2022 (3) TMI 829

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....se are based on borrowed satisfaction and are without independent application of mind This is further evident from following features of reasons recorded: i) That in reasons recorded in column no 8(a) it is incorrectly stated that assessee has not filed return of income where as factually return was filed on 02/02/2015 which itself vitiates the belief formed; ii) That in reasons no tangible material is narrated or described so as to form valid belief u/s 148 of the Act; iii) That mere DIT information is mentioned in reasons recorded which is nowhere corroborated by any independent material; iv) That merely for verification and examination case is reopened u/s 148 which is not permissible u/s 148 and for verification only possible option is recourse to section 143(2) of the Act which is missed here (refer para 3 & 5 of reasons recorded); v) That as stated in opening para of reasons recorded mere suspicion created by investigation wing information is made as sole basis to form belief which is proscribed in law; vi) That to make deep scrutiny reopening u/s 148 is made as stated in penultimate para of reasons recorded; vii)....

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....eport relevant extract, statements recorded by investigation wing, etc and without offering cross examination of revenues witness whose statements is extensively relied in impugned orders, which is sufficient to quash the assessment order and order passed by Ld CIT-A. 3. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the action of Id AO in making addition of Rs. 24,69,636/- without appreciating that burden to, prove that transaction is bogus/sham has remained un-discharged from side of revenue and contrary findings of Ld CIT-A are repudiated at length. 4. That on the facts and in the circumstances of the case and in law, both Id CIT-A and Id AO erred in making subject additions without appreciating that the modus operandi relied extensively in impugned orders is never co-related even remotely to the facts of the present case as there is no iota of evidence brought on record which can display that assessee herein has inducted certain cash at the time of sale to certain indentified broker/middleman/syndicate member who has in turn introduced certain identified artificial paper company for alleged parking of said cash ....

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.... capital gains) as genuine. 9. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the action of Id AO in making addition of Rs. 24,69,636/- without appreciating spirit of law contained in section 10(38) and section 43(5)(d) where statutory status is provided to evidences generated from stock exchange system treating the same to be impeccable and only from finance act 2017 with prospective effective from AY 2018-2019, amendment is made in section 10(38), prior to which such gains would remain exempt. 10. That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal. Humble Prayer: i) To quash reopening made without authority of law merely for verification and scrutiny and without valid notice u/s 143(2) of the Act. ii) To delete the addition of Rs. 24,69,636/- on a/c of alleged bogus LTCG. iii) To quash assessment order and Id CIT-A order for being passed in serious violation of audi altrem partem. iv) To hold section 68 etc does not apply to sale of shares and that too sans credit in books of account maintained by as....

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....em Bio (EBFL) (hereinafter referred as The Scrip) were examined. It was also found that the assessee has earned a return of approximately 1584% over a very short period of just over 13 months. These facts demanded a deeper study of the price movements and share market behavior of the entities involved in trade of the scrip as the share price movements and the profit earned by the beneficiaries were beyond human probabilities. Thus a deeper study was needed to ascertain whether the transactions were genuine investment transactions or colorable device only to convert the unaccounted cash into tax exempt income. In short, it was to be ascertained whether the apparent was real. 11. The scrip were thoroughly examined and the following facts emerged: Facts of the Share namely M/s Esteem Bio (EBFL) 12. The revenue held that from the Individual Transaction Statement of the assessee and the Investigation Report on Manipulation of penny stocks for bogus Long Term Capital Gain (hereinafter referred as LTCG), it was noticed that the assessee is a LTCG beneficiary and during the relevant year has earn LTCG exempt u/s 10(38) of net amount of Rs. 21,03,034/- through transactions in the i....

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....cation of Funds           Gross Block 13.32 12.69 6.18 5.33 4.24 Less: Accum. Depreciation 1.10 0.52 0.00 0.00 0.00 Net Block 12.22 12.07 6.18 5.33 4.24 Investments 3.15 2.73 0.24 0.24 0.24 Inventories 0.16 0.38 3.13 2.75 1.99 Sundry Debtors 0.32 2.45 1.70 0.14 0.00 Cash and Bank Balance 0.37 0.04 0.55 0.81 0.00 Total Current Assets 0.85 2.87 5.38 3.70 1.99 Loans and Advances 13.49 8.59 0.00 0.00 0.75 Total CA, Loans & Advances 14.34 11.46 5.38 3.70 2.74 Current Liabilities 1.98 0.03 0.00 0.00 0.00 Provisions 0.03 0.02 0.00 0.00 0.00 Total CL & Provisions 2.01 0.05 0.00 0.00 0.00 Net Current Assets 12.33 11.41 5.38 3.70 2.74 Total Assets 27.70 26.21 11.80 9.27 7.22 Book Value (Rs.) 18.31 17.08 285.43 998.86 570.38   Profit & Loss Account of Esteem Bio Organic Food Processing   ------------------------in Rs. Cr. -------------------- &nb....

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....the public domain such as BSE official website www.bseindia.com and moneycontrol.com, there is no significant dividend pay-outs by the company in its entire history. Rejection of Vague & General Facts & Submission of the assessee 20. The reply of the assessee has been considered but not found acceptable in the light of the developments in the case as already discussed above which clearly show that the assessee has not been able to discharge onus of proving genuineness of transactions. From the overall facts of the case as brought out above, it is amply evident that, a. Assessee purchased shares of a company/script which is devoid of any basic fundamentals and was suspended by the BSE for trading previously as well as afterward. A regular and genuine investor would hardly know-that such a company to even listed on BSE. b. From the Audited financials filed by the company with BSE, it is a matter of fact that the listed company does not have any significant/real business as seen from its last many P&L accounts and do not have any significant fixed assets or plant and machinery most of assets being either investment or loans. c. The price movements of s....

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....ch so she made above mentioned investments as a regular investor in order to buy the shares of such script. n. The assessee bought the share at a rock bottom price and exited near the peak of the scrip price curve. o. In the replies, the assessee has mainly contended that since sale were made through exchange and the payment was received through banking channel, it was a genuine transaction. Secondly, sale was made online after paying STT at the market rates therefore sale transactions were also genuine. The contention of the assessee was examined. It is not the case of this office whether purchase of shares through preferential placement did actually took place or shares were sold on the exchange at the prevalent market rates after paying STT or not. What this office has come to conclude on the basis of above analysis, documentary evidences, circumstantial evidences, human conduct and preponderance of probabilities is that what is apparent in this case is not real, that these financial transactions were sham ones and that this entire edifice was only a colorable device used to evade tax. 21. The Assessing Officer further held that according to Oxford English d....

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.... of certain information received. 2. The AO did not confirm that the material in the report was relatable to the transaction entered by the assessee. 3. That the copy of the investigation report and statement of persons recorded by the investigation Wing and opportunity of cross examination was not provided by the AO. 4. That the transaction was genuine since, all the documentation was done in which no infirmity was found. 5. The assessee has cited several case laws in her favour and tried to distinguish the judgments relied upon by the AO. The Ld.CIT(A) held that The principle of "preponderance of probability" is judiciously followed as against "beyond reasonable doubt." It is also to be borne in mind, that Directorate of investigation, Kolkata in coordination with other Directorates of Investigation at other places, carried out a major exercise and unearthed the massive racket of entry operators and manipulators to launder the black money and tax evasion. During the said exercise various statements were recorded. Certainly, simultaneous action was not taking place in each and every beneficiary's case. Therefore every benef....

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....am. To address this objection a background of this entire gamut of the scam is briefly stated below. Outcome of investigations by the Investigation wing * Total 84 BSE listed companies were identified as penny stocks. * More than 60,000 PAN of the beneficiaries was involved. * More than 5000 paper/shell companies involved in providing bogus accommodation entries were detected. * Statements of the directors of the companies were recorded. * Cash trail reflected how unaccounted/undisclosed cash of beneficiaries was routed through to convert black money into LTCG/STCG. IMPORTANT OBSERVATIONS OF NSE/SEBI/SIT * 11 member Special investigation Team (SIT) of Hon'ble Supreme Court on Black Money has also pointed out the Misuse of exemption on Long Term Capital Gains tax for money laundering in the Third SIT report on Black Money. * Order of BSE of January, 2015 showing the list of 22 banned penny stock companies for trading. The Ld. AR, on behalf of the appellant has reiterated, that the various searches and investigations conducted by the IT Dept, Inv Wing Kolkata found no material against the Ap....

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....civil appeal number 1969 of 2011 with civil appeals number 3174-3177 of 2011 and civil appeal number 3180 of 2011) has observed as under: "Considering the reversal transactions, quantity, price and time and sale, parties being persistent in number of such credit transactions with a huge price variations it will be too naive to hold that the transactions are through screen-based trading and hence anonymous. Such conclusion would be overlooking the prior meeting of minds involving synchronization of buy and sell order and not negotiated deals. The impugned transactions are manipulative/deceptive device to create a desired loss and oblique or profit." Thus, the screen based transaction would not necessarily make it sacrosanct especially in a scam ridden case of such massive proportion involving thousands of crores of rupees. Ld.CIT(A) relied on the following recent rulings of the ITAT in similar cases involving bogus capital gains through transactions in Penny Stocks: i) Pune ITAT:- Rejects capital-gains claim on 'penny stock' sale; Disregards paper-trail through contract-notes. Pune ITAT upheld undisclosed income addition for sale ....

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.... L/H of Smt. Shanti devi Bimalchand Jain Vs. Pr.CIT-1, Nagpur has dealt with this issue and observed as under:- v) Hon'ble Nagpur ITAT while delivering judgment dt.10.04.2017, in I.T.A. No. 61/Nag/2013. Assessment Year: 2006-07, in case of Sanjay Bimalchand Jain L/H of Smt. Shanti Devi Bimalchand Jain Vs. Pr. CIT-I, Nagpur has dealt with this issue and observed as under: "7. In this regard I may gainfully refer to the decision of Hon'ble jurisdictional High Court in the case of Major Metals Ltd. vs. Union of India and others in Writ Petition No. 397 of 2011 vide order dated 22nd February, 2012. The Hon'ble jurisdictional High Court in this case has held that a company cannot command disproportionate and huge share premium and such receipt of bogus share application money even though through banking channel can be held to be assessee's undisclosed income received in the garb of unjustified share application money. In the present case I find that there is no justification whatsoever that the shares of an unknown company of Rs. 5/- can be sold within two years time at Rs. 485/- without there being any reason on record. This unexplained spurt in the va....

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..../- in no time has been totally rejected by the authorities below. The assessee has not at all been able to adduce cogent evidences in this regard. There is no economic or financial justification for the sale price of these shares. The so called purchaser of these shares has not been identified despite efforts of the AO. The broker company through which shares were sold did not respond to queries in this regard. Hence the fantastic sale price realization is not at all humanly probably; as there is no economic or financial basis, that a share of little known company would jump from Rs. 5/- to 485/-. In these circumstances, I do not find any infirmity in the orders of the authorities below. Accordingly I affirm the same and decide the issue against the assessee." It can be seen from the above that the Hon'ble 1TAT has held that this, kind of receipt can be taxed u/s 68. 4.8 The A.O. has applied section 68 of Income Tax Act, 1961. The relevant provisions of section 68 are reproduced as under: "68. Cash credits Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the natu....

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....cer acquires jurisdiction to reopen an assessment under section 147(a) read with section 148 of the Income-tax Act, 1961, only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons, which he must; record, to believe that, by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profits or gains chargeable to income-tax has escaped assessment. He may start reassessment proceedings either because some fresh facts had come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income-tax Officer, the sufficiency of reasons for forming the belief is not for the court to judge but it is open to an assessee to establish tha....

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.... Hersh Win Chadha Vs. DCIT 135 TTJ 513 (ITAT Delhi) * Arvind M Kariya Vs. ACIT IN ITA No. 7024/Mum/2010 (ITAT Mumbai) 5.2 DECISIONS ON THE ISSUE OF - RULE OF EVIDENCE AO is a quasi - judicial authority and rigor of the rules of evidence contained in the evidence act are not applicable. There is no presumption in law that the AO is to discharge an impossible burden to assess the tax liabilities by direct evidence only and to establish the evasion beyond doubt as in criminal proceedings. * Dhakeshwari Cotton Mills Ltd. Vs. CIT (1954) 26 ITR 775 (SC) * S.S. Gadgil vs. Lal & Co. (1964) 53 ITR 231 (SC) * CIT vs. Jay Engineering Works Ltd. (1978) 113 ITR 389 (Delhi HC) * Dinshaw Darabshaw Shroff vs. CIT (1943) 11 ITR 172 (Bom.) * Hersh win Chadha Vs. DCIT 135 TTJ 51 (ITAT Delhi) DIRECT DECISIONS OF HON'BLE COURTS/TRIBUNALS IN THE CASE OF PENNY STOCK COMPANIES * M.K. Rajeshwari vs. ITO in ITA No. 1723/Bang/2018 vide order dated 12.10.2018 * Abhimanyu Soin vs. ACIT in ITA No. 951/Chd/2016 vide order dated 18.04.2018 * Sanjay Bimalchand Jain vs. ITO in ITA No. 61/Nag/2013 vide ord....

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....explained expenditure u/s 69C. While the appellant denies the sale expenditure it is known fact that there are no free lunches in the commercial world. Even the judicial authorities have upheld the incurring of such expenditure for arranging tax exempt income of such a sizable amount. Accordingly, the addition of Rs. 1,17,602/- is hereby confirmed. 25. Aggrieved with the order of the ld. CIT(A), the assessee filed appeal before the Tribunal. 26. The ld. AR argued the issue extensively relying on various case laws with regard to reopening u/s 148 and as well as on merits of the case. Write up of our arguments for your honors kind consideration in forthcoming hearing Ground No. 1 & 1.1 on validity of impugned reopening u/s 148 on basis of reasons recorded in extant case (typed copy placed on records) In reasons recorded u/s 148(2) in present case, it is submitted that same are based on mere vague information which remains totally un-described and inchoate, that too for mere purpose of scrutiny/verification and examination of long term capital gains disclosed in ITR as exempt u/s 10(38) of the Act, impugned reopening u/s 148 is made, which as per coordinate bench decisi....

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....purpose of verification of the genuineness, how can there by satisfaction of escapement of income. Any satisfaction with regard to escapement of income or otherwise can be recorded only after the verification of genuineness, identification and creditworthiness of the transaction and not earlier. Thus, we are of the opinion that the Assessing Officer has reopened the case under Section 147 for the purpose of verification of genuineness, identification and creditworthiness of the transactions mentioned in the information supplied by the DIT (Investigation) and this is what the Assessing Officer has concluded at the end of the reasons recorded for issue of notice under Section 148. Now, the question remains whether an assessment can be reopened under Section 147 for the purpose of verification of genuineness, identification and creditworthiness of any transaction. In our opinion, the reply is clearly NO. Thus, if the Assessing Officer considered it necessary to ensure that the assessee has not understated the income, he can issue the notice under Section 143(2). However, proviso to above Section provides the time limit within which such notice can be issued. Once that time limit is ex....

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....nsidering Bombay high court decision and above SBS realtors case) (ITA 1375/Del/2019) (Order: 21.08.2019): Reasons recorded in above case: Subsequently, the Assessing Officer recorded the following reasons for reopening of the assessment u/s 147 of the Act: "Information has been received from Investigation Wing of the Income tax Department that large scale, manipulation had been done in the market price of shares of SPLASH MEDIA by a group of persons acting as a syndicate in order to provide entries of tax exempt long term capital gains to the assessee (beneficiary). According to the information available, the assessee had traded in the above scrip to the tune of Rs. 23,74,500/- during the financial year 2010-11 and bogus LTCG amounting to Rs. 21,16,776/- had been facilitated to the assessee during the financial year 2010-11. Hence, I have reason to believe that the above income of Rs. 21,16,776/- chargeable to tax has escaped assessment for the asst, year 2011-12, within the meaning ofsec.147 of the Income-tax Act." Held: Even otherwise also, a perusal of the reasons recorded show that the notice has been issued in a mechanical manner without independent applicat....

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....would have expected him to point out what he found when he went through the information. In other words, what in such information led him to form the belief that income escaped assessment. But this is absent. He straightaway records the conclusion that "the above said instruments are in the nature of accommodation entry which the assessee had taken after paying unaccounted cash to the accommodation entry given (sic giver)". The AO adds that the said accommodation was "a known entry operator" the source being "the report of the Investigation Wing". 21. The third and last part contains the conclusion drawn by the AO that in view of these facts, "the alleged transaction is not the bonafide one. Therefore, I have reason to be believe that an income of Rs. 5,00,000 has escaped assessment in the AY 2004-05 due to the failure on the part of the Assessee to disclose fully and truly all material facts necessary for its assessment... " 22. As rightly pointed out by the /TAT, the 'reasons to believe' are not in fact reasons but only conclusions, one after the other. The expression 'accommodation entry' is used to describe the information set out without expla....

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....g Officer and such reopening is made on the basis of borrowed satisfaction, therefore, such reopening is not in accordance with law and ha to be quashed. Accordingly, such reassessment proceedings have to be treated as not in accordance with law and has to be quashed." Prayer on legal /jurisdictional challenge: We humbly request your honors to follow the above rulings, in present case and quash the impugned reopening action u/s 148 of the Act which in our humble submission is clearly without authority of law and merely for purpose of verification/scrutinizing and examination impugned reopening is made which is held to be impermissible and for that provisions of section 143(2) must have been used if at all which is nowhere done as mandated in law. Plea on merits of the case: Addition of Rs. 24,69,636 (break up : addition u/s 68 Rs. 23,52,034 on ground of alleged bogus LTCG and addition of Rs. 117,062 on ground of alleged unexplained expenditure u/s 68 of the Act) Brief facts: During the period under consideration appellant assessee earned, long term capital gains of Rs. 23,52,034/- on sale of 6000 shares of M/s Esteem Bio Organic Food Processing Ltd (EBFL) (date of sale Feb....

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....n the said list also the names of the appellants do not find any place. At page 63 of the SEBI order-trading by trading in M/s. Esteem Bio Organic Food Processing Ltd. - a further list of 25 persons is mentioned and once again the names of the appellants do not find place in this list also. 25. As mentioned elsewhere the brokers of the assesses namely ISG Securities Limited and SMC Global Securities Limited are stationed at New Delhi and their names also do not find place in the list mentioned here in above in the SEBI order. There is nothing on record to show that the brokers were suspended by the SEBI nor there anything on record to show that the two brokers of the appellants mentioned here in above were involved in the alleged scam. The Assessing Officer has not even considered examining the brokers of the appellants. It is a matter of fact that SEBI looks into irregular movements in share prices on range and warn investor against any such unusual increase in shares prices. No such warnings were issued by the SEBI. 29. As mentioned elsewhere the shares of M/s. Esteem Bio Organic Food Processing Ltd. were suspended from trading in the stock exchange but that was from 29.06.....

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.... Hon'ble Tribunal which is reproduced below for sake of ready reference: "6. We have considered the rival submissions and perused the material on record. The assessment order clearly show that the A.O. merely reproduced the modus operandi of the entry providers who booked bogus long term capital gains through penny stock companies in which either there is no business or they have accumulated losses or a Company is floated only for that purpose. Learned Counsel for the assessee has filed financials of M/s EBFL from A, Ys. 2011-2012 to 2017-2018 and for the assessment year under appeal the financials are reproduced above, which clearly show that this Company is dealing in actual business activities. Its financials are very heavy and as such the modus operandi of this type of penny stock companies would not be available in the case of M/s EBFL. The findings of the A. O. are entirely based upon interim order of SEBI. However, it is an admitted fact that interim order of the SEBI have been later on revoked by the SEBI on assessee as well as M/s EBFL have been cleared from all allegations and charges.... " Above holding squarely applies to present facts. Further, Chennai b....

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....Stock Holding Corporation of India Limited clearly indicate that the shares were purchased by the assessee through on-market transactions, and that too in demat form. Payments were made by the assessee were also through bank. Ld. Counsel for the assessee has certified that these records were with the lower authorities. It is a matter of record that SMIL had issued bonus shares in the ratio of 3:1 and thereafter split their shares. Sale made by the assessee was also through stock exchange and consideration received through bank only. In similar circumstances in the case of Nirav Kumar Mahendra Kumar Sapani (supra) this Tribunal had held as under:- "5. We have considered the rival submissions on either side and perused the relevant material available on record. The purchase of shares of Swaca Business Machines Ltd. by both the assessees was evidenced by way of Contract Note issued by the recognized stock broker ASE Capital Markets Ltd. It is not in dispute that ASE Capital Markets Ltd. is one of the recognized stock brokers by Security Exchange Board of India. The shares were also sold through ASE Capital Markets Ltd. The Contract Notes for purchase and sale of shares were f....

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.... ld. Sr. DR extensively relied on the orders of the revenue authorities below. He has extensively quoted from various judgments and reiterated the facts that have been mentioned above as excerpts from the orders of the Assessing Officer and the ld. CIT(A). 29. Heard the arguments of both the parties and perused the material available on record. 30. With regard to the reopening u/s 148, we have gone through the reasons recorded by the Assessing Officer before issuing of notice. The reasons are as under: "Smt. Krishna Devi is an existing assessee of this ward as per territorial jurisdiction. ITR has been filed by assessee for the assessment year under consideration in this ease. 2. In this case information was reed transferred from F.NO CCIT-2 / DLI/ Exchange information /2017-2018 dated 08.11.2.017 on account of non genuine long term capital gain. It is gathered that during the FY 2013-2014 the assessee had traded shares of M/s Esteem Bio amounting to Rs. 23,57,640. As per information forwarded it has been noticed that trading in this script is suspicious and this company used to facilitate introduction of unaccounted income of members of beneficiaries in the....

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....y other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters wh....

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.... section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012." 32. The provisions of Section 148 of the Act are as under: "Section 148. Issue of notice where income has escaped assessment. 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verif....

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....e Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. (3) For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself." 34. The ld. AR argued on the issues ranging from nonscrutinizing and examination of records to approval u/s 151. The ld. AR argued that the Assessing Officer has failed to scrutinize and examine the record before him and the reasons recorded were merely the ....

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.... the due date and such notice has been served after taking due approval of the Pr. CIT in accordance with the provisions of Section 151. In our opinion, the formation of belief by the Assessing Officer that the income of the assessee chargeable to tax had escaped assessment was reasonable as well as rationale and related to the information received which is discernable from the bare reading of the reasons recorded by the Assessing Officer. While the reasons themselves are undisputable, there is no reason to find out fault with the approval given by the ld. PCIT which is based on the facts enumerated before him. We find nothing on record to dispute the approval given by the ld. PCIT u/s 151 for issue of notice u/s 148. 36. Further, it is the case of the Ld.AR that there was no independent application of mind by the sanctioning authorities for according approval. Whilst it is the settled position in law that the sanctioning authority is required to apply his mind and the grant of approval must not be made in a mechanical manner, however, as noted by the Division Bench of the Hon'ble Calcutta High Court in Prem Chand Shaw (Jaiswal) vs. ACIT 383 ITR 597, the mere fact that the sanct....

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....ficer in this case. Similarly, we find that there is existence of reason and existence of belief by the AO to reopen the assessment based on the information and on verification of the material before him. 42. The Hon'ble Supreme Court in the case of Lakhmani Mewal Das 103 ITR 437 enunciated that the two conditions required to be satisfied before the Income Tax Officer issued a notice under s. 148 of the Income Tax Act are that he must have reason to believe (i) that the income chargeable to tax had escaped assessment and (ii) that such income had escaped assessment by reason of the omission or failure on the part of assessee, to disclose fully and truly material facts necessary for assessment for that year. Both these conditions must co-exist in order to confer jurisdiction on the Income Tax Officer. Further the Income Tax Officer should record his reasons before initiating proceedings under s. 148(2); before issuing the notice after the expiry of four years from the end of the relevant assessment year, the Commissioner should be satisfied on the reasons recorded by the Income Tax Officer that it was a fit case for the issue of such notice. ..... ............ (c) The groun....

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....ict but a prima facie reason. In the instant case, neither the information was wrong nor the reasons to believe were faltered. Hence, we uphold the action of revenue authorities on the issue of impugned notice dated 31.03.2018 u/s 148. On Merits: 45. On merits of the case, the ld. AR primarily argued that the issue is no longer res integra based on the judgment of the Hon'ble High Court in the case of the assessee. The ld. AR has produced the order of the Hon'ble High Court dated 15.01.2021. We have gone through the same and find that the scrips involved in that year are different from the scrips involved in the instant year. The order of the Hon'ble High Court dealt with the scrips namely Gold Line International Finvest Ltd.(para 11 of the order of Hon'ble HC) whereas the scrips involved in the instant year are M/s Esteem Bio Organic Food Processing Ltd. In that case, the enquiry of the AO were not inclusive and no action has been taken by the AO for not responding to the notices issued by the revenue authorities. We, with great respect, humbly submit that the issues, shares involved and the investigation in both the years are different and hence differentiable. The observat....

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....me of operation but only a passive beneficiary of the manipulation of the trades/scrips by some other persons or entities. In order to prove the passive benefit gained by the assessee , the assessee has to come with suitable or reliable evidences which can exonerate the assessee which is grossly absent in the assessee's case. 49. We have also gone through the various enquiries conducted by the SEBI in the case of M/s Esteem Bio Organic Food Processing Ltd. The said scrips has been restrained from operation of trading. The details are as under: 50. The Competent Authorities of SEBI has passed orders dated 13.03.2019 and 22.12.2020 which has indicted the trading of shares in circumspective nature against the interest of the public. The company was also restrained from trading on the SEBI platform. Further, the Metropolitan Stock Exchange vide order dated 23.12.2020 has also restrained from accessing the securities market by issuing prospectus, offer document or advertisement soliciting money from the public in any manner for a period of 8 years. 51. The order dated 13.03.2019 of the SEBI is as under: SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTIONS ....

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.... Prices (NHP). These connected entities whose trades contributed majorly to the buying volume and to the price rise of the scrip were referred to as the "Trading Group" entities. Direct/ indirect connection was observed amongst the trading group entities and also with other entities related/connected to companies on the basis of Know Your Client (KYC) details, bank statements, off-market transactions amongst themselves and information available on the MCA website, etc. 4. Subsequent to passing of the interim order, investigation was carried out by SEBI to find out fraudulent practice, if any, in the trading of the above mentioned scrips and to look into the trading activity of the entities so as to ascertain any price manipulation in breach of provisions of the securities law. The investigation into the trading activity of certain entities in the scrip of Esteem Bio has revealed that eight connected entities of the trading group have contributed to the price rise of the scrip of Esteem Bio by their positive contribution to LTP and establishing NHP in the scrip by trading amongst themselves in a concerted manner. It was observed that 8.89% to total market positive LTP durin....

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...., its promoters/directors or to any company related to Esteem Bio. b) The trading account through which the alleged manipulative trades were done in the scrip was not opened by him but by some other person whom he does not know. Trades done in his name from this account were without his knowledge or consent. c) He is an investor and invests in securities market from his own savings and he is trading in securities market through his genuine trading accounts opened in the year 2010, 2013 & 2014. He is facing mental agony and harassment due to the restrictions imposed on him on buying, selling and dealing in any shares or commodities. 7. During the course of hearing, the authorized representative was advised to furnish certain documents by February 4, 2019, in support of his claim that the trading account, demat account and bank account were misused and that the Noticee had not authorized anyone to execute the alleged manipulative trades. He was also advised to furnish details of demat statement, bank statement and Income Tax Returns for the relevant period as it was claimed by him that he has been a regular investor in securities. However, till date, no doc....

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....on of manipulative, fraudulent and unfair trade practices "(1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:- (a) indulging in an act which creates false or misleading appearance of trading in the securities market; (e) any act or omission amounting to manipulation of the price of a security; 10. I would now proceed to examine as to whether or not, in the facts of this matter, the manner of trading in the shares of Esteem Bio by the Noticees can be considered as trades executed in normal course of trading or it contains elements which would amount to violation of the aforesaid provisions of PFUTP Regulations. 11. The SCN mentions that the eight Noticees were part of the 'trading group' entities, i.e. the entities whose trades have contributed to price rise in the scrip. Based on the findings of the investigation, it was alleged that there was connection/relation amongst them as th....

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.... written reply, i.e., Noticee no. 4, has not disputed the connections and transactions as alleged in the SCN. The Noticee has also not disputed his relation with counterparties to the trades. Similarly, other Noticees have also not raised any disputes with regard to their connections as pointed out in the SCN. I find it relevant to refer a judgment of the Hon'ble Securities Appellate Tribunal (SAT) dated December 08, 2006 in the case of Classic Credit Ltd. vs. SEBI (Appeal No. 68 of 2003), wherein Hon'ble SAT have observed that, "...the appellants did notfile any reply to the second show-cause. This being so, it has to be presumed that the charges alleged against them in the show cause notice were admitted by them". This finding was reiterated by Hon'ble SAT in a recent case decided on February 11, 2014 (Sanjay Kumar Tayal & Ors. vs. SEBI - Appeal No. 68 of 2013), where it was observed that, "... As rightly contended by Mr. Rustomjee, learned senior counsel for respondents, appellants have neitherfiled reply to show cause notices issued to them nor availed opportunity of personal hearing offered to them in the adjudication proceedings and, therefore, appellants are presumed to have....

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.... 14.50(1) 1.85 (1) 90.4 (11) NHP contribution of the Noticees by trading among themselves Buyer/Counterparty  Accurate Buildwell Pvt. Ltd. (NHP contribution in Rupees, Number of trades in bracket) Pawan Kumar Kaul (NHP contribution in Rupees, Number of trades in bracket) Ashvin Verma (NHP contribution in Rupees, Number of trades in bracket)  Vishal Yadav (NHP contribution in Rupees, Number of trades in bracket) Total (NHP contributi on in Rupees, Number of trades in bracket) Accurate Buildwell Pvt. Ltd. 0.05 (1) 8.95 (1)     9 (2) Century Buildmart Pvt. Ltd.   10.1 (1) 8.1 (1)   18.2 (2) Core Capital Services Limited       6.55 (1) 6.55 (1) Pawan Kumar Kaul 0.05 (1) - - - 5.5 (1) River High Right Share Brokers Pvt. Ltd. 10.1 (1)       10.1 (1) Vishal Yadav     7.85 (1)   7.85 (1) Total 15.15 (3) 19.05 (2) 15.95 (2) 6.55 (1) 56.70 (8) Details of trades in which Noticees were counter parties and NHP contribution Date Bover Name Seller....

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....sell order there was no other sell order available in the system. The buy order available in the system was at the price of Rs. 112.35, which was much lower than the sell order price. Within 4 seconds of placing the sell order, i.e. at 3:09:57 PM, Century Buildmart Pvt. Ltd. (Noticee No. 5), a connected entity, placed buy order at the same price and die same volume as the sell order of Noticee No. 2 and the trade for 1200 shares was executed at the price of Rs. 134.90, This trade created NHP difference of Rs. 10.10. Considering the absence of liquidity in. the scrip and negligible volume of trade and the timing of orders placed by the connected entities, I find that the trade was not executed in normal course of trading. The Noticee No. 5 by placing buy order to match the sell order of Noticee No. 2 contributed to price rise in the scrip and established NHP of Rs. 134.90 which was Rs. 10.10 more from the last high price in the scrip. 17. On January 17, 2014, Accurate Buildwell Pvt. Ltd. (Noticee No. 1) placed sell order tor 1200 shares at 10:18:35 AM at a price of Rs. 145.00 per share. Before this sell order, there was no other sell order in the system. The buy order avail....

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.... price was Rs. 5.00.1 note that the orders were placed in the evening by the Noticees and the orders matched within a time difference of 4 seconds. Considering the absence of liquidity in the scrip and the negligible volume of trade and the timing of orders placed by the connected entities, I find that the trade was not executed in normal course of trading. The Noticee No. 2 by placing buy order to match the sell order of Noticee No. 1 contributed to price rise in the scrip and established another NHP which was Rs. 5 more from the last high price in the scrip. 21. On January 27, 2014, Ashwin Verma (Noticee No. 4) placed a sell order tor 4800 shares at 3:24:23 PM at a price of Rs. l 93.1 per share. At the time of placing of the sell order by Notices No. 4, other sell orders were available m the system m the range of Rs. 184.00 to Rs. 185.00, while a buy order was available at the price of Rs.l75.00. The sell order placed by the Noticee No. 4 was at a price higher than the available sell order price. Within minutes of placing of the sell order by Noticee No. 4, a buy order was placed by Century Buiidmaxt Pvt. Ltd. (Noticee No. 5), a connected entity. The buy order was at the....

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....the price use in the scrip. Sure Portfolio Services Pvt. Ltd. (Noticee No. 8) has executed trades which contributed Rs. 1.85 to positive LTP and the trade has matched with River High Right Share Brokers Pvt. Ltd. (Notic.ee No. 7). Similarly, trades of other Noticees have also contributed to the price rise. 25. It is noted that the trades executed by and between the Noticees have been executed in a way to ensure matching of orders placed by one Noticee with other Noticees. The Noticees apparently have placed their orders in such a way that every time the order placed by one of them matches with the order of another counterparty Noticee, it leads to establishing a NHP and making positive contributions to LTP in the scrip of Esteem Bio. Their pattern of trading was unusual and did not contain the characteristics for being held to be executed by persons in normal course of trading in the market. 26. As can be observed from the above analysis, during the period of price rise only a few trades were taking place in the scrip of Esteem Bio on each day and the trades were mostly happening on account of matching and execution of orders placed by the Noticees. On most of the....

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....h trading pattern had resulted into an artificial rise in price and volume in the shares of Esteem Bio thereby creating a false and misleading impression about the trading in the scrip of Esteem Bio to the investors at large in the market. By continuously entering sell and buy orders deliberately to match each other's order and entering into trades in the scrip in a concerted manner the Noticees have collusively established higher prices of the scrip which was bound to have influenced the decision of the innocent investors to invest in die scrip. In this regard, the observations made by die Hon'ble SAT in its order dated March 21, 2014 in Saumil Bhavnagari Vs. SEBI are worth recalling, which are as under: "... but by purchasing shares at the higher price in LTP in most of the trades, the noticee bad given a wrong impression about the liquidity of the scrip in the market. It must not be forgotten that every trade establishes the price of the scrip and the Noticees trading at higher than LTP resulted in the price of the scrip going up and wm done with a view to set the price at a desired level and thereby influencing the innocent/gullible investors. By purchasing at a higher....

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....arket, in exercise of the powers conferred upon me under sections 11 (1), 1 IB, 11(4) read with section 19 of die SEBI Act, 1992 hereby restrain the Noticees from accessing the securities market and further prohibit them from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of four years. However, for the purpose of computation of the period of restrain and prohibition as directed above, the period of restraint already undergone by the Noticees in terms of the interim order dated June 29, 2015 shall be taken into account. It is also clarified that during the period of restraint, the existing holding, including units of mutual, funds, of the Noticees shall remain frozen. 32. The above, directions shall be effective from the date of this order. 33. A copy of this order, shall be served upon the Noticees, Stock Exchanges, Depositories and Registrar and Share Transfer Agents of all Mutual Funds for ensuring compliance with the above direction.    -Sd- Date: March 13, 2019           S. ....

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....stead were allegedly transferred to few of the entities who had funded the applicants of the IPO. Before conducting the investigation in the IPO of the Company, a common ex-parte ad interim order dated June 29, 2015 was issued inter alia against the Company and to three other companies who were seen to have followed a common modus operandi in deploying a fraudulent scheme with respect to their respective IPOs. 2. The brief facts related to the IPO and the scheme allegedly deployed by the Company and other Noticees, as noted from the SCN, are as under: i. The Company came out with an IPO by offering 45,00,000 equity shares (30.20% of the post issue size) of INR10 each at an issue price of INR 25, to raise INR11.25 Crore. The equity shares of the Company were listed on SME segment of BSE Ltd. ("BSE") on January 07, 2013. ii. The Company had disclosed in the Prospectus that the funds so raised in the IPO shall be utilized in the following manner: Table 1: Proposed Utilization Sr. no. Particulars Amount (INR in Lakh) 1 Setting up of Shade Net Cultivation facility 380.00 2 Development of Farm land for transition to Organic Farm....

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....000 45,18,000 470 1,74,000 vi. It was also noticed during the investigation that certain entities had provided funds to several IPO applicants to enable them to make application under the IPO of the Company. Such entities were further noticed to be connected with the Company itself, based on various factors like fund transactions, common directorship in companies, etc. For the sake of convenience of reference, the said entities are hereinafter referred to as "funding group entities". vii. The investigation further revealed that applications of 270 Retail Individual Investors (RIIs) were funded by the funding group entities, out of which 238 applicants were allotted 14,28,000 shares. Similarly, in HNI category also, 60,000 shares allotted to one HNI were funded by the funding group entity. Further, in the market maker category, the application for 7,50,000 shares were funded by the funding group entities. In total, out of 45,18,000 shares allotted under the IPO, 23,34,000 shares allotted to 240 applicants (238 RIIs,+ 1 Market maker+ 1 HNI),were funded by the funding group entities, which comes to 51.66% of the total shares allotted under the IPO. ....

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....ors. (9 allottees got allotment) * It had received INR 10.60 Lakh from Khan Enterprises (Proprietorship firm of Noticee no. 7) Yes Bank - 01368390 000 2266 * A One Furniture had issued 20 cheques of INR 1.50 Lakh each to the Company on behalf of 20 Non ASBA retail investors. (20 allottees got allotment) * It had received INR 16.50 Lakh from Magnum Industrial Corporation and INR 15 Lakh from Sumit Kumar. 4 Ram Prakash Proprietorship Firm * Khan Enterprise (Noticee no. 7) Tamilnad Mercantile Bank - 21115005 080 0272 * Khan Enterprise had issued 19 cheques of INR 1.50 Lakh each to the Company on behalf of 19 Non ASBA retail investors. (18 allottees got allotment) * It had received INR 22.40 Lakh from Shiv Traders & INR 5 Lakh from Garg Traders & Suppliers. * Shiv Traders (TMB - 211150050800237) had received INR 81.50 Lakh from ECO, INR 67 Lakh from the Company in October and December, 2012 5 Aavia Softech Pvt. Ltd. (Noticee no. 8) Axis Bank - :9120200 240 45250 * Aavia Softech Pvt Ltd had issued 10 cheques of INR 1.50 Lakh each to the Company on behalf of 10 Non ASBA retail investors. (9....

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....nic Pvt. Ltd., Goldline, Madhukar Dubey (Noticee no. 6). 12 Gracious Software Pvt Ltd. (Noticee no. 15) Axis Bank - 91202001 500 6932 * It had issued 42 cheques of INR 1.50 Lakh each to the Company on behalf of 42 non ASBA allottees. (42 allottees got allotment) * It had received INR 63 Lakh from Mayfair Infosolution Pvt Ltd. Further, it had fund movement with Goldline. x. A summary of the amounts funded by various funding group entities, no. of allottees who got allotment of shares due to such act of funding made on their behalf by the respective funding entities etc., are presented in the table herein below: Table 5 Sr. No. Funding Entity Amount funded (Rs. in lacs) No. of allottees got allotmen t Received back from IPO proceeds of Esteem (Rs. in lacs) No. of shares allotted 1 Goldline International Finvest Ltd. (Noticee no. 4) 277.50 39(2 ASBA) 484.60 10,32,000 2 Satendra Kumar & Proprietorship firm (Noticee no. 5) 58.50 38 - 2,28,000 3 Madhukar Dubey & Proprietorship firm (Noticee no. 6) 54.00 29 - 1,74,000 4 Ram Prakash & Proprietorship firm (Noticee no. 7) 2....

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....and 15,through affixation. It is noted that the Noticee nos. 1, 3, 4, 10and 15 had sought inspection of the documents which was granted to them. Later on, opportunity of personal hearing to the Noticees was granted on June 18, 2019 which was rescheduled to July 02, 2019. However, as inspection of documents was sought by few more Noticees, the personal hearing was again rescheduled to August 06, 2019. It is noted from the records that the hearing notice was served upon on various Noticees through substituted mode of service, viz., Newspaper publication, with the following details: Table 6 6. On the said date, i.e., August 06, 2019,only Noticee no. 13 appeared through authorize On the said date, i.e., August 06, 2019, only Noticee no. 13 appeared through authorized representative and he was heard, while adjournment requests were received from Noticee nos. 1, 3, 4,10and 15Accordingly, the Noticee no. 1, 3, 4 10and 15were provided with another opportunity of personal hearing on November 14, 2019. On the said date only, Noticee no. 3 appeared on his behalf as well as on behalf of the Company (Noticee no.1) also and inter alia informed that Noticee no. 2has expired. ....

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....have formed basis of making allegations. The case deserves reinvestigation for appreciation of correct facts, as has been done in certain other cases. viii. IPO proceeds were utilized towards the stated objects and land development agreements for an amount of INR 5.66 Crore have been executed by the Company. ix. Apart from the above, the Company had spent INR29.00Lakh (approx.) towards expenses of IPO. The details of the said amount spent are: INR2.66 (approx.) Lakh to BSE; INR2.88 Lakh to SAP Printer Solutions Pvt. Ltd.; INR20.00Lakh (approx.) to Guiness Corporate Advisor (Merchant Banker); INR1.23 Lakh to NSDL and CDSL; and INR1.24 Lakh (approx.) to Innovative Communication. Also, INR 58.00 Lakh has been paid to Cameo Corporate Services. x. The Company has also extended an amount of INR 4.40 Crore in short term loans to various entities. 8. Noticee no. 10 (Avisha Credit Capital Limited), vide its letter dated September 11, 2017, while denying the allegations, has submitted that it is a Non-Banking Financial Company (hereinafter referred to as 'Avisha') and in its normal course of business, it had provided funds to needy people, who in turn have....

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.... for 6000 shares for a small amount of INR1.50 Lakh, which cannot be said to have made under instructions of anyone else, particularly in the absence of any evidence. vi. Ms. Sunita had also applied under the IPO of another company viz., Eco Friendly Food Processing Park Ltd. ("ECO"). The said application in the IPO was rejected and the refund amount of INR1.50 Lakh was utilized towards application of IPO of Esteem Bio. vii. In ECO also, Noticee no. 3(Brij Kishore Sabharwal), is one of the Directors. As her application for shares of ECO was rejected, the same shows that Ms. Sunita does not have any connection (except professional) with the Noticee no. 3. viii. There is no direct connection with Noticee no. 4 (Goldline International Finvest Ltd.). It has taken loan of INR50.00 Lakh from Noticee no. 4, which was a RBI registered NBFC, during FY 2012-13. The said loan has been repaid during FY 2014-15 with interest of INR 5.81 Lakh (approx.). ix. There is no allegation of receipt of IPO proceeds by Ace Consultants. x. For an act to be termed as 'fraudulent', inducement or misrepresentation needs to be present, as held by Hon'ble Supreme Cou....

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....iate reply. 3. However, we are of the opinion that if any document is relied by the respondent while disposing of the matter such document should be made available to the appellant........" 12. Similar observations have also been made by Hon'ble SAT in the matter of Shruti Vora Vs. SEBI (Date of decision: February 12, 2020). In the said matter, the appellant therein had challenged the rejection of her request to inspect all the documents collected during the investigation. While rejecting the said challenge, Hon'ble SAT inter alia held : "...A bare reading of the provisions of the Act and the Rules as referred to above do not provide supply of documents upon which no reliance has been placed by the AO, nor even the principles of natural justice require supply of such documents which has not been relied upon by the AO." (emphasis supplied). Therefore, applying the ratio of the aforesaid orders in the present case, I observe that the demand of the Noticees to provide them with the copy of investigation report and other material collected during the investigation is devoid of merit and has to be rejected since in the extant case, all the documents that have been reli....

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....No person shall directly or indirectly- (a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made there under; (b) employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed to be listed on a recognised stock exchange; (c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder. SEBI (PFUTP) Regulations, 2003 Prohibition of certain dealings in securities Regulation 3. No person shall directly or indirectly- (a) buy, sell or otherwise deal in securities in a fraudulent manner; (b) use or employ, in connection with issue, purchase or sale of any se....

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.... Food Processing Ltd. ("ECO"), which was in turn transferred by ECO to Goldline. * Goldline had fund movement with Mayfair Infosolution Pvt. Ltd., Guiness Securities Ltd. and Sanjeev Agarwal. * Goldline had also fund movement with the entities who had funded to IPO allottees viz. AMS Powertronic Pvt. Ltd, Bright Securities, Columbia Sales. 2 Satendra Kumar * Nisha Traders had received funds from Magnum Industrial and Bright Sr.no. Particulars Connection - Fund Movement   Proprietors hip Firm Bright Securities * A R Enterprise * Nisha Traders (Noticee no. 5) Securities * Bright Securities had fund movement with Nisha Traders, Magnum Industrial, N V Sales Corporation, A One Furniture, Goldline and AMS Powertronic Pvt. Ltd. * Address: Plot No. 3, Gali No. 3, East Guru Angad Nagar, Laxmi Nagar, Delhi - 110092. * Proprietorship firm of Sumit Kumar, Madhukar Dubey and Satendra Kumar were having common address. 3 Madhukar Dubey Proprietors hip Firm * Alliance Traders * N V Sales Corporation * A One Furniture * Magnum Industrial (Noticee no. 6) * N V Sale....

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.... Vinay Kumar * Nikky Printing Press Pvt. Ltd. is connected with ayfair Infosolution Pvt. Ltd, AMS Powertronic Pvt. Ltd., through common Directors. 9 Neel Kanth Trading Co. (Noticee no. 12) * It had fund movement with AMS Powertronic Pvt. Ltd. 10 Ace Consultant (Noticee no. 13) * It had fund movement with the ISF Securities Ltd and Goldline. * Common Address with ISF Securities Ltd. * Till March 2014, Brij Kishore Sabharwal (Director of Eco & Esteem Bio) was the director in ISF Securities Ltd. 11 Amsons Apparels Pvt. Ltd. (Noticee no. 14) * It had fund movement with AMS Powertronic Pvt. Ltd., Goldline, Madhukar Dubey and Mayfair Infosolution Pvt. Ltd. 12 Gracious Software Pvt. Ltd. (Noticee no. 15) * It had fund movement with Goldline and Mayfair Infosolution Pvt. Ltd. 13 Aavia Buildtech Pvt. Ltd. * It had received IPO proceeds of INR 40.00 Lakh from the Company. * Aavia Buildtech Pvt. Ltd. and Aavia Softech Pvt. Ltd., were having common address: 1/2486, Gali No. 26, Ramnagar, Modern Shahdra, East Delhi 110032. * Aavia Buildtech Pvt. Ltd. and Aavia Softech Pvt. Ltd. have common Directors: 1) Sr. no. Particulars ....

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....who have responded to the allegations made in the SCN, are also found to have made only various bald assertions and their denial of having any connection with the Company or with other entities has not been backed by any credible supportive evidences, so as to inspire confidence in any of their explanations to counter the allegations of connections made against them in the SCN. 19. On a careful perusal of the replies filed by the Noticees, it is observed that the Noticee no. 1has simply tried to shrug off the allegations of connections with other entities by claiming that the fund transactions alleged in the SCN, took place out of commercial dealings, however, no verifiable documents such as balance sheets, invoices, TDS certificate, agreement/contract etc., have been produced before me to support such a tall claim of having transferred huge sums of money, viz :INR 239.60 Lakh from the IPO proceeds directly and INR 245 Lakhs indirectly (through ECO), to the Noticee no. 4 as a matter of so called commercial transactions. Similarly, Noticee no. 10, which has claimed to be an NBFC as also made a bald and superfluous statement stating that it had provided funds to needy people....

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....as not denied its connection with the Noticee no. 3.It has been explained that the said Ms. Sunita Khemka (prop. of Noticee no. 13) along with her family members owned majority shareholding of ISF and further she was one of the Designated Director of ISF. It has further been stated that Noticee no. 3remained as a Director of ISF for some time after the family members of the Ms. Sunita Khemka acquired the said company. It has however been contended that there was no personal or collusive nexus with the Noticee no. 3 (Mr. Brij Kishore Sabharwal),who eventually left the Board of ISF. In so far as the transactions with Goldline (Noticee no. 4) is concerned, the Noticee no. 13has vehemently argued that it had received an amount of INR 50.00 Lakh from Noticee no. 4 (Goldline International)and the said amount was repaid to it along with interest @ 9%. In support of her contentions, the Noticee no. 13has submitted copy of bank account statement showing the relevant transaction entries, copy of Income Tax Returns and balance sheetsetc. A perusal of the said documents reflectsthat the Noticee no. 13had received INR 25 Lakh each on January 15 and 17, 2013 from the Noticee no. 4and has also tr....

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....of a firm is inseparable cannot be taken away from the proprietor of such firm, who in the present case also happened to be a Director and shareholder in ISF, hence the connection between Noticee no.13 (a proprietorship firm of Ms. Sunita Khemka) and Noticee no. 3(Mr. Brij Kishore Sabharwal) is inevitably clear and settled. It has been contended before me that in the initial transition days of acquisition of ISF by Ms. Sunita Khemka and her family, it was thought proper to let Noticee no. 3continue for a while as a Director of ISF to retain retail clients of the said company and the Noticee no. 3eventually ceased to be Director of ISF w.e.f March 21, 2014. I find such an explanation is completely baseless offering no justification of continuation of Noticee no.3 as a Director of a company acquired by the proprietor of Noticee no.13 since the services of Noticee no. 3 could have been availed in any other form also to retain retail clients, instead of allowing him to continue as a Director of the Company. Irrespective of the aforesaid, in my view a close connection between Noticee no.3and Noticee no.13, is now established beyond doubt. 24. The details of connections amongst ....

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....o the Company by way of cheque on behalf of IPO applicants, out of the funds so received from the Noticee no. 4. 28. I note that neither the ultimate recipient of the funds, i.e., the Company, nor the transferor of the funds, i.e., the funding group entities on behalf of various IPO applicants, have furnished any justification for such fund movements in their accounts on behalf of the applications filed by large number of third party unrelated applicants. It is pertinent to mention here that the Company has allotted shares to those applicants whose applications were supported by cheques issued by various third- party funding group entities (and not by the applicants themselves) which was grossly against the norms governing the issue of shares under IPO. 29. Having found that the Noticees have prima facie enjoyed inter se connections amongst themselves as alleged in the SCN, I note that the other connected leg of the allegation pertaining to the funding of IPO applicants by the funding group entities and their direct and indirect funds movements with the Company indicating that the Company, out of the IPO proceeds so received by it in the IPO, has transferred huge ....

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....tors) to the tune of INR 4.5 Lakh for their IPO applications, it has made a shallow statement that it has provided funds to some needy persons, in pursuance of its business activity of non-banking financial company. It has further been argued by them that the recipient of the funds had their discretion to utilize such funds (over which it had no control). However, as I have observed before, the Noticee no.10 has neither furnished any particulars of such advances having been made to such needy people who applied for shares of the Company under its IPO nor has provided any documentary evidence so as to substantiate its claim of having transacted with those people in course of its activities as a NBFC. 32. Insofar as the Noticee no. 13 (Ace Consultant) is concerned, I note that it faces the allegation of having funded one ASBA applicant, who was eventually allotted shares under the IPO of the Company. In this regard, the Noticee no. 13 has argued that the allegations do not have merit as it was the proprietor of the Noticee no. 13 itself, viz., Ms. Sunita Khemka, whose application has been alleged to have been funded by the Noticee no. 13 (her proprietorship firm). I further ....

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....p firm of Ms. Sunita Khemka, have been duly captured, which in the absence of any other contradictory evidence, have to be accepted. Therefore, as the allegations against Noticee no. 13 are limited to funding the IPO application of its own proprietor, the said charges are not maintainable in view of the factual support and legal framework, as discussed above. 35. Adverting to the allegation against the Company and the other Noticees, it is noted in the SCN that the Company has with the help of its connected entities, funded large number of IPO applications and has effected subsequent allotments of shares to those investors. As can be seen from the narrative of the SCN, out of 450 retail applicants, applications of as many as 270 applicants were funded by the funding group entities and out of the said applications, a total number of 238 applicants got allotment of 14,28,000 shares from the Company under its IPO. Another set of 96000 shares were also funded indirectly. Further, the market maker category also was fully funded since one market maker, who was allotted 7,50,000 shares was also funded by Noticee no. 4 (Goldline) and similarly, in the HNI category, out of total 11....

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.... in support of the said contention. 38. At this stage, I observe that there was no need for the Company to even refer to the underwriting agreement, had the Company and/or the other Noticees were able to show an iota of bonafide in their transactions thereby successfully controverting the allegations of funding the IPO applicants who were allotted shares by the Company. The details of funding made by the funding group entities need no further discussion in this order, as the same have already been elaborated earlier and have been found to be uncontested by any of the submissions of the Noticees. 39. Without prejudice to the above, in order to deal with the argument pertaining to the Underwriting Agreement, its relevant clauses are reproduced hereunder: "2. Underwriting On the basis of representations and warranties contained in this Agreement and subject to its terms and conditions, the Underwriter hereby agrees to underwrite and/or procure subscription for the Equity Shares in the manner and on the terms and conditions contained in Section 5 of this Agreement. ...... 5. Issue Notwithstanding anything contained elsewher....

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....esumption that there was no necessity on the part of the Company to conceive any plan or scheme to arrange funding for its IPO applicants as alleged in the SCN, so as to absolve it from the charges of arranging funds with the connivance of connected funded group entities. Even after considering that the aforesaid clauses of the Underwriting Agreement did provide some comfort to the Company in the matter of subscribing against the defaults in making payment by some of the applicants, the unassailable facts remain that the Company and its connected entities were indeed involved in providing funding to as much as 51.66% of the total shares allotted and in the absence of such efforts made by the Company and its connected entities in an organized manner, the IPO of the Company was bound to fail. 41. In view of the aforesaid discussions, I observe that on a holistic assessment of the financial transactions that have taken place between the Company and various funding group entities as highlighted above, that have neither been disputed nor could be substantiated with any tangible justifiable reasons by the Noticees and additionally looking at the non-response of large number of N....

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..... In the aforesaid context, it goes without saying that the Company was under obligation to counter the charges made in the SCN with cogent reasons and supporting documents so as to substantiate the trail of funds out of the IPO proceeds, justifying the utilisation of IPO proceeds on the lines as stated under the object clause of the Prospectus. However, the Company has not been able to provide a complete picture of the utilisation of the entire amount of IPO proceeds in any of its replies. 45. It is observed that, the Company had, during the investigation, filed certain details of utilisations such as: (i) INR 3.75 Crore towards setting up of shade Net cultivation facility; (ii) INR 5.64 Crore towards development of farm land; (iii) INR 29 Lakh towards purchase of tools etc; (iv) INR 30 Lakh towards Brand building; (v) INR 31.28 Lakh towards Issue expenses; (vi) and INR 99.67 Lakh claimed to have been invested in short term loans On the other hand contrary to the aforesaid claims made during the investigation., as noted in the SCN, the Company was found to have actually transferred almost the entire proceeds so raised in the IPO to different entities soon after the comple....

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....the letter head of the Company and not even on a stamp paper. Strangely enough, the Company had decided to part with such an amount constituting more than 50% of the money raised from the public through certain agreements recorded on a plain and unstamped and un-notarized piece of paper which renders their documents ab initio unenforceable in law. It is also seen that the contents of all the four agreements are identically worded. The Company did not pay heed to get these agreements registered/notarized, so as to safeguards its interest in case of any future dispute/default from the counter party. Again, from those agreements, it is not clear as to who is the executant on behalf of the second parties, viz., Raj Marketing, S P Enterprises etc. There is also no witness to those agreements meaning thereby, these agreements do not possess any qualities to be called as valid and lawfully enforceable documents. 48. Another factual contradiction/discrepancy noticed in the submissions of the Noticee Company, is the dates mentioned in those unenforceable agreements. For illustration, the agreement with Raj Marketing India Limited, proprietorship firm based in Ghaziabad is meant for....

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....9 months before the IPO, has been executed for Land development (total consideration of INR 1,84,18000 for 97.34 Acres/393920 Sq. Meters) at the rate of INR 46.75 per Sq. Meter. Thus, in a short span of time, the price for land development has been shown to have increased multi fold in the IPO documents. 51. Further, as can be easily deciphered from the dates of fund transfers mentioned in the table above, except for few transactions amounting to INR 2.40 Crore, all the remaining fund transactions were executed by the Company in the pre-IPO period. For illustration, the Company has projected to have paid INR 2.16 Crore to Shiv Traders out of the IPO proceeds for land development, however, out of the said amount, all the transactions (mentioned in serial no. 4 of the table), except for one transaction of INR 60 Lakh, were executed during October, 2012. Thus, the Company has clearly attempted to claim its pre-IPO transactions with those entities for its explanations for utilization of proceeds of IPO which creates an incongruous and contradictory situation that can hardly justify the utilization of IPO proceeds. 52. After noting the above said factual contradictions....

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.... to organic farming, aggregating to almost half of the IPO proceeds, by producing unverifiable documents like unregistered/un- notarized self-generated agreements recorded on its letter heads, self-generated invoices etc. which have no legal sanctity nor are they enforceable in a court of law. Moreover, the Company has not been able to furnish any statutory documents like approved development plan, payment of land revenue/property tax, audited balance sheets showing the aforesaid transactions pertaining to land development, evidence of deduction of TDS from payment made to the counter parties/contractors etc., in support of its claim that those transfers of large sums of amounts were indeed meant for the land development of farm land for transition to organic farming. The Company has not been able to show any corresponding revenue earned out of such agreements and payments made to various parties or any latest status report with respect to the development of the said land even after 7 years of executing those so called agreements. Moreover, the Company has not even identified the respective portions of land, the development of which was entrusted to those 4 entities under those fab....

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....r short of being termed as a short term loan transaction from any perspective. There is no second view that a company which raises funds from the public by offering its securities, is obligated to disclose the true objects of such issuance and also to adhere to the said stated objects. In the present case, the Company had not disclosed in the objects of IPO any intention to extend short term loans to any entity however, in deviation from the stated objects it has gone ahead in advancing short-term loans of such large amounts to those four entities. The information submitted by the Company during investigation had only stated about Investment in short term advances for an amount of INR 99.67 Lakh, which is not the same as advancing short term loans and admittedly the amount of such loans is INR 4.40 Crore which is far higher than the amount of INR 99.67 Lakh, as noted above. Thus, the transfer of IPO proceeds amounting to INR 4.40 Crore towards short term loans is certainly an act done by the Company outside the declared objects of IPO behind the back of the public shareholders. Further, the Company has also not bothered to provide any details on the recovery status of those so call....

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....the public shareholders in the IPO documents. Therefore, in this context it becomes crucial to discuss in detail the fund transfers made by the Company to various funding group entities, which would again contradict and demolish the claim of the Company about utilization of IPO proceeds as per the stated objects. 60. As discussed in the previous paragraphs, the Company in its written replies has stated that an amount of INR 5.60 Crore has been utilised towards land development agreements, apart from advancing short term loans of INR 4.40 Crore. Thus, as per the Company's replies the total amount of IPO proceeds utilised towards the land development agreements and short term loans aggregates to INR 10 Crore. However, it is seen from the records that the Company has not provided any details with respect to the transfer of INR 4.84 Crore made to the Noticee no. 4 (Goldline) and also with respect to various other amounts which were transferred immediately after receiving in the IPO proceeds. Even if the aforesaid submissions of the Company are taken on their face value, the amounts of funds transfers as per the claim of the Company in the submissions at the stage of investigat....

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....IPO proceeds and within a short span of 11 days after the IPO exercise was over, the Company had transferred approximately INR 11.00 Crore to various entities, details of which have been enumerated in the pictorial representation under para 2 (viii) of this order. Thus, the gross inability of the Company to furnish any supporting details to substantiate the transfer of funds to various entities coupled with the evasive & misleading explanations offered by it from time to time as pointed out in previous paragraphs speak volumes of the unscrupulous misconduct of the Company and does not inspire confidence in any of the submissions made by the Company. 62. In terms of the charges made in the SCN, the Company had transferred INR 4.84 Crore to the Noticee no.4 (Goldline); INR 81 Lakh to Noticee no. 9 (Mayfair Infosolutions); and INR 15.50 Lakh to the Noticee no. 10 (Avisha Credit Capital), all of whom are called the funding group entities, out of the proceeds of the IPO. Thus, in total the Company had transferred INR 5.80 Crore to the aforesaid 3 funding group entities, all of which were found to be involved in providing funds to a large number of retail IPO applicants so as to....

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....th other funding Noticees. 65. I observe that the Company while requesting for a reinvestigation of the matter has contended that during the investigation by SEBI, only a selected financial dealings have been picked up as it was constrained to furnish all the financial transactions to the investigating officer for some reasons. The Company has further claimed that, if it was provided with sufficient opportunity to furnish explanation about utilizations of the IPO proceeds during the investigation, the outcome of the investigation would have been different. In this regard, I note that the issues involved in the present proceedings pertain to the year 2013 and the Company is now requesting for a reinvestigation primarily on the ground that during the investigation, for some constraining circumstances, they were not able to provide complete information and in the absence of the same, the investigating authority has picked up some selected transactions and entries, while proposing initiation of the present proceedings. I have considered the request of the Noticee Company and observe that the Company has neither explained as to what were the constraining factors that prevented ....

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....fense, neither the Company nor any other Noticees could come up with any tangible material or verifiable evidence (which they were deprived of furnishing during the investigation) to justify the huge sums of fund transfers made out of IPO proceeds in flagrant violation of the stated objects of the IPO as per the prospectus. 67. To sum up the present matter, it is found that the Company, working under a pre- conceived scheme to pursue a common objective with other Noticees, first ensured that financial support is provided to the IPO applications of as many as 240 investors who were ultimately allotted 23,34,000 shares from the IPO of the Company. As seen and discussed earlier in this order, immediately after the successful completion of the IPO which garnered support of 51.66% of the applications with the collusion and support of the funding group entities, the Company has transferred INR 5.80 Crore (approx.) that constituted around 51% of the total IPO proceeds, to various funding group entities. All the Noticees, while playing their respective roles in the scheme, have ensured that the IPO sails through and crosses the mandatory statutory threshold of achieving 90% of the....

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....Company successfully listed on the SME segment of BSE. Finally, the funds so raised in the IPO were also fraudulently diverted by transferring them to numerous entities including certain funding group entities who had funded the IPO applications of large number of applicants, in a glaring display of breach of trust of the genuine public shareholders who never came to know that the funds raised by the Company from them have actually been utilized for purposes other than the objects/purposes declared by the Company in its IPO documents. Thus, I am satisfied that the SCN has been successfully brought home the charges against the Noticee no. 1 and the funding group entities, viz: Noticee nos. 4 to 12, 14 and 15, who with their active connivance with Noticee no.1 at their respective ends, have contributed their part in fructifying the said scheme. In view thereof, I am convinced beyond doubt to hold that the Noticee nos. 1, 4 to 12, 14 and 15 have violated Section 12 A(a), (b) and (c) of SEBI Act, 1992 read with Regulations 3(a), (b), (c), (d) and 4(1) of PFUTP Regulations, 2003. 69. Insofar as degree of proof to establish the charges is concerned, I note that for proceedings l....

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....during the relevant period of time. 73. I note that various judicial pronouncements have deliberated on the role and liabilities of directors for the violations committed by the Company. One such case has been decided by the Hon'ble Supreme Court in the matter of N. Narayanan Vs. Adjudicating Officer, SEBI (2013) 12 SCC 152, wherein it was observed that: "33. Company though a legal entity cannot act by itself, it can act only through its Directors. They are expected to exercise their power on behalf of the company with utmost care, skill and diligence. This Court while describing what is the duty of a Director of a company held in Official Liquidator v. P.A. Tendolkar (1973) 1 SCC 602 that a Director may be shown to be placed and to have been so closely and so long associated personally with the management of the company that he will be deemed to be not merely cognizant of but liable for fraud in the conduct of business of the company even though no specific act of dishonesty is provide against him personally. He cannot shut his eyes to what must be obvious to everyone who examines the affairs of the company even superficially." 74. In my view the facts and circum....

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....e IPO, it is essential that the shareholders of the Company are given an opportunity to exit from the Company, by its Promoters. Directions: 77. In view of the foregoing, I, in exercise of the powers conferred upon me under Section 11(1), 11(4), and 11 B read with Section 19 of the Securities and Exchange Board of India Act, 1992, pass the following directions: i. Noticee no. 3 (promoter of the Company) is directed to make a public offer through a merchant banker to acquire shares of the Company from public shareholders by paying them the value determined by the valuer in the manner prescribed in Regulation 23 of the SEBI (Delisting of Equity Shares) Regulations, 2009 and acquire the shares offered in response to the public offer, within three months from the date of this Order. ii. BSE is directed to facilitate valuation of shares to be purchased as directed at (i) above, and compulsorily delist the Company, if the public shareholding reduces below the minimum level in view of aforesaid purchase. iii. The Noticee no. 1 is hereby restrained from accessing the securities market by issuing prospectus, offer document or advertisement soliciting mone....

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....units of mutual funds shall remain under freeze. viii. The proceedings against Noticee no. 2 are abated and against Noticee no. 13 are dropped without any directions. 78. The Order shall come into force with the immediate effect. 79. A copy of this order shall be forwarded to the Noticees, all the recognized stock exchange, depositories and registrar and transfer agents for ensuring compliance with the above directions.    -Sd- Date: December 22, 2020 S. K. MOHANTY Place: Mumbai WHOLE TIME MEMBER 53. Further, we also find that Capital markets regulator SEBI imposed a total penalty of Rs. 40 lakh on five entities and three individuals for indulging in fraudulent trading activities in the scrip of Esteem Bio Organic Food Processing Ltd. An amount of Rs. 5 lakh each has been imposed on them. The entities and individuals are collectively referred to as noticees. An investigation was conducted by the regulator in the shares of Esteem Bio Organic Food Processing during the February 7, 2013 and July 31, 2015 period. It was found that a set of connected entities were pushing up the price of the scrip through unusual trades in such a....

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....his device of stock transactions of unworthy stocks with no profits continues to plague the legitimate economy of our country. As seen from the facts narrated above, the transactions herein clearly do not inspire confidence as being genuine and are shrouded in mystery, as to why the so-called transactions lead to exorbitant returns which are made tax free. 59. The Hon'ble Calcutta High Court in the case of CIT Vs Korlav Trading Company Ltd. 232 ITR 280 and CIT Vs Precision finance P. Ltd. 208 ITR 495 had observed and held that mere filing of confirmation and transaction through the banking channel is not enough to prove the genuineness. 60. The Hon'ble High Court in the case of CIT Vs. Maithan International 375 ITR 123 (Cal) has held that "Assessing Officer could not accept genuineness merely on the basis of bank statement. 61. Further, the Hon'ble Delhi High Court in the case of CIT Vs. Vikram Singh 85 Taxmann 104 observed that even if the transaction is made through cheque it cannot be presumed to be genuine. These observations are more so valid when weighed against the plethora of evidences and incongruence brought out by the revenue to prove the not so genuine of these....

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....ns have proved beyond doubt. Keeping in view the judgments of Hon'ble Delhi High Court in the case of CIT Vs. Vikram Singh 85 Taxmann 104, CIT Vs. Maithan International 375 ITR 123 (Cal) (supra), Hon'ble Delhi High Court in the case of PCIT-7 Vs. Bikram Singh in ITA No. 55/2017 order dated 25.08.2017 (supra), Hon'ble Calcutta High Court in the case of CIT Vs Korlav Trading Company Ltd. 232 ITR 280 and CIT Vs Precision finance P. Ltd. 208 ITR 495 (supra), in the instant case where they have been multiple evidences collected by the revenue, the claim of the assessee that she is a passive beneficiary of the entire operation without her involvement or role cannot be accepted. At this juncture, it is worthwhile to mention, the Hon'ble Apex Court judgment dated 08.02.2018 in the case of SEBI Vs Rakhi Trading Pvt. Ltd. wherein it was observed that based on the huge price variation of the transactions it will be too naïve to hold that the transactions are through screen based trading and hence anonymous. The Hon'ble Court held that such conclusion would be overlooking the prior meeting of minds involving synchronization of buy and sale orders and not negotiated deals. The Hon'ble Apex....

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....et 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 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 r....

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....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." 66. First of all, the Hon'ble High Court did not find any perversity on the finding of fact arrived by the Tribunal based on evidences placed on record and deficient enquiry of the AO. Secondly, there was no independent source of fact to corroborate the finding of the AO which was purely based on uncorroborated enquiry by the ....

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.... 10. In the backdrop of the facts of the case, the following judgments have also relied upon: a. Raymond Woollen Mills Ltd. Vs. ITO 236 ITR 34 (SC) b. ACIT Vs. Rajesh Jhaveri Brokers Pvt. 291 ITR 500 (SC) c. ITO Vs. Selected Dalurband Coal Co. Pvt. Ltd. 217 ITR 597 (SC) d. Anant Kumar Saharia Vs. CIT 232 ITR 533 (Gauhati) e. Phool Chand Bajrang Lal Vs. ITO 203 ITR 456 (SC) 11. The price of shares has been risen from Rs. 26.50 to Rs. 392.00 (average) any span of 13 months. 12. The company had no profit/ meager profit to demand such price. 13. The assessee is not a regular trader investing in the stock market transactions. 14. In the entire period of 5 years, there was only highest spurt for the smallest period wherein the sale took place in the entire period between 2010 to 2015 as depicted in the graph above showing typical bell shape. 15. The shares were purchased of market from private party. 16. No iota of due diligence viz. the advisor, the analysis of fundamentals, the profits, the assets undertaken by the assessee. 17. The order of the SEBI dated13.03.2019 and ....