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TMI Blog2019 (5) TMI 1670X X X X Extracts X X X X X X X X Extracts X X X X ..... o note that in the extracts of the statement of Sri Sunil Dokania given in the Show Cause notice, it is nowhere mentioned that the alleged person has provided any entry to the assessee directly. When the transactions were as per norms prescribed by SEBI and concerned stock exchange and suffered STT,brokerage, service tax, and cess. There is no iota of evidence over thetransactions as it were reflected in demat account. AO did not doubt the genuineness of the documents submitted by assessee. Theld AO failed to bring on record any evidence to suggestthat the sale of shares by the Assessee were not genuine. The assessee produced the contract notes, details of demataccounts and produced documents showing all payments were received bythe assessee through banks. In these circumstances, the long term capital gain (LTCG) earned by the assessee should not be treated as bogus - Decided in favour of assessee Unexplained expenditure towards commission charges of sale of such shares by the operator - HELD THAT:- As already held that the transactions relating to LTCG were genuine and not the accommodation entries as alleged by the AO. Consequently, the addition is hereby directed to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was earlier restrained by the SEBI. Thereafter, the SEBI revoked his earlier interim order and held that the company and the assessee as well not involved in price manipulation. As such, LTCG on sale of shares of Kailash Auto Finance Ltd can under no circumstances be doubted. Thus, the LTCG claimed u/s 10(38) should be allowed and addition made on wrong facts deserve to be deleted. 2) That the Ld. CIT(A) erred in confirming the alleged addition merely relied upon the statement of few unrelated persons and also based on the information received from Invg, Wing of I.T. Dept. The said statement was taken behind back of the company and did not provided any opportunity to cross examination to them. Thus, it is completely denial of natural justice. The impugned addition so made merely relying upon the information received and alleged statements recorded is unjustified and deserve to be deleted. Therefore, the disallowance of commission made by the Ld. AO and confirmed by the Ld. CIT(A) is unjustified and needs to be deleted. 4) That the petitioner craves leave to add, alter, amend or withdraw any ground and grounds of appeal before or at the time of hearing. 4. The brief facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enny stock company controlled by them. These shares are transferred to the beneficiary at a very nominal price mostly off-line through preferential allotment or off-line sale. The beneficiary (an individual) holds the shares for one year, the statuary period after which LTCG is exempt u/s 10(38) of the Income tax Act,1961. In the meantime the operators rig the price of the stock and gradually rise its price many times, often 500 to 1000 times. This is done through low volume transaction indulged in by the dummies of the operator at a pre-determined price. When the price reaches the desired level the beneficiary who bought the shares at a nominal price, is made to sell it to a dummy paper company of the operator. For this, unaccounted cash is provided by the beneficiary which is routed through a few layers of paper companies by the operator and finally is parked with the dummy paper company that will buy the shares. 4.2. Further, it may be mentioned here that the price of the shares of the penny stock companies are rigged and are raised through circular trading. This is managed by the Operator of the scrip. An Operator is a person who is managing the overall affairs of the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s has been voluntarily surrendered by such assessees. iv) In Kolkata, where this investigation was started some of the beneficiaries who had taken entries of nearly ₹ 40 crores have voluntarily surrendered it for taxation without any further enquiry. v) Several assessees have filed revised return since the enquiry and have taken back their claim of exemption. 4.4. The Securities and Exchange Board of India (SEBI) has in the recent past, passed some orders on the issue of manipulation of share market for providing accommodation entry of bogus LTCG. SEBI considering the inputs from Income Tax Department as well as from its own surveillance system and that of the stock exchange has taken appropriate action in case of the suspect scrips. These actions include passing interim direction, suspending the trade, reducing the price bank etc. 5. Thereafter, the Assessing Officer concentrated on circumstantial/direct evidences against the claim of long term capital gain of the assessee. The Assessing Officer in order to keep the order short, restricted his discussion in assessment order, only to scrip, namely, Kailash Auto Finance Ltd. and noted that the same would be applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /1423 dated 14.12.17 we would like to state as under: As regards to your contention that the LTCG earned by us in scrip s of Kailash Auto and Lifeline Drugs and others are not natural but is arranged one, we shall like to highlight the fact that any assessee claiming a transaction of purchase and sale of shares to fall under LTCG has to pass four tests viz i) Assessee should had purchased the shares, ii) Shares to be held for at least 365 days by the assessees, iii) Assessee should have sold the shares and iv) Finally STT should have been paid on the sale of the shares. Let us them one by one. i. Assessee should had purchased the shares. In the matter of Kailash Auto In the instant case we would like to mention that we had never purchased the shares of Kailash Auto from the market but we were holding the shares of ltd. company which had undergone a scheme of arrangement of merger by which the scrip bought by the assessee got merged into a listed company i.e. Kailash Auto. Further we would like to highlight that the entire process of Merger of the Private Limited Companies with the listed companies has been already supervised and approved by the Hon ble A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, Merrill Lynch India Equities Fund (Mauritius) Ltd, Merrill Lynch Series Fund Inc M L Fundamental Growth Strategyduring the year FY 14-15. Further in the above context we would like to mention that after seeing the above Facts and other submission given by the assessee the Hon'ble WholeTime Member of SEBI has observed that there are no adverse findings against .with respect to their role in the manipulation of the scrip of Kailash Autocopy of the order attached for ready reference. We don't presume that the AO had doubt on my assessee that they may had made arrangements with the above FII's for manipulation in the price and sold the shares to them thereafter. iv. STT should had been paid on the sale on the shares The fact that the STT has been paid can be easily verified from the sale contract notes already submitted to your office. v. As to your contention that the Directorate of Investigation, Kolkata has carried out country wide investigation to unearth the organized racket of generating bogus entries of Long Term Capital Gains (LTCG] In context to the same we shall like to mention that a survey on 21.01.2016 in this connection was conducted at our premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There are lots of companies which have defeated the general trend of increase in their share price in spite of the negative or low profitability. Similar date sare available for all years for various companies details of such two companies with current data s are reproduced below: Source: money control November 24,2017 From the above table it may be clearly seen that prices of Rain Industries have increased more than six times whereas its profits have fallen in the relevant period by 2 per cent. In another case i.e. Thirumalai Chemicals even if the profits have increased by 1.32 times but the prices of the same have increased by almost 10 times. We shall also like to draw your attention to another financial parameter Price to Earnings Ratio (PE) in case of Rain Industries the PE of industry average is 29.44 times were as PE of Rain Industries is 351.68 times i.e. 11.94 times more than the industry average. Whereas the performance of so alleged bogus LTCG scrip s in the relevant financial year has been as under: From the above table it can be seen that in the current financial year there has been decreased in the price of the shares in comparison to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition made by assessing officer. The ld. CIT(A) has simply reiterated the findings of the Assessing Officer and confirmed the order of the Assessing Officer. 9. Aggrieved by the order of theld CIT(A), the assessee is in appeal before us. 10. The ld. Counsel for the assessee submitted before us that the assessee claimed exemption of long term capital gain of ₹ 7,12,89,467/- u/s 10(38) of the Act, since the share purchased / sold were listed shares and were purchased and sold through stock broker in Stock exchange and STT was deducted at the time of sale. The ld. Counsel for the assessee submitted before us, the details of the long term capital gain of ₹ 7,12,89,467/- earned during the financial year on account of sale of shares through a recognized stock brokers, in a recognized stock exchange and claimed as exempt u/s 10(38) of the Act. Further,the ld. Counsel submitted that all the relevant details and documents asked by the Assessing Officer were submitted against the notice u/s 142(1) of the Act, during the assessment proceedings. During the assessment proceedings, the assessee submitted the following details and documents in support of his claim of exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld CIT(A) should be upheld. 12. We have heard both the parties and perused the material available on record. We note that the assessee is a regular investor in shares and has been investing in shares since past several years. The said fact is evident from the details given below: Thus, from the above table, it is abundantly clear that the assessee is a regular investor in shares and is having a substantial amount of investments. During the year under consideration, the assessee has sold the impugned three scrips and earned capital gains on the same which is claimed year after year consistently. The details of long term capital gain earned by the assessee is given below: We note that the assessee claimed exemption of LTCG of ₹ 7,12,89,467/- u/s 10(38) of the Act, since the shares purchased and sold were listed shares and were purchased and sold through stock broker in Stock Exchange and STT was deducted at the time of sale. The details of purchase and sales transaction made by the assessee is given below: Therefore, the details of LTCG of ₹ 7,12,89,467/- earned during the financial year on account of sale of shares through a registered stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase bill dated 12.02.2012, reflecting the purchase of 3,20,000 shares of Careful Projects Advisory Ltd. from Trump Traders Pvt. Ltd. (Paper Book Page No. 4) ii) Copy of purchase bill dated 09.10.2012 reflecting the purchase of 9,00,000 shares of Careful Projects Advisory Ltd. from Trump Traders Pvt. Ltd. (Paper Book Page No. 5) iii) Copy of Bank Statement reflecting the debit transaction of the amount of ₹ 3,20,000/- paid for the purchase of shares by cheque no. 729958 on 10.02.2012 (Paper Book Page No. 9) iv) Copy of Bank Statement reflecting the debit transaction of the amount of ₹ 9,00,000/- paid for the purchase of shares by cheque no. 037633 on 09.10.2012 (Paper Book Page No. 8) v) Copy of statement of DEMAT account evidencing the debit of shares of Kailash Auto Finance Ltd. on 07.04.2014, 09.04.2014, 10,04,2014, 11.04.2014, 15.04.2014, 16.04.2014 and so on; (Paper Book page no. 64- 65) vi) Copy of order approving the Scheme of Amalgamation passed by the Hon'ble High Court in relation to merger of Kailash Auto Finance Ltd. and Careful Projects Advisory Ltd. and Panchshul Marketing Ltd. (Paper Book page No. 85- 115). vii) Copy of Contract Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions of sale of shares of EINS Edutech Ltd. (Paper Book page No. 59-61) . Therefore, by submitting these plethora documents and evidences, the ld Counsel for the assessee claimed that long term capital gain (LTCG) earned in respect of the scrips, namely: Kailash Auto Finance Ltd., Lifeline Drug Pharma Ltd, and Eins Edutceh Ltd. (Now Aplaya Creations Ltd.) are genuine. We also note that the Securities Exchange Board of India (SEBI) also declared these scrips and shares as genuine and the interim order passed by the SEBI was revoked by SEB1 itself, vide its order SEB1/WTM/MPB/EFD-DRA- 1/31/2017 dated 21.09.2017 (page nos. 69-84). Assessee's name is at S.N. 154 (at page no. 80) read with para 7 of Page no. 83. Hence, we note that since these shares/scrips were traded on the platform of recognized stock exchange and the Securities Exchange Board of India (SEBI) did not give any adverse reporttherefore, long term capital gain arise or earned by the assessee should be genuine and it should not be bogus by any stretch of imagination. Moreover, the assessing officer did not doubt on the documents and evidences as noted by us above. The assessing officer mainly made additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere pre-arranged to book such gain in the hands of the pre-fixed beneficiaries. The above allegations are generalized and not specific to the case of the assessee. The assessee was asked to show cause, vide letter dated 14.12.2017, as to why the Long Term Capital Gain booked by way of transaction in the aforesaid scrips would not be considered bogus, and consequently, be added to his total income. The assessee duly replied to the show cause notice vide his letter dated 22.12.2017 thereby giving all the details and reasons as required by the AO to prove that the LTCG incurred by the assessee on sale of above mentioned shares are genuine and cannot be considered as bogus. However, the Ld. AO did not consider the submission of the assessee and made the addition of LTCG in the hands of the assessee treating the same to be unexplained. We note that it appears from the show cause notice that the Ld. AO has relied on the following information for arriving at such conclusion: (a) Information received from the office of DIT(Inv), Kol regarding entry of bogus LTCG. (b) Statement given by Sri Sunil Dokania, an alleged entry operator who was involved in price rigging and providing Bogus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Broker named Eureka Stock Share Broking Services Ltd. in the Stock Exchange. The shares were purchased and sold based on the prevailing market condition. The payments were received through proper banking channel. The purchase and sale transactions were subjected to Security Transaction Tax, Service Tax, Brokerage charges and Stamp duty. The share purchase and sale transactions are reflected in the d-mat account. The purchase of shares (Investments) was not disputed in earlier year, where assessment is completed u/s. 143(3) of the Income Tax Act. These facts are verifiable from the regular books of accounts. The transactions can also be verified from the Stock Exchange. Therefore, we do not agree with the assessing officer and hence the addition made by assessing officer needs to be deleted. So far second allegation of the assessing officer is concerned, we note thatassessing officer has relied on the statement given by Sri Sunil Dokania, an alleged entry operator. We note that the AO has made general allegations about the alleged entry operator, Sri Sunil Dokania, vide page no. 22 of the assessment order. We note that no copy of such statement was given to the assessee nor a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anytangible evidence found during search carry no significance. 16. We note that Securities Exchange Board of India (SEBI) is an authority which regulates the listed companies. The SEBI controls listed companies and makes rules and regulations and the listed companies are supposed to follow the rules, regulations and directions given by SEBI. We note that SEB1 by its interim order dated 29.03.2016 restrained 246 entities from accessing the securities market and from dealing and buying selling in securities, directly or indirectly in any manner whatsoever till any further directions (Page No. 69) and included Kailash Auto Finance Ltd. and assessee at Serial No. 1 and Serial No. 156 (Page Nos. 70 74 respectively) . However, the same was revoked by SEB1 vide its order SEB1/WTM/MPB/EFDDRA- 1/31/2017 dated 21.09.2017 (page nos. 69-84). Assessee's name is at S.N. 154 (at page no. 80) read with para 7 of Page no. 83. We note that the SEBI by its order bearing reference no. SEBI/WTM/MPB/EFD- DRA-I/31/2017, dated 21.03.2017, has held as under: 6.Considering the fact that there are no adverse findings against the aforementioned 244 entities with respect to their role in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the person alleged to provide the entries as alleged by the AO. We also note that SEBI has given a clean chit to the company and has freed it from the allegation of market rigging. Therefore, the allegation of the AO itself becomes infructuous.Further, the assessee had also requested for an opportunity to cross examine Sri Sunil Dokania, whose statement has been relied on by the AO for making the addition. However, the Ld. AO did not provide any opportunity for cross examine the so-called operators. It is well established law that no adverse view can be taken against an assessee on the basis of statement recorded by department of any person without providing copy of the statement to the assessee and also without providing opportunity for cross examination of the said person. 18. We note that Hon ble Bombay High Court in the case of CIT vs. Lavanya Land Pvt. Ltd. [2017] 83taxmann.com 161 (Bom) held that there was no evidence whatsoever toallege that money changed hands between the assessee and the broker or any other person including the alleged exit provider whatsoever to convert unaccounted money for getting benefit of LTCG as alleged. In the said case, theHon ble High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 (Bombay HC) (xiii) CIT vs. Himani M. Vakil [2014] 41 taxmann.com 425 (Gujarat HC) (xiv) CIT vs. Maheshchandra G. Vakil [2013] 40 taxmann.com 326 (Gujarat HC) (xv) CIT vs. Sumitra Devi [2014] 49 Taxmann.com 37 (Rajasthan HC) (xvi) GaneshmullBijay Singh Baid HUF vs. DCIT ITA Nos. 544/Kol/2013 (Kolkata ITAT) (xvii) Meena Devi Gupta Others vs. ACIT ITA Nos. 4512 4513/Ahd/2007 (Ahmedabad ITAT) (xviii) Manish Kumar Baid ITA 1236/Kol/2017 (Kolkata ITAT) (xix) Mahendra Kumar Baid ITA 1237/Kol/2017 (Kolkata ITAT) 21. The ldCounsel also brought to our notice that once the assessee has furnished all evidences in support of the genuineness of the transactions, the onus to disprove the same is on revenue. He referred to the judgement of Hon ble Supreme Court in the case of Krishnanand Agnihotri vs. The State of Madhya Pradesh [1977] 1 SCC 816 (SC). In this case the Hon ble Apex Court held that the burden of showing that a particular transaction is benami and the appellant owner is not the real owner always rests on the person asserting it to be so and the burden has to be strictly discharged by adducing evidence of a definite character which would directly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. and the gains were treated as business profit of the assessee by treating the sales of the shares within the ambit of adventure in nature of trade. Thus, it can be seen that in the decision relied upon by the ld. DR, the dispute was whether the profit earned on sale of shares was capital gains or business profit. 24. We note that when the transactionswere as per norms prescribed by SEBI and concerned stock exchange and suffered STT,brokerage, service tax, and cess. There is no iota of evidence over thetransactions as it were reflected in demat account. AO did not doubt the genuineness of the documents submitted by assessee. Theld AO failed to bring on record any evidence to suggestthat the sale of shares by the Assessee were not genuine. The assessee produced the contract notes, details of demat accounts and produced documents showing all payments were received bythe assessee through banks. In these circumstances, the long term capital gain (LTCG) earned by the assessee should not be treated as bogus, as held by the jurisdictional Hon`ble Calcutta High court in various cases, as mentioned below: (i) . CIT V. Shreyashi Ganguli [ITA No. 196 of 2012] (Cal- HC) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E INVESTMENTS ITA 620 of 2008, dated 26thAugust 2008, held as follows: It appears that the share loss and the whole transactions were supported by contract notes, bills and were carried out through recognized stockbroker of the Calcutta Stock Exchange and all the payments made to the stockbroker and all the payments receivedfrom stockbroker through account payee instruments, which were also filed in accordance with the assessment. It appears from the facts and materials placed before the Tribunal and after examining the same the Tribunal came to the conclusion and allowed the appeal filed by the assessee. In doing so, the Tribunal held that the transaction fully supported by the documentary evidences could not be brushed aside on suspicion and surmises. However, it was held that the transactions of share are genuine. Therefore, we do not find that there is any reason to hold that there is any substantial question of law involved in this matter. Hence, the appeal being ITA No.620 of 2008 is dismissed. (vi) The Hon'ble Calcutta High Court in the case of Principal Commissioner Of Income vs M/S. Blb Cables And Conductors; ITAT No.78 of 2017, GA No.747 of 2017; dt. 19 J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re at the prevailing price and therefore the suspicion of the AO was misplaced and not substantiated. (viii)CIT V. Lakshmangarh Estate Trading Co. Limited [2013] 40 taxmann.com 439 (Cal) In this case the Hon ble Calcutta High Court held that on the basis of a suspicion howsoever strong it is not possible to record any finding of fact. As a matter of fact suspicion can never take the place of proof. It was further held that in absence of any evidence on record, it is difficult if not impossible, to hold that the transactions of buying or selling of shares were colourable transactions or were resorted to with ulterior motive. We note that above mentioned judgments of Hon`ble Calcutta High Court, by and large held that wherethe whole transactions were supported by contract notes, bills and were carried out through recognized stockbroker of Stock Exchange and all the payments made to the stockbroker and all the payments receivedfrom stockbroker through account payee cheques, then in these facts and circumstances addition made by assessing officer on account of bogus long term capital gain should be deleted. We note that unless and until the order of Jurisdictional Hon`bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xx) Baijnath Agarwal vs. ACIT [2010] 40 SOT 475 (Agra (TM) (xxi) ITO vs. Bibi Rani Bansal [2011] 44 SOT 500 (Agra) (TM) (xxii) ITO vs. Ashok Kumar Bansal ITA No. 289/Agra/2009 (Agra ITAT) (xxiii) ACIT vs. Amita Agarwal Others ITA Nos. 247/(Kol)/ of 2011 (Kol ITAT) (xxiv) Rita Devi Others vs. DCIT IT(SS))A Nos. 22-26/Kol/2p11 (Kol ITAT) (xxv) Surya Prakash Toshniwal vs. ITO ITA No. 1213/Kol/2016 (Kol ITAT) (xxvi) Sunita Jain vs. ITO ITA No. 201 502/Ahd/2016 (Ahmedabad ITAT) (xxvii) Ms. Farrah Marker vs. ITO ITA No. 3801/Mum/2011 (Mumbai ITAT) (xxviii) Anil Nandkishore Goyal vs. ACIT ITA Nos. 1256/PN/2012 (Pune ITAT) (xxix) CIT vs. Sudeep Goenka [2013] 29 taxmann.com 402 (Allahabad HC) (xxx) CIT vs. Udit Narain Agarwal [2013] 29 taxmann.com 76 (Allahabad HC) (xxxi) CIT vs. Jamnadevi Agarwal [2012] 20 taxmann.com 529 (Bombay HC) (xxxii) CIT vs. Himani M. Vakil [2014] 41 taxmann.com 425 (Gujarat HC) (xxxiii) CIT vs. Maheshchandra G. Vakil [2013] 40 taxmann.com 326 (Gujarat HC) (xxxiv) CIT vs. Sumitra Devi [2014] 49 Taxmann.com 37 (Rajasthan HC) (xxxv) GaneshmullBijay Singh Baid HUF vs. DCIT ITA Nos. 544/Kol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agr/2009 (Agra ITAT) (vi) ACIT vs.Amita Agarwal Others - ITA Nos. 247/(Kol)/ of 2011 (Kol ITAT) (vii) Lalit Mohan Jalan (HUF) vs. ACIT ITA No. 693/Kol/2009 (Kol ITAT) (viii) Mukesh R. Marolia vs. Addl. CIT [2006] 6 SOT 247 (Mum) 31. We note that the ld. D.R. had heavily relied upon the decision of the Hon ble Bombay High Court in the case of Bimalchand Jain in Tax Appeal No. 18 of 2017. We note that in the case relied upon by the ld. D.R, we find that the facts are different from the facts of the case in hand. Firstly, in that case, the purchases were made by the assessee in cash for acquisition of shares of companies and the purchase of shares of the companies was done through the broker and the address of the broker was incidentally the address of the company. The profit earned by the assessee was shown as capital gains which was not accepted by the A.O. and the gains were treated as business profit of the assessee by treating the sales of the shares within the ambit of adventure in nature of trade. Thus, it can be seen that in the decision relied upon by the ld. DR, the dispute was whether the profit earned on sale of shares was capital gains or business profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supported by the contract notes, bills and were carried out through recognized stock broker of the Calcutta Stock Exchange and all the bills were received from the share broker through account payee which are also filed in accordance with the assessment. It appears from the facts and materials placed before the Tribunal and after examining the same, the tribunal allowed the appeal by the assessee. In doing so the tribunal held that the transactions cannot be brushed aside on suspicion and surmises. However it was held that the transactions of the shares are genuine. Therefore we do not find that there is any reason to hold that there is no substantial question of law held in this matter. Hence the appeal being ITA No.620 of 2008 is dismissed. 36. We note that the ld. AR cited plethora of the case laws to bolster his claim which are not being repeated again since it has already been incorporated in the submissions of the ld. AR (supra) and have been duly considered to arrive at our conclusion. The ld. DR could not bring to our notice any case laws to support the impugned decision of the ld. CIT(A)/AO. In the aforesaid facts and circumstances of the case, we hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration is whether, in such cases, the legal evidence produced by the assessee has to guide decision in the matter or the general observations based on statements, probabilities, human behaviour and discovery of the modus operandi adopted in earning alleged bogus LTCG and STCG, that have surfaced during investigations, should guide the authorities in arriving at a conclusion as to whether the claim is genuine or not. An alleged scam might have taken place on LTCG etc. But it has to be established in each case, by the party alleging so, that this assessee in question was part of this scam. The chain of events and the live link of the assessee's action giving her involvement in the scam should be established. The allegation imply that cash was paid by the assessee and in return the assessee received LTCG, which is income exempt from income tax, by way of cheque through Banking channels. This allegation that cash had changed hands, has to be proved with evidence, by the revenue. Evidence gathered by the Director Investigation's office by way of statements recorded etc. has to also be brought on record in each case, when such a statement, evidence etc. is relied upon by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. However, the Assessing Officer as well as the Commissioner (Appeals), have brought out any part of the investigation wing report in which the assessee has been investigated and /or found to be a part of any arrangement for the purpose of generating bogus long term capital gains. Nothing has been brought on record to show that the persons investigated, including entry operators or stock brokers, have named that the assessee was in collusion with them. In absence of such finding how is it possible to link their wrong doings with the assessee. In fact, the investigation wing is a separate department which has not been assigned assessment work and has been delegated the work of only making investigation. The Act has vested widest powers on this wing. It is the duty of the investigation wing to conduct proper and detailed inquiry in any matter where there is allegation of tax evasion and after making proper inquiry and collecting proper evidences the matter should be sent to the assessment wing to assess the income as per law. No such action executed by investigation wing against the assessee. In absence of any finding specifically against the assessee in the investigation wing repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of statement recorded by department of any person without providing copy of the statement to the assessee and also without providing opportunity for cross examination of the said person.We note that the assessee had never entered into any transaction with Sri Sunil Dokania, against whom investigation wing had allegedly made inquiry. We also note that in the extracts of the statement of Sri Sunil Dokania given in the Show Cause notice, it is nowhere mentioned that the alleged person has provided any entry to the assessee directly. We note that the ld Counsel has provedthat assessee is a regular investor in shares and securities. The shares were purchased and sold through a Registered Broker named Eureka Stock Share Broking Services Ltd. in the Stock Exchange. The shares were purchased and sold based on the prevailing market condition. The payments were received through proper banking channel. The purchase and sale transactions were subjected to Security Transaction Tax (STT), Service Tax, Brokerage charges and Stamp duty. The share purchase and sale transactions are reflected in the DMAT account. The purchase of shares (Investments) was not disputed in earlier year, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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