TaxTMI 
TaxTMI 
2022 (2) TMI 1376
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.... Kanpur has erred in law and on facts without appreciating the facts that the issue involved pertains to organized scam/tax evasion activity and unique modus operandi of this embezzlement for which CBDT's Circular No.23 of 2019 dated 06.09.2019 and subsequent O.M. dated 16.09.2019 mandate that the appeals may be filed on merits in case of the assessee claiming bogus LTCG/STCL through Penny Stocks. 3. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, unjust and bad in law be vacated and the order dated 30.12.2016 passed u/s 143(3) of I.T. Act of the Assessing Officer be resorted." 3. The ld. DR at the outset invited my attention to the petition for condonation of delay, which happened to be for 376 days. Explaining the reasons for delay in filing the appeal, the ld. DR submitted that earlier the Pr. Commissioner of Income Tax had not recommended the proposal for filing appeal before ITAT on the ground that the tax effect involved in this case was below monetary limit prescribed by CBDT vide Circular No. 70/2019 dated 8.8.2019. However, later on CBDT vide Circular No. 23/2019 dated 6.9.2019 and dated 16.09.2019 had decided that Departmental ....
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....ppeal and preliminary objections raised by ld A.R. was also rejected and ld D.R. was asked to proceed with his arguments. 7. The ld. DR submitted that the assessee has declared long term capital gain on the sale of little known penny stocks, the prices of which were manipulated with the help of certain operators and stock brokers and therefore, the assessee had introduced his own money in the form of arranged long term capital gains. It was submitted that such organized tax evasion racket has been unearthed by the Department and therefore, the Assessing Officer had rightly disallowed the same and had made the additions u/s 69A of the Act which the ld. CIT(A) has deleted by ignoring the phenomenon of arrangement of dubious transactions. It was submitted that before Assessing Officer the assessee stated that he had not undertaken any trading activity in shares and in this respect invited my attention to page 32 of assessment order. The ld. AR on the other hand submitted that the ld. CIT(A) has deleted the additions made by the Assessing Officer by holding that the Assessing Officer has not carried out necessary verifications and has not examined the stock brokers through whom the ....
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....hat the stock brokers and the persons from whom the assessee had purchased and sold shares has not been examined by the Assessing Officer and Assessing Officer had made the additions on the basis of general statement of certain persons. While allowing the relief, ld. CIT(A) has held that the Assessing Officer has ignored the various documentary evidences which were in favour of the assessee. The ld. CIT(A) has recorded similar findings in the above cases. For the sake of completeness the findings of ld. CIT(A) in ITA No. 204/Lkw/2020 are reproduced below: "Decision: I have gone through the facts of the case, relevant part relied upon by the AO, of the report of the investigation wing and submissions of the appellant. "Facts in this case are not disputed. The assessee is an individual and during the financial year 2013-14 relevant to AY 2014-15, earned Income from trading in shares, share consultancy and earnings from interest. During the year, the assessee has shown exempted Long Term Capital Gain amounting to Rs. 4,81,223/- on sale of shares of Neil Industries Ltd.. The assessee purchased 2000 shares of M/s Octagon Commodity Pvt. Ltd. through offline tra....
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....eating the exempt capital gain income as unexplained income under the head income from undisclosed sources without invoking any specific section of income tax act, 1961, primarily on the basis of report received from investigation wing and for the reason that the appellant name was appearing in ITD system of Penny Stocks. A perusal of the chapter 3 of the 153 page report of Investigation wing shows that the investigation officers in a massive exercise searched or surveyed some 32 Share Broking Entities and more than 20 Entry operators. After conducting detailed investigations of such high magnitude, they unearthed and identified some 84 odd companies, which are listed on various national stock exchanges that were being misused for providing bogus accommodation entry of Long Term Capital Gain/ Short Term Capital Loss. SEBI has directed stock exchange to suspend trading in more than 26 Scripts listed in BSE. Promoters and key entry operators of such stocks were identified and their statements were recorded. All these evidences collected were given to all the AOs for taking further necessary action as per law. On perusal of the facts mentioned in the assessment order it is an....
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....under the EPS facility in a tab labeled "Penny Stocks". Hence it is clear that the assessment order was passed without establishing anything against the appellant by any investigative agency or by AO. The assessment is made purely only on basis of presumptions, which is bad in law. It is seen from the report that investigation wing gathered substantial information against each and every stock broker and every such company whose scrip was used and who was involved in the Penny Stock Scam in any manner, recorded their statements and specified all the evidence gathered during their investigation in their report being relied upon by AO, which is completely missing in the case of M/s Sajendra Mookim or Kolkata Stock Exchange or of M/s Neil Industries Ltd. or the appellant. It will be another case if this broker and transactions done by them were found to be bogus and appellant being one of the beneficiaries was named by the promoters of the scrip, Here just because 'the appellant has traded in a scrip that was being used by few brokers for illegal purposes, won't make transactions undertaken by appellant as bogus, making it liable for any addition, in absence of anythin....
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....t evolve the matter further to prove as to how these sections are applicable on facts of this case to tax this amount as income from the undisclosed sources of the assessee. No addition can be made in assessment without invoking any particular charging section of the IT Act. Hon'ble Allahabad High Court in the case of CIT vs. Udit Narain Agarwal vide judgment and order dated 12.12.2012 in ITA 560 of 2009 wherein their lordships after enumerating various material and information as had been placed on record by the assesses with regard to one such penny stock transaction, has further observed and held as under: "Briefly stated the facts giving rise to the present appeal are as follows;- 'The appeal relates to the Assessment Year 2004-05. The assessee-opposite party is an 'individual'. He filed return of income on 31.3.2005 declaring Income of Rs. 34,97,761/-. The case was selected for scrutiny and the income from long term capital gain amounting to Rs. 17,54,237/- on sale of 19000 shares of Focus Industrial Resources through broker M/s. MKM Finsec, Delhi was investigated. It transpired that the shares were purchased on 8.7.2002 for Rs.1,90,0....
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....ails as per records of ROC was filed. ii) The payment of the share application money was made through Account payee Demand Draft prepared from appellant's bank account. iii) The shares allotted were transferred to Demat A/c No.DEL/CL4/16179378 with Stock Holding Corporation of India Ltd. Having DP ID No.IN301127. iv) The shares of the company listed with Delhi Stock Exchange, v) The shares of Focus Industrial Resources Ltd. Were sold through share broker MKM Finsec Pvt, Ltd., 301 Dhaka Chamber 2058/39 Naiwal, Karol Bagh, New Delhi-11005. vi) The details of sale are on record. The details of number of shares and their sale rate are on record. vii) The shares of the company were sold through delivery instruction of the depository account with Stock Holding Corporation of India Ltd. And were transferred to Abhipra Capita Ltd. In this case even the name of buyer and his ID No. in which the shares of the appellant were transferred were also filed. Thus the objection of the AO that the detail of purchase and sale of shares is not made available is not correct. viii) The sale consideration of these shares was received thro....
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....hares represent appellant's undisclosed income. Hon'ble Apex Court in the case of Kishan Chand Che/la Ram Vs CIT reported in 125 ITR 713 has held "that the burden is on the Department to prove that the money belongs to the assessee by bringing proper evidence on record and the assessee could not be excepted to call the concerned person in evidence to help the Department to discharge the burden that lay upon it". Similar view has been expressed by the Hon'ble Allahabad High Court in the case of CIT vs. Daya Chand Jain Vaidya 98 ITR 280. xii) The AR's of the appellant has a/so strongly emphasized on the peculiar fact that after the allotment of shares, the same were transferred to Demat A/c, remained in Demat account during the period of holding and transferred to the Demat account of the buyer, itself proves the genuineness of the purchase/sale transaction of shares having regard to the relevant provisions contained in the Depository Act The transaction made through Demat account is in itself an evidence to prove the genuineness of share transaction. Merely because the sale of shares fetched a handsome price, which price is supported by official quotation is....
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....d by demand draft. Therefore, the transaction in question cannot be said to be fake and is a genuine transaction. The Tribunal has not committee any error in upholding the order of CIT(Appeals) on this point, "The appeal fails and is dismissed. Order Date :- 12.12.2012" Hon'ble Supreme Court in the case of Krishnanand Agnihotri vs. The State of Madhya Pradesh [1977] 1 SCC 816 (SC) held that the burden of showing that a particular transaction is benami and the appellant owner is not the real owner always rests on the person asserting it to be so and the burden has to be strictly discharged by adducing evidence of a definite character which would directly prove the fact of benami or establish circumstances unerringly and reasonably raising inference of that fact. The Hon'ble Apex Court further held that it is not enough to show circumstances, which might create suspicion because the court cannot decide on the basis of suspicion. It has to act on legal grounds established by evidence. The assessee produced all evidences to explain the source of the amounts received by the assessee from the brokers. The AO was not justified in assessing the sale proce....
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.... was long term capital gain arising on the sale of 11,000 shares of a company M/s Welcome Coir Industries Ltd. The Assessing Officer had disbelieved the long-term capital gain and made a corresponding addition of Rs. 11,77,000/- under Section 68 of the Act. Upon appeal the assessee adduced evidence in the shape of contract notes/bills receipt; payments made through banking channel; contract notes and; copies of passbook of its Demat account in support of it thus asserted its claim of long term capital gain as genuine and correct. Qua the payment made by the assesses for purchase of shares, it was not disputed by the department that the same was made through banking channel. It is also an undisputed fact that 11,000 shares were sold in the previous year relevant to the Assessment Year 2005-06 which were of the company M/s Welcome Coir Industries Ltd. Entire sale proceeds were also received through banking channel. The CIT (Appeals) after detailed examination of the case of the assessee and evidence thus adduced by the assessee including the entries in the Demat account passbook; evidence of the broker firms through whom the transactions were made; contract....
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....) held : "The Tribunal was undoubtedly competent to disagree with the view of the Appellate Assistant Commissioner. But in proceeding to do so, the Tribunal had to act judicially, i.e. to consider all the evidence in favour of and against the assesses. An order recorded on a review of only a part of the evidence and ignoring the remaining evidence cannot be regarded as conclusively determining the questions of fact raised before the Tribunal." The Supreme Court thus laid down the test of fair and full review of evidence by the Tribunal, a final authority on fact when it reverses a finding of fact by a lower appellate authority. In this regard, the Tribunal the higher appellate authority has neither considered and weighed, in entirety, the evidence relied by the lower appellate authority nor it has dealt with the reasoning and findings of the lower appellate authority while passing the order of reversal. It is then difficult for this court to the uphold as correct the finding of fact recorded by the Tribunal. We are therefore of the view that the Tribunal's finding is not conclusive, and it has been arrived by following a faulty process. The T....
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.... asking following information: "The above noted appeal against the order u/s 143(3) of the I.T. Act, 1961 has been preferred by the appellant. "In this case, the appellant claim for exemption u/s 10(38) of the I.T, Act, 1961 in relation to Long Term Capital Gain arising on sale of shares has been disallowed. In the assessment order, it has been held that this whole transaction of purchase and sales of shares is a colorable device and is a fabricated transaction and same was held as bogus. "It is, therefore, requested that all the available material specifically pertaining to the appellant that has been received from the D.I.T(investigation), Kolkata or gathered through any other sources may kindly be flagged in the assessment record and the same may kindly be sent to this office with all pages properly numbered, for disposal of the appeal. You may appreciate that since quantum of revenue involved in these appeals is substantial, therefore every available piece of documentary evidence specifically pertaining to the appellant becomes important. Therefore, same may kindly be identified and forwarded to this office so that judicious decision in this appeal ca....
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....urts, but only by an appropriate agency." Therefore respectfully, following the law laid down by jurisdictional High Court in the case of Ms. Amita Bansal & Mr. Udit Narain Agarwal (Supra), and from the Lucknow ITAT in various cases mentioned above, I am of the view that the AO's finding is not conclusive, and it has been arrived by following a faulty process. It cannot be denied that the fact of purchase and sale transaction in penny stocks being recorded in an off market transaction in the Demat passbook raises a doubt as to its genuineness and it is also true that this evidence is relevant to the decision on the point in issue in this case, yet, this was not the only evidence relevant to the issue. There exists other evidence, adduced by the appellant in this case, in shape of contract notes; bank transactions pertaining to payment for purchase and sale of share and other material. The AO has not considered the available material and evidences existing on record in proper way before disbelieving the claim of the appellant. The AO has also not specifically dealt with the evidence placed on record by the appellant during assessment proceedings. AO made assessment igno....
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....know Benches and other Benches has allowed relief to the assessee by placing reliance on the evidences filed by the assessee before Assessing Officer. I do not find any adversity in the order of ld. CIT(A) specifically keeping in view the fact that Lucknow Benches in a number of cases after relying on the judgment of Hon'ble Delhi High Court in the case of Krishna Devi and others had allowed relief to various assessees. 10. The hon Delhi High Court in the case of Krishna Devi and Others had held as under: "3. The present appeals under Section 260A of the Income Tax Act, 1961 [hereinafter referred to as the 'Act'] are directed against the common order dated 6th August, 2019 [hereinafter referred to as the 'Impugned Order'] passed in ITA No. 1069/DEL/2019 (for AY 2014-15), 2772/DEL/2019 (for AY 2015-16) and other appeals for the same AYs, by the Income Tax Appellate Tribunal [hereinafter referred to as the 'ITAT']. However, the Impugned Order records the factual position only in respect of ITA No. 1069/DEL/2019. 4. The Revenue urges identical questions of law in all the afore-noted appeals with the only difference being the figures relating to the addit....
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.... the Investigation Wing. It is apparent from the Assessment Order that the Assessing Officer has not conducted any independent and separate enquiry in the case of the assessee. Even, the statement recorded by the Investigation Wing has not been got confirmed or corroborated by the person during the assessment proceedings. xx xx xx 23. It is provided u/s. 142 (2) of the Act that for the purpose of obtaining full information in respect of income or loss of any person, the Assessing Officer may make such enquiry as he considers necessary. In our considered view the Assessing Officer ought to have conducted a separate and independent enquiry and any information received from the Investigation Wing is required to be corroborated and affirm during the assessment by the Assessing Officer by examining the concerned persons who can affirm the statements already recorded by any other authority of the department. Facts narrated above clearly show that the Assessing Officer has not made any enquiry and the entire assessment order and the order of the first Appellate Authority are devoid of any such enquiry. 24. The report from the Directorate Income Tax Investigation....
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.... the order of the SEBI is also much later than the date of transactions transacted and nowhere SEBI has declared the transaction transacted at earlier dates as void. xx xx xx 30. Considering the vortex of evidences, we are of the considered view that the assessee has successfully discharged the onus cast upon him by provisions of section 68 of the Act as mentioned elsewhere, such discharge of onus is purely a question of fact and therefore the judicial decisions relied upon by the DR would do no good on the peculiar plethora of evidences in respect of the facts of the case in hand and hence the judicial decisions relied upon by both the sides, though perused, but not considered on the facts of the case in hand." 6. Aggrieved by the aforesaid findings, the Revenue has filed the instant appeals contending that, notwithstanding the tax effect in the appeals falling below the threshold prescribed under Circular No. 23 dated 6th September, 2019, the appeals are maintainable in view of the Office Memorandum dated 16th September, 2019 issued by the CBDT, which clarifies that the monetary limits prescribed in the aforementioned circular shall not apply where an a....
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....mati Dayal v. CIT, (1995) Supp. (2) SCC 453. 9. Mr. Hossain further argues that the learned ITAT has erred in holding that the AO did not consider examining the brokers of the Respondent. He asserts that this holding is contrary to the findings of the AO. As a matter of fact, the demat account statement of the Respondent was called for from the broker M/s SMC Global Securities Ltd under Section 133(6) of the Act, on perusal whereof it was found that the Respondent was not a regular investor in penny scrips. 10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same for the reasons stated hereinafter. 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, ....
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....ed that "There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of e....
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.... ii) Smt. Sabreen vs. ITO -3(4), Kanpur in ITA No.498/Lkw/2019 vide order dated 20/07/2021. iii) Shri Surendra Kumar Gupta vs. Dy.CIT in ITA No.125/Lkw/2019, order dated 13/07/2021 iv) Shri Jai Prakash Sharma vs. Dy. CIT in ITA No.544/Lkw/2019 order dated 03/06/2021] v) Shri Ashish Kumar Chaurasia, HUF vs. Dy.CIT, in ITA No.552/Lkw/2019, order dated 03/06/2021 vi) Smt. Divya Agarwal vs. Dy.CIT, in ITA No.555/Lkw/2019, order dated 03/06/2021 12. In view of above facts and circumstances and judicial precedents, the appeals filed by the Revenue are dismissed. 13. In the result, both the appeals of the Revenue are dismissed." 9. Respectfully following the aforesaid consolidated order of the Tribunal in the case of Smt. Renu Agarwal in I.T.A. No.204/Lkw/2020 and Shri Raj Kumar Agarwal in I.T.A. No.205/Lkw/2020, order dated 17/01/2022, I do not find any infirmity in the order of learned CIT(A) as in this case also the necessary evidences were duly filed before Assessing Officer. This fact of having filed the necessary evidences before the Assessing Officer are coming out from the findings of learned CIT(A). In his findings the l....
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....not made any enquiry from the share broker M/s Globe Capital Market Ltd. or Bombay Stock Exchange Limited seeking specific information pertaining to these transactions undertaken by the appellant. Directorate of Income Tax (System) had uploaded the information pertaining to the trading run by the penny stocks and that the information pertaining to the assessee was available in the ITD module under the EFS facility in a tab labeled "Penny Stocks". AO perused the information available on the system and utilized the same in finalizing the assessment. Therefore, AO on the basis of the detailed and comprehensive enquiries made by Investigation Wing, Kolkata made the assessment. AO made the addition of Rs. 8,18,256/- by treating the exempt capital gain income as unexplained income under the head income from undisclosed sources without invoking any specific section of income tax act, 1961, primarily on the basis of report received from investigation wing and for the reason that the appellant name was appearing in ITD system of Penny Stocks. A perusal of the chapter 3 of the 153 page report of Investigation wing shows that the investigation officers in a massive exercise searched ....
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....r data available on record there is no adverse evidence at all either in the form of any general or specific statement by the principal officer of either M/s Globe Capital Market Ltd or from M/s Nikki Global Finance against the appellant or against these transactions undertaken by appellant. The appellant submitted before AO also, all these facts that her broker through whom the transaction has been made, does not find place in the investigation report. He also submitted that there was nothing in the investigation report against him. Ignoring these facts, AO still made the addition without giving any reason whatsoever. The AO has only quoted facts pertaining to various completely unrelated persons whose statements were recorded and on the basis of unfounded presumption, addition was made in the hands of the appellant. It is seen from records that name of the appellant is neither quoted by any of the beneficiaries who surrendered the income nor any material is found at any place where investigation was done by Kolkata, Ahmadabad or Kanpur Investigation Wing, in which the name of the appellant was found to be mentioned. SEBI has prima facie not found involvement of the conce....
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....the information available on ITD system and modus operandi narrated by investigation wing pertaining to the whole scam unearthed. It is clear and now well settled as it appears from the plethora of case laws relied upon by appellant that these transactions in penny stocks that are fully supported by the documentary evidences could not be brushed aside on mere suspicion and surmises. AO has to bring specific adverse material on record against the specified transactions of sale/purchase of shares undertaken by appellant to prove that they are not genuine. It was held in Tribunal decision rendered in the case of Smt. Manju Bansal V Income Tax Officer - 1(1), Lucknow in ITA No.70/LKW/2011 dated 12/03/2015 after relying upon the case of Mohit Agarwal vs. ACIT in I.T.A. No.171/Lkw/2008 dated 28/11/2008 that when overwhelming documentary evidences are produced by the assessee, the burden shifts on the AO to explain away them. Only the investigation report cannot be relied upon by AO for making any addition. How the above mentioned evidences could be ignored? The AO has to give cogent reasons for rejecting them. These are important documents, some of them arising under the provisions of th....
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....r dated 27th February, 2008 accepted the plea of the assessee and deleted the addition. The Revenue's appeal before the Tribunal has failed. We have heard Sri Shambhu Chopra, learned Senior Standing Counsel, appearing for the Revenue and Sri Krishna Agarwal, learned counsel appearing for the respondent-assesses. "Sri Chopra submitted that the CIT (Appeals) as also the Tribunal had erred in law deleting the addition as much as the broker had not produced any documentary evidence to support the claim set up by the assessee regarding sale of the shares in question. "We have given our thoughtful consideration to the plea and we find that the CIT(Appeals) while deleting the addition has held as follows. "2.5. I have considered the facts of the case, assessment record, submission of AR and position of law, in my opinion, appellant deserves to succeed. At the time of making assessment, the AO on the basis that the appellant could not furnish any evidence to prove that the shares were actually transferred from his name and there was no actual sale of shares and the money allegedly received as sale consideration of shares was in fact appellant's own money ....
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..... d) Copy of ledger account of the appellant in the books of share broker. e) Copy of Bank Statement of appellant with Bank of India, Agra. x) Further during the course of assessment proceedings it is seen that notices u/s 133(6)/131 were issued to the share broker were complied with. This fact seen along with the evidences as referred in Para(ix) above duly prove the existence of the share broker along with the transaction with the assessee. The AO has wrongly compared that onus of the assessee is the same as required in respect of cash credit entries. The Hon'ble Jodhpur Tribunal had the occasion to consider a case in respect of similar type of share transaction. The decision reported in 13 SOT 61 in the case of ITO vs. Smt. Kusum Lata wherein the Hon'ble Bench held that the share transaction was not bogus. The Hon'ble Bench confirmed the order of CIT (A) who held that assessee has filed the requisite evidence to establish the genuineness of share transaction and merely because share broker could not report the transaction to Stock Exchange, it could not be said that the share transaction was bogus. The Hon'ble Bench further held that th....
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....ht any material on record to disprove the evidences as adduced by the appellant. The Hon'ble Supreme Court in the case of Sreelekha Banerjee and Others vs. CIT 49 ITR 112 has held "Before the department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence which it has in its possession. The department cannot be merely rejecting unreasonably a good explanation, convert good proof into no proof. The AO has based his conclusion on unfounded presumption and surmises. This also cannot be approved. Reliance is placed to the Hon'ble Supreme Court decision in the case of Umacharan Shaw & Bros. vs. CIT 37 ITR 271. "(2.7) Thus in view of above facts and circumstances of the case it is well established by the appellant regarding genuineness of share transaction and he has sufficiently discharged the onus cast' upon him. AO's action is not well founded in position of law in adding entire amount of sale of shares as income from undisclosed and unexplained sources u/s 68 of I.T. Act. Therefore, I am deleting the entire amount of Rs.19,51,038/-. However, the AO is directed to....
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....ellant on 10.11.2003 from broker M/s El bee Portfolio Pvt. Ltd vide contract Note dated 10.11.2003 and received in the Demat account and thereafter sold vide Contract Note dated 26.2.2005 of the broker M/s D.N. Kansal Securities Pvt. Ltd. And sale proceeds of share credited in the bank account of the appellant, still it was rightly held that shares sold were not the same shares purchased in November, 2003? 2. Whether the ITAT rightly treated the sale price of 11,000 shares, as income from undisclosed sources and added to the income of the appellant u/s 68 of the Act on the ground that the appellant could not filed any cogent evidence why the shares purchased in November, 2003, the payment was made in February, 2004 and credited in Demat Account in November, 2004 ignoring the contract note dated 10.11.2003, sale bill dated 17.11.2003 of purchases and sale of shares by Contract Note dated 26.2.2005? 3. Whether the Tribunal rightly disallowed Rs. 11,77,000/- received from the sale of shares and being not liable to be exempted as long term capital gains, when the share were purchased in November, 2003 and sold in February, 2005 as per contract notes of purchase and sa....
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...., therefore, for that reason alone, doubtful or not genuine. In such cases individual transactions relating to the particular assessee (in whose case genuineness of the transaction is doubted) need be examined before adverse conclusion be drawn against such assessee. Upon appeal by the revenue the Tribunal has reversed the finding of the CIT (Appeals) and sustained the addition made by the Assessing Officer. The Tribunal's order is one of reversal. However, the Tribunal has without directly dealing with the reasoning given by the CIT (Appeals) passed its order on a solitary reasoning of the purchase of shares having been recorded late in the Demat account of the assessee. In this regard, it is noticed while the assessee claimed to have purchased the shares in the month of February 2003 at the cost of Rs. 55,594/-. They were found recorded in the Demat account of the assessee, for the first time in November 2004. Heard Sri Suyash Agarwal, learned counsel for the appellant and Sri Praveen Kumar, learned counsel for the respondent as also perused the record. It cannot be denied that the fact of purchase transaction being recorded late in the Demat passbook raises....
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....by the CIT (Appeals)." As three Judge bench of the Supreme Court, in Udhavdas Kewalram Vs. CIT (Supra) held that the AO had to act judicially, i.e. to consider all the evidence in favour of and against the assessee. An order recorded on a review of only a part of the evidence and ignoring the remaining evidence cannot be sustained. The Supreme Court thus laid down the test of fair and full review of evidence by the AO. In this regard, in the instant case the AO has neither considered and weighed, in entirety, the evidence presented by the investigation authority nor it has dealt with the reasoning and submissions of the appellant while passing the assessment order. It is clear that the order of the AO is nothing but an estimation made, based on presumptions. In Hari Iron Trading Co. v. CIT [2003] 263 ITR 437 (P&H), a Division Bench of the Hon'ble Punjab and Haryana High Court observed that an assessee has no control over the way an assessment order is drafted. It was observed that generally, the issues which are accepted by the Assessing Officer do not find mention in the assessment order and only such points are taken note of on which the assessee's expla....
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....hin 15 days of receipt of this letter." In reply to this specific opportunity given, the Assessing Officer simply sent the assessment folder to this office for perusal without specifying any adverse evidence present on records against the appellant whatsoever of any kind in support of the suspicion relied upon by him. It is therefore clear that there is no adverse material on record against the appellant, to show that the share prices of Nikki Global were rigged in the case of appellant or that the appellant had in fact participated in any such scheme of procuring bogus entry of share sales to show bogus capital gains. Income Tax Appellate Tribunal - Kolkata "D" BENCH in the case of Kiran Kothari (HUF) vs. ITO, Ward 35(3), Kolkata, on 15 November, 2017 in ITA No.443/Kol/2017 for AY 2013-14 held in exactly similar facts and circumstances that no addition can be made in the hands of appellant. Hon'ble Allahabad High Court in the case of K.N. Agarwal Vs. CIT (1991) 189 ITR 769 (All), relevant extract of the said judgment are given hereunder:- "Indeed, the orders of the Tribunal and the High Court are binding upon the Assessing Officer and since he acts i....