TaxTMI 
TaxTMI 
2021 (7) TMI 210
X X X X Extracts X X X X
X X X X Extracts X X X X
....5 That the order passed by learned CIT(A) is bad in law and on facts. The learned CIT(A) has erred in confirming the addition of Rs. 28,47,833/- u/s 68 without considering the fact of the case by relying on certain decision, the fact of which are different from the case of the appellant, which is quite unjust, illegal and against the facts of the case. 3. The learned CIT(A) has erred in confirming the addition of Rs. 28,47,833/- based on the enquiry of the investigation wing of Kolkata and statement of one Vpul Vidur Bhatt without providing such document to the appellant and to cross examine the Vipul Vidur Bhatt, which is quite unjust, illegal and against the facts of the case. 4. That learned CIT(A) has erred in conforming the addition of Rs. 28,47,833/- without considering the various judicial proceedings submitted before him, which are directly related to facts of the appellant, which is quite unjust, illegal and against the facts of the case. 5. That learned CIT(A) has erred in addition of Rs. 89,935/- being 3% on the amount of sale consideration of Rs. 29,97,833/- under section 69C without any documentary evidence against asssessee which is quite unjust illegal and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T(A) is bad in law and on facts. 1. That learned CIT(A) has erred in conforming the addition of Rs. 56,02,384/- u/s 68, whereas section 68 is not applicable on the transaction entered into by the assessee, which is quite unjust, illegal and against the facts of the case. 2. That learned CIT(A) has erred in holding the genuine income of Long Term Capital Gain exempted u/s 10(38) of Rs a sham transaction, by applying test of human probability, without any evidence against the assessee, which is quite unjust, illegal and against the facts of the case. 3. That the Ld. CIT(A) has erred in confirming the disallowance of claim of assessee of exempted LTGC based on information/statement gathered by investigation wing of the department, without any opportunity to cross examine such persons and without providing such documents for assessee's comments, which is quite unjust, illegal and against the facts of the case. 4. That the Learned CIT(A) erred in confirming the disallowing of claim of exempted income based on wrong analysis of the financial and prices of the shares, which is quite unjust, illegal and against the facts of the case. 5. That the Learned CIT(A) erred in mentioning....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rned CIT(A) has erred in ignoring the decision of Hon'ble Delhi Bench of ITAT in case of Shikha Dhawan (Appeal No.ITA No.3035/Del/2018) wherein the similar transaction of Turbotech Engineering is considered as genuine, which is quite unjust, illegal and against the facts of the case. 5. That the learned CIT(A) has erred in wrongly applying the decision of Hon'ble Supreme Court in case of the assessee wherein the facts of the case of the assessee is altogether different, which is quite unjust, illegal and against the facts of the case. 6. That the learned CIT(A) has erred in holding that the capital gain earned by the assessee, based on some inquiries but not on the assessee, is bogus and/or managed affairs, which is quite unjust, illegal and against the facts of the case. 7. That the learned CIT(A) has erred in not providing the cop[y of the report of the investigation wing and further not providing any opportunity to cross examine the persons mentioned in the report, which is quite unjust, illegal and against the facts of the case. 8. That the learned CIT(A) has erred in concluding that the purchases have been made in cash, which is quite unjust illegal and against the fac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iding such documents for assessee's comments, which is quite unjust, illegal and against the facts of the case. 8. That the learned CIT(A) has erred in mentioning the fact that learned AO has tried to conduct inquiries during assessment proceedings, in confirming disallowance, where as no such inquiries have been carried out, which is quite unjust illegal and against the facts of the case. 9. That the learned CIT(A) has erred in concluding that the purchases have been made in cash, which is quite unjust illegal and against the facts of the case. 10. The learned CIT(A) has erred in ignoring the various judgments quoted by the assessee, which is quite unjust illegal and against the facts of the case. 11. The learned ?CIT(A) has erred in enhancing the income of Rs. 28176/- under section 69C, without any evidence against the assessee, which is quite unjust illegal and against the facts of the case. Appellant craves to leave, add, amend, alter or modify of any ground before final date of hearing. Darshan Kumar Pahwa ITA No.987/Ind/2019 A.Y 2011-12 Re-opening of assessment u/s 147/148 is unjustified and improper That re-opening of assessment u/s 147/148 is unjustified and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n. These statements are pre-existing and were recorded during search and survey and no where independently re-examined by the Id AO. The assessee has not made any transaction with VAS Infra but has purchased and sold shares of VAS Infra. Accordingly, the company has correctly denied having any transactions with the assessee. (Tax Effect Rs. 205916/-) 5. Brought forward loss ought to have been adjusted against addition made That the appellant was dealing in shares as business activity. The learned AO has disallowed loss incurred in trading of shares of VAS Infra. Such disallowance has I consequently increased business income. There were brought forward business looses available with the appellant and addition made ought to have been adjusted against brought forward business loss. (Tax Effect Rs. 205916/-) 6. Any other ground may be permitted to be taken later That the appellant further craves leave to add, to alter and or to amend any of the foregoing grounds of appeal as and when necessary. (No Tax Effect) 3. From perusal of the above grounds we find that following two common issues have been raised :- (i) Genuineness of Long Term Capital Gain from sale of equity share....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee is an individual engaged in the business of bus body building. E-return of income for Assessment Year 2014-15 filed on 29.9.2014 declaring income at Rs. 15,80,150/-. Case was selected for complete scrutiny assessment through CASS followed by issuance of notice u/s 143(2) and 142(1) of the Act. While examining the records and details filed by the assessee, Ld. A.O observed that the assessee has claimed exemption u/s 10(38) of the Act at Rs. 28,47,833/- on sale of equity shares in the name of the company Sunrise Asian Ltd. 6,000 equity shares of M/s. Conart Traders Ltd were purchased on 22.10.2011 at Rs. 1,50,000/- from P. Saji Textiles Limited. Pursuant to the order of Hon'ble Bombay High Court M/s. Conart Traders Limited was merged with M/s Sunrise Asian Limited. Thereafter 6000 equity shares of M/s SAL were received in lieu of the shares of M/s Conart Traders Limited. Subsequently assessee sold the shares of M/s SAL on the recognised stock exchange through a registered broker and against the sale consideration received, the cost of purchase was deducted giving rise of LTCG at Rs. 28,47,833/-. However, Ld. A.O was not satisfied since in his view the extent of growth and f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en subsequently followed by the Co-ordinate Bench of Jaipur in the case of Ashok Agrawal V/s ACIT ITA No.124/JP/2020 dated 18.11.2020. He also submitted that there was no evidence found which could indicate that the assessee was engaged in the alleged racket of providing accommodation entries. Reliance was also placed on the judgment of Hon'ble Supreme Court in the case of M/s Andaman Timber Industries V/s CCE contending that no opportunity of cross examination was provided which thus violates the principles of natural justice and the addition so made is liable to be deleted. 11. Ld. Counsel for the assessee also argued referred to the following written submissions:- A. Addition made by Ld. AO is vague, based merely on surmises and conjectures and without any basis 1. Assessment Order page 2 para 3.1, Ld. AO has stated - "3.1 The department has conducted various searches u/s 132 /surveys u/s 133A/enquiries conducted by the department on the various brokers of stock exchange and various assessee/companies. The investigation carried out by the department has proved that a scheme was hatched by various players to obtain/provide accommodation entry of bogus LTCG through manipula....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unt and commission charged over and above at certain fixed percentage for providing such accommodation entry......" [Para 3.1] In the instant case, Ld. AO erred in not considering the fact that the shares were purchased through banking channel and cheque was issued to M/s. P. Saji Textiles Limited. [PB 16, 18] 5. Ld. AO failed to bring on record any positive material to establish that the shares were purchased in lieu of cash. Nothing was brought on record to establish that assessee is having any source of income other than the reported sources of income. Also, no material was found to establish that the transaction was a cash transaction merely to convert unaccounted money into accounted money. Ld. AO made an allegation without bringing on record any cogent material that assessee has brought back his unaccounted money in the books of accounts by way of managing bogus LTCG. Ld. AO did not bring on record any specific instance of the assessee having earned any undisclosed income or unexplained investment. Ld. AO failed to bring on record any live link to establish any collusion on the part of assessee to generate the alleged bogus LTCG. Ld. AO has brought nothing on record to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion is executed in lieu of cash. 7. Ld. AO erred in stating that - "......These shares have a lock in period of 1 year as per Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. Another route to acquire the shares is through Amalgamation or merger. In this route, the beneficiaries of LTCG are allotted shares of a private limited company which is subsequently amalgamated with a listed penny stock and the beneficiaries receive shares of the listed penny stock in exchange of the shares of private limited company....." [AO page 3, 1st line] From the above following is made out - a. Ld. AO erred in mentioning grossly incorrect fact that the shares have a lock in period of one year as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR regulations). The ICDR regulations do not mention that the shares have a lock in period of one year in respect of shares in the impugned transaction of the assessee. b. Process for amalgamation is prescribed under the law which requires it to be carried out in accordance to the directions issued by the order of Hon'ble High Court. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of Sunrise Asian Limited. Shares are not allotted to assessee through 'preferential allotment' as mentioned in the ICDR Regulations, 2009. The ICDR Regulations, 2009 do not require that the shares have a lock in period of one year. 10. In the ICDR Regulations, 2009 the term 'listed issuer' has been defined to mean any issuer whose equity shares are listed on a recognized stock exchange. The term 'listed penny stock' has not been defined. 11. SEBI is the market regulator for the operations of stock exchanges in India. SEBI also ensures protection of interest of the investors transacting on stock exchanges. In order to protect the interest of the investors, SEBI has issued - SEBI (Investor Protection and Education Fund) Regulations, 2009. Assessee is an investor who has acted bonafidely on the recognized stock exchange and has complied with all the regulatory requirements while making the impugned transactions. Ld. AO has jeopardized the interest of assessee by making an addition for the acts, if any, of the market operators which were not in compliance with the market regulations. Ld. AO has acted against the objective of SEBI in protecting the interest of investor. 12. Ld. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions, conjectures and surmises and acted without any evidence or upon a view of facts which could not reasonably be entertained or finding was perverse which could not be sustained and Supreme Court was entitled to interfere with such finding - Held, yes - Whether, therefore, addition made was liable to be deleted - Held, yes Ld. AO being quasi-judicial authority must not base his findings on no-material or no-evidence. This is a fundamental rule of justice and established legal proposition that there may be something more than bare suspicion, to support the findings, in the assessment order, as held by the Hon'ble Supreme Court, in the case of - a. Omar Salav Mohamed Sait - [1959] 37 ITR 151 b. Umacharan Shah & Bros - [1959] 37 ITR 271 15. In the instant case, Sunrise Asian Limited (the amalgamated company) is neither included in the list of Shell Companies nor has been struck off from the Registrar of Companies. Hon'ble Mumbai Bench of ITAT in the case of Shakti Hardware Collections Private Limited - ITA No. 6301/MUM/2014 - order pronounced on 31.01.2018 had raised a specific query on the existence of the name of the company in the list prepared by MCA based on which po....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tes the acceptability of the impugned transaction. [PB 43, 19] 5. In the assessment proceedings, Ld. AO made a very general reference by using the term 'various' in relation to conduct of search/survey by the Department. Ld. AO has not made reference to any specific search/survey carried out in case of any specific assessee or broker or company. No document/report has been provided to the assessee on the basis of which the claim of LTCG has been rejected. Ld. AO has mentioned that various syndicates have arranged accommodation entry of bogus LTCG. No such specific instance has been brought on record to establish if assessee is involved in such transactions of accommodation entries. It is pertinent to mention here that the no reference has been made to name of assessee. [AO page 2] 6. Ld. AO merely on surmises and conjectures and without bringing on record any cogent material to establish that assessee was engaged in price rigging of the impugned script rejected the claim of exemption of LTCG u/s 10(38). 7. Transaction of purchase of shares was executed on 22.10.2011 i.e. AY 2012-13 and the shares were sold in AY 2014-15 (impugned year). This transaction of purchase of share....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xercise is carried out, the additions could not be sustained in the eyes of law." Para 13 - "Therefore, considering the entirety of facts and circumstances, we are not inclined to accept the stand of Ld.CIT(A) in sustaining the impugned additions in the hands of the assessee. Resultantly, the addition on account of alleged Long-Term Capital Gains as well as estimated commission against the same, stands deleted. The grounds of appeal, to that extent, stand allowed." [emphasis supplied] In the instant case, assessee has submitted copy of contract notes, bank statement, share certificate before Ld. AO. Ld. AO failed to consider these documents which establish the genuineness of the transaction. c. Hon'ble Delhi Bench of ITAT in the case of RiazMunshi - ITA no. 8314/DEL/2018 - order pronounced on 11.03.2020 - Para 6.1 - "....................The A.O. did not make any further investigation or enquiry into the matter and merely relied upon the interim order of the SEBI and investigation carried out by the Kolkata Wing. Further, it is not clear from the assessment order whether Investigation Wing report have been confronted to the assessee or any right of cross-examination have bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ount, without paying any taxes - He, therefore, treated long term capital gain as not genuine and made addition under section 68 - Whether since Assessing Officer failed to produce any material evidence to dislodge or controvert genuineness of conclusive documentary evidences produced by assessee in support of his claim that he was a genuine investor from past many years, addition made under section 68 was to be deleted - Held, yes [Paras 24,25 and 31] [In favour of assessee] In the instant case, Ld. AO has not brought on record any specific report or documents relating to any search/survey on the basis of which claim of LTCG has been rejected. No material has been brought on record to controvert the genuineness of the documentary evidences produced by assessee. Addition made by Ld. AO ought to be deleted. e. Hon'ble Mumbai Bench of ITAT in the case of Vijay Ratan Mittal - ITA No. 3429 of 2019 order pronounced on 01.10.2019 - Para 37 - "The observations of the Hon'ble Apex Court are equally applicable to the case of the assessee. The AO and CIT(A) both, having failed to bring on record any material to prove that the transactions of the assessee were collusive transactions....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the claim of LTCG ought to be deleted. g. Hon'ble Delhi Bench of ITAT in the case of Swati Luthra - [2020] 115 taxmann.com 167 - order pronounced on 28.06.2019 - Para 17 - "We also find that the Ld. AO has raised objection regarding the cash purchase of shares and that shares were dematerialised few days back only from the date of sale. There is no law which prohibits the purchase of shares in cash, however in the present case, assessee had filed copies of bills of purchase, copy of share certificates and transfer forms etc. before Ld. AO and no adverse inference could be drawn only because the shares were purchased in cash. Regarding Demat of shares, we hold that it is the option of the buyer of shares to keep the shares either in Demat form or in paper form. Merely because the shares were dematted at a later stage, no adverse inference could be drawn. The Learned Counsel for the Assessee has taken us through various documents filed in the paper book as referred to above which specifically prove the purchase of shares made by assessee genuinely which were also sold genuinely. The transactions were carried through Demat account and banking channel on which STT has been paid b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a company which amalgamated into another company (Kailash) by order of High Court - Assessing Officer noticed that scrips of Kailash were used by entry providers for providing bogus accommodation entries and that in some other matter in course of proceedings before Investigation Wing, one Chartered Accountant had confirmed that he had provided accommodation entry in scrip of Kailash and, consequently, he treated long-term capital gain under section 69 - Assessee had duly shown transaction in cheques right from purchase to sale of shares and all transactions had been routed through DMAT account in Bombay Stock Exchange as per quoted price as on that date - SEBI did not find any prima facie material for manipulation in price of scrip of Kailash - Further, statement of Chartered Accountant could not be sole ground to implicate assessee and justify additions especially when, nowhere assessee had been found to be beneficiary of any kind of accommodation entry in any inquiry by Investigation Wing or any such material had been unearthed by department - Whether, on facts, long-term capital gain shown by assessee was genuine and, consequently liable for exemption under section 10(38) - Hel....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Accordingly, in view of above facts and circumstances, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Hence, this ground of revenue's appeal is dismissed." [emphasis supplied] In the instant case, Ld. AO nothing on record to controvert the fact duly established by supporting evidences for payment of consideration through bank, share certificate, dematerialization of shares in DMAT account, allotment of shares on amalgamation, sale of shares through recognised stock exchange on which STT has been paid. In absence of any evidence that the assessee has introduced his own unaccounted money by way of bogus LTCG is not sustainable. j. Hon'ble Jaipur Bench of ITAT in the case of Pramod Kumar Lodha - [2018] 100 taxmann.com 8 - order pronounced on 16.07.2018 - HEAD NOTE - "Section 69B, read with section 10(38) of the Income-tax Act, 1961 - Undisclosed investments (Share transactions) - Assessment year 2010-11 - It was alleged that in name of long-term capital gain from sale of shares, assessee had introduced his own unaccounted money - However, it was found that after purchase, shares were held for some time and were dematerializd in D-mat accoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was held that the transactions of share are genuine. Therefore, we do not find that there is any reason to hold that there is any substantial question of law involved in this matter. Hence, the appeal being ITA No.620 of 2008 is dismissed." [emphasis supplied] In the instant case, the entire transaction of purchase and sale of impugned shares is supported with all documentary evidences. These documents cannot be brushed aside merely on surmises and conjectures. No addition can be made in absence of any material negating the submissions of assessee. 10. Ld. AO erred in stating that the transaction of sale of shares is bogus more particularly when the Profit and Loss Account of Sunrise Asian Limited (amalgamated company) is reproduced in the impugned order at page 4. From this, it is evidently clear that the company has earned profit of Rs. 1.03 crores (profit before taxes) for AY 2014-15 against revenue of Rs. 113.46 crores. 11. Ld. AO erred in considering only the Profit and Loss Account of Sunrise Asian Limited (amalgamated company) and not considering the Balance Sheet. The comparative data of the Profit and Loss Account as reproduced in the impugned order is as availabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sold by the assessee in the price range of Rs. 450 to Rs. 505 during the month of August 2013. [PB 45-48] The assessee is aware of the above mentioned facts relating to the increase in the price of the impugned shares. This is corroborated from response of the assessee to question no. 12 in his statement recorded during the assessment proceedings. [AO page 8] Not even an iota of doubt has been raised by Ld. AO on the detailed and exhaustive replies given by the assessee in the statement recorded during the course of assessment which is reproduced in the impugned assessment order. As alleged by the Ld. AO, if assessee was involved in price rigging, he would have sold his shares in the later period wherein he would have received the best appreciation for his investment. Further, one fails to understand how the price range of Rs. 400 - 500 was maintained for an elongated period of almost 27 months. The allegation of Ld.AO is vague, without any basis and merely surmise and conjecture. C. All the conditions enumerated in section 10(38) are complied with in the impugned transaction of sale of shares of listed company on recognized stock exchange 1. Section 10(38) reads - "an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taxing statute or it is not. If it is not, the Income-tax Officer has no power to impose tax on the said income. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. The law empowers the ITO to assess the income of an assessee according to law and determine the tax payable thereon. In doing so he cannot assess an assessee on an amount, which is not taxable in law, even if the same is shown by an assessee. There is no estoppel by conduct against law nor is there any waiver of the legal right as much as the legal liability to be assessed otherwise than according to the mandate of the law. 4. Principles of estoppels will not operate against the Income-tax Act as held by Hon'ble Supreme Court in the case of CIT v. V.MR.P Firm [1965] 56 ITR 67 (SC). The relevant observations are extracted as under - "The contention is that the assessees having opted to accept the scheme, derived benefit there-under, and agreed to have their discharged debts excluded from the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of the assessee. [PB 45-48] b. Genuineness - The shares were purchased in AY 2012-13. The payment was done through cheque. No doubt has been raised on the genuineness of the purchase transaction. One limb of the transaction i.e. purchase is undisputed and uncontroverted. c. Creditworthiness - The shares are sold on the recognized stock exchange through the stock brokers. The identity of the purchaser of the shares so sold cannot be revealed and the sale consideration being received directly in the bank account of the seller of the shares (assessee), creditworthiness is established. Provisions of section 68 are not attracted. Addition made by rejecting the LTCG of Rs. 28,47,833 and treating it as deemed income u/s 68 ought to be deleted. E. Addition made on account of unexplained expenses u/s 69C of Rs. 89,935 1. Ld. AO has estimated commission expense @ 3% on the entire sale consideration of Rs. 29,97,831 amounting to Rs. 89,935 by applying the provisions of section 69C. 2. Ld. AO has merely alleged that assessee has paid commission for the above mentioned share transaction. The estimation has been made merely on surmises and conjectures without bringing on record any....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in penny stock companies and also making addition for estimated brokerage expenses for arranging bogus capital gain. Second common grievance is by way of raising the legal issue contending that since no opportunity was awarded to the assessee to cross examine the third persons, whose statement were taken as a base to make additions, the impugned additions are liable to be deleted. 16. Since we are adjudicating the above stated common issue on the basis of above assessee namely Shri Shivnarayan Sharma, we note that the assessee purchased 6000 equity shares of Conart Traders Ltd on 22.10.2011 at a cost of Rs. 1,50,000/- . There is no restriction under the law to purchase equity shares on off line mode. Vide order dated 22.3.2013 of the Hon'ble Mumbai High Court M/s Conart Traders Limited was merged with M/s SAL and in lieu there of 6000 shares of M/s SAL were received by the assessee in its demat account. After holding the equity shares for more than 12 months since purchased on 22.10.2011, assessee sold the shares of M/s SAL during the period April 2014 to June 2014 through a registered broker and all the transactions of sale of shares took place on the recognised stock exchange. S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....would reveal that the assessee purchased certain shares of an entity namely M/s STL as early as September, 2011. The shares were converted into demat form in assessee's account during the month of March, 2012. The transactions took place through banking channels. The investments were duly reflected by the assessee in financial statements of respective years. The copies of financial statements of M/s STL for FYs 2009-10 & 2010-11 which led to investment by the assessee in that entity was also furnished during the course of assessment proceedings. Subsequently, M/s STL got merged with another entity viz. M/s SAL pursuant to scheme of amalgamation u/s 391 to 394 of The Companies Act, 1956. The Scheme was duly approved by Hon'ble Bombay High Court vide order dated 22/03/2013, a copy of which is on record. Consequently, the shares of M/s STL held by the assessee got swapped with the shares of M/s SAL and new shares were allotted to the assessee during June, 2013 pursuant to the approved scheme of amalgamation. M/s SAL is stated to be listed public company Group 'A' shares signifying high trades with high liquidity. The assessee has sold these shares through its stock broker namely M....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounts to violation of principal of natural justice because of which the assessee was adversely affected. The whole basis of making the addition is third party statement without there being any tangible material. It is trite law that additions merely on the basis of suspicious, conjectures or surmises could not be sustained in the eyes of law as held by Hon'ble Supreme Court in Omar Salay Mohamed Sait V/s CIT (1959 37 ITR 151). The suspicion however strong could not partake the character of legal evidence as held by Hon'ble Supreme Court in Umacharan Shaw & Bros. V/s CIT (1959 37 ITR 271). Therefore, we find that onus as caster upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The allegation of price rigging / manipulation has been levied without establishing the vital link between the assessee and various entities of Shri Vipul Bhat. We find that the whole basis of making additions is third....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er of the shares were group entities of Shri Vipul Bhat, could not be sustained. The fact that there were independent buyers also would rebut the same and weaken the conclusion drawn by Ld. AO. 11. The Ld. AR has relied on plethora of judicial pronouncements in support of various submissions, which we have duly considered. These decisions would only support the conclusions drawn by us that once the assessee has discharged the onus of proving the genuineness of the transactions, the onus would shift on the revenue to dislodge assessee's claim and bring on record contrary evidences to rebut the same. Until and unless this exercise is carried out, the additions could not be sustained in the eyes of law. 12. To enumerate the few, the Hon'ble Bombay High Court in CIT V/s Shyam S.Pawar (54 Taxmann.com 108 10/12/2014) declined to admit revenue's appeal since the revenue failed to carry forward the inquiry to discharge this basic onus. The co-ordinate bench of this Tribunal in Mukesh R.Marolia V/s Addl. CIT (6 SOT 247 15/12/2005) held that personal knowledge and excitement on events should not lead the Assessing Officer to a state of affairs where salient evidences are overlooked. When....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hand, the Id. AO has referred to SEBI enquiry against M/s Sunrise Asian Ltd. However, we note that the said enquiry was regarding failure to comply with certain disclosure requirements and therefore, the subject matter of the enquiry has no connection with the transaction of bogus long term capital gain and has no bearing in judging the genuineness of the transaction undertaken by the assessee or for that matter, the price and realization on sale of shares so undertaken by the assessee through the stock exchange. Further, it has been held in the aforesaid case that the findings of investigation & modus operandi in other cases narrated by the AO and also CIT(A) nowhere prove any connection with the assessee nor the assessee's involvement or connection or collusion with the brokers, exit providers, accommodation providers or companies or directions etc and for making the addition, it is necessary to bring on record evidence to establish ingenuity in transactions or any connection of the assessee or its transaction with any of the alleged parties. In the instant case, as we have discussed earlier, there is no finding which proves assessee's connection, involvement or collusion....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... D-mat account of the assessee and they have been sold through the Dmat account only. Hence the delivery of shares a/so stand proved. The AO has not brought any material on record to show that the assessee was part of fraudulent price rigging. Accordingly, in the absence of any evidence to implicate the assessee or to prove that the transactions are bogus I am of the view that the capital gains declared by the assessee cannot be doubted with. In that View of the matter the addition made towards expenses is not also sustainable. 25. In light of above discussions and in the entirety of facts and circumstances of the case and following the decisions of the Hon'ble jurisdictional High Court and of that of the Coordinate Benches in cases referred supra, we are of the considered view that the assessee has discharged the necessary onus cast on him in terms of claim of exemption of long term capital gains u/s 10(38) of the Act by establishing the genuineness of transaction of purchase and sale of shares and satisfying the requisite conditions specified therein and the gains so arising on sale of shares therefore has been rightly claimed as exempt u/s 10(38) of the Act. Accordingly, i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rformance of the said companies. In our considered view, the above factor at best was a pointer or cause for careful scrutiny of the transaction by the Assessing Officer but from it cannot be concluded that transactions were sham. It is a matter of common knowledge that prices of shares in the share market depends upon innumerable factors and perception of the investor and not alone on the financial performance of the company. Further, we also find from record that Ld. AO also didn't confront copies of statements recorded by Investigation Wing, Kolkata of Sh, Nikhil Jain, Sh. Sanjay Vora, Sh. Rakesh Somani, Sh. Anil Kumar Khemka and Sh. Bidyoot Sarkar to the appellant during assessment proceedings and merely extracted copies of their statement in the assessment order only. The Ld. AO has not confronted any material to the assessee nor provided any adequate opportunity to the assessee to defend her case. Since the statements were not confronted to the assessee, she was deprived of her right to cross examine the witnesses. Also whatever they have stated in their statement is no gospel truth and cannot be applied blindly to all the persons who have brought the scrips in the entire....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross- examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 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. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 22. As regards the judgment of Hon'ble Delhi High Court in the case of Suman Poddar V/s ITO (supra) delivered on 17.09.2019 relied by Ld. Depar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ithout 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 International Finvest Limited, but nothing emerged from this effort. The payment for the shares in 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 I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tances demonstrated before the ITAT 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 v. CIT (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 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. 23. We therefore in the light of above judgments which are squarely applicable in the issues raised in the instant appeals are of the cons....