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TMI Blog2024 (7) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT Jaipur in Purushotam Soni [ 2018 (4) TMI 1839 - ITAT JAIPUR] and Pramod Jain [ 2018 (2) TMI 300 - ITAT JAIPUR] In the impugned orders, the theory propounded by the ld. AO suggests large scale generation investment of unaccounted monies took place, but even after conducting an invasive search action, no evidence to support such addition was unearthed. As per the ld. AO, the assessee had earned routed unrecorded income. If that were so, it would have certainly reflected in the investigated documents. The documents in the form of undisclosed sales or bogus expenses etc. AO has however not been able to bring on record any material or evidence unearthed during search/ investigation which would reveal as to from which income earning activity did the assessee derive such unaccounted monies to support his theory that he had routed such unaccounted monies in the guise of bogus capital gains. The addition was fully dependent on indirect evidence and statement of different persons. The relevant documents in support of claims of transactions are submitted by the assessee was never been rejected by the revenue . We respectfully relied on the orders Mukesh Ratilal Marolia [ 2011 (9) TMI 919 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O in making an addition of Rs. 2,54,98,050/- under section 68 of the Act by alleging that the sale of shares of Luminaire Tech Limited was a sham transaction on the basis of presumption, surmises and conjunctures, without any evidence of a round trip cash transaction. 1.4. That on the facts and circumstances of the case and in law the Ld. NFAC has erred in relying on the various case laws and observations which are not applicable to the facts of the appellant hence addition confirmed by the NFAC contrary to the ratio laid down by the jurisdictional High Court and Tribunal, the addition may be directed to be deleted. 2. Addition of Rs. 7,50,772/-under section 69C of the Act. 2.1. That on the facts and circumstances of the case and in law the Ld. NFAC has erred in upholding the order of the Ld. AO in making an addition of Rs. 7,50,772/- under section 69C as an alleged commission paid to entry arid exit providers. 2.2. That on the facts and circumstances of the case and in law the Ld. NFAC has erred in upholding the order of the Ld. AO in making an addition of Rs. 7,50,772/- under section 69C as an alleged commission paid to entry and exit providers without any evidence of such paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO. 275 OF 2012 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 76 OF 2012. PARIDHI PROPERTIES LIMITED . ..Petitioner/Transferor Company AND COMPANY SCHEME PETITION NO. 276 OF 2012 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 77 OF 2012. LUMINAIRE TECHNOLOGIES LIMITED . ...Petitioner/Transferee Company In the matter of the Companies Act 1 of 1956; AND In the matter of Sections 391 to 394 of the Companies Act, 1956; AND In the matter of the Scheme of arrangement between PARIDHI PROPERTIES LIMITED, the Transferor Company WITH LUMINAIRE TECHNOLOGIES LIMITED, the Transferee Company Mr. Rajesh Shah with Mr. Chandrakant Mhadeshwar /b Rajesh Shah Co. Advocates for Petitioners in both Petitions. Mrs. R. N. Sutar, Asstt. Official Liquidator, present in CSP No. 275 of 2012. Mr. N.D. Sharma i/b Dr. T. C. Kaushik for Regional Director in both Petitions. PC: CORAM: S.J. Kathawalla, J. DATE : 27th July, 2012 PC: 1. Heard counsel for the parties. 2. The sanction of the Court is sought to a Scheme of Arrangement between PARIDHI PROPERTIES LIMITED, the Transferor Company with LUMINAIRE TECHNOLOGIES LIMITED, the Transferee Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the Regional Director in Paragraph 6(a) of his Affidavit, the Petitioner/Transferee Company through its counsel undertakes to comply with the suggestions of the Regional Director that the Reserve arising out of this scheme shall not constitute as free reserve as per section 2(29) of the Act and the same be styled as Capital Reserve by the Transferee Company, The said undertaking is accepted. 7. In response to the observations raised by the Regional Director in Paragraph 6(b) of his affidavit, the Counsel appearing on behalf of the Petitioner Companies has tendered the copy of the Board Resolutions and states that the Petitioner Companies has already passed a Resolutions in its Meetings of the Board of Directors held on 14th February, 2012 and in the said meetings the Board of Directors of the Petitioner Companies has resolved to extend the period fixed for seeking approval of the Scheme by the Court from 31/03/2012 to 31/12/2012. 8. In response to the observations raised by the Regional Director in Paragraph 6(c) of his Affidavit, the Petitioner/Transferee Company through its counsel undertakes to comply with provisions of section 40 read with section 18 of the Act and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n International Ltd. under preferential issue at par of face value of Rs. 10/- each vide allotment letter dated 08.03.2012. The Assessing Officer has not disputed the genuineness of the letter of allotment issued by the company to the assessee wherein it has been communicated that the assessee has been allotted 3,50,000 equity shares vide allotment letter dated 08.03.2012 against the application of the assessee at par of face value of Rs. 10/- each without any premium. The assessee has also produced the bank statement showing the payment of consideration of the acquisition of shares on 29.02.2012. It appears that the said payment was made by the assessee at the time of applying for allotment of shares and subsequently the shares were allotted by the company on 01.03.2012. Thus, it is clear that the shares acquired by the assessee is not a trading transaction but these were allotted directly by the company under the preferential issue and hence, the role of intermediate is ruled out. Once, the shares were directly allotted by the company M/s Rutron International Ltd. against the consideration paid by the assessee through cheque. Then the role of any intermediately particular of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces Limited, Splash Media Infra Services Ltd, Rutron International Limited and FACT enterprise Ltd. Regarding other companies I am not aware who are the directors of these companies. Thus, it is clear from the relevant part of statement of Shri Anil Agrawal as reproduced by the AO that he has stated having business nexus with these companies and nature of business being consultancy services. Hence, he has not stated anything about providing bogus long term capital gain in respect of the equity shares of M/s Rutron International Ltd. A business nexus with any company will not automatically lead to the conclusion that the shares allotted by the other company is bogus transaction. As per question no. 5 and answer thereto it is clear that Shri Anil Agrawal was not the Director of M/s Rutron International Ltd. but he has stated to know some of the directors of these companies including M/s Rutron International Ltd. Hence, from this relevant part of the statement of Shri Anil Agrawal it cannot be inferred that he has provided the bogus long term capital gain from purchase and shares of equity shares of M/s Rutron International Ltd. much less the specific transaction of preferential issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quity shares of M/s Paridhi Properties Ltd. The share allotted in private placement as per of Rs. 10/- cannot be termed as penny stock. The AO doubted that the entire process of application and allotment of shares as it have been completed within a short duration of 5 days, which in the opinion of the AO is not possible in ordinary course. However, when the assessee has produced the record including the share application, payment of share application money, allotment of share then merely because of a short period of time will not be a sufficient reason to hold that the transaction is bogus. The shares allotted to the assessee vide share certificate dated 31.03.2011 were dematerialized on 21.10.2011, therefore, on the date of dematerialization of the shares the holding of the shares of the assessee cannot be doubted and hence the acquisition of the shares of the assessee cannot be treated as a bogus transaction. Nobody can have the shares in his own name in demat account without acquiring or allotment through due process hence, except the purchase consideration paid by the assessee holding of shares cannot be doubted when the assessee has produced all the relevant record of issuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nity given to us to read the recorded statement of Shri Deepak Patwari and to produce him from the cross examination before your good self, we have to submit that from the reading of the statements of Shri Deepak Patwari it is clear that he has never taken the name of the assessee, nor the assessee is aware of any Shri Deepak Patwari neither he has made any transaction with him, so in what capacity he can call him for cross examination before your good self. Since your good self has got the authority, we humbly request you to kindly issue the notice u/s 131 of the income Tax act 1961 to him also for cross examination. We also request your good self to kingly provide us the copy of statements of Shri Deepak Patwari along with the other relevant documents. Please note that the assessee is ready to bear the cost of his travelling in this regard, It is manifest from the assessee's reply to show cause notice that the assessee had specifically demanded the cross examination of Shri Deepak Patwari however, the Assessing Officer did not offer the opportunity to the assessee to cross examine Shri Deepak Patwari. Further, the AO asked the assessee to produce the Principal Officers of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose I as to what could be the subject matter of the cross-examination t 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the entire premium collected all throughout the country and deposited in Benami bank accounts actually belongs to the assessee-company or the assessee-company had direct control on these bank accounts. Ultimately, the entire case of the revenue hinges upon the presumption that assessee is bound to have some large share in so-called secret money in the form of premium and its circulation. However, this presumption or suspicion how strong it may appear to be true, but needs to be corroborated by some evidence to establish a link that GTC actually had some kind of a share in such secret money. 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 var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd! in some sham transactions which were detected in the search case of B.C. Purohit Group. The AO has also stated in the assessment order itself while discussing the modus operand! that accommodation entries of long term capital gain were purchased as long term capital gain either was exempted from tax or was taxable at a lower rate. As the appellant's case is of short term capital gain, it does not exactly fall under that category of accommodation transactions. Further as per the report of DCIT, Central Circle-3 Sh. P.K. Agarwal was found to be an entry provider as stated by Sh. Pawan Purohit of B.C. Purihit and Co. group. The AR made submission before the AO that the fact was not correct as in the statement of Sh. Pawan Purohit there is no mention of Sh. P. K. Agarwal. It was also submitted that there was no mention of Sh. P. K. Agarwal in the order of Settlement Commission in the case of Sh. Sushil Kumar Purohit. Copy of the order of settlement commission was submitted. The AO has failed to counter the objections raised by the appellant during the assessment proceedings. Simply mentioning that these findings are in the appraisal report and appraisal report is made by the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and the Assessing Officer required a deeper scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock Exchange records showed that the shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt.Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause it arises in the context of same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted or regular as such. The relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and pertaining to the addition of Rs. 25,93,000/-, Barring the figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For the same reasons, even this additional question cannot be termed as substantial question of law. 4.5. CIT vs Jamnadevi Agrawal [2010] 328 ITR 656 (Bom). The relevant paragraphs are reproduced as below: - 4. In all these cases, the assessees had claimed/offered long-term capital gains on sale of shares of various listed companies, which were all accepted by the Assessing Officer in the respective assessments. Thereafter, on account of search, proceedings were initiated under section 153A of the Act. For easy reference, we may take the facts in Income-tax Appeal No. 41 of 2010. It is agreed between the parties that the decision in Income-tax Appeal No. 41 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in the case of Kamal Kumar Agrawal (individual), which is the lead matter. 10. The sole contention raised by the Revenue in these appeals is that the entire long-term capital gains claimed by the assessee represent undisclosed income of the assessee because : (a)most of the sales of the shares effected by the group are of the same companies and through the same brokers located at Calcutta, (b) Pradeep Kumar Daga, the principal broker has confirmed that the transactions with the Haldiram group are sham and explained the modus operandi as follows: Party A wants to claim LTCG and approaches me through a person X. Mr. X approaches me with two names, i.e., the buyer (A) and the seller (B). Mr. A buys the share of the 29 company held by the seller B at Rs. 3 through my terminal. After 365 days or one year when the share of the company has reached high of Rs. 100, Mr. X approaches me through Mr. A with the name fresh purchaser Mr. C, who is willing to buy the shares of Mr. A at Rs. 100. Mr. A (who was previously the purchaser and wants to avail of LTCG now) becomes the seller and sells his shares at Rs. 100 to Mr. C through my terminal. Mr. C gives me a cheque of Rs. 100 for the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions were genuine. Nothing is brought to our notice that the findings recorded by the Tribunal are contrary to the documentary evidence on record. 14. The Tribunal has further recorded a finding of fact that the cash credits in the bank accounts of some of the buyers of shares cannot be linked to the assessees. Moreover, in the light of the documentary evidence adduced to show that the shares purchased and sold by the assessees were in conformity with the market price, the Tribunal recorded a finding of fact that the cash credits in the buyers' bank accounts cannot be attributed to the assessees. No fault can be found with the above finding recorded by the Tribunal. 15. Reliance placed by the counsel for the Revenue on the decision of the apex court in the case of Sumati Dayal [19951 214 ITR 801 is wholly misplaced. In that case, the assessee therein had claimed income from horse races and the finding of fact recorded was that the assessee therein had not participated in races, but purchased winning tickets after the race with the unaccounted money. In the present case, the documentary evidence clearly shows that the transactions were at the rate prevailing in the stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Management Consultants Pvt. Ltd. cannot be disputed, because the fact that the Assessee has received the said amount is not in dispute. It is neither 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. Though there is some discrepancy in the statement of the Director of M/s. Richmand Securities Pvt. Ltd. regarding the sale transaction, the Tribunal relying on the statement of the employee of M/s. Richmand Securities Pvt. Ltd. held that the sale transaction was genuine. 7 In these circumstances, the decision of the ITAT in holding that the purchase and sale of shares are genuine and therefore, the Assessing Officer was not justified in holding that the amount of Rs. 1,41,08,484/-represented unexplained investment under Section 69 of the Income Tax Act, 1961 cannot be faulted. 4.7. PCIT vs. Ziauddin A. Siddiquie ITA No. 2012 of 2017 Date 04/03/2012 (BOM) The relevant paragraphs are reproduced as below: - 2. We have considered the impugned order with te assistance of the learned Counsels and we have no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dited into demat account were 250000 shares. During the current financial year 2013-2014, the assessee sold 97000 shares and the balance 153000 shares remain unsold as on 31/03/2022. For both the shares, the payments for purchase of shares were made by the assessee by account payee cheques out of sources duly disclosed in the books of accounts. 4.2. The assessee furnished the following documents in support of his contentions before the lower authorities :- a) Complete details of bank accounts held by the assessee together with the bank statements evidencing the payments made for purchase of shares and sale proceeds credited in the bank account for sale of shares. b) Payments made by account payee cheques for purchase of shares and investment made in shares were duly reflected in the books of accounts of the assessee in the year of purchase. Invoice for purchase of shares was enclosed. c) Demat statement of the assessee for the relevant periods. d) Contract notes cum bills raised by the share broker. e) Securities transaction tax paid details f) Details of long term capital gains earned by the assessee. 4.3. The ld. AO issued a show cause notice to the assessee wherein he sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than a year before sale transaction was executed. g. The department was not averse to the purchase transaction as no adverse inference was drawn with respect to the purchases in A.Y. 2012-2013. The return of income the A.Y. 2012- 2013 has attained finality and now the department cannot blow hot and cold where at one end drawing no adverse inference in A.Y. 2012-2013 but during A.Y. 2014-2015 doubting the genuineness of this Long Term Capital Gains and indirectly doubting the genuineness of the purchases itself. The finding of the department is not only illogical but also ill founded. h. To the best of knowledge of the assessee, trading in the shares of Blazon Marbles Ltd was never suspected nor any penalty action was awarded on company for irregularities of price rigging by SEBI. This is a very crucial aspect where the watch dog does not find any abnormality in price change. i. SEBI has passed final orders that investigations did not find any adverse evidence / findings in respect of violations of provisions of SEBI (Prohibition of Fraudulent Unfair Practices relating to security market) Regulations, 2003 in the case of Radford Global Ltd. j. It is known fact and a practice i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Prohibition of Fraudulent and unfair Practices relating to Securities Market) Regulations, 2003 in respect of 82 persons including the assessee herein and the company Radford Global Ltd. This final order of SEBI dated 20/09/2017 was also placed on record by the assessee before the ld. AO vide letter dated 23/09/2017 making a request not to take any adverse view on the issue of LTCG. 4.3.1. With regard to Blazon Marbles Ltd, SEBI vide its order dated 13.10.2017 had passed an order u/s 15I of SEBI Act read with Rule 5 thereon had levied penalty on certain persons for making some procedural violations and for non-appearance to the summons issued by SEBI. The name of the assessee or its registered share broker is not reflected in the said list. 4.4. The ld. AO while making the assessment u/s. 143(3) r.w.s. 153A of the Act did not heed to the aforesaid contentions of the assessee and proceeded to treat the sale proceeds of shares amounting to Rs 8,41,04,109/- as unexplained cash credit u/s 68 of the Act by treating the same as an accommodation entry and also added an amount of Rs 50,46,247/- on account of unexplained commission expenditure incurred u/s 69C of the Act at the rate of 6% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce rise. The Hon ble Bombay High Court held that the assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain and that the gain has accordingly to be assessed as undisclosed credit u/s 68. Reliance is also paid on the decision of the Mumbai D‟ Bench of the ITAT dated 22.03.2017 in ITA No. 6398 / Mum / 2012 in the case of Disha N. Lalwani, Mumbai v. ITO, Ward-23 (2)(2), Mumbai wherein it was held that the mere contention that the monies have come through account payee cheques is at best neutral. In the statement given by Choksi it has been accepted to the practice of taking cash and issuing cheques in the guise of subscription to share capital. The question required a thorough examination and a superficial one. From the facts of the case, one fact is oozing out that merely a paper work was camouflaged by the assessee. 15.3 Thus, based on the above mentioned facts and circumstances, the revenue has sufficient, cogent, tangible, reliable, authenticated proof to show that Long term capital gains booked by assessee in his books were prearranged method to evade taxes and launder money which can be summari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to how the assessee invested in nondescript listed companies having such meager financials by preferential allotment and made huge capital gains in complete disregard of market movement, it is clear that the assessee brought back his own unaccounted income into his books of account in the form of bogus capital gains. Moreover, the statements of various accommodation entry providers recorded by the Investigation Wing further lend credence to the fact that the assessee took accommodation entries. Now since it has been established that accommodation entries were taken, it is only logical to assume that the assessee must have also paid commission to the accommodation entry providers for arranging the accommodation entry of bogus LTCG. As it has been admitted on oath by various accommodation entry providers that for accommodation entries in the nature of LTCG they charge commission ranging from 4% 6%, thus 6% of the sale consideration is being taken as the unexplained expenditure incurred by the assessee for arranging the accommodation entries. 15.5.2 In view of the above facts it is crystal clear that the assessee utilized his unaccounted cash to obtain the above said bogus LTCG. Sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence, an amount of Rs. 50,46,247/- (6% of Rs. 8,41,04,109/-) is taxed as unexplained expenditure u/s 69C of the Income Tax Act, 1961. Alternatively, this amount also represents the undisclosed income or income from undisclosed sources of the assessee for the previous year relevant to the assessment year 2014- 2015. 4.5. The ld. CIT(A) confirmed the addition of unexplained cash credit u/s. 68 of the Act of Rs 8,41,04,109/- giving finding as under:- 7.34. In the present case, it is noted that there are sufficient evidences of the scripts of these company having been manipulated during the period during which the assessee has held the shares of these companies. Further, these shares have been offloaded to exit providers and not genuine investors. In light of the fact that the transactions are managed through synchronised trading and are not genuine transactions even though conducted on the Stock Exchange, the gain made by the assessee is required to be taken as bogus Long Term Capital Gain. 7.35. In light of the above discussion, the claim by the assessee that the addition has been made merely on presumption and without any evidence is not found acceptable. The reliance placed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EBI Act, 1992 was passed by SEBI levying penalties on certain persons for procedural violations and for non-appearance to the summons issued by SEBI. We find that assessee is not reflected in the said list of persons on whom penalties were levied. The main grievance of the ld. AO is that rise in share price of Radford Global Ltd and Blazon Marbles Ltd is devoid of commercial principle or market factors ; that transactions are based on mutual connivance on part of assessee and operators ; that assessee resorted to preconceived scheme to procure bogus long term capital gains and hence the transactions are not bonafide ; that SEBI also passed an interim order in the case of Radford Global Ltd holding that share prices were determined artificially by manipulations ; that these are close circuit transactions and are pre-structured; that assessee had failed to discharge his onus cast on him ; that net worth of Radford Global Ltd and Blazon Marbles Ltd is negligible and that its share prices were artificially rigged ; that investigations prove that cash is routed through various accounts to provide these bogus long term capital gain entries. The ld. AO by making these observations proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The transaction of holding the shares are reflected in Demat account and sale of shares are through Demat account. More so, when there is no dispute regarding the purchase price and sale price of shares. Our view is further fortified by the decision of Hon ble Jurisdictional High Court in the case of CIT vs Jamnadevi Agarwal reported in 328 ITR 656 (Bom) wherein it was held that From the documents produced before the Court it was seen that the shares in question were, in fact, purchased by the assessees on the respective dates and the company had confirmed to have handed over the shares purchased by the assessees. Similarly, the sale of the shares of the respective buyer was also established by producing documentary evidence. It is true that some of the transactions were off-market transactions. However, the purchase and sale price of the shares declared by the assessees were in conformity with the market rates prevailing on the respective dates, as was seen from the documents furnished by the assessees. Therefore, the fact that some of the transactions were off-market transactions could not be a ground to treat the transactions as sham transactions. On a perusal of those documenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, violations under SEBI Act, SCRA, PFUTP Regulations, etc., were observed and SEBI shall continue its proceedings against them. Hence, the directions issued vide Orders dated October 12, 2015, March 18, 2016 and August 26, 2016 against the remaining 24 entities shall continue. This revocation order is without prejudice to any other action SEBI may initiate as per law. 5.5.1. We find that the name of the assessee is reflected in Serial Number 26 which is part of 82 entities acquitted by SEBI, on whom clean chit has been given. Further Radford Global Limited is reflected in Serial Number 1 which is also part of 82 entities acquitted by SEBI, on whom clean chit has been given. 5.5.2. With regard to Blazon Marbles Ltd, we find that though an order was passed u/s 15I of SEBI Act, 1992 by SEBI on 13/10/2017, the same was passed only for levying penalties on certain persons for making procedural violations and for non-appearance to the summons issued by SEBI. The said order of SEBI does not allege any involvement of the assessee herein with the manipulation of share prices. 5.6. We find that the assessee had held the shares in the instant case for 33 months in the case of Blazon Marbles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee also gave details of investments made by him through IPOs and through preferential allotment in various companies in the statement u/s 132(4) of the Act itself. The assessee also explained the complete basis of he deciding to make investment in Radford Global Ltd in his statement u/s 132(4) of the Act. It is pertinent to note that no questions were even posed by the investigation wing at the time of search proceedings and also during recording of statement u/s 132(4) of the Act with regard to shares invested by the assessee in Blazon Marbles Ltd. 5.8. Hence the entire addition has been made merely by placing reliance on the Kolkata Investigation Wing report which are more general in nature and does not implicate the assessee herein in any manner whatsoever. We are unable to persuade ourselves to accept to the contentions of the ld. DR that Kolkata Investigation Wing had conducted a detailed enquiry with regard to the scrip dealt by the assessee herein and hence whomsoever had dealt in this scrip, would only result in bogus claim of long term capital gain exemption or bogus claim of short term capital loss. Merely because a particular scrip is identified as a penny stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be not violative of provisions of relevant Act and Rules by the SEBI upon necessary investigation and even the initial restraint order was revoked vide interim order dated 06/09/2017, therefore, we find no basis in sustaining the impugned addition made by the AO by treating the said transaction to be a penny stock transaction resulting in bogus long term capital gains. Accordingly, we direct the AO to delete the impugned addition of Rs 84,45,050. Further, since the other addition of Rs 22,712 by AO is also consequent to the aforesaid impugned addition, therefore, the said addition is also directed to be deleted. 5.9. We hold that the entire addition has been made based on mere surmise, suspicion and conjecture and by making baseless allegations against the assessee herein. Now another issue that arises is as to whether the ld. AO merely on the basis of Kolkata investigation wing report could come to a conclusion that the transactions carried out by the assessee as bogus. In our considered opinion, the ld. AO is expected to conduct independent verification of the matter before reaching to the conclusion that the transactions of the assessee are bogus. More importantly, it is bounde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant operative portion of the said judgement is reproduced below:- 5. We have perused the concurrent findings and on which heavy reliance is placed by Mr.Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried out in paras 20, 20.1, 20.2 and 21 of his order, what was important and vital for the purpose of the present case was whether the transactions in shares were genuine or sham and bogus. If the purchase and sale of shares are reflected in the Assessee's DMAT account, yet they are termed as arranged transactions and projected to be real, then, such conclusion which has been reached by the Commissioner and the Assessing Officer required a deeper scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock Exchange records showed that the shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt.Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that he holds t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparent on the face of the record either. 7. As a result of the above discussion, we do not find any substance in the contention of Mr.Sureshkumar that the Tribunal misdirected itself and in law. We hold that the Appeals do not raise any substantial question of law. They are accordingly dismissed. There would no order as to costs. 8. Even the additional question cannot be said to be substantial question of law, because it arises in the context of same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted or regular as such. The relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and pertaining to the addition of Rs. 25,93,150/-. Barring the figure of loss that is stated to have been taken, no distinguish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income-tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent's unaccounted money, but he did not dig deeper. Notices issued under sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar case (supra) and Sumati Dayal case (supra) is of no assistance. Upon examining the judgment of Suman Poddar case (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal (supra) too turns on its own specific facts. The above-stated cases, thus, are of no assistan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commissioner of Income Tax (Central)- 1 vs. NRA Iron Steel (P) Ltd (2019) 103 taxmann.com 48 (SC) but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal is devoid of merits and it is dismissed with no order as to costs. 5.14. We find that the ld. DR had relied on the decision of Hon ble Calcutta High Court in the case of PCIT vs Swati Bajaj reported in 139 taxmann.com 352 which is an elaborate decision rendered after considering various decisions of various High Courts on the subject. In the said decision, it was held that assessee had to establish the genuineness of rise of price of shares within a short period of time that too when general market trend was recessive. But we find that when there are several decisions of Hon ble Jurisdictional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot inclined to accept to the stand of the ld. CIT(A) in sustaining the impugned additions on account of denial of exemption for long term capital gains u/s 10(38) of the Act and estimated commission @ 6% against the same. Accordingly, ground nos. 1 2 raised by the assessee are allowed. 6. The Ground No. 3 raised by the assessee is challenging the levy of interest u/s 234B and 234C of the Act, which would be consequential in nature and does not require any specific adjudication. 7. The Ground No. 4 raised by the assessee is challenging the initiation of penalty proceedings u/s 271(1) (c ) of the Act, which would be premature for adjudication at this stage. Hence dismissed. 8. In the result, the appeal of the assessee Shri Yogesh Popatlal Thakkar in ITA No. 1605/Mum/2021 for A.Y. 2014-15 is partly allowed. . 5. The Ld.DR vehemently argued and fully relied on the order of revenue authorities. The Ld. DR invited our attention in appeal order, page 23, paragraph 6.2.7 which is reproduced as below: - 6.2.7 Appellant does have the documents such as contract notes; undertaking share sale through the stock exchange, routing it through the banking channel and Demat accounts to indicate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a bit perfunctory. There is absolutely no discussion of the factual position in any of the 89 appeals, the exception is in paragraph 4 with regard to the certain facts of the assessees case (SwatiBajaj). We are not very appreciative of the manner in which the bunch of appeals have been disposed of. The cardinal principles which courts and tribunal have followed consistently is that each assessment year is an individual unit and unless and until it is shown that there are distinguishing feature in a particular assessment year, the decision taken for the earlier years are to be followed to ensure consistency. While doing so the Courts/Tribunals are required to examine the facts and render a finding as to why the decision in the earlier assessment years should be adopted or not. 52. Apart from the above, the Hon ble Court noted that the assessee had never mentioned before the AO that, he wanted the copy of investigation report or the statements of the brokers/entry operators and therefore the assessee s plea regarding non-availability of relevant material or denial of cross-examination claimed was rejected. The relevant observation of the Hon ble High Court is as under: Nothing pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of undisclosed sales or bogus expenses etc. The AO has however not been able to bring on record any material or evidence unearthed during search/ investigation which would reveal as to from which income earning activity did the assessee derive such unaccounted monies to support his theory that he had routed such unaccounted monies in the guise of bogus capital gains. The addition was fully dependent on indirect evidence and statement of different persons. The relevant documents in support of claims of transactions are submitted by the assessee was never been rejected by the revenue. We respectfully relied on the orders of Hon ble Jurisdictional High Court, Mukesh Ratilal Marolia (supra) and Ziauddin A. Siddiquie (supra). The view was taken in favour of assessee by the Coordinate bench of the ITAT Mumbai in the case of Yogesh P Thakkar(supra) cannot be circumvented. In our considered view, we set aside the appellate order. The ground of appeal of the assessee is succeeded. The addition amounting to Rs. 2,54,98,050/- u/s 68 amounting to Rs. 7,50,772/- u/s 69C are quashed. 7. In the result, appeal of the assessee ITA No. 4271/Mum/2023 is allowed. Order pronounced in the open court on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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