE STATEMENT OF SHRI DEVESH UPADHYAY AND OTHER BROKERS (WHOSE STATEMENT WAS SUPPOSED TO HAVE BEEN RECORDED BY INVESTIGATION WING, BUT NOT PROVIDED TO ASSESSEE), WHO IN TURN HAVE ACCEPTED TH AT THEY WERE ALSO HAND IN GLOVE FOR PROVIDING ACCOMMODATION ENTRIES TO FACILITATE ACCOM MODATION ENTRY TO THE BENEFICIARIES LIKE ASSESSEE. THE AO RECORDS THAT THE STATEMENT OF MR. DEVESH UPADHYAY WAS GIVEN TO THE ASSESSEE ON 12. 12. 2017 AND THEREAFTER HE ACKNOWLE DGES THAT THE ASSESSEE REQUESTED FOR CROSS EXAMINATION OF SHRI DEVESH UPADHAYAY AS WELL AS THE OWNERS OF SUB-BROKERS M/S. MOTILAL OSWAL AND M/S. JALAN & CO THROUGH WHOM ASSE SSEE BOUGHT AND SOLD THE SCRIPS IN QUESTION. WE NOTE THAT THE ASSESSEE ASKED FOR CROSS EXAMINATI ON OF HIS OWN BROKERS BECAUSE THE AO DURING THE ASSESSMENT PROCEEDINGS USED TO TE LL THE LD. AR THAT THE BROKERS HAVE ACCEPTED BEFORE THE DEPARTMENT THAT THEY WERE INVOL VED IN THE NEFARIOUS/UNSCRUPULOUS ACTIVITIES OF RUNNING A RACKET TO PROVIDE ACCOMMODA TION ENTRIES AND THE ASSESSEES WERE A BENEFICIARY OF THE SAME. HOWEVER, WE NOTE THAT THE AO ACKNOWLEDGES IN THE ASSESSMENT ORDER THAT HE DENIED CROSS EXAMINATION OF SHRI DEVE SH UPADHYAY AND THE BROKERS OF OWNER OF M/S. MOTILAL OSOWAL AS WELL AS M/S. JALAN & CO., ON THE SPECIOUS PLEA THAT IT WAS NOT NECESSARY. AT PAGE 19 OF ASSESSMENT ORDER FOR AY 2 015-16 THE AO FOR DENYING CROSS EXAMINATION IN HIS OWN WORDS OBSERVED SINCE THE STATEMENT OF SHRI DEVESH UPADHYAY IS SECONDARY EVIDENCE AND THE ASSESSEE CANNOT ABSOLVE HIMSELF FROM ALL THE FACTS BROUGHT OUT IN THE ORDER . WAS PLEASED TO DENY THE CROSS EXAMINATION OF THE PERSONS STATEMENT HE WAS HEAVILY RELYING TO DRAW ADVERSE INFERENCE AGAINST T HE ASSESSEE. HOWEVER, INTERESTINGLY, WE NOTE THAT AO HAD GIVEN OPPORTUNITY TO ASSESSEE TO BRING THE WITNESSES WHOM EVER HE WISHED TO CROSS EXAMINE BEFORE HIM ON 15.12.2017 AND THERE AFTER, THE AO WAS OF THE OPINION THAT THE ASSESSEE FAILED TO DISCHARGE HIS ONUS U/S. 68 O F THE ACT. 15 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 23. BEFORE US THE STATEMENT OF SHRI DEVESH UPADHYAY HAS BEEN FILED WHICH IS RECORDED U/S. 131 DATED 04.03.2016 WHEREIN WE NOTE THAT HE H AS ACCEPTED THAT HE IS AN ACCOMMODATION ENTRY OPERATOR AND HE DIRECTLY CONTRO LS CERTAIN PAPER/SHELL COMPANIES NAMES OF WHICH HE GAVE WAS REFERRED TO IN THE ANNEXURE A . ACCORDING TO SHRI DEVESH UPADHYAY, HE WAS INVOLVED IN PURCHASING OF PENNY S TOCK SHARES WHICH PROVIDED EXIT ROUTE TO BENEFICIARIES AND THAT HE WAS PROVIDING EXIT ROU TE TO PENNY STOCK COMPANIES LIKE GCM, LIFE LINE DRUG & PHARMA LTD., SRK INDUSTRIES, TUNNI TEXTILES ETC. AFTER GOING THROUGH THE ENTIRE STATEMENT OF SHRI DEVESH UPADHYAY, WE NOTE T HAT FOR QUESTION NO. 8 ASKED BY THE OFFICER OF THE DEPARTMENT HE ANSWERED AS UNDER: QESTION NO. 8: DO YOU KNOW SHRI N. K. SARAOGI AND HIS FAMILY MEMBE RS WHO ARE THE MEMBERS OF SARAOGI GROUP ENGAGED IN THE TRADE OF CO TTON SAREES FROM BURRABAZAR, KOLKATA? ANSWER SIR, I DO NOT KNOW SHRI N. K. SARAOGI AND HIS FAMILY MEMBERS. 24. WE NOTE THAT QUESTION NO. 12 WAS THAT IT IS SEEN THAT THE JAMA KHARCHI COMPANIES CONTROLLED BY YOU AS PER ANNEXURE A HAVE BOUGHT T HE PENNY SCRIPS FROM THE MEMBERS OF SARAOGI GROUP DISCUSSED IN THE ABOVE QUESTION WHICH HAS RESULTED INTO HUGE LONG TERM CAPITAL GAINS IN THE HANDS OF THE MEMBERS OF SARAOG I GROUP. HENCE, THEY WERE BENEFICIARIES OF LTCG ENTRY PROVIDED WITH THE HELP OF YOUR JAMA KHARCHI COMPANIES. PLEASE STATE THE NAME AND ADDRESS OF THE PERSONS WH O CONTACTED FOR PROVIDING THE ABOVEMENTIONED ENTRIES. ANS- SIR, SHRI VIKASH SUREKA CONTACTED HIM FOR ARRA NGING THE EXIT ROUTE FOR PROVIDING THE BOGUS LTCG ENTRY. FOR THIS I GOT THE COMMISSION OF 0.15% OF THE TRADE VALUE. MY JOB WAS LIMITED TO TAKE CASH FROM SHRI VIKASH SUREKA AND RO UTED IT UPTO THE BANK ACCOUNT OF SHARE BROKING FIRMS. THE COMPLETE DETAILS OF SHRI VIKASH SUREKA WILL BE PROVIDED 7 DAYS. 16 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 QUESTION NO. 13 IT WAS ASKED THAT THE SARAOGI GROUP HAS TAKEN THE B OGUS LTCG IN THE SCRIPS OF M/S. GCM, LIFE LINE DRUG & PHARMA LTD., S RK INDUSTRIES, TUNNI TEXTILES ETC . AND SHRI DEVESH UPADHYAY ANSWERED THAT HIS JAMA KHARCHI COMPANIES HAVE PROVIDED ENTRY OF BOGUS LTCG AND STCL TO VARIOUS BENEFICIARIES. 25. FROM AN ANALYSIS OF THE AFORESAID RELEVANT QUES TION AND ANSWERS, WE NOTE THAT FOR QUESTION NO. 8 AS TO WHETHER HE KNEW MR. N. K. SARA OGI OR HIS FAMILY MEMBERS, SHRI DEVESH UPADHYAY HAS CLEARLY ANSWERED IN THE NEGATIVE AND O THER ANSWERS ARE ONLY A GENERAL REPLY THAT HE HAS BEEN DOING BOGUS ACCOMMODATION ENTRIES FOR VARIOUS BENEFICIARIES TO CLAIM LTCG AND STCL FOR VARIOUS SCRIPS. THOUGH QUESTION NOS. 12 AND 13 WAS LEADING QUESTIONS, WE NOTE THAT THE ANSWERS WERE GENERAL IN NATURE AND ALSO CONTRADICTING PER-SE BECAUSE, ON ONE HAND, HE SAYS THAT HE DOES NOT KNOW MR. N. K. S ARAOGI AND ANY MEMBERS OF SARAOGI GROUP, THEN TO QUESTION NO. 12, WHICH IS CLEARLY A LEADING QUESTION HE ANSWERS THAT ONE VIKASH SUREKHA CONTACTED HIM FOR ARRANGING THE EXIT ROUTE. AND ANSWER TO QUESTION NO. 13 IN NO WAY HELP THE DEPARTMENT, WHICH IS ALSO A GENE RAL REPLY THAT HE IS INVOLVED IN PROVIDING ACCOMMODATION ENTRY TO BENEFICIARYS TO CLAIM BOGUS LTCG. THUS, AS DISCUSSED ABOVE, WE COULD NOT FIND ANY ANSWERS GIVEN BY SHRI DEVESH UPA DHYAY TO DIRECTLY INCRIMINATE SHRI N K SARAOGI OR HIS FAMILY MEMBERS WHOSE CASES ARE BEFOR E US. THE AO IN HIS ORDERS HAVE NOT POINTED OUT AS TO HOW A NEXUS HAS BEEN MADE FROM TH E ANSWERS GIVEN BY SHRI DEVESH UPADHYAY LEADING TO THAT OF LTCG CLAIMED BY SHRI N. K. SARAOGI AND HIS FAMILY MEMBERS. ALL THAT SHRI DEVESH UPADHYAY HAS STATED IS THAT HE IS CONTROLLING CERTAIN SHELL/PAPER COMPANIES AND THEIR NAMES ARE GIVEN IN ANNEXURE A AND THEY ARE PROVIDING ACCOMMODATION ENTRY OF BOGUS LTCG AND STCL TO VARIO US BENEFICIARIES AND FOR THAT ONE SHRI VIKASH SUREKA CONTACTED HIM FOR ARRANGING THE EXIT ROUTE FOR PROVIDING THE BOGUS LTCG AND FOR DOING SO HE GOT COMMISSION OF 0.15% OF THE TRADE VALUE AND THAT HE DOES NOT KNOW THIS MR. N. K. SARAOGI AND HIS FAMILY MEMBERS. NEITHER ATTEMPT HAS BEEN MADE BY THE AO TO ELICIT THE CONNECTION OF ASSESSEE WITH SHRI V IKASH SUREKHA NOR SHRI VIKASH SUREKHAS 17 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 STATEMENT WAS RECORDED TO CORROBORATE ANY WRONG DOI NG OR EVEN TO SUGGEST ANY KIND OF CONNECTION BETWEEN (SHRI VIKASH SUREKHA) AND THE A SSESSEES. SO, WE DO NOT FIND ANY STATEMENT OF SHRI DEVESH UPADHYAY TO BE INCRIMINATI NG IN NATURE QUA THE ASSESSEES CLAIM OF LTCG. IT MAY BE TRUE THAT SHRI DEBESH UPADHYAY M AY BE INVOLVED IN NEFARIOUS/UNSCRUPULOUS ACTS OF PROVIDING ACCOMMODA TION ENTRIES FOR BENEFICIARYS AND MUST HAVE DEALT WITH THE SCRIPS ON WHICH THE ASSESSEES ARE ALSO CLAIMING LTCG, BUT THAT FACT ALONE CANNOT BE USED TO DENY THE ASSESSEES CLAIM, WHEN THERE IS NO EVIDENCE EITHER ORAL OR DOCUMENTARY AGAINST THE ASSESSEES CLAIM. SO, AS A FORERSTATED, WE NOTE THAT SHRI DEVESH UPADHYAY HAS SPECIFICALLY ANSWERED TO QUESTION NO. 8 THAT HE DOES NOT KNOW MR. N. K. SARAOGI AND HIS FAMILY MEMBERS. THEREFORE, THE GENE RAL LEADING QUESTION AS TO WHETHER HE DEALT WITH PENNY STOCKS COMPANIES WHICH HAPPENED TO BE ONES WHICH WERE TRADED BY THE ASSESSEE AND HIS FAMILY MEMBERS CANNOT BE THE FOUND ATION ON WHICH THE AO CAN DEBUNK THE CLAIM MADE BY THE ASSESSEE, WHEN THE ASSESSEE HAS P RODUCED SUPPORTING DOCUMENTS TO PROVE THE PURCHASE AND SALE OF SCRIPS THROUGH BSE AND FUR THER WHEN THE PAYMENTS WAS MADE THROUGH BANK ACCOUNT AND THE SHARES WERE IN DE-MAT FORMAT. WE NOTE THAT THE AO HAS BEEN INFLUENCED BY THE GENERAL REPORTS MADE BY THE INVES TIGATION WING AS WELL AS THE SEBIS INTERIM ORDER IN RESPECT OF 84 PENNY STOCK COMPANIE S AND THE STATEMENT OF SHRI DEVESH UPADHYAY WHICH WERE THE BASE ON WHICH LTCG CLAIM O F THE ASSESSEE WAS NOT ACCEPTED BY THE AO. WE NOTE THAT EVEN THE ASSESSEES PLEA TO C ROSS EXAMINE SHRI DEVESH UPADHYAY AS WELL AS TO SUMMON BOTH THE BROKERS OF THE ASSESSEE WAS TURNED DOWN BY THE AO WHICH IS CLEARLY AGAINST THE PRINCIPLES OF NATURAL JUSTICE A S HELD BY THE HONBLE SUPREME COURT IN ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENT RAL EXCISE 62 TAXMAN.COM 3 WHEREIN IT HAS BEEN HELD THAT IF THE AO IS USING T HE STATEMENT OF THIRD PARTY TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE, THEN ASSESSEE HAS T O BE GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE THIRD PARTY OR ELSE THE ORDER ON THE STRENGTH O F 3 RD PARTY WHO HAS NOT BEEN ALLOWED TO BE CROSS EXAMINED IS A NULLITY IN THE EYES OF LAW. WE NOTE THAT THE ASSESSEE IN ORDER TO SUBSTANTIATE THE SALE OF LIFE LINE DRUG & PHARMA LT D. HAVE PRODUCED ALL SUPPORTING 18 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 DOCUMENT WE NOTE THAT ASSESSEE PURCHASED THE SHARE S ON 09.04.2014 AND WERE SOLD IN AY 2014-15 AND 2015-16. 26. THE FOLLOWING DOCUMENTS WERE PRODUCED BY SHRI N . K. SARAOGI TO CLAIM THE EXEMPT INCOME. WE NOTE THAT THE ASSESSEE HAS BEEN ALLOTTE D 25000 SHARES OF M/S. LIFE LINE DRUG & PHARMA LTD. (HEREINAFTER REFERRED TO LDPL) ON 05.10 .2012. THE SHARES OF LDPL WERE RECEIVED BY THE ASSESSEE IN HIS DE MAT ACCOUNT MAIN TAINED WITH M/S. MOTILAL OSWAL SECURITIES LTD., DEPOSITORY PARTICIPANTS. COPY OF THE LETTER OF ALLOTMENT, BANK STATEMENT SHOWING PAYMENT FOR APPLICATION MONEY AND DE MAT ST ATEMENT SHOWING RECEIPT OF SHARES IN ASSESSEES ACCOUNTS ARE PLACED FROM PAGE NOS. 97 TO 113 (AY 2014-15) AND FROM PAGE NOS. 118 TO 134 FOR (AY 2015-16). WE NOTE THAT THESE SH ARES OF LDPL HAVING FACE VALUE OF RS. 10/- EACH WAS SPLIT INTO SHARES HAVING FACE VALUE O F RS. 1/- EACH AND ACCORDINGLY, THE ASSESSEE GOT 25000 SHARES OF LDPL IN TOTAL ON SPLIT . THEREAFTER, THE ASSESSEE HAD SOLD 96800 SHARES OF LDPL HAVING FACE VALUE OF RS. 1/- DURING AY 2014-15. FOR WHICH THE ASSESSEE CLAIMED LTCG OF RS. 2,06,65,887/-. FROM THE DETAIL S FILED TO CLAIM THE LTCG, WE NOTE THAT THE ASSESSEE HAD MADE PAYMENT OF SHARE APPLICA TION MONEY BY WAY OF ACCOUNT PAYEE CHEQUE WHICH HAS BEEN DULY DEBITED IN THE BANK ACCO UNT MAINTAINED WITH BANK OF BARODA, INDIA EXCHANGE PLACE BRANCH. THEREAFTER, ALLOTMENT OF SHARES BY LETTER OF ALLOTMENT FROM THE COMPANY IS ALSO FOUND PLACED IN THE PAPER BOOK. WE ALSO NOTE THAT AFTER THE ALLOTMENT OF SHARES, THE SHARES WERE RECEIVED IN ASSESSEES DE M AT ACCOUNT MAINTAINED WITH M/S. MOTILAL OSWAL SECURITIES LTD., THE DEPOSIT PARTICIPANT. WE NOTE THAT THESE SHARES WERE DULY HELD IN THE ASSESSEES NAME IN DE MAT ACCOUNT BEFORE BEING SOLD AND THE DE MAT STATEMENT IS FOUND PLACED IN THE PAPER BOOK. WE NOTE THAT THE ASSESSE E SOLD IN AY 2014-15 96800 SHARES THROUGH THE BROKER M/S. MOTILAL OSWAL LTD. ON VARIO US DATES BETWEEN 11.03.2014 AND 27.03.2014 ON THE ELECTRONIC TRADING PLATFORM OF TH E BSE. WE NOTE THAT THE SHARES OF LDPL WAS LISTED ONLY ON THE BSE. THE BROKER HAS ISSUED CONTRACT NOTE CUM BILL OF SALE OF SHARES AND AFTER SALE OF THE SHARES, THE DELIVERY OF THE S AID SHARES WERE DONE BY ISSUE CUM 19 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 INSTRUCTION SLIP TO THE DEPOSIT PARTICIPANT FOR TRA NSFER OF EQUIVALENT NUMBER OF SHARES TO THE BROKERS ACCOUNT FOR ONWARD TRANSFER OF THE SAID SH ARES TO STOCK EXCHANGE. IT WAS BROUGHT TO OUR NOTICE THAT AS PER THE ESTABLISHED PRACTICE, THE BROKER M/S. MOTILAL OSWAL SECURITIES LTD. RECEIVED THE PAYMENT FROM BSE FOR SALE OF THES E SHARES AND AFTER DEDUCTION OF THE BROKERAGE AND OTHER NECESSARY CHARGES ISSUED THE CH EQUE IN FAVOUR OF THE ASSESSEE AND THE SAID CHEQUE WAS THEN DEPOSITED BY THE ASSESSEE IN THE BANK ACCOUNT. THIS FACT IS EVIDENT FROM THE BANK STATEMENT FILED BEFORE US. THUS, WE NOTE THAT THE SALE TRANSACTION HAS BEEN SUPPORTED BY CONTRACT NOTE, THE BILLS RAISED BY THE BROKER, DE MAT STATEMENT AND BANK STATEMENT AND WE ALSO NOTE THAT THE SHARE WERE REGU LARLY QUOTED IN THE BSE OF BOTH SALE AND PURCHASE AND WERE MADE AT THE QUOTED PRICE. WHEN T HE AFORESAID EVIDENCES WERE PLACED BEFORE THE AO FOR HIS SCRUTINY, WITHOUT FINDING ANY INFIRMITY IN THE DOCUMENTS FILED, THE AO OPINED THAT THE LTCG EARNED BY THE ASSESSEE IS NOT NATURAL BUT IS PRE-ARRANGED ONE AND WHEN THE SHOW CAUSE NOTICE WERE ISSUED WITH THE STA TEMENT OF SHRI DEVESH UPADHYAY, THE ASSESSEE PLEADED THAT HE DOES NOT KNOW THIS PERSON AND ALSO INTURN REQUESTED THE AO TO ARRANGE THE CROSS EXAMINATION OF HIM TO ELICIT THE TRUTH. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES PLEA FOR CROSS EXAMINATION OF SHRI DEVES H UPADHYAY AS WELL AS DID NOT TAKE STEP TO CALL FOR THE BROKERS THROUGH WHOM THE ASSESSEE H AD MADE THE PURCHASE/SALE OF THE SHARES IN BSE. SINCE THE AO HAS BUILT HIS CASE ON THE BAS IS OF A STATEMENT OF SHRI DEVESH UPADHYAY WHO IS SUPPOSED TO BE AN ACCOMMODATION ENT RY PROVIDER AND WHO THROUGH HIS SHELL COMPANIES WERE ACTIVELY PARTICIPATING AS AN E XIT PROVIDER FOR BENEFICIARIES WHO CLAIMS LTCG/STCL, HE SHOULD HAVE ELICITED THE CONNECTION I F ANY WITH THE ASSESSEES AND THEREAFTER IF THERE WAS ANY ADVERSE ORAL/DOCUMENTAR Y MATERIAL AGAINST THE ASSESSEES, THEN AFTER GIVING A COPY OF IT, SHOULD HAVE ALLOWED CROS S-EXAMINATION. WE NOTE THAT SHRI DEVESH UPADHYAY HAS NOT MADE ANY DIRECT INCRIMINATING STAT EMENT AGAINST THE ASSESSEES. RATHER, WE NOTE THAT SHRI DEVESH UPADHYAY HAS SPECIFICALLY DENIED KNOWING THE ASSESSEE AND HIS FAMILY MEMBERS AS DISCUSSED ELABORATELY [SUPRA]. E VEN OTHERWISE IF THE AO WANTED TO USE THE STATEMENT OF A THIRD PARTY THEN HE SHOULD HAVE GIVEN AN OPPORTUNITY TO THE ASSESSEE TO 20 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 CROSS EXAMINE HIM BEFORE USING IT AGAINST THE ASSES SEE AS HELD BY HONBLE SUPREME COURT IN ANDAMAN & TIMBERS LTD. (SUPRA). LET US DISCUSS CER TAIN JUDICIAL PRECEDENTS ON THE ISSUE OF LTCG CLAIM ON SIMILAR SCRIPS. 27. WE NOTE THAT IN AN IDENTICAL/SIMILAR CASE, WHER EIN THE AO MADE ADDITION OF THE LTCG CLAIM MADE ON SALE OF M/S. KAFL SCRIPS ON SIMILAR R EASONING BASED ON THE SEBI INTERIM REPORT, INVESTIGATION REPORT OF THE WING OF THE DEP ARTMENT AND CERTAIN STATEMENTS RECORDED BY THE DEPARTMENT IN THE CASE OF SANJIV SHROFF VS. ACIT IN ITA NO. 1197/KOL/2018 DATED 02.01.2019, WHEREIN THE TRIBUNAL OBSERVED AS UNDER AND GAVE RELIEF TO THE ASSESSEE: WE NOTE THAT SHARES OF M/S. KAFL WERE SOLD BY ASSE SSEE THROUGH RECOGNIZED BROKER IN A RECOGNIZED BOMBAY STOCK EXCHANGE. THE DETAILS OF SU CH SALE AND CONTRACT NOTE HAVE BEEN SUBMITTED BEFORE AO/LD. CIT(A). WE TAKE NOTE THAT W HEN THE TRANSACTIONS HAPPENED IN THE STOCK EXCHANGE, THE SELLER WHO SELLS HIS SHARES ON THE STOCK EXCHANGE DOES NOT KNOW WHO PURCHASES SHARES. ACCORDING TO OUR KNOWLEDGE, THE SHARES ARE SOLD AND BOUGHT IN AN ELECTRONIC MODE ON THE COMPUTERS BY THE BROKERS AND THERE IS A LSO NO DIRECT CONTACT AT ANY LEVEL EVEN BETWEEN THE BROKERS. WE NOTE THAT AS AND WHEN ANY SHARES ARE OFFERED FOR SALE IN THE STOCK EXCHANGE PLATFORM, ANY ONE OF THE THOUSANDS OF BROK ERS REGISTERED WITH THE STOCK EXCHANGE IS AT LIBERTY TO PURCHASE IT. AS FAR AS OUR UNDERSTANDIN G, THE SELLING BROKER DOES NOT EVEN KNOW WHO THE PURCHASING BROKER IS. THIS IS HOW THE SEBI KEEP S A STRICT CONTROL OVER THE TRANSACTIONS TAKING PLACE IN RECOGNIZED STOCK EXCHANGES. UNLESS THERE I S A EVIDENCE TO SHOW THAT THERE IS A BREACH IN THE AFORESAID PROCESS WHICH FACT HAS BEEN UNEARTHED BY METICULOUS INVESTIGATION, WE ARE OF THE OPINION THAT THE UNSCRUPULOUS ACTIONS OF FEW PLAYER S EXPLOITING THE LOOPHOLES OF THE STOCK EXCHANGE CANNOT BE THE BASIS TO PAINT THE ENTIRE SA LE/PURCHASE OF A SCRIP LIKE THAT OF M/S. KAFL AS BOGUS WITHOUT BRINGING OUT ADVERSE MATERIAL SPEC IFICALLY AGAINST THE ASSESSEE. 17. THE FACT OF HOLDING THE SHARES OF M/S. KAFL IN THE D-MAT ACCOUNT CANNOT BE DISPUTED. FURTHER, THE ASSESSING OFFICER HAS NOT EVEN DISPUTE D THE EXISTENCE OF THE D-MAT ACCOUNT AND SHARES CREDITED IN THE D-MAT ACCOUNT OF THE ASSESSE E. THEREFORE, ONCE, THE HOLDING OF SHARES IS D-MAT ACCOUNT CANNOT BE DISPUTED THEN THE TRANSACTI ON CANNOT BE HELD AS BOGUS. THE AO HAS NOT DISPUTED THE SALE OF SHARES FROM THE D-MAT ACCOUNT OF THE ASSESSEE AND THE SALE CONSIDERATION WAS DIRECTLY CREDITED TO THE BANK ACCOUNT OF THE AS SESSEE, THEREFORE, ONCE THE ASSESSEE PRODUCED ALL RELEVANT EVIDENCE TO SUBSTANTIATE THE TRANSACTI ON OF PURCHASE, DEMATERIALIZATION AND SALE OF SHARES THEN, IN THE ABSENCE OF ANY CONTRARY MATERIA L BROUGHT ON RECORD THE SAME CANNOT BE HELD AS BOGUS TRANSACTION MERELY ON THE BASIS OF STATEME NT OF SHRI SUNIL DOKANI, SHRI BIDYOOT SARAL, SHRI NARENDRA BASIN AND SHRI AMIT DOKANI RECORDED B Y THE INVESTIGATION WING, KOLKATA WHEREIN THERE IS A GENERAL STATEMENT OF PROVIDING B OGUS LONG TERM CAPITAL GAIN TRANSACTION TO THE CLIENTS WITHOUT STATING ANYTHING ABOUT THE TRANSACT ION OF ALLOTMENT OF SHARES BY THE COMPANY TO THE ASSESSEE. 21 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 18. THE ASSESSEE HAS REQUESTED THE CROSS EXAMINATI ON OF SHRI SUNIL DOKANI, SHRI BIDYOOT SARAL, SHRI NARENDRA BASIN AND SHRI AMIT DOKANI WHI CH WAS NOT PROVIDED TO THE ASSESSEE BY THE AO. THUS, IN VIEW OF THE DECISION OF HON'BLE SUPREM E COURT IN CASE OF CCE VS. ANDAMANTIMBER INDUSTRIES 127 DTR 241(SC) THE ASSESSMENT BASED ON STATEMENT W ITHOUT GIVING AN OPPORTUNITY TO ASSESSEE TO CROSS EXAMINE THE MAKER OF THE ADVERSE STATEMENTS RELIED ON BY THE AO, IS NOT SUSTAINABLE IN LAW. WE FIND THAT THE STATEMENT CANNOT BE USED BY THE AO WITHOUT GIVING AN OPPORTUNITY TO CROSS EXAMINATION OF SHRI SUNIL DOKANI, SHRI BIDYOOT SARAL, SHRI NARENDRA BASIN AND SHRI AMIT DOKANI. THEREFORE , THE STATEMENT OF WITNESS CANNOT BE SOLE BASIS OF THE ASSESSMENT WITHOUT GIVEN AN OPPORTUNIT Y OF CROSS EXAMINATION AND CONSEQUENTLY IT IS A SERIOUS FLAW WHICH RENDERS THE ORDER A NULLITY . THE MUMBAI SPECIAL OF THE TRIBUNAL IN CASE OF GTC INDUSTRIES VS. ACIT (SUPRA) HAD THE OCCASION TO CONSIDER THE ADDITION MADE BY THE AO ON THE BASIS OF SUSPICION AND SURMISES AND OBSERVED IN PAR 46 AS UNDER:- 46. IN SITUATIONS LIKE THIS CASE, ONE MAY FALL INT O REALM OF 'PREPONDERANCE OF PROBABILITY' WHERE THERE ARE MANY PROBABLE FACTORS, SOME IN FAVOUR OF THE ASSESSEE AND SOME MAY GO AGAINST THE ASSESSEE. BUT THE PROBABLE FACTORS HAVE TO BE WEIGH ED ON MATERIAL FACTS SO COLLECTED. HERE IN THIS CASE THE MATERIAL FACTS STRONGLY INDICATE A PR OBABILITY THAT THE WHOLESALE BUYERS HAD COLLECTED THE PREMIUM MONEY FOR SPENDING IT ON ADVE RTISEMENT AND OTHER EXPENSES AND IT WAS THEIR LIABILITY AS PER THEIR MUTUAL UNDERSTANDING W ITH THE ASEESSEE. ANOTHER VERY STRONG PROBABLE FACTOR IS THAT THE ENTIRE SCHEME OF 'TWIN BRANDING' AND COLLECTION OF PREMIUM WAS SO DESIGNED THAT ASSESSEE COMPANY NEED NOT INCUR ADVER TISEMENT EXPENSES AND THE RESPONSIBILITY FOR SALES PROMOTION AND ADVERTISEMENT LIES WHOLLY U PON WHOLESALE BUYERS WHO WILL BORNE OUT THESE EXPENSES FROM ALLEGED COLLECTION OF PREMIUM. THE PROBABLE FACTORS COULD HAVE GONE AGAINST THE ASSESSEE ONLY IF THERE WOULD HAVE BEEN SOME EVIDENCE FOUND FROM SEVERAL SEARCHES EITHER CONDUCTED BY DRI OR BY THE DEPARTMENT THAT A SSESSEE-COMPANY WAS BENEFICIARY OF ANY SUCH ACCOUNTS. AT LEAST SOMETHING WOULD HAVE BEEN U NEARTHED FROM SUCH GLOBAL LEVEL INVESTIGATION BY TWO CENTRAL GOVERNMENT AUTHORITIES . IN CASE OF CERTAIN DONATIONS GIVEN TO A CHURCH, ORIGINATING THROUGH THESE BENAMI BANK ACCOU NTS ON THE BEHEST OF ONE OF THE EMPLOYEES OF THE ASSESSEE COMPANY, DOES NOT IMPLICATE THAT GT C AS A CORPORATE ENTITY WAS HAVING THE CONTROL OF THESE BANK ACCOUNTS COMPLETELY. WITHOUT GOING INTO THE AUTHENTICITY AND VERACITY OF THE STATEMENTS OF THE WITNESSES SMT. NIRMALA SUNDAR AM, WE ARE OF THE OPINION THAT THIS ONE INCIDENT OF DONATION THROUGH BANK ACCOUNTS AT THE D IRECTION OF ONE OF THE EMPLOYEE OF THE COMPANY DOES NOT IMPLICATE THAT THE ENTIRE PREMIUM COLLECTED ALL THROUGHOUT THE COUNTRY AND DEPOSITED IN BENAMI BANK ACCOUNTS ACTUALLY BELONGS TO THE ASSESSEE-COMPANY OR THE ASSESSEE- COMPANY HAD DIRECT CONTROL ON THESE BANK ACCOUNTS. ULTIMATELY, THE ENTIRE CASE OF THE REVENUE HINGES UPON THE PRESUMPTION THAT ASSESSEE IS BOUND TO HAVE SOME LARGE SHARE IN SO-CALLED SECRET MONEY IN THE FORM OF PREMIUM AND ITS CIRCULATION. H OWEVER, THIS PRESUMPTION OR SUSPICION HOW STRONG IT MAY APPEAR TO BE TRUE, BUT NEEDS TO BE CO RROBORATED BY SOME EVIDENCE TO ESTABLISH A LINK THAT GTC ACTUALLY HAD SOME KIND OF A SHARE IN SUCH SECRET MONEY. IT IS QUITE A TRITE LAW THAT SUSPICION HOWSOEVER STRONG MAY BE BUT CANNOT BE THE BASIS OF ADDITION EXCEPT FOR SOME MATERIAL EVIDENCE ON RECORD. THE THEORY OF 'PREPONDERANCE OF PROBABILITY' IS APPLIED TO WEIGH THE EVIDENCES OF EITHER SIDE AND DRAW A CONCLUSION IN F AVOUR OF A PARTY WHICH HAS MORE FAVOURABLE FACTORS IN HIS SIDE. THE CONCLUSIONS HAVE TO BE DRA WN ON THE BASIS OF CERTAIN ADMITTED FACTS AND MATERIALS AND NOT ON THE BASIS OF PRESUMPTION OF FA CTS THAT MIGHT GO AGAINST ASSESSEE. ONCE NOTHING HAS BEEN PROVED AGAINST THE ASSESSEE WITH A ID OF ANY DIRECT MATERIAL ESPECIALLY WHEN VARIOUS ROUNDS OF INVESTIGATION HAVE BEEN CARRIED O UT, THEN NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE.' 22 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 19. SINCE, WHEN THE ASSESSING OFFICER HAS NOT BROU GHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PAID OVER AND ABOVE THE PURCHASE C ONSIDERATION AS CLAIMED AND EVIDENT FROM THE BANK ACCOUNT THEN, IN THE ABSENCE OF ANY EVIDEN CE IT CANNOT BE HELD THAT THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED MONEY BY WAY OF BOGU S LONG TERM CAPITAL GAIN. THE HON'BLE RAJASTHAN HIGH COURT DATED 11-09-2017IN CASE OF CIT VS. SMT. POOJA AGRAWAL [ ITA NO 385/2011 ] HAS UPHELD THE FINDING OF THE TRIBUNAL O N THIS ISSUE IN PARA 12 AS UNDER:- '12. HOWEVER, COUNSEL FOR THE RESPONDENT HAS TAKEN US TO THE ORDER OF CIT(A) AND ALSO TO THE ORDER OF TRIBUNAL AND CONTENDED THAT IN VIEW OF THE FINDING REACHED, WHICH WAS DONE THROUGH STOCK EXCHANGE AND TAKING INTO CONSIDERATION THE RE VENUE TRANSACTIONS, THE ADDITION MADE WAS DELETED BY THE TRIBUNAL OBSERVING AS UNDER :- 'CONTENTION OF THE AR IS CONSIDERED. ONE OF THE MAI N REASONS FOR NOT ACCEPTING THE GENUINENESS OF THE TRANSACTIONS DECLARED BY THE APPELLANT THAT AT THE TIME OF SURVEY THE APPELLANT IN HIS STATEMENT DENIED HAVING MADE ANY TRANSACTIONS IN SH ARES. HOWEVER, SUBSEQUENTLY THE FACTS CAME ON RECORD THAT THE APPELLANT HAD TRANSACTED NO T ONLY IN THE SHARES WHICH ARE DISPUTED BUT SHARES OF VARIOUS OTHER COMPANIES LIKE SATYAM COMPU TERS, HCL, IPC L, BPCL AND TATA TEA ETC. REGARDING THE TRANSACTIONS IN QUESTION VARIOUS DETA ILS LIKE COPY OF CONTRACT NOTE REGARDING PURCHASE AND SALE OF SHARES OF LIMTEX AND KONARK CO MMERCE & IND. LTD., ASSESSEE'S ACCOUNT WITH P.K. AGARWAL & CO. SHARE BROKER, COMPANY'S MAS TER DETAILS FROM REGISTRAR OF COMPANIES, KOLKATA WERE FILED. COPY OF DEPOSITORY A/C OR DEMAT ACCOUNT WITH ALANKR IT ASSIGNMENT LTD., A SUBSIDIARY OF NSDL WAS ALSO FILED WHICH SHOWS THAT THE TRANSACTIONS WE RE MADE THROUGH DEMAT A/C. WHEN THE RELEVANT DOCUMENTS ARE AVAILABLE THE FACT OF TRANSA CTIONS ENTERED INTO CANNOT BE DENIED SIMPLY ON THE GROUND THAT IN HIS STATEMENT THE APPELLANT D ENIED HAVING MADE ANY TRANSACTIONS IN SHARES. THE PAYMENTS AND RECEIPTS ARE MADE THROUGH A/C PAYEE CHEQUES AND THE TRANSACTIONS ARE ROUTED THROUGH KOLKATA STOCK EXCHANGE. THERE IS NO EVIDENCE THAT THE CASH HAS GONE BACK IN APPELLANTS'S ACCOUNT. PRIMA FACIE THE TRANSACTIO N WHICH ARE SUPPORTED BY DOCUMENTS APPEAR TO BE GENUINE TRANSACTIONS. THE AO HAS DISCUSSED MO DUS OPERANDI IN SOME SHAM TRANSACTIONS WHICH WERE DETECTED IN THE SEARCH CASE OF B.C. PURO HIT GROUP. THE AO HAS ALSO STATED IN THE ASSESSMENT ORDER ITSELF WHILE DISCUSSING THE MODUS OPERANDI THAT ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN WERE PURCHASED AS LONG TERM CAPIT AL GAIN EITHER WAS EXEMPTED FROM TAX OR WAS TAXABLE AT A LOWER RATE. AS THE APPELLANT'S CAS E IS OF SHORT TERM CAPITAL GAIN, IT DOES NOT EXACTLY FALL UNDER THAT CATEGORY OF ACCOMMODATION T RANSACTIONS. FURTHER AS PER THE REPORT OF DCIT, CENTRAL CIRCLE-3 SH. P.K. AGARWAL WAS FOUND T O BE AN ENTRY PROVIDER AS STATED BY SH. PAWAN PUROHIT OF B.C. PURIHIT AND CO. GROUP. THE AR MADE SUBMISSION BEFORE THE AO THAT THE FACT WAS NOT CORRECT AS IN THE STATEMENT OF SH. PAW AN PUROHIT THERE IS NO MENTION OF SH. P. K. AGARWAL. IT WAS ALSO SUBMITTED THAT THERE WAS NO ME NTION OF SH. P. K. AGARWAL IN THE ORDER OF SETTLEMENT COMMISSION IN THE CASE OF SH. SUSHIL KUM AR PUROHIT. COPY OF THE ORDER OF SETTLEMENT COMMISSION WAS SUBMITTED. THE AO HAS FAILED TO COUN TER THE OBJECTIONS RAISED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS. SIMPLY MENTIONIN G THAT THESE FINDINGS ARE IN THE APPRAISAL REPORT AND APPRAISAL REPORT IS MADE BY THE INVESTIN G WING AFTER CONSIDERING ALL THE MATERIAL FACTS AVAILABLE ON RECORD DOES NOT HELP MUCH. THE A O HAS FAILED TO PROVE THROUGH ANY INDEPENDENT INQUIRY OR RELYING ON SOME MATERIAL THA T THE TRANSACTIONS MADE BY THE APPELLANT THROUGH SHARE BROKER P.K. AGARWAL WERE NON-GENUINE OR THERE WAS ANY ADVERSE MENTION ABOUT THE TRANSACTION IN QUESTION IN STATEMENT OF SH. PAW AN PUROHIT. SIMPLY BECAUSE IN THE SHAM TRANSACTIONS BANK A/C WERE OPENED WITH HDFC BANK AN D THE APPELLANT HAS ALSO RECEIVED SHORT 23 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 TERM CAPITAL GAIN IN HIS ACCOUNT WITH HDFC BANK DOE S NOT ESTABLISH THAT THE TRANSACTION MADE BY THE APPELLANT WERE NON GENUINE. CONSIDERING ALL THESE FACTS THE SHARE TRANSACTIONS MADE THROUGH SHRI P.K. AGARWAL CANNOT BE HELD AS NON-GEN UINE. CONSEQUENTLY DENYING THE CLAIM OF SHORT TERM CAPITAL GAIN (6 OF 6) [ ITA-385/2011] MA DE BY THE APPELLANT BEFORE THE AO IS NOT APPROVED. THE AO IS THEREFORE, DIRECTED TO ACCEPT C LAIM OF SHORT TERM CAPITAL GAIN AS SHOWN BY THE APPELLANT.' IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AO IS BASED ON MERE SUSPIC ION AND SURMISES WITHOUT ANY COGENT MATERIAL TO SHOW THAT THE ASSESSEE HAS BROUGHT BACK HIS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN. ON THE OTHER HAND, THE ASSESSEE HAS BROUGHT ALL THE RELEVANT MATERIAL TO SUBSTANTIATE ITS CLAIM THAT TRANSACTIONS OF THE PUR CHASE AND SALE OF SHARES ARE GENUINE. EVEN OTHERWISE THE HOLDING OF THE SHARES BY THE ASSESSEE AT THE TIME OF ALLOTMENT SUBSEQUENT TO THE AMALGAMATION/MERGER IS NOT IN DOUBT, THEREFORE, THE TRANSACTION CANNOT BE HELD AS BOGUS. ACCORDINGLY WE DELETE THE ADDITION MADE BY THE AO O N THIS ACCOUNT.' 20. WE NOTE THAT THE SALE OF SHARES OF M/S. KAFL WH ICH WAS DEMATERLIZED IN DEMAT ACCOUNT HAS TAKEN PLACE THROUGH RECOGNISED STOCK EX CHANGE AND ASSESSEE RECEIVED MONEY THROUGH BANKING CHANNEL. SO, ASSESSEE HAS EXPLAINED THE NATURE AND SOURCE OF THE MONEY WITH SUPPORTING DOCUMENTS AND THUS HAS DISCHARGED THE ON US CASTED UPON HIM BY PRODUCING THE RELEVANT DOCUMENTS MENTIONED IN PARA 15 (SUPRA), AC CORDINGLY, THE QUESTION OF TREATING THE SAID GAIN AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT CANNOT ARISE UNLESS THE AO IS ABLE TO FIND FAULT/INFIRMITY WITH THE SAME. WE NOTE THAT TH E SOURCE OF THE RECEIPT OF THE AMOUNT HAS BEEN EXPLAINED AND THE TRANSACTION IN RESPECT OF WHICH T HE SAID AMOUNT HAS BEEN RECEIVED BY ASSESSEE HAS NOT BEEN CANCELLED BY THE STOCK EXCHANGE/SEBI. SO, IT IS DIFFICULT TO COUNTENANCE THE ACTION OF AO/LD. CIT(A) IN THE AFORESAID FACTS AND CIRCUMS TANCES EXPLAINED ABOVE. 21. EVEN ASSUMING THAT THE BROKERS MAY HAVE DONE SO ME MANIPULATION THEN ALSO THE ASSESSEE CANNOT BE HELD LIABLE FOR THE ILLEGAL ACTI ON OF THE BROKERS WHEN THE ENTIRE TRANSACTIONS HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS DULY RECORDED IN THE DEMAT ACCOUNTS WITH A GOVERNMENT DEPOSITORY AND TRADED ON THE STOCK EXCHA NGE UNLESS SPECIFIC EVIDENCE EMERGES THAT THE ASSESSEE WAS IN HAND IN GLOVES WITH THE BROKER FOR COMMITTING THE UNSCRUPULOUS ACTIVITY TO LAUNDER HIS OWN MONEY IN THE GUISE OF LTCG IS BROUG HT ON RECORD BY THE AO. 22. THERE IS ALSO NOTHING ON RECORD WHICH COULD SUG GEST THAT THE ASSESSEE GAVE HIS OWN CASH AND GOT CHEQUE FROM THE ALLEGED BROKERS/BUYERS . THE ASSESSMENT IS BASED UPON SOME THIRD PARTIES STATEMENTS RECORDED BEHIND THE BACK OF THE ASSESSEE AND THE ASSESSEE HAS NOT BEEN ALLOWED TO CROSS EXAMINE THOSE PERSONS, SO THE STA TEMENTS EVEN IF ADVERSE AGAINST THE ASSESSEE CANNOT BE RELIED UPON BY THE AO TO DRAW ADVERSE INF ERENCE AGAINST THE ASSESSEE IN THE LIGHT OF THE DOCUMENTS TO SUBSTANTIATE THE CLAIM OF LTCG, WH ICH HAS NOT BEEN FOUND FAULT WITH BY THE AO. 23. LET US LOOK AT CERTAIN JUDICIAL DECISIONS ON SI MILAR FACTS:- 24. THE CASE OF THE ASSESSEES IS SIMILAR TO THE DE CISION OF HONBLE BOMBAY HIGH COURT, NAGPUR BENCH IN CIT VS. SMT. JAMNADEVI AGRAWAL & OR S. DATED 23RD SEPTEMBER, 2010 REPORTED IN (2010) 328 ITR 656 WHEREIN IT WAS HELD THAT: 24 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 'THE FACT THAT THE ASSESSEES IN THE GROUP HAVE PURC HASED AND SOLD SHARES OF SIMILAR COMPANIES THROUGH THE SAME BROKER CANNOT BE A GROUND TO HOLD THAT THE TRANSACTIONS ARE SHAM AND BOGUS, ESPECIALLY WHEN DOCUMENTARY ITA NOS. 93 TO 99/RPR/2 014 & C.O. NOS. 12 TO 18/RPR/2014 . A.Y. 2004-05 10 PRODUCED TO ESTABLISH THE GENUINENE SS OF THE CLAIM. FROM THE DOCUMENTS PRODUCED, IT IS SEEN THAT THE SHARES IN QUESTION WE RE IN FACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY HAS CONFIRMED TO H AVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEES. SIMILARLY, THE SALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRODUCING DOCUMENTARY EVIDENCE. IT IS TRUE THAT SOM E OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS. HOWEVER, THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET RATES PREVAILING ON T HE RESPECTIVE DATES AS IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEES. THEREFORE, TH E FACT THAT SOME OF THE TRANSACTIONS WERE OFF- MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHAM TRANSACTIONS. THE STATEMENT OF THE BROKER P THAT THE TRANSACTIONS WIT H THE H GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCING DOCUMENTARY E VIDENCE TO THE EFFECT THAT THE SHARES SOLD BY THE ASSESSEES WERE IN CONSONANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EVIDENCE, THE TRIBUNAL HAS ARRIVED AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT ON RECORD TO SHOW THAT THE FINDI NGS RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE DOCUMENTARY EVIDENCE ON RECORD. THE TRIBUNAL HA S FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE,BANK ACCOUNTS OF SOME OF TH E BUYERS OF SHARES CANNOT BE LINKED TO THE ASSESSEES. MOREOVER, YN THE LIGHT OF THE DOCUMENTAR Y EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE ASSESSEES WERE IN CONFORM ITY WITH THE MARKET PRICE, THE TRIBUNAL RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE BUYERS' BANK ACCOUNTS CANNOT BE ATTRIBUTED TO THE ASSESSEES. NO FAULT CAN BE FOUND WITH THE AB OVE FINDING RECORDED BY THE TRIBUNAL. THEREFORE, THE DECISION OF THE TRIBUNAL IS BASED ON FINDING OF FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL.ASSTT. C IT VS. KAMAL KUMAR S. AGRAWAL (INDL.) & ORS. (2010) 41 DTR (NAG) (TRIB) 105: (2010) 133 TTJ (NAG) 818 AFFIRMED; SUMATI DAYAL VS. CIT (1995) 125 CTR (SC) 124: (1995) 80 TAXMAN 89 (S C) DISTINGUISHED. 12. THE HON'BLE HIGH COURT OF RAJASTHAN IN CIT VS. SMT. PUSHPA MALPANI - REPORTED IN (2011) 242 CTR (RAJ.) 559; (2011) 49 DTR 312 DISMISSED THE APPEAL OF DEPARTMENT OBSERVING 'WHETHER OR NOT THERE WAS SALE OF SHARES AND RECEIP T OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSENTIALLY A QUESTION OF FACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT AT THE TIME O F TRANSACTIONS, THE BROKER IN QUESTION WAS NOT BANNED BY SEBI AND THAT ASSESSEE HAD PRODUCED COPIE S OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICATE, APPLICATION FOR TRANSFER OF SHAR E CERTIFICATE TO DEMAT ACCOUNT ALONG WITH COPIES OF HOLDING STATEMENT IN DEMAT ACCOUNT, BALAN CE SHEET AS ON 31ST MARCH, 2003, SALE BILL, BANK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS, OF CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. ON 23RD JULY, 2003. THEREFORE, 'TH E PRESE/ITDPPEAL DOES NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. 25. THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF ANUPAM KAPOOR 299 ITR 0179 HAS HELD AS UNDER:- THE TRIBUNAL ON THE BASIS OF THE MATERIAL ON RECOR D, HELD THAT PURCHASE CONTRACT NOTE, CONTRACT NOTE FOR SATES, DISTINCTIVE NUMBERS OF SHARES PURCH ASED AND SOLD, COPY OF SHARE CERTIFICATES AND THE QUOTATION OF SHARES ON THE DATE OF PURCHASE AND SALE WERE SUFFICIENT MATERIAL TO SHOW THAT THE TRANSACTION WAS NOT BOGUS BUT A GENUINE TRANSAC TION. THE PURCHASE OF SHARES WAS MADE ON 28TH APRIL, 1993 I.E.. ASST. YR. 1993-94 AND THAT A SSESSMENT WAS ACCEPTED BY THE DEPARTMENT AND THERE WAS NO CHALLENGE TO THE PURCHASE OF SHARES IN THAT YEAR. IT WAS ALSO PLACED BEFORE THE 25 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 RELEVANT AO AS WELL AS BEFORE THE TRIBUNAL THAT THE SALE PROCEEDS HAVE BEEN ACCOUNTED FOR IN THE ACCOUNTS OF THE ASSESSEE AND WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE TRIBUNAL WAS RIGHT IN REJECTING THE APPEAL OF THE REVENUE BY HOL DING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPANY. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CONTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTED AND THE TRANSACTION TOOK PLA CE THROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHIC H COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITIER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUCH PRESUMPTION COULD BE DRAWN BY THE AO MERELY ON SURM ISES AND CONJECTURES. IN THE ABSENCE OF ANY COGENT MATERIAL IN THIS REGARD, HAVING BEEN PLA CED ON RECORD, THE AO COULD NOT HAVE REOPENED THE ASSESSMENT. THE ASSESSEE HAD MADE AN I NVESTMENT IN A COMPANY, EVIDENCE WHEREOF WAS WITH THE AO. --THEREFORE, THE AO COULD NOT HAVE ADDED INCOME, WHICH WAS RIGHTLY DELETED BY THE CIT(A) AS WELL AS THE TRIBUNAL. IT IS SETTLE D LAW THAT SUSPICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. CONSEQUENTLY, NO QUE STION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW, ARISES FOR ADJUDICATION. C. VASANTLAL & CO . VS. CIT (1962) 45 ITR 206 (SC), M.O. THOMAKUTTY VS. CIT (.1958) 34 ITR 501 (KER)) AND MU KAND SINGH VS. SALES TAX TRIBUNAL (1998) 107 STC 300 (PUNJAB) RELIED ON; UMACHARAN SHAW &BRO S. VS. CIT (1959) 37 ITR 271 (SC) APPLIED; JASPAL SINGH VS. CIT (2006) 205 CTR (P & H ) 624 DISTINGUISHED 26. THE CO-ORDINATE BENCH OF AHMEDABAD IN ITA NOS. 501 & 502/AHD/2016 HAD THE OCCASION TO CONSIDER A SIMILAR ISSUE WHICH WAS WHER EIN THE ASSESSMENT WAS FRAMED ON THE STRENGTH OF THE STATEMENT OF A BROKER. THE RELEVANT PART READS AS UNDER:- 14. THE ENTIRE ASSESSMENT IS BASED UPON THE STATEMENT O F SHRI MUKESH CHOKSI. IT IS AN UNDISPUTED FACT THAT NEITHER A COPY OF THE STATEMEN T WAS SUPPLIED TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN BY THE A SSESSING OFFICER/CIT(A). THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES IN CIVIL APPEAL NO. 4228 OF 2006 WAS SEIZED WITH THE FOLLOWING ACTION OF THE TRIBUNA L :- 6. THE PLEA OF NO CROSS EXAMINATION GRANTED TO THE VARIOUS DEALERS WOULD NOT HELP THE APPELLANT CASE SINCE THE EXAMINATION OF THE DEALERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE POSSESSION OF THE APPELLANT THE MSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PRICES REMAIN STATIC. SINCE WE ARE NOT UPHOLDING AN D APPLYING THE EX FACTORY PRICES, AS WE FIND THEM CONTRAVENED AND NOT NORMAL PRICE AS ENVISAGED UNDER SECTION 4(1), WE FIND NO REASON TO DISTURB THE COMMISSIONERS ORDERS. 15. THE HONBLE APEX COURT HELD AS UNDER :- ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMU CH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WA S ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON T HE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORR ECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT G RANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORD ER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING 26 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROS S-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EXFACTORY PRICES REMAIN STA TIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED T O CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMONY F OR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS EXAMINATION. THAT APART, THE A DJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID D EALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUB JECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOS E AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTI ONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING T HE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF TH E TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTM ENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNE SSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE. WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. 16. ON THE STRENGTH OF THE AFOREMENTIONED DECISIO N OF THE HONBLE SUPREME COURT, THE ASSESSMENT ORDER HAS TO BE QUASHED . 17. EVEN ON FACTS OF THE CASE, THE ORDERS OF THE AU THORITIES BELOW CANNOT BE ACCEPTED. THERE IS NO DENYING THAT CONSIDERATION WAS PAID WHEN THE SHARES WERE PURCHASED. THE SHARES WERE THEREAFTER SENT TO THE COMPANY FOR THE TRANSFER OF NAME. THE C OMPANY TRANSFERRED THE SHARES IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECORD WHICH COUL D SUGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THERE IS A LSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE NEVER WITH THE ASSESSEE. ON THE CONTRARY, THE SHARES WERE THEREAFTER TRANSFERRED TO DEMAT ACCOUNT. THE DEMAT ACCOUNT WAS IN THE NAME OF THE A SSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF THE SHARES WE RE OF SOME FICTITIOUS COMPANY WHICH WAS NOT LISTED IN THE BOMBAY STOCK EXCHANGE/NATIONAL STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFERRED TO DEMAT ACCOUNT. SHRI MUKESH CHOK SI MAY HAVE BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT THE TRANSACTIONS WERE GENUINE AND THEREFORE, NO ADV ERSE INFERENCE SHOULD BE DRAWN. 18. IN THE LIGHT OF THE DECISIONS OF THE HONBLE S UPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND CONSIDERING THE FACTS IN TOT ALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PRESUMPTION AND SURMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT EVIDENCES ON RECORD RELATING TO THE SALE/PUR CHASE TRANSACTIONS IN SHARES SUPPORTED BY 27 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 BROKERS CONTRACT NOTES, CONFIRMATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE DEMAT ACCOUNT. 19. ACCORDINGLY, WE DIRECT THE A.O. TO TREAT THE GA INS ARISING OUT OF THE SALE OF SHARES UNDER THE HEAD CAPITAL GAINS- SHORT TERM OR LONG TERM AS THE CASE MAY BE. THE OTHER GRIEVANCE OF THE ASSESSEE BECOMES INFRUCTUOUS. 27. THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SU PPORT OF THE CLAIM OF THE ASSESSEE THAT IT EARNED LTCG ON TRANSACTIONS OF HIS INVESTMENT IN SH ARES. THE PURCHASE OF SHARES HAD BEEN ACCEPTED BY THE AO IN THE YEAR OF ITS ACQUISITION AND THEREAFTER UNTIL THE SAME WERE SOLD. THE OFF MARKET TRANSACTION FOR PURCHASE OF SHARES IS NO T ILLEGAL AS WAS HELD BY THE DECISION OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DOLA RRAI HEMANI VS. ITO IN ITA NO. 19/KOL/2014 DATED 2.12.2016 AND THE DECISION BY HONBLE CALCUTTA HIGH COURT IN PCIT VS. BLB CABLES & CONDUCTORS PVT. LTD. IN ITAT NO. 78 OF 2017 DATED 1 9.06.2018 WHEREIN ALL THE TRANSACTIONS TOOK PLACE OFF MARKET AND THE LOSS ON COMMODITY EXCHANGE WAS ALLOWED IN FAVOUR OF ASSESSEE. THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE CHEQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE OF SHARES AND THE SALE OF SHARES WERE ALSO REFLECTED IN DEMAT ACCOUNT STATEMENTS. THE SALE OF SHARES SUFFERED STT, BROKERAGE ETC. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE HELD THAT THE TRANSACTIONS WERE BOGUS. THE FOLL OWING JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT:- (I) THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME VS M/S. BLB CABLES AND CONDUCTORS ; ITAT NO.78 OF 2017, GA NO.747 OF 2017; DT. 19 JUN E, 2018, HAD UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING A S FOLLOWS:- '4. WE HAVE HEARD BOTH THE SIDE AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE LD. AR SUBMITTED TWO PAPERS BOOKS. FIRST BOOK IS RUNNING I N PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US THE LD. AR SUBM ITTED THAT THE ORDER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH THE BROKER WAS EXPELLED. THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF B OTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBMITTE D THE IT RETURN, LEDGER COPY, LETTER TO AO LAND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM WHIC H IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTR ACTS NOTES WHICH ARE PLACED ON PAGES 28 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REGIST ERS WERE ALSO SUBMITTED IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. THE B OARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIONS IN COMMODITY WAS PLACED AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER HAND THE LD. DR RELIED IN THE ORDER OF THE LOWER AUTHORITIES . 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD SUCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME LOSS WAS ALSO CONFIRMED BY THE LD. CIT(A). HOWEVER WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME CONCRETE EVIDENCE WH ERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. 28 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 II) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDENCES PRODUCED BY T HE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE G ENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUCE THE QUANTU M OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BUT HE MISERABLY F AILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT THE PREVAILING P RICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTIATED. III)CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITE D [2013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RECORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER HELD THAT I N ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANS ACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTED TO WITH UL TERIOR MOTIVE. IV) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CA L HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWE VER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BROKERAGE, SERVICE TAX, AND CESS. THE RE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL F ILED BY THE REVENUE WAS DISMISSED. V) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE D ECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHERE T HE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON TH E BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE AO DID NOT DOUB T THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT T HE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED BY TH E REVENUE WAS DISMISSED. VI) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. VII) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE AO, BASED ON THE I NFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRA NSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTE D BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DE MAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED BY HIGH COURT. 29 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 28. WE NOTE THAT SINCE THE PURCHASE AND SALE TRA NSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND BANK ST ATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCHASE OF SHARES WERE ACCEPTED BY THE LD AO IN EA RLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BASIS OF SOME REPORTS OF THE IN VESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, THE LD AR, IN ADDITION TO THE AFORESAID JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLOWING CASES:- (I) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (II) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (IV) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (V) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VI) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (VII) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (IX) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (X) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XI) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XII) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XIII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XIV) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XVI) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XVII) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XVIII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) (XIX) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 29. THE LD AR ALSO BROUGHT TO OUR NOTICE THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHNANAND AG NIHOTRI VS. THE STATE OF MADHYA PRADESH [1977] 1 SCC 816 (S C) . IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR T RANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL OWNER ALWAYS RESTS ON THE PERSON AS SERTING IT TO BE SO AND THE BURDEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFIN ITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGL Y AND REASONABLY RAISING INFERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT I S NOT ENOUGH TO SHOW CIRCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DEC IDE ON THE BASIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SU BMITTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RE LATING TO EXEMPTION CLAIMED BY THE ASSESSEE ON LTCG ON ALLEGED PENNY SOCKS. (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 30 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 30. MOREOVER IT WAS SUBMITTED BEFORE US BY LD AR TH AT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRICE RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SUBMITTED THAT THERE IS NO ALLEGATION IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFF ECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HIS BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN CSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SUPPORT OF T HIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSESS THE SALE PROCEEDS O F SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. AMITA AGARWAL & OTHERS - ITA NOS. 247/(KO L)/ OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 31. WE NOTE THAT THE LD. D.R. HAD HEAVILY RELIED UP ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BIMALCHAND JAIN IN TAX AP PEAL NO. 18 OF 2017. WE NOTE THAT IN THE CASE RELIED UPON BY THE LD. D.R, WE FIND THAT THE F ACTS ARE DIFFERENT FROM THE FACTS OF THE CASE IN HAND. FIRSTLY, IN THAT CASE, THE PURCHASES WERE MAD E BY THE ASSESSEE IN CASH FOR ACQUISITION OF SHARES OF COMPANIES AND THE PURCHASE OF SHARES OF T HE COMPANIES WAS DONE THROUGH THE BROKER AND THE ADDRESS OF THE BROKER WAS INCIDENTALLY THE ADDRESS OF THE COMPANY. THE PROFIT EARNED BY THE ASSESSEE WAS SHOWN AS CAPITAL GAINS WHICH WAS N OT ACCEPTED BY THE A.O. AND THE GAINS WERE TREATED AS BUSINESS PROFIT OF THE ASSESSEE BY TREAT ING THE SALES OF THE SHARES WITHIN THE AMBIT OF ADVENTURE IN NATURE OF TRADE. THUS, IT CAN BE SEEN THAT IN THE DECISION RELIED UPON BY THE LD. DR, THE DISPUTE WAS WHETHER THE PROFIT EARNED ON SALE O F SHARES WAS CAPITAL GAINS OR BUSINESS PROFIT. 32. IT IS CLEAR FROM THE ABOVE THAT THE FACTS OF T HE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS IN THE CASES WHEREIN THE CO-ORDINATE BENCH O F THE TRIBUNAL HAS DELETED THE ADDITION AND ALLOWED THE CLAIM OF LTCG ON SALE OF SHARES OF M/S KAFL. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, AND SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO NOT TO TREAT THE LONG TERM CAPITAL AS BOGUS AND DELETE THE CONSEQUEN TIAL ADDITION. 33. THE NEXT ISSUE IN CONFIRMING THE ADDITION OF RS .1,83,020/- AS UNEXPLAINED EXPENDITURE TOWARDS COMMISSION CHARGES OF SALE OF SUCH SHARES B Y THE OPERATOR. WE HAVE ALREADY HELD THAT THE TRANSACTIONS RELATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODATION ENTRIES AS ALLEGED BY THE AO. CONSEQUENTLY THE ADDITION OF RS.1,83,020 /- IS HEREBY DIRECTED TO BE DELETED. WE ACCORDINGLY HOLD THAT THE ISSUE IS ALLOWED IN FAVOU R OF THE ASSESSEE. 28. IN THE LIGHT OF THE DOCUMENTS FILED BY THE ASSE SSEE BEFORE THE AO/LD. CIT(A) AND BEFORE US, WHICH COULD NOT BE CONTROVERTED BY ANY M ATERIAL BY AO, SO RESPECTFULLY FOLLOWING THE RATIO LAID BY THE HONBLE JURISDICTIO NAL HIGH COURT AND OTHER HIGH COURTS AND THE RATIO LAID BY THE HONBLE SUPREME COURT AND THIS TRIBUNAL, AND IN THE LIGHT OF THE AFORESAID FACTS AND CIRCUMSTANCES DISCUSSED AND IN THE LIGHT OF THE EVIDENCE PLACED 31 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 BY THE ASSESSEE BEFORE THE AO/LD. CIT(A) AND BEFORE US WHICH HAVE BEEN DISCUSSED IN PARA SUPRA AND BELOW (INFRA)), WE HAVE TO NECESSARI LY ALLOW THE CLAIM OF THE ASSESSEE FOR LTCG ON LIFE LINE DRUG & PHARMA LTD. 29. FOR AY 2015-16, WE NOTE THAT THE ASSESSEE HAD O PENING INVESTMENT OF 153200 SHARES OF LDPL AS ON 01.04.2014 WHICH WERE ALLOTTED TO HIM IN THE YEAR 2012 AND AS DISCUSSED ABOVE. THESE REMAINING SHARES WERE SOLD THROUGH TH E SAME BROKER M/S. MOTILAL OSWAL SECURITIES LTD. ON VARIOUS DATES BETWEEN 09.04.2014 TO 30.04.2014 ON THE ELECTRONIC PLATFORM OF BSE FOR THE QUOTED PRICE ON THESE DAYS WHICH IS NOT DISPUTED. WE NOTE THAT THE BROKER HAS ISSUED CONTRACT NOTES CUM BILL OF SALE O F SHARES AND THE DELIVERY OF SAID SHARES WERE DONE BY ISSUE OF INSTRUCTION SLIP TO THE DEPOS ITORY PARTICIPANT FOR TRANSFER OF EQUIVALENT NUMBER OF SHARES TO THE BROKERS ACCOUNT FOR ONWARD S TRANSFER OF THE SAID SHARES TO STOCK EXCHANGE. AFTER THE BROKER HAS RECEIVED THE PAYMEN T FROM BSE FOR SALE OF THESE SHARES, THE BROKER AFTER DEDUCTING THEIR BROKERAGE AND OTHER CH ARGES HAD ISSUED THE CHEQUE IN FAVOUR OF THE ASSESSEE WHICH HAS BEEN DEPOSITED IN ASSESSEES BANK ACCOUNT. 30. WE FIND FORCE IN THE CONTENTIONS OF THE LD. AR THAT THE AO AND CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SUSPICIOUS TRANSACTIONS SURROUNDING CIRCUMSTANCE, HUMAN CONDUC T AND PREPONDERANCE OF PROBABILITY WITHOUT BRINGING ON RECORD ANY RELEVANT MATERIAL OR LEGALLY ADMISSIBLE EVIDENCE AGAINST THE ASSESSEE. FOR THE SAID PROPOSITION WE RELY ON THE J UDGMENT OF THE SPECIAL BENCH OF MUMBAI BENCH IN THE CASE OF GTC INDUSTRIES LTD. (SUPRA). T HE VARIOUS FACETS OF THE CONTENTION OF THE AO, TO ROPE IN THE ASSESSEE FOR DRAWING ADVERSE I NFERENCES WHICH REMAIN UNPROVED BASED ON THE EVIDENCE AVAILABLE ON RECORD ARE NOT REITERA TED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOUS CASE LAWS RELIED UPON BY THE L D. AR ARE ALSO NOT REITERATED FOR THE SAKE OF BREVITY. WE FURTHER FIND THAT NEITHER THE REPOR TS RELIED ON BY THE AO HAS NOT BEEN BROUGHT ON RECORD NOR IS THERE ANY REFERENCE OF FINDING OF SUCH REPORT TO IMPUTE THE ASSESSEE IS THERE 32 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 ON RECORD. THE AO HAS MERELY CARVED OUT CERTAIN FEA TURES/MODUS- OPERANDI OF COMPANIES INDULGING IN PRACTICES NOT SANCTIONED BY LAW AND AS MENTIONED IN SUCH REPORT. HOWEVER, WE NOTE THAT NEITHER ANY INVESTIGATION WAS CARRIED OUT AGAINST THE ASSESSEE NOR AGAINST THE BROKERS TO WHOM THE ASSESSEE DEALT WITH THE PURCHAS E AND SALE OF SHARES IN QUESTION. THUS THE AO HAS FAILED TO BRING ON RECORD ANY MATERIAL C ONTAINED IN THE PURPORTED REPORTS WHICH ARE HAVING SO CALLED ADVERSE IMPACT ON THE ASSESSEE . 31. AT THE COST OF REPETITION, WE FIND THAT THE TRA NSACTIONS OF SALE OF SHARES BY THE ASSESSEE WAS DULY BACKED UP BY MATERIAL/EVIDENCE INCLUDING C ONTRACT NOTES, DEMAT STATEMENT, BANK ACCOUNT REFLECTING TRANSACTIONS, THE SHARES HAVING BEEN SOLD ON THE ONLINE PLATFORM OF THE STOCK EXCHANGE AND EACH TRADE OF SALE OF SHARES WER E HAVING UNIQUE TRADE NUMBER AND TRADE TIME. IT IS NOT THE CASE OF THE AO THAT THE SHARES WHICH WERE SOLD ON THE DATE MENTIONED IN THE CONTRACT NOTE WERE NOT THE TRADED PRICE ON THAT PARTICULAR DATE AND FOR THAT THE ASSESSEE CANNOT BE BLAMED UNLESS THERE WAS ANY MATERIAL/EVID ENCE TO PROVE THAT THE ASSESSEE OR ANY ONE ON HIS BEHALF HAS RIGGED THE STOCK PRICE. IT SH OULD BE NOTED THAT THE STOCK EXCHANGE AND SEBI ARE THE STATUTORY AUTHORITIES APPOINTED BY THE GOVT. OF INDIA TO ENSURE THAT THERE IS NO STOCK RIGGING OR MANIPULATION. THE AO HAS NOT BROUG HT ANY EVIDENCE ON RECORD TO SHOW THAT THESE AGENCIES HAVE ALLEGED ANY STOCK MANIPULATION AGAINST THE ASSESSEE OR THE BROKERS OR THE COMPANY IN QUESTION. IN ABSENCE OF ANY EVIDENCE TO BACK THE CONCLUSION OF AO/CIT(A), IT CANNOT BE SAID THAT MERELY BECAUSE THE STOCK PRI CE MOVED SHARPLY, THE ASSESSEE WAS TO BE BLAMED FOR BOGUS TRANSITIONS. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE HAS PURCHASED THE STOCKS THROUGH BSE AND THROUGH REGISTERED BROKERS AND THEREAFTER THE ASSESSEE HAS SOLD THE SHARES THROUGH THE REGISTERED SHARE/STOCK BROKERS W ITH BOMBAY STOCK EXCHANGE, AND IS SUPPORTED BY VALID CONTRACT NOTES AS PER LAW; AND IN SIMILAR CASE, THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL CIT VS RUNGTA PROPER TIES IN ITA NO.105 OF 2016 DATED 08 MAY, 2017 WHEREIN IT WAS HELD THAT ON THE LAST POINT, THE TRIBUNAL HELD THAT THE AO HA D NOT BROUGHT RELEVANT MATERIAL TO SHOW THAT THE TRANSACTIONS IN SHARES OF THE COMPANY INVOLVED WERE FALSE OR FICTITIOUS. IT IS THE FINDING OF THE AO T HAT 33 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 THE SCRIPTS OF THIS COMPANY WAS EXECUTED BY A BROKE R AND THE BROKER WAS SUSPENDED FOR SOME TIME. IT IS THE ASSESSEES CONTENTION THAT EVEN THOUGH THERE ARE ALLEGATIONS AGAINST THE BROKER, AND FOR THAT REASON THE ASSESSEE CANNOT BE HELD LIABLE ON THIS P OINT, THE TRIBUNAL HELD THAT AS A MATTER OF FACT THE AO DOUBTED THE INTEGRITY O F THE BROKER AND THE BROKER FIRM AND ALSO AO OBSERVED THAT THE ASSESSEE HAD NOT FURNISHED ANY EXPLANATION IN RESPECT OF ANY DISCUSSION OF TRADING OF SHARES. THE AO RELIED THE LOSS OF RS.25,30,396/- ONLY ON THE BASIS OF INFORMATION SUBMITTED BY STOCK AS FICTITIOUS. THE A O HAS ALSO NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS PLACED BY THE ASSESSEE ON RECORD. THE AOS OBSERVATION AND CONCLUSION ARE MERELY BASED ON INFORMATION. THEREFORE ON SUCH BASI S, NO DISALLOWANCE CAN BE MADE AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF TH E LD. CIT(A), WHO HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. THIS GROUND NO.1 OF THE REVE NUE IS DISMISSED. WE AGREE WITH THE REASONING OF THE TRIBUNAL ON THIS POINT ALSO. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. THE SUGGESTED QUESTION, IN OUR OPINION DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. 32. IN THE LIGHT OF THE DOCUMENTS STATED (SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GA MUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OU R CONSIDERED OPINION HAS NO LEGS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD . DR COULD NOT CONTROVERT THE FACTS WHICH ARE SUPPORTED WITH MATERIAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH ARE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT(A). WE NOTE THAT THE ALLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANI PULATION OF SHARES MUST THEREFORE CONSEQUENTLY FAIL. AT THE COST OF REPETITION, WE NO TE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NO TES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. NEITHER THESE EVIDENCES WERE FOUND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS NOR T HE AO HAD ISSUED ANY NOTICE TO THE BROKERS FOR CONFIRMATION. THE FACTS OF THE CASE AND THE EVI DENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACT IONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING TH E CLAIM OF THE ASSESSEE EXEMPTED U/S 10(38) OF THE ACT ON THE BASIS OF SUSPICION, SURMIS ES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRONG, CANNOT PARTAKE T HE CHARACTER OF LEGAL EVIDENCE. IN THE 34 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 AFORESAID FACTS AND CIRCUMSTANCE, FOR ALLOWING THE APPEAL WE RELY ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. ALI PINE INVESTMENTS IN ITA NO.620 OF 2008 DATED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOW S : IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCK BROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECEIVED FROM THE SHARE BROKER T HROUGH ACCOUNT PAYEE WHICH ARE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESSEE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANSACTIONS CANNOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER IT WAS HELD THAT THE TRANSACTIONS OF THE SHARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THER E IS NO SUBSTANTIAL QUESTION OF LAW HELD IN THIS MATTER. HENCE THE APPEAL BEING ITA NO.620 OF 2008 I S DISMISSED. 33. WE NOTE THAT THE LD. AR CITED PLETHORA OF THE C ASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSION. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES OF M/S. LDP L AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DE LETE THE ADDITION OF RS.3,53,56,735/-. 34. COMING NEXT TO THE COMMISSION @ 5% DISALLOWED B Y THE AO AS UNEXPLAINED EXPENSES OF COMMISSION U/S. 69C OF THE ACT, WE AFTE R HAVING HELD THE PURCHASE AND SALE OF SHARES OF LDPL IS GENUINE THE QUESTION OF DISALLOWA NCE OF COMMISSION EXPENSES DOES NOT ARISE AND, THEREFORE, DIRECTED TO BE DELETED OF RS. 17,67,837/-. 35. COMING TO AY 2014-15, IT(SS)A NO. 46/KOL/2018 I N RESPECT OF SHRI N. K. SARAOGI. WE NOTE THAT RETURN OF INCOME WAS FILED BY THE ASSE SSEE ON 30.12.2014 AND HE GOT THE INTIMATION FROM DEPARTMENT U/S. 143(1) OF THE ACT O N 07.01.2015. THE LAST DATE FOR ISSUE OF NOTICE U/S. 143(2) WAS ON 30.09.2015 AND SINCE THE SEARCH HAPPENED ON 15.12.2015, THIS 35 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 ASSESSMENT YEAR I.E. (AY 2014-15) WAS NOT PENDING B EFORE THE AO ON THE DATE OF SEARCH . SO AS PER THE LAW LAID DOWN IN KABUL CHAWLA (SUPRA) BY THE HONBLE DELHI HIGH COURT WHICH VIEW HAS BEEN CONCURRED BY JURISDICTIONAL HIGH COUR T IN VEERPRABHU MARKETING LTD. (SUPRA) AND THE HONBLE SUPREME COURT UPHOLDING THE ORDER O F HONBLE DELHI HIGH COURT IN KURELE PAPER MILLS (SUPRA), NO ADDITION/DISALLOWANCE CAN B E MADE WITHOUT INCRIMINATING MATERIAL, AGAINST THE ASSESSEE QUA THE ASSESSMENT YEAR. AS D ISCUSSED ABOVE IN THE ASSESSEES CASE OF AY 2015-16, WE NOTE THAT THERE IS NO INCRIMINATING MATERIAL AGAINST THE ASSESSEE EITHER ORAL OR DOCUMENTARY TO DRAW ADVERSE INFERENCE AGAINST TH E ASSESSEE ON HIS CLAIM OF EXEMPT INCOME BY VIRTUE OF SALE OF SHARES OF M/S. LIFE LIN E DRUGS & PHARMA LTD. (NOW M/S. ARIHANT ) ON 11.03.2014 AND 27.03.2014. WE NOTE TH AT BASED ON THE GENERAL STATEMENT OF SHRI DEBESH UPADHYAY/GENERAL REPORT OF INVESTIGATIO N WING OF DEPARTMENT AND INTERIM ORDER OF SEBI [WHICH IN NO WAY IMPLICATE THE ASSESS EE/BROKER/SCRIP] THE CLAIM OF ASSESSEE HAS BEEN DISALLOWED AND ADDITION OF RS.2,06,65,887/ - WAS SADDLED ON ASSESSEE. THEREAFTER AN ADDITION OF COMMISSION FOR EARNING THIS INCOME @ 5% OF RS.10,33,294/- WAS ALSO MADE AGAINST THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED IT. NOW THE ASSESSEE HAS PREFERRED T HIS APPEAL BEFORE US. 36. WE NOTE THAT ASSESSEE HAS PURCHASED 25000 SHARE S OF M/S. LIFE LINE DRUG & PHARMA LTD. AT THE RATE OF RS.10/- EACH ON 26.09.2012. THE SE SHARES WERE PURCHASED FROM M/S MOTLLAL OSWAL SECURITIES LTD WHO HAS RAISED BILL ON THE ASSESSEE AGAINST WHICH PAYMENT WAS MADE BY CHEQUE. COPY OF BILL & BANK STATEMENT EVIDE NCING PAYMENT IS ENCLOSED IN PAPER BOOK AT PAGE NOS. 1 TO 3. THAT THE SELLER M/S MOTIL AL OSWAL SECURITIES LTD. TRANSFERRED THE SHARES OF LIFELINE DRUGS AND PHARMA LTD. IN DEMAT A CCOUNTS OF THE ASSESSEE MAINTAINED WITH M/S. MOTIAL OSWAL SECURTITIES LTD, DEPOSITORY PARTICIPANT. A COPY OF DEMAT STATEMENT SHOWING RECEIPT OF SHARES IN ASSESSEE'S ACCOUNTS AR E ENCLOSED AS PER PAPER BOOK PAGE NO. 4. THAT THE SAID COMPANY M/S LIFELINE DRUGS AND PHARMA CHOSE TO SPLIT ITS SHARE OF FACE VALUE OF RS.L0/-EACH INTO FACE VALUE OF RE 1/-EACH ON 13. 11.2013. ACCORDINGLY THE ASSESSEE'S 36 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 HOLDING GOT INCREASED TO 2,50,000 SHARES OF M/S LIF ELINE DRUGS AND PHARMA LTD AUTOMATICALLY BY CORPORATE ACTION WHICH IS EVIDENT FROM THE DEMAT STATEMENT AS PER PAPER BOOK PAGE NO.14. THAT THE ASSESSEE MAINTAINS CLIENT ACCOUNT WITH BROKER M/S MOTILA OSWAL SECURITIES LTD WHO IS A REGISTERED BROKER WITH SEBI TO DEAL IN SHARES AND SECURITIES AND ALSO MEMBER OF BOTH NATIONAL STOCK EXCHANGE AND STOCK BO MBAY. THAT THE SAID SHARES ON INSTRUCTION FROM CLIENT WERE SOLD BY BROKER M/S MOT ILAL OSWAL SECURITIES LTD. ON VARIOUS DATES FROM 11.03.2014 TO 27.03.2014 ON THE PLATFORM OF BOMBAY STOCK EXCHANGE, RELEVANT CONTRACT NOTES WERE ALREADY FILED WITH ASSESSING OF FICER. THE CONTRACT NOTES SPECIFICALLY SHE AMOUNT OF STT PAID ON THE SAID TRANSACTIONS OF SALE EXECUTED ON THE BOMBAY STOCK EXCHANGE. COPIES OF THE CONTRACT NOTES ARE ENCLOSED AS PER PAPER BOOK AND MARKED AS PAGE NOS. 15 TO 16. THAT THE ASSESSEE HAS ALSO RECEIVED PAYMENT FROM THE BROKER ON VARIOUS DATES AS PER PAY-OUT RULES FROM 13.03.2014 TO 27.03.2014 AGAINST THE ABOVE SALE IN ITS BANK ACCOUNT MAINTAINED WITH ING BANK. COPY OF THE STATE MENT ENCLOSED AND MARKED PAGE NOS. 15 TO 16. 37. THE ASSESSEE SOLD THE SHARES OF LIFELINE DRUGS AND PHARMA LTD WHICH ARE LISTED ON THE BOMBAY STOCK EXCHANGE WITH A BSE CODE 506113 AN D EARNED LONG TERM CAPITAL GAIN WHICH IS EXEMPT UNDER SECTION 10(38). THE LD ASSESS ING OFFICER HAS NEITHER APPLIED HIS MIND NOR HAVE MADE 'ANY EFFORTS TO VERIFY THE EVIDE NCES FILED BY THE ASSESSEE, BUT HAD MECHANICALLY TREATED THE TRANSACTION AS BOGUS AND H AS FIRST DISALLOWED EXEMPTION U/S 10(38) ON THE LONG TERM CAPITAL GAIN OF RS. 2,06,65,887/-A ND THEN ADDED THE SAID AMOUNT AS UNDISCLOSED INCOME UNDER SECTION 68. DESPITE THE IN FORMATION SUCH AS CONTRACT NOTES EVIDENCING THE PAYMENT OF STT AS PER THE PROVISIONS OF THE ACT, BILLS, PAYMENT AND RECEIPTS THROUGH BANK, DEMAT ACCOUNT ETC. ALREADY SUBMITTED. THE LD. ASSESSING OFFICER HAS NEITHER CONSIDERED NOR REVIEWED THE INFORMATION FILED BEFOR E HIM. THE SHARES TRANSACTION CANNOT BE TERMED AS BOGUS MERELY ON SUSPICION, IN SPITE OF TH E ASSESSING OFFICER'S ACCEPTANCE IN THE ASSESSMENT ORDER THAT THE TRANSACTIONS WERE ON THE ELECTRONIC PLATFORM OF STOCK EXCHANGE 37 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 AND DONE THROUGH APPROVED BROKER AND THROUGH BANKIN G CHANNELS. SINCE THE ASSESSEE HAS PRESENTED ALL THE RELEVANT DOCUMENTS SUCH AS CONTRA CT NOTES, BILLS ETC. THE LONG- TERM CAPITAL GAIN EARNED ON SALE OF SHARES SHALL BE TREATED UNDE R SECTION 10(38) AND CONSIDERED AS EXEMPTED. 38. THESE DOCUMENTS HAVE BEEN FILED BEFORE THE AUT HORITIES BELOW AND BEFORE US. IN THE LIGHT OF THE AFORESAID EVIDENCE FILED TO SUBSTANTIA TE THE LTCG CLAIM ON SALE OF SHARES OF LDPL AND IN THE ABSENCE OF ANY MATERIAL TO FIND ANY INFIRMITY IN THE DOCUMENTS FILED BY THE ASSESSEE OR ANY EVIDENCE/MATERIAL TO TAKE A VIEW AS THAT OF AO/LD. CIT(A), WE ARE OF THE OPINION THAT THE LTCG CLAIM OF ASSESSEE NEEDS TO BE ACCEPTED AND DIRECTED TO BE ALLOWED. 39. WE NOTE THAT THE AO HAS BEEN INFLUENCED BY THE GENERAL REPORTS MADE BY THE INVESTIGATION WING AS WELL AS THE SEBIS INTERIM OR DER IN RESPECT OF 84 PENNY STOCK COMPANIES AND THE STATEMENT OF SHRI DEVESH UPADHYAY WHICH WERE THE BASE ON WHICH LTCG CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO. WE NOTE THAT EVEN THE ASSESSEES PLEA TO CROSS EXAMINE SHRI DEVESH UPADHYAY AS WELL AS TO SUMMON BOTH THE BROKERS OF THE ASSESSEE WAS TURNED DOWN BY THE AO WHICH IS CLEARLY AGAINST THE PRINCIPLES OF NATURAL JUSTICE AS HELD BY THE HONBLE SUPREME COURT IN AND AMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE 62 TAXMAN.COM 3 WHER EIN IT HAS BEEN HELD THAT IF THE AO IS USING THE STATEMENT OF THIRD PARTY TO DRAW ADVE RSE INFERENCE AGAINST THE ASSESSEE, THEN ASSESSEE HAS TO BE GIVEN AN OPPORTUNITY TO CROSS EX AMINE THE THIRD PARTY OR ELSE THE ORDER ON THE STRENGTH OF 3 RD PARTY WHO HAS NOT BEEN ALLOWED TO BE CROSS EXAMINE D IS A NULLITY IN THE EYES OF LAW. SO ON MERITS ALSO WE NOTE THAT ADDITIO N BY DISALLOWING THE CLAIM OF ASSESSEE ON LTCG CLAIM OF EXEMPT INCOME ON SALE OF SHARES OF LD PL NEED TO BE ALLOWED. 40. MOREOVER WE NOTE THAT RETURN OF INCOME WAS FILE D BY THE ASSESSEE ON 30.12.2014 AND HE GOT THE INTIMATION FROM DEPARTMENT U/S. 143(1) O F THE ACT ON 07.01.2015. THE LAST DATE 38 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 FOR ISSUE OF NOTICE U/S. 143(2) WAS ON 30.09.2015 A ND SINCE THE SEARCH HAPPENED ON 15.12.2015, THIS ASSESSMENT YEAR I.E. (AY 2014-15) WAS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH. SO AS PER THE LAW LAID DOWN IN KAB UL CHAWLA (SUPRA) BY THE HONBLE DELHI HIGH COURT WHICH VIEW HAS BEEN CONCURRED BY JURISDI CTIONAL HIGH COURT IN VEERPRABHU MARKETING LTD. (SUPRA) AND THE HONBLE SUPREME COUR T UPHOLDING THE ORDER OF HONBLE DELHI HIGH COURT IN KURELE PAPER MILLS (SUPRA), NO ADDITION/DISALLOWANCE CAN BE MADE WITHOUT INCRIMINATING MATERIAL, AGAINST THE ASSESSE E QUA THE ASSESSMENT YEAR. AS DISCUSSED ABOVE IN THE ASSESSEES CASE OF AY 2015-16, AS WELL AS THIS ASSESSMENT YEAR, WE NOTE THAT THERE IS NO INCRIMINATING MATERIAL AGAINST THE ASSE SSEE EITHER ORAL OR DOCUMENTARY TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE ON HIS CLAIM OF EXEMPT INCOME BY VIRTUE OF SALE OF SHARES OF M/S. LIFE LINE DRUGS & PHARMA LTD. (NOW M /S. ARIHANT ), THEREFORE NO ADDITION OUGHT TO HAVE BEEN MADE AGAINST THE ASSESSEE WITHOU T INCRIMINATING MATERIAL, AGAINST THE ASSESSEE QUA THIS ASSESSMENT YEAR. SO THE ADDITION OF RS 2,06,65,887/- IS ORDERED TO BE DELETED AND COMMISSION @ 5% OF RS 10,33, 294/- IS A LSO ORDERED TO BE DELETED. APPEAL OF SMT. URMILA DEVI SARAOGI IN IT(SS)A NOS. 42 & 43/KOL/2018 41. AT THE OUTSET ITSELF, WE NOTE THAT THIS ASSESSE E IS THE WIFE OF SHRI N. K. SARAOGI. FIRST WE WILL TAKE UP THE AY 2013-14, WHEREIN WE NOTE THA T FOR AY 2013-14. SHE HAD FILED THE RETURN OF INCOME ON 27.12.2013 WHICH HAS BEEN ACCEP TED BY THE DEPARTMENT ON 04.02.2014 VIDE INTIMATION U/S. 143(1). SO, THIS ASSESSMENT Y EAR IS NOT PENDING ON THE DATE OF SEARCH WHICH HAPPENED ON 15.12.2015. AS PER THE SETTLED P RINCIPLE OF LAW, THOUGH ONCE SEARCH TAKES PLACE U/S. 132 OF THE ACT, THE AO HAS TO ISSU E NOTICE U/S. 153A FOR SIX ASSESSMENT YEARS, PREVIOUS TO THE YEAR OF SEARCH, UNLESS THE A SSESSMENT YEAR IS PENDING BEFORE HIM (I.E. ABATED ASSESSMENT YEAR), THE AO HAS TO REITERATE TH E RETURNED INCOME UNLESS THERE IS INCRIMINATING MATERIAL (WHICH WAS UNDISCLOSED BY AS SESSEE) FOUND DURING THE SEARCH. IN THIS YEAR, THOUGH THERE WAS NO INCRIMINATING MATERIALS FOUND DURING SEARCH IN RESPECT TO SCRIPS TRANSACTED DURING THIS YEAR PURSUANT TO WHICH ASSES SEE CLAIMED LTCG WHICH IS EXEMPT FROM TAX, THE AO IN SEC. 153A PROCEEDINGS HAS NOT ACCEPT ED THE ASSESSEES CLAIM OF LTCG IN 39 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 RESPECT OF ITS SALE OF SHARES OF M/S. TUNNI TEXTILE S AND HAS MADE AN ADDITION OF RS.56,76,063/- AND ALSO ADDED A COMMISSION OF 5% OF RS.2,83,803/-. WE NOTE THAT THE ASSESSEE HAD PRODUCED THE FOLLOWING DOCUMENTS TO PR OVE THE GENUINENESS OF THE TRANSACTIONS FOR AY 2013-14. WE NOTE THAT THE ASSESSEE HAD PURC HASED 5000 SHARES OF M/S. TUNI TEXTILES MILLS LTD., 2500 SHARES @ RS.22.03 EACH ON 04.03.2011 AND 2500 SHARES @ RS.222.03 ON 07.03.2011. WE NOTE THAT THE SHARES W ERE PURCHASED ON-LINE FROM THE PLATFORM OF BSE. A COPY OF THE CONTRACT NOTE CUM B ILL FROM THE BROKER EVIDENCING THE SAID PURCHASE WAS BROUGHT TO THE NOTICE OF AO/CIT(A) AND BEFORE US. THEREAFTER, THE SHARES OF THE COMPANY WERE SPLIT FROM FACE VALUE OF RS. 10/- EACH ON FACE VALUE OF RS. 1/- EACH. THUS, THE NUMBER OF SHARES HELD BY THE ASSESSEE STOOD INC REASED TO 50,000 SHARES HAVING FACE VALUE OF RS. 1/- EACH. THE PURCHASE WAS DONE THROU GH THE BROKER M/S. MOTILAL OSWAL SECURITIES LTD. AND AGAINST THE BILL FOR PURCHASE R AISED BY THE BROKER, THE ASSESSEE MADE THE PAYMENT BY ACCOUNT PAYEE CHEQUE WHICH HAS BEEN DULY DEBITED IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH IDBI BANK, AMRATALA STREET BRANCH. WE NOTE THAT THE BROKER HAS TRANSFERRED THE SHARES IN ASSESSEES DEP OSITORY ACCOUNT MAINTAINED WITH THE BROKER M/S. MOTILAL OSWAL SECURITIES LTD., THE DEPO SITORY PARTICIPANT. WE NOTE THAT SHARES WERE HELD IN THE ASSESSEES NAME IN DE MAT ACCOUNT TILL THE TIME IT WAS SOLD AND THE DE MAT STATEMENT WAS ALSO PRODUCED BEFORE THE AUTHORITIES BELOW. 42. THE SHARES IN M/S. TUNI TEXTILES MILLS WERE SOL D THROUGH THE SAME BROKERS ON 13.06.2012 TO 15.06.2012 ON THE ELECTRONIC PLATFORM OF BSE. AFTER THE SALE, THE BROKER ISSUED CONTRACT NOTE CUM BILL FOR SALE OF SHARES AN D AFTER THE DELIVERY OF THE SAID SHARES WERE DONE BY ISSUE OF INSTRUCTION SLIP TO THE DEPOSITORY PARTICIPANT FOR TRANSFER OF EQUIVALENT NUMBER OF SHARES TO THE BROKERS ACCOUNT FOR ONWARD TRANSFER OF THE SAID SHARES TO STOCK EXCHANGE. THE SALE CONSIDERATION WAS OBTAINED BY TH E ASSESSEE THROUGH BANKING CHANNEL. THUS, THE ASSESSEE HAS PRODUCED ALL THE DOCUMENTS T O PROVE THE TRANSACTION FOR CLAIMING THE LTCG. WHEREAS THE AO DID NOT FIND ANY INFIRMITY IN THE DOCUMENTS FURNISHED BEFORE HIM WHEREAS HE GOT IT CARRIED AWAY BY THE REPORT OF THE INVESTIGATION WING AS WELL AS THE 40 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 STATEMENT GIVEN BY SHRI DEVESH UPADHAYAY AGAINST WH OM THE ASSESSEE ASKED FOR CROSS EXAMINATION WAS DENIED. THOUGH THE STATEMENT OF SH RI DEVESH UPADHYAY DOES NOT IN ANY WAY INCRIMINATE THE ASSESSEE AND SINCE THE AO HAS H EAVILY RELIED ON THE STATEMENT IT WAS INCUMBENT UPON HIM TO ALLOW THE ASSESSEE TO CROSS E XAMINE SHRI DEVESH UPADHYAY WITHOUT WHICH THE STATEMENT OF SHRI DEVESH UPADHYAY CANNOT BE RELIED UPON TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE. SO WITHOUT ANY INCR IMINATING MATERIALS AGAINST THE ASSESSEE UNEARTHED DURING THE SEARCH QUA THIS ASSESSEE THIS ASSESSMENT YEAR IN RESPECT OF THE CLAIM OF THE ASSESSEE, NO ADDITION CAN BE MADE BY THE ASSESS EE IN THE LIGHT OF THE HONBLE DELHI HIGH COURT DECISION IN CIT VS. KABUL CHAWLA (2016) 380 I TR 573 (DEL.), CONCURRED BY THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. VEERP RABHU MARKETING IN ITA NO. 661 OF 2008 AND THE HONBLE SUPREME COURT UPHOLDING THE OR DER OF HONBLE DELHI HIGH COURT IN KURELE PAPER MILLS (SUPRA) AND SINCE THERE IS NO IN CRIMINATING MATERIAL QUA THE ASSESSMENT YEAR UNDER CONSIDERATION AGAINST THE ASSESSEE, THER EFORE, NO ADDITION IS WARRANTED AND THEREFORE, THE LTCG CLAIM OF THE ASSESSEE IS TO BE ALLOWED AND WE DIRECT THE AO DELETION OF RS 56,76,063/-. 43, NEXT TO THE COMMISSION OF 5% SINCE WE HAVE DECI DED THAT THE LTCG CLAIM IS GENUINE QUESTION OF DISALLOWANCE OF COMMISSION DOES NOT AR ISE AND NO DISALLOWANCE ON THIS COUNT WAS WARRANTED AND SO WE DIRECT THE DELETION OF RS 2 ,83,803/-. 44. FOR AY 2014-15, THE ASSESSEE HAD FILED THE RETU RN OF INCOME ON 31.12.2014 WHICH WAS ACCEPTED U/S. 143(1) OF THE ACT ON 10.03.2015 A ND THE LAST DATE FOR ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT EXPIRED ON 30.09.2015 AND SI NCE SEARCH HAPPENED ON 15.12.2015 THE ASSESSMENT YEAR 2014-15 IS NOT PENDING ON THE DATE OF SEARCH AND SO IS AN UNABATED ASSESSMENT U/S. 153A OF THE ACT. ACCORDING TO AO, T HE ASSESSEE HAD SHOWN IN THIS ASSESSMENT YEAR THAT SHE HAD RECEIVED LTCG ON SALE OF SHARES OF M/S. ISLAND MEDIA ENTERTAINMENT WHICH HAS BEEN MERGED WITH M/S. SRK I NDUSTRIES WHICH ASSESSEE CLAIMED TO HAVE EXEMPTED INCOME. THE AO WITHOUT ACCEPTING THE PLEA OF ASSESSEE THAT UNLESS THERE IS 41 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 ANY INCRIMINATING MATERIAL AGAINST THE ASSESSEE QUA THIS ASSESSMENT YEAR, THE AO HAS MADE THE ENTIRE CLAIM AS AN ADDITION U/S. 68 OF RS.4,15, 84,883/- AND THEREAFTER, COMMISSION @ 5% OF RS.20,79,244/- WAS ADDED TO THE INCOME OF THE AS SESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS P LEASED TO DISMISS THE SAME. AGGRIEVED, THE ASSESSEE IS BEFORE US. 45. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY G ONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THIS ASSES SMENT YEAR WAS NOT PENDING ON THE DATE OF SEARCH SO, ADDITION/DISALLOWANCE CAN BE MADE ONLY W ITH THE AID OF INCRIMINATING MATERIAL QUA THAT ASSESSMENT YEAR, THIS RATIO DECIDENDI OF T HE HONBLE DELHI HIGH COURT IN CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL.), WAS CONCURR ED BY THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. VEERPRABHU MARKETING LTD. (20 16) 73 TAXMAN 143 (CAL), AND THE HONBLE SUPREME COURT UPHOLDING THE ORDER OF HONBL E DELHI HIGH COURT IN KURELE PAPER MILLS (SUPRA), CONCURRED WITH HONBLE DELHI HIGH CO URT THAT NO ADDITION CAN BE MADE WITHOUT INCRIMINATING MATERIALS QUA THE ASSESSMENT YEAR UNDER CONSIDERATION. WE NOTE THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 31.1 2.2014 WHEREIN THE ASSESSEE HAS DULY DISCLOSED THE EXEMPT INCOME OF RS.4,15,84,882/- WHI CH HAS BEEN ACCEPTED BY AN INTIMATION U/S. 143(1) ON 10.03.2015 AND THE NOTICE FOR ISSUE OF 143(2) NOTICE EXPIRED ON 30.09.2015 AND SINCE THE SEARCH HAPPENED ONLY ON 15.12.2015 TH IS ASSESSMENT YEAR IS OBVIOUSLY NOT PENDING ON THE DATE OF SEARCH AND SO, THE AO HAS TO REITERATE THE RETURN OF INCOME OF THE ASSESSEE OF RS.7,77,552/- AND ONLY UNSETTLE THE SAM E BY MAKING AN ADDITION/DISALLOWANCE ONLY ON THE BASIS OF INCRIMINATING MATERIALS UNEART HED DURING SEARCH QUA THIS ASSESSMENT YEAR. AS AFORESAID, THE ASSESSEE HAD SHOWN IN ITS R ETURN THE LTCG EXEMPT INCOME FROM THE SALE OF SHARES PURCHASED FROM M/S. ISLAND MEDIA ENT ERTAINMENT, M/S. TRANSCEND INDUSTRIES LTD. WHICH HAS BEEN MERGED WITH M/S. SRK INDUSTRIES . DURING THE PROCEEDINGS U/S. 153A, THE ASSESSEE HAS FILED THE FOLLOWING DOCUMENTS TO S UBSTANTIATE ITS CLAIM OF LTCG WHICH WAS EXEMPT U/S. 10(38) OF THE ACT ON SALE OF M/S. SRK I NDUSTRIES BY FILING THE COPY OF THE CONTRACT NOTE FOR PURCHASE OF THE SAME FROM PAGES 1 46 TO 162 OF THE PAPER BOOK WHEREIN WE 42 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 NOTE THAT THE ASSESSEE HAD FILED COPIES OF THE CONT RACT NOTE FOR PURCHASE OF SHARES, COPY OF BANK STATEMENT SHOWING THE PAYMENT, COPY OF DE MAT STATEMENT, COPY OF CONTRACT NOTE FOR SALE OF SHARES, COPY OF BANK STATEMENT FOR RECEIPT OF PAYMENT AND DE MAT STATEMENT SHOWING DELIVERY OF THE SHARES. THE ASSESSEE HAD ALSO REQU ESTED THE AO TO SUMMON SHRI DEVESH UPADHYAY AS WELL AS THE BROKERS OF THE ASSESSEE M/S . MOTILAL OSWAL SECURITIES LTD. SO THAT BOTH OF THEM CAN BE CROSS EXAMINED BY THE ASSESSEE VIDE LETTER DATED 15.12.2017 AND 19.12.2017. WE NOTE THAT FOR CLAIMING THE LTCG, TH E ASSESSEE HAD PURCHASED 57,000 EQUITY SHARES OF M/S. TRANSCEND COMMERCE LIMITED AT THE RA TE OF RS. 10/- EACH ON 31.10.2012 FROM M/S ISLAND MEDIA AND ENTERTAINMENT PVT. LTD. T HE COPY OF THE BILL FROM THE SAID PARTY EVIDENCING THE ABOVE PURCHASES IS FOUND ENCLOSED IN PAPER BOOK. AGAINST THE BILL FOR PURCHASE RAISED BY THE SELLER M/S. ISLAND MEDIA AND ENTERTAINMENT PVT. LTD, THE PAYMENT WAS MADE BY WAY OF ELECTRONIC TRANSFER I.E RTGS WHI CH IS DULY DEBITED IN THE BANK A/C MAINTAINED BY ASSESSEE WITH BANK OF BARODA, INDIA E XCHANGE KOLKATA BRANCH, COPY OF WHICH IS FOUND ENCLOSED IN THE PAPER BOOK. THUS, T HE SOURCE OF PAYMENT FOR PURCHASE OF SHARES IS NOT DISPUTED. CONSEQUENT TO THE PAYMENT H AVING BEEN MADE, THE PARTY TRANSFERRED THE SHARES IN ASSESSEE'S DE MAT DEPOSITORY ACCOUNT MAINTAINED WITH M/S MOTILAL OSWAL SECURITIES LTD, THE DEPOSITORY PARTICIPANT. THEREAF TER THE COMPANY M/S. TRANSCEND COMMERCE LIMITED MERGED WITH M/S. SRK INDUSTRIES LT D. ON MERGER THE ASSESSEE GOT 126540 SHARES OF M/S SRK INDUSTRIES LTD IN PLACE OF 57,000 SHARES OF TRANSCEND COMMERCE LTD. THEREAFTER THE SHARES OF THE COMPANY SPLIT FRO M FACE VALUE OF RS.10/- EACH TO FACE VALUE OF RS.5/- EACH. THUS THE NUMBER OF SHARES HELD BY H IM INCREASED TO 253080 SHARES HAVING FACE VALUE OF RS.5/- EACH. THESE TRANSACTIONS ARE D ULY DEPICTED IN THE DEMAT STATEMENT OF THE ASSESSEE AND THESE SHARES WERE DULY HELD IN THE ASS ESSEE'S NAME IN DEMAT A/C BEFORE BEING SOLD. COPY OF DEMAT STATEMENT IS FOUND ENCLOSED. TH E SHARES IN M/S. SRK INDUSTRIES LTD. WHICH WAS LISTED ON BSE WITH CODE 531307 WERE SOLD THROUGH THE BROKER M/S MOTILAL OSWAL SECURITIES LTD ON 23.12.2013, 24.12.2013, 31.12.201 3, 01.01.2014, 02.01.2014, 06.01.2014, 06.01.2014, 09.01.2014 13.01.2014, 16.01.2014, 17.0 1.2014, 20.01.2014 & 22.01.2014 ON 43 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 THE ELECTRONIC PLATFORM OF THE BOMBAY STOCK EXCHANG E THROUGH THE REGISTERED BROKER AND PAYMENT WAS RECEIVED BY THE ASSESSEE THROUGH BANKIN G CHANNEL. THUS THE ASSESSEE HAS DISCHARGED HER ONUS TO PROVE THE LTCG CLAIM WHICH H AS BEEN MADE ON THE SALE OF SHARES OF M/S. SRK INDUSTRIES, THEREFORE, NO ADDITION IS WARR ANTED ON MERITS AND SINCE THERE IS NO INCRIMINATING MATERIAL QUA THE ASSESSMENT YEAR UNDE R CONSIDERATION AGAINST THE ASSESSEE, THEREFORE ADDITION OF RS 4,15,84,883/- AND COMMISSI ON @5% OF RS 20,79,244/- IS DIRECTED TO BE DELETED. THUS GROUNDS OF APPEAL FOR THESE TWO ASSESSMENT YEARS ARE ALLOWED IN FAVOUR OF THE ASSESSEE. APPEAL OF SHRI ROBIN SARAOGI IN IT(SS)A NOS. 50 & 5 1/KOL/2018 46. COMING TO AY 2010-11 IN THE APPEAL PREFERRED BY SHRI ROBIN SARAOGI, THE ASSESSEE, WHO IS THE SON OF MR. NARENDRA KUMAR SARAOGI FILED HIS RETURN OF INCOME ON 11.10.2010. HE RECEIVED INTIMATION FROM THE DEPARTMENT U/S. 143 (1) OF THE ACT ON 12.05.2011 AND SINCE THE SEARCH HAPPENED ON 15.12.2015 THIS ASSESSMENT Y EAR WAS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH AND SO IT IS AN UNABATED ASSESSM ENT U/S. 153A PROCEEDING. THE AO HAS TAKEN NOTE THAT THE ASSESSEE HAS CLAIMED LTCG ON SA LE OF SHARES OF M/S. KAILASH FICOM LTD. (NOW M/S. MINDVISION CAPITAL LTD.) THE AO TAKING NO TE OF THE ASTRONOMICAL RISE IN PRICE OF SHARES, HE WAS OF THE OPINION THAT THERE WAS MANIPU LATION ON THE TRADING ACTIVITY AND RIGGING OF PRICES SO ACCORDING TO HIM, THE HUMAN PROBABILIT IES DOES NOT ALLOW HIM TO ACCEPT THE CLAIM OF THE ASSESSEE AND FOR THE SAME REASON AS IN THE CASE OF OTHER ASSESSEES, HE ADDED AN AMOUNT OF RS.26,47,257/- AS WELL AS AN AMOUNT OF RS .1,32,362/- AS UNEXPLAINED COMMISSION FOR LTCG. AGGRIEVED, THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE, AGAINST WHICH THE ASSESSEE IS BEFORE US. 47. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY G ONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSE E MAINTAINS CLIENT ACCOUNT WITH BROKER M/S ACCORD CAPITAL MARKET LTD WHICH IS A REGISTERED BROKER WITH SEBI TO DEAL IN SHARES AND 44 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 SECURITIES AND ALSO MEMBER OF BOTH NATIONAL STOCK E XCHANGE AND BOMBAY STOCK EXCHANGE. THAT ON INSTRUCTION FROM ASSESSEE, THE BROKER M/S A CCORD CAPITAL MARKET LTD PURCHASED 30000 SHARES & 2500 SHARES OF M/S KAILASH FICOM LTD NOW M/S. MINDVISION CAPITAL LTD (WHICH SHARES WERE QUOTED & REGULARLY TRADED ON BSE ) ON 11.04.2008 & 15.04.2008 FROM THE PLATFORM OF BSE, CONTRACT NOTES FOR THE SAID TR ANSACTION WERE FILED BEFORE THE AO/LD. CIT(A) AND IS FOUND PLACED IN PAPER BOOK. WE NOTE THAT THE ASSESSEE HAD MADE THE PAYMENT TO THE BROKER BY CHEQUE FROM ITS BANK ACCOUNT MAINT AINED WITH IDBI BANK AGAINST THE PURCHASE OF THE SHARES. COPY OF THE BANK STATEMENT IS FOUND PLACED IN PAPER BOOK EVIDENCE PAYMENT THROUGH BANK AND THAT THEREAFTER THE BROKER HAD TRANSFERRED THE SHARES IN THE DEMAT ACCOUNT OF THE ASSESSEE MAINTAINED WITH THE SAME BR OKER M/S ACCORD CAPITAL MARKET LTD, AS DEPOSITORY PARTICIPANT. COPY OF THE DEMAT STATEMENT IS FOUND PLACED IN PAPER BOOK AND THAT THE SAID SHARES ON INSTRUCTION FROM ASSESSEE W ERE SOLD BY BROKER M/S ACCORD CAPITAL MARKET LTD ON 12.01.2010, 13.01.2010 & 18.01.2010 B EING 20000, 10000 & 2500 EQUITY SHARES ON THE PLATFORM OF BOMBAY STOCK EXCHANGE, TH E RELEVANT CONTRACT NOTES WERE FILED WITH ASSESSING OFFICER/LD. CIT(A) AND FOUND PLACED IN PAPER BOOK. WE NOTE THAT THE CONTRACT NOTES SPECIFICALLY SHOW THE AMOUNT OF STT PAID ON THE SAID TRANSACTIONS OF SALE EXECUTED ON THE BOMBAY STOCK EXCHANGE. AND THAT TH E ASSESSEE HAS RECEIVED PAYMENT FROM THE BROKER ON 18.10.2010, 19.10.2010 & 22.10.2010 A GAINST THE ABOVE SALE IN ITS BANK ACCOUNT MAINTAINED WITH BANK OF BARODA. COPY OF THE BANK STATEMENT IS FOUND PLACED IN PAPER BOOK DISCLOSING THIS FACT. 48. WE NOTE THAT THE ASSESSEE HAD SOLD THE SHARES OF M /S KAILASH FICOM LTD NOW M/S. MINDVISION CAPITAL LTD WHICH ARE LISTED ON THE BOMB AY STOCK EXCHANGE WITH A BSE CODE OF 530955AND EARNED LONG TERM CAPITAL GAIN WHICH IS EXEMPT UNDER SECTION 10(38). THE ASSESSING OFFICER HAS NEITHER FOUND ANY INFIRMITY I N THE DOCUMENTS FILED NOR BOTHERED TO VERIFY THE EVIDENCES FILED BY THE ASSESSEE, BUT HAD GOT CARRIED AWAY BY THE INVESTIGATION REPORT AND MECHANICALLY TREATED THE TRANSACTION AS BOGUS ADDED THE SAID AMOUNT AS UNDISCLOSED INCOME UNDER SECTION 68. SINCE THE ASSE SSEE HAS PRESENTED ALL THE RELEVANT 45 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 DOCUMENTS SUCH AS CONTRACT NOTES, BILLS AND DE-MAT ACCOUNT DETAILS THE LONG-TERM CAPITAL GAIN EARNED ON SALE OF SHARES THROUGH BSE THE CLAIM OF A SSESSEE UNDER SECTION 10(38) NEED TO BE ALLOWED UNLESS ANY ADVERSE MATERIAL IS IN THE POSSE SSION OF THE AO TO DISALLOW IT. SO WITHOUT ANY INCRIMINATING MATERIALS AGAINST THE ASS ESSEE UNEARTHED DURING THE SEARCH QUA THIS ASSESSEE THIS ASSESSMENT YEAR IN RESPECT OF TH E CLAIM OF THE ASSESSEE, NO ADDITION CAN BE MADE BY THE ASSESSEE IN THE LIGHT OF THE HONBLE D ELHI HIGH COURT DECISION IN CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL.), CONCURRED B Y THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. VEERPRABHU MARKETING IN ITA NO. 6 61 OF 2008 AND THE HONBLE SUPREME COURT UPHOLDING THE ORDER OF HONBLE DELHI HIGH COU RT IN KURELE PAPER MILLS (SUPRA) AND SINCE THERE IS NO INCRIMINATING MATERIAL QUA THE AS SESSMENT YEAR UNDER CONSIDERATION AGAINST THE ASSESSEE, THEREFORE, NO ADDITION IS WARRANTED A ND ADDITION OF RS 26,47,257/- AND COMMISSION @5% OF RS 1,32,362/- MADE IS DIRECTED TO BE DELETED.. 49. COMING TO AY 2013-14. THE RETURN OF INCOME WAS FIL ED BY SHRI ROBIN SARAOGI ON 30.10.2013 AND THE ASSESSEE RECEIVED 143(1) INTIMAT ION FROM THE DEPARTMENT ON 26.03.2015 AND SINCE THE SEARCH HAPPENED ON 15.12.2015 THE ASS ESSMENT FOR THIS ASSESSMENT YEAR WAS NOT PENDING ON THE DATE OF SEARCH SO IT IS AN UNABA TED ASSESSMENT. THE AO NOTED THAT ASSESSEE HAD CLAIMED LTCG ON SALE OF SHARES OF M/S. TUNI TEXTILES AND DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND MADE AN ADDITION OF RS.1, 22,31,722/- AND ALSO ADDED A COMMISSION @ 5% OF RS.6,11,586/-. AGGRIEVED, THE A SSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WHO WAS PLEASED TO DISMISS THE SAME. AGGRIE VED, THE ASSESSEE IS BEFORE US. 50. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSE E MAINTAINS CLIENT ACCOUNT WITH BROKER M/S. JALAN & CO. WHICH IS A REGISTERED BROKER WITH SEBI TO DEAL IN SHARES AND SECURITIES AND ALSO MEMBER OF BOTH NATIONAL STOCK EXCHANGE AND CAL CUTTA STOCK EXCHANGE. THAT ON INSTRUCTION ASSESSEE, THE BROKER M/S. JALAN & CO. P URCHASED 10000 SHARES OF M/S. TUNI TEXTILES LTD. (WHICH SHARES WERE QUOTED & REGULARLY TRADED ON BSE) ON 08.03.2011 FROM THE 46 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 PLATFORM OF BSE, SUMMARIZED CONTRACT NOTES FOR THE SAID TRANSACTION WERE FILED BEFORE THE AO/LD. CIT(A) AND IS FOUND PLACED IN PAPER BOOK. W E NOTE THAT THE ASSESSEE HAD MADE THE PAYMENT TO THE BROKER ON 11.03.2011 BY CHEQUE FROM ITS BANK ACCOUNT MAINTAINED WITH BANK OF BARODA AGAINST THE PURCHASE OF THE SHARES I NCLUDING ABOVE. COPY OF THE BANK STATEMENT IS EVIDENCING PAYMENT THROUGH BANK IS FOU ND PLACED IN PAPER BOOK AND THAT THEREAFTER THE BROKER HAD TRANSFERRED THE SHARES IN THE DEMAT ACCOUNT OF THE ASSESSEE MAINTAINED WITH THE SAME BROKER M/S JALAN & CO, AS DEPOSITORY PARTICIPANT. COPY OF THE DEMAT STATEMENT EVIDENCING THE SAME IS FOUND PLACED IN PAPER BOOK AND WE NOTE THAT THE COMPANY CHOSE TO SPLIT THE SAID EQUITY SHARES OF FA CE VALUE OF RS.10/-EACH TO THE FACE VALUE OF RS.L/- EACH ON 07.04.2011. THUS, THE TOTAL SHARE HOLDING HELD BY THE ASSESSEE IN THE COMPANY AS ON THAT DATE I.E. 7.4.2011 BEING 10000 E QUITY SHARE HAVING FACE VALUE OF RS 10/- EACH AUTOMATICALLY BY CORPORATE ACT ON STOOD CONVER TED IN TO 1,00,000 EQUITY SHARES HAVING FACE VALUE OF RE 1/- EACH OF TUNI TEXTILES LTD. IN THE DEMAT ACCOUNT OF THE ASSESSEE BY WAY OF ABOVE CORPORATE ACTION AS EVIDENT FROM DEMAT STA TEMENT. 51. THAT THE SAID SHARES ON INSTRUCTION FROM ASSESSEE W ERE SOLD BY BROKER M/S JALAN & CO ON 28.06.2012, 02.07.2012, 03.07.2012, 04.07.2012 & 06.07.2012 BEING 28000, 13400, 6800, 7000 & 44800 EQUITY SHARES OF RS. 1/- EACH RE SPECTIVELY ON THE PLATFORM OF BOMBAY STOCK EXCHANGE, RELEVANT CONTRACT NOTES HAVE BEEN F ILED BEFORE ASSESSING OFFICER/CIT(A) AND FOUND PLACED IN PAPER BOOK. WE NOTE THAT THE CO NTRACT NOTES SPECIFICALLY SHOW THE AMOUNT OF STT PAID ON THE SAID TRANSACTIONS OF SALE EXECUTED ON THE BOMBAY STOCK EXCHANGE. AND THAT THE ASSESSEE HAS RECEIVED PAYMEN T FROM THE BROKER ON 04.12.2012, 05.07.2012, 06.07.2012, 07.07.2012 & 11.07.2012 AGA INST THE ABOVE SALE IN ITS BANK ACCOUNT MAINTAINED WITH IDBI BANK. COPY OF THE BANK STATEME NT EVIDENCING THE SAME IS FOUND PLACED IN PAPER BOOK. 52. WE NOTE THAT THE ASSESSEE HAD SOLD THE SHARES O F M/S. TUNI TEXTILE LTD WHICH ARE LISTED ON. THE BOMBAY STOCK EXCHANGE WITH A BSE COD E OF 531411 AND EARNED LONG TERM 47 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 CAPITAL GAIN WHICH IS EXEMPT UNDER SECTION 10(38). THE ASSESSING OFFICER HAS NEITHER FOUND ANY INFIRMITY IN THE DOCUMENTS FILED NOR BOTHERED T O VERIFY THE EVIDENCES FILED BY THE ASSESSEE, BUT HAD GOT CARRIED AWAY BY THE INVESTIGA TION REPORT AND MECHANICALLY TREATED THE TRANSACTION AS BOGUS AND ADDED THE SAID AMOUNT AS U NDISCLOSED INCOME UNDER SECTION 68. SINCE THE ASSESSEE HAS PRESENTED ALL THE RELEVANT D OCUMENTS SUCH AS CONTRACT NOTES, BILLS AND DE-MAT ACCOUNT DETAILS THE LONG-TERM CAPITAL GAIN E ARNED ON SALE OF SHARES THROUGH BSE THE CLAIM OF ASSESSEE UNDER SECTION 10(38) NEED TO BE A LLOWED UNLESS ANY ADVERSE MATERIAL IS IN THE POSSESSION OF THE AO TO DISALLOW IT. SO WITHOU T ANY INCRIMINATING MATERIALS AGAINST THE ASSESSEE UNEARTHED DURING THE SEARCH QUA THIS ASSES SEE THIS ASSESSMENT YEAR IN RESPECT OF THE CLAIM OF THE ASSESSEE, NO ADDITION CAN BE MADE AGAI NST THE ASSESSEE IN THE LIGHT OF THE HONBLE DELHI HIGH COURT DECISION IN CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL.), CONCURRED BY THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. VEERPRABHU MARKETING LTD. (2016) 73 TAXMAN 143 (CAL), AND THE HONBLE SUPREME COURT UPHOLDING THE ORDER OF HONBLE DELHI HIGH COURT IN KURELE PAPER MILLS (SUP RA) AND SINCE THERE IS NO INCRIMINATING MATERIAL QUA THE ASSESSMENT YEAR UNDER CONSIDERATIO N AGAINST THE ASSESSEE, THEREFORE, NO ADDITION IS WARRANTED AND ADDITION OF RS 1,22,31,7 22/- AND COMMISSION @5% OF RS 6,11,586/- MADE IS DIRECTED TO BE DELETED. THUS GRO UNDS OF APPEAL FOR THESE TWO ASSESSMENT YEARS ARE ALLOWED IN FAVOUR OF THE ASSESSEE. 53. SINCE THERE ARE GENERAL GROUNDS OF APPEAL IN AL L THE APPEALS THEY ARE DISMISSED. 54. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 25TH JANU ARY, 2019. SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25TH JANUARY, 2019 JD.(SR.P.S.) 48 IT(SS)A NOS.46&47/KOL/2018 NARENDRA KUMAR SARAOGI, AYS. 2014-15 & 2015-16 IT(SS)A NOS.42&43/KOL/2018 SMT. URMILA DEVI SARAOGI, AYS. 2013-14 & 2014-15 IT(SS)A NOS.50&51/KOL/2018 ROBIN SARAOGI, AYS. 2010-11 & 2013-14 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT (I) SHRI NARENDRA KUMAR SARAOGI (II) SMT. URMILA DEVI SARAOGI AND (III) SHRI ROBIN SARAOGI BF-254, SALT LAKE, KOLKATA-700 064. 2 RESPONDENT DCIT, CENTRAL CIRCLE-3(4), KOLKATA. 3. 4. CIT(A)-21, KOLKATA (SENT THROUGH E-MAIL) CIT- , KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR