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TMI Blog2017 (8) TMI 1501X X X X Extracts X X X X X X X X Extracts X X X X ..... IC Jindal is an incriminating material even if it is retracted on 15.09.2011? - denial of deduction u/s 10(38) - Held that:- We find that on 26.03.2010 a search and seizure operation u/s 132(1) was conducted at the premises of the assessee. On the same date, search was also conducted at the other group of companies as well as at the residential premises of the managing director of the appellant company. The places covered under the search was New Delhi, Gwalior, Raipur, Indore and Banmore and from all the aforesaid premises a cash of 5,62,635/- was found and out of the aforesaid a sum of 5,00,000/-, was seized however aforesaid cash was found duly recorded in the books as such no addition was made in respect thereof. Apart from the aforesaid, no other material which can be held to be incriminating material was referred to which was found from any of the premises despite the search undertaken by the revenue which formed the basis for making additions in these years. In two years i.e. 2006-07 and 2007-08 additions made in the assessments orders u/s 143(3) were repeated in orders passed u/s 153A. In the present case assessee is maintaining regular books of accounts, no other material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is held that AO is incorrect in holding that delivery of the shares has not been taken by the assessee. All the sales were effected through stock exchange, STT has been paid which is clearly depicted in the contract notes, and details provided and were confirmed by the brokers as well as depository. CBDT in their circulars quoted above have expressed that date mentioned in the contract note should be taken as the date of purchase of the shares and date of transfer in the demat account is not relevant for the determination of the holding period for the computation of the capital gain. We, therefore, hold that date mentioned in the contract note of purchase be taken to determine the holding period of the shares in order to compute the LTCG. Merely because shares purchased by assessee were transferred to his demat account on a later date, date of transfer to demat account could not be taken as date of purchase. DMAT account and contract note showed details of share transaction, and Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income u/s 68 in Commissioner of Income-tax-13 v. Shyam R. Pawar [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being disposed off by this consolidated order. 02 The grounds on the basis of which assessee has challenged the first appellate order are reproduced hereunder: a) In ITA No. 3176/Del/2014 for the AY 2006-07, assessee has raised following grounds of appeal: 1. That the learned Commissioner of Income Tax (Appeals) - XXXII, New Delhi has grossly erred both in law and on facts in dismissing the appeal filed by assessee against the order of assessment dated 29.12.2008 u/s 143(3) of the Act. 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there is no concept of abatement of a pending appeal under second proviso to section 153A of the Act and as such erroneous legal misconception of the assessee could not be a valid ground to hold that appellant does not want to purse the appeal and therefore the order made is legally invalid and vitiated. 2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining an addition of ₹ 36,72,01649/- representing the long term capital gain declared by the appellant and held to be taxed as short term capital gain. 3. That the learned Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of internet of ₹ 10,304/- under section 234B of the Act and ₹ 34,378/- under section 234C of the Act which are not leviable on the facts and circumstances of the case of the appellant. It is therefore prayed that, it be held that, the dismissal of the appeal by the learned Commissioner of Income Tax (Appeals) was not in accordance with law and furthermore disallowance made by learned Assessing officer and, sustained by the learned Commissioner of Income Tax (Appeals) along with interest levied may kindly be deleted and appeal of the appellant company be allowed. c) In ITA No. 1342/Del/2013 for the AY 2005-06, assessee has raised following grounds of appeal :- 1. On the facts and in the circumstances of the case the ld. CIT(A) erred in dismissing Appellant's ground No. 1 against passing of order by the Assessing Officer u/s 153A/143(3) of the Act in the case when there was no undisclosed income or any incriminating documents found in the search. 2. The Ld. CIT(A) erred in dismissing Appellant's ground No. 2 against Assessing Officer's passing the order in violation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that the assessment order having been passed in violation of the principal of natural justice and without giving adequate time and opportunity to the appellant to represent its case and to file its replies and clarification, is bad in the eyes of law and liable to be quashed. 3. The ld. CIT (A) erred on facts in law in confirming addition of ₹ 3.06.421/- u/s. 14A of the Act read with Rule 8D of the IT Rules; 4. The ld. CIT (A) erred on facts and in law to dismiss Appellant's ground against the charging of interest u/s 234A and 234B of the Act. 5. That the appellant craves leave to add, alter, amend and/or rescind any of the ground of appeal. 03 In respect of the aforesaid five appeals, assessee has filed five paper books containing the notices issued, reply and written submissions of the assessee filed before the AO/CIT (Appeals), documents/evidences filed before the AO/CIT(Appeals), remand reports etc. Additionally, assessee has also filed a common written synopsis in respect of aforesaid five appeals and a judgment paper book of the relevant judgments on which it has placed reliance on plethora of decisions. 04 For all the three assessment years 2005-06 to 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares were actually held by the assessee company. On similar basis short term capital gain declared by the assessee was taxed as speculative income and therefore income was computed at ₹ 37,36,26,040/-. 07 Against the order of assessment dated 29.12.2008, assessee filed appeal before the ld. CIT (Appeals) within the due date of filing of the appeal. Pending the appeal before the ld. CIT (Appeals), assessee sent letter to the stock broker M/s PK Aggarwal & Co requiring him to clarify certain issues as required by the AO and in reply the stock broker in its letter dated 31.08.2009 confirmed that shares were purchased off market and the shares were delivered in physical form after the purchase, and as assessee required the shares in its demat account as such, after dematerialization, such shares were transferred in the demat account of the assessee. Due to aforesaid reasons of fresh evidence obtained after the assessment, assessee on 12.01.2010 filed written submissions along with an application under Rule 46A providing the additional evidences in the form of certificate from the broker regarding purchase and sale of shares and the contract notes evidencing the payment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, assessee filed appeal before ld. CIT (Appeals) within the period of limitation. Search u/s 132(1) of the Act : 12 A search u/s 132(1) of the Act was conducted at the premises of the assessee on 26.03.2010, and on account of the aforesaid search, proceedings u/s 153A of the Act was undertaken for the aforesaid assessment years and assessment orders u/s. 153A of the Act were framed on 30.12.2011, wherein again additions made in the orders of assessment made u/s 143(3) of the Act was repeated. Against the aforesaid orders passed u/s. 153A of the Act, assessee filed appeal before the ld. CIT (Appeals). However, when the assessee received notice of hearing for the appeals from the ld. CIT (Appeals) dated 25.04.2012, assessee withdrew its appeal on the assumption that such appeals have been abated on account of search and hence ld. CIT (Appeals) dismissed the appeal of the assessee on 14.05.2012 for the assessment years 2006-07 and 2007-08 filed against the order of assessment passed u/s 143(3) of the Act without adjudicating the grounds of appeal raised before him and without taking into account the documentary evidences furnished by the assessee before the ld. Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gain ₹ 36,72,01,649/- ii. Speculation income ₹ 50,36,977/- 4. Against the additions made in the aforesaid order of the assessment, assessee duly filed an appeal before the learned CIT (Appeals) within the period of limitation on 28.01.2009. 5. It is submitted that during the course of the appellate proceedings, appellant on 12.01.2010 also filed an application u/r. 46 of the Income Tax Rules along with additional evidences and also filed its written submissions in support of the grounds of appeal raised before the learned CIT (Appeals), which clearly shows that appellant was seriously pursuing its appeal against the order of assessment passed u/s. 143(3) of the Act. 6. It is however submitted that subsequently, on 26.03.2010 a search and seizure operation u/s 132(1) of the Act was conducted at the premises of the appellant and in pursuance to the aforesaid search, an assessment u/s 153A of the Act was made on 30.12.2011 at an income of ₹ 37,42,08,170/- by making the similar additions as were made in the order of assessment dated 29.12.2008 passed u/s. 143(3) of the Act. The additions made in the aforesaid order are as under : i. Unexplained cash cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not abate, and it is only the assessment pending on the date of search would abate and hence, immediately thereafter present appeal bearing ITA No. 3176/D/2014 was filed and that is how the delay of 676 days occurred. 10. Thus, since the circumstances stated above constitute sufficient cause, the appellant prays that delay in filing of appeal be condoned u/s. 253(5) of the Act. The submission of the appellant is that technical considerations cannot and should not act as bar to the cause of substantial justice. It is further submitted that Hon'ble Apex Court in its judgment in the case of Improvement Trust vs. Ujagar Singh reported in (2010) 6 SCC 786 has held that, unless mala fides are writ large, delay should be condoned. Matters should be disposed of on merits and not technicalities. In fact, the Apex Court in the case of Mrs. Katiji & Others reported in 167 ITR 471 has held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. It is submitted that, Apex Court in the case of Ram Nath Sao vs. Gobardhan Sao and Others reported in AIR 2002 SC 1201 held as under : " Thus it becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who advised it for filing of the appeal before the Tribunal. 15 The Learned CIT [DR], on the other hand, submitted that assessee himself has withdrew its appeal before the ld. CIT (Appeals) on the ground that the appeal has been abated in view of the search u/s 132(1) of the Act, and there is an inordinate delay of 676 days in filing of the appeal, as such, delay in filing of the appeal should not be condoned. 16 We are of the opinion that it is not of much material how inordinate delay is, the requirement is as to whether the assessee has been able to explain the delay. In view of this approach when we examine the reasons leading to the delay in filing the appeals before the Tribunal, we came to the conclusion that the assessee has been able to explain the delay and delay in filing of the appeal deserves to be condoned and the appeals should be admitted as delay in filing of the appeal was wholly on account of sufficient cause and delay has not occasioned on account of deliberate act of the assessee. From the facts, it is evident that against the orders of assessment passed u/s 143(3) of the Act, assessee duly filed the appeal before the ld. CIT (Appeals) within the period of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is realized that : 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. --------------------------------------------------------------------------- 1." Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period." Page No : 0473 3. " Every day's delay must be explained " does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, common sense and pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, the cause of substantial jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appeal on merits after affording reasonable opportunity of hearing to both the sides. " [Extracted from ITR online True pages] In the aforesaid circumstances, we are of the considered opinion that delay in filing of the appeals has occasioned only on account of the sufficient cause and the action of the assessee cannot be imputed with negligence, inaction or lack of bona fides, as assessee was seriously contesting additions made in the orders of assessment passed u/s 143(3) of the Act in the appeal proceedings u/s 153A of the Act such additions were already challenged before us, which additions were mere repetition of the additions made in the orders passed u/s 143(3) of the Act, as such delay cannot be attributed to any deliberate act of the assessee, and hence the delay in filing of the appeals in ITA No. 3176/Del/2014 & 3177/Del/2014 is condoned and we preferred to dispose off these appeals on merits. 17 Now coming to the issues involved in the present batch of five appeals. The issues involved as emanating from the grounds of appeal are summarized hereunder :- S.No. Issues involved Appeals in which such issues are involved ITA No. AY A Whether any incrimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken for scrutiny as per CBDT guidelines. In assessment years 2005-06 and 2006-07, the Assessing Officer though not referred to any incriminating material found as a result of search, but relied upon the statement of Shri IC Jindal, Managing Director of the assessee company recorded u/s 132(4) of the Act for making the additions. In the appeal before the ld. CIT (Appeals), assessee challenged the additions on the ground that additions made without any incriminating material is unsustainable in law and statement of Shri. Jindal is not incriminating as it has been retracted immediately after search, however, ld. CIT (Appeals) dismissed the aforesaid ground. In the appeal before us, in support of the aforesaid issue, appellant assessee has filed written synopsis referring to various documents etc, the relevant contents thereof are reproduced hereunder: "6. ADDITION MADE IS OUTSIDE THE SCOPE OF SECTION 153A OF THE ACT: 6.1 It is respectfully submitted that during the course of the search on the appellant company no incriminating material was found from the premises of the appellant, as no document what so ever has been referred in the order of the assessment while making the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was not in the proper state of mind, he was confronted with Shri. Aseem Kumar Gupta, who in his statement has alleged as under: " I have given ₹ 2 crores from M/s Moderate Credit Corporation Ltd. to M/s Magnum Steel Limited and another ₹ 80 lakhs through Ravnet Solutions Pvt. Ltd. in lieu of cash received on his instruction from his office. I arranged a deal of capital gain amounting to ₹ 20 crores between Magnum Steel Limited and Shri. Santosh Shah r/o Lal Bazar, Kolkata (mobile no. 09830053858) in lieu of cash received from his office. This money was handed over to me by employees of M/s Magnum Steel limited whose name are Shri. Som Nath. Shri Som Nath was introduced me by Shri. I.C. Jindal, MD Magnum Steel Limited. I gave ₹ 20 crores to Shri. Santosh Shah who arranged capital gain for Shri. I.C. Jindal and his company through stock broker Sh. P.K. Aggarwal resident of Kolkata." 6.4 After recording the aforesaid statement of Shri. Aseem Kumar Gupta, Shri, Jindal was asked to cross examine him and in the cross examination, he has confirmed that he has not received any cash from Mr. Jindal. He has also stated that he has not introduced Sh. P.K. Aggar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated by issuance of notice u/s 153A of the Act dated 20.04.2011, appellant filed a reply dated 15.09.2011 (see page 115-117 of PB-2), wherein it was submitted as under: "……..The recording of statement was started at 8:40 pm, on 26-03- 2010 and continued till 27-03-2010 up to 10:00 AM in which merely 20 questions have been asked and I was regularly forced to surrender income. I finally have to surrender ₹ 51 crores as additional undisclosed income for buying peace of mind and in respect of the following: 1. Magnum Steels Ltd.- ₹ 2.80 crores as introduction in share capital 2. Other flagship concerns - ₹ 48.20 crores as income from operations of group companies i.e. i) M/s Magnum Steel Ltd. ii) M/s Magnum International Ltd. iii) M/s Courage Financial Services Pvt. Ltd. iv) M/s N.R. Sponge Pvt. Ltd. It was also stated by me that the details of above mentioned surrender company wise will be submitted later on. I also presented 2 cheques towards payment of tax on surrendered additional undisclosed income of ₹ 51 crores, of ₹ 3.40 crores dated on 30-04-2010 and ₹ 12.91 crores dated 31-07-2010 bearing no.252775 and 252776 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission wherein again it was stated that statement made by the Shri. Jindal has immediately been retracted. Aforesaid submission of the appellant has also been extracted by the learned CIT(A) which is appearing at page 10 of the order of the learned CIT(A). For the sake of convenience, aforesaid para is extracted hereunder: "6.6 The statement of I.C. Jindal recorded during the search operation on 27.03.2010 was not valid in law because it was given under pressure, threat and coercion. I.C. Jindal was also not in proper state of mind at that time. The surrender of amount of ₹ 51 crores was obtained under pressure, threat and coercion and as such it was not valid in law. I.C. Jindal had retracted the statement as well as the surrender immediately after the search. No incriminating material was found during the search which could indicate so much undisclosed income. Such surrender is not valid in law as held by the Hon'ble Supreme Court in Pullangode Rubber Produce Co. Limited 91 ITR 18, Nagubai Annal v Shama Rao (AIR) 1956 SC 100. 6.7 Similarly, the statement of Aseem Gupta is not valid in law as the same was also obtained under pressure, threat and coercion…&helli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence there is no reason not to disbelieve the retraction made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of ₹ 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee." 6.12 In view of the aforesaid since the statement of the Shri. Jindal has been recorded in the night, which has immediately been retracted same cannot be treated as incriminating material. It is submitted that in the instant case, apart from the retracted statement of Shri. IC Jindal, and unsubstantiated allegation of Shri. Aseem Kumar Gupta, no material was found from the premises of the appellant. It is submitted that in fact in the case of CIT vs. Harjeev Aggarwal reported in [2016] 70 taxma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned AO. Further, in the statement he has alleged that he has arranged alleged accommodation entry of capital gain through Santosh Shah, however before drawing any adverse inference, Shri. Santosh Shah has not been examined. It is relevant to state here that assessee has purchased and sold the shares through stock broker Shri. P.K. Aggarwal, M/s S.K. Khemka and M/s S.B. Buthra & Co and on the basis of the independent enquiry conducted by the learned AO, aforesaid three brokers have confirmed the factum of sale and purchase of the shares, in such circumstances, the statement of Shri. Aseem Kumar Gupta is of no much credence, more so when he has also not been confronted for the cross examination of the assessee, despite specific request. It is submitted that AO also relied upon the statement of SH. Aseem Gupta during assessment but such statement was neither supplied nor opportunity to cross examine was provided which was otherwise also requested by appellant specifically vide letter dated 15-09-2011 (PB 2 Pg 115 - 117). This evidence cannot be relied upon in view of the following judgments, it is submitted that such, statement cannot be relied to make addition u/s 153A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Such action defeat the very purpose of search/survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further such actions show the department as a whole and officers concerned in poor light. 2 I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during search/survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence 3 In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during search/survey/other proceedings under the I.T. Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/coercion shall be viewed by the Board of adversely." 6.17 It would be evident from the aforesaid instruction that statement/surrender by itself cannot be made a basis to make addition. In the instant case, since the surrender was made under pressure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statement. " Same view has been taken in the following judicial pronouncements: a) CIT vs. M.P. Scrap Traders [2015] 372 ITR 507 (Gujarat) b) CIT vs. Vivek Aggarwal [2015] 231 Taxman 392 (Delhi) c) CIT vs. Tara Chand Mahipal [2016] 65 taxmann.com 29 (Calcutta) d) CIT vs. Sunil Aggarwal [2015] 379 ITR 367 (Delhi) 6.19 It is also submitted that statement recorded under section 132(4) of the Act does not constitute incriminating material found as a result of search. Aforesaid submissions is supported by the order of the Tribunal in the case of DCIT vs. Pratap Singh Rajendra Hamola & Co. reported in 19 DTR (Chd) 182, wherein it has been held that statements recorded by itself cannot constitute evidence found as a result of search for purpose of determining undisclosed income under Chapter XIV-B of the Act. The Jodhpur Bench of the Tribunal in the case of Shree Chand Soni vs. Dy. CIT reported in 101 TTJ has held as under :- " 47. This addition is based on the statement alone and no such income was disclosed in the returns filed for the block period. Admittedly no incriminating document was found to support the impugned addition. This Bench has been continuousl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006- 07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4). Further reference of this letter is not mentioned either in the assessment order or in CIT (A)'s order. Still further, there is no order sheet entry of receiving this letter in the assessment record nor there is receipt of the assessing officer on this letter. Therefore, this letter though part of assessment record presently does not prove that this letter was filed during the assessment proceedings. Hence, this letter does not substantiate retraction even on 15.09.2011. ii) Further, there is no evidence of retraction before DGIT (Inv.) after two days. As per letter of assessee dated 15.09.2011 the director of the assessee company has met the DGIT (Investigation), New & claimed retraction. Hence, even if it is treated that the letter is filed on 15.09.2011 the same is after 1 year 6 month. iii) Retraction letter does not state as to how pressure & coercion was applied. The search was carried in the presence of witness for fair conduct of search. Sh. Aseem Gupta who is a party to the statement is still confirming the statement. During the assessment proceeding also he has confirmed his earlier statement. This proves that there was no coercision or undue pressure while rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re controlled by Sh. Aseem Gupta, an entry operator who is confirming to his statement that these transaction of share capital is nothing but book entry. Therefore, there is no chance of production of director of these applicant company to prove genuineness of these share capital. iv) Hence, genuineness of the transaction was and can not be proved. Reliance is place case laws for application of section 68:- a) MAP academy 361 ITR 258 (Delhi) b) NR Portfolio P. Ltd. 264 CTR 258(Delhi) c) Nova Promoters & Unless Ltd. 342 ITR 169 (Delhi) d) CIT Vs. Nipul Builders 350 ITR 169 (Delhi) v) Share allotted to these share applicant at premium of ₹ 90 were repurchased by the family member of Sh. I. C. Jindal at face value of ₹ 10. b) LTCG i) In the statement Sh. Aseem Gupta if not involved in providing entry provide books of LTCG, then how he came to know the name of share brokers through whom LTCG was booked. ii) Behaviour/ various action taken against the share broker as mentioned in the assessment order proves the non genuineness of alleged LTCG. iii) Various action against scrip in respect of which LTCG has been claimed by SEBI/stock exchange. iv) Stocks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2010 (because 28.03.2010 was Sunday) before the DGIT and ADIT and due to retraction, cheques issued were never encashed by Revenue. It was submitted that letter dated 15.09.2011 was mere reiteration of the retraction made on 29.03.2010 and was filed on the first available opportunity before the assessing officer. It was therefore submitted that the contention of the revenue that the retraction was late is incorrect. It was also submitted that assessee had furnished documentary evidences in support of the transactions and requested to record the statement of Shri Aseem Gupta in its presence and allow cross-examination; revenue apart from the retracted statement could not bring any material before making the addition. His rejoinder is as under :- "AR submission That the captioned appeals were heard on 1st June, 2017. That after concluding the oral arguments, learned CIT DR made a request for filing his written synopsis of arguments to be taken on record and assessee also made a request to file its rejoinder submissions. That copy of the written synopsis of arguments of the learned CIT DR has been provided to the assessee. as such, in rejoinder to the aforesaid written synopsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 of the PB-2, obtained during the inspection where learned CIT, Delhi-2, in the case of the assessee itself, while reviewing the completed assessment, has noticed that in respect of orders passed u/s 143(3) of the Act has observed that order sheet has not been maintained. As such, non maintaining the order sheet entry properly is no ground to make such comment or argument though noticing that the letter dated 15.09.2011 is part of the assessment record. Intact, the learned AO and learned CIT(A) have also not recorded various replies received by them in response to the summons u/s 131/133 from the Calcutta Stock Exchange and brokers obtained during original assessment proceedings and also during subsequent proceedings u/s 153A of the Act. Certified copies of the aforesaid documents were also provided by the learned AO and are forming part of PB-2. 2.4 It is submitted that assessee filed a letter to obtain certified copies of the relevant documents as due to change of various counsels at different stages, complete records were not available with the assessee and in response to the aforesaid letter, the assessing officer himself has provided the certified true copies of all the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employee. It is submitted that while making the aforesaid submissions, learned CIT DR has completely overlooked the relevant portion of the letter, wherein assessee specifically staled that no money was transacted and a request was also made to record his statement in the presence of the assessee as such, the contention that no reference was made in respect of cash given by the employee is factually incorrect and contrary to record. 2.9 It is submitted that admittedly and undisputedly, recording of statement of Shri. I.C. Jindal started at 8.40 PM on 26.03.2010 and continued for whole night and concluded on 27.03.2010 at 10 AM, which itself shows that statement recorded is not voluntary. It is submitted that whole night revenue authorities kept pressurizing Shri. Jindal to surrender, and because Shri. Jindal was fully exhausted as he was not allowed to sleep, he has no option but to agree with the department and hence under forced circumstances, he was made to surrender. It is however submitted that immediately after the search, on the very next working day i.e. 29.03.2010 (as 28Ih March, 2010 was Sunday), assessee met with DGIT and ADIT and retracted his statement and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the assessee and investor and there is no evidence found either during the search or in the post search enquiry that there awas cash transacted between the assessee and investor and the search made after five years and finding a meager cash also shows that the story of the AO in the assessment order is frivolous specifically in the absence of any material brought in the notice. The books fo the accounts or the statement can only become incriminating evidence when any corroborative evidence is found in support of the statement or entries in the books of the account but not otherwise. The assessing officer did not bring any material in fact summons issued to almost all the shareholders were duly served, and those companies ahave provided complete details i.e. confirmation, Company master data as proof of address, PAN, ITR, MOA/AOA, share application form, bank statement, audit report, and no efforts were ever made by the AO to examine the shareholders through the bankers, ROC or their own assessment records. In fact, money trail does not show that any money was transacted by the assessee for any investment received by it. During the course of hearing a chart was furnished to sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial in support of the finding. Further, in the latest case of CIT v. SVP Builders (India) Ltd. reported on 238 Taxman 653 (Del) and CIT vs. Five Vision Promoters (P.) Ltd. reported in [2016] 380 ITR 289 (Delhi), aforesaid judgment cited by the revenue has been considered and wherein it has been held that where addition has been made without bringing any adverse material, same deserves to be deleted. 6. It is submitted that at page 3 in para b(i) to b(vii), learned CIT DR commented on the LTCG. Parawise, rejoinder is as under: 6.1 Para b(i); It is not disputed that Shri. Aseem Gupta resides nereby and search also took place at his premises on the same date and few of the companies in which he is a shareholder has also made investment in the assessee company. As such, being the investor and also proximity with the assessee, merely because he is aware about one of the broker through which sale and purchase of shares have taken place is wholly irrelevant, and does not lead to a conclusion that LTCG is not genuine. It is further submitted that each of the broker in response to the notices issued u/s 131/133 has independently confirmed the purchase and sale of the shares, and appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and recorded such a finding without examining the true facts which leads to lacking duties of revenue authorities due to which assessee has to suffer too much. 6.3 In para b(iv) to b(vii), the learned CIT DR finding fault in the documents instead referring to any material contrary to the evidence filed by the assessee. It is true that stocks were purchased off market which are truly declared by the assessee, payments were made before dematerialization of the same which is not disputed, the authenticity of the contract note cannot be doubted without brining any material. The brokers have repeatedly confirmed directly to the AO in response to the notice u/s 133 which has also been noted by the AO in the remand reports in the appellate proceedings against the order passed u/s 143(3) of the Act. The broker has confirmed taking physical delivery and for keeping the scrips for dematerialization to be made in sizable lot before transfer to the demat account of the assessee. The delivery of the scrips cannot be doubted once broker has confirmed in this connection directly to the AO and is evident from pages 84-114 of the PB-2. The AO though referred the same in the remand report but inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search and seizure operation u/s 132(1) of the Act was conducted at the premises of the assessee. On the same date, search was also conducted at the other group of companies as well as at the residential premises of the managing director of the appellant company. The places covered under the search was New Delhi, Gwalior, Raipur, Indore and Banmore and from all the aforesaid premises a cash of ₹ 5,62,635/- was found and out of the aforesaid a sum of ₹ 5,00,000/-, was seized however aforesaid cash was found duly recorded in the books as such no addition was made in respect thereof. Apart from the aforesaid, no other material which can be held to be incriminating material was referred to which was found from any of the premises despite the search undertaken by the revenue which formed the basis for making additions in these years. In fact, in two years i.e. 2006-07 and 2007-08 additions made in the assessments orders u/s 143(3) were repeated in orders passed u/s 153A of the Act. 26 The legislature has introduced section 153A of the Act by the Finance Act, 2003 w.e.f. 01.06.2003 in order to frame assessment in the cases, wherein search is initiated u/s 132 of the Act as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CIT v. Kabul Chawla reported in 380 ITR 573 (Del.) in para 37 has held as under :- "Summary of the legal position 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Pr. CIT V Meeta Gutgutia 82 taxmann.com 287 ( Del) considering the decision relied up on by revenue in Smt. Dayawanti Gupta v. CIT [2016] 390 ITR 496/[2017] 245 Taxman 293/[2016] 75 taxmann.com 308 (Delhi) (para 70) was distinguished as under :- "63. Even this Court has in Mahesh Kumar Gupta (supra) and Ram Avtar Verma (supra) followed the decision in Kabul Chawla (supra). The decision of this Court in Kurele Paper Mills (P.) Ltd. (supra) which was referred to in Kabul Chawla (supra) has been affirmed by the Supreme Court by the dismissal of the Revenue's SLP on 7th December, 2015. The decision in Dayawanti Gupta 64. That brings us to the decision in Smt. Dayawanti Gupta (supra). As rightly pointed out by Mr. Kaushik, learned counsel appearing for the Respondent, that there are several distinguishing features in that case which makes its ratio inapplicable to the facts of the present case. In the first place, the Assessees there were engaged in the business of Pan Masala and Gutkha etc. The answers given to questions posed to the Assessee in the course of search and survey proceedings in that case bring out the points of distinction. In the first place, it was stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovered during search, the additions which were made for all the years whereas additions in the present case were made by the AO only for AY 2004-05 and not any of the other years. Even the additions made for AYs 2004-05 were subsequently deleted by the CIT (A), which order was affirmed by the ITAT. Even the Revenue has challenged only two of such deletions in ITA No. 306/2017. 68. In para 23 of the decision in Smt. Dayawanti Gupta (supra), it was observed as under: "23. This court is of opinion that the ITAT's findings do not reveal any fundamental error, calling for correction. The inferences drawn in respect of undeclared income were premised on the materials found as well as the statements recorded by the assessees. These additions therefore were not baseless. Given that the assessing authorities in such cases have to draw inferences, because of the nature of the materials - since they could be scanty (as one habitually concealing income or indulging in clandestine operations can hardly be expected to maintain meticulous books or records for long and in all probability be anxious to do away with such evidence at the shortest possibility) the element of guess wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue is empowered under various provisions of the I. T. Act, to reopen / revise such assessments if there is any material or information found in their possession. Section 153A limits their power only to the material found during the search in order to assess the undisclosed income or property. Revenue could not show us any material referred to by the Assessing Officer in the orders passed u/s 153A of the Act which led him to assess u/s 153A of the Act as those assessment were already completed and can be interfered only on the basis of some incriminating material unearthed during the course of search. Finding and conclusion on 153A whether there was any incriminating material 33 Now we shall examine the additions made by the AO in each of three assessment years separately. 34 In AY 2005-06, the additions were made on account of unexplained cash credit u/s 68 of the Act (i) ₹ 5 crores relates to share capital allotted to 7 companies and (ii) ₹ 6,59,04,383/- relating to long term capital gain declared by the assessee as undisclosed income. Apart from this there is a disallowance of R. 74,741/- u/s 14A of the Act. After examining the order of assessment, on the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have been deposited on account of advance tax also, in any case if the revenue is not authorized to take those cheques or deposit it, we see no reasons why the search party has accepted those cheques. Hon Delhi High court in case of Digipro Import & Export Pvt Limited V Union of India W.P. (C) 3070/2017 & CM No. 13393/2017 dated 15/5/2017 has condemned such an act , which is without authority of law. Similar view is also expressed by the Hon. High court in Capri Bathaid Private Limited v. Commissioner of Trade & Taxes 2016 (155) DRJ 526 . Further no orders were also passed u/s 210(3) of the act, or any other action has been taken to recover the demand on the income surrendered by Shri. IC Jindal in relation to aforesaid assessee. This action itself proves that the assessee was under financial threat for payment of such taxes , which may have dire consequences. The assessment proceedings were initiated after one and half year later but during this period, there is no proceedings or action by ld AO or fresh statements recorded as the same was retracted if cheques were not encahsed. 38 Now we have to examine whether such statement of Shri. IC Jindal, MD of the assessee company r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee submitting a copy of letter before us which is certified by the ld AO. It is also confirmed before us that above letter are part of the record of the assessment and ld CIT (A) has mentioned it in his order. It is surprising that revenue authorities were sitting on cheques collected and not encashing them even after one and half year without pursuing whether assessee or related persons has accepted the disclosure or not. In the letter dated 15.09.2010, assessee had stated the circumstances in which the statement was recorded and asked the revenue authorities to examine Shri. Aseem Gupta and Shri. Somnath and also insisted to verify each and every transaction before drawing any conclusion. It was stated that no adverse inference be drawn in view of forced surrender. The Assessing Officer has neither examined Shri. Somnath nor Shri. Aseem Gupta, despite the request of the assessee and relied upon the statement of Shri Aseem Gupta that too in his assessment proceedings. Such evidence which was taken at the back of the assessee and no opportunity was provided to cross examine them cannot be a piece of evidence which can be relied upon for making the addition. Hon'ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice." 42 In the present case, the statement of Shri. Assem Gupta recorded in his assessment was never confronted and after retraction by Shri. IC Jindal, despite specific request, Shri. Aseem Gupta was not confronted for cross examination. Therefore, Such statement cannot be held to be an evidence for making the addition. Even otherwise, no supporting material was brought on record despite highlighting that the statement of Shri. Aseem Gupta is fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport of the transactions. 45 The CBDT in instruction no. F.No. 286/98/2013-IT (Inv.II) dated 18.12.2014 and Instruction No. F no. 286/2/2003- IT (Inv) dated 10.03.2003) has emphasized upon the need to focus on gathering evidences during search/survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. The reason behind is that in case of retraction, the case of Revenue should not fail. In the present case also, apart from the statement, no efforts were made by the Revenue to gather evidence during the search. 46 Ld DR has relied up on the decision of PCIT V Bhagirath Agarwal 351 ITR 143. We have carefully perused that decision. In that decision the facts were that it was not a case of retracted confession but in fact statement was further confirmed by the assessee vide letter dated 9/1/2006. In the present case there is retraction of the statement, which is by way of stated meeting with the higher official as well as before ld AO reiterated before CIT (A). In view of this, reliance on the above decision is misplaced. 47 Second decision relied up on by revenue is in the case PCIT vs. Avinash Kumar Setia 81 Taxmann.com 486. In this cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from the case on hand." 48 In the present case, the facts are quite different, as in that case the facts relating to retraction were also not disclosed. In the present case, assessee has submitted that he has approached the higher authority at the first available instances, agitating the retraction before ld AO, before CIT (A) also. The statement of facts made by the assessee before lower authorities that he immediately met the higher official stating his retraction and which was also mentioned before the ld AO and CIT (A) also mentioning this fact in his appellate order, it is not correct to say that assessee has not retracted the statement in time. Further, the facts recorded in the statement are also not matching with the others sums mentioned in the transaction. The retraction letter is also part of the record of the ld AO who has issued the certified copy of that letter , therefore, in view of the above facts, reliance on the above decision by the revenue is misplaced. 49 In view of the aforesaid, we hereby hold that statement of Shri. I C. Jindal is not incriminating material once the same has been retracted and the statement of Shri. Aseem Gupta recorded on the same date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e served to the shareholders and AO apart from issuing notices to the shareholders did not make any further enquiry / efforts to bring any material contrary to the evidences furnished by assessee, as such, assessee submitted that addition made is not sustainable. On the other hand, learned CIT DR placed reliance on the orders of the authorities below. Since we have already dealt the legal issue in favour of the assessee by directing the Assessing Officer to delete the additions made in the assessment framed under section 153A in absence of incriminating material during the search, following the same the addition in question in absence of incriminating material and non-abatement of assessment already framed under section 143(3) before the date of search, does not stand and directed to be deleted. C. Addition made u/s 68 of the Act in respect of the long term capital gain, which was claimed as exempt. 51 This issue is involved in ITA No. 1342/Del/2013 for the AY 2005- 06, ITA No. 1343/Del/2013 in the AY 2006-07. The assessee has submitted that for both the aforesaid assessment years, assessments were made originally u/s 143(3) of the Act. In AY 2005-06, the assessment was specifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract notes. In view of the aforesaid, it was submitted that provision of section 68 are inapplicable specifically when nothing adverse was brought on record and as such, exemption u/s 10(38) cannot be denied. On the other hand, learned CIT [DR] placed reliance on the orders of the authorities below. 52 Since we have already dealt the legal issue in favour of the assessee by directing the Assessing Officer to delete the additions made in the assessment framed u/s. 153A of the Act for the aforesaid assessment year, in absence of incriminating material found during search and in absence of abatement of assessment order already framed before the search, as such, this issue does not survive for adjudication and stands to be deleted. D Long term capital gain on account of sale of the listed securities claimed exempt u/s 10(38) of the Act which was treated as short term capital gain : 53 Before us, apart from oral arguments, the AR of the assessee has filed written synopsis, the relevant contents are reproduced hereunder : 9.1 It is submitted that in the assessment years 2005-2006 and 2006-07 the learned Assessing Officer has made additions of ₹ 6,59,04,383/- and ₹ 36,72, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of PB-1) Copy of ledger account of M/s P.K. Agarwal & Co. for the period of 01.04.2003 to 31.03.2005. Copy of account of S.K. Financial Services Pvt. Ltd. in respect of purchase of shares. Copy of the investment account as on 31.03.2004. Copy of the audited balance sheet as on 31.03.2004. Copy of the demat account The copies of the contract notes and bills for the purchase and sale of the shares. Proof of payment of STT.. Reply dated 19.12.2011 (Pg 151-159 of PB-1) Appellant relied on its submissions and evidences furnished in the original assessment proceedings. In the course of the original assessment proceedings, assessee has furnished following reply along with following evidences: 1) Reply dated 25.06.2008 (Pg 10-14 of PB-2): Details of long term capital gain. 2) Reply dated 21.10.2008 (Pg 16 of PB-2): Detail of the depository with whom assessee is maintaining its Demat A/c. Copy of the demat account. Copy of the broker note in respect of sale and purchase of shares. 3) Reply dated 25.11.2008 (Pg 31-33 of PB-2): Statement showing complete details of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khemka.: (Pg 69- 76 of PB-2): Share broker filed its reply alongwith relevant documents and confirmed the sale of shares to the assessee 24.03.2010: Reply of M/s P.K. Agarwal & Co. (Pg 84-114 of PB-2): Sharebroker filed its detailed reply providing complete detail of purchase and sale of the shares, a copy of the same was also sent to the assessee. ii. 22.11.2011 (Pg 81 of PB-2): Notice u/s 133(6) of the Act was sent to M/s S.B. Bhutra & Co. 29.11.2010: Reply of M/s S.B. Bhutra & Co.: (Pg 68 of PB-2): Reply was sent by the stock broker stating that transaction was off market. Enquiries made by the AO in the proceedings u/s 153A of the Act: i. 02.12.2011 (Pg 136-137 of PB- 2): An email was sent to the Calcutta Stock exchange, to verify whether the transactions were done through stock exchange, whether STT was paid, name of the stock brokers involved and whether there was any irregularity. 09.12.2012 (Pg 138-214 of PB-2): Reply was received from the stock exchange, confirming that STT was paid on the executed transaction. Further to the aforesaid no adverse comment was given. 9.5 In fact, learned AO during the remand proceedings for the AY 2006-07 also sent follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been purchased off line when it was stated by them that such shares had not been purchased in online trading system. Further none of the contract notes were held to be bogus by the stock exchange. 9.7 During the course of the remand proceedings, learned AO made extensive enquires from the stock brokers and after receiving the replies from the stock brokers, purchase of the shares had not been disputed by the learned AO, however, as per the AO only dispute is with regard to the fact that whether the gain accrued to the assessee is long term or short term. 9.8 It is submitted at this stage itself that the in the case of the appellant learned AO has made addition under section 68 of the Act by holding that alleged long term capital gain s unexplained cash credit in the books of the assessee. It is submitted that in view of the remand reports of the learned AO, which remand reports have been submitted after extensive enquiries, and last remand report dated 29.09.2010 was even submitted after the search on the appellant, it has been admitted that sale and purchase of the shares by the appellant is genuine and only dispute is with regard to the holding period of the shares. In suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons stated hereinabove. 9.12 Further while making the impugned addition, learned AO has held as under: S.No. Findings of the learned AO Rebuttal submission 1. All the shares sold were penny stock companies. It is respectfully submitted that assessee has purchased the shares of public limited companies and such companies are listed on stock exchange. Shares were purchased at market value and is also evident from pages 136 - 214 of the PB 2 and analysis has been made in Annexure 'C' enclosed with synopsis. Shares were sold through stock exchange at a price quoted on the stock exchange. Sales consideration has duly been received by the assessee in its bank account. On the sale of the shares STT has been paid. Once the shares are listed on the stock exchange and sale of such shares are made through stock exchange at a price quoted on the stock exchange, the contention of the revenue is wholly irrelevant. 2. The price rise in such shares is not supported by any logic. The aforesaid finding is pure suspicion and nothing more. An assessee cannot control the price of the shares which are traded throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infact, while so holding, no enquires were made from the stock broker at the time of assessment, which enquiries were made after the assessment in the remand proceedings, when each of the stock broker has confirmed the factum of the purchase by the assessee on the date stated in the contract notes. Further he has also ignored the Circular: No. 704, dated 28-4-1995 issued by CBDT wherein it has been held that date mentioned in the contract note should be taken as the date of purchase of the shares and date of transfer in the demat account is not relevant for the determination of the holding period for the computation of the capital gain. 9.14 It is further submitted that aforesaid sale of the shares were through a broker M/s P.K. Aggarwal & Co., who is registered with Calcutta Stock Exchange. Further the shares which were sold were also traded in stock exchange and, in respect of which STT has also been paid. As such, neither the purchase of the shares nor the sale of the shares can be doubted. At this stage, reliance is placed on the following judicial pronouncements: a) High Court of Gujarat in case of Commissioner of Income-tax-I Vs. Maheshchandra G. Vakil [2013]40 taxmann.co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... broker Mr Rajendra Prasad Shah on the said date but had only stated there was no trade vide Trade No. 1586. This alone would not automatically make the entire transaction as sham and bogus when other documents as stated supra prove the contrary. 2.9.5. We find that the similar issue had been adjudicated by the co-ordinate bench of this tribunal in the case of DCIT vs Sunita Khemka in ITA Nos. 714 to 718/Kol/2011 dated 28.10.2015 and in the case of ITO vs Rajkumar Agarwal in ITA No. 1330 (Kol) of 2007 dated 10.8.2007 wherein it was held that when purchase and sale of shares were supported by proper contract notes , deliveries of shares were received through demat accounts maintained with various agencies, the shares were purchased and sold through recognized broker and the sale considerations were received by account payee cheques, the transactions cannot be treated as bogus and the income so disclosed was assessable as LTCG. We find that in the instant case, the addition has been made only on the basis of the suspicion that the difference in purchase and sale price of these shares is unusually high. The revenue had not brought any material on record to support its finding that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of the assessee. The transaction of holding shares are reflected in the Demat account and the sale of shares are also through Demat account and consequently the transaction cannot be doubted as sham or bogus transaction. 9.15 It is submitted that despite the aforesaid evidences, the learned Assessing Officer on the basis of the statement of the appellant and also adverse action taken by the SEBI against the stock broker held that appellant had obtained accommodation entry from M/s P.K. Aggarwal & CO. and has introduced money in the garb of the capital gain. It is submitted that merely because the share broker was indulged in malpractices, would not ipso facto lead to a conclusion that sale and purchase of shares through such stock broker is not genuine. It is submitted that M/s P.K. Aggarwal & CO. has not stated that sale and purchase of the shares on behalf of the appellant company is not genuine nor the share broker has ever stated that he has provided any accommodation entry to the appellant company. It is further submitted that before drawing the adverse conclusion, the learned Assessing Officer has placed reliance on the action taken by the SEBI against the share broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding. Such a finding is vitiated because of the use of inadmissible material iii) 26 ITR 775 (SC) Dhakeshwari Cotton Mills ltd. v CIT The estimate of the gross rate of profit on sales, both by the Income-tax Officer and the Tribunal, seems to be based on surmises, suspicions and conjectures. It is somewhat surprising that the Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills without showing that statement to the assessee and without giving him an opportunity to show that that statement had no relevancy whatsoever to the case of the mill in question. Both the Income-tax Officer and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion. iv) 37 ITR 288 (SC) Lal Chand Bhagat Ambica Ram v CIT The Tribunal in arriving at the conclusion it did in the present case indulged in suspicions, conjectures and surmises and acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, or the findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dematerialized after a long time and there is no evidence of delivery of the shares. 55 The learned AR in the rejoinder submitted that the Shri. Aseem Gupta has made statement which is factually incorrect. It was submitted that Shri. IC Jindal specifically requested as the statement was recorded u/s 132(4) in the mid night and whole night he was not allowed to sleep and he was fully exhausted and was not in the fit state of mind when the statement of Shri. Aseem Gupta was recorded in his presence, as such, assessee vide its letter dated 15.09.2011 duly requested to record the statement of Shri. Aseem Gupta in his presence which was never done. In respect of action taken by SEBI against the stock broker, it was submitted that same is wholly irrelevant because there was no restriction brought to his notice on the broker for sale and purchase or deal in shares when the transaction of the assessee took place. It was submitted that all the transaction of the assessee took place till 29.11.2005, and till that date there was no restriction on the stock broker. The learned AR also filed a copy of the order of the SEBI and submitted that restriction was imposed on the broker on 30.11.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequently sold through stock exchange and STT was also paid. The Calcutta Stock exchange to whom notice was sent u/s 133(6) through email, has also replied and furnished the details which information indicates that the price of the shares purchased off line is matching with the price traded on the stock exchange. Further, in response to the enquiry, depository M/s IKM Investor Services Ltd also filed the necessary details which confirm the details filed by the assessee. The AO also made enquiry u/s 133(6) through email from Calcutta Stock Exchange at the time of completing assessment u/s 153A of the Act, though not quoted in the order of assessment and found that in reply no adverse comments was made by Calcutta Stock Exchange. Even finding of the AO while passing the order u/s 153A of the Act is incorrect that contract notes submitted at the time of original assessment were different than later filed. The contract note of purchases made were of much earlier date when STT was not applicable as same was applicable w.e.f. 01.10.2004 and all the purchases were made prior to that date. STT has been paid in the contract for the sales made stock exchange. 59 After examining all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch LTCG has been claimed. The dates of enquiry mentioned in the assessment order passed u/s 153A of the Act are much after the date of sale of shares by the assessee except order dated 29.09.2005 of the SEBI restricting P K Agarwal & Co. not to buy sale or deal in securities in any manner. The learned AR has filed order dated 11.08.2008 by which the restrictions have been vacated of the earlier orders. In this order, restrictions on P K Agarwal & Co. have been made but only from 30.11.2005 in respect of scripts of Nageswar Investment Ltd. 63 Hon Calcutta High court in case of Pr CIT V Rungta Properties Limited 83 Taxmann.com 106( Cal) has dealt with identical situation where broker was suspended and it held as under :- 11. On the last point, the Tribunal held that the Assessing Officer had not brought on records any material to show that the transactions in shares of the company involved were false or fictitious. It is finding of the assessing officer that the scripts of this company was executed by a broker through cross deals and the broker was suspended for some time. It is assessee's contention on the other that even though there are allegations against the broker, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of purchase of shares was received back in cash, nor it is the case of the Revenue that the sale consideration received by the assessee was returned back in cash. It is also not the case of the Revenue that the shares in question are still lying with the assessee, nor it is the case of the Revenue that the amounts received by the assessee on sale of the shares is more than what is declared by the assessee. 14. The entire assessment is based upon the statement of Shri Mukesh Choksi. It is an undisputed fact that neither a copy of the statement was supplied to the assessee nor any opportunity of cross-examination was given by the Assessing Officer/CIT(A). The Hon'ble Supreme Court in the case of Andaman Timber Industries [Civil Appeal No. 4228 of 2006] was seized with the following action of the Tribunal:- "6. The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static. Since we are not upholding and applying the ex factory prices, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 16. On the strength of the aforementioned decision of the Hon'ble Supreme Court, the assessment order has to be quashed. 17. For the sake of the completeness of the adjudication, even on facts of the case, the orders of the authorities below cannot be accepted. There is no denying that consideration was paid when the shares were purchased. The shares were thereafter sent to the company for the transfer of name. The company transferred the shares in the name of the assessee. There is nothing on record w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, the holding period being more than twelve months, these gains were required to be treated as long-term capital gains and the assessee was entitled to exemption u/s. 54EC of the Act. The Assessing Officer, however, disputed this claim. As per information available to him from the Income Tax Investigation Wing, these shares were transferred to Demat account of Bubna Stock Broking Services Ltd. to the Demat account of the assessee on 05.03.2004, and back to Demat account of Bubna Stock Broking Services Ltd. on 23.04.2004. Accordingly, in the opinion of the Assessing Officer, the holding period of shares by the assessee was less than twelve months, and gain on ale of such shares was required to be treated as short-term capital gains. In effect, according to the Assessing Officer, the assessee was not eligible for exemption u/s. 54EC. It was in this backdrop that an addition of ₹ 10,23,540/- was made to the returned income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(Appeals). Learned CIT(Appeals) noted that the assessee did not have any demat account at the point of time when shares were purchased and it was duly on 05.03.2004 that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd this explanation has not even been challenged or controverted. In these circumstances, Assessing Officer's challenge to the capital gains being treated as long-term capital gains is indeed devoid of legally sustainable basis. Once Assessing Officer does not challenge genuineness of a transaction, it cannot be open to him to alter the date of purchases, as claimed by the assessee, and once this date remains unchallenged, there is no basis for hearing the capital gains as a short-term capital gain. There is not even a whisper of an allegation about genuineness of the transaction even though it is a case of, what is commonly known as, penny stock and the value of the shares has gone up almost 40 times within one year. On these facts, the Assessing Officer does not question or probe genuineness of transaction and yet claims that these gains should be treated as short-term capital gains. We leave it at that." 66 Further Honourable Bombay High court where DMAT account and contract note showed details of share transaction, and Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee earned capital gain was disallowed and addition of ₹ 25,93,150/- made under section 68 of the IT Act was upheld. 3. Mr.Sureshkumar seriously complained that such finding rendered concurrently should not have been interfered with by the Tribunal. In further Appeal, the Tribunal proceeded not by analyzing this material and concluding that findings of fact concurrently rendered by the Assessing Officer and the Commissioner are perverse. The Tribunal proceeded on the footing that onus was on the Department to nail the Assessee through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr.Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, therefore, be admitted. 4. Mr.Gopal, learned Counsel appearing on behalf of the Assessee in each of these Appeals, invites our attention to the finding of the Tribunal. He submits that if this was nothing but an accommodation of cash or conversion of unaccounted money into accounted one, then, the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme. 6. It is in that regard that we find that Mr.Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of ₹ 25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lsi Online. Com Ltd. 5. Offshore Finvest Ltd. And 6. Scintilla Commercial & Credit Ltd. The entire sale proceeds realized on sale of shares was treated as Long Term Capital Gain. Since the sale transactions took place through authorized stock exchange and securities transaction tax was paid, the assessee claimed the entire sale proceeds arising out of the transaction as long term capital gain exempt from tax u/s. 10(38) of the IT act. The AO did not believe the transaction as genuine on the basis of certain observations and treated the entire sale proceeds as 'Income from Other Sources' and Added it to the total income. 3. The basis of disbelieving the transactions of purchase and sale as non-genuine, as it appears from the assessment order are as follows: (i) The AO observed that the purchase and the sale in the shares of above listed companies are bogus. (ii) The AO conducted enquiry through Calcutta Stock Exchange (CSE) regarding the purchases of the impugned sales and on the basis of the report of the CSE the AO came to a conclusion that no purchase took place through the floors of CSE. Having received a confirmation from CSE the AO came to a conclusion that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n furnished to the assessee. Hence, the assessee is unable to make any submission thereon. Further, the said is a list of online transaction whereas the purchase made by the purchaser is a physical transaction or off market purchase'. Though no adverse condition against the assessee can be drawn, when all other contemparaneous evidence is available and filed by the assessee. 4.2 The assessee has also submitted that the broker through whom the shares purchases were carried out was neither suspended nor debarred as on the date of the above said purchase. In fact, the online trading transaction details furnished by the CSE and relied upon by the AO itself shows that Sri. N.M. Lohia, the broker had carried out transaction in July and August, 2003. 4.3 The assessee has informed and has also furnished evidence that the said shares have been physically presented to M/s. Karvy & Co. for the purpose of D-MAT and that the said agency which is a reputed and independent agency has issued D-MAT certificates to the assessee. It clearly shows that the assessee was the owner of the shares in the year 2004 itself by which time the D-MAT process was completed. It is submitted that a fact whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of share transaction in case of off market transaction. As regards purchases, it is submitted that these shares were purchased off market and delivery was affected by hand physically. Thereafter, the appellant followed, due procedure step by step till the shares were demated. After purchase of shares physically, these shares were lodged with the respective Companies for making necessary changes in the names of the purchasers. After the company affected necessary changes in the purchaser's name, the shares were delivered back to the appellants and then sent to Depository Participant (DP) for demat with a request form. The DP, then verified the purchases with the company whose shares were purchased. It was only after such verifications were completed with respective companies and the DP was satisfied about the accuracy with regard to the holder that the DP credited the amounts to the Demat Account. Shares were then ready for trading in electronic platform of stock exchanges. Thus, the moment these shares were demated after following the due procedure, all the previous steps starting from purchase culminating in demat, form stood validated as otherwise demat could not have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transactions security transaction tax (STT) was paid wherever applicable after 01.10.2004. This is in the nature of contemporary evidence. (d) Nothing cogent and concrete have been mentioned in the assessment order to indicate as to how the appellant was in league with the brokers in the transaction of specific scrips. Even in course of recording the statements of these brokers, no question was put to elicit any answer. (e) Even otherwise the findings of authorities, under any other statute, have got no bearing to the Income tax proceedings. Income Tax officer has to conduct his own enquiries while completing the assessment and reach his own finding. This is what law enjoins upon him as a quasi judicial authority under a statute. 9. Further, the learned A.R. submitted before the CIT(A) that action initiated/taken by any another authority Administering a statute cannot be used against the assessee to which he was not party. The so called order of SEBI, which was not made available to the assessee's, may have impact on the persons who are parties to the proceeding but certainly not on the assessees. It is an established position of law, as stated by the Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares are bogus. His entire evidence is based on surmises and suspicion. Such an assessment cannot be sustained in the eye of law. In this regard the assessee's placed reliance on the following judgments of the Apex Court. It is a settled principle that mere conjecture, surmise or assumption of facts as distinct from inference from proved circumstances do not amount to evidence within the meaning of Section 143(3) for the purposes of being utilized in the assessment. This is a case in which there is no evidence against the assessee's except some vague, confusing enquiries the Assessing officer has sought to draw conclusion against the assessee's. It was held by Apex Court that "the Income tax officer is not entitled to make a pure guess and make an assessment without reference to any evidence and material at all. There must be something more than suspicion to support the assessment. (Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC). The same principle is also reiterated in the case of Umacharan Shaw & Bros. v. CIT [1959] 37 ITR 271 (SC). It was held that a suspicion however, strong may not take the place of proof. The conclusions which are based on surmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1999] 238 ITR 486 (Cal.) ♦ Mukesh R. Marolia Case (supra) ♦ ITO v. Smt. Neelam Chawla [I.T. Appeal No. 5335 (Delhi) of 2004 dt. 31-12-2007] ♦ Shripal Singh Gulati v. ITO [I.T. Appeal No. 285 (Agra.) of 2004 dt. 30-4-2008] ♦ Kamal Kumar S Agrawal case (supra) 12. The CIT(A), on careful consideration of various contentions of the assessees before him, on an overall appreciation of facts and circumstances of these cases, the CIT(A) was of the considered view that when there is no dispute with regard to off market transactions, in view of the observations of the Tribunal in various decisions, reliance placed by the AO on the replies received from CSE are of no probative value to draw an adverse conclusion against the assessees. The CIT(A) concluded that in all these cases involving similar facts, in the absence of any positive evidence, and merely on the basis of mere suspicion the transactions cannot be held to be not genuine. 13. Aggrieved, department is in appeal before us. The learned Counsel for the assessee reiterated the submissions before the CIT(A). 14. The learned D.R. besides relying upon the Order of the A.O. submitted before the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalized for ₹ 2,00,000/- for unfair trade practices like indulging in fraudulent and unfair trade practices by the adjudicating Officer of SEBI in its order dated 22-02-2010 in the case of M/s. Sangotri Constructions Ltd. (in short "SCL"). Similarly, M/s. N.M. Lohia, stock broker was penalized on 4 other occasions as per the list enclosed by jacking up the prices of scrips traded by him including PSL Financial Services Ltd., Sangotri Constructions Ltd., Richfield Financial Services Ltd., Stenly Credit Capital Ltd., Excellon Agencies Ltd. The adjudication order of the SEBI are enclosed for kind perusal of the Hon'ble Tribunal. (d) In this connection, it is humbly submitted that the share transactions of M/s. N.M. Lohia and Co-represented by its proprietor Sri Nethmal Lohia has been indicated severely by the Adjudicating Officer by levying penalties. (e) Similarly, the other broker, which the present group has purportedly dealt with is Sri Rajendra Prasad Shah, through whom shares of M/s. Sangotri Constructions Ltd. M/s. Scintilla Commercial and Credit Ltd. and M/s. Offshore Finvest Ltd. were purported to have been acquired by the assessee's. Certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market basis. However, as per the paper books submitted before the Hon'ble ITAT, it is found that the assessee has submitted contract notes issued by M/s. NM Lohia &, Co, which bears Trade No. and Trade Time of Calcutta Stock Exchange (page No. 21 and 22 of assessee's paper book). (k) When the share is transacted through off market, there cannot be any Trade No. of the Calcutta Stock Exchange since the purchase is not routed through the stock exchange. Thus, it is proved that the assessee's contention of off market purchase is against the evidence available on record. Further, the said transactions in the F.Y.2003-04 do not appear in the transaction list quoted in the assessment order (Page No.l5 of the paper book). This shows that the assessee has simply shown bogus purchases depicting with a imaginary Trade No. Similarly, all other purchases of the individuals of the group where the assessee claimed it to be off market purchase but the broker note depicts the Trade No. of Calcutta Stock Exchange. (l) The assesses of this group have allegedly purchased the shares of M/s. Navketan Merchants Ltd. This company is a stock broking firm in OTCEI (Over The Counter Exchang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer may please be admitted and taken on record since they relate to commission of offence and fraud committed by the 3 brokers during the relevant period of time when the alleged purchase and sale of share took place. The other orders were referred to by the Assessing Officer in the assessment order referring to the website of ww.sebi.gov.in which was containing such adjudicating orders. 16. The learned counsel for the assessees, on the other hand, strongly opposing the above cotenntiosn of teh Learned Departmental Representative, supported the orders of the CIT(A), and submitted that the assessing officer, without bringing any positive evidence on record, could not have concluded that the transactions in question are not genuine. He submitted that since prescribed procedure has been followed from the stage of purchase till the ultimate stage of shares being D-MATTED, there is hardly any room to doubt or suspect that the transactions in purchase are not genuine. In order to hold so, it is submitted by the learned counsel, that the assessing officer is required to bring in cogent evidence to prove that the purchases were not genuine. No such cogent evidence has been brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which revealed that some of the brokers named above have been suspended for some act of commission or omission, and his consequent conclusion that the transactions entered through these brokers are not genuine, learned counsel submitted that the transactions of the assessees in dispute cannot be treated as sham merely for some discrepancies or adverse report by the SEBI. Learned counsel further submitted that the AO has not brought out any material to establish the final outcome of the enquiry initiated by SEBI and specific shares purchased by the assessees in the course of course of making investment. Therefore, it is not possible to take any adverse view on the basis of mere suspicion that SEBI had initiated some action and found the brokers violating the rules of SEBI. 19. As regards the next allegation that purchases and sales of shares were made with reference to penny stocks which were purchased at a nominal price and sold at a very high price, it is submitted by the learned counsel for the assessee that all the sale transactions were made through stock exchanges, and as such there is hardly any scopes for price manipulation. More over, it is submitted that these are the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not genuine. 21. The learned counsel for the assessees submitted that mere suspicion and surmise cannot take the place of truth. It was pointed out that in the whole case the AO has raised suspicions without any concrete proof. For this purpose the learned counsel relied on the decision of Dhakeswari Cotton Mills v. CIT [1954] 26 ITR 775 (SC). Based on the principles enunciated by the Apex Court in the case of Dhakeswari Cotton Mills Ltd. (supra) and Umacharan Shaw & Bros v. CIT [1959] 37 ITR 271, it is submitted that a suspicion however strong may not take the place of proof. The conclusions which are based on surmises and conjectures cannot take the place of proof therefore the assessment made by the AO which is predominately influenced by suspicion is liable to be set aside. These principles enunciated by the Apex Court have been followed by various Tribunals. In this regard the notable cases are DN Kamani (HUF) v. Dy.CIT [1999] 70 ITD 77 (TM), Pooja Bhat v. Asstt. CIT [2000] 73 ITD 205 (Mum.) and Mrs. Aishwarya K. Rai v. Dy. CIT [2007] 104 ITD 166 (Mum.) (TM). 22. In support of his contentions, the learned counsel for the assessees also placed reliance on the following dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions in purchase are not genuine. In order to hold so, as observed by the CIT(A), the A.O. is required to bring in cogent evidence to prove that the purchases were not genuine. No such cogent evidence has been brought on record, but merely proceeded to arrive at his conclusions basing on mere surmise and suspicion that the purchase transactions are bogus. Even though enquiry with CSE revealed that no purchase has taken place through CSE, since the transactions were in physical form and done through off market, the question of the same being routed through the floor of a recognized stock exchange does not arise. Further, on an overall appreciation of facts and when there is no dispute with regard to off market transactions, the CIT(A) was correct in observing that reliance placed by the AO on the replies received from CSE are of no probative value to draw an adverse conclusion against the assessee. In consonance with the fundamental principle that there cannot be a sale without a purchase, if the purchase of shares by the assessees is disbelieved, there cannot be consequent sale of the said shares by the assessee. Therefore, the fact of the purchases cannot be doubted, since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sold at a very high price, since all the sale transactions were made through stock exchanges there is hardly any scopes for price manipulation. It is all the more so, since the assessee has paid STT. Even with regard to the observation of the assessing officer that the assessee before purchasing the shares the assessees did not take into account the financial standing of the companies, the CIT(A) was correct is observing that the share market is generally sentiment driven and the assessees cannot remain static. Even the absence of experience of the assessees in transaction of the shares except dealing in these penny stocks, does not clinch the issue against the assessee. This may at the most lead to a suspicion but the same cannot be treated as conclusive to draw any adverse inference against the assessees to the effect that the transactions are not genuine. Similarly, even the opening of D-MAT accounts at Calcutta, a remote place may give rise to a suspicion, but the same cannot lead to any adverse inference against the assessee. In course of hearing, the assessee's had produced its books, there is no finding in the assessment order that payments were not made to the brokers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and if he show his bonafide in transaction by showing relevant material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame transaction. Fact of tinted broker may be relevant for suspicion but it alone necessarily does lead to conclusion of all transaction of that broker as tinted. In such circumstances, further enquiry is needed and that is for individual case. Such further enquiry was not conducted in that case. 11. At this juncture, it would be relevant to mention here that it is not disputed by the Revenue before us that the shares of these assessees were already shown in the earlier Balance Sheet submitted by the assessees, and therefore, in that situation, how the revenue condemned the transaction even on the ground of steep rise in the shares. If within a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of the assessee. According to us, even in the absence of the confirmation by those share brokers one has to examine that whether the shares have been purchased and after retaining them for a certain period those shares have actually been sold by the assessee. In the present case, facts have revealed that the shares of Sarang Chemicals were duly demated and thereupon the sales were made through banking transactions. The Demat account maintained with ICICI bank has revealed the shares numbers, etc. From the side of the assessee, it is vehemently contested that there was a reason of denial of transaction by those share-brokers because they have not intimated the transaction to the SEBI and that one of them has also made the purchase transaction in cash which was against the SEBI guidelines. Apartment from these evidences, our attention has also been drawn on a certificate issued by "share transfer agent" that the transfer of those shares in the name of the assessee was duly approved. The assessee has expressed to hold those shares in "dematerialized form" therefore the assessee was asked to fill up the "dematerialization request form". This informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us, has no application to the facts of the case, as brought out by the learned counsel for the assessees. 28. In the light of the foregoing discussion, respectfully following the decision of the Jharkhand High Court in the case of Arun Kumar Agarwal(HUF) (supra), besides other decisions of the Tribunal referred to above, we find no infirmity in the impugned orders of the CIT(A). The same are accordingly confirmed and the grounds of the Revenue in these appeals are rejected." 68 Further identical question of share purchase and sales was also considered by Hon Delhi High court ITA Nos. 43/2016 & 44/2016 PR. COMMISSIONER OF INCOME TAX - 5 JATIN INVESTMENT PVT. LTD. Dated 18/1/2017 where the findings of the CIT (A) and ITAT were upheld that unless the revenue establishes that the money has gone for profits on shares from the coffers of the unaccounted income of the assessee, in view of exhaustive evidences produced by the assessee, which were not further probed and proved false. 69 The assessee has supported the transactions with overwhelming documentary evidences which were not proved to be false as well as prices at which transaction took places was also not held by ld AO to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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