TaxTMI 
TaxTMI 
2019 (1) TMI 298
X X X X Extracts X X X X
X X X X Extracts X X X X
....3(3) of the Income Tax Act, 1961; in short 'the Act'. Heard all the assessees as well as the department reiterating their respective stands against and in support of the impugned unexplained cash credits addition(s). 2. It emerges at the outset that all these assessees have claimed to have derived LTCG from sale of shares held in M/s Unno Industries Ltd. (after amalgamation) in the relevant previous year to be exempt u/s 10(38) of the Act. The CIT(A)'s identical discussion in all these cases affirms Assessing Officer's action treating the same to be unexplained cash credits u/s 68 of the Act as follows:- 5. Decision: 5.1. Grounds I. 2 and 4: As all the grounds relate to the lone effective issue of addition of Rs. 9,40,715 made by the AO under section 68 of the IT Act, they are considered together. During the assessment proceedings, the AO noted that the appellant carried out sale transactions for an amount of rupees 9,95,200 in respect of 32,000 shares of Unno Industries Ltd. in the relevant financial year. The learned AD looked into the various details of the said transaction. The appellant submitted that the resultant LTCG (Long Term Capital Gains) flowing out of the impugn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng I.e., from purchase of stock to receiving of cheque for its sale was done in a systematic and organised manner to give it a real and legal colour by a group of persons (being the operators) on receipt of cash from the appellant. He, therefore, on consideration of the circumstantial evidences, natural human conduct and preponderance of probabilities reached a conclusion that the apparent in this case was not real and that these financial transactions were no real but sham ones and the entire edifice was a colourable device used to evade tax. In view the fact that the appellant failed to prove the source of the credit, and genuineness of the credit of the entire sum received in the garb of alleged capital gains, the AO proceeded to add the entire-sum received of rupees 9,40,715 as unexplained cash credit under section 68 of the IT Act. 5.1.4. During the appellate proceedings, the appellant submitted written submissions dated 22.02.2018 and 07.05.2018. The appellant primarily contends that as the purchase of the impugned shares have been effected by payment of cheque .through banking transaction and as the sales are corroborated by contract notes, the AO was legally not justified....
X X X X Extracts X X X X
X X X X Extracts X X X X
....party the copy of the transfer deed has also not been submitted. Thus, in the absence of any broker note, deed of transfer etc., the appellant has not been able to produce any evidence as to the actual purchase of the share. That the sum of Rs. 50,000 has gone from the appellant's bank account does not in any way prove the acquisition of such shares consequent to actual purchase by the appellant or actual delivery of the shares on the said date or thereafter in the absence of the acknowledgement by the seller of actual receipt of the funds in respect of actual delivery of shares from his demat account or folio evidencing receipt of the shares in appellant's name. Moreover, an equivalent amount of Rs. 50,000 has been deposited through transfer on the same day in the bank account. Thus, on facts, acquisition and holding of shares of M/s Baviscon Vincom Ltd. by the appellant from the said date of debit of alleged purchase sum from the bank account remains gravely in doubt. The fact that share bills show purchase of shares of a private limited company in contrast to the ultimate transfer of public limited company, leads to the unequivocal conclusion that the credit of such shar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubsequently applied for amalgamation with Mls Unno Industries Ltd. In the year 2012 itself. Thus, during the brief period since its incorporation, the appellant allegedly purchased the shares of the said unlisted company which had no other purpose but to amalgamate with another company with in first few months of its incorporation. The appellant has no past history or expertise of share trading and as per the AO, from the case records and returns the appellant does not show substantial trading activity. This has not been rebutted with any evidence by the appellant during the appellate proceedings. Thus, picking a script of a company which is just incorporated a few months back without having knowledge of any financials or past record, without any insider information and yet timing to get the advantage of a bonus declaration and waiting to watch the company applying for amalgamation with another and ultimately selling it with an astronomical profit of an unusual 2,200 percent of its purchase price requires an expertise which the appellant is badly lacking. The appellant has dabbled with the share transactions occasionally, few and far between, having transacted only in a few scripts....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll it. This is beyond the natural conduct of any rational shareholder. "Brief Audited Financial data of UIL for the last two years and Certified Financials as on 31st March 2012 are given hereunder: (Rs. In Lacs) Profit & Loss Statement 31.03.2012 31.03.201 31.03.2010 Income from operations 67.98 70.82 67.94 Other Income 1.87 0.00 0.00 Total income 69.85 70.82 67.94 Expenditure Cost of goods sold 3.29 0.00 0.00 Administrative, personnel and other expenses 38.87 31.94 32.46 Loss on F & O Transaction 25.28 30.98 25.28 Long Term Capital Loss 0.00 .32.50 0.00 Provision for NPA written back (14.11) (34.64) 5.22 Profit before depreciation, interest and tax 16.52 10.04 4.97 Depreciation 1.02 0.98 1.02 Interest & Fin charges 5.02 5.67 10.45 Profit/(Loss) Before Tax 10.48 3.38 (6.50) Add: Deferred Tax adjustment 23.83 Less: Provision for tax 0.90 14.30 0.08 Less: Deferred tax 0.00 0.00 0.00 Profit / (Loss) After tax for the year 9.58 (10.92) 17.24 Balance shee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the case of Sanjay Bimalchand Jain versus the ITO in LT.A. No. 61/Nag/2013 observed as below- "All the authorities below, in particular the Tribunal, have observed in unison that the assessee did not produce any evidence to rebut the presumption drawn against him under Section 68 of the Act', by producing the parties in whose name the amounts in question had been credited by the assessee in his books of account. In the absence of any cogent evidence, a bald explanation furnished by the assessee about the source of the credits in question viz., realisation from the debtors of the erstwhile firm, in the opinion of the assessing officer, was not satisfactory. It is well settled that in view of Section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income tax as the Income of the assessee of that previous year, if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the assessing officer, not satisfactory." (Vijay Kumar Talwar Vs. CIT)(SC). "I have heard both the counsel and perused the records. The facts of the case clearly indicate that the assessee h....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be applied by the authorities below. In the case of Sumati Dayal 214 ITR 801, it was held that during the year 1970-71 (pertaining to the assessment year 1971-72) between April 6, 1970, and March 20, 1971, the appellant claims to have won in horse race a total amount of Rs. 3,11,831/- on 13 occasions out of which ten winnings were from jackpots and three were from treble events. Similarly in the year 1971-72, the appellant won races on two occasions and both times the winning were from a jackpot. These receipts were tested on the touch stone of human probability and it was found that apparent was not real. That it was contrary to statistic al theory and experience of the frequencies and probabilities. The exceptional luck enjoyed by the assessee was held to be beyond preponderance of probability. Hence, the Hon'ble Apex Court has affirmed the view that it would not be unreasonable to infer that the appellant had not really participated in any of the races except to the extent of purchasing the winning tickets after the events presumably with unaccounted funds. When the present case is examined on the touch stone of above case law, it is clear that these transactions of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t has been framed for the impugned assessment year by the Revenue u/s 143(3) of the Act originally, while based on information received from Addl.CIT(Inv.), Unit-v, Mumbai that the assessee is indulging in non-genuine and bogus capital gains from transaction of sale and purchase of shares of M/s Shiv Om Investment and Consultancy Limited which was penny stock company and pre-dated contract notes were issued by the Brokers to manipulate and introduce long term capital gains in favour of the assessee which are exempt from tax u/s 10(38) of the Act leading to escapement of income from taxation / which led to issue of notice dated 07-04-2008 u/s 148 of the Act which is within four years from the end of the relevant assessment year, the receipt of afore-stated information from Addl. C1T(Inv) in our considered view is fresh and tangible material which has live link and nexus with the formation of belief that the income of the assessee has escaped assessment, and keeping in view that the original assessment was not framed u/s 143(3) of the Act and no opinion was. ever formed by the AD and hence there is no change of opinion keeping In view the ratio of decision of Hon'ble Supreme Cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the entire transactions of sale and purchase of shares in getting issued pre-dated contract notes for purchases of shares for which payments were also made for these purchase in cash and hence these purchases never existed at that relevant time . It is the allegation of the Revenue that the entire sale and purchase of shares were manipulated by the assessee in collusion with the brokers in order to earn tax free exempt long-term capital gains on sales of shares u/s 10(38) of the Act whereby unaccounted cash of the assessee has been introduced in disguise in lieu of sale proceeds of shares. Keeping in view facts and circumstances of the case and as per our discussions and reasoning as set out above, we find no infirmity in the orders of the learned CIT(A) which we uphold and sustain" assessee relied upon the decision of the ITAT , Hyderabad in the case of ITO v, Smt Aarti Mittal (2014) 41 taxmann.com 118(Hyd.-Trib) whereby the Tribunal has arrived at the decision that sale and purchase was genuine even though purchase was off-market transaction which was routed not through stock exchange but backed by physical delivery of shares which was later de-mated and under the circumstances ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e also been made in cash. Only paper transactions have been made because there was no evidence of physical delivery of the shares. The AO was right in asking the details of the dividend if any received during the holding period. But no such information was provided at any stage of proceeding. Even, the entries in the Demat Account were not sacrosanct because the AO had found on investigation that those were all "off market" transactions. It was also noted by the AO that Hon'ble ITAT Mumbai Bench had held that those companies were nothing but entry providers. Rather, it was proved beyond doubt that Mahasagar Group was engaged in the business of issuance of fraudulent bills. We, therefore, affirm the findings of the Revenue Authorities and dismiss the ground of the assessee. " 5.1.18. In similar circumstances, the following decisions are also noteworthy to mention i) Chandan Gutpa vs. CIT - Hon'ble Punjab & Haryana High Court (2015 54 taxmann.com 10 (P&H)/ (2015) 229 Taxman 173. ii) Balbir Chand Maini vs. CIT - Hon'ble Punjab and Haryana High Court (2011) 12 taxmann.com 276 iii) Usha Chandresh Shah vs. ITO, ITAT Mumbai 2014-TIOL-1459-ITAT-MUM. 5.1.19, It is a w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ansactions are actually sham and the entire edifice is only a colourable device meant to be a smoke screen to defraud the revenue and evade taxes. The abnormal profits and consequent long-term capital gains on sale of shares has 'actually not arisen from investment in shares In natural or in ordinary way but due to a designed, preplanned, arranged trading made through a camouflaged artifice in cahoots with operators. I also come to the conclusion that the appellant has failed in giving any evidence to prove' the genuineness of the purchase of the alleged shares leading to LTCG which qualify for exemption under section 10(38) of the IT Act. As the appellant has failed to' identify the source of the credit and its genuineness, the addition made by the AO of the entire receipt purportedly to have been received out of sale of shares, under section 68 of the IT Act is legally justified and does not call for any interference. Appellant's grounds fail." I further find that brokerage commission also stands disallowed in both the lower proceedings in some of the cases. 3. I have given my thoughtful consideration to rival contentions. Identical paper book(s) comprising o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct that the assessee received Rs. 31,62,372/- from sale of once scrips i.e. 'Unno Industries Ltd.' the assessee submitted the following facts: "Details of Purchase of share for Long Term capital Gain F.Y.2013-14 (A.Y.2014-15): 1. I state that I had purchased 100 equity shares of Pinnacle Vintrade Ltd. on 20.01.2012 from Uniglory Developers Pvt. Ltd. Pinnacle Vintrade Ltd. was merged with Unno Industries Ltd. and there was change of management and control of Unno Industries ltd. pursuant to scheme of arrangement sanctioned by the Hon'ble High Court at Bombay. 2. Payment for the purchase of aforesaid 100 equity of Pinnacle Vintrade Ltd. was made by Account Payee Tamilnad Mercantile Ltd. Bank Cheque no. 736027. 3. Bank statement of Tamilnad Mercantile Ltd. Bank reflecting payment (cheque no. 736027) for purchase of the said investment in equity shares of Pinnacle Vintrade Ltd. is enclosed (highlighting the said entry). Annexure-I. 4. The equity shares of Unno Industries Ltd. were allotted pursuant upon merger of Pinnacle Vintrade Ltd. with Unno Industries Ltd. pursuant to sanction of scheme of arrangement by the Hon'ble High Court at Bombay, I was issued 91000 equity sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ring the time of sale by me. The security code of the said equity shares at BSE is 519273 and ISIN No. is INE 142N01023. 2. Equity shares of Unno Industries Ltd. were sold on Bombay Stock Exchange through SEBI registered stock broker Ashika Stock Broking Ltd. and Guiness Securities Ltd. whose details are as under: a) Name: Ashika Stock Broking Ltd. Address: Trinity, 7th Floor, 226/1, A.J.C. Bose Road, Kolkata-700020. Contact No. 033 22839952. b) Name: Guiness Securities Ltd. Address: Guiness House, 18, Deshpriya Park Road, Kolkata-700026 Contact No. 033 30015555. 3. Contract Notes issued regarding sale of equity shares of Unno Industries Ltd. on Bombay Stock Exchange by SEBI registered brokers- Ashika Stock Broking Ltd. and Guiness Securities ltd. are enclosed. Annexure V. 4. The relevant Demat Account statements of Ashika Stock Broking Ltd. and Guiness Securities Ltd. reflecting the debit of shares of Unno Industries Ltd. upon sale are enclosed. (entries highlighted). Annexure VI. 5. The Ledger of the brokers of Ashika Stock Broking Ltd. and Guiness Securities Ltd. for the financial year 2013-14 are enclosed. Annexure VII. 6. Tamilnad Mercantile Ltd. bank Stat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mmission." 7. Thereafter the AO made an addition under 68 of the Act. Aggrieved the assessee carried the matter an appeal. The ld. First appellate authority confirmed the action of the AO on the ground that, the transaction in question comes within the ambit of 'Suspicious Transaction' and therefore, the rules of 'Suspicious Transaction' would apply to the case. He further stated that the payments through bank of processing of transaction through stock exchange and other such features are only apparent features and that the real feature are the manipulation and abnormal price raise and the sudden dip thereafter. Based on surrounding circumstances and circumstantial evidence and the order of the Tribunal in the case of "Bhag Chand Chabra (HUF) vs. ITO", in I.T.A. No. 3088& 3107/2007 dated 31.12.2010, the addition made by the AO was confirmed. Aggrieved the assessee is in appeal before us. 8. A perusal of the order of the AO demonstrates that this addition was made merely on "suspicion" and in a routine and mechanical manner. This is clear from the fact that the AO refers to some 'Sharp Trading Compnay as one of the main ,manipulated company and whereas the assessee sold scrips ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment year under appeal (2005-06) are before us. There cannot be any doubt about the transaction as has been observed by the assessing officer. The transactions were as per norms under controlled by the Securities Transaction Tax, brokerage service tax and cess, which were already paid. They were complied with. All the transactions were through bank. There is no iota of evidence over the above transactions as it were through demat format. Hence, we agree with the given findings of the ld. Commissioner of Income Tax (Appeals) in accepting the transactions as genuine too. In view of the fact findings we cannot reappreciate, recording is such, cannot be said to be perverse as it is not fact finding of the ld. Tribunal alone. The commissioner of Income Tax came to the same fact finding. Concurrent fact finding itself makes the story of perversity, unbelievable." The "D" Bench of the Kolkata Tribunal in the case of Gautam Kumar Pincha vs. ITO, in I.T.A. No. 569/Kol/2017 dated 15.11.2017 at para 19 onwards held as follows: (i) M/s Classic Growers Ltd. vs. CIT [ITA No. 129 of 2012] (Cal HC) - In this case the ld AO found that the formal evidences produced by the assessee to su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f this Tribunal wherein the loss suffered by the Assessee was allowed since the AO failed to bring on record any evidence to suggest that the sale of shares by the Assessee were not genuine. (vi) CIT V. Bhagwati Prasad Agarwal [2009- TMI-34738 (Cal HC) in ITA No. 22 of 2009 dated 29.4.2009] - In this case the Assessee claimed exemption of income from Long Term Capital Gains. However, the AO, based on the information received by him from Calcutta Stock Exchange found that the transactions were not recorded thereat. He therefore held that the transactions were bogus. The Hon'ble Jurisdictional 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 High Court. 8.4. In the light of the documents stated i.e. (I to xiv) in Para 6(supra) we find that there is absolutely no adverse material to i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as already been incorporated in the submissions of the ld. AR (supra) and have been duly considered by us to arrive at our conclusion. The ld. DR could not bring to our notice any case laws to support the impugned decision of the ld. CIT(A)/AO. In the aforesaid facts and circumstances of the case, we hold that the ld. CIT(A) was not justified in upholding the addition of sale proceeds of the shares as undisclosed income of the assessee u/s 68 of the Act. We, therefore, direct the AO to delete the addition. 9. In the result the appeal of the assessee is allowed." The "A" bench of the Kolkata Tribunal in the case of ITO vs. Shaleen Khemani in I.T.A. No. 1945/Kol/2014 dated 18.10.2017 at para 9.1. to 9.4 held as follows: 9.1 We further find that the transaction of sale of shares by the assessee was duly backed by all evidences including Contract Notes, Demat Statement, Bank Account reflecting the transactions, the Stock Brokers have confirmed the transactions, the Stock Exchange has confirmed the transactions, the Shares have been sold on the online platform of the Stock Exchange and each trade of sale of shares were having unique trade no. and trade time. It is not the case t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egrity of the broker or the manner in which the broker operation as per the statement of one of the directors of the broker firm and also AO observed that assessee had not furnished any explanation in respect of the intention of showing trading of shares only in three penny stocks. AO relied the loss of Rs. 25,30,396/- only on the basis of information submitted by the Stock fictitious. AO has also not doubted the genuineness of the documents placed on record by the assessee. AO's observation and conclusion are merely based on the information representative. Therefore on such basis no disallowance can be made and accordingly we find no infirmity in the order of ld. CIT(A), who has rightly allowed the claim of assessee. Thus ground No. 1 of the revenue is dismissed." We agree with the reasoning of the Tribunal on this point also. We do not find any reason to interfere with the impugned order. The suggested questions, in our opinion do not raise any substantial question of law. 9.3. We therefore hold that there is absolutely no adverse material to implicate the assessee to the entire gamut of unwarranted allegations leveled by the ld AO against the assessee, which in our conside....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y cases to this effect. Hence we hold that the ld AO was not justified in assessing the sale proceeds of shares of SOICL as undisclosed income of the assessee u/s 68 of the Act and therefore we uphold the order of the ld CITA and dismiss the appeal of the revenue. Accordingly the grounds raised by the revenue are dismissed." Applying the proposition of law laid down in all the above referred cases, the facts of this case, I find force in the submission of the assessee and there are backed by evidence. I also find that the revenue has not based its finding on in any evidence. In view of the above discussion the addition made u/s 68 of the Act is hereby deleted." 6. Learned Departmental Representative vehemently contends at this stage that the DIT(Inv) has carried out a detailed investigation in various entry operators cases. They have been found to have rigged such kind scrip's prices rise. There is not even a single material during the course of hearing which could suggest the assessee to have engaged in any kind of foul play. This tribunal's another co-ordinate bench decision in ITA No.2281/Kol/2017 Navneet Agarwal vs. ITO decided on 20.07.2018 has rejected Revenue's all the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith the said scheme of amalgamation, the assessee was allotted 50000 equity shares of "M/s. Cressanda Solutions Ltd." The demat shares are reflected in the transaction statement of the period from 1st November 2011 to 31st December, 2013 (A copy of the scheme of amalgamation alongwith copy of order of the Hon'ble Bombay High Court and a copy of the letter to this effect submitted by "Cressanda Solutions Ltd". to Bombay Stock Exchange is placed in the Paper Book at page no 22 to 43.) 6. The assessee sold 50000 shares costing Rs. 500000/- through her broker "SKP Stock Broking Pvt. Ltd" which was a SEBI registered broker and earned a Long Term Capital Gain of Rs. 2,18,13,072/-. (Copy of the bank statement, brokers contract note together with the delivery instructions given to the DP and broker's confirmation is also placed in the paper book at page no 44 to 65). 7. Copy of Form No. 10DB issued by the broker, in support of charging of S.T.T. in respect of the transactions appearing in the ledger is placed in the paper book at page no. 66. 8. The holding period of the said scrip is more than one year (above 500 days) through in order to get the benefit of claim of Long Term Capita....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idence under the pretentious garb of preponderance of human probabilities and theory of human behavior by the department. 14. It is well settled that evidence collected from third parties cannot be used against an assessee unless this evidence is put before him and he is given an opportunity to controvert the evidence. In this case, the AO relies only on a report as the basis for the addition. The evidence based on which the DDIT report is prepared is not brought on record by the AO nor is it put before the assessee. The submission of the assessee that she is just an investor and as she received some tips and she chose to invest based on these market tips and had taken a calculated risk and had gained in the process and that she is not party to the scam etc., has to be controverted by the revenue with evidence. When a person claims that she has done these transactions in a bona fide and genuine manner and was benefitted, one cannot reject this submission based on surmises and conjectures. As the report of investigation wing suggests, there are more than 60,000 beneficiaries of LTCG. Each case has to be assessed based on legal principles of legal import laid down by the Courts of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtment which has not been assigned assessment work and has been delegated the work of only making investigation. The Act has vested widest powers on this wing. It is the duty of the investigation wing to conduct proper and detailed inquiry in any matter where there is allegation of tax evasion and after making proper inquiry and collecting proper evidences the matter should be sent to the assessment wing to assess the income as per law. We find no such action executed by investigation wing against the assessee. In absence of any finding specifically against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated. In this case, in our view, the Assessing Officer at best could have considered the investigation report as a starting point of investigation. The report only informed the assessing officer that some persons may have misused the script for the purpose of collusive transaction. The Assessing Officer was duty bound to make inquiry from all concerned parties relating to the transaction and then to collect evidences that the transaction entered into by the assessee was also a collusive trans....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the secreted profits of the appellant in its business was the result of pure conjectures and surmises on his part and had no foundation in fact and was not proved against the appellant on the record of the proceedings. If the conclusion of the Income-tax Officer was thus either perverse or vitiated by suspicions, conjectures or surmises, the finding of the Tribunal was equally perverse or vitiated if the Tribunal took count of all these probabilities and without any rhyme or reason and merely by a rule of thumb, as it were, came to the conclusion that the possession of 150 high denomination notes of Rs. 1,000 each was satisfactorily explained by the appellant but not that of the balance of 141 high denomination notes of Rs. 1,000 each". The observations of the Hon'ble Apex Court are equally applicable to the case of the assessee. In our view, the assessing officer having failed to bring on record any material to prove that the transaction of the assessee was a collusive transaction could not have rejected the evidences submitted by the assessee. In fact, in this case nothing has been found against the assessee with aid of any direct evidences or material against the assessee des....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich an inquiry is held. The government servant should be given an opportunity to deny his guilt and establish his innocence. He can do so only when he is told what the charges against him are. He can therefore, do so by cross-examining the witnesses produced against him. The object of supplying statements is that, the government servant will be able to refer to the previous statements of the witnesses proposed to be examined against him. Unless the said statements are provided to the government servant, he will not be able to conduct an effective and useful cross-examination. 29. In Rajiv Arora v. Union of India and Ors. AIR 2009SC 1100, this Court held: Effective cross-examination could have been done as regards the correctness or otherwise of the report, if the contents of them were proved. The principles analogous to the provisions of the Indian Evidence Act as also the principles of natural justice demand that the maker of the report should be examined, save and except in cases where the facts are admitted or the witnesses are not available for cross-examination or similar situation. The High Court in its impugned judgment proceeded to consider the issue on a technical plea....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... those dealers and what extraction the Appellant wanted from them. 6. As mentioned above, the Appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the crossexamination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005[2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 7. In view the above, we are of the opinion that if th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the evidence filed by the assessee in support of the claim. Further, the Assessing Officer has also failed to establish that the assessee has brought back his unaccounted income in the shape of long term capital gain. Hence we delete the addition made by the AO on this account." c) The Hon'ble Punjab and Haryana High Court in the case of PREMPAL GANDHI[ITA-95-2017(O&M)] dated18.01.2018 at vide Page 3 Para 4 held as under: "..... The Assessing Officer in both the cases added the appreciation to the assessee's' income on the suspicion that these were fictitious transactions and that the appreciation actually represented the assessee's' income from undisclosed sources. In ITA-18-2017 also the CIT (Appeals) and the Tribunal held that the Assessing Officer had not produced any evidence whatsoever in support of the suspicion. On the other hand, although the appreciation is very high, the shares were traded on the National Stock Exchange and the payments and receipts were routed through the bank. There was no evidence to indicate for instance that this was a closely held company and that the trading on the National Stock Exchange was manipulated in any manner." The Court also he....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by us to arrive at our conclusion. The ld. DR could not bring to our notice any case laws to support the impugned decision of the ld. CIT(A)/AO. In the aforesaid facts and circumstances of the case, we hold that the ld. CIT(A) was not justified in upholding the addition of sale proceeds of the shares as undisclosed income of the assessee u/s 68 of the Act. We, therefore, direct the AO to delete the addition." e) The BENCH "D" OF KOLKATA ITAT in the case of KIRAN KOTHARI HUF [ITA No. 443/Kol/2017] order dated 15.11.2017 held vide Para 9.3 held as under: "........ We find that there is absolutely no adverse material to implicate the assessee to the entire gamut of unfounded/unwarranted allegations leveled by the AO against the assessee, which in our considered opinion has no legs to stand and therefore has to fall. We take note that the ld. DR could not controvert the facts which are supported with material evidences furnished by the assessee which are on record and could only rely on the orders of the AO/CIT(A). We note that the allegations that the assessee/brokers got involved in price rigging/manipulation of shares must therefore consequently fail. At the cost of repetitio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... evidences were neither found by the ld AO to be false or fabricated. The facts of the case and the evidences in support of the assessee's case clearly support the claim of the assessee that the transactions of the assessee were bona fide and genuine and therefore the ld AO was not justified in rejecting the assessee's claim of exemption under section 10(38) of the Act." g) The BENCH "H" OF MUMBAI ITAT in the case of ARVINDKUMAR JAINHUF[ITA No.4682/Mum/2014]order dated 18.09.2017 held as under vide Page 6 Para 8: "......We found that as far as initiation of investigation of broker is concerned, the assessee is no way concerned with the activity of the broker. Detailed finding has been recorded by CIT (A) to the effect that assessee has made investment in shares which was purchased on the floor of stock exchange and not from M/s Basant Periwal and Co. Against purchases payment has been made by account payee cheque, delivery of shares were taken, contract of sale was also complete as per the Contract Act, therefore, the assessee is not concerned with any way of the broker. Nowhere the AO has alleged that the transaction by the assessee with these particular broker or share was b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Hon'ble Supreme Court in the case of PCIT vs. Teju Rohit kumar Kapadia order dated 04.05.2018 upheld the following proposition of law laid down by the Hon'ble Gujrat High Court as under: " It can thus be seen that the appellate authority as well as the Tribunal came to concurrent conclusion that the purchases already made by the assessee from Raj Impex were duly supported by bills and payments were made by Account Payee cheque. Raj Impacts also confirmed the transactions. There was no evidence to show that the amount was recycled back to the assessee. Particularly, when it was found that the assessee the trader had also shown sales out of purchases made from Raj Impex which were also accepted by the Revenue, no question of law arises." 20. Applying the proposition of law as laid down in the above-mentioned judgments to the facts of this case we are bound to consider and rely on the evidence produced by the assessee in support of its claim and base our decision on such evidence and not on suspicion or preponderance of probabilities. No material was brought on record by the AO to controvert the evidence furnished by the assessee. Under these circumstances, we accept the eviden....