Tribunal grants appeal, orders re-evaluation by Assessing Officer. Emphasizes importance of concrete facts in assessments.

The Tribunal partially allowed both appeals, remanding the issues to the Assessing Officer for re-evaluation. The Assessee was granted the opportunity to cross-examine third-party statements and present necessary evidence. The decision emphasized the importance of concrete facts over mere suspicion in assessments, directing compliance with court precedents for a thorough re-adjudication process.

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Issues Involved:
1. Disallowance of exemptions claimed under Section 10(38) of the Income Tax Act.
2. Legitimacy of off-market purchase of shares.
3. Genuineness of transactions and evidence provided.
4. Role of the assessee in alleged price rigging or manipulation.
5. Admissibility and use of statements from third parties without cross-examination.

Detailed Analysis:

Disallowance of Exemptions Claimed Under Section 10(38):
The primary issue in both appeals was the confirmation by the Commissioner of Income-tax (Appeals) of the disallowance of exemptions claimed under Section 10(38) of the Income Tax Act for long-term capital gains on the sale of shares. The Assessee argued that the transactions were genuine, conducted through proper banking channels, and duly reflected in the books of accounts and Demat statements. The Assessee also contended that the purchase and sale of shares were done through online mediums, with payments made via account payee cheques.

Legitimacy of Off-Market Purchase of Shares:
The Assessee cited the Hon’ble Mumbai High Court's decision in the case of Shri Mukesh Ratilal Marolia to support the legitimacy of off-market purchases. It was argued that such transactions are not illegal if conducted through proper banking channels and reflected in the financial statements.

Genuineness of Transactions and Evidence Provided:
The Assessee provided various pieces of evidence to substantiate the genuineness of the transactions, including Demat account statements and proof of payment of Securities Transaction Tax (STT). It was emphasized that the department had accepted the purchase of shares in earlier years and that the Assessee had held the shares for more than 12 months, qualifying for long-term capital gains.

Role of the Assessee in Alleged Price Rigging or Manipulation:
The Revenue argued that the transactions were part of a modus operandi involving price rigging and manipulation, citing investigations by different agencies. However, the Assessee countered that no direct evidence was presented against them, and no specific allegations were made in SEBI orders or investigation reports implicating the Assessee in such activities.

Admissibility and Use of Statements from Third Parties Without Cross-Examination:
The Tribunal noted that the foundation of the assessment was the statement of one Shri Ashok Kumar Kayan, who allegedly provided bogus long-term capital gains to clients, including the Assessee. However, this statement was not provided to the Assessee for cross-examination, rendering it inadmissible as evidence. The Tribunal emphasized that assessments should not be based on mere suspicion but on concrete facts, which were lacking in this case.

Conclusion:
The Tribunal decided to restore the issue to the file of the Assessing Officer for re-adjudication, citing the need for a thorough examination of the facts and evidence. The Assessing Officer was directed to provide the Assessee with an opportunity to cross-examine any third-party statements used against them and to substantiate their claim with all necessary evidence. The Tribunal also instructed the Assessing Officer to consider the directions of the Hon’ble Delhi High Court in the case of Pr.CIT Vs. M/s. Laxman Industrial Resources Ltd. and the Co-ordinate Bench's decisions in similar cases.

Result:
Both appeals were partly allowed for statistical purposes, with the issues being remanded back to the Assessing Officer for re-evaluation after granting the Assessee adequate opportunity to present their case.

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