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TMI Blog2020 (1) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer to accept the long term capital gain declared as such. - Decided in favour of assessee. - ITA No. 6703/DEL/2019 - - - Dated:- 10-1-2020 - Shri Bhavnesh Saini, Judicial Member, And Shri N.K. Billaiya, Accountant Member For the Assessee : Shri S.K. Tulsian, Adv, Ms. Bhoomija Verma, Adv For the Revenue : Shri Ved Prakash Mishra, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] - 36, New Delhi dated 24.07.2019 pertaining to Assessment Year 2015-16. 2. The grievance of the assessee relates to the addition made u/s 68 of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] by treating the long term capital gain as not genuine amounting to ₹ 5,70,91,750/- and is further aggrieved by the addition of ₹ 11,41,835/- being 2% of the alleged bogus long term capital gain. 3. The representatives of both the sides were heard at length, the case records carefully perused and with the assistance of the ld. Counsel, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was no reason why there should have been splitting of shares. The Assessing Officer thereby referred to the general observations in respect of entry providers and their modus operandi and came to the conclusion that the rise in share price was unreasonable, mode of acquisition of shares was questionable and findings of the INV- Wing, Kolkata proved that the associated brokers/entry operators and beneficiaries had worked out an arrangement, in which shares were acquired by the assessee, their share prices were rigged and then with the help of entry operators, routing cash, shares were sold at high price to arrive at tax free capital gains. 10. After referring to the general observations and investigation report and the modus operandi of the entry operators, the Assessing Officer came to the conclusion that the assessee has failed to discharge his onus cast upon him by provisions of section 68 of the Act and made addition of ₹ 5,70,91,750/-. 11. The Assessing Officer further observed that the beneficiaries of such transactions pay some commission to the entry providers and assuming that the assessee must have paid 2% commission, made furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer accepted the transactions in respect of short term capital gain and balance long term capital gain. 19. A perusal of the assessment order clearly shows that nowhere the Assessing Officer has made any adverse comment in respect of habitual investments made by the assessee. On the contrary, he has accepted all the transactions other than those of LDPL. 20. Section 142(2) provides that for the purpose of obtaining full information in respect of income or loss of any person, the Assessing Officer may make such enquiry as he considers necessary and u/s 142(3) it is provided that the assessee shall be given an opportunity of being heard in respect of any material gathered on the basis of any enquiry under sub section (2) and in section 143(3) of the Act it is provided that after hearing such evidence, as the assessee may produce and such other evidence as the Assessing Officer may require on specified points and after taking into account all relevant material which he has gathered, the Assessing Officer shall make an assessment on the total income or loss of the assessee. 21. A conspectus reading of all these relevant provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders of the SEBI or the Investigation Wing. In our considered view, additions made by the Assessing Officer and confirmed by the ld. CIT(A) are heavily guided by surmises, conjectures and presumptions and, therefore, have no legs to stand on. 26. It would not be out of place to refer to the decision of the Hon'ble Supreme Court in the case of Adamine Construction Pvt Ltd 99 Taxmann 45 wherein the Hon'ble Supreme Court, while dismissing the appeal, made the following observations: What is evident is that the AO went by only the report received and did not make the necessary further enquiries - such as into the bank accounts or other particulars available with him but rather received the entire findings on the report, which cannot be considered as primary material. The assessee had discharged the onus initially cast upon it by providing the basic details which were not suitably enquired into by the AO. The assessee had discharged the onus initially cast upon it by providing the basic details which were not suitably enquired into by the AO. 27. In the case of Odeon Builders Pvt Ltd 110 Taxmann.com 64, the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order that the Assessing Officer has not conducted any independent and separate enquiry in this case of the assessee. Even the statement recorded by the INV Wing has not been got confirmed or corroborated by the person during the assessment proceedings. The Assessing Officer ought to have conducted a separate and independent enquiry and any information received from the INV Wing is required to be corroborated and reasserted/reaffirmed during the assessment proceedings by examining the concerned persons who can affirm the statements already recorded by any other authority of the department. 23. There is no dispute that the statement which was relied upon by the Assessing Officer was not recorded by the Assessing Officer in the assessment proceedings but it was pre existing statement recorded by the INV Wing and the same cannot be the sole basis of assessment without conducting proper enquiry and examination during the assessment proceedings itself. In our humble opinion, neither the Assessing Officer conducted any enquiry nor has brought any clinching evidence to disprove the evidences produced by the assessee. 24. Our above view is forti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the decision of the Hon'ble High Court of Delhi in the case of Suman Poddar ITA No. 841/2019 and in the case of Udit Kalra ITA No. 220/2019 and several other decisions of the coordinate bench. 30. We have given thoughtful consideration to the orders of the authorities below and have carefully perused the judicial decisions relied upon by the ld. DR. We find that in all those cases, either the assessee entered into solitary transaction resulting into long term capital gain or prior to the solitary transaction, the assessee was neither engaged in the purchase and sale of shares nor subsequent to earning of long term capital gain, the assessee was found to be engaged in the purchase and sale of shares. These facts are clearly distinguishable from the facts of the case in hand. As mentioned elsewhere, the assessee is a habitual investor having portfolio of investment in shares in crores and is still holding investment in shares in several crores and is constantly engaged in investing in shares of various companies. 31. Considering the vortex of evidences, we are of the considered view that the assessee has successfully discharged the onus cast ..... X X X X Extracts X X X X X X X X Extracts X X X X
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