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TMI Blog2024 (4) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... d Shri Girish Agrawal, Accountant Member For the Revenue : Shri Giridhar Dhelia, AR For the Assessee : Shri P. K. Koley, Sr. DR ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of Ld. CIT(A), Dhanbad, dated 15.07.2020 passed against the assessment order by Ld. ITO, Ward-2(3), Dhanbad u/s. 143(3)/147 of the Income tax Act, 1961 (hereinafter referred to as the Act ), dated 12.09.2018 for AY 2013-14. 2. The lone issue involved in the present appeal is in respect of addition made towards long term capital gain earned by the assessee on sale of shares claimed as exempt u/s. 10(38) of the Act which has been treated as bogus entry by the Ld. AO along with payment of presumptive commission @ 3% to the entry operator for providing long term capital gain, treating it as unexplained expenditure. The assessee has raised as many as 21 grounds of appeal. From the perusal of all these grounds, we note that these are nothing but peripheral arguments on the issue noted above. Accordingly, these are not reproduced for the sake of brevity and the same will be dealt while adjudicating on the issue. 3. Brief facts as culled out from records are that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , assessee had furnished all the required details and documents in response to notice issued by the Ld. AO and show cause notice, which are all placed on record. 4.2. The Ld. AO after discussing the modus operandi and several judicial precedents held that the said long term capital gain was bogus which represents undisclosed money (cash) introduced to the capital in the guise of exempt income (LTCG). He added the amount of Rs. 79,67,088/- under the head income from unexplained money. He also estimated payment of commission @ 3% for providing capital gains and thus made a further addition of Rs. 2,39,012/- as unexplained expenditure. Aggrieved, assessee went in appeal before the Ld. CIT(A) who confirmed the addition made by the Ld. AO after discussing the theory of preponderance of human probabilities and conduct and various judicial precedents. 5. According to Ld. Counsel for the assessee, investment and disinvestment in the share of CCL cannot be treated as accommodation entry in the garb of LTCG as the issue is no longer res integra for which he placed reliance on the decision of Hon ble jurisdictional High Court of Jharkhand in the case of Arun Kumar Agarwal, HUF (2012) 26 taxma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Further, there is no positive evidence brought on record by the ld. AO that money changed hands between the assessee and broker or any other person to convert unaccounted money by availing LTCG. He also contended that reliance placed by the ld. AO on the purported statements is bad in law since no opportunity was afforded to assessee to cross examine such persons which is gross violation of principles of natural justice. According to the ld. Counsel, impugned order does not reflect the name of the person whose statement has been relied upon against the assessee and also no specific name of the entry operator is known with whom assessee had undertaken the alleged accommodation entry. In support of this submission, he placed reliance on the decision of Hon ble Supreme Court in the case of Andaman Timber Industries vs CCE 314 ELT 641 (SC). 5.8. On the issue relating to addition made towards brokerage/commission as unexplained expenditure u/s 69C on the aforesaid alleged bogus LTCG accommodation entry, ld. Counsel submitted that it is based on surmises, conjectures and suspicion. There is nothing brought on record to establish as to who is the entry operator to whom assessee paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an illegal transaction. iii) Assessee sold shares through Online Trading platform after payment of STT. iv) Transactions carried out by the assessee through Stock Exchange are without any physical interaction between buyer and seller. v) Assessee is a habitual investor having portfolio of investment in shares. vi) Neither the trading in shares of CCL is suspended as on date nor the share is delisted by SEBI vii) Assessing Officer arrived at adverse conclusion without making any independent inquiries either from SEBI or stock exchange or broker or share company to ascertain genuineness of the impugned transaction. viii) Name of scrip appearing in the list of penny stock of income tax department cannot be a basis to make addition. ix) No addition can be made on the basis of adverse material, when neither such purported material was shown nor referred and confronted or supplied to the assessee in the course of assessment proceedings. x) No opportunity was afforded to assessee to cross examine the purported statements relied upon by Assessing Officer in the order of assessment violating the principles of natural justice. 8. We draw our force from the decision of Hon ble jurisdictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the observations made by the Tax Appeal No.4 of 2011 with analogous case Assessing Officer himself, it is clear that after getting that enquiry report, the SEBI prima facie found involvement of some of the share brokers in unfair trade practices. Even in a case where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, if purchased the share from that broker innocently and bonafidely 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 al ..... 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