MR PANKAJ GOSHAR,MUMBAI V. .DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 8(4), MUMBAI

ITA 1256/MUM/2024

AI Insights

The case involves multiple appeals related to the assessment years 2014-15 and 2015-16 concerning the assessee, Pankaj Dhanji Goshar, who was engaged in trading shares of M/s Pine Animation Ltd. The Revenue challenged the relief granted by the Ld.CIT(A) regarding the additions related to long term capital gains and estimated commission expenses. The assessee also appealed against the addition made based on a WhatsApp chat, which was considered as an unexplained cash credit. The Tribunal examined the evidences, including the final order of SEBI which exonerated the assessee, and found that the additions made were not justified.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 37957 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Other Referred Cases: Shri Vijayrattan Balkrishnan Mittal vs. DCIT, DCIT vs. Shri Prakash Chand Sharma/Smt Kalawati Sharma, Shri Kunal Dedhia vs. DCIT, Mukesh Mittal vs. DCIT, Shyam R Pawar vs. CIT, Priyank Ankit Miglani and others vs. DCIT, Gopal Nichaldas Pariani vs. DCIT, Yogesh Thakkar and others vs. DCIT, Suman Poddar vs ITO, PCIT vs Krishna Devi and others, PCIT vs Prem Pal Gandhi, PCIT vs Hitesh Gandhi, PCIT vs Sanjay Bimalchand Jain, PCIT vs Ziauddin A Siddique, PCIT vs Laxman Industrial Resources Ltd, Mukesh Ratilal Marolia vs Additional CIT, CIT vs Jamna Devi Agrawal
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESHWARI MENON
• Assessee Lawyers: NEELKANTH KHANDELWAL
• Keywords: Set aside; Opportunity of being heard; Question of law; Unexplained cash credit; Unexplained expenditure; Income from undisclosed sources; Gift; Capital Gains; Sham transactions; Search and seizure; Accommodation entries; Wrong claim; Opportunity of cross examination; Penny stocks; Deduction for capital gain; Bogus
• Section: 143(3); 142(1); 192; 48; 132; 153A; 68; 131; 43; 113; 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “C” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. A.Y. Appellant Respondent 1224/Mum/2024 2014-15 Deputy Commissioner of Income Tax, 6th Floor, Aayakar Bhavan, M.K.Road, Mumbai. Pankaj Dhanji Goshar, 1101, Mont Blanc, 550, Jam-e-Jamshed Road, Matunga East, Mumbai PAN: AACPG7709G 1223/Mum/2024 2015-16 1256/Mum/2024 2015-16 Mr. Pankaj Goshar, 1601, Mount Pleasant, 586, Lady Jehangir Road, Matunga, Mumbai PAN: AACPG7709G Deputy Commissioner of Income Tax, Central Circle-8(4), Aayakar Bhavan, M.K.Road, Mumbai. For Assessee : Shri Neelkanth Khandelwal For Revenue : Ms.Rajeshwari Menon, Sr.DR Date of Hearing : 18-10-2024 Date of Pronouncement : 20-12-2024 O R D E R PER B.R. BASKARAN, A.M : The Revenue has filed appeals for the AYs.2014-15 and 2015-16. The assessee has filed appeal for the AY.2015-16. All of them are directed against the orders dated 12-01-2024 & 15-01-2024 passed by the Ld.CIT(A)-50, Mumbai. Since most of the issues urged in these appeals 2 ITA Nos. 1223, 1224 & 1256/Mum/2024 are identical in nature and further, they arise out of same set of facts, they were heard together and are being disposed of by this common order, for the sake of convenience. 2. In both the appeals filed by the Revenue for both the years, the relief granted by the Ld.CIT(A) in respect of additions relating to long term capital gains and estimated commission expenses are being assailed. In the appeal of the assessee filed for AY.2015-16, the assessee is assailing the decision of the Ld.CIT(A) in confirming the additionmade on the basis of whatsapp chat. 3. The facts relating to the case are discussed in brief. The assessee is carrying on monsoon shed hiring business in addition to carrying on agricultural activities. He has been making investments in shares and securities, mutual funds etc. During both the years under consideration, the assessee has sold shares of M/s.Pine Animation Ltd., and earned long term capital gains in both the years. The assessee claimed the same as exempt u/s 10(38) of the Act. The investigation wing of Income Tax Department, Kolkata found out that the prices of shares of certain companies (called as penny stock companies) are being manipulated in order to generate bogus long term capital gains. M/s.Pine Animation Ltd., was identified as one of such companies. The SEBI, being the regulator of the Stock Exchange, started investigation on those activities. In respect of M/s.Pine Animation Ltd., an Ad-interim Order dated 08-05-2015 was passed by SEBI, wherein it initiated enquiries on the promoters and the allottees of shares of M/s.Pine Animation Ltd. The said Ad-interim order contained the name of the assessee and his sister. Accordingly, the assessee was subjected to search and seizure operations u/s 132 of the Act by the Income Tax Department from 10-09-2015 to 13-09-2015. A sworn statement u/s 132(4) of the Act was also recorded from the assessee 3 ITA Nos. 1223, 1224 & 1256/Mum/2024 during the course of search. In the statement, the assessee had stated that the shares of M/s.Pine Animation Ltd., were purchased by him on the advice of his share broker Shri Bhavesh Sha. The Revenue recorded a statement from the above said share broker also u/s 131 of the Act and he also confirmed that he had advised the assessee to buy the shares of M/s. Pine Animation Ltd. 4. Subsequently, the assessments of both the years under consideration were framed u/s 143(3) r.w.s 153A of the Act, wherein the AO held that the long term capital gains earned by the assessee on sale of Pine Animation Ltd are bogus in nature. Accordingly, he assessed the long term capital gains declared by the assessee in both the years as income of the assessee, i.e., he rejected the claim for exemption u/s 10(38) of the Act. Besides the above, the AO presumed that the assessee would have incurred commission expenses in generating bogus gains, which he estimated @ 5%. Accordingly, the AO assessed 5% value oflong term capital gains as commission expenses u/s 69C of the Act in both the years. In assessment year 2015-16, the AO made addition of Rs.2.00 crores on the basis of Whatsapp chat found between the assessee and another person in the survey operations conducted in the hands of M/s.Krazee Properties P Ltd. The AO also noticed that the print out of whatsapp chat from the phone of the assessee was taken up by search team. The whatsapp chat contained exchanges of chat on accommodation entry of Rs.2.00 crores. The AO took the view that the assessee has used his unaccounted money to avail accommodation entries and accordingly assessed the amount of Rs.2.00 crores as unexplained cash credit in the hands of the assessee in AY 2015-16. 4 ITA Nos. 1223, 1224 & 1256/Mum/2024 5. The Ld.CIT(A) deleted the additions relating to long term capital gains and commission expenses in both the years. Hence the Revenue has filed these two appeals. The Ld CIT(A) confirmed the addition made on the basis of Whatsapp chat in AY 2015-16. Hence, the assessee has filed appeal for AY 2015-16. ASSESSMENT YEAR : 2014-15 (REVENUE’S APPEAL):- 6. We shall first take up the appeal filed by the revenue for AY 2014- 15. We noticed earlier that the search was conducted in the hands of the assessee on the basis of Ad-interim report given by SEBI, since enquiry was conducted by SEBI on all the purchasers of shares in the preferential allotment made by M/s Pine Animation Ltd (earlier known as 4K Animation Ltd). The assessee had purchased 6,00,000 shares of above said company @ Rs.10/- per share in the shares issued under private placement on preferential basis. The shares were allotted to the assessee on 07-12-2012. Subsequently, the face value of shares was split from Rs.10/- per share to Re1.00 per share. Accordingly, the assessee got 60,00,000 shares. All these shares were sold by the assessee in the month of January 2014 to March, 2014 and earned long term capital gains, which was claimed as exempt u/s 10(38) of the Act. The assessee’s sister Smt. Lata Shah also purchased 6,00,000 shares and hence she was also subjected to enquiry by SEBI. 7. During the course of assessment proceedings, the AO issued a notice u/s 142(1) of the Act to the assessee raising various queries. The assessee also duly furnished replies to them. The AO noticed that the assessee has not carried out fundamental analysis of M/s Pine Animation Ltd before investing in the shares of above said company. He noticed that the financials and fundamentals of M/s Pine Animation Ltd did not justify the prices quoted in the stock exchange. Further, the AO referred to the 5 ITA Nos. 1223, 1224 & 1256/Mum/2024 report given by the Investigation wing of Kolkatta, particularly, the statements recorded by them from few persons, who were operating in the penny stocks. The AO referred to the statements recorded from Shri Raj Kumar Kedia, wherein he had admitted that he had arranged investment in the shares of M/s Pine Animation Ltd on behalf of the beneficiaries. The AO also noticed that the Investigation wing had recorded statements from various other persons and found out that a syndicate of share brokers, entry providers of Jamakharchi companies and penny stock companies were operating together to generate bogus capital gains, i.e., they have been jointly operating to give the benefit of accommodation entries to the beneficiaries for a commission ranging from 5% to 7% of the trade value or long term capital gains. Then the AO referred to the financial statements of the above said company extracted by the investigation wing for several years. He also referred to the manner in which the shares were issued and transferred by the syndicate. He also referred to the price movement of the shares of the above said company in various patches, which resulted in abnormal increase in the prices of shares of above said company. Accordingly, the AO came to the conclusion that the financials of above said company were dubious and its prices are artificially jacked up in order to accommodate the beneficiaries like the assessee. 8. The AO also referred to the investigation carried out by the Investigation wing with the buyers of the shares of above said company, who were named as Exit providers. The AO issued notices to some of the exit providers, but they did not respond to the notices. When this fact was confronted with the assessee, he replied that the shares have been sold by him in the stock exchange platform and he will not know the identity of the buyers in the online trading. 6 ITA Nos. 1223, 1224 & 1256/Mum/2024 9. The assessee also requested the AO to furnish the documents relied upon by him to disbelieve his share transactions and also sought opportunity of cross examination of persons, on whose statements, the AO is placing reliance. But the AO did not afford that opportunity to the assessee. Before the AO, the assessee furnished all the documents in support of purchase and sale of shares. The Ld A.R submitted that the assessee also furnished copy of final SEBI report, wherein he and his sister have been exonerated by SEBI. However, the AO did not accept any of those documents. He concluded as under:-  The financials of M/s. Pine Animation Limited were very poor during the period when the shares were purchased by the beneficiaries.  The business profile shows that the company was not engaged into any substantial activity.  The business profile shows that the company was not having any future plans which could attract investors from all over India to invest in the company.  The whole process of rigging value of the shares on the stock market was a prearranged and a managed process so as to for booking accommodation entry of bogus LTCG in the garb of sale proceeds on sale of shares.  The shares were rigged on the stock exchange through manipulation of the stock market.  Various share brokers whose statements have been recorded and discussed in the report, confirmed the fact that the shares of M/s. Pine Animation Limited have been used for providing entry of bogus LTCG.  Various Exit Providers have confirmed that they have purchased the shares of M/s. Pine Animation Limited to provide entry of bogus LTCG.  Transactions of shares were not governed by market factors prevalent at relevant time in such trade, but same were product of design and mutual connivance on part of assessee and the operators.  Therefore, it is found that the shares of M/s. Pine Animation Limited 7 ITA Nos. 1223, 1224 & 1256/Mum/2024 were used to provide accommodation entry in terms of LTCG to the beneficiaries. Then, the AO referred to certain decision rendered by ITAT and High Courts, wherein the addition relating to bogus capital gains had been confirmed. Accordingly, he held that the long term capital gains declared by the assessee are bogus and accordingly assessed the same as income of the assessee. 10. The AO also referred to the statement given by one of the exit providers named Shri Jagdish Purohit, wherein had had admitted to be charging 5% commission. Relying upon the said statement, the AO assessed 5% of the long term capital gains as estimated commission expenses incurred by the assessee. 11. The assessee preferred appeal before the Ld.CIT(A) challenging the additions made by the AO. The assessee contended that (a) the shares were purchased in the earlier year relevant to AY 2013-14 and it has been accepted by the AO. Hence, having accepted the genuineness of purchase, the AO should not have doubted the sales. (b) all the evidences relating to purchases and sales were submitted before the AO and he did not find fault with any of those documents. (c) the search was conducted on the basis of an ex-parteAd- interim order of SEBI. However, the assessee and his sister have been exonerated in the final order. The AO did not consider the final order at all. 8 ITA Nos. 1223, 1224 & 1256/Mum/2024 (d) the AO has simply placed reliance on the report of the investigation wing and the statements taken by them from certain operators and an exit provider. The assessee had sought copies of those statements and also the opportunities to cross examine them. However, the AO did not provide the documents and also the opportunity of cross examination. (e) the AO did not deal with various case laws relied upon by the assessee, but relied on certain case law which are not applicable to the facts of the present case. 12. Hence, the CIT(A) called for a remand report from the assessing officer. The AO submitted that the modus operandi in generating bogus capital gains have been extensively investigated by the Investigation wing of Kolkata, Mumbai and Delhi. He submitted that the contents of the statement given by certain operators have already been incorporated in the assessment order. The AO did not offer any comment on the issue of not providing opportunity of cross examination. He also did not comment upon the documents furnished by the assessee to prove purchases and sales. 13. The remand report given by the AO was confronted with the assessee, who furnished his comments on it. In effect, the assessee submitted that the AO has not addressed various contentions raised by him. The assessee also placed reliance on the following case law to contend that the additions made by the AO should be deleted:- (a) Shri VijayrattanBalkrishnan Mittal vs. DCIT (2020)(121 taxmann.com 100)(Mum-Trib); (b) DCIT vs. Shri Prakash Chand Sharma/Smt Kalawati Sharma ITA No. 780 & 781-2019 (Jaipur) dated 18th November, 2020; 9 ITA Nos. 1223, 1224 & 1256/Mum/2024 (c) Shri Kunal Dedhia vs. DCIT (ITA Nos. 3893/Mum/2019 & 3901 dated 31-07-2020); (d) Mukesh Mittal (TS-271-ITAT-2021 (Del)) Accordingly, the assessee contended that no addition as regards Long Term Capital Gains or cash commission can be made. 14. In view of the submissions made by the assessee against the remand report, the Ld.CIT(A) called for another remand report from the assessing officer specifically asking the AO to find out as to whether the final order of SEBI dated 19-09-2017 (wherein the assessee and her sister have been exonerated) has attained finality or not. The AO replied that the assessee had challenged the Interim order by filing appeal before Securities Appellate Tribunal and the same has been dismissed as infructuous in view of the final order passed by SEBI. The AO also reported that a notice was sent to Shri Jagdish Purohit, the exit provider, asking him to appear before him in order to provide opportunity of cross examination. Shri Jagdish Purohit has replied that he did not know Mr. Pankaj Dhanji Ghoshar (assessee herein) and also denied any business relationship with him. Also he submitted that he does not possess any document relating to Shri Pankaj Dhanji Ghoshar. Thus, Shri Jagdish Purohit did not appear before the AO and hence opportunity of cross examining him could not be given to the assessee. 15. Thereafter, the Ld.CIT(A) proceeded to dispose of the appeal. He noticed that the assessing officer had passed assessment order u/s 143(3) on 10-02-2016 in the hands of the assessee’s sister Mrs Lata Shah, wherein he did not question about purchase of shares of M/s Pine Animation Ltd by her. We noticed earlier that Mrs Lata Shah had also purchased 6,00,000 shares of above said company in the year relevant to 10 ITA Nos. 1223, 1224 & 1256/Mum/2024 AY.2013-14 and they were gifted by her to the assessee herein. The assessee had sold those shares in the year relevant to AY 2015-16 and the AO has assessed the Long term capital gains in that year also. Hence, the Ld CIT(A) has referred to the assessment order passed for AY 2013-14 in the hands of Smt Lata Shah. 16. The Ld.CIT(A) summarized as under, the contentions of the assessee and the details of documents furnished by the assessee to prove the purchase and sale of shares :- “19.4 Before me the appellant has furnished his explanation on the above mentioned issues discussed by the A.O in the assessment order. I have gone through the various submissions of the appellant. In a nutshell the appellant's contention is summarised as under- I. The appellant is a regular investor in shares. He has also invested in other shares during the concerned period. II. The shares of Pine Animation Ltd. were purchased on the recommendation of Shri. Bhavesh Shah, who was working as sub broker with First Global stock brokers. III. This fact has also been confirmed by Shri Bhavesh Shaha in his statementrecorded u/s 131 of the IT Act on 13.09.2015. IV. No incriminating evidences were found during the search which demonstrates that the appellant has availed any accommodation entry. No cash as alleged by the AO was found during the search. V. The appellant has carried out genuine transaction and the same are supported by documentary evidence. VI. Shares have been sold online stock exchange through reputed brokers. VII. Purchases have been accepted by the AO as no addition in this regard has been made. 11 ITA Nos. 1223, 1224 & 1256/Mum/2024 VIII. No opportunity for cross examination to the person on whose statements the AO has relied has been provide. IX. SEBI has exonerated the appellant from charge of manipulation. SEBI also held that there was no price manipulation of shares of PAN. 19.5 I have noted that the Appellant during the course of appellate proceedings before me, in support of the long-term capital gains earned on sale of shares of PAL filed the following documentary evidences 1. Allotment advice dated 21.12.2012 from company for purchase of shares by appellant 1. Allotment advice dated 04.02.2013 from company for purchase of shares by appellant's sister Smt Lata V Shah 1. Demat account statement of the appellant showing share transactions 1. Personal details of Bhavesh Shah (former deputy manager of Karvy Stock Broker Ltd) who recommended the appellant to subscribe in the preferential issue of PAL. 1. Declaration of gift of shares from Smt Lata V Shah to appellant. (vi) Certificate showing STT paid by appellant for sale of share of PAL for FY2013-14 (vii) For source of investment in shares of PAL- Copy of financial statement, audit report, acknowledgement of return of income and loan confirmation of M/s. Grafton Merchants Pvt Ltd from whom temporary loan was taken by appellant and repaid immediately within less than a month. (viii) Brokers report, bank statement for AY 2013-14 showing purchases of preferential shares of PAL and contract notes reflecting sale of shares of PAL for AY 2014-15. (ix) Details of holdings in listed and unlisted shares by appellant as on 31.03.2014 (x) Utilisation of funds received on sale of shares. 12 ITA Nos. 1223, 1224 & 1256/Mum/2024 (xi) Letter dated 19.12.2017 & 20.12.2017 addressed to broker First Global Stock Broking Pvt Ltd wherein details of identity of Exit providers and certain other clarifications were sought for (xii) Letter dated 26.12.2017 received from broker wherein it is confirmed that transactions are done through exchange terminals where they cannot see the buyer or broker and counter party for them is the Stock Exchange and settlement also takes place with Stock Exchange and not with the buyer or his broker. (xiii) Annual report of company PAL for FY 2010-11 to 2016-17. The main contention of the Appellant is that the AO has not disproved the documentary evidences filed by the Appellant in support of the exemption claimed under section 10(38) of the Act in respect of long term capital gain earned on sale of shares of PAL.” 17. Thereafter, the Ld.CIT(A) referred to the statement taken from the assessee u/s 132(4) of the Act during the course of search operations. Upon examining it, the Ld.CIT(A) concluded that the assessee is a regular trader in the share market. Hence it is not an isolated case of purchase of shares of M/s Pine Animation Ltd. The assessee had stated that he purchased the shares of above said company on the advice of his share broker Shri Bhavesh Shah, who was also examined and he also confirmed that he had advised the assessee herein to buy the shares of M/s Pine Animation Ltd. Accordingly, the ld CIT(A) concluded as under:- “19.6.4 During the assessment and appellate proceedings the appellant has furnished the brokers notes, details of payments made for the purchase, copy of bank statement etc in support of purchase. It is not in dispute that the appellant had made purchase of shares off market through preferential allotment of shares by the concerned company. The appellant has discharged his onus of proving the fact that shares purchased by him were dematerialized in Demat account and held by the appellant till the same were sold from the Demat account of the appellant. The transaction of holding the shares are reflected in the Demat account and the selling of shares are through the Demat account. In the backdrop of these facts the transaction could 13 ITA Nos. 1223, 1224 & 1256/Mum/2024 not be treated as non genuine merely because they are done in off market.” The Ld.CIT(A) took support of the decision rendered by the Hon’ble jurisdictional Bombay High Court in the case of CIT Vs. Jamna Devi Agrawal (328 ITR 656)(Bom). 18. The Ld.CIT(A) noticed that the assessee and his sister has been exonerated by the SEBI in its order dated 19-09-2017. Further, the SEBI had also exonerated certain exit providers quoted by the AO in the assessment order. Accordingly, he held that the reliance placed by the AO on Ad-interim order of SEBI would fail. 19. The Ld.CIT(A) also noticed that the AO had placed reliance on the statements recorded by the investigation wing from Shri Rajagopalan Nagraj Sharma – Director of Pine Animation Ltd (PAL); Shri Mandar Subhas Palav, Independent Director of PAL; Shri Narayan Toshniwal, CA of PAL and Shri Jagdish Purohit, exit provider. The Ld CIT(A) also noticed that the assessee had requested the AO (through various letters ) to provide an opportunity to cross examine all the above said persons, but he has not provided such an opportunity . However, he held that the AO has not made addition solely on the basis of statements given by the above said persons. The Ld.CIT(A) observed that the AO has also conducted independent enquiries of exit providers, carried out detailed analysis of financials of the PAL. Accordingly, the Ld.CIT(A) held that there is no necessity in this case to offer cross examination of the above persons to the assessee. In support of his above said view, he took support of the decision rendered by Hon’ble Kolkata High Court in the case of Swati Bajaj (139 taxmann.com 352)(Kol). 14 ITA Nos. 1223, 1224 & 1256/Mum/2024 20. However, he agreed with the assessee on other aspects of contentions. Before Ld CIT(A), the assessee had also placed reliance on the following case laws:- (a) Indravadan Jain (HUF) (ITA No. 454 of 2018)(Bom) (b) Ziauddin A Siddique (ITA No.2012 of 2017)(Bom) (c) Shyam R Pawar (54 taxmann.com 108)(Bom) (d) Priyank Ankit Miglani and others (ITA No.2531/Mum/2021) (e) Gopal Nichaldas Pariani (ITA No.7761 & 7762/Mum/2019) (f) Yogesh Thakkar and others (ITA 1605/Mum/2021 and others) The Ld.CIT(A) noticed that the facts prevailing in the case of Priyanka Ankit Miglani were identical with the case of the assessee. In fact, the concerned Ld CIT(A) in the case of Priyanka Ankit Miglani, had followed the decision rendered by the Tribunal in the case of Vijayrattan Balkrishna Mittal in ITA No.3248/Mum/2019 dated 01-10-2019. The Ld CIT(A) noticed that the decision rendered by Ld CIT(A) in the case of Priyanka Ankit Miglani has been upheld by the Tribunal in ITA No.2531/Mum/2021). The Ld.CIT(A) noticed that the facts prevailing in the present case and in the cases of Anuj Rajinder Miglani** and Vijayrattan Balkrishnan Mittal are identical in nature. In this regard, the Ld CIT(A) has prepared a chart showing parity of facts between the above said cases.(** decided along with Priyanka Ankit Miglani) The said chart is extracted below, for the sake of convenience:- 15 ITA Nos. 1223, 1224 & 1256/Mum/2024 Accordingly, the Ld CIT(A) held that the decision rendered by the co- ordinate bench of Tribunal in the case of Priyanka Ankit Miglani is fully applicable to the present case. Further, the Ld CIT(A) also took support of the decision rendered by Mumbai bench of Tribunal in the case of Gopal Nihaldas Pariani (order dated 24-02-2023. Finally, the Ld.CIT(A) concluded as under:- “23. From the above discussion, it is a facts that there is no adverse findings regarding purchase of shares, the appellant is a regular investor in the shares. The SEBI has given a clear cut findings that the 16 ITA Nos. 1223, 1224 & 1256/Mum/2024 appellant was not involved in price manipulation and has no nexus with the promoters or entities related to the PAL. Further, the facts in the appellant’s case and the facts in the above mentioned decisions are identical. Hence, respectfully following the decisions of Hon’ble jurisdictional ITAT in case of Gopal Nihaldas Pariani and Priyanka Miglani, the addition made by the AO on account of long term capital gains from sale of shares of PAL is deleted. Thus, appeal on GROUND NO.2 IS ALLOWED.” Since the addition on account of long term capital gain was deleted, the Ld CIT(A) held that the addition relating to estimated commission expense will not survive. Accordingly, he deleted the addition relating to commission expenses made u/s 69C of the Act. The revenue is aggrieved. 21. We heard rival contentions and perused the record. We noticed that the Ld CIT(A) has followed the decision rendered by the Co-ordinate Bench in the case of Priyanka Ankit Miglani (supra), wherein the facts were identical with the present case. We notice that the Co-ordinate Bench of the Tribunal has examined an identical issue in the above case in a detailed manner and accordingly deleted the addition. The operative portion of the decision rendered by the Co-ordinate Bench in the case of Priyanka Ankit Miglani (supra) is extracted below:- “5. We find that the ld. AO had relied on the findings of the investigation wing of Kolkata and an interim order dated 08.05.2015 passed by SEBI wherein assessee and the company Pine Animation Ltd were prevented from accessing the securities market either directly or indirectly in any manner whatsoever, till the completion of final investigation by SEBI. The main grievance of the ld. AO is that rise in share price of Pine Animation Ltd is devoid of commercial principle or market factors ; that transactions are based on mutual connivance on part of assessee and Smt. Prayanka Ankit Miglani and others operators; that assessee resorted to preconceived scheme to procure bogus long term capital gains and hence the transactions are not bonafide; that SEBI also passed an interim order in the case of Pine Animation Ltd holding that share prices were determined artificially by manipulations; that these are close circuit transactions and are pre- structured; that assessee had failed to discharge her onus cast on her ; that net worth of Pine Animation Ltd is negligible and that its share prices were artificially rigged ; that investigations prove that cash is routed through various accounts to provide these bogus long term capital gain entries. The 17 ITA Nos. 1223, 1224 & 1256/Mum/2024 ld. AO by making these observations proceeded to treat the sale proceeds of the shares as unexplained cash credit u/s 68 of the Act. Since the receipt of sale proceeds was treated as bogus, the ld. AO also proceeded to add estimated commission @ 6% on LTCG amount for arranging the said bogus transaction as unexplained expenditure u/s 69C of the Act. 5.1. At the outset, we find that the documentary evidences submitted by the assessee were found to be genuine and no adverse inferences were drawn by the ld.AO on the same.Infact the ld. AO had an occasion to examine the same thrice - once during original assessment proceedings; second during the first remand proceedings and third during second remand proceedings. Even in the remand reports, the ld. AO had not given any adverse comments or drawn adverse inferences on the documentary evidences submitted before him. The transactions were carried out by the assessee in the secondary market through a registered share broker at the prevailing market prices. Payments were received by the assessee by account payee cheques from the stock exchange through the registered broker. Amounts received on sale of shares were duly subjected to levy of Securities Transaction Tax (STT) at the applicable rates. 5.2. We find that no enquiries were carried out by the ld. AO either on the broker or with the stock exchange with regard to transactions carried out by the assessee. The ld. AO had merely relied on the Kolkata investigation report without linking the assessee with the various allegations leveled in the said investigation report. 5.3. We find that the ld. AO had not proved with any cogent evidence on record that assessee was involved in converting his unaccounted income into exempt long term capital gains by conniving with the so called entry operators and brokers who were involved in artificial price rigging of shares. No evidence is brought on record to prove that assessee was directly involved in price manipulation of the shares dealt by him in connivance with the brokers and entry operators. 5.4. It is not in dispute that the assessee had made purchase of shares in off-market through preferential allotment of shares by the concerned company. Now the next issue that arises for our consideration is as to whether an off market purchase of shares could be taken as a ground to declare the entire transaction as sham. In our considered opinion, the transactions could not be treated as sham merely because they are done in off-market, if the assessee had discharged his onus of proving the fact that shares purchased by him were dematerialized in the Demat account and held by the assessee till the same were sold from the Demat account of the assessee. The transaction of holding the shares are reflected in Demat account and sale of shares are through Demat account. More so, when there is no dispute regarding the purchase price and sale price of shares. Our view is further fortified by the decision of Hon'ble Jurisdictional High Court 18 ITA Nos. 1223, 1224 & 1256/Mum/2024 in the case of CIT vs Jamnadevi Agarwal reported in 328 ITR 656 (Bom) wherein it was held that - \"From the documents produced before the Court it was seen that the shares in question were, in fact, purchased by the assessees on the respective dates and the company had confirmed to have handed over the shares purchased by the assessees. Similarly, the sale of the shares of the respective buyer was also established by producing documentary evidence. It is true that some of the transactions were off-market transactions. However, the purchase and sale price of the shares declared by the assessees were in conformity with the market rates prevailing on the respective dates, as was seen from the documents furnished by the assessees. Therefore, the fact that some of the transactions were off-market transactions could not be a ground to treat the transactions as sham transactions. On a perusal of those documentary evidences, the Tribunal had arrived at a finding of fact that the transactions were genuine. Nothing was brought to notice of the Court that the findings recorded by the Tribunal were contrary to the documentary evidences on record. Therefore, no substantial question of law arose from the order of the Tribunal.\" 5.5. We find that independent enquiries were conducted by SEBI and SEBI had passed an interim order dated 08.05.2015 in the case of Pine Animation Ltd, wherein the assessee and Pine Animation Ltd together with some others, were restrained from accessing the securities market, either directly or indirectly in any manner whatsoever, till the final investigation by SEBI is completed. After completion of the final investigation, SEBI had passed a final order dated 19.09.2017 in the case of Pine Animation Ltd clearly acquitting 114 persons which admittedly included the assessee on the plea that they were not involved in artificial price rigging of shares. In the said order, SEBI had listed out the names and PAN of various persons who were involved in artificial price rigging of shares and the list of beneficiaries together with exit providers. Hence even SEBI does not allege any involvement of the assessee herein with the manipulation of share prices. The relevant operative portion of the SEBI order dated 19/09/2017 is reproduced hereunder:- “10. Considering the fact that there are no adverse findings against the aforementioned 114 entities with respect to their role in the manipulation of the scrip of PAL, I am of the considered view that the directions issued against them vide interim order dated May 08, 2015 which were confirmed vide Orders dated June 02,2016, July 05, 2016, August 22, 2016, and June 02,2017 need not be continued. 11. In view of the foregoing, I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11, 11(4) and 11B of the SEBI Act, hereby revoke the 19 ITA Nos. 1223, 1224 & 1256/Mum/2024 Confirmatory Orders dated June 02,2016, July 05, 2016, August 22, 2016, and June 02,2017 qua aforesaid 114 entities (paragraph 9 above) with immediate effect. 12. The revocation of the directions issued vide the abovementioned orders (at paragraph 11) is only in respect of the entities mentioned at paragraph 9 of this order in the matter of Pine Animation Limited. As regards remaining entities in the scrip of PAL, violations under SEBI Act, SCRA, PFUTP Regulations, etc., were observed and SEBI shall continue its proceedings against them. Hence, the directions issued vide Orders dated July 05, 2016, August 22, 2016, and June 02,2017 against the remaining 62 entities shall continue. 5.5.1. We find that the name of the assessee is reflected in Serial Number 38 which is part of 114 entities acquitted by SEBI, on whom clean chit has been given. 5.6. We find that the assessee had held the shares in the instant case for 16 months in the case of Pine Animation Ltd and then sold the shares in the open market at prevailing market prices. From the above order of SEBI, it is very clear that SEBI, based on its investigations and replies given by various parties, had ordered either to take action against certain parties or had acquitted certain parties on the ground that they are not involved in the price manipulation. In any case, the assessee has been duly discharged by SEBI on the ground that she is not involved in price manipulation of scrip of Pine Animation Ltd. Hence it could be safely concluded that the assessee herein is merely a gullible investor, who had resorted to make investment in the shares of Pine Animation Ltd based on market information through the guidance of her father in law Shri Rajinder Miglani and had sold the shares in the secondary market in prevailing market prices. It is not the case of the ld. AO that assessee herein had directly sold the shares in the secondary market with clear knowledge of the name of the person to whom the said shares were sold. In secondary market transactions, the buyer and seller are not supposed to know each other unless it is a case of 'block deals'. Same is the case of the assessee herein. Admittedly, the assessee's case does not fall under the category of 'block deals'. 5.7. We find that one of the findings of the ld. AO in page 3 of his order is that assessee does not have elaborate experience in share trading and that the isolated investment made by the assessee is in Pine Animation Ltd. This is factually incorrect as assessee has been regular in making investments in various scrips which is evident from the demat statement furnished on record by the assessee. Hence the observation made by the ld. AO in this regard is dismissed as factually incorrect. Moreover, the father in law of the assessee Shri Rajinder Miglani had in his statement recorded by the investigation wing had stated that all the investments in shares on behalf of the family members were carried out by him and that those investments 20 ITA Nos. 1223, 1224 & 1256/Mum/2024 were made based on inputs received from known friends and market information. 5.8. Hence the entire addition has been made merely by placing reliance on the Kolkata Investigation Wing report which are more general in nature and does not implicate the assessee herein in any manner whatsoever. We are unable to persuade ourselves to accept to the contentions of the ld. DR that Kolkata Investigation Wing had conducted a detailed enquiry with regard to the scrip dealt by the assessee herein and hence whomsoever had dealt in this scrip, would only result in bogus claim of long term capital gain exemption or bogus claim of short term capital loss. Merely because a particular scrip is identified as a penny stock by the income tax department, it does not mean all the transactions carried out in that scrip would be bogus. So many investors enter the capital market just to make it a chance by investing their surplus monies. They also end up with making investment in certain scrips (read penny stocks) based on market information and try to exit at an appropriate time the moment they make their profits. In this process, they also burn their fingers by incurring huge losses without knowing the fact that the particular scrip invested is operated by certain interested parties with an ulterior motive and once their motives are achieved, the price falls like pack of cards and eventually make the gullible investors incur huge losses. In this background, the only logical recourse would be to place reliance on the orders passed by SEBI pointing out the malpractices by certain parties and taking action against them. Since assessee has been finally discharged in the list of 114 entities in final order of SEBI dated 19.09.2017 after its detailed investigations, the transaction carried out by the assessee cannot be termed as bogus. We find that the revenue had primarily relied SEBI interim order dated 08.05.2015 passed in the case of Pine Animation Ltd. This SEBI Interim order is subsequently revoked on 19.09.2017 duly acquitting the assessee as stated supra. Before the first appellate proceedings, the assessee had furnished the SEBI final order dated 19.09.2017 duly acquitting the assessee, which was duly appreciated by the ld. CIT(A) while granting relief to the assessee. We find that the main basis for denying the exemption u/s 10(38) of the Act was the reliance placed on the Interim order of SEBI dated 08.05.2015, wherein the assessee's name was included as one of the beneficiaries and to have indulged in mal practices. Later pursuant to detailed investigations carried out by SEBI, a final order was passed on 19.09.2017, wherein specifically the assessee along with remaining 113 entities had been discharged by SEBI stating that those 114 entitites were not involved in price manipulation of scrip of Pine Animation Ltd. When the final SEBI order dated 19.09.2017 was placed before the ld. AO in the remand proceedings, the ld. AO shifts his stand that findings of SEBI are not binding on the Income Tax Department. We are unable to persuade ourselves to accept to this argument of the ld. DR and the ld. AO. This aspect was subject matter of adjudication by the Co-ordinate Bench of this Tribunal in the case of Sunita Chaudhry vs 21 ITA Nos. 1223, 1224 & 1256/Mum/2024 ITO in ITA No. 143/Mum/2022 for A.Y. 2013-14 dated 13.10.2022 wherein it held as under:- “12. We find that despite the aforesaid interim order dated 06/09/2017 passed by SEBI being specifically mentioned by the assessee in her objections before the AO as well as in her submission before the learned CIT(A), the impugned addition was sustained. Since, the very transaction of the assessee in the scrips of First Financial Services Ltd, which resulted in long term capital gains to the assessee, has been found to be not violative of provisions of relevant Act and Rules by the SEBI upon necessary investigation and even the initial restraint order was revoked vide interim order dated 06/09/2017 , therefore, we find no basis in sustaining the impugned addition made by the AO by treating the said transaction to be a penny stock transaction resulting in bogus long term capital gains. Accordingly, we direct the AO to delete the impugned addition of Rs 84,45,050. Further, since the other addition of Rs 22,712 by AO is also consequent to the aforesaid impugned addition, therefore, the said addition is also directed to be deleted.” 5.9. We hold that the entire addition has been made based on mere surmise, suspicion and conjecture and by making baseless allegations against the assessee herein. Now another issue that arises is as to whether the ld. AO merely on the basis of Kolkata investigation wing report could come to a conclusion that the transactions carried out by the assessee as bogus. In our considered opinion, the ld. AO is expected to conduct independent verification of the matter before reaching to the conclusion that the transactions of the assessee are bogus. More importantly, it is bounden duty of the ld. AO to prove that the evidences furnished by the assessee to support the purchase and sale of shares as bogus. This view of ours is further fortified by the decision of Hon'ble Delhi High Court in the case of PCIT vs Laxman Industrial Resources Ltd in ITA No. 169/2017 dated 14.03.2017. It is well settled that the suspicion however strong could not partake the character of legal evidence. Hence the greater onus is casted on the revenue to corroborate the impugned addition by controverting the documentary evidences furnished by the assessee and by bringing on record cogent material to sustain the addition. No evidence has been brought on record to establish any link between the assessee herein with the entry operators who were allegedly involved in price rigging of shares artificially or any other person named in the assessment order being involved in any price rigging and also the exit provider. This onus is admittedly not discharged by the revenue in the instant case. 5.10. We find that the Co-ordinate Bench of this Tribunal in the case of Mukesh RatilalMarolia vs Additional CIT reported in 6 SOT 247 (Mum ITAT) dated 15.12.2005 had held that personal knowledge and excitement on events should not lead the ld. AO to a state of affairs where salient evidences are overlooked. It was held that when every transaction has been accounted, documented and supported, it would be very difficult to brush 22 ITA Nos. 1223, 1224 & 1256/Mum/2024 aside the contentions of the assessee that he had purchased shares and had sold shares and ultimately purchased a flat utilizing the sale proceeds of those shares and therefore, the co-ordinate bench chose to delete the impugned additions. We find that this tribunal decision was approved by the Hon'ble Jurisdictional High Court in ITA No. 456 of 2007 dated 07.09.2011. It is pertinent to note that the Special Leave Petition preferred by the Revenue against this decision before the Hon'ble Supreme Court has been dismissed vide SLP No. 20146 of 2012 dated 27.01.2014. 5.11. Further we find that the Hon'ble Jurisdictional High Court in the case of CIT vs Shyam S Pawar reported in 54 taxmann.com 108 (Bom), it was held that where Demat account and contract note showed details of share transaction and the ld.AO had not proved the said transaction as bogus, the long term capital gain earned on said transaction could not be treated as unaccounted income u/s 68 of the Act. The relevant operative portion of the said judgement is reproduced below:- 5. We have perused the concurrent findings and on which heavy reliance is placed by Mr.Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried out in paras 20, 20.1, 20.2 and 21 of his order, what was important and vital for the purpose of the present case was whether the transactions in shares were genuine or sham and bogus. If the purchase and sale of shares are reflected in the Assessee's DMAT account, yet they are termed as arranged transactions and projected to be real, then, such conclusion which has been reached by the Commissioner and the Assessing Officer required a deeper scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock Exchange records showed that the shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt.Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme. 6. It is in that regard that we find that Mr.Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and 23 ITA Nos. 1223, 1224 & 1256/Mum/2024 which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs.25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, is not enough to prove that the transactions in the impugned shares were bogus/sham. The details received from Stock Exchange have been relied upon and for the purposes of faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparent on the face of the record either. 7. As a result of the above discussion, we do not find any substance in the contention of Mr.Sureshkumar that the Tribunal misdirected itself and in law. We hold that the Appeals do not raise any substantial question of law. They are accordingly dismissed. There would no order as to costs. 8. Even the additional question cannot be said to be substantial question of law, because it arises in the context of same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted or regular as such. The relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and pertaining to the addition of Rs.25,93,150/-. Barring the figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For the same reasons, even this additional question cannot be termed as substantial question of law. 5.12. We are conscious of the decision of Hon'ble Delhi High Court in the case of Suman Poddar vs ITO reported in 112 taxmann.com 329 dated 17.09.2019 where the decision was rendered in favour of the revenue. The Special Leave Petition filed by the assessee before the Hon'ble Supreme 24 ITA Nos. 1223, 1224 & 1256/Mum/2024 Court in this case was dismissed by the Hon'ble Apex Court vide its order dated 22/11/2019. But we find that there is yet another decision of Hon'ble Delhi High Court in the case of PCIT vs Krishna Devi and others in ITA 125/2020 ; 130 & 131/2020 dated 15.01.2021 reported in 126 taxmann.com 80 (Delhi HC) wherein similar issue of penny stock vis a vis long term capital gain exemption u/s 10(38) of the Act was subject matter of adjudication, in favour of the assessee. This decision rendered in the case of Smt Krishna Devi considers all the propositions laid out hereinabove and are squarely applicable to the facts before us. Infact the Hon'ble High Court duly endorses the elaborate findings given by the Delhi Tribunal on various facets of the issue. Moreover, in this decision, the Hon'ble Delhi High Court duly considered the decision of Suman Poddar (earlier Hon'ble Delhi High Court decision referred to supra) and also the decision of Hon'ble Supreme Court in the case of Sumati Dayal which was heavily relied upon by the ld. DR before us also herein. The relevant operative portion of the decision of Hon'ble Delhi High Court in the case of Smt Krishna Devi is reproduced hereunder:- “10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same for the reasons stated hereinafter. 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income-tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent's unaccounted money, but he did not dig deeper. Notices issued under sections 133(6)/131 of the Act were issued to M/s Gold Line 25 ITA Nos. 1223, 1224 & 1256/Mum/2024 International Finvest Limited, but nothing emerged from this effort. The payment for the shares in Smt. Prayanka Ankit Miglani and others question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that \"There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de- mat account and the consideration has been received through banking channels.\" The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar case (supra) and Sumati Dayal case (supra) is of no assistance. Upon examining the judgment of Suman Poddar case (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT 26 ITA Nos. 1223, 1224 & 1256/Mum/2024 and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal (supra) too turns on its own specific facts. The above-stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower Smt. Prayanka Ankit Miglani and others tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. 14. In this view of the matter, no question of law, much less a substantial question of law arises for our consideration. 15. Accordingly, the present appeals are dismissed.” 5.13. The transactions of sale of shares were done in online platform of BSE through the registered share broker from whom the received the sale consideration. The broker also receives payments for all his transactions from Stock Exchange. The seller and the buyer cannot know the names of each other as well as their respective brokers, who were involved in the trading transactions in the secondary platform. In such a situation, it cannot be presumed that there could be any transfer of cash between the buyers and sellers to convert the unaccounted money of the beneficiaries as alleged by the ld AO. There is absolutely no evidence brought on record whatsoever to allege that money changed hands between the assessee and the broker or any other person including the alleged exit provider whatsoever to convert unaccounted money for getting benefit of LTCG as alleged. Hence we hold that in the absence of any material to show that huge cash was transferred from one side to another , addition cannot be sustained. 5.14. We find that all the observations, conclusions and findings of the ld. AO are based on suspicion, surmises and hearsay. It is trite law that the suspicion howsoever strong cannot partake the character of legal evidence. We find that the entire case of the revenue hinges upon the presumption that the assessee has ploughed back her own unaccounted money in the form of bogus LTCG. However, this presumption or suspicion how strong it may appear to be true, but needs to be corroborated by some evidence to establish a link that the assessee had brought back her unaccounted income in the form of LTCG. Reliance in this regard is placed on the decision of Special Bench of Mumbai Tribunal in the case of GTC Industries Ltd. vs. ACIT reported in 80 taxmann.com 284 (Mumbai-Trib.)(SB) The Tribunal observed as under: 27 ITA Nos. 1223, 1224 & 1256/Mum/2024 “46. ......... Ultimately the entire case of Revenue hinges upon the presumption that assessee is bound to have some large share in so called secret money in the form of premium and its circulation.However, this presumption or suspicion how strong it may appear to be true but needs to be corroborated by some evidence to establish a link that GTC actually had some kind of a share in such secret money. It is quite a trite law that suspicion howsoever strong may be but cannot be the basis of addition except for some material evidence on record. The theory of „preponderance of probability‟ is applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumptions of facts that might go against the assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigations have been carried out, then nothing can be implicated against the assessee.” 5.15. We find that the ld. CIT(A) had called for a remand report twice from the ld. AO before passing the appellate order. The remand report of the ld.AO is reproduced in pages 35 and 36 of the order of ld. CIT(A). In the remand report, while defending the assessment, the ld. AO relied on various case laws in favour of the revenue. We find that the assessee in her rejoinder had distinguished each and every case law on facts. This rejoinder is enclosed in pages 43 and 44 of the order of ld. CITA. After this, one more remand report was called for by the ld. CITA from the ld. AO. The second remand report dated 24.01.2019 was submitted by the AO reiterating the findings of the assessment order. Assessee filed rejoinder to the second remand report on 20.02.2020. The ld. CIT(A) after considering all these submissions had passed a reasoned order granting relief to the assessee. 5.16. We find that the ld. CIT(A) relied on the decision of Nagpur Bench of Hon'ble Jurisdictional High Court in the case of Sanjay Bimalchand Jain vide order dated 10/04/2017 reported in 89 taxmann.com 196 which is against assessee. We find that the distinguishing facts in the case of Sanjay Bimalchand Jain vis a vis the facts of the case are as under:- (a) The assessee therein had purchased shares of two companies whose address was same and even the authorized signatory was same for both the companies and eventually both the companies merged with another company, which is not the case of the assessee herein before us. (b) The address of the broker from whom the assessee therein had purchased the shares of these companies was also the same as that of those companies which is not the case of the assessee herein before us. (c ) The shares were purchased by the assessee in cash which gave rise to the suspicion that the transaction of purchase of shares was back dated whereas in 28 ITA Nos. 1223, 1224 & 1256/Mum/2024 the present case of the assessee herein before us, the shares were purchased by issuing account payee cheque which rules out the possibility of back dating. (d) The assessee had not provided strong and enough documentary evidences in support of purchase and sale of shares whereas in the case of the assessee herein before us, enough documentary evidences were duly submitted before the ld. AO which stood uncontroverted by the ld. AO. (e) Furthermore, the Hon'ble Bombay High Court in Sanjay Bimalchand Jain has categorically observed that its facts are not similar to the one prevailing in the Hon'ble Bombay High Court decision in CIT vs Jamnadevi Agarwal reported in 328 ITR 656, whereas the facts of the assessee herein before us are similar to the one prevailing in the case of Jamnadevi Agarwal. 5.16.1. Hence we hold that the decision relied upon by the ld. DR vehemently before us on Sanjay Bimalchand Jain, is factually distinguishable and does not advance the case of the revenue. 5.17. We find that the Hon'ble Jurisdictional High Court in the recent case of PCIT vs Ziauddin A Siddique in Income Tax Appeal No. 2012 of 2017 dated 04.03.2022 had held as under:- “2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramakrishna Fincap Ltd (\"RFL\") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax (\"STT\") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commissioner of Income Tax (Central)- 1 vs. NRA Iron & Steel (P) Ltd (2019) 103 taxmann.com 48 (SC) but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal is devoid of merits and it is dismissed with no order as to costs.” 29 ITA Nos. 1223, 1224 & 1256/Mum/2024 5.18.We find that the Hon'ble Calcutta High Court in the case of M/s Classic Growers Ltd. vs. CIT in ITA No. 129 of 2012 had observed that in that case, the ld. AO found that the formal evidences produced by the assessee to support huge losses claimed in the transactions of purchase and sale of shares were stage managed. The Hon'ble High Court held that the opinion of the ld. AO that the assessee generated a sizeable amount of loss out of prearranged transactions so as to reduce the quantum of income liable for tax might have been the view expressed by the ld. AO but he miserably failed to substantiate that. The Hon'ble High Court held that the transactions were at the prevailing price and therefore the suspicion of the ld. AO was misplaced and not substantiated. 5.19. We find that the Hon'ble Calcutta High Court in the case of CIT vs Shreyashi Ganguli in ITA No. 196 of 2012 had observed that in that case, the Hon'ble Calcutta High Court held that the Assessing Officer doubted the transactions since the selling broker was subjected to SEBI's action. However the transactions were as per norms and suffered STT, brokerage, service tax, and cess. There is no iota of evidence over the transactions as it were reflected in demat account. The appeal filed by the revenue was dismissed. We find that the assessee's case before us is in a much stronger footing as no action has been initiated on the Broker by SEBI and even the action initiated on the assessee by SEBI vide Interim order dated 08.05.2015 were finally revoked by SEBI in its final order dated 19.09.2017. 5.20. We find that the Hon'ble Calcutta High Court in the case of CIT vs Bhagwati Prasad Agarwal reported in 2009- TMI-34738 (Cal HC) in ITA No. 22 of 2009 dated 29.4.2009, had observed that the Assessee claimed exemption of income from Long Term Capital Gains. However, the ld. AO, based on the information received by him from Calcutta Stock Exchange found that the transactions were not recorded there. He therefore held that the transactions were bogus. The Hon'ble High Court, affirmed the decision of the Tribunal wherein it was found that the chain of transactions entered into by the assessee have been proved, accounted for, documented and supported by evidence. It was also found that the assessee produced the contract notes, details of demat accounts and produced documents showing all payments were received by the assessee through banks. On these facts, the appeal of the revenue was summarily dismissed by Hon'ble High Court. In the instant case of the assessee before us, no such enquiries were even sought to be made by the ld. AO with the stock exchange to understand whether the transactions carried out in online platform of BSE were genuine or not. Hence the assessee's case before us stands on a better pedestal. 5.21. We find that the Hon'ble Punjab & Haryana High Court in the case of PCIT (Central), Ludhiana vs Prem Pal Gandhi reported in 401 ITR 253 (P&H) in Para 4 & 5 of its order and the PCIT (Central), Ludhiana vs Hitesh Gandhi in ITA NO. 18 of 2017 dated 16.02.2017 (P&H) in Para 5 & 6 of its order had 30 ITA Nos. 1223, 1224 & 1256/Mum/2024 rendered the similar decisions in favour of the assessee on identical facts and circumstances. 5.22. We find that the Hon'ble Jharkhand High Court in the case of CIT vs Arun Kumar Agarwal HUF reported in 210 taxman 405 (Jharkhand) had rendered the similar decision on identical facts and circumstances as under:- “10. We have considered the submissions of the learned counsel for the parties and we are of the considered opinion that the learned Assessing Officer was much influenced by the enqiury report which may has been brought on record by the efforts of the Assessing Officer and that enquiry report was prepared by the SEBI and from the observations made by the Assessing Officer himself, it is clear that after getting that enquiry report, the SEBI prima facie found involvement of some of the share brokers in unfair trade practices. Even in a case where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, if purchased the share from that broker innocently and bonafidely and if he show his bonafide in transaction by showing relevant material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame transaction. Fact of tinted broker may be relevant for suspicion but it alone necessarily does lead to conclusion of all transaction of that broker as tinted. In such circumstances, further enquiry is needed and that is for individual case. Such further enquiry was not conducted in that case. 11. At this juncture, it would be relevant to mention here that it is not disputed by the Revenue before us that the shares of these assessees were already shown in the earlier Balance Sheet submitted by the assessees, and therefore, in that situation, how the revenue condemned the transaction even on the ground of steep rise in the shares. If within a period of one year, the share price has risen from Rs.5 to 55 and from 9 to 160 and one person was holding the shares much prior to that start of rise of the share, then how it can be inferred that such person entered into sham transaction few years ago and prepared for getting the benefit after few years when the share will start rising steeply. In present case even there was no reason for such suspicion when the shares were purchased years before the unusual fluctuation in the share price. Here in this case, we have given example of one of the Tax Appeal wherein the shares were purchased in the year 2004 and were sold in the year 2006, which is said to be one of the case wherein the gap in the purchase and sale of the shares was narrowest. In other cases as we have noticed from the various orders of the C.I.T(Appeals) that, the shares of some of the companies were purchased 31 ITA Nos. 1223, 1224 & 1256/Mum/2024 by the assessees even five years ago from the time of sale and those purchasers were already disclosed in the Balance Sheet of the assessee, then from any angle, it is proved that the assessees had held the shares much prior to 12 months of the sale of the shares. 12. Hence, these Appeals are dismissed. 5.23. We find that the ld. DR before us vehemently relied on the recent decision of Hon'ble Calcutta High Court in the case of PCIT vs Swati Bajaj reported in 139 taxmann.com 352 (Cal) which is an elaborate decision rendered after considering various decisions of various High Courts on the subject. In the said decision, it was held that assessee had to establish the genuineness of rise of price of shares within a short period of time that too when general market trend was recessive. But we find that when there are several decisions of Hon'ble Jurisdictional High Court as stated supra are already in favour of the assessee, the same would prevail over this tribunal and this tribunal need not take cognizance of the Hon'ble Non-Jurisdictional High Court. The law is very well settled by the Hon'ble Supreme Court in the case of Union of India vs Kamalakshi Finance Corporation Ltd reported in 55 ELT 43 (1991) that the decision of Hon'ble Jurisdictional High Court would have higher precedence value than the decision of Hon'ble Non- Jurisdictional High Court on the Tribunal. The Hon'ble Supreme Court emphasised therein that the orders of the Tribunal should be followed by the authorities falling within its jurisdiction so that judicial discipline would be maintained in order to give effect to orders of the higher appellate authorities. The Hon'ble Apex Court has Smt. Prayanka Ankit Miglani and others observed that utmost regard must be had by the adjudicating authorities and the appellate authorities to the requirement of judicial discipline. Hence we deem it fit and appropriate to follow the decisions of Hon'ble Jurisdictional High Court referred supra wherein the impugned issue is decided in favour of the assessee. Moreover, when there are two conflicting decisions of various High Courts, the Hon'ble Supreme Court in the case of Vegetable Products reported in 88 ITR 192 (SC) had held that Construction that is favourable to the assessee should be adopted. Hence by following this principle, the decision of Hon'ble Calcutta High Court and other decisions that are rendered against the assessee, need not be followed by this Court in the peculiar facts and circumstances of the instant case. 5.24. The ld. DR relied on the decision of this tribunal in the case of DCIT vs Leena Power Tech Engineers (P) Ltd reported in 130 taxmann.com 341 (Mumbai Trib) dated 21.09.2021 in support of his contentions. We have gone through the said decision and we find that the said decision was rendered in the context of receipt of share capital and share premium by that assessee wherein the genuineness of transactions and creditworthiness were not proved by that assessee. This is factually distinguishable with the 32 ITA Nos. 1223, 1224 & 1256/Mum/2024 facts of the assessee before us. Hence reliance placed on this decision by the ld. DR does not advance the case of the revenue. 5.25. The ld. DR relied on the decision of Hon'ble Delhi High Court in the case of CIT vs Jansampark Advertising & Marketing (P) Ltd reported in 375 ITR 373 (Del) in support of his contentions. On perusal of the said judgement, it only postulates that the appellate authority should conduct enquiry on its own or by calling a remand report from the ld. AO and cannot merely brush aside his co-terminus powers by stating that the ld. AO had not carried out any enquiry. This decision was rendered in the context of lack of proper enquiries by the ld. AO, which is not the facts of the case in the instant appeal before us. It is settled law that the ld. CIT(A) has got enhancement powers and he could do what ld. AO had not done with regard to the issue in dispute before him. We hold that the ld. DR before this tribunal would be entitled only to defend the case of the ld. AO and cannot improve the case of the revenue. No power is vested in the statute for the same. The tribunal, being a second appellate authority, could only adjudicate the disputed order before it i.e. the order of ld. CIT(A). That order of ld. CIT(A) had already been passed after considering the assessment order. In this regard, the wordings used in section 254(1) of the Act would also be relevant which reads as under :- Section 254(1). The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard , pass such orders thereon as it thinks fit. The crucial words are -a) such orders andb) thereon. The expressions 'such orders' and 'thereon' used in section 254(1) of the Act restricts the scope of powers of the tribunal to confine only to the orders before it and not to travel beyond it. That is precisely the reason the power of enhancement of income has not been granted by the statute to the tribunal, when the same was given to ld. CIT(A). Hence the legislature in its wisdom had consciously curtailed the powers of the tribunal to adjudicate only those issues that are reflected in the orders of the lower authorities and materials available on record with respect to the facts. Accordingly, the tribunal is bound to pass orders only based on facts and materials available on record. In our considered opinion, this is how the expression 'pass such orders thereon' used in section 254(1) of the Act need to be understood. In any case, we find that in the instant appeal before us, the ld. CIT(A) had sought for a remand report twice from the ld. AO. In both the remand reports, the ld. AO had merely reiterated his findings given in the assessment order. Hence sufficient opportunities were indeed given to the ld. AO to justify his case by the ld.CIT(A). Hence we hold that the reliance placed on this decision of Hon'ble Delhi High Court supra does not advance the case of the revenue. 5.26. In any case, we find that the assessee had duly proved the nature and source of credit representing sale proceeds of shares of Pine Animation Ltd within the meaning of section 68 of the Act. The sale proceeds have been 33 ITA Nos. 1223, 1224 & 1256/Mum/2024 received by the assessee from the stock exchange through the SEBI registered share broker by account payee cheques through regular banking channels. We find that the three ingredients of section 68 of the Act are duly fulfilled by the assessee in the instant case. Hence there is no question of making any addition as unexplained cash credit u/s 68 of the Act in the instant case. 5.27. Considering the totality of the facts and circumstances of the instant case and respectfully following the judicial precedents relied upon hereinabove, we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee by deleting the impugned additions on account of denial of exemption for long term capital gains u/s 10(38) of the Act and estimated commission @ 6% against the same. Accordingly, the grounds raised by the revenue are dismissed.” 22. We noticed earlier that the Ld.CIT(A) has given a clear cut finding that the facts prevailing in the instant case are identical with the facts of the above said case. Hence, we are of the view that the Ld CIT(A) was justified in following the above said decision, wherein the co-ordinate bench has rendered its decision following the binding decisions rendered by the Hon’ble jurisdictional Bombay High Court. 23. We may refer to some of the facts prevailing in the instant case. We notice that the assessee has discharged its obligation by furnishing all documents evidencing purchase and sale of shares. The payments have been given and the sale proceeds were received through banking channels. The shares have entered demat account of the assessee on purchase/split and exited it upon sale of those shares. The shares have been sold in the stock exchange platform by paying Securities Transaction Tax. We notice that the assessing officer did not find fault or found any deficiency in any of those documents. 24. We noticed earlier that the AO had fully placed reliance on the Investigation report given by the Investigation wing and the Ad-interim report given by SEBI. However, in the final report, the SEBI has 34 ITA Nos. 1223, 1224 & 1256/Mum/2024 exonerated the assessee and his sister herein. Their name finds place in serial number 30 and 49 of the final order of SEBI. This fact has been recorded by Ld CIT(A) at page 42 of his order. We noticed earlier that the revenue has conducted search on the assessee on the basis of Ad-interim report of SEBI and the present assessment order has been passed consequent thereto. Thus, very basis on which the search has been conducted has failed in this case. 25. We noticed earlier that the AO has fully placed reliance on the investigation report given by the investigation wing and also relied upon the statements recorded from certain persons and exit providers. The assessee sought opportunity to cross examine all those persons, but such opportunity was not given. However, in the second remand proceeding, the AO issued notice only to an alleged exit provider named Shri Jagdish Purohit only. Even though Shri Jagdish Purohit did not present himself for cross examination, yet he sent a letter to the AO, wherein he has stated that he was not aware of the assessee and further, he did not have any business relationship with the assessee. This reply of Mr.Jagdish Purohit was not proved to be wrong by the AO. However, in respect of other persons, no step was taken by the AO to afford the opportunity of cross examination either during the course of assessment proceedings or in remand proceedings. Even though the Ld CIT(A) has expressed the view that the AO has not solely placed reliance on those statements and hence affording of opportunity of cross examination is not mandatory, yet the important point here is that it is not the case of the AO that those persons had specifically implicated the assessee that he was involved in rigging of prices. Hence, there is no evidence available with the AO to prove that the assessee was part of the group, which were manipulating the prices of shares. The fact that the assessee was not part of the group, which were manipulating the prices of shares has been proved by the final report of 35 ITA Nos. 1223, 1224 & 1256/Mum/2024 SEBI, wherein the assessee and her sister have been exonerated from the initial allegations of being part of the group. 26. Thus, we notice that the documents furnished by the assessee to support the claim of purchase and sale of shares were not found fault with by the AO. Further, we notice that the AO has not proved that the assessee was part of the group, which was manipulating the prices of shares. These two aspects have been considered by the Hon’ble Bombay High Court in the cases of Shyam R Pawar (supra) and Ziauddin A Siddique(supra). 27. Further, the Ld.CIT(A) has also given a finding that the assessee is a regular investor in shares. We also notice that a statement was taken from the assessee u/s 132(4) of the Act, wherein the AO did not find anything wrong. In the statement, the assessee had stated that he had purchased shares of Pine Animation Ltd on the advice of his Share broker Shri Bhavesh Shah and he had also confirmed that he only has advised the assessee to buy shares of M/s Pine Animation Ltd. None of these statements were found to be false. 28. In view of the foregoing discussions, it has to be held that the assessee has purchased the shares of M/s.Pine Animation Ltd in the normal course of his investment activities. Hence the long term capital gain earned by the assessee on sale of shares of above said company cannot be considered to be an accommodation entry. Accordingly, we are of the view that the Ld.CIT(A) was justified in deleting the addition of long term capital gains made by the AO. 29. Since the long term capital gains earned by the assessee is held to be genuine one, the question of paying any commission expenses does not arise in the facts of the present case. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting the estimated commission expenses. 36 ITA Nos. 1223, 1224 & 1256/Mum/2024 ASSESSMENT YEAR 2015-16 (REVENUE’S APPEAL): - 30. We shall now take up the appeal filed by the Revenue for AY 2015- 16. In this year, the first two additions made by the AO in this year relate to the addition of long term capital gains and estimated commission expenses. We noticed earlier that the assessee and his sister Shri Lata Shah had initially purchased shares of M/s Pine Animation Ltd. The assessee’s sister had gifted her shares to the assessee and they were sold by him during the year relevant to AY.2015-16. Both the additions were deleted by the Ld.CIT(A) and hence the revenue has filed this appeal. The facts relating to the addition of long term capital gains and estimated commission expenses made in this year are identical with the facts discussed in AY.2014-15. Accordingly, the decision rendered by us in the earlier paragraphs in AY.204-15 in respect of both the additions shall apply mutatis mutandis in this year also. Accordingly, we confirm the relief granted by the Ld.CIT(A) in respect of both these additions in this year also. ASSESSMENT YEAR 2015-16 (ASSESSEE’S APPEAL): - 31. In this appeal, the assessee is assailing the decision of the Ld.CIT(A) in confirming the addition of Rs.2.00 crores made on the basis of whatsapp chat. The facts relating thereto are discussed in brief. The revenue carried out a survey operation in the hands of M/s Krazee properties P Ltd. During the course of survey operation a document was impounded, which indicated a trend of accommodation entries transacted between Shri Jayant Shamji Chheda and the assessee. It appeared to be a print out of the chat between them using whatsapp chat application. The AO observes as under in the assessment order in this regard:- “The said conversation between the assessee Shri Pankaj Dhanji GosharandShri Jayant Shamji Chedda over the whatsapp application 37 ITA Nos. 1223, 1224 & 1256/Mum/2024 speaks of certain loan of Rs.5,00,00,000/- advanced by the assessee Shri Pankaj Dhanji Goshar to Shri Jayant Shamni Chheda. It is evident from the paper seized that assessee Shri Pankaj Dhanji Goshar is mentioning about some 2 crores entry cheque which was returned to the company owned by Shri Jayant Shamji Chheda before March. The survey action was carried out on 10th September, 2015 in the premises of M/s Krazee Properties P Ltd and thus presumably the cash was given to Shri Jayant Shamji Chheda before March, 2015 in lieu of accommodation entry of Rs.2 crores received by you on some dates in F.Y. 2014-15.” The assessee contended that the whatsapp chat does not have evidentiary value. It was further contended that the print out of the same does not bear any date and time. Therefore, the authenticity and reliability of alleged whatsapp chat is questionable and doubtful. Accordingly, it was contended that the AO should not place reliance on it to make any addition. 32. The AO observed that the same whatsapp chat was available in the phone of the assessee also and a back up of the same was also taken by the search officials. The whatsapp chat is related to the entry cheque and the corresponding cheque was returned back by Shri Jayant Shamji Chheda and his company. The entries mentioned in whatsapp chat were matching with the books of the assessee and it proves that the cash was exchanged between the parties. In view of the above, the AO assessed Rs.2.00 crores as unexplained cash credit u/s 68 of the Act. 33. Before the Ld.CIT(A), the assessee narrated the explanations given by him to the AO. It was stated that Shri Jayant Shamji Chheda is a neighbor of the assessee staying in the same building. There was exchange of friendly interest free loans for the past several years. The assesseefurnished the details of loans exchanged between the parties from financial year 2011-12 onwards. Besides the above, the assessee’s mother named Smt Navalben Dheanji Goshar has given interest free loan of Rs.50,00,000/- to Shri Jayant Chamji Chheda and the same has been 38 ITA Nos. 1223, 1224 & 1256/Mum/2024 repaid by him. It was contended that the assessee has not given any cash as alleged by the AO. It was further contended that the whatsapp chat does not have any evidentiary value. In this regard, the assessee relied upon following decisions:- (a) Lavanya Land (P) Ltd (2017)(83 taxmann.com 161)(Bom); (b) Common Cause (A registered Society) vs. UOI (77 taxmann.com 245)(SC); (c) CIT vs. Saffire Hotels (P) Ltd (2015)(377 ITR 0523)(Bom); (d) DCIT vs. Neelkanth builders P Ltd (2004)(87 TTJ (Mum) 287); (e) CIT vs. DhirajlalDuriabhai Patel-HUF (2010–TIOL–475-HC- AHM-IT) The assessee has also questioned the observation of the AO that the whatsapp chat conversation corresponding to the print out impounded from M/s Krazee Property developers was available in his phone. In this regard, the assessee submitted as under before theLd.CIT(A):- “To prove the authenticity of the said conversation, appellant had requested Ld AO to provide confirmation from Whatsapp Service Provider that such conversation between the appellant and Jayant Chheda had been exchanged and extracted from his mobile only. But no such confirmation was provided.” However, the Ld.CIT(A) took the view that the assessee had confirmed that the contents of his I phone 6 plus were copied in 2 portable Hard disk by the forensic team and the same were marked as “Annexure A-4”. The Ld. CIT(A), accordingly, took the view that the print out of the whatsapp chat impounded in the survey operation was backed by the data copied from the phone of the assessee. The whatsapp chat mentioned that the assessee has given back 2 crores entry cheque against which cash of 2 crores was 39 ITA Nos. 1223, 1224 & 1256/Mum/2024 to be received. The ledger account also refers to the above said amount. Accordingly, the ld CIT(A) held that there were cash transactions between the assessee and Shri Jayant Shamji Chheda. Accordingly, the Ld CIT(A) confirmed the addition. The assessee is aggrieved. 34. The Ld A.R submitted that the assessee had financial transactions with Shri Jayant Chheda and the relevant details were furnished to the AO. The Ld.CIT(A) has also extracted the same in his order. He submitted that the Ld.CIT(A) has also incorporated the copy of print out of Whatsapp chat. A perusal of the same would show that it does not contain any dates. The fact of absence of date was also specifically raised before the tax authorities. However, they have proceeded to take the alleged transactions as pertaining to the year relevant to AY 2015-16. The Ld A.R. invited our attention to the notice dated 27-09-2017 issued by the AO u/s 142(1) of the Act, which is placed at pages 58 to 66 of the paper book. Referring to query No.8, the Ld A.R submitted that the AO had raised query on the alleged accommodation entry of Rs.5.00 crores, Rs.9.50 crores and Rs.50,00,000/-. The AO did not ask any question about the impugned addition of Rs.2.00 crores and he proceeded to make the addition without raising any query thereon. He further submitted that it is not clear as to whether the whatsapp chat referred to by the AO was available in the phone of the assessee, as the assessee disputed the same before the AO in his letter dated 24th October, 2017 filed before him. He submitted that the assessee has stated in his sworn statement that he does not discuss financial transactions relating to his business in whatsapp. He further submitted that the assessee has only confirmed that the imaging of his phone and two laptops have been taken in external hard discs, but did not confirm any alleged Whatsapp chats. He further submitted the Revenue has not followed the procedure prescribed u/s 65B of the Act Indian Evidence Act for taking the Whatsapp chat as an evidence for making this 40 ITA Nos. 1223, 1224 & 1256/Mum/2024 addition. Accordingly, he submitted that the addition of Rs.2.00 crores cannot be sustained on this legal ground also. 35. The Ld D.R, on the contrary, placed reliance on the order passed by Ld CTI(A). 36. We heard rival contentions and perused the record. We notice that the impugned addition has been made on the basis of whatsapp chat. The contentions of the Ld A.R are summarised below:- (a) The impugned addition of Rs.2.00 crores has been made on the basis of a print out, which appeared to be a copy of whatsapp between assessee and Shri Jayant S Chheda. The said document was found in the premises of M/s Krazee Properties P Ltd. It is scanned as under by Ld CIT(A) As submitted by Ld A.R, these whatsapp chat does not contain any dates. Further, it is found from the premises of a third party. Hence, 41 ITA Nos. 1223, 1224 & 1256/Mum/2024 we are unable to understand as to how the AO considered this document as relating to the year relevant to AY 2015-16. (b) We also examined the notice u/s 142(1) of the Act issued by the AO and notice that the AO has not raised any query with regard to the amount of Rs.2.00 crores. However, the AO raised a query on this issue by a letter dated 15-12-2017. In response thereto, the assessee filed a reply, wherein he denied the whatsapp chat altogether. He also contended that the print out of whatsapp chat does not have any evidentiary value. He also submitted that the said document has been impounded from a third party and it cannot form part of books of accounts of the assessee. (c) The AO has observed that the data in the I-phone of the assessee has been copied in the Hard disk by the Search team. With regard to copying of the data from mobile phone, the assessee has only confirmed the action of copying the data in reply to the question no.130 posed to the assessee. Accordingly, we agree with the contentions of Ld A.R, it cannot be taken as confirmation of whatsapp chat. (d) However, the assessee has filed a letter dated 24-10-2017 before the AO, wherein he has submitted as under:- “…..I was informed by the concerned officers who were in charge of the Search/Survey that the entire data of my mobile phone has been found to be erased/deleted. In the circumstances, the question of taking print out from my mobile data does not arise…. In view of the peculiar facts and circumstances of the case, I request you to provide me the confirmation from the Whatsapp Service Provider/iCloud Service Provider that the conversations as referred with various persons in several paras of your Notice have been extracted from my mobile phone” 42 ITA Nos. 1223, 1224 & 1256/Mum/2024 We notice that the has contended before the AO that the said Whatsapp chat was not available in his phone. Hence, if the Whatsapp chat was really available in the Iphone, then the same should be available in the Hard disk, wherein all the datas were copied by the revenue. We notice that the AO has not brought anything on record, despite the fact that the assessee was disputing the same. We notice that the Ld CIT(A) has also confirmed this addition only for the reason that the data from iphone has been copied in the External Hard disk by the revenue. He also did not bother to call for the same from the AO. (e) Finally, as submitted by Ld A.R, the AO has not followed the procedure prescribed in sec.65B of the Act before placing reliance on a data supposed to have been collected from an electronic device. Accordingly, it was contended that the AO could not have placed reliance on it. In this regard, the Ld A.R placed reliance on the decision rendered by Hon’ble Supreme Court in the case of Anvar P V vs. P.K.Basheer and Others (Civil Appeal No.4226 of 2012)(2014)(10 SCC 473)(SC), wherein it was held that the certificate prescribed u/s 65B(4) of the Indian Evidence Act is compulsory. This two member decision of Hon’ble Supreme Court was later approved by three judges Bench of Hon’ble Apex Court in the case of Arjun Pandit Rao Khotkar vs. Kailash Khushan Rao (2020)(4 SCC (civil) -3 judges). In the present case, the said certificate has not been obtained. (f) We have earlier extracted the observations made by the AO in the assessment order with regard to this addition. The conclusion arrived by the AO are extracted here again at the cost of repetition:- 43 ITA Nos. 1223, 1224 & 1256/Mum/2024 “…….The survey action was carried out on 10th September, 2015 in the premises of M/s Krazee Properties P Ltd and thus presumably the cash was given to Shri Jayant Shamji Chheda before March, 2015 in lieu of accommodation entry of Rs.2 crores received by you on some dates in F.Y. 2014-15.” It can be noticed that the AO himself was not sure that the alleged transactions pertained to the year relevant to AY 2015-16. He presumes that they may belong to AY.2015-16. When the AO was not sure as to whether the above said transaction has happened or not, he could not have made the addition u/s 68 of the Act. (g) We also notice that the AO has not brought any corroborative material on record to support the whatsapp chat nor did he examine Shri Jayant Chheda. Hence, we are of the view that the tax authorities are not justified in making this addition, when the evidences relied upon by them do not support their conclusion. 37. We also notice that the Delhi Bench of Tribunal in the case of Designers Point (India) P Ltd (ITA No.2517/Del/2022 dated 06-09-2023) has held that the addition cannot be made on the basis of whatsapp chat without bringing any material to corroborate the same. The relevant observations made by the Tribunal are extracted below:- “7. This is also pertinent to mention that the Assessing Officer has proceeded to make addition on the basis of whatsapp chats between Ms. Seema Dutta and Mr. Aman Sheghal and their statements only and no other documentary evidence or adverse positive material has been found and searched during the course of search and seizure We are unable to see any distinction between the cases of Shri Dhananjay Singh & Ms. Yamini Singh with the cases of Mr. Aman Sheghal& Ms. Seema Dutta. The whatsapp chats standalone basis is not having valid evidence to support the action of the Assessing Officer making addition u/s. 69C of the Act on account of alleged part payment of salary in cash to said two persons. Therefore sole grievance of assessee is allowed and Assessing Officer is directed to delete the addition.” 44 ITA Nos. 1223, 1224 & 1256/Mum/2024 Identical view has been expressed by Kolkata Bench of Tribunal in the case of Atul Tantia vs. DCIT (ITA No.492/Kol/2021 dated 28-03-2023). Further, the AO has not brought any E-certificate as required u/s 65B of the Act before placing reliance on the digital evidence. Hence, the AO could not have placed reliance on the said document which is alleged to be print out of whatsapp chat. In the absence of e-certificate, the same shall become a third party document and it cannot be relied upon by the AO without bringing any corroborative evidence to show that the assessee has received/paid the money mentioned therein in cash. 38. In view of the above discussions, we are of the view that the Ld. CIT(A) was not justified in confirming the addition of Rs.2.00 crores made by the AO as unexplained cash credit u/s 68 of the Act. Accordingly, we set aside the order passed by the Ld.CIT(A) and direct the AO to delete this addition. 39. In the result, the appeal of the assessee is allowed and both the appeals of the Revenue are dismissed. Order pronounced in the open court on 20-12-2024 Sd/- Sd/- [SUNIL KUMAR SINGH] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 20-12-2024 TNMM 45 ITA Nos. 1223, 1224 & 1256/Mum/2024 Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, “C” Bench, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "