TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 1376
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....ting 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 appeals may be filed on merits as an exception to the said ci....
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....d 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 shares were purchased and sold. It was submitted that ld. CIT(A) has ....
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.... 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 transaction from Nandani Mittal & Co. transaction for which the payment was made @ Rs.30 per share ....
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....ing 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 important fact in this case that there is no mentioning of the share broker M/s Safal Finstock Ltd. and MPSE Securities Ltd i....
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....inst 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 anything specific or remotely general against the appellant. Here the integrity of the promoter or the broker or the manner in which the brokerage operations....
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....e 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.1,90,000/- and sold on 14.8.2003 for Rs.19,54,948/-. The resultant gain was treated by the assessee as long term capital gains. The assessing officer examined him and was of the view tha....
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....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 through account payee Demand Drafts duly ascertained by the AO independently to have been issued from the bank account of the broker. ix) During the course of assessment proceedings the following evidences were brought on record: - a) Copy of s....
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.... 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 issued by Magadh Stock Exchange, therefore, there cannot be any reason to doubt the genuineness of the sale transaction of the shares. It is settled position of law by the decisions reported in 26 ITR 776 (SC), 37 ITR 288(SC), 63 ITR 449(SC) and 1 SOT 90 (Mum) (supra) that suspicion how so ever strong....
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.... 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 proceeds of shares as unexplained cash credit under section 68 of the Act. Hon'ble Allahabad High Court in the case of Ms. Amita Bansal vs. Commissioner Of Income (2018) 400 ITR 324 (All) on 30 March, 2017 INCOME TAX APPEAL Mo. - 326 of 2010, HELD: "1. Whether on the facts and circumstances of the case the ITAT was correct to ....
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....ough 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 note dated 10.11.2003 etc. allowed the appeal. In his view the disallowance of the said claim was not justified. The CN (Appeals) had further found that merely because certain transactions performed by the brokers through whom the assessee had sold those shares were doubtful, it could not be said that the transactions performed by the assessee were, therefore, for that reason alon....
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....tions 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 Tribunal has not considered a/I relevant and other material evidence existing on record before disbelieving the claim of the assessee. The Tribunal has also not specifically dealt with the findings recorded 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 orde....
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....ted 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 can be taken. "You are directed to send the assessment record with all pages duly numbered and all the specific evidence available on record pertaining to appellant, properly flagged within 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 o....
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....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 ignoring the fact that there is no evidence of either the appellant or the share broker present on record that binds them for being involved in any illegal or manipulative transactions leading to an unreasonable high long-term capital gain. I do not find that the AO has brought out any part of the report from the investigation wing in which the assessee has been investigated and or is found to be a part of any arrangement for the purpose of generating bogus long-term capital gains. Nothing has been brought on re....
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.... 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 additions made under Section 68 read with Section 115BBE of the Act. Accordingly, the same are being decided by way of this common order. 5. It is not in dispute, as noted in the Impugned Order, that the factual background in all the three appeals is quite similar. However, for the sake of convenience, the facts in respect of ITA 125/2020 are being noted and discussed elaborately. Briefly stated, the Respondent Assessee is an individual who has derived income from interest on loan, FDR, NSC and bank interest under the head of 'income from oth....
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....sidered 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 Wing, Kolkata is dated 27.04.2015 whereas the impugned sales transactions took place in the month of March, 2014. The exparte ad interim order of SEBI is dated 29.06.2015 wherein at page 34 under para 50 (a) M/s. Esteem Bio Organic Food Processing Ltd was restrained from accessing the securities market and buying selling and dealing in securities either directly or indirectly in any manner till further directions. A list of 239 persons is also mentioned in SEBI order which are at pages 34 to 42 of the order the names of the appellants do not find any place in the said ....
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.... 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 assessee is claiming bogus LTCG through penny stocks, and the appeals be heard on merits. 7. Mr. Zoheb Hossain, learned senior standing counsel for the revenue (Appellant herein), contends that the learned ITAT has completely erred in law in deleting the addition, and thus the Impugned Order suffers from perversity. He submits that there are certain germane factual errors, inasmuch as the learned ITAT has wrongly recorded that there was no independent enquiry conducted by the AO, when in fact the AO had issued notices to the companies in question under Section 133(6) of the Act. He points out that....
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....e 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, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted b....
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....hat 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 evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by....
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....foresaid 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 learned CIT(A) has also noted that the Assessing Officer had not carried out any independent verification and moreover, the broker through whom assessee entered into transactions was also not examined. The findings of learned CIT(A) has been made part of this order as below: "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. During the year, the assessee has shown exempted Long Term Capital Gain amounting to Rs. 8,18,256/- on sale of shares of Nikki Global Finance Ltd. The assessee purchased 15715 shares of M/s Nikki Global Finance Ltd. through offline transaction from....
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....tal 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 important fact in this case....
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....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 concerned company in any unfair trade practices and has allowed the trading of the same on public portal. Therefore, because of that fact the same script has been purchased and sold by many investors through various brokers across the country, leading to some bogus transaction, or the promoters of the Scrip company were in collusion for providing certain sham transactions, such transactions of the appellant cannot be held to be a sham transaction only by mere assumption unless any specific material is found against the appellant. AO made addition only on the basis of general information that was available in the investigation report and in the ITD module under the EPS facility in a tab labeled "Penny Stocks". Hence it is clear that the assessment order was passed without establishi....
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....ted 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 the Companies Act. No third party investigation was done by AO to prove that the evidence brought on record by appellant is forged. The brokers were never confronted with the evidences produced by the assessee. The apparent has to be treated as real unless proved otherwise. Long ago Hon'ble Supreme Court has laid this law while rendering the celebrated decision in the case CIT Vs. Daulat Ram Rawatmal [1964] 53 ITR 574 (SC). Lastly the AO added whole amount of Rs. 8,18,256/- without invoking any specific charging section from IT Act. AO did not invoke any section of IT Act 1961 to tax this amount but treated as assessee's own money, introduced routing through various channels. AO admittedly estimated that the assessee must have paid at least 3% of this sum as charges for suc....
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....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 which was routed through the help of some unscrupulous person and hence made an addition of Rs.19,51,038/- as income from undisclosed and unexplained sources u/s 68 of I.T. Act. On the other hand during the course of assessment as well as appellate proceedings the AR's of the appellant filed written submission along with documents and vehemently opposed the AO's action inviting attention to the facts of the case, the main points which have not been properly considered by the AO or have been totally ignored which are as under: - i) The shares were applied and allotted directly from the company Focus Industrial Resources Ltd. Who is registered with ROC and copy of master data details as per records of ROC was filed. ii) The payment of the share application money was made through Account payee Demand Draft prepar....
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....sessee 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 the burden of proving a transaction is always on the person asserting it to be bogus and this burden has to be strictly discharged by adducing legal evidences of a character which would either directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an inference to that effect. The Bench held that there was no evidence except speculation that this profit was not from the sale of shares. The AO had failed to establish his case and to discharge the requisite burden cast on him. xi) In this case as rightly pointed out by the AR's, there is no evidence on record as referred in assessment order, to prove that the proceeds received against sale of shares represent appellant's undisclosed income. Hon'ble Apex Court in the case of Kishan Chand Chella Ram Vs CIT reported in 125 ITR 713 has held "that the burden is on the Department to prove that the money belongs to t....
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....#39;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 assess the long term capital gains of Rs.17,54,237/- as shown by the appellant." "The Tribunal has upheld the finding. It had held that the assess was in possession of the shares in question and had sold the said shares in course of ordinary transaction of sale of shares at stock exchange and if the broker did not file any evidence since the same were seized by the Revenue Department, there is no fault with the assesses. From the aforesaid facts it is clear that the shares in question were allotted to the assessee in the public issue, which was held in Demat a/c of Stock Holding Corporation of India Ltd. The shares were transferred to Abhipra Capital Ltd. The sale consideration was received 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 dism....
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....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 sales of shares?" Another question (no. 4) was sought to raised as below: "Whether the Tribunal was justified in holding that purchase of 1,000 shares by assessee was unexplained, ignoring the fact that purchase of such shares was not doubted by the A.O. ?" However, in view of the finding recorded by the assessing officer for addition to be made under section 68 of the Act without allowing any deduction in respect of cost of acquisition of the shares, it necessarily flows from such finding that the assessing officer did not believe the case of the assessee of purchase of the shares in question. Accordingly, the additional question does not arise in this case. The sole addition, which is subject matter of dispute in the instant appeal, relates to addition of Rs. 11,77,000/-/ which according to the assessee 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 longterm capital g....
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.... respondent as also perused the record. It cannot be denied that the fact of purchase transaction being recorded late 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 assessee in this case, in shape of contract notes; bank transactions pertaining to payment for purchase and sale of share and other material relied upon by the CIT(Appeals). Such other relevant evidence ought to have been also looked at in entirety and thereafter conclusion as to genuineness of the transaction should have been drawn. It may have been open to the Tribunal to declare any piece of evidence relied by the CIT(Appeals) to be irrelevant or unreliable. That having not been done, it could not have side-stepped the evidence and/or the reasoning of the CIT(Appeals), especially, because the order of the Tribunal is one of reversal. A three Judge bench of the Supreme Court, in Udhavdas Kewalram Vs. CIT (1967) 66 ITR 462 (SC) held : "The Tribunal was undoubtedly competent to disagree with th....
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....tion in the assessment order and only such points are taken note of on which the assessee's explanations are rejected and additions/disallowances are made. Applying the principles laid down by the observations of the Punjab and Haryana High Court, I find that if the entire material pertaining to these transactions like DMAT statements, Contract Notes of purchase and sale of shares and source of funds to acquire the shares that had been placed by the assessee before the Assessing Officer at the time when the assessment was being made and the AO, applied his mind to that material and did not express anything contrary about the evidence placed by appellant then in such circumstances it shows that the evidence placed by the appellant has been accepted by AO. AO then cannot go ahead and make an addition on part evidence available with him where there is no mention of the transactions done by appellant or by her broker. AO was specifically asked to file any specific material against the appellant vide this office letter no. CIT(A)-I/KNP/Penny Stock/2017-18/10 dated 04.03.2018 asking following information: "The above noted appeal against the order u/s 143(3) of the I.T. Act, ....
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.... upon the Assessing Officer and since he acts in a quasi-judicial capacity, the discipline of such functioning demands that he should follow the decision of the Tribunal or the High Court, as the case may be. He cannot ignore it merely on the ground that the Tribunal's order is the subject matter of revision in the High Court or that the High Court's decision is under appeal before the Supreme Court. Permitting him to take such a view would introduce judicial indiscipline, which is not called for even in such cases. It would lead to a chaotic situation. True it is that the dilemma of the Revenue is also real and substantial in such cases, but such a situation cannot be provided for by judicial interpretation by courts, 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 transaction being recorded in an off market transacti....