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

ITSSA 66/KOL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0221 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 13-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOULEN HANGSHING
• Assessee Lawyers: S M SURANA
• Keywords: Income from undisclosed sources; Search and seizure; Principle of natural justice; Opportunity of cross examination; Transactions in derivatives; Question of law; Accommodation entries; Onus to prove; Retraction; Penny stocks
• Section: 143(3); 133A; 153A; 260A; 147; 68; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER) ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD.......................................APPELLANT FLAT 2C, TRINITY BUILDING 227/1A, AJC BOSE ROAD MINTO PARK KOLKATA 700 020 [PAN: AADCC 3480 E] DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(3), KOLKATA.........RESPONDENT APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE, APPEARED ON BEHALF OF THE ASSESSEE. SHRI GOULEN HANGSHING, CIT, D/R. APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 10 TH , 2018 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 14 TH , 2018 ORDER PER J. SUDHAKAR REDDY, AM :- BOTH THESE APPEALS ARE FILED BY THE ASSESSEE DIRECTED AGAINST SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-21, KOLKATA, (HEREINAFTER THE LD. CIT(A)), DT. 02/07/2018, PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), RELATING TO ASSESSMENT YEARS 2013-14 & 2014-15, WHEREIN, THE LD. CIT(A) HAS CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER U/S 153A R.W.S. 143(3) OF THE ACT. 2. FACTS IN BRIEF:- THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF SHARE TRADING. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT, WAS CONDUCTED AT THE RESIDENTIAL PREMISES/OFFICE PREMISES, BANK LOCKERS ETC. AT PATNI GROUP OF CASES ON 08/03/2016, AND THEREAFTER, THE ASSESSEE COMPANY WAS ALSO SEARCHED AND THE ASSESSING OFFICER RECORDS THAT, BOOKS OF ACCOUNTS AND OTHER INCRIMINATING DOCUMENTS HAVE BEEN FOUND AND ASSESSED DURING THE COURSE OF SEARCH. THE ISSUE PERTAINING TO WHICH THE ADDITION WAS MADE AND IS AGITATED BEFORE US, IS BROUGHT OUT AT PARA 7 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2013-14, WHICH IS EXTRACTED FOR READY REFERENCE:- 2 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD 7. DURING THE COURSE OF SEARCH & SEIZURE OPERATION IT WAS SEEN THAT THE ASSESSEE HAS INDULGED IN THE PURCHASE AND SALE OF PENNY STOCKS IN A PRE- ARRANGED MANNER TO BOOK A LOSS IN TRADING TO REDUCE THE TAXABLE INCOME MAINLY FROM INTEREST ON LOAN. IT IS SEEN THAT AS PER THE RETURN FILED THE TOTAL INCOME OF THE ASSESSEE IS RS 10,66,490/- WHICH INCLUDE STCG WITHOUT STT RS 8,37,289/-, STCG WITH STT RS 2,66,056/-, INCOME FROM BUSINESS AND PROFESSION RS (-) 36,858/- WHICH IS SET OFF WITH STCG, TOTAL INCOME RS 10,66,490/-. IT IS ALSO SEEN THAT THE ASSESSEE'S TOTAL REVENUE FROM OPERATION IS FROM SALE OF EQUITY SHARES OF RS 4,54,95,419/- AND OTHER INCOME OF RS 1,42,52,617/- WHICH INCLUDE INTEREST INCOME OF RS 1,26,04,670/-. EXEMPT DIVIDEND RS 5,10,291/- AND NET GAIN ON SALE OF INVESTMENT OF RS 11,37,654/-, WHICH INCLUDE STCG AND ALSO EXEMPT LTCG OF RS 34,309/-. THE ASSESSEE HAS DEBITED VARIOUS EXPENSES LIKE SALARY ETC OF RS 2,92,742/-, INTEREST ON LOAN RS 8,877/-, MISCELLANEOUS EXPENSES 7,41,228/- AND OTHER SMALL EXPENSES OF RATES AND TAXES, AUDIT FEES, INTERNAL AUDIT FEES ETC. THE TOTAL INCOME FROM BUSINESS & PROFESSION IS LOSS OF RS 36,858/-. FROM THE ABOVE IT IS CLEAR THAT THE ASSESSEE'S INTEREST INCOME OF RS 1,26,04,670/- HAS BEEN VANISHED AND THE NET PROFIT IS ONLY A LOSS OF RS 36,858/-. IT IS ALSO SEEN THAT DURING THE YEAR THE ASSESSEE HAS PURCHASED 2 LAKHS SHARES OF BLUE CIRCLE AT RS 82,29,808/- AND SOLD THE SAME AT RS 32,31,860/- THEREBY INCURRING LOSS OF RS 49,97,948/-. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION DIFFERENT INCRIMINATING FACTS WAS FOUND AND THE TOTAL MODUS OPERANDI OF THE ASSESSEE COMPANY WAS REVEALED. THE FACT WAS CONFRONTED WITH THE ASSESSEE AND THE STATEMENT WAS RECORDED U/S 132(4) OF SRI AKHILESH KR JAIN, KEY PERSON AND DIRECTOR AS DULY MENTIONED IN THE SHOW- CAUSE TO THE ASSESSEE COMPANY. ON THE BASIS OF THOSE FACTS AND DOCUMENTS AND POST SEARCH INVESTIGATION A SHOW CAUSE WAS MADE ON 20/09/2017 AS UNDER WHERE THE ASSESSEE WAS ASKED TO SHOW-CAUSE WHY THE LOSS CLAIMED BY THE ASSESSEE ON SUCH TRANSFER OF PENNY STOCK NAMELY M/S BLUE CIRCLE WILL NOT BE TREATED AS A BOGUS LOSS ON COLORABLE TRANSACTION. FROM THE COPIES OF THE CONTRACT NOTES IT WAS CLEAR THAT THE TRANSACTIONS ARE NOT NORMAL. THE SHOW CAUSE WAS AS UNDER. IN THE SAID SHOW-CAUSE BY MISTAKE SECTION 68 WAS MENTIONED. LATER DURING THE HEARING BEFORE THE UNDERSIGNED THE FACT WAS DISCUSSED AND IT WAS TOLD THAT SECTION 68 WAS MENTIONED BY MISTAKE AND WHY THE CLAIM OF LOSS WILL NOT BE TREATED AS BOGUS LOSS ON COLORABLE TRANSACTION AND WILL NOT BE ALLOWED TO SET OFF WITH THE INTEREST INCOME AS MENTIONED IN THE SUBJECT OF THE SHOW-CAUSE. 2.1. THEREAFTER, THE ASSESSING OFFICER AT PARA 9 TO 14, SUMMARIZED THE SUBMISSIONS OF THE ASSESSEE AND HIS FINDINGS AS FOLLOWS:- SUBMISSIONS OF THE ASSESSEE:- A) THE ASSESSEE SUBMITTED THAT THE TRANSACTIONS ARE EVIDENCED BY DOCUMENTS INCLUDING COPY OF PURCHASE AND SALE BILLS, ISSUE D BY THE REGISTERED AND 3 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD RECOGNIZED SHARE BROKER, DEMAT ACCOUNT STATEMENTS, BANK STATEMENTS ETC. THAT THE TRANSACTIONS ARE ALSO FULLY SUPPORTED BY STATUTORY DOCUMENTS BACKED BY PAYMENT OF LEVIES AND DUTIES LIKE, BROKERAGE, SERVICE TAX, SHARE TRANSACTION TAX (STT), ETC. B) THE STATEMENT RECORDED DURING THE COURSE OF SURVEY U/S 133A OF THE ACT, FROM THIRD PARTIES CANNOT BE EVIDENCE, AS THE ASSESSING OFFICER HAS NO POWER TO RECORD A STATEMENT U/S 133A OF THE ACT. C) THE ASSESSEE RELIED ON AN AFFIDAVIT FILED, WHEREIN, THE STATEMENT RECORDED IN SURVEY U/S 133A OF THE ACT, WAS RETRACTED. THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE DOCUMENTS, EVIDENCE, BOOKS OF ACCOUNT ETC. WHILE MAKING AN AFFIDAVIT OF RETRACTION OF THE STATEMENT RECORDED, HELD THAT THE STATEMENT IN QUESTION, HAS EVIDENTIARY VALUE. HE HELD THAT THE ASSESSEE COULD NOT SUBMIT ANY EXPLANATION AND THE MODUS OPERANDI OF THE ASSESSEE COMPANY TO PROVE THAT THE BOGUS LOSS IS BOOKED FOR REDUCING THE TAXABLE INCOME WITH THE SOLE MOTIVE TO AVOID TAX. HE FURTHER HELD THAT ON ANALYSIS OF THE TRANSACTIONS REVEAL THAT THEY WERE MADE IN A PRE-ARRANGED MANNER. FURTHER AT PARA 12 & 13 OF HIS ORDER, HE HELD AS FOLLOWS:- 12. THE QUANTITY BOUGHT BY THE ASSESSEE COMPANY IS 49835; 165; 49835; 25000; 165; 25080; 50000; TOTAL 2 LAKHS. THE RATES ARE 41.05, 41.05, 41.05, 41.10, 41.10,41.05 & 41.05. FROM THE ABOVE IT IS CLEAR THAT THE TRANSACTIONS WERE MADE IN A PRE-ARRANGED MANNER SO THAT THOUGH THE ASSESSEE HAS PURCHASED IN THE SPLIT FIGURE LIKE 49835; 165; 49835; 25000; 165; 25080; 50000 ETC BUT THE ORDER TIME AND TRADE TIME ARE SAME UP-TO THE SECONDS. EVEN IN THE CASES WHEN THE ASSESSEE PURCHASED ONLY 165 SHARES THE ORDER TIMES AND TRADE TIMES ARE THE SAME. IT ONLY PROVES THAT THOUGH THERE ARE ABOUT LAKHS OF TERMINALS WORKING IN THE STOCK EXCHANGE ALL OVER THE COUNTRY AND CRORES OF PERSONS ARE TRANSACTING IN SHARE MARKET, BUT A PARTICULAR SHARE IS BEING TRANSACTED BY TWO SAME PARTIES WHEN ONE PARTY, THE ASSESSEE HERE, IS OFFERING FOR PURCHASE AND THE OTHER PARTY WHO IS BOOKING LTCG BY SELLING THE SAME QUANTITY OF SHARES OF THE SAME SCRIP EVEN WHEN THE FIGURE IS 49835 SHARES AND THE ORDER TIME AND TRADE TIME ARE IDENTICAL UP-TO SECONDS AND TRADE NUMBERS ARE SERIALLY MARKED. IT PROVES THAT THE SALE OFFER AND THE PURCHASE OFFER IN THIS CASE ARE MADE WITH IDENTICAL QUANTITY AND RATE AND IMMEDIATELY THE TRADE IS COMPLETED AT THE SAME TIME IN SECONDS. IT IS POSSIBLE ONLY IN THE CASE OF PRE-ARRANGED TRANSACTIONS. 13. REGARDING THE SALE CONTRACT NOTES THE ASSESSEE HAS SOLD THOSE 2 LAKH SHARES ON 01/03/2013 @ RS 16.55 & 16.05. IN THE CONTRACT NOTES DATED 05/03/2013 IT IS SEEN THAT THE ORDER TIME IS FROM 13:39:52 TO 15:08:27 IN ALL 4 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD THE 14 TRANSACTIONS DONE BY THIS CONTRACT NOTE, THE TRADE TIME IS FROM 14:02:55 TO 15:08:40. THIS IS TO MENTION HERE THAT THE BROKER IS M/S AUM CAPITAL MARKETS PVT LTD WHICH IS RUN BY KEY PERSON SHRI DINESH KUMARJAIN WHO IS THE ELDER BROTHER OF SHRI AKHILESH KUMAR JAIN KEY PERSON OF THE ASSESSEE COMPANY. HERE THE SALES ARE MADE WHEN THE PRICE OF THE SHARES ARE DROPPED BY THE ENTRY OPERATORS, THE SHARE ARE PURCHASED BY THE COMPANIES AS ELABORATELY MENTIONED IN THE SHOW-CAUSE NOTICE ABOVE. 2.2 SIMILARLY FOR THE ASSESSMENT YEAR 2014-15, AT PARA 7.1, THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS ISSUED A SHOW-CAUSE NOTICE AS TO WHY THE CLAIM OF LOSS SHOULD NOT BE TREATED AS BOGUS LOSS AS THE TRANSACTIONS IN QUESTION IS A COLORABLE TRANSACTION. RELIANCE WAS PLACED ON THE INVESTIGATION REPORT OF THE DDIT, FINDING OF THE SEBI IN THE CASE OF FFSL AND AT PARA 14, IS WAS CONCLUDED AS FOLLOWS:- 7.1 IT IS ALSO SEEN THAT DURING THE YEAR THE ASSESSEE HAS PURCHASED 1,92,500 SHARES OF M/S FIRST FINANCIAL SERVICES LTD AT RS 39,70,289/- AND SOLD THE SAME AT RS 14,11,967/- THEREBY INCURRING LOSS OF RS 25,58,322/- AND ALSO HAVE PURCHASED 109835 SHARES OF RUTRON INTERNATIONAL LTD AT RS 48,79,686/- AND SOLD THEM AT RS 31,87,554/-. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION DIFFERENT INCRIMINATING FACTS WAS FOUND AND THE TOTAL MODUS OPERANDI OF THE ASSESSEE COMPANY WAS REVEALED. THE FACT WAS CONFRONTED WITH THE ASSESSEE AND THE STATEMENT WAS RECORDED U/S 132(4) OF SRI AKHILESH KR JAIN, KEY PERSON AND DIRECTOR AS DULY MENTIONED IN THE SHOW-CAUSE TO THE ASSESSEE COMPANY. ON THE BASIS OF THOSE FACTS AND DOCUMENTS AND POST SEARCH INVESTIGATION A SHOW CAUSE WAS MADE ON 20/09/2017 AS UNDER WHERE THE ASSESSEE WAS ASKED TO SHOW- CAUSE WHY THE LOSS CLAIMED BY THE ASSESSEE ON SUCH TRANSFER OF PENNY STOCKS NAMELY M/S FIRST FINANCIAL AND M/S RUTRON INTERNATIONAL LTD WILL NOT BE TREATED AS A BOGUS LOSS ON COLORABLE TRANSACTION. FROM THE COPIES OF THE CONTRACT NOTES IT WAS CLEAR THAT THE TRANSACTIONS ARE NOT NORMAL. THE SHOW CAUSE WAS AS UNDER. IN THE SAID SHOW-CAUSE BY MISTAKE SECTION 68 WAS MENTIONED. LATER DURING THE HEARING BEFORE THE UNDERSIGNED THE FACT WAS DISCUSSED AND IT WAS TOLD THAT SECTION 68 WAS MENTIONED BY MISTAKE AND WHY THE CLAIM OF LOSS WILL NOT BE TREATED AS BOGUS LOSS ON COLORABLE TRANSACTION AND WILL NOT BE ALLOWED TO SET OFF WITH THE INTEREST INCOME AS MENTIONED IN THE SUBJECT OF THE SHOW-CAUSE. 2.3. WHEN THE MATTER TRAVELLED TO THE LD. CIT(A), THE ORDER WAS CONFIRMED. PAGES 1 TO 163 OF THE LD. CIT(A)S ORDER FOR THE ASSESSMENT YEAR 2014-15, WAS NOTHING BUT REPRODUCTION OF THE ASSESSMENT ORDER. SIMILARLY, FOR THE ASSESSMENT YEAR 2013-14, THE LD. CIT(A) EXTRACTED AT PAGES 2 TO 49, THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2014-15. THEREAFTER, THE NEXT 10 PAGES, THE SUBMISSIONS OF THE ASSESSEE ARE EXTRACTED. 5 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD ONLY IN THE LAST 10 PAGES OF HIS ORDER, THE LD. CIT(A) GAVE HIS FINDINGS, WHICH ARE BASED ON WHAT HE CALLS RULES OF SUSPICIOUS TRANSACTIONS. HE STATES THAT ALL THESE PAPERS WERE MERE DOCUMENTS AND NOT EVIDENCE AND THAT THE ELABORATE PAPER WORK PRECISELY STRENGTHENS HIS BELIEF THAT, THE MATTER RELATING TO BOGUS BENEFIT OF THE LONG TERM CAPITAL LOSS, HAS CLEARLY BEEN SCHEMED, PRE-PLANNED AND EXECUTED WITH MALAFIDE INTELLIGENCE AND PRECISION. HE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. P. MOHANAKALA IN [2007] 291 ITR 278 (SC), CIT V. DURGA PRASAD MORE 1971 82 ITR 540, AND MANY OTHER JUDGMENTS. HE ALSO RELIED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SANJAY BIMALCHAND JAIN V. PRINCIPAL COMMISSIONER OF INCOME- TAX-1, NAGPUR [2018] 89 TAXMANN.COM 196 (BOMBAY) AND UPHELD THE FINDINGS OF THE ASSESSING OFFICER. 3. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING THE DISALLOWANCE OF TRADING LOSS CLAIMED BY IT ON PURCHASE AND SALE OF SHARES. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. S.M. SURANA, SUBMITTED THAT A) THE DISALLOWANCE IN QUESTION HAS BEEN MADE IN AN ASSESSMENT MADE U/S 153A R.W.S. 143(3) OF THE ACT AND THAT SUCH A DISALLOWANCE IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND THAT ALL THE MATERIAL IN QUESTION ARE DISCLOSED MATERIAL AND ARE PART OF THE OFFICIAL RECORD. B) THAT FOR THE ASSESSMENT YEAR 2013-14, THE RETURN OF INCOME WAS FILED ORIGINALLY U/S 139 OF THE ACT, ON 26/09/2013 AND WAS PROCESSED U/S 143(3) ON 30/11/2014 AND NO NOTICE U/S 143(2) OF THE ACT, WAS ISSUED TO THE ASSESSEE WITHIN THE PERIOD STIPULATED UNDER THE ACT, AND HENCE THE ASSESSMENT HAS NOT ABATED AS ON THE DATE OF SEARCH, WHICH IS 08/03/2016. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA ITA 707/2014, ITA 709/2014, ITA 713/2014, JUDGMENT DT. 28 TH AUGUST, 2015 AND ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHRI DEEPAK KUMAR AGARWAL, INCOME TAX APPEAL NO. 1709 OF 2014, AND OTHER CASE-LAW FOR THE 6 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD PROPOSITION THAT NO ADDITION CAN BE MADE IN AN ASSESSMENT MADE U/S 153A R.W.SS 143(3) OF THE ACT, FOR THE YEARS WHERE THE ASSESSMENT HAS NOT ABATED, UNLESS ANY INCRIMINATING MATERIAL RELATABLE TO THAT ADDITION/DISALLOWANCE IS FOUND DURING THE COURSE OF SEARCH. THUS, HE SUBMITS THAT ON THIS GROUND, THE ADDITION FOR THE ASSESSMENT YEAR 2013- 14, HAS TO BE DELETED. C) FOR THE ASSESSMENT YEAR 2014-15, HE SUBMITS THAT THE ASSESSMENT HAS ABATED. HE ARGUED THAT THE ISSUE IN QUESTION FOR BOTH THE ASSESSMENT YEARS 2013-14 AS WELL AS FOR 2014-15 IS COVERED IN THE FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, BY A CATENA OF JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT AS WELL AS THAT OF OTHER HONBLE HIGH COURTS AND ORDERS OF THE ITAT. HE SUBMITS THAT THE ASSESSEE HAS PRODUCED ALL POSSIBLE EVIDENCES IN SUPPORT OF THE TRANSACTIONS AND THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAVE MADE THE ADDITION MERELY ON SUSPICION, CONJECTURES AND SURMISES AND WITHOUT ANY EVIDENCE. RETRACTED STATEMENTS OF THIRD PARTIES HAVE BEEN RELIED UPON WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE SUCH THIRD PARTIES. HE SUBMITTED THAT THE ENTIRE ADDITION IS MADE BASED ON THE REPORT OF THE DDIT-KOLKATA, WITHOUT ANY INVESTIGATION OR COLLECTING ANY EVIDENCES AGAINST THE ASSESSEE. HE RELIED ON THE FOLLOWING CASE-LAW:- PR. CIT VS. B L B CABLES AND CONDUCTORS ITAT NO.78 OF 2017 GA NO.747 OF 2017 (HONBLE CALCUTTA HIGH COURT) COMMISSIONER OF INCOME TAX VS M/S. ALPINE INVESTMENTS ITA NO. 620 OF 2008, GA NO.2589 OF 2008 CIT VS. CARBO INDUSTRIAL HOLDING LTD. [2000] 244 ITR 422 (CALCUTTA) AND OTHER DECISIONS, WHICH WE WOULD BE REFERRING DURING THE COURSE OF OUR FINDINGS. 5. THE LD. D/R, SUBMITTED THAT THE SPECIFIC SEIZED MATERIAL, BASED ON WHICH THE ASSESSING OFFICER HAD MADE THE DISALLOWANCE IN QUESTION, HAS NOT BEEN SPECIFIED BY THE ASSESSING OFFICER BUT ON A READING OF THE ASSESSMENT ORDER, IT TRANSPIRES THAT THERE IS SOME SEIZED MATERIAL WHICH THE ASSESSING OFFICER HAS FAILED TO HIGHLIGHT IN HIS ORDER. HE 7 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD RELIED ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) AND SUBMITTED THAT THE TRANSACTIONS ARE SUSPICIOUS, FICTITIOUS, ORGANIZED, PRE-CONCEIVED AND HAVE BEEN STAGE MANAGED BY THE ASSESSEE TO GENERATE LOSS. HENCE HE SUBMITTED THAT THE ASSESSING OFFICER WAS RIGHT IN DISALLOWING THE CLAIM BASED ON HUMAN PROBABILITIES AND SUBSTANTIAL EVIDENCE. HE PRAYED THAT THE ORDER OF THE ASSESSING OFFICER AS CONFIRMED BY THE LD. CIT(A) BE UPHELD OR IN ALTERNATIVE THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER TO PIN POINT THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH BASED ON WHICH THE ADDITION IS MADE. ON A SPECIFIC QUERY FROM THE BENCH, HE COULD NOT CONTROVERT THE SUBMISSIONS OF THE ASSESSEE ON EVIDENCE. 6. IN HIS REJOINDER, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED SETTING ASIDE OF THE MATTER. HE FURTHER RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. BEST INFRASTRUCTURE [2017] 397 ITR 82 (DELHI) , FOR THE PROPOSITION THAT A STATEMENT U/S 132(4) CANNOT BE CONSIDERED AS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, UNLESS CORROBORATED WITH SOME OTHER MATERIAL FOUND DURING THE COURSE OF SEARCH. 6.1. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION 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 TRANSACTIONS 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 CONSIDERATION FOR PURCHASE OF SHARES, COPY OF DEMAT ACCOUNTS ETC. THESE EVIDENCES, HAVE NOT BEEN CONTROVERTED OR FOUND TO BE FALSE BY THE ASSESSING OFFICER. IN FACT NO CONTRARY EVIDENCE TO PROVE THAT THESE DOCUMENTS HAVE NO EVIDENTIARY VALUE HAS BEEN COLLECTED 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 RECORD 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 SHARES 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 PROBABILITIES, HUMAN BEHAVIOUR, THE ALLEGED UNNATURAL FLUCTUATION IN PRICES OF THE SHARES ETC., BUT NOT BASED ON ANY EVIDENCE 8 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD 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 CASE 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 TRANSACTIONS WERE SUPPORTED BY CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCKBROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE PAYMENTS MADE TO THE STOCKBROKER AND ALL THE PAYMENTS RECEIVED FROM STOCKBROKER THROUGH ACCOUNT PAYEE INSTRUMENTS, WHICH WERE ALSO FILED IN ACCORDANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED BEFORE THE TRIBUNAL AND AFTER EXAMINING THE SAME THE TRIBUNAL CAME TO THE CONCLUSION AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. IN DOING SO, THE TRIBUNAL HELD THAT THE TRANSACTION FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCES COULD NOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER, IT 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 QUESTION 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 ITR 422 (CALCUTTA), THE HONBLE JURISDICTIONAL HIGH COURT, HELD AS FOLLOWS:- 9. WE ALSO NOTICE A SHARE TRANSACTION OF THE SHARES OF 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 DETAILS, 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 SHARE 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 WAS ON TWO DIFFERENT DATES. IF THE SHARE BROKER, EVEN AFTER ISSUE OF SUMMONS, DOES NOT APPEAR, FOR THAT REASON, THE CLAIM OF THE ASSESSEE SHOULD NOT 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 FAILED TO APPEAR, THE ASSESSEE SHOULD NOT BE PUNISHED FOR THE DEFAULT OF A BROKER AND 9 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD WE ARE IN FULL AGREEMENT WITH THE TRIBUNAL THAT ON MERE SUSPICION THE CLAIM OF THE ASSESSEE SHOULD NOT BE DENIED. 10. IN THE RESULT, WE ANSWER THE QUESTION IN THE AFFIRMATIVE, 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 MODUS OPERANDI OF PERSONS FOR EARNING LONG TERM CAPITAL GAINS WHICH HIS 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 FALL IN THIS CATEGORY. SPECIFIC EVIDENCES PRODUCED BY THE ASSESSEE ARE NOT CONTROVERTED BY THE REVENUE AUTHORITIES. NO EVIDENCE COLLECTED FROM THIRD PARTIES IS CONFRONTED TO THE ASSESSES. NO OPPORTUNITY OF CROSS-EXAMINATION 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 FROM THE INVESTIGATION WING. 13. THE ISSUE FOR CONSIDERATION BEFORE US IS WHETHER, IN SUCH CASES, THE LEGAL EVIDENCE PRODUCED BY THE ASSESSEE HAS TO GUIDE OUR DECISION IN THE MATTER OR THE GENERAL OBSERVATIONS BASED ON STATEMENTS, PROBABILITIES, HUMAN BEHAVIOR AND DISCOVERY OF THE MODUS OPERANDI ADOPTED IN EARNING ALLEGED BOGUS LTCG AND STCG, THAT HAVE SURFACED DURING INVESTIGATIONS, SHOULD GUIDE THE AUTHORITIES IN ARRIVING AT A CONCLUSION AS TO WHETHER THE CLAIM 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. THE CHAIN OF EVENTS AND THE LIVE LINK OF THE ASSESEES ACTION GIVING HER INVOLVEMENT 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 CHANNELS. THIS ALLEGATION THAT CASH HAD CHANGED HANDS, HAS TO BE PROVED WITH EVIDENCE, BY THE REVENUE. EVIDENCE GATHERED BY THE DIRECTOR INVESTIGATIONS 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 UPON 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 THIRD PARTY AS EVIDENCE TO MAKE AN ADDITION. IF ANY MATERIAL OR EVIDENCE IS SOUGHT TO BE RELIED UPON BY THE AO, HE HAS TO CONFRONT THE ASSESSEE WITH SUCH MATERIAL. THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED BASED ON MERE CONJECTURES UNVERIFIED BY EVIDENCE UNDER THE PRETENTIOUS GARB OF PREPONDERANCE OF HUMAN PROBABILITIES AND THEORY OF HUMAN BEHAVIOR BY THE DEPARTMENT. 10 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD 14. IT IS WELL SETTLED THAT EVIDENCE COLLECTED FROM THIRD PARTIES CANNOT BE USED AGAINST AN ASSESSEE UNLESS THIS EVIDENCE IS PUT BEFORE HIM AND HE IS GIVEN AN OPPORTUNITY TO CONTROVERT THE EVIDENCE. IN THIS CASE, THE 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 RECORD BY THE AO NOR IS IT PUT BEFORE THE ASSESSEE. THE SUBMISSION OF THE ASSESSEE THAT SHE IS JUST AN INVESTOR AND AS SHE RECEIVED SOME TIPS AND SHE CHOSE TO INVEST BASED ON THESE MARKET TIPS AND HAD TAKEN A CALCULATED RISK AND 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 THAT 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 MORE 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, PREPONDERANCE OF HUMAN PROBABILITIES CANNOT BE THE ONLY BASIS FOR REJECTING THE CLAIM OF THE ASSESSEE. UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO CONTROVERT THE VALIDITY AND CORRECTNESS OF THE DOCUMENTARY EVIDENCES PRODUCED, THE SAME CANNOT BE REJECTED BY THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF OMAR SALAV MOHAMED SAIT REPORTED IN (1959) 37 ITR 151 (S C) HAD HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF SURMISES, SUSPICION AND CONJECTURES. IN THE CASE OF CIT(CENTRAL), KOLKATA VS. DAULAT RAM RAWATMULL REPORTED IN 87 ITR 349, THE HON'BLE SUPREME COURT HELD THAT, THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO. THE BURDEN OF PROVING A TRANSACTION TO BE BOGUS HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCES, WHICH WOULD DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH CIRCUMSTANCE UNERRINGLY AND REASONABLY RAISING AN INTERFERENCE TO THAT EFFECT. THE HON'BLE SUPREME COURT IN THE CASE OF UMACHARAN SHAH & BROS. VS. CIT 37 ITR 271 HELD THAT SUSPICION HOWEVER STRONG, CANNOT TAKE THE PLACE OF EVIDENCE. 16. WE FIND THAT THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAS BEEN GUIDED BY THE REPORT OF THE INVESTIGATION WING PREPARED WITH RESPECT TO BOGUS CAPITAL GAINS TRANSACTIONS. HOWEVER WE DO NOT FIND THAT, THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A), HAVE BROUGHT 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 THE PURPOSE OF GENERATING BOGUS LONG TERM CAPITAL GAINS. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PERSONS INVESTIGATED , INCLUDING ENTRY OPERATORS OR STOCK BROKERS, HAVE NAMED THAT THE ASSESSEE WAS IN COLLUSION WITH THEM. IN ABSENCE OF SUCH FINDING HOW IS IT POSSIBLE TO LINK THEIR WRONG DOINGS WITH THE ASSESSEE. IN FACT THE INVESTIGATION WING IS A SEPARATE DEPARTMENT WHICH HAS NOT BEEN ASSIGNED ASSESSMENT WORK AND HAS BEEN DELEGATED THE WORK OF ONLY MAKING INVESTIGATION. THE ACT HAS VESTED WIDEST POWERS ON THIS WING. IT IS THE DUTY OF THE INVESTIGATION WING TO CONDUCT PROPER AND DETAILED INQUIRY IN ANY MATTER WHERE THERE IS ALLEGATION OF TAX EVASION AND AFTER MAKING PROPER INQUIRY AND COLLECTING PROPER EVIDENCES THE MATTER SHOULD BE SENT TO THE 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 ASSESSEE IN THE INVESTIGATION WING REPORT, THE ASSESSEE CANNOT BE HELD TO BE GUILTY OR LINKED TO THE WRONG ACTS OF THE PERSONS INVESTIGATED. IN THIS CASE, IN OUR VIEW, THE ASSESSING OFFICER AT BEST COULD HAVE CONSIDERED THE INVESTIGATION REPORT AS A STARTING POINT OF INVESTIGATION. THE REPORT ONLY INFORMED THE ASSESSING 11 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD OFFICER THAT SOME PERSONS MAY HAVE MISUSED THE SCRIPT FOR THE PURPOSE OF COLLUSIVE TRANSACTION. THE ASSESSING OFFICER WAS DUTY BOUND TO MAKE INQUIRY FROM ALL CONCERNED PARTIES RELATING TO THE TRANSACTION AND THEN TO COLLECT EVIDENCES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS ALSO A COLLUSIVE TRANSACTION. WE, HOWEVER, FIND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT THE TRANSACTIONS ENTERED BY THE ASSESSEE WHICH ARE OTHERWISE SUPPORTED BY PROPER 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 SUPPORT THE SAME. THE HONBLE COURT HELD: ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGHED WITH THE INCOME-TAX OFFICER WE MAY OBSERVE THAT THE NOTORIETY FOR SMUGGLING FOOD GRAINS AND OTHER COMMODITIES TO BENGAL BY COUNTRY BOATS ACQUIRED BY SAHIBGUNJ AND THE NOTORIETY ACHIEVED BY DHULIAN AS A GREAT RECEIVING CENTRE FOR SUCH COMMODITIES WERE MERELY A BACKGROUND OF SUSPICION AND THE APPELLANT COULD NOT BE TARRED WITH THE SAME BRUSH AS EVERY ARHATDAR AND GRAIN MERCHANT WHO MIGHT HAVE BEEN INDULGING IN SMUGGLING OPERATIONS, WITHOUT AN IOTA OF EVIDENCE IN THAT BEHALF. THE CANCELLATION OF THE FOOD GRAIN LICENCE AT NAWGACHIA AND THE PROSECUTION OF THE APPELLANT UNDER THE DEFENCE OF INDIA RULES WAS ALSO OF NO CONSEQUENCE INASMUCH AS THE APPELLANT WAS ACQUITTED OF THE OFFENCE WITH WHICH IT HAD BEEN CHARGED AND ITS LICENCE ALSO WAS RESTORED. THE MERE POSSIBILITY OF THE APPELLANT EARNING CONSIDERABLE AMOUNTS IN THE YEAR UNDER CONSIDERATION WAS A PURE CONJECTURE ON THE PART OF THE INCOME-TAX OFFICER 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 CONJECTURE OR SURMISE ON THE PART OF THE INCOME-TAX OFFICER. AS REGARDS THE DISCLOSED VOLUME OF BUSINESS IN THE YEAR UNDER CONSIDERATION IN THE HEAD OFFICE AND IN BRANCHES THE INCOME-TAX OFFICER INDULGED IN SPECULATION WHEN HE TALKED OF THE POSSIBILITY OF THE APPELLANT EARNING A CONSIDERABLE 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. 2,91,000 BUT THE CONCLUSION WHICH HE ARRIVED AT IN REGARD TO THE APPELLANT HAVING EARNED THIS LARGE AMOUNT DURING THE YEAR AND WHICH ACCORDING TO HIM REPRESENTED THE SECRETED PROFITS OF THE APPELLANT IN ITS BUSINESS WAS THE RESULT OF PURE CONJECTURES AND SURMISES ON HIS PART AND HAD NO FOUNDATION 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 EITHER PERVERSE OR VITIATED BY SUSPICIONS, CONJECTURES OR SURMISES, THE FINDING OF THE TRIBUNAL WAS EQUALLY PERVERSE OR VITIATED IF THE TRIBUNAL 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 THE POSSESSION OF 150 HIGH DENOMINATION NOTES OF RS. 1,000 EACH WAS SATISFACTORILY 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 EQUALLY APPLICABLE TO THE CASE OF THE ASSESSEE. IN OUR VIEW THE ASSESSING OFFICER HAVING FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE TRANSACTION OF THE ASSESSEE WAS A COLLUSIVE TRANSACTION COULD NOT HAVE REJECTED THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN FACT IN THIS CASE NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE WITH AID OF ANY DIRECT EVIDENCES OR 12 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD 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. 18. WE NOW CONSIDER THE VARIOUS PROPOSITIONS OF LAW LAID DOWN BY THE COURTS OF LAW. THAT CROSS-EXAMINATION IS ONE PART OF THE PRINCIPLES OF NATURAL JUSTICE HAS BEEN LAID DOWN IN THE FOLLOWING JUDGMENTS: A) AYAAUBKHAN NOORKHAN PATHAN VS. THE STATE OF MAHARASHTRA 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 OPPORTUNITY 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 EXAMINED BY THAT PARTY. NOT PROVIDING THE SAID OPPORTUNITY TO CROSS-EXAMINE WITNESSES, 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 1963 SC 1719; M/S. KESORAM COTTON MILLS LTD. V. GANGADHAR AND ORS. ,AIR 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. AIR 2010 SC 142; AND STATE OF UTTAR PRADESH V. SAROJ KUMAR SINHA AIR 2010 SC 3131). 24. IN LAKSHMAN EXPORTS LTD. V. COLLECTOR OF CENTRAL EXCISE (2005) 10 SCC 634, THIS COURT, WHILE DEALING WITH A CASE UNDER THE CENTRAL EXCISE ACT, 1944, CONSIDERED A SIMILAR ISSUE I.E. PERMISSION WITH RESPECT TO THE CROSS-EXAMINATION OF A WITNESS. IN THE SAID CASE, THE ASSESSEE HAD SPECIFICALLY ASKED TO BE ALLOWED TO CROSS-EXAMINE THE REPRESENTATIVES OF THE FIRMS CONCERN, TO ESTABLISH THAT THE GOODS IN QUESTION HAD BEEN ACCOUNTED FOR IN THEIR BOOKS OF ACCOUNTS, AND THAT EXCISE DUTY HAD BEEN PAID. THE COURT 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 OPPORTUNITY TO SHOW CAUSE AGAINST AN ACTION PROPOSED TO BE TAKEN BY THE GOVERNMENT, IS THAT THE GOVERNMENT SERVANT IS AFFORDED A REASONABLE OPPORTUNITY TO DEFEND 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 AND 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 PRODUCED AGAINST HIM. THE OBJECT OF SUPPLYING STATEMENTS IS THAT, THE GOVERNMENT SERVANT WILL BE ABLE TO REFER TO THE PREVIOUS STATEMENTS OF THE WITNESSES PROPOSED TO BE EXAMINED AGAINST HIM. UNLESS THE SAID STATEMENTS ARE PROVIDED TO THE GOVERNMENT SERVANT, HE WILL NOT BE ABLE TO CONDUCT AN EFFECTIVE AND USEFUL CROSS-EXAMINATION. 29. IN RAJIV ARORA V. UNION OF INDIA AND ORS. AIR 2009 SC 1100, THIS COURT HELD: EFFECTIVE CROSS-EXAMINATION COULD HAVE BEEN DONE AS REGARDS THE CORRECTNESS OR OTHERWISE OF THE REPORT, IF THE CONTENTS OF THEM WERE PROVED. THE PRINCIPLES ANALOGOUS TO THE PROVISIONS OF THE INDIAN EVIDENCE ACT AS ALSO THE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT THE MAKER 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 OR SIMILAR SITUATION. THE HIGH COURT IN ITS IMPUGNED JUDGMENT PROCEEDED TO CONSIDER THE ISSUE ON A TECHNICAL PLEA, NAMELY, NO PREJUDICE HAS BEEN CAUSED TO THE APPELLANT BY SUCH NON-EXAMINATION. IF THE 13 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD BASIC PRINCIPLES OF LAW HAVE NOT BEEN COMPLIED WITH OR THERE HAS BEEN A GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE HIGH COURT SHOULD HAVE EXERCISED ITS JURISDICTION OF 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 REQUIREMENT OF THE PRINCIPLES OF NATURAL JUSTICE. IN THE ABSENCE OF SUCH AN OPPORTUNITY, 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 NATURAL 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 SENIOR COUNSEL WHO APPEARED FOR THE REVENUE. 5. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS-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 INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER 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 AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-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 EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK 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 DISCREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING 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 DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTIONED 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 BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS 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 WITH 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 CAUSE NOTICE. 14 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD 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 CABLES & 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 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 WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE. HERE IN THE CASE THE TRANSACTIONS OF THE COMMODITY EXCHANGED HAVE NOT ONLY BEEN EXPLAINED BUT ALSO SUBSTANTIATED FROM THE CONFIRMATION 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 TRANSACTION. THE BROKER WAS EXPELLED FROM THE COMMODITY EXCHANGE CANNOT BE THE CRITERIA TO HOLD THE TRANSACTION AS BOGUS. IN VIEW OF ABOVE, WE REVERSE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE COMMON GROUNDS OF ASSESSEES APPEAL. [QUOTED VERBATIM] THIS IS ESSENTIALLY A FINDING OF THE TRIBUNAL ON FACT. NO MATERIAL HAS BEEN SHOWN TO US WHO WOULD NEGATE THE TRIBUNALS FINDING THAT OFF MARKET TRANSACTIONS ARE NOT PROHIBITED. AS REGARDS VERACITY OF THE TRANSACTIONS, THE TRIBUNAL HAS COME TO ITS CONCLUSION ON ANALYSIS OF RELEVANT MATERIALS. THAT BEING THE POSITION, TRIBUNAL HAVING ANALYZED THE SET OF FACTS IN COMING TO ITS FINDING, WE DO NOT THINK THERE IS ANY SCOPE OF INTERFERENCE WITH THE ORDER OF THE TRIBUNAL IN EXERCISE OF OUR JURISDICTION UNDER SECTION 260A OF THE INCOME TAX ACT, 1961. NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL AND THE STAY PETITION, ACCORDINGLY, 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 CONTROVERT 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 UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN. HENCE WE DELETE THE 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 (APPEALS) AND THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT PRODUCED ANY EVIDENCE WHATSOEVER IN SUPPORT OF THE SUSPICION. ON THE OTHER HAND, ALTHOUGH THE APPRECIATION IS VERY HIGH, THE SHARES WERE TRADED ON 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. 15 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD 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 ASSESSING OFFICER RELIED UPON IN THE APPEAL WERE NOT PUT TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE CIT (APPEALS) NEVERTHELESS CONSIDERED THEM IN DETAIL AND FOUND THAT THERE WAS NO CO-RELATION BETWEEN THE AMOUNTS 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 PERVERSE OR IRRATIONAL. ACCORDINGLY, NO QUESTION OF LAW ARISES. D) THE BENCH D OF KOLKATA ITAT IN THE CASE OF GAUTAM PINCHA [ITA NO.569/KOL/2017] ORDER DATED 15.11.2017 HELD AS UNDER VIDE PAGE 12 PARA 8.1: IN THE LIGHT OF THE DOCUMENTS STATED I.E. (I TO XIV) IN PARA 6(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMPLICATE THE ASSESSEE TO HAVE ENTERED GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION 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 ARE 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 EVIDENCES 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 THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE THAT INCOME FROM LTCG IS EXEMPTED U/S 10(38) OF THE ACT. FURTHER IN PAGE 15 PARA 8.5 OF THE JUDGMENT, IT HELD: 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 ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED BY US TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT (A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITION. E) THE BENCH D OF KOLKATA ITAT IN THE CASE OF KIRAN 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 MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNFOUNDED/UNWARRANTED ALLEGATIONS LEVELED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR 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 ASSESSE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARES MUST THEREFORE CONSEQUENTLY FAIL. 16 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD 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. NEITHER THESE EVIDENCES WERE 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 EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE EXEMPTED U/S 10(38) OF THE 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 CHARACTER 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 HAS ALREADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DULY CONSIDERED TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTICE ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE THEREFORE DIRECT THE AO TO DELETE THE ADDITION. F) THE BENCH A OF KOLKATA ITAT IN THE CASE OF SHALEEN 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 ADVERSE MATERIAL TO IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGATIONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION, HAS NO LEGS TO STAND IN THE EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE ARGUMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON THE ORDERS OF THE LD AO. WE FIND THAT 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 ASSESSEE 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 NEITHER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF THE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THEREFORE THE LD AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. G) THE BENCH H OF MUMBAI ITAT IN THE CASE OF ARVIND 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 INVESTIGATION OF BROKER IS CONCERNED, THE ASSESSEE IS NO WAY CONCERNED WITH THE ACTIVITY OF THE BROKER. DETAILED FINDING HAS BEEN RECORDED BY CIT (A) TO THE EFFECT THAT ASSESSEE HAS MADE INVESTMENT IN SHARES WHICH WAS PURCHASED ON THE FLOOR OF STOCK EXCHANGE AND NOT FROM M/S BASANT PERIWAL AND CO. AGAINST PURCHASES PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE, DELIVERY OF SHARES WERE TAKEN, CONTRACT OF SALE WAS ALSO COMPLETE AS PER THE CONTRACT ACT, THEREFORE, THE ASSESSEE IS NOT CONCERNED WITH ANY WAY OF THE BROKER. NOWHERE THE AO HAS ALLEGED THAT THE TRANSACTION BY THE ASSESSEE WITH THESE PARTICULAR BROKER OR SHARE WAS BOGUS, MERELY BECAUSE THE INVESTIGATION WAS DONE BY SEBI AGAINST BROKER OR HIS 17 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD ACTIVITY, ASSESSEE CANNOT BE SAID TO HAVE ENTERED INTO INGENUINE TRANSACTION, INSOFAR AS ASSESSEE IS NOT CONCERNED 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 THAT TRANSACTIONS IN M/S RAMKRISHNA FINCAP PVT. LTD. ON THE FLOOR OF THE STOCK EXCHANGE ARE INGENUINE OR MERE ACCOMMODATION ENTRIES. THE CIT (A) AFTER RELYING ON THE VARIOUS DECISION OF THE COORDINATE BENCH, WHEREIN ON SIMILAR FACTS AND CIRCUMSTANCES, ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, 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 RECORD. 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 ASSESSEE IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEAL) RECORDED A FINDING 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 TRANSACTIONS 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 EVIDENCE PRODUCED ON RECORD. THE TRIBUNAL HAS AFFIRMED SUCH FINDING. SUCH 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 RAISED IN THE PRESENT APPEAL. HENCE, THE PRESENT APPEAL IS DISMISSED. I) THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BHAGWATI PRASAD AGARWAL IN I.T.A. NO. 22/KOL/2009 DATED 29.04.2009 AT PARA 2 HELD AS FOLLOWS: THE TRIBUNAL FOUND THAT THE CHAIN OF TRANSACTION ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTED BY EVIDENCE. THE ASSESSEE PRODUCED BEFORE THE COMMISSIONER OF INCOME TAX(APPEAL) THE CONTRACT NOTES, DETAILS OF HIS DEMAT ACCOUNT AND, ALSO, PRODUCED DOCUMENTS SHOWING THAT ALL PAYMENTS WERE RECEIVED 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 ALREADY MADE BY THE ASSESSEE FROM RAJ IMPEX WERE DULY SUPPORTED BY BILLS AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE. RAJ IMPACTS ALSO CONFIRMED THE TRANSACTIONS.THERE WAS NO EVIDENCE TO SHOW THAT THE AMOUNT WAS RECYCLED BACK TO THE ASSESSEE.PARTICULARLY, WHEN IT WAS FOUND THAT THE ASSESSEE THE TRADER HAD ALSO SHOWN SALES OUT OF PURCHASES MADE FROM RAJ IMPEX WHICH WERE ALSO ACCEPTED BY THE REVENUE, NO QUESTION OF LAW 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 THE ADDITION MADE, CANNOT BE SUSTAINED FOR BOTH THE IMPUGNED ASSESSMENT YEARS. 18 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD 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 JAIN, THE ASSESSEE THEREIN, FOR THE ADDITION. 8. COMING TO THE SPECIFIC ARGUMENTS RAISED FOR THE ASSESSMENT YEAR 2013-14, WE FIND FROM PARA 5 OF THE ASSESSMENT ORDER THAT THE ORIGINAL RETURN OF INCOME WAS FILED U/S 139 OF THE ACT ON 26/09/2013, BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2013-14 AND NO NOTICE U/S 143(2) OF THE ACT, WAS ISSUED. HENCE, THE ASSESSMENT IN THIS CASE HAS NOT ABATED. THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S. SETHIA AGROTECH LTD., I.T(SS)A NO. 91/KOL/2017 & C.O. NO. 85/KOL/2017 , ORDER DT. 01/12/2017, HAD CONSIDERED THE MATTER AND AFTER CONSIDERING VARIOUS JUDGMENTS OF THE CO-ORDINATE BENCH AND JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), HAD HELD AS FOLLOWS:- 8.1. WE FIND THAT THE CO-ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF DY. CIT V. AGGARWAL ENTERTAINMENT (P .) LTD REPORTED IN [2016] 72 TAXMANN.COM 340 (DELHI - TRIB.) HAD ADDRESSED THIS ASPECT. THE RELEVANT HEADNOTES IS REPRODUCED BELOW:-- ' SECTION 153A , READ WITH SECTION 143 , OF THE INCOME-TAX ACT , 1961-SEARCH AND SEIZURE - ASSESSMENT IN CASE OF (IN CASE OF SECTION 143(1) ASSESSMENT)- ASSESSMENT YEAR 2004-05- WHETHER ASSESSMENT IN RESPECT OF WHICH RETURN HAS BEEN PROCESSED UNDER SECTION 143(1) , CANNOT BE REGARDED AS PENDING FOR PURPOSE OF SECTION 153A AS ASSESSING OFFICER IS NOT REQUIRED TO DO ANYTHING FURTHER ABOUT SUCH A RETURN AND, THUS, SAID ASSESSMENT CANNOT BE REOPENED IN EXERCISE OF POWER OF SECTION 153A - HELD YES (PARAS 10 AND 12) (IN FAVOUR OF ASSESSEE).' 8.2. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9.12.2015 REPORTED IN 2016-TIOL- 167-ITAT-KOL HAD EXPLAINED THE AFORESAID PROVISIONS AS BELOW:- '6.4 IN OUR OPINION, THE SCHEME OF ASSESSMENT PROCEEDINGS SHOULD BE UNDERSTOOD IN THE FOLLOWING MANNER PURSUANT TO THE SEARCH CONDUCTED U/S. 132 OF THE ACT :- (A) NOTICE U/S. 153 A OF THE ACT WOULD BE ISSUED ON THE PERSON ON WHOM THE WARRANT OF AUTHORIZATION U/S. 132 OF THE ACT WAS ISSUED FOR THE SIX ASSESSMENT YEARS PRECEDING THE YEAR OF SEARCH AND ASSESSMENTS THEREON WOULD BE COMPLETED U/S. 153 A OF THE ACT FOR THOSE SIX ASSESSMENT YEARS. 19 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD (B) IN RESPECT OF THE YEAR OF SEARCH, NOTICE U/S. 143(2) OF THE ACT WOULD BE ISSUED AND ASSESSMENT THEREON WOULD BE COMPLETED U/S. 143(3) OF THE ACT. (C) IN RESPECT OF CONCLUDED ASSESSMENTS PRIOR TO THE YEAR OF SEARCH, NO ADDITION COULD BE MADE IN THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE RELEVANT ASSESSMENT YEAR. (D) PURSUANT TO THE SEARCH U/S. 132 OF THE ACT, THE PENDING PROCEEDINGS WOULD GET ABATED. IN RESPECT OF ABATED ASSESSMENTS, THE TOTAL INCOME NEEDS TO BE DETERMINED AFRESH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A AND OTHER PROVISIONS OF THE ACT. 6.4.1 THE CONCLUDED ASSESSMENTS FOR THE PURPOSE OF SECTION 153A OF THE ACT SHALL BE - (I) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMPLETED U/S. 143(1) AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT HAS EXPIRED OR; (II) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMPLETED U/S. 143(3) OF THE ACT ; UNLESS THEY ARE REOPENED U/S. 147 OF THE ACT FOR SOME OTHER PURPOSE IN BOTH THE SCENARIOS STATED ABOVE. 6.4.2 THE SCHEME OF ASSESSMENT PROCEEDINGS CONTEMPLATED U/S. 153 A OF THE ACT ARE TOTALLY DIFFERENT AND DISTINCT FROM THE PROCEEDINGS CONTEMPLATED U/S. 147 OF THE ACT AND THESE PROCEDURES OF ASSESSMENT OPERATE IN DIFFERENT FIELDS AND HAVE DIFFERENT PURPOSES TO BE FULFILLED ALTOGETHER. 6.4.3 THE EXPRESSION 'ASSESS OR REASSESS' STATED IN SECTION 153A(1)(B) HAS TO BE UNDERSTOOD AS BELOW:- 'ASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF ABATED ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER THERE ARE ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO RELEVANT ASSESSMENT YEARS ; 'REASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF CONCLUDED ASSESSMENT YEARS WHERE INCRIMINATING MATERIALS WERE FOUND DURING THE COURSE OF SEARCH IN RESPECT OF THE RELEVANT ASSESSMENT YEAR.' 8.3. WE ALSO FIND THAT RECENTLY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HELD AS UNDER:- '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED 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 OF THE SEARCH SHALL ABATE. 20 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE LD AOS AS A FRESH EXERCISE. (III) THE LD AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE LD AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE LD AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' (V) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED 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 COMPLETE ASSESSMENT PROCEEDINGS. (VI) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE LD AO. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE LD AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 38. THE PRESENT APPEALS CONCERN AYS 2002-03, 2005-06 AND 2006-07, ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 8.4. WE FIND THAT THE DECISION RELIED UPON BY THE LD DR IN THE CASE OF CIT VS ANIL KUMAR BHATIA REPORTED IN (2013) 352 ITR 493 (DEL) DOES NOT IN ANY MANNER ADVANCE THE CASE OF THE REVENUE AS ADMITTEDLY THE HON'BLE DELHI HIGH COURT IN PARA 24 OF ITS ORDER HAD HELD AS UNDER:- '24. WE ARE NOT CONCERNED WITH A CASE WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN BE INVOKED EVEN IN SUCH A SITUATION. THAT QUESTION IS THEREFORE LEFT OPEN.' 21 ITA NO. 65/KOL/2018 ASSESSMENT YEAR: 2013-14 & ITA NO. 66/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. CONSISTENT VYAPAAR PVT. LTD 8.1. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE REFERRED JUDGEMENTS TO THE FACTS OF THE CASE ON HAND, WE UPHOLD THE CONTENTIONS OF THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION, BOTH THESE APPEALS OF THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. KOLKATA, THE 14 TH DAY OF SEPTEMBER, 2018. SD/- SD/- [ MADHUMITA ROY] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14.09.2018 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. M/S. CONSISTENT VYAPAAR PVT. LTD FLAT 2C, TRINITY BUILDING 227/1A, AJC BOSE ROAD MINTO PARK KOLKATA 700 020 2. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(3), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES