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TMI Blog2021 (7) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... n the bank account attached with the Demat account. The detail of the persons purchasing the shares is not provided on the portal of SEBI and all the transactions of purchase and sale took place on the portal through registered brokers under the control of SEBI. M/s SAL has not been striked off as a shell company. Trading of shares of M/s SAL was permitted by SEBI. Prime facie, all the conditions provided u/s 10(38) of the Act seems to have been fulfilled by the assessee. Whether assessee was not provided opportunity of cross examination? - A.O has referred to some investigation carried out by the Department in the case of some brokers and other assessee(s) located at Kolkata and other places and there is a reference of the company M/s SAL. As not disputed that name of the assessee is not appearing in such report nor any evidence was found by the Ld. A.O which could indicate that assessee was also a part or connected to the alleged racket of providing accommodation entry of bogus LTCG nor any proof of any agreement between the assessee and other persons mentioned in the report has been found. So the basis of addition is primarily on the statement of third party as well as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d following grounds of appeal:- Shivnarayan Sharma ITA No.889/Ind/2018 A.Y 2014-15 That the order passed by learned CIT(A) is bad in law and on facts. The learned CIT(A) has erred in confirming the addition of ₹ 28,47,833/- u/s 68 without considering the fact of the case by relying on certain decision, the fact of which are different from the case of the appellant, which is quite unjust, illegal and against the facts of the case. 3. The learned CIT(A) has erred in confirming the addition of ₹ 28,47,833/- based on the enquiry of the investigation wing of Kolkata and statement of one Vpul Vidur Bhatt without providing such document to the appellant and to cross examine the Vipul Vidur Bhatt, which is quite unjust, illegal and against the facts of the case. 4. That learned CIT(A) has erred in conforming the addition of ₹ 28,47,833/- without considering the various judicial proceedings submitted before him, which are directly related to facts of the appellant, which is quite unjust, illegal and against the facts of the case. 5. That learned CIT(A) has erred in addition of ₹ 89,935/- being 3% on the amount of sale consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The appellant craves leave to add, amend, alter or otherwise raise any other ground of appeal. Prayank Jain ITA No.206/Ind/2019 A.Y 2014-15 That the order passed by learned CIT(A) is bad in law and on facts. 1. That learned CIT(A) has erred in conforming the addition of ₹ 56,02,384/- u/s 68, whereas section 68 is not applicable on the transaction entered into by the assessee, which is quite unjust, illegal and against the facts of the case. 2. That learned CIT(A) has erred in holding the genuine income of Long Term Capital Gain exempted u/s 10(38) of Rs a sham transaction, by applying test of human probability, without any evidence against the assessee, which is quite unjust, illegal and against the facts of the case. 3. That the Ld. CIT(A) has erred in confirming the disallowance of claim of assessee of exempted LTGC based on information/statement gathered by investigation wing of the department, without any opportunity to cross examine such persons and without providing such documents for assessee s comments, which is quite unjust, illegal and against the facts of the case. 4. That the Learned CIT(A) erred in confirming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) has erred in considering the script from which the assessee has earned Long Term Capital Gain as penny stock , a term nowhere define under the Income Tax Act and under any other law for the time being in force, which is quite unjust, illegal and against the facts of the case. 4. That the learned CIT(A) has erred in ignoring the decision of Hon ble Delhi Bench of ITAT in case of Shikha Dhawan (Appeal No.ITA No.3035/Del/2018) wherein the similar transaction of Turbotech Engineering is considered as genuine, which is quite unjust, illegal and against the facts of the case. 5. That the learned CIT(A) has erred in wrongly applying the decision of Hon ble Supreme Court in case of the assessee wherein the facts of the case of the assessee is altogether different, which is quite unjust, illegal and against the facts of the case. 6. That the learned CIT(A) has erred in holding that the capital gain earned by the assessee, based on some inquiries but not on the assessee, is bogus and/or managed affairs, which is quite unjust, illegal and against the facts of the case. 7. That the learned CIT(A) has erred in not providing the cop[y of the report of the investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries but not on the assessee, is bogus and/or managed affairs, which is quite unjust, illegal and against the facts of the case. 7. That the learned CIT(A) has erred in confirming the disallowance of claim of assessee exempted LTGC based on information/statement gathered by investigation wing of the department, without any opportunity to cross examine such persons and without providing such documents for assessee s comments, which is quite unjust, illegal and against the facts of the case. 8. That the learned CIT(A) has erred in mentioning the fact that learned AO has tried to conduct inquiries during assessment proceedings, in confirming disallowance, where as no such inquiries have been carried out, which is quite unjust illegal and against the facts of the case. 9. That the learned CIT(A) has erred in concluding that the purchases have been made in cash, which is quite unjust illegal and against the facts of the case. 10. The learned CIT(A) has erred in ignoring the various judgments quoted by the assessee, which is quite unjust illegal and against the facts of the case. 11. The learned ?CIT(A) has erred in enhancing the income of ₹ 28176 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition made on the basis of suspicion without any material on record The Id AO has made additions in respect of trading in shares of VA Infra relying on report of searches u/s 132 surveys u/s 133A conducted on brokers and companies at Mumbai. These statements are not equivalent to material much less incriminating material in eyes of law and they are not corroborated by any iota of independent material. These statements cannot bind assessee who was not subject matter of any parallel survey operation. These statements are pre-existing and were recorded during search and survey and no where independently re-examined by the Id AO. The assessee has not made any transaction with VAS Infra but has purchased and sold shares of VAS Infra. Accordingly, the company has correctly denied having any transactions with the assessee. (Tax Effect ₹ 205916/-) 5. Brought forward loss ought to have been adjusted against addition made That the appellant was dealing in shares as business activity. The learned AO has disallowed loss incurred in trading of shares of VAS Infra. Such disallowance has I consequently increased business income. There were brought forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Term Capital Turbotech 9,39,230/- 28,176/- Darshan Kumar Pahwa Bogus Loss Vas Infrastructure 7,43,099/- - 5. The impugned additions made by the Ld. A.O are on a common reasoning that the alleged capital gain/ loss have been earned/incurred are from sale of equity shares of penny stock companies which have seen abnormal price rise in short span without any major financial growth. 6. As the issues raised and facts are common, we will take up the facts of the assessee namely Shri Shivnarayan Sharma ITA No.889/Ind/2018 to adjudicate the common issues and our decision shall apply mutandis mutandis in the case of another assessee(s) namely Sapan Shah, Prayank Jain, Govind Harinarayan Agrawal (HUF), Manish Govind Agrawal (HUF) and Darshan Kumar Pahwa. All the assessee(s) as well as Ld. Departmental Representative has raised no objection in case the common issues are adjudicated in the light of the facts of assessee namely Shri Shivnarayan Sharma. 7. Brief facts in the case of Shri Shivnarayan Sharma are that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rage expenses of ₹ 89,935/- for arranging bogus LTCG. Income assessed at ₹ 45,17,920/- 8. Aggrieved assessee preferred appeal before Ld. CIT(A) against the addition made u/s 68 of the Act at ₹ 28,47,833/- and addition of brokerage expenses at ₹ 89,935/-. Again complete details of purchase and sales were filed along with the Demat account and bank statement. However, Ld. CIT(A) was not satisfied and he confirmed the view taken by Ld. A.O observing that the assessee is indulged in arranging bogus LTCG, the appellant had made investment through the derecognised broker and have earned excessive return within a short span of time which is extremely unfair. Placing reliance on the decisions Ld. CIT(A) held that the transactions of sale of equity shares giving rise to the alleged LTCG at ₹ 28,47,833/- are sham which could not stand the test of human probability. 9. Aggrieved assessee is now in appeal before the Tribunal. 10. Ld. Counsel for the assessee filed paper book containing from page 1 to 63. It was also submitted that the issue raised in this appeal are squarely covered by the decision of Coordinate Bench, Mumbai in the case of Dipesh R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make his submission on the same. Such a reliance on these material by the Ld. CIT(A) vitiates the entire proceedings and the order so made is ought to be quashed. [CIT(A) Page 21, Para 4.1.3] 3. Reliance is placed on the decision of Hon ble Supreme Court in the case of Sona Builders [2001] 119 Taxman 430 order pronounced on 24.07.2001 Para 7 Having regard to the statutory limit within which the appropriate authority has to act and his failure to act in conformity with the principles of natural justice, we do not think we can remand the matter to the appropriate authority. We must set his order aside. Para 8 The appeal is, accordingly, allowed. The judgment and order under appeal is set aside. The order of the appropriate authority dated 31-5-1993 is quashed. [emphasis supplied] In the instant case, the documents on the basis of which the claim of LTCG is rejected are not confronted to the assessee. Adverse view taken without confronting the documents is against the principles of natural justice. The addition made on the basis of such a document not confronted to assessee is illegal, void and the impugned order ought to be quashed. 4. Ld. AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had given cash to Mr. Sanjay Saxena. The Assessing Officer has not chosen to examine Mr. Sanjay Saxena to establish that cash was given by the assessee to Mr.Trivedi through Mr. Sanjay Saxena. Perusal of the reassessment order shows that the Assessing Officer has not made any efforts to link the cash received and deposited by Mr.Trivedi in his bank account was in fact paid by the assessee. In other words, the decision of the Assessing Officer in discarding the sale and holding that the amount received by the assessee from Mr.Trivedi represented the undisclosed income of the assessee is based on conjectures and surmises and is not based on any independent evidence gathered prior to or during the course of reassessment proceedings.In these circumstances, in the absence of any cogent evidence brought on record, the decision of the Tribunal in holding that the Assessing Officer has failed to establish the nexus between the cash amount deposited in the bank account of Mr.Trivedi is attributable to the cheque issued by Mr.Trivedi in favour of the assessee cannot be faulted. Consequently, the decision of the Tribunal in deleting the addition of ₹ 10,35,562 cannot be faulted. [e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock exchange operating under regulator i.e. SEBI is not warranted. 8. Ld. AO has made reference to Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR regulations 2009). The instant case is not case of issue of capital. Accordingly, reference made by Ld. AO to these regulations is irrelevant. 9. However, in these regulations, various terms have been defined. For the terms which are not explicitly defined under this regulation, shall have the meaning as per the Companies Act, 2013, the Securities Contracts (Regulation) Act, 1956 and Depositories Act, 1996 and the rules/regulations there under. The term penny stock has not been defined either under ICDR Regulations, 2009 or under the Companies Act, 2013; Securities Contracts (Regulation) Act, 1956 and Depositories Act, 2013. It is stated by Ld. AO that the shares are generally allotted through the route of preferential allotment (private allotment) or off market transaction. The ICDR Regulations, 2009 have specifically defined the term preferential issue . In the instant case, assessee has purchased shares of Conart Trader s Limited under an off market t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romoter/director/key management person of Conart Trader s Limited (amalgamating company) or Sunrise Asian Limited (amalgamated company) The observations of Ld. AO are vague, without any basis and merely surmises and conjectures. It is pertinent to mention here that the transactions of purchase and sale of shares are executed through banking channel on the recognized stock exchange. 13. Ld. AO erred in mentioning grossly incorrect fact .He has also not knowing to the company very well i.e. M/s Sunrise Asian............ [AO Page 8 para 3.5] a. The assessee had purchased shares of Conart Trader s Limited. The shares of Sunrise Asian Limited allotted due to amalgamation of Conart Trader s Limited with Sunrise Asian Limited through the order of Hon ble Bombay High Court. b. Assessee has knowledge about the company which is narrated by him in his statement recorded by the Ld. AO in the course of assessment proceedings, vide answer to question no. 5 and 6. [AO Page 07-08] 14. Above submission of the assessee is fortified by the decision of Hon ble Supreme Court in the case of LalchandBhagatAmbica Ram [1959] 37 ITR 288 (SC) - Section 143 of the Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h by Ld. AO and Ld. CIT(A) 1. In compliance to the notice issued u/s 142(1), assessee submitted the details of shares purchased and sold during the impugned year i.e. AY 2014-15. Copy of DMAT account was also submitted. 2. Assessee had purchased 6,000 shares of Conart Trader s Limited on 22.10.2011 i.e. AY 2012-13 from P. Saji Textiles Limited for a consideration of ₹ 1,50,000. This consideration was paid by cheque, duly reflected in the bank statement placed on record. Shares were purchased in physical form and it is an off- market transaction. Copy of share certificate from Conart Trader s Limited, duly endorsed for transfer to assessee is also placed on record. [PB 19] 3. Ld. AO failed to consider the various documents submitted by the assessee substantiating the share transaction. Ld. AO failed to bring on record any cogent material to negate the claim of assessee. Claim of the assessee is ought to be allowed. 4. Both before Ld. AO and Ld. CIT(A), copy of the ledger account of the assessee for the DMAT account maintained with share broker Swastika Investmart Limited for AY 2014-15, share certificate from Conart Trader s Limited, duly endorsed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para 47 ........................It is quite a trite law that suspicion howsoever strong may be but cannot be the basis of addition except for some material evidence on record. The theory of 'preponderance of probability' is applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of facts that might go against assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigation have been carried out, then nothing can be implicated against the assessee. [emphasis supplied] In the instant case, nothing has been proved against the assessee with respect to the sale of shares. b. Hon ble Mumbai Bench of ITAT in the case of Dipesh Ramesh Vardhan ITA No. 7648 of 2019 order pronounced on 11.08.2020 Para 11 The Ld. AR has relied on plethora of judicial pronouncements in support of various submissions, which we have duly considered. These decisions would only support the conclusions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps in earlier year as well as in subsequent years. It would, therefore, show that assessee is regularly dealing in scrips. The A.O. has not brought any adverse material against the assessee so as to make the above additions. Considering the totality of the facts and circumstances of the case and financials of M/s EBFL as reproduced above and other years [PB-76], we set aside the Orders of the authorities below and delete both the additions. [emphasis supplied] In the instant case, addition has been made by Ld. AO without considering the documents on record and without bringing any adverse material against the addition so made. Also, Ld. AO did not confront the material relied upon him for rebuttal by the assessee. Addition so made ought to be deleted. d. Hon ble Delhi Bench of ITAT in the case of Anoop Jain [2020] 114 taxmann.com 550 order pronounced on 10.01.2020 HEAD NOTE - Section 68 of the Income-tax Act, 1961 - Cash credit (Share dealing) - Assessment year 2015-16 - During relevant assessment year assessee sold certain shares of company LDPL and generated exempted long term capital gains - Assessing Officer drawing support from report of investigation win ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his common and interconnected issue of the four assessee s appeals is allowed. [emphasis supplied] In the instant case, both Ld. AO and Ld. CIT(A) have brought nothing on record to prove that the shares transactions of the assessee were collusive transactions. No document or material has been brought on record to establish the live link of the assessee with the so called search/surveys. Addition made by Ld. AO ought to be deleted. f. Hon ble Delhi Bench of ITAT in the case of KarunaGarg [2019] 109 taxmann.com 403 - order pronounced on 06.08.2019 Para 30 Considering the vortex of evidences, we are of the considered view that the assessee has successfully discharged the onus cast upon him by provisions of section 68 of the Act as mentioned elsewhere, such discharge of onus is purely a question of fact and therefore the judicial decisions relied upon by the DR would do no good on the peculiar plethora of evidences in respect of the facts of the case in hand and hence the judicial decisions relied upon by both the sides, though perused, but not considered on the facts of the case in hand. Para 31 We accordingly direct the Assessing Officer to accept the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by assessee. Whatever statements have been referred to in the order was general in nature with whom assessee did not have any transaction. Considering the totality of the facts and circumstances of the case, we hold that assessee has entered into genuine transaction of sale and purchase of shares and therefore, satisfied the conditions of Section 10(38) of the I.T. Act. The assessee is entitled for exemption under the same provision. We accordingly, set aside the orders of the authorities below and delete the addition of ₹ 41,85,762/-. Appeal of assessee is allowed. [emphasis supplied] In the instant case, the transaction was carried out through DMAT account and banking channel on which securities transaction tax (STT) was paid. The report on which Ld. AO has placed his reliance was never confronted to the assessee. Ld. AO has failed to consider the documentary evidences submitted by the assessee relating to the purchase and sale of shares. These documents have not been disputed both by Ld. AO and Ld. CIT(A) and there is no rebuttal to the explanation of the assessee. No specific material has been brought on record to put assessee under liability. h. Hon ble D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies of equal number of shares. Sale of shares from the DEMAT account through stock exchange and at the prevailing price as on the date of sale and further payment of STT on the transaction of sale has been duly established. In absence of any contrary fact, the mere reliance by the Assessing Officer on the report of Investigation Wing, Kolkata is not sufficient to establish the fact that the transaction is bogus. The finding of the Assessing Officer is based merely on the suspicion and surmises without any tangible material to show that the assessee has introduced his own unaccounted income in the share of long term capital gain even otherwise the reliance of the statements recorded by the Investigation Wing, Kolkata wherein without giving an opportunity of cross examination is a complete violation of principles of natural justice as held by the Hon'ble Supreme Court in the case of CCE Vs Andaman Timber Industries (Supra). The Coordinate Bench has also followed the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs. PoojaAgarwal order dated 11/09/2017 wherein the Hon'ble High Court has duly considered the fact that the Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company involved were false or fictitious. It is the finding of the AO that the scripts of this company was executed by a broker and the broker was suspended for some time. It is the assessee s contention that even though there are allegations against the broker, and for that reason the assessee cannot be held liable on this point In the instant case, nothing has been brought on record to establish that the transaction in shares of the impugned company were false or fictitious. It is not a case that broker through whom the scripts of the impugned company were executed was suspended for some time. No addition can be made in absence of any positive material on record. l. Hon ble Calcutta High Court in the case of M/s. Alpine Investments ITA No. 620 of 2018 order pronounced on 26.08.2008 ..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 received from stockbroker through account payee instruments, which were also filed in accordance with the assessment. It appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as earned profit before tax of ₹ 1.03 crores. 13. Ld. AO has alleged that the company has incurred losses during the period FY 2010-11 and FY 2011-12 i.e. relevant to AY 2011-12 and AY 2012-13. The correct fact being that during the period in which shares were purchased by assessee, the company was at break even. No profit and no loss incurred by assessee. [AO page 5 PB 66] 14. Ld. AO in the impugned order has reproduced the share price pattern of Sunrise Asian Limited from the website www.moneycontrol.com which is readily available in the public domain. Ld. AO has made his observations on the share price pattern and stated that the prices were rigged on the basis of this chart. Ld. AO further stated that this chart/graph reveals bogus LTCG. Assessee contends that no such pattern is enunciated in the Act or its rules as legislated by the Parliament. Nor any standards of procedure have been formulated stating the guidelines as given by the CBDT to this effect. 15. The share price pattern of Sunrise Asian Limited as reproduced in the impugned order relates to the period January 2011 to July 2016. Assessee had purchased the shares in October 2011 and were sold i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nits of equity oriented fund or units of a business trust is entered into on or after 01st October 2014 d. Securities transaction tax (STT) is paid In the instant case, assessee all the above mentioned conditions are duly fulfilled. Assessee is entitled to claim LTCG income exempt u/s 10(38). Claim of the assessee is bonafide, lawful and complies with the provisions of section 10(38). 2. It is a settled law that charge has to be clear and it cannot be presumed on the basis of evidence. Reliance is placed on the decision of Hon ble Apex Court in the case of Dilip Kumar and Company Ors Civil Appeal no. 3327 of 2007 order pronounced on 30.07.2018 Para 43 There cannot be any implied concept either in identifying the subject of the tax or person liable to pay tax. That is why it is often said that subject is not to be taxed, unless the words of the statute unambiguously impose a tax on him, that one has to look merely at the words clearly stated and that there is no room for any intendment nor presumption as to tax. It is only the letter of the law and not the spirit of the law to guide the interpreter to decide the liability to tax ignoring any amount of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute or it is not. If it is not, the Income-tax Officer has no power to impose tax on the said income. [emphasis supplied] 5. Principles of estoppels were also dealt by Hon ble Bombay High Court in the case of BalmukundAcharya 310 ITR 310 (Bom) and it held in Para 33 This Court in the case of Nirmala L. Mehta v. A. Balasubramaniam, CIT [2004] 269 ITR 1 has held that there cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. In the case on hand, it was obligatory on the part of the Assessing Officer to apply his mind to the facts disclosed in the return and assess the assessee keeping in mind the law holding the field. Similar view was taken by Hon ble Calcutta High Court in the case of CIT v. BhaskarMitter 73 Taxman 437. D. Provisions of section 68 not applicable on the impugned transaction of sale of shares of listed company on recognized stock exchange 1. Without prejudice to the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inate Mumbai Bench in the case of Dipesh Ramesh Vardhan Vs DCIT dated 11.08.2020, Co-ordinate Bench of Jaipur in the case of Ashok Agrawal ITA No.124/JP/2020 order dated 18.11.2020, Co-ordinate Bench of Delhi in the case of Swati Luthra ITA No.6480/Del/2017 order dated 28.06.2019, Co-ordinate Bench of Lucknow in the case of Achal Gupta ITA No.501/Lkw/2019 order dated 16.12.2020, Co- ordinate Bench of Indore in the case of Aditya Mundra ITA No.632/Ind/2019 dated 13.01.2021 and in the case of Shewta Agrawal ITA No.280/Ind/2019 21.12.2020 and also recent judgment of Hon ble High Court of Delhi in the case of PCIT V/s Krishna Devi others. 13. In case of remaining assessee(s) in the instant appeals, Ld. Counsel for the assessee has filed similar type of submissions along with paper book containing the facts and documents placed before lower authorities which are almost identical except the change in the name of the company and the amount of addition. 14. Per contra Ld. Departmental Representative vehemently argued supporting the orders of both the lower authorities and decisions referred and relied by Ld. CIT(A). Reliance was also placed on the judgment of Hon ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to some investigation carried out by the Department in the case of some brokers and other assessee(s) located at Kolkata and other places and there is a reference of the company M/s SAL. However it is not disputed that name of the assessee is not appearing in such report nor any evidence was found by the Ld. A.O which could indicate that assessee was also a part or connected to the alleged racket of providing accommodation entry of bogus LTCG nor any proof of any agreement between the assessee and other persons mentioned in the report has been found. So the basis of addition is primarily on the statement of third party as well as the information gathered from other sources. Perusal of the records shows that the assessee has not been provided any access to such report nor any opportunity was provided to cross examine those persons who accepted to have provided accommodation entries for the bogus LTCG, to the assessee. 18. We observe that all the above stated facts and the issue of genuineness of LTCG and failure of the Ld. A.O to provide opportunity to cross examination by the assessee with regard to the addition made u/s 68 of the Act for the sale consideration r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee group, in his statement, maintained the position that trading transactions were genuine transactions carried out through stock exchange following all process and legal procedures. The assessee also filed trading volume data and price range of the scrip for a period of more than 2 years i.e. from Jan, 2013 to July, 2015. The shares reflected healthy trading volume and the price range reflected therein was in the range of ₹ 360/- to ₹ 600/- per share. The price range was stated to be in the same range for 15 months after the period of sale of shares by the assessee, which has not been disputed bythe revenue. On the basis of all these facts, it could be gathered that the assessee had duly discharged the onus casted upon him to prove thegenuineness of the stated transactions and the onus had shifted on revenue to rebut the same. 7. As against the assessee s position, the primary material to make additions in the hands of assessee is the statement of Shri Vipul Bhat and the outcome of search proceedings on his associated entities including M/s SAL. However, there is nothing on record to establish vital link between the assessee group and Shri Vipul Bhat or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was acquainted with Shri Vipul Bhat or any of his entities and secondly, the onus casted upon assessee to prove the genuineness of the transactions was already discharged by the assessee. Shri Vipul Bhat, in his statement, stated that one Shri Sandeep Maroo acted as intermediary who introduced Vardhan family to him. However, no further investigations have been carried out to establish this vital link between the assessee and Shri Vipul Bhat. We do not find any independent investigations by Ld. AO to bring on record any tangible material to corroborate the same. There are no evident or even allegation of any cash exchange between the assessee and group entities of Shri Vipul Bhat. This is further evidenced by the fact that no substantial incriminating material / wealth of that magnitude has been found during the course of search operations on assessee which would corroborate such presumption and prove that the transactions were sham transactions, in any manner. 9. The fact that the assessee could not produce the concerned person of M/s SAL was rightly controverted by submitting that the aforesaid entity was not under the control of the assessee and the assessee was under no o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court vide SLP No. 20146 of 2012 dated 27/01/2014 which is reported as 88 CCH 0027 SCC. The SMC Bench of Tribunal in Anraj Hiralal Shah (HUF) V/s ITO (ITA No. 4514/Mum/2018 dated 16/07/2019) held that in the absence of any evidence to implicate the assessee or to prove that the transactions were bogus, the Long-Term Capital Gains declared by the assessee could not be doubted with. This case was dealing with gains earned by the assessee on sale of same scrip i.e. M/s Sunrise Asian Ltd. 13. Therefore, considering the entirety of facts and circumstances, we are not inclined to accept the stand of Ld.CIT(A) in sustaining the impugned additions in the hands of the assessee. Resultantly, the addition on account of alleged Long-Term Capital Gains as well as estimated commission against the same, stands deleted. The grounds of appeal, to that extent, stand allowed. 19. Subsequently Co-ordinate Bench of Jaipur in the case of Ashok Agrawal V/s ACIT in ITA No.124/JP/2020 dated 18.11.2020 has followed the decision of Hon'ble Mumbai Tribunal in the case of Dipesh Ramesh Vardhan (supra) while dealing with the same issue of Long Term Capital Gain from sale of equity share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal proposition laid down by the Hon'ble Supreme Court that the burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidence held that the modus operandi, generalisation, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee unless specific evidence is brought on record to controvert the validity and correctness of the documentary evidences produced, the same cannot be rejected. We are in complete agreement with the said view and in the instant case, we find that evidence produced by the assessee in support of his claim of purchase and sale of shares on the stock exchange have not been refuted by any adverse findings or material which could demonstrate involvement of the assessee or collusion with so called accommodation entry providers to obtain bogus LTCG as so alleged by the authorities below. 24. We also find that while analyzing sale of shares of similar scrip of M/s Sunrise Asian Ltd and claim of exemption of long term capital gains u/s10(38), the Mumbai Benches of the Tribunal in case of Anraj Hiralal Shah (HUF) vs ITO (supra) has upheld the claim of the assessee's claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Gain eared from sale of equity shares of M/s SAL holding it to be a genuine gain and in this context we also note that in the case of Shri Shivnarayahn Sharma and Prayank Jain the alleged company is M/s Conart Traders Ltd subsequently merged with M/s SAL under the order of Hon ble Mumbai High Court and therefore the above stated decision will be squarely applicable in the case of these two assessee(s). 21. Further we observe that in the case of Govind Harinarayan Agrawal HUF, Manish Govind Agrawal HUF alleged issue of gain from share is from sale of equity shafes of Turbotech. Similar type of issue of the alleged bogus of Long Term Capital Gain from sale of shares of Turbotech came up before the Co-ordinate Bench held in the case of Swati Luthra wherein the Co-ordinate Bench has decided in favour of the assessee allowing both the grounds raised on merits as well as legal observing as follows:- 12. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. We find that the transactions of the assessee of purchase of shares of M/s Esteem Bio and M/s Turbotech., holding of the shares for more than one year and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court in the case of M/s Andaman Tiimber Industries vs. CCE (SC) reported in 127 DTR 241 has held as follows: According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross- examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to be the last fact finding authority who on the basis of evidence brought on record has rightly came to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. Relevant extract of the judgment of Hon ble Delhi High Court in the case of PCIT V/s Krishna Devi Others is reproduced below:- 10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same for the reasons stated hereinafter. 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels. The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain s submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (HUF) as they have sold the equity shares held in Demat account and transactions performed on a recognised stock exchange through registered broker at the price appearing on the exchange portal and at the point of time of sale of equity shares, companies were not marked as shell companies by SEBI and nor the trading of these scrips were suspended. The assessee also deserves to succeed on the legal ground as no opportunity was awarded to cross examination the third person which were allegedly found to be providing accommodation entries and therefore no addition was called for in the hands of the assessee without providing opportunity of cross examination in view of the ratio laid down by Hon'ble Apex Court in the case of Andaman Timber Industries vs. CCE 281 CTR 241 (SC) that not allowing the assessee to cross examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected . 24. We accordingly in view of our above discussions, facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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