M/s. Bhansali Fincom Pvt. Ltd., , Kolkata V. DCIT, Central Circle - 3(3), Kolkata , Kolkata

ITSSA 61/KOL/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4281 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 13-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Assessee Lawyers: S M SURANA
• Keywords: Depreciation; Income from undisclosed sources; Search and seizure; Principle of natural justice; Opportunity of cross examination; Transactions in derivatives; Question of law; Corroborative evidences; Accommodation entries; Block assessment; Onus to prove; Penny stocks
• Section: 143(3); 153A; 234B; 14A; 260A; 115JB; 68; 63; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM & SHRI M.BAL AGANESH, AM ] I.T.A NO. 61/KOL/2018 ASSESSMENT YEARS : 2014- 15 M/S BHANSALI FINCOM PVT. LTD. -VS- DC IT, CENTRAL CIRCLE-3(3), KOLKATA [PAN: AABCB 3060 B] (APPELLANT) (RESPOND ENT) FOR THE APPELLANT : SHRI S.M. SU RANA, ADVOCATE FOR THE RESPONDENT : SHRI P.K. SRIHARI, CIT DR DATE OF HEARING : 03.10.2018 DATE OF PRONOUNCEMENT : 10.10.2018 ORDER PER M.BALAGANESH, AM 1.THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE OR DER PASSED THE LD. COMMISSIONER OF INCOME TAX(APPEAL)-21, KOLKATA (IN SHORT THE LD. CI T(A)] IN APPEAL NOS. 10799/DCIT, CC-3(3)/CIT(A)-21/KOL/2017-18 DATED 02.07.2018 AG AINST THE ORDER PASSED BY THE ACIT, CC-3(3), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 153A / 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 31 .12.2017 FOR THE ASSESSMENT YEAR 2014-15. 2. THE ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETH ER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CITA WAS JUSTIFIED IN CONFIRMING THE D ISALLOWANCE OF TRADING LOSS ON SALE OF SHARES OF M/S FIRST FINANCIAL SERVICES LTD AND COMF ORT FINCAP LTD IN THE SUM OF RS 30,26,421/- AS BOGUS FOR THE ASST YEAR 2014-15 IN T HE ASSESSMENT FRAMED U/S 153A OF THE ACT. 2 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 2 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE THE A SSESSEE IS A COMPANY CARRYING ON BUSINESS OF DEALING IN SHARES AND LOAN TRANSACTIONS . THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2014-15 ON 22.9.2014 DECLA RING TOTAL INCOME OF RS 22,42,340/-. THIS RETURN WAS PROCESSED U/S 143(1) O F THE ACT ON 17.6.2015 DETERMINING REFUND OF RS 20/-. THE RETURN WAS SELECTED FOR SCRU TINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE ACT ON 28.8.2015 WHICH WAS DULY SERVED ON TH E ASSESSEE BY SPEED POST. THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED U/S 13 2 OF THE ACT AT THE RESIDENTIAL, OFFICE PREMISES,BANK LOCKERS ETC OF THE PATNI GROUP OF CAS ES ON 8.3.2016. A SEARCH WARRANT WAS EXECUTED IN THE NAME OF THE ASSESSEE. CONSEQUE NT TO THE SEARCH, NOTICE U/S 153A OF THE ACT WAS ISSUED ON THE ASSESSEE FOR THE ASST YEA R 2014-15. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 21.10.2016 DECLARING TOTAL INCOME OF RS 22,42,340/-. HENCE AS ON THE DATE OF SEARCH, TH E ASSESSMENT FOR THE ASST YEAR 2014- 15 WAS PENDING WOULD FALL UNDER THE CATEGORY OF AB ATED ASSESSMENT AND HENCE THE TOTAL INCOME COULD BE DETERMINED BY THE LD AO IN THE ASSE SSMENT TO BE FRAMED U/S 153A OF THE ACT IRRESPECTIVE OF THE EXISTENCE OF THE INCRIM INATING MATERIALS FOUND DURING THE COURSE OF SEARCH. THE LD AO SERVED ANOTHER NOTICE U/S 143(2) OF THE ACT BY EMAIL ON 18.9.2017 ON THE ASSESSEE AFTER THE DATE OF FILING OF RETURN BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 153A OF THE ACT . 4. THE BREAK UP OF COMPUTATION OF TOTAL INCOME OF T HE ASSESSEE IS AS UNDER:- INCOME FROM BUSINESS OR PROFESSION - RS 22,42,34 0/- INCOME FROM OTHER SOURCES (EXEMPT DIVIDEND- RS 82,5 35) - RS 0/- -------------------- TOTAL INCOME UNDER NORMAL PROVISIONS OF THE ACT RS 22,42,340/- -------------------- COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT NET PROFIT AS PER PROFIT AND LOSS ACCOUNT - RS 2 2,38,994/- ADD: CONTINGENT PROVISION AGAINST STANDARD ASSETS 8,409 3 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 3 EXPENSES DISALLOWED U/S 14A - 24,360 INCOME TAXES FOR EARLIER YEAR - 46,9 25 TDS WRITTEN OFF - 3,263 --------------- - RS 82,957/- ------------------- RS 23,21,951/- LESS: DIVIDEND EXEMPT U/S 10(34) RS 82,5 35/- ------------------- BOOK PROFITS U/S 115JB OF THE ACT RS 22,39,4 16/- ------------------- 5. THE DETAILS OF INCOME AND EXPENDITURE OF THE ASS ESSEE ARE AS UNDER:- INCOME REVENUE FROM OPERATIONS SALE OF EQUITY SHARES 17,00,079 INTEREST INCOME FROM LOAN 61,38,836 ---------------- 78,38,915 OTHER INCOME DIVIDEND RECEIVED 82,535 INTEREST ON INCOME TAX REFUND 11,090 PROFIT DISTRIBUTION FROM DEVELOPMENT FUND 6, 840 ------------- 1,00,465 ------------------ TOTAL REVENUE (A) 79,39,380 ------------------ EXPENSES PURCHASE OF EQUITY SHARES (STOCK IN TRADE) 47,26, 500 SALARY AND BONUS 4,37,367 INTEREST ON LOAN 1,51,233 DEPRECIATION AND AMORTIZATION EXPENSES 10,02 2 OTHER EXPENSES RATES & TAXES 4,400 AUDIT FEES 9,551 RENT PAID 60,000 MISCELLANEOUS EXPENSES 2,45,979 4 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 4 INCOME TAXES FOR EARLIER YEAR 46,925 CONTINGENT PROVISION AGAINST STANDARD ASSETS 8 ,409 ------------ 3,75,264 ------------------- TOTAL EXPENSES (B) 57,00,386 ------------------- NET PROFIT (A) (B) 22,38,994 6. THE ASSESSEE PURCHASED 4500 EQUITY SHARES OF M/S COMFORT FINCAP LTD DURING THE YEAR FOR RS 17,79,021/- AND SOLD THE SAME DURING TH E YEAR FOR RS 7,13,890/-. SIMILARLY IT PURCHASED 132000 EQUITY SHARES OF M/S FIRST FINANCI AL SERVICES LTD FOR RS 29,47,479/- AND SOLD THE SAME DURING THE YEAR FOR RS 9,86,189/- . SINCE THE PRIMARY BUSINESS OF THE ASSESSEE IS DEALING IN SHARES, THE LOSS INCURRED ON SALE OF SUCH SHARES OF RS 30,26,421/- WAS CLAIMED AS BUSINESS LOSS AND THE SAME WAS SET O FF WITH OTHER INCOME OF THE ASSESSEE IN THE RETURN OF INCOME. THE LD AO ALLEGED THAT T HE ASSESSEE BY BOOKING THIS TRADING LOSS HAD PRACTICALLY SET OFF THE SAME WITH THE INTE REST INCOME WHICH WOULD BE SEPARATELY TAXED OTHERWISE, AMONG OTHERS. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS, A STATEMENT WAS RECORDED U/S 132(4) OF THE ACT FROM S HRI AKHILESH KR JAIN, DIRECTOR OF THE ASSESSEE COMPANY. ON THE BASIS OF THIS STATEME NT, THE LD AO CAME TO A CONCLUSION THAT THE SHARES TRADED BY THE ASSESSEE ARE TO BE CL ASSIFIED AS PENNY STOCKS AND THE ENTIRE TRADING LOSS WAS PRE-ARRANGED ONE WITH A MALIGN INT ENTION TO EVADE TAX ON OTHER INCOME OF THE ASSESSEE. ACCORDINGLY, HE PROCEEDED TO DISAL LOW THE TRADING LOSS ON SALE OF SHARES CLAIMED IN THE SUM OF RS 30,26,421/- IN THE ASSESSM ENT. THIS ACTION OF THE LD AO WAS UPHELD BY THE LD CITA. AGGRIEVED, THE ASSESSEE IS I N APPEAL BEFORE US FOR THE ASST YEAR 2014-15. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS NOT I N DISPUTE THAT THE ENTIRE PURCHASE AND SALE OF SHARES TRANSACTIONS HAVE BEEN ROUTED THROUG H RECOGNIZED STOCK BROKER AND TRADED IN RECOGNIZED STOCK EXCHANGE AND ARE DULY SUPPORTED BY CONTRACT NOTES FOR PURCHASE AND 5 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 5 SALE SEPARATELY, TRANSACTIONS HAD DULY SUFFERED SER VICE TAX, SECURITIES TRANSACTION TAX (STT) , BROKERAGE ETC. THE PAYMENTS ARE MADE BY TH E ASSESSEE BY ACCOUNT PAYEE CHEQUES FOR PURCHASES BY THE ASSESSEE THROUGH THE R ECOGNIZED AND REGISTERED SHARE BROKER. THE SALE PROCEEDS OF THE SHARES WERE RECEI VED IN ACCOUNT PAYEE CHEQUES FROM THE REGISTERED SHARE BROKER AND THROUGH THE STOCK E XCHANGE. WE FIND THAT THE REVENUE HAD PLACED HEAVY RELIANCE ON THE STATEMENT RECORDED FROM SHRI AKHILESH KR JAIN U/S 132(4) OF THE ACT. BUT IT IS PERTINENT TO NOTE THA T THE SAID STATEMENT HAS BEEN SUBSEQUENTLY RETRACTED BY HIM BEFORE THE HONBLE MA GISTRATE AND THE SAME HAS BEEN IGNORED BY THE LD AO AND THE LD CITA AS AN AFTER TH OUGHT AND ACCORDINGLY HAS GOT NO EVIDENTIARY VALUE. IN THIS REGARD, WITHOUT HAVING ANY CORROBORATIVE MATERIAL TO SUPPORT THE STATEMENT RECORDED DURING SEARCH, NO ADDITION C OULD BE MADE. ADMITTEDLY, NO OTHER CORROBORATIVE EVIDENCES WERE FOUND BY THE REVENUE T O SUPPORT THE STATEMENT RECORDED FROM SHRI AKHILESH KR JAIN. MOREOVER, ONCE A STATE MENT GIVEN IS RETRACTED, IT OBVIOUSLY LOSES ITS EVIDENTIARY VALUE AND THE SAME CANNOT BE RELIED UPON BY THE REVENUE FOR FRAMING AN ADDITION. IN THIS REGARD, THE INSTRUCT IONS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT IN SHORT) IN F.NO. 286/2/2003-IT (INV) DATED 10.3.2003 WOULD BE RELEVANT TO BE LOOKED INTO WHEREIN IT IS MENTIONED THAT WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATI ONS, NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. F OR THE SAKE OF CONVENIENCE AND CLARITY, THE RELEVANT INSTRUCTIONS DATED 10.3.2003 ISSUED BY CBDT IS REPRODUCED HEREUNDER:- TO ALL CHIEF COMMISSIONERS OF INCOME TAX (CADRE CONTRA ) & ALL DIRECTORS GENERAL OF INCOME TAX INV. SIR, SUB:- CONFESSION OF ADDITIONAL INCOME DURING THE CO URSE OF SEARCH & SEIZUREAND SURVEY OPERATION REGARDING 6 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 6 INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHER E ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOS ED INCOME DURING THE COURSE OF THE SEARCH & SEIZURE AND SURVEY OPERATIONS. SUCH CO NFESSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETRACTED BY THE CONCE RNED ASSESSEES WHILE FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, ON CONFE SSIONS DURING THE COURSE OF SEARCH& SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND C ONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WH AT HAS NOT BEEN DISCLOSED OR IS NOTLIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEP ARTMENTS. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH IT SEIZURES AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS T O THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. FURTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDIN GS ALSO, ASSESSING OFFICERS SHOULD RELY UPON THE EVIDENCES/MATERIALS GATHERED D URING THE COURSE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WHILE FRAMIN G THE RELEVANT ASSESSMENT ORDERS YOURS FAITHFULLY, SD/- (S. R. MAHAPATRA] UNDER SECRETARY (INV. II) 7.1. WE FIND LOT OF FORCE IN THE ARGUMENTS ADVANCED ON BEHALF OF THE ASSESSEE THAT RETRACTED STATEMENTS OF THIRD PARTIES HAVE BEEN REL IED UPON WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE SUCH T HIRD PARTIES. IN RESPONSE, THE LD DR VEHEMENTLY RELIED ON THE ORDERS OF THE LOWER AUTHOR ITIES BY STATING THAT EXTENSIVE ENQUIRIES WERE MADE BY THE INVESTIGATION WING OF IN COME TAX DEPARTMENT AND DISALLOWANCE HAS BEEN MADE BASED ON SUCH REPORTS AN D STATEMENTS RECORDED FROM VARIOUS PARTIES. HE ARGUED THAT THE RETRACTED STAT EMENTS SHOULD NOT BE GIVEN DUE COGNIZANCE AS IT IS ONLY AN AFTER THOUGHT. WE FIND THAT THE LD AO HAD PLACED RELIANCE ON THE INVESTIGATION REPORT OF DDIT AND FINDING OF SEB I IN RESPECT OF SCRIPS TRADED BY THE 7 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 7 ASSESSEE. THERE IS ABSOLUTELY NO EVIDENCE BROUGHT ON RECORD LINKING THE ASSESSEE WITH THE ALLEGED MALAFIDES. HENCE THE ENTIRE DISALLOWA NCE OF TRADING LOSS WAS MADE ONLY BASED ON SUSPICION, SURMISES AND CONJECTURES WITHOU T BRINGING ON RECORD WITH MATERIAL EVIDENCES, THE LINKAGE OF THE ASSESSEE AND BY PROVI NG THE CONNIVANCE OF THE ASSESSEE WITH THE STOCK BROKERS, STOCK EXCHANGE AND THE THIR D PARTIES FROM WHOM PURCHASES WERE MADE AND TO WHOM SALES WERE MADE. THERE IS NO EVID ENCE TO PROVE THAT THE ASSESSEE HAD RECEIVED BACK THE MONIES IN CASH FROM THE CONCE RNED PARTIES AFTER MAKING THE PURCHASES AND SIMILARLY THERE IS NO EVIDENCE TO PRO VE THAT THE ASSESSEE HAD PASSED ON THE CASH TO THE CONCERNED PARTIES AFTER RECEIVING THE S ALE PROCEEDS OF SHARES BY CHEQUE. IN THIS REGARD, WE WOULD LIKE TO PLACE RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS M/S BLB CABLES & CONDUCTORS PVT LTD IN ITAT NO. 78 OF 2017 GA NO. 747 OF 2017 DATED 19.6.2018 WHEREIN THE RELEVANT OPERATIVE PORTION OF THE SAID ORDER IS REPRODUCED AS UNDER:- 4.1. FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD SUCH LOSS AS BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME L OSS WAS ALSO CONFIRMED BY THE LD. CIT(A). HOWEVER, WE FIND THAT ALL THE TRANSACTI ONS THROUGH THE BROKER WERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BR OKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME CONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. HERE IN THE C ASE THE TRANSACTIONS OF THE COMMODITY EXCHANGED HAVE NOT ONLY BEEN EXPLAINED BU T ALSO SUBSTANTIATED FROM THE CONFIRMATION OF THE PARTY. BOTH THE PARTIES AR E CONFIRMING THE TRANSACTIONS WHICH HAVE BEEN DULY SUPPORTED WITH THE BOOKS OF AC COUNTS AND BANK TRANSACTIONS. THE LD AR HAS ALSO SUBMITTED THE BOA RD RESOLUTION FOR THE TRADING OF COMMODITY TRANSACTION. THE BROKER WAS EXPELLED F ROM THE COMMODITY EXCHANGE CANNOT BE THE CRITERIA TO HOLD THE TRANSAC TION AS BOGUS. IN VIEW OF ABOVE, WE REVERSE THE ORDER OF THE LOWER AUTHORITIE S AND ALLOW THE COMMON GROUNDS OF ASSESSEES APPEAL. THIS IS ESSENTIALLY A FINDING OF THE TRIBUNAL ON FACT. NO MATERIAL HAS BEEN SHOWN TO US WHICH WOULD NEGATE THE TRIBUNALS FINDING THAT OFF MARKET TRANSACTIONS ARE NOT PROHIB ITED. AS REGARDS VERACITY OF THE TRANSACTIONS, THE TRIBUNAL HAS COME TO ITS CONCLUSI ON ON ANALYSIS OF RELEVANT MATERIALS. THAT BEING THE POSITION, TRIBUNAL HAVIN G ANALYSED THE SET OF FACTS IN COMING TO ITS FINDINGM WE DO NOT THINK THERE IS ANY SCOPE OF INTERFERENCE WITH THE 8 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 8 ORDER OF THE TRIBUNAL IN EXERCISE OF OUR JURISDICTI ON UNDER SECTION 260A OF THE INCOME TAX ACT, 1961. NO SUBSTANTIAL QUESTION OF LA W IS INVOLVED IN THIS APPEAL. THE APPEAL AND THE STAY PETITION , ACCORDINGLY, SHA LL STAND DISMISSED. THERE SHALL BE NO ORDER AS TO COSTS. 7.2. WE FIND THAT THE STATEMENT RECORDED U/S 132(4) OF THE ACT CANNOT BE CONSIDERED AS AN EVIDENCE OR MATERIAL FOUND DURING THE COURSE OF SEARCH AND IN THIS REGARD WOULD LIKE TO PLACE RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS BEST INFRASTRUCTURE (INDIA) PVT LTD REPORTED IN 397 ITR 82 (DEL) . THE HONBLE DELHI HIGH COURT FURTHER IN THE CASE OF CIT VS HARJEEV AG GARWAL REPORTED IN 290 CTR 263 (DEL) HAD HELD AS UNDER:- 23. IT IS ALSO NECESSARY TO MENTION THAT THE AFORESAID INTERPRETATION OF SECTION 132(4) OF THE ACT MUST BE READ WITH THE EXPLANATION TO SECTIO N 132(4) OF THE ACT WHICH EXPRESSLY PROVIDES THAT THE SCOPE OF EXAMINATION UNDER SECTIO N 132(4) OF THE ACT IS NOT LIMITED ONLY TO THE BOOKS OF ACCOUNTS OR OTHER ASSETS OR MA TERIAL FOUND DURING THE SEARCH. HOWEVER, IN THE CONTEXT OF SECTION 158BB(1) OF THE ACT WHICH EXPRESSLY RESTRICTS THE COMPUTATION OF UNDISCLOSED INCOME TO THE EVIDENCE F OUND DURING SEARCH, THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT CAN FORM A BASIS FOR A BLOCK ASSESSMENT ONLY IF SUCH STATEMENT RELATES TO ANY INCRIMINATING EVIDENC E OF UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND CANNOT BE THE SOLE BASIS FOR MAKI NG A BLOCK ASSESSMENT. 24. IF THE REVENUE'S CONTENTION THAT THE BLOCK ASSESSM ENT CAN BE FRAMED ONLY ON THE BASIS OF A STATEMENT RECORDED UNDER SECTION 132(4) IS ACCEPTED, IT WOULD RESULT IN IGNORING AN IMPORTANT CHECK ON THE POWER OF THE AO AND WOULD EXPOSE ASSESSEES TO ARBITRARY ASSESSMENTS BASED ONLY ON THE STATEMENTS, WHICH WE ARE CONSCIOUS ARE SOMETIMES EXTRACTED BY EXERTING UNDUE INFLUENCE OR BY COERCION. SOMETIMES STATEMENTS ARE RECORDED BY OFFICERS IN CIRCUMSTANCES WHICH CAN MOST CHARITABLY BE DESCRIBED AS OPPRESSIVE AND IN MOST SUCH CASES, ARE SUBSEQUENTLY RETRACTED. THEREFORE, IT IS NECESSARY TO ENSURE THAT SUCH STATEMENTS, WHICH ARE RETRACTED SUBSEQUENTLY, DO NOT FORM THE SOLE BASIS FOR COMPUTING UNDISCLOSED INCOME OF AN ASSESSEE. 7.3. WE ALSO FIND THAT SIMILAR ISSUE HAD BEEN ANALY SED AND DEALT IN DETAIL BY THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S CONSISTENT VYAPAAR PVT LTD VS DCIT IN ITA NO. 65/KOL/2018 (ASST YEAR 2013-14) AND ITA NO. 66/KOL/2018 (ASST YEAR 2014-15) DATED 14.9.2018 , WHEREIN IT WAS HELD AS U NDER:- 9 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 9 6.1. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CO NSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS :- THE ASSESSEE, IN THIS CASE HAS SUPPORTED THESE TRAN SACTIONS BY SUBMITTING COPIES OF CONTRACT NOTES FOR PURCHASE AND SALE OF SHARES, DAILY MARKET QUOTATIONS ON THE DATE OF PURCHASE, BANK STATEMENTS SHOWING PAYMENTS OF CONSI DERATION FOR PURCHASE OF SHARES, COPY OF DEMAT ACCOUNTS ETC. THESE EVIDENCES, HAVE N OT BEEN CONTROVERTED OR FOUND TO BE FALSE BY THE ASSESSING OFFICER. IN FACT NO CONTR ARY EVIDENCE TO PROVE THAT THESE DOCUMENTS HAVE NO EVIDENTIARY VALUE HAS BEEN COLLEC TED BY THE ASSESSING OFFICER. THE ENTIRE ADDITION HAS BEEN MADE ON THE BASIS THAT THE PRICES OF SHARES HAVE BEEN RIGGED BY CERTAIN INDIVIDUALS. NO EVIDENCE IS BROUGHT ON RECO RD TO CONNECT THE ASSESSEE WITH THE ALLEGED RIGGING OF PRICES OF SHARES. NO EVIDENCE IS BROUGHT ON RECORD TO DEMONSTRATE THAT THE ASSESSEE WAS INVOLVED IN THE RIGGING OF SH ARES IN THE STOCK MARKET OR WAS CLOSELY INVOLVED WITH THE PERSONS WHO ARE ALLEGEDLY CONNECTED IN RIGGING OF THE PRICES OF SHARES. THE ENTIRE ADDITION HAS BEEN MADE ON PROBAB ILITIES, HUMAN BEHAVIOUR, THE ALLEGED UNNATURAL FLUCTUATION IN PRICES OF THE SHAR ES ETC., BUT NOT BASED ON ANY EVIDENCE CONNECTING THE ASSESSEE WITH SUCH ALLEGATIONS. THE ADDITION HAVE THUS BEEN MADE ON CONJECTURES AND SURMISES. 6.2. THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF COMMISSIONER OF INCOME TAX VS M/S. ALPINE INVESTMENTS ITA NO. 620 OF 2008, GA NO.2589 OF 2008, JUDGMENT DT. 26 TH AUGUST, 2008, HELD AS FOLLOWS:- IT APPEARS THAT THE SHARE LOSS AND THE WHOLE TRANSA CTIONS WERE SUPPORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROU GH RECOGNIZED STOCKBROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE PAYMENTS MADE TO THE STOCKBROKER AND ALL THE PAYMENTS RECEIVED FROM STOC KBROKER THROUGH ACCOUNT PAYEE INSTRUMENTS, WHICH WERE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFO RE THE TRIBUNAL AND AFTER EXAMINING THE SAME THE TRIBUNAL CAME TO THE CONCLUS ION AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. IN DOING SO, THE TRIB UNAL HELD THAT THE TRANSACTION FULLY SUPPORTED BY THE DOCUMENTARY EVID ENCES COULD NOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER, I T WAS HELD THAT THE TRANSACTIONS OF SHARE ARE GENUINE. THEREFORE, WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS ANY SUBSTANTIAL QUESTI ON OF LAW INVOLVED IN THIS MATTER. HENCE, THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. SIMILARLY, IN THE CASE OF CIT VS. CARBO INDUSTRIAL HOLDING LTD. [2000] 244 IT R 422 (CALCUTTA), THE HONBLE JURISDICTIONAL HIGH COURT, HELD AS FOLLOWS :- 10 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 10 9. WE ALSO NOTICE A SHARE TRANSACTION OF THE SHARES O F ESCORTS LTD. WHERE THE ASSESSEE CLAIMED RS. 60,490 LOSS. THE RELEVANT DATE OF CONTRACT IS 15- 12-1983. THE ASSESSEE RECEIVED 4,600 SHARES ON 11-1 -1984, AND IT SOLD THESE SHARES ON 18-1-1984 AND THE ASSESSEE RECEIVED THE PAYMENT AGAINST THAT SALE ON 24-1-1984. THEREFORE, SEEING THESE DET AILS, IT CANNOT BE SAID THAT THE PURCHASE AND SALE ARE ON THE SAME DATE. IT IS TRUE THAT THE TRANSACTIONS ARE WITH SOME BROKERS, BUT IN THE SHAR E TRANSACTIONS THE PURCHASE AND SALE ARE NORMALLY THROUGH SOME BROKER. PAYMENT BY ACCOUNT PAYEE CHEQUE HAS NOT BEEN DISPUTED. PAYMENT ON PURCHASE AND SALE AND PAYMENT RECEIVED BY ACCOUNT PAYEE CHEQUE W AS ON TWO DIFFERENT DATES. IF THE SHARE BROKER, EVEN AFTER ISSUE OF SUM MONS, DOES NOT APPEAR, FOR THAT REASON, THE CLAIM OF THE ASSESSEE SHOULD N OT BE DENIED, SPECIALLY IN CASES WHEN THE EXISTENCE OF THE BROKER IS NOT IN DISPUTE NOR THE PAYMENT IS IN DISPUTE. MERELY BECAUSE SOME BROKER F AILED TO APPEAR, THE ASSESSEE SHOULD NOT BE PUNISHED FOR THE DEFAULT OF A BROKER AND WE ARE IN FULL AGREEMENT WITH THE TRIBUNAL THAT ON MERE SUSPI CION THE CLAIM OF THE ASSESSEE SHOULD NOT BE DENIED. 10. IN THE RESULT, WE ANSWER THE QUESTION IN THE AFFIR MATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. RECENTLY, THE KOLKATA C BENCH OF THE TRIBUNAL IN THE CASE OF NAVNEET AGARWAL,-VS- ITO, WARD-35(3), KOLKATA; I.T.A. NO. 2281/KOL/2017; ASSESSMENT YEAR: 2014-15, HELD AS FOLLOWS:- 12. THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A ) HAVE REJECTED THESE EVIDENCES FILED BY THE ASSESSEE BY REFERRING TO MO DUS OPERANDI OF PERSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH H IS EXEMPT FROM INCOME TAX. ALL THESE OBSERVATIONS ARE GENERAL IN NATURE AND ARE APPLIED ACROSS THE BOARD TO ALL THE 60,000 OR MORE ASSESSEES WHO F ALL IN THIS CATEGORY. SPECIFIC EVIDENCES PRODUCED BY THE ASSESSEE ARE NOT CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVIDENCE COLLECTED FROM THI RD PARTIES IS CONFRONTED TO THE ASSESSES. NO OPPORTUNITY OF CROSS-EXAMINATIO N OF PERSONS, ON WHOSE STATEMENTS THE REVENUE RELIES TO MAKE THE ADDITION, IS PROVIDED TO THE ASSESSEE. THE ADDITION IS MADE BASED ON A REPORT FR OM THE INVESTIGATION WING. 13. THE ISSUE FOR CONSIDERATION BEFORE US IS WHETHE R, IN SUCH CASES, THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUI DE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEM ENTS, PROBABILITIES, HUMAN BEHAVIOR AND DISCOVERY OF THE MODUS OPERAND I ADOPTED IN EARNING ALLEGED BOGUS LTCG AND STCG, THAT HAVE SURFACED DUR ING INVESTIGATIONS, SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCL USION AS TO WHETHER THE CLAIM IN GENUINE OR NOT. AN ALLEGED SCAM MIGHT HAVE TAKEN PLACE ON LTCG ETC. BUT IT HAS TO BE ESTABLISHED IN EACH CASE, BY THE PARTY ALLEGING SO, THAT THIS ASSESSEE IN QUESITON WAS PART OF THIS SCAM. TH E CHAIN OF EVENTS AND THE 11 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 11 LIVE LINK OF THE ASSESEES ACTION GIVING HER INVOLV EMENT IN THE SCAM SHOULD BE ESTABLISHED. THE ALLEGATION IMPLY THAT CASH WAS PAID BY THE ASSESSEE AND IN RETURN THE ASSESSEE RECEIVED LTCG, WHICH IS INCOME EXEMPT FROM INCOME TAX, BY WAY OF CHEQUE THROUGH BANKING CHANNE LS. THIS ALLEGATION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVENUE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIG ATIONS OFFICE BY WAY OF STATEMENTS RECORDED ETC. HAS TO ALSO BE BROUGHT ON RECORD IN EACH CASE, WHEN SUCH A STATEMENT, EVIDENCE ETC. IS RELIED UPO N BY THE REVENUE TO MAKE ANY ADDITIONS. OPPORTUNITY OF CROSS EXAMINATION HAS TO BE PROVIDED TO THE ASSESEE, IF THE AO RELIES ON ANY STATEMENTS OR THIR D PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATERIAL OR EVIDENCE IS SO UGHT TO BE RELIED UPON BY THE AO, HE HAS TO CONFRONT THE ASSESSEE WITH SUC H MATERIAL. THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED BASED ON MERE CONJE CTURES UNVERIFIED BY EVIDENCE UNDER THE PRETENTIOUS GARB OF PREPONDERANC E OF HUMAN PROBABILITIES AND THEORY OF HUMAN BEHAVIOR BY THE D EPARTMENT. 14. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PU T BEFORE HIM AND HE IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CASE, THE AO RELIES ONLY ON A REPORT AS THE BASIS FOR THE ADDITION. THE EVIDENCE BASED ON WHICH THE DDIT REPORT IS PREPARED IS NOT BROUGHT ON RECOR D BY THE AO NOR IS IT PUT BEFORE THE ASSESSEE. THE SUBMISSION OF THE ASSE SSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RECEIVED SOME TIPS AND SHE CHOS E TO INVEST BASED ON THESE MARKET TIPS AND HAD TAKEN A CALCULATED RISK A ND HAD GAINED IN THE PROCESS AND THAT SHE IS NOT PARTY TO THE SCAM ETC., HAS TO BE CONTROVERTED BY THE REVENUE WITH EVIDENCE. WHEN A PERSON CLAIMS THA T SHE HAS DONE THESE TRANSACTIONS IN A BONA FIDE AND GENUINE MANNER AND WAS BENEFITTED, ONE CANNOT REJECT THIS SUBMISSION BASED ON SURMISES AND CONJECTURES. AS THE REPORT OF INVESTIGATION WING SUGGESTS, THERE ARE MO RE THAN 60,000 BENEFICIARIES OF LTCG. EACH CASE HAS TO BE ASSESSED BASED ON LEGAL PRINCIPLES OF LEGAL IMPORT LAID DOWN BY THE COURTS OF LAW. 15. IN OUR VIEW MODUS OPERANDI, GENERALISATION, PRE PONDERANCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR RE JECTING THE CLAIM OF THE ASSESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RE CORD TO CONTROVERT THE VALIDITY AND CORRECTNESS OF THE DOCUMENTARY EVIDENC ES PRODUCED, THE SAME CANNOT BE REJECTED BY THE ASSESSEE. THE HON'BLE SU PREME COURT IN THE CASE OF OMAR SALAV MOHAMED SAIT REPORTED IN (1959) 37 IT R 151 (S C) HAD HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF S URMISES, SUSPICION AND CONJECTURES. IN THE CASE OF CIT(CENTRAL), KOLKATA V S. DAULAT RAM RAWATMULL REPORTED IN 87 ITR 349, THE HON'BLE SUPRE ME COURT HELD THAT, THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REA L IS ON THE PARTY WHO CLAIMS IT TO BE SO. THE BURDEN OF PROVING A TRANSAC TION TO BE BOGUS HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTAN CE UNERRINGLY AND REASONABLY RAISING AN INTERFERENCE TO THAT EFFECT. THE HON'BLE SUPREME 12 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 12 COURT IN THE CASE OF UMACHARAN SHAH & BROS. VS. CIT 37 ITR 271 HELD THAT SUSPICION HOWEVER STRONG, CANNOT TAKE THE PLAC E OF EVIDENCE. 16. WE FIND THAT THE ASSESSING OFFICER AS WELL AS T HE LD. CIT(A) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREP ARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER WE DO NOT FIND THAT, THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A), HAVE B ROUGHT OUT ANY PART OF THE INVESTIGATION WING REPORT IN WHICH THE ASSESSEE HAS BEEN INVESTIGATED AND /OR FOUND TO BE A PART OF ANY ARRANGEMENT FOR T HE PURPOSE OF GENERATING BOGUS LONG TERM CAPITAL GAINS. NOTHING H AS BEEN BROUGHT ON RECORD TO SHOW THAT THE PERSONS INVESTIGATED , INCL UDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASSESSEE WAS IN COLLUSION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LINK THEIR WRONG DOINGS WITH THE ASSESSEE. IN FACT THE INVESTIGATION WING IS A S EPARATE DEPARTMENT WHICH HAS NOT BEEN ASSIGNED ASSESSMENT WORK AND HAS BEEN DELEGATED THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VESTED WIDES T POWERS ON THIS WING. IT IS THE DUTY OF THE INVESTIGATION WING TO CONDUCT PROPER AND DETAILED INQUIRY IN ANY MATTER WHERE THERE IS ALLEGATION OF TAX EVASION AND AFTER MAKING PROPER INQUIRY AND COLLECTING PROPER EVIDENC ES THE MATTER SHOULD BE SENT TO THE ASSESSMENT WING TO ASSESS THE INCOME AS PER LAW. WE FIND NO SUCH ACTION EXECUTED BY INVESTIGATION WING AGAINST THE ASSESSEE. IN ABSENCE OF ANY FINDING SPECIFICALLY AGAINST THE ASS ESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUIL TY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CASE, IN OUR VIEW, THE ASSESSING OFFICER AT BEST COULD HAVE CONSIDERED THE INVESTIGA TION REPORT AS A STARTING POINT OF INVESTIGATION. THE REPORT ONLY INFORMED TH E ASSESSING OFFICER THAT SOME PERSONS MAY HAVE MISUSED THE SCRIPT FOR THE PU RPOSE OF COLLUSIVE TRANSACTION. THE ASSESSING OFFICER WAS DUTY BOUND T O MAKE INQUIRY FROM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION A ND THEN TO COLLECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. WE, HOWEVER, FIND THAT THE A SSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT THE TR ANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHERWISE SUPPORTED BY PROPE R THIRD PARTY DOCUMENTS ARE COLLUSIVE TRANSACTIONS. 17. THE HONBLE SUPREME COURT WAY BACK IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT [1959] 37 ITR 288 (SC) HELD THAT ASSESSMENT COULD NOT BE BASED ON BACKGROUND OF SUSPICION AND IN ABSENCE OF ANY EVIDENCE TO SUPP ORT THE SAME. THE HONBLE COURT HELD: ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGH ED WITH THE INCOME- TAX OFFICER WE MAY OBSERVE THAT THE NOTORIETY FOR S MUGGLING FOOD GRAINS AND OTHER COMMODITIES TO BENGAL BY COUNTRY BOATS AC QUIRED BY SAHIBGUNJ AND THE NOTORIETY ACHIEVED BY DHULIAN AS A GREAT RE CEIVING CENTRE FOR SUCH COMMODITIES WERE MERELY A BACKGROUND OF SUSPIC ION AND THE 13 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 13 APPELLANT COULD NOT BE TARRED WITH THE SAME BRUSH A S EVERY ARHATDAR AND GRAIN MERCHANT WHO MIGHT HAVE BEEN INDULGING IN SMU GGLING OPERATIONS, WITHOUT AN IOTA OF EVIDENCE IN THAT BEHALF. THE CAN CELLATION OF THE FOOD GRAIN LICENCE AT NAWGACHIA AND THE PROSECUTION OF T HE APPELLANT UNDER THE DEFENCE OF INDIA RULES WAS ALSO OF NO CONSEQUEN CE INASMUCH AS THE APPELLANT WAS ACQUITTED OF THE OFFENCE WITH WHICH I T HAD BEEN CHARGED AND ITS LICENCE ALSO WAS RESTORED. THE MERE POSSIBI LITY OF THE APPELLANT EARNING CONSIDERABLE AMOUNTS IN THE YEAR UNDER CONS IDERATION WAS A PURE CONJECTURE ON THE PART OF THE INCOME-TAX OFFIC ER AND THE FACT THAT THE APPELLANT INDULGED IN SPECULATION (IN KALAI ACCOUNT ) COULD NOT LEGITIMATELY LEAD TO THE INFERENCE THAT THE PROFIT IN A SINGLE TRANSACTION OR IN A CHAIN OF TRANSACTIONS COULD EXCEED THE AMOUNTS , INVOLVED IN THE HIGH DENOMINATION NOTES,---THIS ALSO WAS A PURE CONJECTU RE OR SURMISE ON THE PART OF THE INCOME-TAX OFFICER. AS REGARDS THE DISC LOSED VOLUME OF BUSINESS IN THE YEAR UNDER CONSIDERATION IN THE HEA D OFFICE AND IN BRANCHES THE INCOME-TAX OFFICER INDULGED IN SPECULA TION WHEN HE TALKED OF THE POSSIBILITY OF THE APPELLANT EARNING A CONSI DERABLE SUM AS AGAINST WHICH IT SHOWED A NET LOSS OF ABOUT RS. 45,000. THE INCOME-TAX OFFICER INDICATED THE PROBABLE SOURCE OR SOURCES FROM WHICH THE APPELLANT COULD HAVE EARNED A LARGE AMOUNT IN THE SUM OF RS. 2,91,0 00 BUT THE CONCLUSION WHICH HE ARRIVED AT IN REGARD TO THE APPELLANT HAVI NG EARNED THIS LARGE AMOUNT DURING THE YEAR AND WHICH ACCORDING TO HIM R EPRESENTED THE SECRETED PROFITS OF THE APPELLANT IN ITS BUSINESS W AS THE RESULT OF PURE CONJECTURES AND SURMISES ON HIS PART AND HAD NO FOU NDATION IN FACT AND WAS NOT PROVED AGAINST THE APPELLANT ON THE RECORD OF THE PROCEEDINGS. IF THE CONCLUSION OF THE INCOME-TAX OFFICER WAS THUS E ITHER PERVERSE OR VITIATED BY SUSPICIONS, CONJECTURES OR SURMISES, TH E FINDING OF THE TRIBUNAL WAS EQUALLY PERVERSE OR VITIATED IF THE TR IBUNAL TOOK COUNT OF ALL THESE PROBABILITIES AND WITHOUT ANY RHYME OR REASON AND MERELY BY A RULE OF THUMB, AS IT WERE, CAME TO THE CONCLUSION THAT T HE POSSESSION OF 150 HIGH DENOMINATION NOTES OF RS. 1,000 EACH WAS SATIS FACTORILY EXPLAINED BY THE APPELLANT BUT NOT THAT OF THE BALANCE OF 141 HIGH DENOMINATION NOTES OF RS. 1,000 EACH. THE OBSERVATIONS OF THE HONBLE APEX COURT ARE EQUA LLY APPLICABLE TO THE CASE OF THE ASSESSEE. IN OUR VIEW THE ASSESSING OFF ICER HAVING FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE TRAN SACTION OF THE ASSESSEE WAS A COLLUSIVE TRANSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN FACT IN THIS CASE NOT HING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT EVIDENC ES OR MATERIAL AGAINST THE ASSESSEE DESPITE THE MATTER BEING INVESTIGATED BY VARIOUS WINGS OF THE INCOME TAX DEPARTMENT HENCE IN OUR VIEW UNDER THESE CIRCUMSTANCES NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE. 14 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 14 18. WE NOW CONSIDER THE VARIOUS PROPOSITIONS OF LAW LAID DOWN BY THE COURTS OF LAW. THAT CROSS-EXAMINATION IS ONE PART OF THE P RINCIPLES OF NATURAL JUSTICE HAS BEEN LAID DOWN IN THE FOLLOWING JUDGMENTS: A) AYAAUBKHAN NOORKHAN PATHAN VS. THE STATE OF MAHA RASHTRA AND ORS. 23. A CONSTITUTION BENCH OF THIS COURT IN STATE OF M.P. V. CHINTAMAN SADASHIVA VAISHAMPAYAN AIR 1961 SC 1623, HELD THAT THE RULES OF NATURAL JUSTICE, REQUIRE THAT A PARTY MUST BE GIVEN THE OPP ORTUNITY TO ADDUCE ALL RELEVANT EVIDENCE UPON WHICH HE RELIES, AND FURTHER THAT, THE EVIDENCE OF THE OPPOSITE PARTY SHOULD BE TAKEN IN HIS PRESENCE, AND THAT HE SHOULD BE GIVEN THE OPPORTUNITY OF CROSS-EXAMINING THE WITNESSES EX AMINED BY THAT PARTY. NOT PROVIDING THE SAID OPPORTUNITY TO CROSS-EXAMINE WIT NESSES, WOULD VIOLATE THE PRINCIPLES OF NATURAL JUSTICE. (SEE ALSO: UNION OF INDIA V. T.R. VARMA, AIR 1957 SC 882; MEENGLAS TEA ESTATE V. WORKMEN, AIR 19 63 SC 1719; M/S. KESORAM COTTON MILLS LTD. V. GANGADHAR AND ORS. ,AI R 1964 SC 708; NEW INDIA ASSURANCE CO. LTD. V. NUSLI NEVILLE WADIA AND ANR. AIR 2008 SC 876; RACHPAL SINGH AND ORS. V. GURMIT SINGH AND ORS.AIR 2009 SC 2448; BIECCO LAWRIE AND ANR. V. STATE OF WEST BENGAL AND ANR. AI R 2010 SC 142; AND STATE OF UTTAR PRADESH V. SAROJ KUMAR SINHA AIR 2010 SC 3 131). 24. IN LAKSHMAN EXPORTS LTD. V. COLLECTOR OF CENTRA L EXCISE (2005) 10 SCC 634, THIS COURT, WHILE DEALING WITH A CASE UNDER TH E CENTRAL EXCISE ACT, 1944, CONSIDERED A SIMILAR ISSUE I.E. PERMISSION WITH RES PECT TO THE CROSS- EXAMINATION OF A WITNESS. IN THE SAID CASE, THE ASS ESSEE HAD SPECIFICALLY ASKED TO BE ALLOWED TO CROSS-EXAMINE THE REPRESENTATIVES OF THE FIRMS CONCERN, TO ESTABLISH THAT THE GOODS IN QUESTION HAD BEEN ACCOU NTED FOR IN THEIR BOOKS OF ACCOUNTS, AND THAT EXCISE DUTY HAD BEEN PAID. THE C OURT HELD THAT SUCH A REQUEST COULD NOT BE TURNED DOWN, AS THE DENIAL OF THE RIGHT TO CROSS-EXAMINE, WOULD AMOUNT TO A DENIAL OF THE RIGHT TO BE HEARD I .E. AUDI ALTERAM PARTEM. 28. THE MEANING OF PROVIDING A REASONABLE OPPORTUNI TY TO SHOW CAUSE AGAINST AN ACTION PROPOSED TO BE TAKEN BY THE GOVERNMENT, I S THAT THE GOVERNMENT SERVANT IS AFFORDED A REASONABLE OPPORTUNITY TO DEF END HIMSELF AGAINST THE CHARGES, ON THE BASIS OF WHICH AN INQUIRY IS HELD. THE GOVERNMENT SERVANT SHOULD BE GIVEN AN OPPORTUNITY TO DENY HIS GUILT AN D ESTABLISH HIS INNOCENCE. HE CAN DO SO ONLY WHEN HE IS TOLD WHAT THE CHARGES AGAINST HIM ARE. HE CAN THEREFORE, DO SO BY CROSS-EXAMINING THE WITNESSES P RODUCED AGAINST HIM. THE OBJECT OF SUPPLYING STATEMENTS IS THAT, THE GOVERNM ENT SERVANT WILL BE ABLE TO REFER TO THE PREVIOUS STATEMENTS OF THE WITNESSES P ROPOSED TO BE EXAMINED AGAINST HIM. UNLESS THE SAID STATEMENTS ARE PROVIDE D TO THE GOVERNMENT SERVANT, HE WILL NOT BE ABLE TO CONDUCT AN EFFECTIV E AND USEFUL CROSS- EXAMINATION. 29. IN RAJIV ARORA V. UNION OF INDIA AND ORS. AIR 2 009 SC 1100, THIS COURT HELD: EFFECTIVE CROSS-EXAMINATION COULD HAVE BEEN D ONE AS REGARDS THE CORRECTNESS OR OTHERWISE OF THE REPORT, IF THE CONT ENTS OF THEM WERE PROVED. 15 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 15 THE PRINCIPLES ANALOGOUS TO THE PROVISIONS OF THE I NDIAN EVIDENCE ACT AS ALSO THE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT THE M AKER OF THE REPORT SHOULD BE EXAMINED, SAVE AND EXCEPT IN CASES WHERE THE FACTS ARE ADMITTED OR THE WITNESSES ARE NOT AVAILABLE FOR CROSS-EXAMINATION O R SIMILAR SITUATION. THE HIGH COURT IN ITS IMPUGNED JUDGMENT PROCEEDED TO CO NSIDER THE ISSUE ON A TECHNICAL PLEA, NAMELY, NO PREJUDICE HAS BEEN CAUSE D TO THE APPELLANT BY SUCH NON-EXAMINATION. IF THE BASIC PRINCIPLES OF LAW HAV E NOT BEEN COMPLIED WITH OR THERE HAS BEEN A GROSS VIOLATION OF THE PRINCIPL ES OF NATURAL JUSTICE, THE HIGH COURT SHOULD HAVE EXERCISED ITS JURISDICTION O F JUDICIAL REVIEW. 30. THE AFORESAID DISCUSSION MAKES IT EVIDENT THAT, NOT ONLY SHOULD THE OPPORTUNITY OF CROSS-EXAMINATION BE MADE AVAILABLE, BUT IT SHOULD BE ONE OF EFFECTIVE CROSS-EXAMINATION, SO AS TO MEET THE REQU IREMENT OF THE PRINCIPLES OF NATURAL JUSTICE. IN THE ABSENCE OF SUCH AN OPPORTUN ITY, IT CANNOT BE HELD THAT THE MATTER HAS BEEN DECIDED IN ACCORDANCE WITH LAW, AS CROSS-EXAMINATION IS AN INTEGRAL PART AND PARCEL OF THE PRINCIPLES OF NA TURAL JUSTICE. B) ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF C . EX., KOLKATA-II WHEREIN IT WAS HELD THAT: 4. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, AND MR. K. RADHAKRISHNAN, LEARNED SEN IOR COUNSEL WHO APPEARED FOR THE REVENUE. 5. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS F LAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRI NCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTE D. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED U PON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSES SEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-E XAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASS ESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE AD JUDICATING 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 AUTHORIT Y. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS T OTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION O F THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT B E IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX- FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS W ORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. 6. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR 16 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 16 WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPO N THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED I N THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFO RE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COU LD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS ME NTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] WAS PASSED REMITTING THE CASE BA CK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. 7. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WIT H THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CA USE NOTICE. 19. ON SIMILAR FACTS WHERE THE REVENUE HAS ALLEGED THAT THE ASSESSEE HAS DECLARED BOGUS LTCG, IT WAS HELD AS FOLLOWS: A) THE CALCUTTA HIGH COURT IN THE CASE OF BLB CABL ES & CONDUCTORS [ITA NO. 78 OF 2017] DATED 19.06.2018. THE HIGH COURT HELD VIDE PARA 4.1: WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THE BRO KER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME CONCRETE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE E VIDENCE. HERE IN THE CASE THE TRANSACTIONS OF THE COMMODITY EXCHANGED HA VE NOT ONLY BEEN EXPLAINED BUT ALSO SUBSTANTIATED FROM THE CONFIRMAT ION OF THE PARTY. BOTH THE PARTIES ARE CONFIRMING THE TRANSACTIONS WHICH HAVE BEEN DULY SUPPORTED WITH THE BOOKS OF ACCOUNTS AND BANK TRANSACTIONS. THE LD . AR HAS ALSO SUBMITTED THE BOARD RESOLUTION FOR THE TRADING OF COMMODITY T RANSACTION. THE BROKER WAS EXPELLED FROM THE COMMODITY EXCHANGE CANNOT BE THE CRITERIA TO HOLD THE TRANSACTION AS BOGUS. IN VIEW OF ABOVE, WE REVE RSE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE COMMON GROUNDS OF ASSESSE ES APPEAL. [QUOTED VERBATIM] THIS IS ESSENTIALLY A FINDING OF THE TRIBUNAL ON FA CT. NO MATERIAL HAS BEEN SHOWN TO US WHO WOULD NEGATE THE TRIBUNALS FINDIN G THAT OFF MARKET TRANSACTIONS ARE NOT PROHIBITED. AS REGARDS VERACIT Y OF THE TRANSACTIONS, THE TRIBUNAL HAS COME TO ITS CONCLUSION ON ANALYSIS OF RELEVANT MATERIALS. THAT BEING THE POSITION, TRIBUNAL HAVING ANALYZED THE SE T OF FACTS IN COMING TO ITS 17 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 17 FINDING, WE DO NOT THINK THERE IS ANY SCOPE OF INTE RFERENCE WITH THE ORDER OF THE TRIBUNAL IN EXERCISE OF OUR JURISDICTION UNDER SECTION 260A OF THE INCOME TAX ACT, 1961. NO SUBSTANTIAL QUESTION OF LA W IS INVOLVED IN THIS APPEAL. THE APPEAL AND THE STAY PETITION, ACCORDING LY, SHALL STAND DISMISSED. B) THE JAIPUR ITAT IN THE CASE OF VIVEK AGARWAL [ ITA NO. 292/JP/2017] ORDER DATED 06.04.2018 HELD AS UNDER VIDE PAGE 9 PARA 3: WE HOLD THAT THE ADDITION MADE BY THE AO IS MERELY BASED ON SUSPICION AND SURMISES WITHOUT ANY COGENT MATERIAL TO CONTROV ERT THE EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF THE CLAIM. FURTHER, THE AO HAS ALSO FAILED TO ESTABLISH THAT THE ASSESSEE HAS BROUGHT BACK HIS UN ACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN. HENCE WE DELETE TH E ADDITION MADE BY THE AO ON THIS ACCOUNT. C) THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PREM PAL GANDHI [ITA-95-2017 (O&M)] DATED 18.01.2018 AT VIDE PAGE 3 PARA 4 HELD AS UNDER: .. THE ASSESSING OFFICER IN BOTH THE CASES ADDED THE APPRECIATION TO THE ASSESSEES INCOME ON THE SUSPICION THAT THESE WERE FICTITIOUS TRANSACTIONS AND THAT THE APPRECIATION ACTUALLY REPRESENTED THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. IN ITA-18-2017 ALSO THE CIT (A PPEALS) AND THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT PR ODUCED ANY EVIDENCE WHATSOEVER IN SUPPORT OF THE SUSPICION. ON THE OTHE R HAND, ALTHOUGH THE APPRECIATION IS VERY HIGH, THE SHARES WERE TRADED O N THE NATIONAL STOCK EXCHANGE AND THE PAYMENTS AND RECEIPTS WERE ROUTED THROUGH THE BANK. THERE WAS NO EVIDENCE TO INDICATE FOR INSTANCE THAT THIS WAS A CLOSELY HELD COMPANY AND THAT THE TRADING ON THE NATIONAL STOCK EXCHANGE WAS MANIPULATED IN ANY MANNER. THE COURT ALSO HELD THE FOLLOWING VIDE PAGE 3 PARA 5 THE FOLLOWING: QUESTION (IV) HAS BEEN DEALT WITH IN DETAIL BY THE CIT (APPEALS) AND THE TRIBUNAL. FIRSTLY, THE DOCUMENTS ON WHICH THE ASSES SING OFFICER RELIED UPON IN THE APPEAL WERE NOT PUT TO THE ASSESSEE DURING T HE ASSESSMENT PROCEEDINGS. THE CIT (APPEALS) NEVERTHELESS CONSIDE RED THEM IN DETAIL AND FOUND THAT THERE WAS NO CO-RELATION BETWEEN THE AMO UNTS SOUGHT TO BE ADDED AND THE ENTRIES IN THOSE DOCUMENTS. THIS WAS ON AN APPRECIATION OF FACTS. THERE IS NOTHING TO INDICATE THAT THE SAME WAS PERV ERSE OR IRRATIONAL. ACCORDINGLY, NO QUESTION OF LAW ARISES. D) THE BENCH D OF KOLKATA ITAT IN THE CASE OF G AUTAM PINCHA [ITA NO.569/KOL/2017] ORDER DATED 15.11.201 7 HELD AS UNDER VIDE PAGE 12 PARA 8.1: 18 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 18 IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I TO XI V) IN PARA 6(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMP LICATE THE ASSESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINI ON HAS NO LEGS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD . DR COULD NOT CONTROVERT THE FACTS SUPPORTED WITH MATERIAL EVIDENCES WHICH A RE ON RECORD AND COULD ONLY RELY ON THE ORDERS OF THE AO/CIT (A). WE NOTE THAT IN THE ABSENCE OF MATERIAL/EVIDENCE THE ALLEGATIONS THAT THE ASSESSEE /BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE ALSO FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF SHARES RESULTING IN LONG TERM CAPITAL GAIN. THESE E VIDENCES WERE NEITHER FOUND BY THE AO NOR BY THE LD. CIT (A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF TH E EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJE CTING THE CLAIM OF THE ASSESSEE THAT INCOME FROM LTCG IS EXEMPTED U/S 10(3 8) OF THE ACT. FURTHER IN PAGE 15 PARA 8.5 OF THE JUDGMENT, IT HEL D: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALR EADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE B EEN DULY CONSIDERED BY US TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT B RING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE L D. CIT (A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE H OLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE AC T. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITION. E) THE BENCH D OF KOLKATA ITAT IN THE CASE OF K IRAN KOTHARI HUF [ITA NO. 443/KOL/2017] ORDER DATED 15.11.2017 HELD VIDE PARA 9.3 HELD AS UNDER: .. WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE M ATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOU NDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS NO LEGS TO STAND AND THEREFO RE 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 ASSESSE/BROKE RS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE CONSEQUENTLY FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE A SSESSEE HAD FURNISHED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRAC T NOTES, DEMAT STATEMENT AND BANK ACCOUNT TO PROVE THE GENUINENESS OF THE 19 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 19 TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF S HARES RESULTING IN LONG TERM CAPITAL GAIN. NEITHER THESE EVIDENCES WER E FOUND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVID ENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACT IONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUST IFIED IN REJECTING THE CLAIM OF THE ASSESSEE EXEMPTED U/S 10(38) OF TH E ACT ON THE BASIS OF SUSPICION, SURMISES AND CONJECTURES. IT IS TO BE KEPT IN MIND THAT SUSPICION HOW SO EVER STRONG, CANNOT PARTAKE THE CH ARACTER OF LEGAL EVIDENCE. IT FURTHER HELD AS FOLLOWS: WE NOTE THAT THE LD. AR CITED PLETHORA OF THE CASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT H AS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPR A) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSION. THE LD . DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IM PUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CI RCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLO SED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. F) THE BENCH A OF KOLKATA ITAT IN THE CASE OF SH ALEEN KHEMANI [ITA NO. 1945/KOL/2014] ORDER DATED 18.10. 2017 HELD AS UNDER VIDE PAGE 24 PARA 9.3: WE THEREFORE HOLD THAT THERE IS ABSOLUTELY NO ADVE RSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALL EGATIONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OP INION, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR CO ULD NOT CONTROVERT THE ARGUMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDE NCES ON RECORD AND MERELY RELIED ON THE ORDERS OF THE LD AO. WE FIND T HAT THE ALLEGATION THAT THE ASSESSEE AND / OR BROKERS GETTING INVOLVED IN PRICE RIGGING OF SOICL SHARES FAILS. IT IS ALSO A MATTER OF RECORD THAT THE ASSES SEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO PURCHASE AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEIT HER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AN D THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENU INE AND THEREFORE THE LD AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CL AIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. 20 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 20 G) THE BENCH H OF MUMBAI ITAT IN THE CASE OF AR VIND KUMAR JAIN HUF [ITA NO.4682/MUM/2014] ORDER DATED 18.09. 2017 HELD AS UNDER VIDE PAGE 6 PARA 8: WE FOUND THAT AS FAR AS INITIATION OF INVESTIGAT ION OF BROKER IS CONCERNED, THE ASSESSEE IS NO WAY CONCERNED WITH TH E ACTIVITY OF THE BROKER. DETAILED FINDING HAS BEEN RECORDED BY CIT (A) TO TH E EFFECT THAT ASSESSEE HAS MADE INVESTMENT IN SHARES WHICH WAS PURCHASED ON TH E FLOOR OF STOCK EXCHANGE AND NOT FROM M/S BASANT PERIWAL AND CO. AG AINST PURCHASES PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE, DELI VERY OF SHARES WERE TAKEN, CONTRACT OF SALE WAS ALSO COMPLETE AS PER TH E CONTRACT ACT, THEREFORE, THE ASSESSEE IS NOT CONCERNED WITH ANY WAY OF THE B ROKER. NOWHERE THE AO HAS ALLEGED THAT THE TRANSACTION BY THE ASSESSEE WI TH THESE PARTICULAR BROKER OR SHARE WAS BOGUS, MERELY BECAUSE THE INVESTIGATIO N WAS DONE BY SEBI AGAINST BROKER OR HIS ACTIVITY, ASSESSEE CANNOT BE SAID TO HAVE ENTERED INTO INGENUINE TRANSACTION, INSOFAR AS ASSESSEE IS NOT C ONCERNED WITH THE ACTIVITY OF THE BROKER AND HAVE NO CONTROL OVER THE SAME. WE FOUND THAT M/S BASANT PERIWAL AND CO. NEVER STATED ANY OF THE AUTHORITY T HAT TRANSACTIONS IN M/S RAMKRISHNA FINCAP PVT. LTD. ON THE FLOOR OF THE STO CK EXCHANGE ARE INGENUINE OR MERE ACCOMMODATION ENTRIES. THE CIT (A ) AFTER RELYING ON THE VARIOUS DECISION OF THE COORDINATE BENCH, WHEREIN O N SIMILAR FACTS AND CIRCUMSTANCES, ISSUE WAS DECIDED IN FAVOUR OF THE A SSESSEE, CAME TO THE CONCLUSION THAT TRANSACTION ENTERED BY THE ASSESSEE WAS GENUINE. DETAILED FINDING RECORDED BY CIT (A) AT PARA 3 TO 5 HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON REC ORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF CIT (A). H) THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VIVEK MEHTA [ITA NO. 894 OF 2010] ORDER DATED 14.11.2011 VIDE PAGE 2 PARA 3 HELD AS UNDER: ON THE BASIS OF THE DOCUMENTS PRODUCED BY THE ASSE SSEE IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEAL) RECORDED A FIND ING OF FACT THAT THERE WAS A GENUINE TRANSACTION OF PURCHASE OF SHARES BY THE ASSESSEE ON 16.3.2001 AND SALE THEREOF ON 21.3.2002. THE TRANSA CTIONS OF SALE AND PURCHASE WERE AS PER THE VALUATION PREVALENT IN THE STOCKS EXCHANGE. SUCH FINDING OF FACT HAS BEEN RECORDED ON THE BASIS OF E VIDENCE PRODUCED ON RECORD. THE TRIBUNAL HAS AFFIRMED SUCH FINDING. SUC H FINDING OF FACT IS SOUGHT TO BE DISPUTED IN THE PRESENT APPEAL. WE DO NOT FIND THAT THE FINDING OF FACT RECORDED BY THE COMMISSIONER OF INCOME TAX IN APPEAL, GIVES GIVE RISE TO ANY QUESTION(S) OF LAW AS SOUGHT TO BE RAIS ED IN THE PRESENT APPEAL. HENCE, THE PRESENT APPEAL IS DISMISSED. I) THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT I N THE CASE OF CIT VS. BHAGWATI PRASAD AGARWAL IN I.T.A. NO. 22/KOL/2009 D ATED 29.04.2009 AT PARA 2 HELD AS FOLLOWS: 21 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 21 THE TRIBUNAL FOUND THAT THE CHAIN OF TRANSACTION E NTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTE D AND SUPPORTED BY EVIDENCE. THE ASSESSEE PRODUCED BEFORE THE COMMISSI ONER OF INCOME TAX(APPEAL) THE CONTRACT NOTES, DETAILS OF HIS DEMA T ACCOUNT AND, ALSO, PRODUCED DOCUMENTS SHOWING THAT ALL PAYMENTS WERE R ECEIVED BY THE ASSESSEE THROUGH BANK. J) THE HONBLE SUPREME COURT IN THE CASE OF PCIT VS . TEJU ROHITKUMAR KAPADIA ORDER DATED 04.05.2018 UPHELD THE FOLLOWING PROPOSITION OF LAW LAID DOWN BY THE HONBLE GUJRAT HIGH COURT AS UNDER : IT CAN THUS BE SEEN THAT THE APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL CAME TO CONCURRENT CONCLUSION THAT THE PURCHASES AL READY MADE BY THE ASSESSEE FROM RAJ IMPEX WERE DULY SUPPORTED BY BILL S AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE. RAJ IMPACTS ALSO CONF IRMED THE TRANSACTIONS.THERE WAS NO EVIDENCE TO SHOW THAT THE AMOUNT WAS RECYCLED BACK TO THE ASSESSEE.PARTICULARLY, WHEN IT WAS FOUN D THAT THE ASSESSEE THE TRADER HAD ALSO SHOWN SALES OUT OF PURCHASES MADE F ROM RAJ IMPEX WHICH WERE ALSO ACCEPTED BY THE REVENUE, NO QUESTION OF L AW ARISES. 7. APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE ABOVE JUDGMENTS TO THE FACTS OF THIS CASE, ON MERITS IT HAS TO BE CONCLUDED THAT TH E ADDITION MADE, CANNOT BE SUSTAINED FOR BOTH THE IMPUGNED ASSESSMENT YEARS. BE IT AS IT MAY, WE FIND THAT NO SUCH ADDITION HAS BEEN MADE IN THE ORDERS PASSED U/S 153A R.W.S. 143(3) OF THE ACT, ON 30/12/2017 IN THE CASE OF SHRI AKHILESH KUMAR JAIN, FOR THE ASSESSMENT YEARS 2010-11 TO 2017-18, THOUGH THE REVENUE RELIES MAINLY ON THE STATEMENTS RECORDED FROM SHRI AKHILESH KUMAR JA IN, THE ASSESSEE THEREIN, FOR THE ADDITION. 7.4. THE AFORESAID DETAILED REASONING MUTATIS MUTAN DIS APPLIES TO THE GIVEN SET OF FACTS AND CIRCUMSTANCES OF THE CASE BEFORE US. RESPECTFU LLY FOLLOWING THE SAME, WE DIRECT THE LD AO TO DELETE THE DISALLOWANCE OF TRADING LOSS OF RS 30,26,421/- FOR THE ASST YEAR 2014-15. ACCORDINGLY, THE GROUNDS RAISED BY THE ASS ESSEE ARE ALLOWED FOR THE ASST YEAR 2014-15. 8. THE GROUND NO. 4 RAISED BY THE ASSESSEE IS WITH REGARD TO CHARGEABILITY OF INTEREST U/S 234A AND 234B OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 22 IT(SS)A NO.61/KOL/2018 M/S BHANSALI FINCOM PVT. LTD. A.YR. 2014-15 22 9. THE GROUND NOS. 5 & 6 RAISED BY THE ASSESSEE ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 10.10.2018 SD/- SD/- [S.S. GODARA] [ M .BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 10 .10.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. M/S BHANSALI FINCOM PVT. LTD., UNIT 3C, TRINITY BUILDING, MINTO PARK, 226/1, A.J.C. BOSE ROAD, KOLKATA-700020. 2. DCIT,CC-3(3), KOLKATA, 110, SHANTIPALLY, E.M.BYE PASS, NEAR RUBY HOSPITAL, INCOME TAX BUILDING, POORVA, KOLKATA-700107. 3..C.I.T(A).- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S